00333 1 BEFORE THE WASHINGTON UTILITIES AND 2 TRANSPORTATION COMMISSION 3 4 IN THE MATTER OF AIRTOUCH ) Docket No. UT-990300 PAGING, INC., PETITION FOR ) Volume III 5 ARBITRATION OF AN ) Pages 333-649 INTERCONNECTION AGREEMENT WITH ) 6 US WEST COMMUNICATIONS, INC. ) PURSUANT TO SECTION 252 OF THE ) 7 TELECOMMUNICATIONS ACT OF ) 1996. ) 8 _______________________________) 9 10 11 A hearing in the above matter was 12 held on March 18, 1999, at 9:10 a.m., at 1300 13 Evergreen Park Drive Southwest, Olympia, Washington, 14 before Administrative Law Judge LAWRENCE BERG. 15 16 The parties were present as 17 follows: 18 AIRTOUCH PAGING, INC., by Stellman Keehnel, Attorney at Law, Foster, Pepper & Shefelman, 19 1111 Third Avenue, Seattle, Washington, 98101, and Richard J. Busch, Attorney at Law, Foster, Pepper & 20 Shefelman, 777 108th Avenue, N.E., Suite 1500, Bellevue, Washington, 98004-5118. 21 US WEST COMMUNICATIONS, INC., by Lisa 22 A. Anderl, Attorney at Law, 1600 Seventh Avenue, Room 3206, Seattle, Washington 98191, and John M. Devaney, 23 Attorney at Law, Perkins Coie, 607 Fourteenth Street, N.W., Washington, D.C., 20005-2011. 24 Barbara L. Spurbeck, CSR 25 Court Reporter 00334 1 ____________________________________________________ 2 INDEX OF WITNESSES 3 ____________________________________________________ 4 WITNESS: PAGE: 5 MARK S. REYNOLDS 6 Oral Summary 358 7 Examination by Judge Berg 360 8 Examination by Mr. Griffith 362 9 Cross-Examination by Mr. Keehnel 364 10 Examination by Ms. Rendahl 373 11 ROBERT BIDMON 12 Redirect Examination by Mr. Keehnel 375 13 DR. THOMAS ZEPP 14 Redirect Examination by Mr. Keehnel 376 15 KATHRYN MALONE 16 Direct Examination by Mr. Devaney 379 17 Cross-Examination by Mr. Busch 392 18 Examination by Mr. Griffith 435 19 Examination by Ms. Rendahl 439 20 Examination by Mr. Payne 440 21 Redirect Examination by Mr. Devaney 445 22 Recross-Examination by Mr. Busch 453 23 Examination by Judge Berg 468 24 Examination by Mr. Payne 469 25 00335 1 MARK S. REYNOLDS 2 Redirect Examination by Mr. Devaney 473 3 JERROLD THOMPSON 4 Direct Examination by Mr. Devaney 476 5 Cross-Examination by Mr. Keehnel 486 6 Examination by Mr. Griffith 535 7 Redirect Examination by Mr. Devaney 541 8 Recross-Examination by Mr. Keehnel 543 9 EDWARD A. PETERS 10 Direct Examination by Mr. Devaney 546 11 Cross-Examination by Mr. Keehnel 563 12 EDWARD PETERS AND MARK REYNOLDS PANEL 13 Cross-Examination by Mr. Busch 575 14 EDWARD A. PETERS 15 Cross-Examination (Continuing) by Mr. Keehnel 583 16 Examination by Mr. Payne 587 17 Examination by Mr. Griffith 594 18 Redirect Examination by Mr. Devaney 599 19 Recross-Examination by Mr. Keehnel 604 20 WILLIAM E. TAYLOR 21 Direct Examination by Mr. Devaney 606 22 Cross-Examination by Mr. Keehnel 618 23 Examination by Mr. Griffith 631 24 Redirect Examination by Mr. Devaney 631 25 00336 1 ____________________________________________________ 2 INDEX OF EXHIBITS 3 ____________________________________________________ 4 EXHIBIT: MARKED: OFFERED: ADMITTED: 5 Number 18 345 -- 345 6 Number 19 345 -- Denied 7 Number T-20 357 -- 358 8 Number 21 357 -- 358 9 Number T-22 -- 390 390 10 Number 23 -- 390 390 11 Number 24 -- 390 390 12 Number 25 -- 390 390 13 Number 26 -- 384 384 14 Number C-27 391 -- 390 15 Number 28 391 -- 391 16 Number C-29 391 -- 391 17 Number C-30 391 -- 391 18 Number C-31 391 -- 391 19 Number C-32 391 -- 391 20 Number C-33 391 -- 391 21 Number C-34 391 -- 391 22 Number C-35 391 -- 391 23 Number 36 472 -- 472 24 Number 37 472 -- 472 25 Number T-38 475 -- 475 00337 1 Number RT-39 475 -- 475 2 Number 40 475 -- 475 3 Number SRT-41 475 -- 475 4 Number C-42 475 -- 475 5 Number C-43 475 -- 475 6 Number 44 534 -- 534 7 Number 45 534 -- 534 8 Number T-46 546 -- 562 9 Number RT-47 546 -- 562 10 Number 48 243 -- 243 11 Number T-49 605 606 607 12 Number 50 605 -- 605 13 Number RT-51 605 606 607 14 Number 52 -- 634 634 15 Number C-53 647 646 647 16 Number C-54 648 Due 3/24/99 17 18 19 20 21 22 23 24 25 00338 1 JUDGE BERG: We'll be on the record. This 2 is continued proceedings in Washington Utilities and 3 Transportation Commission Docket Number UT-990300, in 4 the matter of petition for arbitration of an 5 interconnection agreement between AirTouch Paging and 6 US West Communications, Inc. Today's date is March 7 18th, 1999. This continued hearing is being 8 conducted at the Commission's offices in Olympia, 9 Washington. 10 There are several matters that were 11 discussed off the record in preparation for today's 12 witness testimony. The issues matrix and contract 13 containing competing language provisions is still 14 being considered by US West, and US West indicates 15 that they should have more information regarding 16 their position regarding the admission of those 17 documents as exhibits after the lunch break this 18 afternoon. 19 There has also been a discussion regarding 20 supplemental testimony requested by AirTouch along 21 with a companion exhibit, and I'm going to allow the 22 parties just to make a brief statement of their 23 position. Mr. Keehnel. 24 MR. KEEHNEL: Yes, Your Honor. Yesterday, 25 some questions were posed by Commission Staff and on 00339 1 cross-examination regarding any differences between a 2 study as far as it covers the MTA and as far as it 3 covers Washington state specifically. 4 Our belief was that inclusion or exclusion 5 of the out-of-state matters, given the nature of the 6 cost study, was not material, but because the 7 question had been asked, we endeavored to ascertain 8 the information. We figured that a complete record 9 for the hearing would be better than somebody 10 guessing. 11 So until the wee hours, we made some calls, 12 collected some data, and provided Dr. Zepp with 13 sufficient information that he was able to re-run the 14 numbers to confirm that if the few transmitters that 15 don't serve Washington that were included in the RF 16 column are excluded and if the percentage of 17 customers who are served by the MTA service, but are 18 outside Washington, are excluded, there is a 19 negligible effect on the overall cost study figures, 20 and has an exhibit which demonstrates that. 21 If we were to make an offer of proof, if US 22 West decides that it does not want to have this 23 information in the record, an offer of proof would 24 consist of a few moments of testimony by Mr. Bidmon, 25 just to give the figure of out-of-Washington 00340 1 customers served by the Washington MTA service, and 2 identification of the number of transmitters that are 3 outside Washington; i.e., do not provide Washington 4 service. 5 The follow-up would be just Dr. Bidmon 6 running his numbers. And I should just note for Mr. 7 Devaney, he should be careful how much he objects, 8 since the numbers do go down slightly as a result of 9 the adjustments. 10 JUDGE BERG: Mr. Devaney. 11 MR. DEVANEY: Well, that doesn't surprise 12 me, but I will say we continue to object. The basis 13 for our objection, Your Honor, as I articulated off 14 the record, is that this was just presented to us 15 this morning. Our position is that there shouldn't 16 have been non-Washington costs in this cost study 17 from the start, nor should there have been 18 non-Washington subscribers from the start, and 19 AirTouch should have filed a correct study from the 20 start. 21 To come in on the last day of the hearing, 22 the morning of the hearing with a revision to the 23 cost study to make those corrections, to us, is 24 improper and puts us in the prejudicial position of 25 not being able to respond. 00341 1 For example, Mr. Keehnel just said that 2 they collected data last night. We have no idea what 3 data they collected. All we have is a single sheet 4 of paper. So for us to probe beneath this, in the 5 type of analysis that was done, the data that were 6 relied upon to prepare it is literally impossible for 7 us to do right now. And for that reason, we object 8 to it. 9 As I acceded to off the record, during the 10 first break this morning, I will confer with my 11 colleagues to see if there's any way we can 12 accommodate the desire of AirTouch to get this into 13 the record. The more I hear about it, though, 14 especially the collection of data last night, I don't 15 think we'll withdraw our objection. As I agreed to 16 before, we will confer at the next break and talk 17 about that. 18 MR. KEEHNEL: Just, John, to assist you so 19 you can make an intelligent decision on this, the 20 only data that I was referring to -- I didn't mean to 21 scare you by that. The data I was referring to is 22 the fact that 49 of 70 of the RF sites are 23 Washington-specific, and 70 percent, and that 63,215 24 of the 86,869 beginning units in service in the cost 25 study are Washington-specific, which is 72.7 percent. 00342 1 That's the only data. 2 MR. DEVANEY: May I ask, there are 106 RF 3 sites in the study. Did you endeavor to find out 4 about the other 36? 5 MR. KEEHNEL: What we did, John, was take a 6 starting percentage for Washington RF, which was 7 originally a 70, ascertained that there were 8 inclusion for the MTA transmitter sites, not for 9 coverage of Washington, excluded those. The growth 10 is proportional because the population is 11 proportional, so on an extended basis, the RF sites 12 grow also in proportion to that same 70/30 split. 13 JUDGE BERG: I think this is discussion 14 that counsel can continue during a break or off the 15 record. To the extent that that information may be 16 -- or more additional information may be of use to 17 you, Mr. Devaney, I would urge you to keep the 18 dialogue open. 19 And I will indicate on the record that I 20 did provide the parties with a tentative decision, 21 but I am also going to reserve the opportunity to 22 rethink the issue, and I will make a final decision 23 after the lunch break this afternoon. 24 I did also indicate to the parties off the 25 record that it is not unprecedented that the 00343 1 Commission favors one methodology over another 2 methodology in a rate-setting type case, but 3 disagrees with some of the inputs. And in those 4 instances, the Commission has directed parties to 5 re-run their studies with other criteria acceptable 6 to the Commission. And that is also a possibility 7 that I wanted to bring to the parties' attention, and 8 which I reserve the opportunity to request. 9 Mr. Keehnel, you also indicated that there 10 are one or more exhibits that you wish to introduce 11 into the record, but may not otherwise have 12 sponsoring witnesses; is that correct? 13 MR. KEEHNEL: Yes, Your Honor, two. 14 Specifically, the first packet was already identified 15 in the initial exhibit list that we provided to 16 counsel some days ago, whenever that was, a week or 17 so ago, and consists of interrogatory responses by US 18 West to questions propounded by AirTouch, just 19 standard responses to particular issues that have 20 arisen in the course of the arbitration, some of 21 which deal with the subsidiary issues, but are 22 important as statements for factual matters. And it 23 comes from US West's admission by US West in the 24 discovery process, so we offer that. 25 The other, Your Honor, is what I referenced 00344 1 in opening statement, that we had just received the 2 evening before the commencement of the arbitration, 3 which is a fax from US West responding to another 4 inquiry, specifically the inquiry that you ordered US 5 West to respond to during a prehearing conference by 6 telephone. And we would also offer that. 7 JUDGE BERG: All right. And the first 8 document consists of seven separate data requests. 9 Let's address that first document first. Mr. 10 Devaney, does US West have any objection to the set 11 of responses to AirTouch data requests being admitted 12 into the record? 13 MR. DEVANEY: May I confer with my 14 colleague, Ms. Anderl? 15 JUDGE BERG: Yes. 16 MR. DEVANEY: We have no objection to the 17 first set, Your Honor. 18 MS. ANDERL: It will be our strong 19 preference that people don't even leaf through the 20 second document that Mr. Keehnel's distributed 21 because of the objection we'll be raising. 22 JUDGE BERG: I'll listen to the objections, 23 and then, if I think it necessary to refer to the 24 document, I will. 25 The set of data requests that are 00345 1 identified as US West responses to AirTouch Paging 2 Requests 1-004, 1-008, 1-009, 1-1010, 1-A002, and -- 3 excuse me, 1-A003, and 1-P009 are all admitted into 4 the record as Exhibit 18. 5 Mr. Devaney, would either yourself or Ms. 6 Anderl like to state the objections to the second 7 distributed document? 8 MR. DEVANEY: Your Honor, Ms. Anderl, I 9 think, will address that issue. 10 MS. ANDERL: Thank you, Your Honor. This 11 document was the subject of a teleconference between 12 Your Honor, Mr. Keehnel, and myself, I believe on 13 Monday earlier this week, and our objection to 14 answering this interrogatory initially was stated in 15 the response, that the request called for information 16 which was attorney-client privileged, attorney work 17 product, and also that it sought proprietary and 18 confidential information. 19 During the course of the discussion with 20 Your Honor, we explained that we were not making a 21 confidential and proprietary objection on the basis 22 of the protective order somehow didn't properly cover 23 the information. We think that the protective order 24 is adequate to protect confidential in this matter. 25 But on the basis that it was confidential and 00346 1 proprietary in the context of potentially revealing 2 negotiations, discussions, or a negotiation position, 3 and that we therefore do not believe that that was 4 proper in the first place, because AirTouch would 5 have known what our negotiation positions were or 6 settlement positions were, and therefore, didn't need 7 to discover those, and also that even if we did put 8 it down in a data request response, it wouldn't 9 properly be admissible in this type of proceeding 10 under Evidence Rule 408. 11 As I recall Your Honor's ruling, it was 12 that matters associated with the negotiations or 13 settlement offers up till this point would not be 14 admissible. I instructed personnel within US West to 15 answer this question in response to your order that 16 we did have to answer it, and I asked them to please 17 be mindful not to disclose any attorney-client 18 privilege or attorney work product information. 19 The response was faxed out while I was 20 here, and I did not have an opportunity to review it. 21 I think it's an accurate response. I do, however, 22 believe that the substance of the response does 23 reveal matters which are confidential, because they 24 relate to negotiations and settlement positions, and 25 therefore not properly made a part of the record in a 00347 1 contested case such as this. 2 That's our objection to the admission of 3 this supplemental response to this data request. And 4 I guess if I could just kind of wrap it up by saying 5 AirTouch knows this answer. And if AirTouch, instead 6 of trying to admit a US West data response, had put a 7 witness on the stand to say, I negotiated with US 8 West and here's some of the positions they took, we 9 would come out of our chairs objecting, and I believe 10 that would be a very sustainable objection. This is 11 exactly the same thing in a different form. 12 JUDGE BERG: Mr. Keehnel, number one, do 13 you agree with the characterization of this 14 information as being a position that US West 15 established during the course of negotiations? 16 MR. KEEHNEL: No, Your Honor. This is 17 territory we did cover for an hour in the conference 18 call, and I think I made the point then and I'll make 19 it briefly now for the record. The question is 20 directed to a policy decision whether termination 21 compensation is or is not going to be paid. It's a 22 very simple question. I thought it called for a 23 pretty simple answer. Either yes, US West had made 24 that decision, or no, it did not. 25 We now have an answer. The answer is a bit 00348 1 convoluted, I have to concede, but it does ultimately 2 answer the question that goes to whether US West has 3 finally dropped its policy objection to paying 4 termination compensation. I think, because that 5 issue is directly pertinent at the policy level to 6 positions that US West has taken, that is, dragging 7 out legal issues which we thought had been decided, 8 it is for that reason that it's highly material. 9 US West can argue that there are some 10 circumstances under which that policy decision would 11 not extend. I don't understand that position, but if 12 there's some mitigating factors, then US West, of 13 course, can argue that in closing brief. 14 But as far as answering the basic 15 underlying decision, a simple decision, whether that 16 policy decision is a yea or a nay, I think we finally 17 have an answer. As for that reason, I think the 18 Commission ought to know what US West's position is. 19 JUDGE BERG: If I understand this, Mr. 20 Keehnel, this goes to the issue as to whether or not 21 a paging provider is entitled to reciprocal 22 compensation? 23 MR. KEEHNEL: Ultimately, yes, Your Honor, 24 as to US West's position on that. 25 JUDGE BERG: And it's also the same 00349 1 ultimate issue that you argue was resolved in the 2 AT&T Wireless case at the Commission in favor of 3 paging providers? 4 MR. KEEHNEL: Yes, Your Honor. 5 JUDGE BERG: And to the extent that US West 6 may have had a policy position at some point in time 7 that's different than their policy position here 8 today, is there anything about that that is going to 9 help me resolve the issue as to whether or not 10 AirTouch is entitled to reciprocal compensation? 11 MR. KEEHNEL: I don't think -- I don't 12 think whether there was any change affects it. I 13 think what the policy is currently is material to 14 assisting in your decision. I think it's easier for 15 you to have to not, again, write part of your 16 decision devoted to legal issues if the parties have 17 reached a fundamental agreement on whether 18 termination compensation is to be paid. 19 And maybe there is something more here, on 20 a very highly technical legal level, that US West can 21 still argue in a closing brief, but as far as I can 22 tell it, given that a preponderance of the testimony 23 here dealt with US West's position on the issue of 24 termination compensation, not just the details, how 25 much has to be paid, but what is our position, given 00350 1 that they burdened you with a couple hundred pages of 2 testimony on that, their response to the same issue 3 in an interrogatory request seems perfectly 4 admissible. If they're able to talk about it in 5 their testimony, why would they say, in response to 6 an interrogatory -- why wouldn't that be equally 7 admissible? 8 I at one time tried to exclude all such 9 information and was unsuccessful. Now that it's been 10 admitted on one side, I think it has to be admitted 11 on the other. 12 JUDGE BERG: Well, it seems to me that the 13 most you could make out of this, Mr. Keehnel, is that 14 US West has changed its policy. I mean, that seems 15 to be the argument. It doesn't even go towards, for 16 example, attacking the credibility of a US West 17 witness, unless a US West witness was to make a 18 statement about the policy that refers to a prior 19 point in time. 20 MR. KEEHNEL: You could be right, Your 21 Honor. For that reason, that argument may go to the 22 weight of this. I'm willing to concede that it may 23 go to the weight of that, but I don't think that 24 diminishes the fact that it has fundamental relevance 25 regardless of the weight we give it. And as with any 00351 1 evidence, I suppose the same is true of this 2 evidence, many of the objections really go to the 3 weight, not to the admissibility, and I accept that. 4 JUDGE BERG: Ms. Anderl. 5 MS. ANDERL: Well, Your Honor, let me 6 preface this by saying this could get really ugly if 7 we are forced down this road, because, frankly, if 8 we're going to open up negotiation positions and 9 settlement offers as fair game in this docket, there 10 are a lot of things that we might be able to show or 11 would be able to put witnesses on about that may be 12 inconsistent with positions that AirTouch is taking 13 in this docket as a litigation position. That's all 14 AirTouch is trying to do here, and I think it's 15 fundamentally wrong. 16 I don't think that a position that US West 17 may or may not have been willing to take in 18 furtherance of negotiation or a settlement is 19 admissible or relevant for purposes of you making a 20 determination as to whether or not AirTouch is 21 entitled to reciprocal compensation under the law, 22 and if so, at what level. 23 This simply doesn't help you. And if it 24 does and if AirTouch wants it in, then, as I said, we 25 can bring the negotiating teams in here and we can 00352 1 talk about what AirTouch was willing to offer in 2 settlement and we can talk about what US West was 3 willing to offer in settlement, but I think that is 4 just a horrible outcome and it's legally wrong and 5 it's bad from a policy standpoint. 6 JUDGE BERG: Is there a US West witness who 7 is qualified to testify that this is a statement of 8 position that was made during the course of 9 settlement negotiations? 10 MS. ANDERL: Your Honor, the document 11 itself represents that. 12 JUDGE BERG: Mr. Keehnel, is that true? 13 MR. KEEHNEL: No, Your Honor. First, 14 that's not what the question asked for. First, the 15 question just asked what is US West's policy. It 16 doesn't ask what is US West's settlement position; it 17 asks what is US West's policy, who made the policy 18 decision, when it was made. 19 If a policy decision had been made not to 20 pay termination compensation, then we would have 21 gotten an answer back, No; but a policy decision has 22 been made that termination compensation will be paid, 23 and we got an answer back, Yes. 24 MS. ANDERL: Your Honor. 25 JUDGE BERG: That's all right. Just -- 00353 1 MS. ANDERL: No, I absolutely have to 2 insist that that be stricken from the record and Mr. 3 Keehnel be asked to please both stop testifying and 4 stop, through his oral argument, trying to get in 5 everything that, whether it's admissible or not, is 6 in dispute. He did it just a couple minutes ago with 7 Mr. Bidmon and Mr. Zepp. He was instructed not to 8 make an offer of proof and not to state what it was 9 they were going to testify about. He did it anyway. 10 He's just, in essence, read the response into the 11 record now. This is absolutely reprehensible. 12 JUDGE BERG: Ms. Anderl, I have to admit 13 that some of what Mr. Keehnel was saying went in one 14 ear and out the other. But you also have to 15 understand that this is not a trial to a jury, that, 16 in fact, you know that I've reversed my own decisions 17 in the past when there was just cause, and to the 18 extent that Mr. Keehnel may have crossed the line, in 19 your opinion, I'll take some of the responsibility 20 for that, for not managing the discussion tighter 21 than I have. 22 What I'm going to do is I am going to look 23 at the document. You're just going to have to trust 24 that I have the ability to disregard matters that are 25 not appropriately considered in this proceeding. 00354 1 MR. KEEHNEL: Your Honor, to complete my 2 answer to your question -- 3 JUDGE BERG: No, that's all right, Mr. 4 Keehnel. I know what I want to do here at this 5 point. I want to look at the document itself. 6 I've reviewed the document offered into 7 evidence by AirTouch Paging. In looking at the 8 responses to requests for information, the responses 9 are couched in language indicating that the position 10 of US West relevant to the response to the request is 11 related to negotiations between the parties. 12 To the extent that this position by US West 13 was part of negotiations and that there is no other 14 indication of what other conditions might relate to 15 such a position, and just in general knowledge that, 16 very often, negotiations are based upon some kind of 17 give and take, I don't see this position as being 18 binding on US West or otherwise contradicting the 19 position -- excuse me, contradicting or estopping US 20 West from developing some other position in this 21 proceeding. 22 To the extent that there's some witness to 23 be presented by US West that has otherwise 24 characterized the position of US West in 25 negotiations, this information may be used to 00355 1 question that witness' characterization. 2 However, it does not represent information 3 that would be used to challenge the credibility of a 4 witness otherwise stating a position of US West in 5 this proceeding. 6 I don't think this is the type of evidence 7 that a reasonably prudent person would rely upon to 8 determine what the policy position of US West is as a 9 matter of nondiscriminatory principles relevant to 10 the industry as a whole. It seems that it's very 11 specific to the negotiation that was ongoing between 12 the parties at this point in time. And it really 13 doesn't assist me in making my decision as to whether 14 or not AirTouch Paging is entitled to reciprocal 15 compensation under the Telecommunications Act and -- 16 excuse me, the Telecommunications Act as implemented 17 by the FCC's First Report and Order. 18 This will be marked as Exhibit 19, and the 19 request to admit Exhibit 19 into the record is 20 denied. 21 One last point I'd like to make to counsel 22 before we begin taking the testimony of witnesses, 23 and that is I understand that, like myself, when 24 counsel communicates with each other off the record 25 and outside the presence of the hearing room, that 00356 1 they resort to more informal relations and conduct 2 their discussions on a first name basis, but I think 3 it's important, in the context of the hearing in 4 front of me, that we keep that on a formal basis so 5 no one thinks that their informal personal 6 relationship is somehow being used to influence me or 7 to otherwise show any disrespect. And I do not think 8 that any undue influence was sought or disrespect was 9 intended, but I think it would be appropriate, on a 10 going forward basis, that we make sure to refer to 11 counsel on the record and to the witnesses in a more 12 formal manner. Okay. Thank you. 13 Anything further before Mr. Reynolds 14 briefly takes the stand? 15 MR. KEEHNEL: No, Your Honor. 16 MR. DEVANEY: No, Your Honor. 17 JUDGE BERG: All right. Mr. Reynolds, if 18 you'll please step up to our impromptu witness box. 19 And before you sit down, raise your hand. 20 Whereupon, 21 MARK S. REYNOLDS, 22 having been first duly sworn by Judge Berg, was 23 called as a witness herein and was examined and 24 testified as follows: 25 JUDGE BERG: Mr. Devaney, would you recite 00357 1 the understanding between counsel as to the admission 2 of Mr. Reynolds' direct testimony and exhibits into 3 the record? 4 MR. DEVANEY: I think Ms. Anderl will be 5 handling Mr. Reynolds, so I'll ask Mr. Anderl to do 6 that. 7 MS. ANDERL: I'm not sure, Your Honor, if 8 counsel have an agreement, although I would suggest 9 that it might be handled in the same way as the 10 earlier witnesses. That is that the exhibits be 11 given numbers -- testimony and exhibits be given 12 numbers and stipulated in. 13 JUDGE BERG: All right. And I also 14 understand, though, along with that, AirTouch would 15 be waiving its right to conduct cross-examination, 16 except to any questions regarding Mr. Reynolds' 17 explanation of what is marked as Exhibit MSR-1; is 18 that correct, Mr. Keehnel? 19 MR. KEEHNEL: I think that's a fair 20 statement, Your Honor. 21 JUDGE BERG: All right. At this point in 22 time, we will mark the direct testimony of Mr. 23 Reynolds as T-20, and we will mark Exhibit MSR-1, 24 also referred to as the US West UNE Cost/Price 25 Summary as Exhibit 21. Ms. Anderl, is there anything 00358 1 confidential about this document? 2 MS. ANDERL: No, there is not. 3 JUDGE BERG: All right. Exhibits T-20 and 4 Exhibit 21 will be admitted into the record. As part 5 of the stipulation between the parties regarding 6 these exhibits, the bench did express some need to 7 have Mr. Reynolds explain the source of information 8 and to affirm its relation to the generic cost case 9 that is under way here at the Commission. 10 And Mr. Reynolds, if you would just do a 11 brief oral description of the document and respond to 12 the questions from the bench, as you understand them, 13 please do. And then afterwards, if we have any other 14 questions about the way this document is formatted or 15 the source of the information, we'll go ahead and ask 16 you questions. 17 THE WITNESS: Okay. Exhibit MSR-1 to my 18 testimony, now which has been marked T-21 in this 19 docket, was originally attached to my testimony in 20 what has been referred to as the generic docket, 21 which carried the Docket Numbers UT-960369, 22 UT-960370, and UT-960371. 23 And that docket was established by the 24 Commission to determine costs and prices, benchmark 25 costs and prices for unbundled network elements and 00359 1 interconnection elements to be used to provide some 2 sort of benchmark for the interim rates that existed 3 in the interconnection agreements between US West 4 and, really, other incumbent LECs and the new 5 competitive providers. 6 The elements are those elements that the 7 Commission required the parties to provide cost 8 support for, and US West provided cost support during 9 the pendency of that docket. What is in Exhibit 10 MSR-1 is a mixture of US West costs and also 11 Commission order costs. 12 And if you look at the first column that is 13 labeled Cost Element, that is a pretty good 14 explanation of what is contained in that particular 15 area of the document. For example, on the first 16 page, you'll see local switching, then you'll see 17 recurring, it designates whether it's a recurring or 18 nonrecurring cost, and then you'll see what the unit 19 of measurement was for that particular cost. 20 You will also see an asterisk for each cost 21 object and an explanation down below in bold and 22 italics, which explains where the costs came from, if 23 it was ordered by the Commission in a particular 24 paragraph of an order in the docket. And for 25 example, using the local switching box on page one, 00360 1 you'll see that the figure under the category LRIC, 2 which is intended to stand for long-run incremental 3 costs, .00115 is from the Eighth Supplemental Order, 4 paragraph 320. And if you were to turn to that 5 particular paragraph in the Eighth Supplemental Order 6 in that docket, you would find the Commission's 7 decision about that particular cost. 8 It also explains, furthermore, that in the 9 subsequent columns of adding attributed and common 10 cost and any additional markups that US West 11 presented during the docket, that those are US West's 12 proposed markups and an additional cost resulting in 13 a price, a proposed price by US West in the final 14 column. 15 The status of the docket is that some of 16 these costs are final, because there was an order 17 after the cost phase of the docket, commonly referred 18 to as Phase I of the docket. And the Phase II of the 19 docket concluded within the last month and a half, 20 and the parties have done their final briefs and 21 we're awaiting a final order, probably in the April 22 or May time frame. 23 E X A M I N A T I O N 24 BY JUDGE BERG: 25 Q. Are those prices that are finalized as the 00361 1 result of an order in that generic case indicated as 2 being final here, or did I misunderstand the status 3 of those determinations? 4 A. The only determinations that are final at 5 this point would involve results in the first couple 6 of columns, either in the cost, the core costs, which 7 we call LRIC, and/or attributed and common. The 8 Commission made decisions surrounding costs of all 9 types, direct costs, attributed, and common costs. 10 And so you actually have to read the explanation down 11 below the unit to determine what was Commission 12 ordered and what is final as opposed to what is still 13 open for Commission determination. 14 I can tell you that all of the prices in 15 the final column are US West-proposed prices at this 16 time and that the Commission has not entered a final 17 determination on those. 18 Q. All right. And just to be repetitive, the 19 total column for each of these cost elements is 20 consistent with the proposed total price proposed by 21 US West in the generic case? 22 A. That's correct. 23 Q. All right. 24 A. And Judge Berg, I think there was also a 25 standing question as to how that related to this 00362 1 docket. 2 Q. Yes. 3 A. And I would just relate that certainly you 4 can ask Mr. Thompson, I think, who sponsors some of 5 these costs in this particular docket, but he also 6 relied on these same prices and costs for his 7 recommendations in this docket. 8 JUDGE BERG: All right. And Mr. Keehnel, 9 I'll certainly give you a chance to ask any questions 10 you may have, but I want to also, before that, give 11 Mr. Payne and Mr. Griffith or Ms. Rendahl, who's 12 joined us, an opportunity to ask any questions they 13 might have. Mr. Payne indicated to me he didn't have 14 questions. Mr. Griffith. 15 E X A M I N A T I O N 16 BY MR. GRIFFITH: 17 Q. Yes, I would just like to concentrate on 18 the two top boxes on the MSR-1, the local switching 19 and tandem switching. Are those being proposed for 20 use in this proceeding? 21 A. Yes, I believe that we are. 22 Q. And are they being proposed for US West 23 terminating traffic, that is, traffic that comes to 24 US West, or is it being proposed in place of the 25 AirTouch cost? 00363 1 A. First, without going into too much depth on 2 testifying here, it is US West's core view that no 3 compensation is due to AirTouch. However, if 4 compensation is to be made, we maintain that these 5 are the proper rates. These have been vetted by the 6 Commission. These are to be used as a benchmark for 7 exchanging traffic with each other, and we believe 8 that these are the correct rates. 9 Q. And then one other question regarding 10 tandem switching. If, in this proceeding, we decided 11 that the AirTouch Glenayre equipment was, in fact, a 12 tandem switch, would that mean that both the tandem 13 switching number and the local switching number would 14 be added together? 15 A. I guess you could only arrive at that 16 determination if you determined that there was also 17 an end office. If you were to, I suppose, buy 18 AirTouch's entire proposal that the CIT was indeed 19 the end office and that the Glenayre switch was a 20 tandem, then our recommendation that these be used 21 would follow. 22 MR. GRIFFITH: Okay, thank you. 23 JUDGE BERG: Ms. Rendahl. 24 MS. RENDAHL: I have no questions. 25 JUDGE BERG: Mr. Keehnel. 00364 1 C R O S S - E X A M I N A T I O N 2 BY MR. KEEHNEL: 3 Q. Mr. Reynolds, whatever final prices come 4 out of the cost docket, those are the prices that 5 will be offered to AirTouch by US West? 6 A. That's an interesting question, because I 7 don't think that the Commission intended these 8 benchmark prices to supplant negotiations. And to 9 the extent that the parties may reach a different 10 determination based on the give and take of 11 negotiations, I don't think that it's an automatic 12 given that these rates would be plugged in. 13 JUDGE BERG: And I would -- 14 Q. Let me ask the question a different way. 15 A. They serve more as a benchmark in allowing 16 the parties a grounding to argue their case. 17 Q. Let me ask -- 18 JUDGE BERG: Mr. Keehnel, before you do, 19 let me just remind the parties that the US West rates 20 that may be set in this proceeding will be interim, 21 conditioned upon the final outcome of the generic 22 case, that any rates that are considered in this 23 proceeding that need to be resolved would be 24 superseded. I may be thinking out loud 25 unnecessarily. As I understand it, US West has 00365 1 withdrawn its cost study and is relying upon its 2 tariffs; is that correct, Ms. Anderl? Help me. 3 MS. ANDERL: Just for the five cost 4 elements that were new cost studies that were 5 originally going to be proposed by Mr. Thompson in 6 this proceeding. 7 JUDGE BERG: All right. Thank you, I do 8 recall that. I apologize for interrupting, Mr. 9 Keehnel. 10 Q. Let me rephrase the question, Mr. Reynolds. 11 In the absence of a contrary agreement under which 12 the parties have agreed that regardless of 13 Commission-set rates, that the parties will abide by 14 some other rate, in the absence of such an agreement, 15 these Commission-determined final rates are what will 16 be offered to AirTouch? 17 A. Assuming that it's determined that AirTouch 18 is entitled to compensation for termination. 19 Q. You're missing my point. I'm talking -- 20 JUDGE BERG: Mr. Keehnel, could you speak 21 up just a little bit louder? 22 MR. KEEHNEL: Certainly. 23 Q. I'm talking about rates that would be 24 charged to AirTouch by US West. 25 A. For terminating traffic to US West? 00366 1 Q. For charges associated with transited 2 traffic delivered to AirTouch? 3 MS. ANDERL: Mr. Keehnel, I'm afraid I 4 don't understand that question. So maybe you could 5 go through it again. 6 Q. If you don't, just tell me. 7 MS. ANDERL: Well, don't -- 8 MR. KEEHNEL: If Mr. Reynolds doesn't, tell 9 me. 10 JUDGE BERG: If Mr. Reynolds understands 11 the question, he can answer. 12 THE WITNESS: Let me rephrase my 13 understanding of what I believe you asked, and if 14 it's incorrect, you can correct me. To the extent 15 that US West in this case -- I think it's an 16 undisputed issue that transit rates would apply. I 17 believe both parties agree that they disagree on the 18 percentage, but they agree that US West is entitled 19 to transit for transit traffic. 20 And I think -- I believe your question is 21 would US West rates be based on the decision coming 22 out of this docket, and I would -- is that -- 23 Q. That's my question. 24 A. I would still have to go back to my 25 understanding that negotiated settlements are 00367 1 superior to results from this docket. These 2 certainly could enter into the negotiations as a 3 baseline rate, but I don't believe US West is bound 4 to these in the spirit of negotiations. I'm sure 5 that, in an arbitration situation, the Commission 6 would turn first to the rates they've already 7 established. And so it certainly drives parties to 8 these rates. 9 Q. My question, Mr. Reynolds, is a simple one. 10 In the absence of the parties reaching an agreement, 11 are the rates to be determined by the Commission in 12 the generic proceedings that you referenced the rates 13 that will be offered to AirTouch? 14 A. I don't know that. That's up to the 15 Commission. I would imagine that an issue like that 16 would go to arbitration and the Commission would 17 probably turn to these rates as the ones that have 18 already been established. 19 My point is is that I don't think there's 20 any guarantee that -- these serve as a benchmark for 21 the parties, they serve as some certainty for the 22 parties to narrow the negotiations and focus the 23 negotiations. Understanding that if these issues go 24 to the Commission, the Commission is certainly most 25 likely to turn to a two-year docket that they spent a 00368 1 lot of time -- that the entire industry spent a lot 2 of time and effort on and find that those are the 3 appropriate rates. I can't imagine them doing it any 4 differently. 5 So it would be maybe futile for US West to 6 take a different position, but to the extent we may 7 have offered AirTouch something during the 8 negotiations that was interesting to AirTouch, they 9 may be willing to pay a higher rate than what's in 10 here. 11 Q. My question is, if the parties don't reach 12 an agreement, Mr. Reynolds -- please accept that 13 assumption -- 14 A. I do. 15 Q. -- as a hypothetical. 16 A. I do. 17 Q. If the parties don't reach an agreement and 18 the Commission determines rates, is it US West's 19 intention to offer those rates to AirTouch for 20 transit traffic? 21 MS. ANDERL: I have to object to the 22 question, because I still don't understand what Mr. 23 Keehnel is asking, and I believe that I am entitled, 24 as US West's representative, to understand the 25 question. 00369 1 JUDGE BERG: Mr. Keehnel, it sounds to me 2 like you're looking for this witness to commit US 3 West to offering the rates that are derived in the 4 Commission's generic case, and it sounds to me that 5 that would also constitute, you know, some -- you're 6 also looking for some sort of waiver that they won't 7 object to the rates that this Commission derives. 8 And I just don't think that's a fair question of this 9 witness. 10 MR. KEEHNEL: I'm just trying to understand 11 the witness' testimony, Your Honor. I'm trying to 12 understand whether he's offering this information, in 13 conjunction with his testimony, as the proposition 14 that whatever the Commission determines are the rates 15 that will be offered to AirTouch ultimately or 16 whether he's not saying that. 17 JUDGE BERG: My understanding is that this 18 represents an alternative last best offer, so to 19 speak, that their first line is that compensation 20 should not be paid, but that if compensation should 21 be paid, that these are the prices that should apply. 22 That's what I heard this witness testify. And if 23 that's not the case, then we probably should get some 24 clarification on that, as well. 25 THE WITNESS: I might apologize. I took 00370 1 Mr. Keehnel's question to be a hypothetical, and not 2 necessarily applying to this case. I think I've 3 already stated that, in the context of this case, US 4 West has made these the basis of if compensation is 5 due, then this is what we should rely on. 6 In the ordinary context of a negotiation, 7 though, I heard your question to be much broader, 8 that suggested that we always defaulted to these 9 rates. And I just wanted to make it clear that it's 10 not US West's understanding that we are held to these 11 rates in negotiations. Parties are free to negotiate 12 and to put forward proposals of their choosing, and 13 certainly, these are meant to be benchmarks that 14 would narrow parties' focuses, but -- and so I was 15 speaking in a much more broader term, and I apologize 16 if we miscommunicated. 17 Q. That's fine. I guess my question, then, 18 goes to this. Are the rates that are attached to 19 your testimony being proposed as interim rates, or 20 are you proposing that this Commission enter those 21 rates as permanent rates regardless of the outcome of 22 the cost docket? 23 A. I don't know that I have thought about that 24 particular question, but I can give you my 25 understanding of how this applies to agreements that 00371 1 currently have interim rates. When the parties could 2 not decide on rates historically, the Commission 3 entered an order that those rates would be interim 4 pending the outcome of this docket. There are some 5 situations where the parties did agree on rates, and 6 I would imagine that those would not be changed. 7 And so to follow-up on your question, to 8 the extent that the Commission enters a similar order 9 in this, that the parties could not agree on rates 10 and that the interim rates that we order here today 11 are subject to trueup or subject to replacement at 12 the conclusion of the generic docket, that's a 13 question maybe better left for the Commission. But I 14 can tell you how it's happened with the other ones. 15 Q. My question is which relief are you asking 16 for? Are you asking this Commission to order the 17 proposed rates attached to your testimony as 18 permanent, or are you asking the Commission, since 19 you're the person propounding rates and stating the 20 company's policy, as interim, to be replaced 21 ultimately by what comes out of the generic cost 22 docket? 23 A. I think we're arguing for consistency with 24 the generic cost docket, yes. 25 MR. KEEHNEL: Thanks. 00372 1 JUDGE BERG: Thank you, Mr. Keehnel. I 2 think the parties should, likewise, then, identify as 3 an issue on briefing as to whether the rate that is 4 independently determined in the outcome of this 5 proceeding, if a rate is determined, whether it 6 should be permanent or interim, based upon any other 7 proceedings here at the Commission. That's the 8 issue, as I hear it here and now and that may be an 9 issue that's appropriate for legal briefing to the 10 Arbitrator. 11 MR. KEEHNEL: I actually think there's 12 agreement on that. I actually think, now that I've 13 heard Mr. Reynolds' testimony, that parties agree 14 that the US West rates would be interim. But If it's 15 an issue in which there's a dispute, we'd be happy to 16 brief it. 17 JUDGE BERG: I'd like to see that position 18 developed in the briefs, and rather than leaving it 19 to the parties to negotiate, and if, in fact, there 20 is agreement between the parties, I should be able to 21 discern it. 22 THE WITNESS: Could I add one more point of 23 clarification for this document? 24 JUDGE BERG: Yes, Mr. Reynolds. 25 THE WITNESS: Because the document that was 00373 1 attached to my testimony during the proceeding did 2 not include a lot of the road map type asterisks. We 3 offered to do that to the hearings officer to make it 4 a much cleaner document, and that's when it was 5 labeled Exhibit 699 in the generic docket, and so 6 this document actually exists in multiple forms 7 during the two-year pendency of that docket. 8 However, the final revised version of this is 699, 9 and it is as you're looking at here today. 10 JUDGE BERG: Ms. Rendahl. 11 E X A M I N A T I O N 12 BY MS. RENDAHL: 13 Q. I'm sorry, you may have gone over this 14 already, and if you're not the appropriate US West 15 witness, let me know. This has to do with the 16 effective date of the agreement. The existing 17 AirTouch/US West agreement, does it specify whether 18 that existing agreement is in effect until there is a 19 new agreement in effect? Is there any language to 20 that effect, or do you know? 21 A. I apologize. I'm not the witness that you 22 should ask. I would think that possibly Ms. Malone 23 would be a more appropriate witness. 24 MS. RENDAHL: Thank you. 25 JUDGE BERG: Thank you, Ms. Rendahl. Would 00374 1 you keep track of that? 2 MS. RENDAHL: I will. 3 JUDGE BERG: All right. Anything else, Mr. 4 Keehnel? 5 MR. KEEHNEL: No, Your Honor. 6 JUDGE BERG: Mr. Devaney, is there anything 7 that you need to ask for clarification purposes? 8 MR. DEVANEY: No, Your Honor. 9 JUDGE BERG: All right. Thank you, Mr. 10 Reynolds. You're excused. 11 THE WITNESS: You're welcome. 12 JUDGE BERG: Why don't we just take a 13 five-minute break, and then we'll resume. It's just 14 an opportunity for the parties to catch their breath 15 and to give our reporter a break. Thank you. 16 (Recess taken.) 17 JUDGE BERG: We'll be back on the record. 18 There is one administrative matter that's come to my 19 attention, and that was when we dispensed with 20 qualification of the witnesses in yesterday's 21 proceeding, I did not direct counsel to query the 22 witnesses whether or not their responses that were 23 provided in their direct testimony would be the same 24 responses they would provide if those questions were 25 asked of them today. 00375 1 To the extent that both Mr. Bidmon and Dr. 2 Zepp are still present, we're going to briefly reopen 3 testimony of those witnesses for the purpose of Mr. 4 Keehnel conducting a qualification of their 5 responses. 6 First we'll take Mr. Bidmon. Mr. Bidmon, 7 although you were excused from testifying yesterday, 8 I would just reinstate the oath that you gave and 9 that any responses to questions that are given here 10 on the record will also be subject to that oath. 11 MR. BIDMON: That's correct. 12 Whereupon, 13 ROBERT BIDMON, 14 having been previously duly sworn, was recalled as a 15 witness and examined and testified as follows: 16 R E D I R E C T E X A M I N A T I O N 17 BY MR. KEEHNEL: 18 Q. Mr. Bidmon, you provided prefiled testimony 19 in this matter? 20 A. Yes, I did. 21 Q. And subject to any corrections or 22 qualifications that you made during the course of 23 your testimony in the proceedings on this record, do 24 you affirm that, were you asked the questions that 25 are stated in your prefiled testimony, that the 00376 1 answers you stated in your prefiled testimony would 2 be your answers? 3 A. Yes, they would. 4 JUDGE BERG: All right. Thank you, Mr. 5 Bidmon. And Dr. Zepp, also the affirmation you took 6 yesterday will be considered still in force for any 7 questions that you're asked at this time. 8 Whereupon, 9 DR. THOMAS ZEPP, 10 having been previously duly sworn, was recalled and 11 was examined and testified as follows: 12 R E D I R E C T E X A M I N A T I O N 13 BY MR. KEEHNEL: 14 Q. Dr. Zepp, you'll recall that prefiled 15 testimony has been filed for you in this matter? 16 A. Yes. 17 Q. Subject to any corrections or 18 qualifications that have been made on the record 19 during the course of these proceedings, are you able 20 to affirm that, were you asked those questions from 21 your prefiled testimony now, that your answers would 22 be the same as are provided in your prefiled 23 testimony? 24 A. Yes. 25 JUDGE BERG: All right, thank you. That 00377 1 will close both the supplemental testimony of Mr. 2 Bidmon and Dr. Zepp at this time. Thank you, 3 gentlemen. Thank you, Mr. Keehnel. Ms. Anderl. 4 MS. ANDERL: Well, I was just going to say, 5 just so that we're completely covered, I imagine 6 we'll do the same for Mr. Reynolds when he returns to 7 the hearing room. 8 JUDGE BERG: Yes, we will. Thank you. I 9 mean, to the extent that Mr. Reynolds' direct 10 testimony was admitted into the record by stipulation 11 without cross -- I agree. We'll do that with Mr. 12 Reynolds, just to be sure that there's no problems 13 down the road. 14 Also, while we were off the record, there 15 was a discussion that I initiated regarding the 16 designation of Exhibit 19. I had raised the question 17 as to whether or not it should be marked as a 18 confidential exhibit. I'll just note that, on 19 additional review, I'll note that the responses were 20 not marked as confidential at the time they were 21 provided to AirTouch. And on that basis, I would 22 just independently tell the parties that I think it 23 would be improper to mark it as confidential at this 24 time. 25 MS. ANDERL: Your Honor, they should have 00378 1 been marked as confidential. I think AirTouch knows 2 that negotiation positions are confidential. We 3 don't believe there would be any prejudice to any 4 party by designating it as a C exhibit, but since 5 it's not been made a part of the record, perhaps it 6 -- I don't know if that obviates the concern or not. 7 JUDGE BERG: I think to the extent that 8 negotiations between the parties has some independent 9 confidential character, that that will have to 10 control. My concern at this point in time is that if 11 those documents have been shared with other parties 12 at AirTouch who have not otherwise executed 13 confidentiality agreements pursuant to the protective 14 order in this case, that it might be setting up 15 AirTouch for some kind of a complaint that would 16 otherwise not be warranted. 17 MS. ANDERL: We would only ask, you know, 18 of course that it be attempted to be contained at 19 this point, not that they be held retroactively to 20 some confidential standard. 21 JUDGE BERG: Mr. Keehnel. 22 MR. KEEHNEL: Just one comment. I noted 23 that Ms. Anderl, a moment ago, said that Exhibit 19 24 was not a part of the record. It was not admitted as 25 an exhibit. It is part of the record. I want to 00379 1 make sure that I wasn't acceding that it wasn't a 2 part, somehow, of the historical record of the case. 3 That's all. 4 JUDGE BERG: I think that's correct. 5 MS. ANDERL: I understand. 6 JUDGE BERG: All right, thank you. All 7 right. Ms. Malone, if you will please take the 8 witness chair, or actually set your materials down 9 and I'll go ahead and administer the affirmation. 10 Whereupon, 11 KATHRYN MALONE, 12 having been first duly sworn by Judge Berg, was 13 called as a witness herein and was examined and 14 testified as follows: 15 D I R E C T E X A M I N A T I O N 16 BY MR. DEVANEY: 17 Q. Good morning, Ms. Malone. 18 A. Good morning. 19 Q. Ms. Malone, you have filed in this 20 proceeding direct testimony and rebuttal testimony 21 with accompanying exhibits; is that correct? 22 A. That's correct. 23 Q. Do you have any corrections that you'd like 24 to make to either piece of testimony or the 25 accompanying exhibits? 00380 1 A. Yes, I do. 2 Q. Would you please -- 3 A. It would be attached to my direct 4 testimony, and it's Exhibit KM-1. The corrections 5 I'm going to make to this testimony reflect the fact 6 that US West withdrew certain cost studies, as was 7 agreed by the parties previously. On page one of 8 Appendix A, the description for dial out pulsing and 9 all of the costs associated with that have been 10 removed. That would be the one-ninety-one-eighteen 11 and eleven-ninety-three. 12 The next item down, DID, the amounts of 13 $4.08 and $20.62 would be removed. On the next page, 14 the Type Two A is removed, $83.16; Type Two B, 15 $83.16; and trunk routing change, $78.62. 16 On page three, the entire page changes, and 17 not that these rates are removed, but they've been -- 18 they've changed as a result of the costs that were 19 approved in the generic cost docket, the implications 20 it had on these particular rates when the studies 21 were re-run. So that would be, for DSO, for zero to 22 eight miles all the way through to over 50 miles, the 23 entire element of DSO becomes $23.02. 24 Q. So that would be under the one-time 25 heading? 00381 1 A. I'm sorry, yes, it would be under the 2 one-time heading. The monthly recurring charge did 3 not change. The element for DS1, under the one-time 4 charge, changes all the way, again, for the entire 5 element, carries over to page four. That rate 6 changes to $162.55. There's another correction on 7 page five. 8 Q. Ms. Malone, the 162.55 on page five, that 9 changes up until multiplexing; is that correct? 10 A. That is correct, I'm sorry. It changes 11 again for the DS3 level. 12 Q. Okay, thank you. 13 A. And again, on page five, the SS7 out of 14 bank signaling is completely removed from the study, 15 the $25.10. 16 JUDGE BERG: Ms. Malone, would that 17 otherwise, then, be indicated as not applicable? 18 THE WITNESS: Right. And those are all the 19 corrections I have at this time. 20 Q. Thank you, Ms. Malone. Now, with those 21 corrections, are the answers you provided in your 22 direct and rebuttal testimony true and correct, to 23 the best of your knowledge? 24 A. Yes, they are. 25 Q. Ms. Malone, before you begin your summary, 00382 1 we have marked as Exhibit 26 this exhibit titled 2 Local Calling Area. Would you please describe what 3 this exhibit represents and why you've presented it? 4 A. Yes, I'd be happy to. This particular 5 exhibit I prepared last evening, in response to some 6 rebuttal testimony that Mr. Bidmon gave. Mr. Bidmon 7 was discussing 705,000 and some odd minutes from his 8 local jurisdiction on his study where he determined 9 what he felt was the appropriate percent of transit 10 traffic. 11 And because there is such a disparity in 12 the amount US West is requesting, that amount being 13 41.5 percent, while AirTouch asserts that the percent 14 transit traffic is seven percent, I did some further 15 research to see if there was any validity in his 16 concern that not much of that traffic is local that 17 would be originated from carriers other than US West. 18 So what this shows is -- the first column 19 is nothing more than the local calling areas in the 20 Washington area of US West, and then the second 21 column to the right is the number of US West NXXs 22 that are assigned to US West. The next column is the 23 number of NXXs assigned to other carriers, and then 24 the next total would be -- the next column is just 25 the total of the NXXs in the local calling area of 00383 1 Washington. Finally, the last column represents the 2 percentage of other NXXs to the total. 3 So what it tells you down at the bottom is 4 that 53 percent of all NXXs in the local calling area 5 of Washington are actually by other than US West. 6 Q. Ms. Malone, when you refer to Mr. Bidmon's 7 transit traffic data, just for the record, I believe 8 that was Exhibit C-7 that this responds to. 9 And just one more question for you. Could 10 you explain for us how this does respond to Exhibit 11 C-7, and in particular the 705,000, approximately, 12 calls reported on that exhibit that were recorded in 13 the local tandem? 14 A. Yes. Mr. Bidmon's testimony yesterday 15 stated that the 705,000 calls represented in his 16 study, of that amount, he felt that there was a small 17 portion of the calls that could belong to other 18 parties, such as a CLEC or an ILEC. 19 And what this information that I prepared 20 last evening tries to depict is that there's a direct 21 correlation that a large majority of those 705,000 22 minutes are actually from local exchange carriers 23 within the state, and they are not US 24 West-originating minutes of use. US West would 25 transit that traffic to AirTouch's terminal. 00384 1 MR. DEVANEY: Okay. Your Honor, with that 2 background, we would move for the admission of -- 3 actually, I guess we agreed we'd reserve till the end 4 of Ms. Malone's summary, didn't we, on admission? 5 JUDGE BERG: Let's go ahead and close that 6 loop on this exhibit now. 7 MR. DEVANEY: On this exhibit, we'd move 8 for its admission now, that's Exhibit 26. 9 MR. BUSCH: I'll reserve questioning on 10 this exhibit until later. I don't object to its 11 admission as an exhibit. 12 JUDGE BERG: All right, very good. So 13 Exhibit 26 will be admitted into the record. Thank 14 you, Mr. Busch. 15 MR. DEVANEY: Thank you, Your Honor. 16 Q. Ms. Malone, with those matters taken care 17 of, would you please provide your summary? And begin 18 with just a brief background of who you are and what 19 perspective you bring to the proceeding. 20 A. As you know, I'm Kathy Malone, and I'm 21 employed by US West Communications. My 22 responsibility in this proceeding is to address the 23 issues raised in the AirTouch arbitration as far as 24 policy issues regarding US West. 25 Q. Ms. Malone, I think you might want to keep 00385 1 your voice up for the court reporter a little bit. 2 A. Can you hear me okay? Specifically, I'm 3 here today to address the issue of transit traffic 4 and its importance in this proceeding. US West has 5 collected data relating to cellular carriers which 6 demonstrates that 41.5 percent of calls that US West 7 delivers to AirTouch originate with third parties. 8 AirTouch asserts the amount to be only seven percent. 9 AirTouch has significantly understated the 10 amount of traffic that originates on the network of 11 other carriers and that US West transports to 12 AirTouch on US West's network. 13 If the Commission were to find that US West 14 is required to pay reciprocal compensation to 15 AirTouch and were to adopt AirTouch's incorrect 16 estimate of the amount of transit traffic in 17 Washington, US West would be improperly required to 18 pay reciprocal compensation to AirTouch for calls 19 initiated by the subscribers of other 20 telecommunications carriers. 21 In testimony by Mr. Bidmon yesterday, he 22 admitted he was not comfortable with AirTouch's study 23 that identifies only seven percent of transit 24 traffic. It would seem appropriate that Mr. Bidmon 25 wasn't comfortable with this since AirTouch has 00386 1 already signed an agreement with US West agreeing 2 that 30 percent of the traffic is transiting between 3 AirTouch and GTE. 4 Q. Ms. Malone, you said signed an agreement 5 with US West. Do you mean GTE? 6 A. I'm sorry, with GTE. Mr. Bidmon also 7 admitted that a portion of the 705,000 local calls 8 identified in AirTouch's transit study could include 9 local traffic originated by CLECs or ILECs. However, 10 AirTouch could not identify that amount. 11 US West relies on transit traffic data for 12 two-way wireless carriers instead of data specific to 13 paging carriers because US West is able to measure 14 the transit traffic through the use of technology 15 referred to as SS7 or Cross7, which is a 16 sophisticated software that is used with the SS7 17 links that carriers use to interconnect with US West. 18 Most of the two-way wireless carriers in 19 Washington have chosen to use SS7 links. The links 20 monitoring software allows US West to measure the 21 amounts of transit traffic that US West delivers over 22 these trunk groups to carriers. However, AirTouch 23 does not use SS7 and, therefore, US West does not 24 have data specific to AirTouch for transit traffic. 25 Two-way wireless is a sound proxy for 00387 1 paging traffic. Most important, two-way wireless 2 carriers, like paging carriers, are present 3 throughout Washington, in both urban and rural areas, 4 and therefore measurements of wireless traffic are 5 reflective of the state calling patterns. 6 Washington has one of the highest transit 7 traffic rates of the 14 states in US West's region. 8 The primary reason for the high transit rate is that 9 there are many carriers in Washington that have their 10 own networks. There are approximately 23 independent 11 telephone companies, 15 two-way wireless carriers, 12 and 35 CLECs that are interconnected with US West in 13 the state of Washington. 14 The statistics, combined with US West's 15 transit traffic study, contradict the assumption 16 AirTouch asks for the Commission to make about the 17 amount of transit traffic. 18 So to further address Mr. Bidmon's 19 testimony regarding local transiting, US West also 20 analyzed the assignment of NXX codes in the 21 Washington local calling area. This analysis reveals 22 53 percent of the NXXs are assigned to carriers other 23 than US West in the Washington local calling area. 24 US West references three data points which 25 support the 41.5 percent transit traffic US West 00388 1 requests in this arbitration. They are: Over 50 2 percent of NXXs are assigned to carriers other than 3 US West in the Washington local calling area. Two, 4 US West submits a transit traffic study that 5 identifies originating traffic transiting US West's 6 network. And three, the fact that AirTouch has 7 already entered into an interconnection agreement 8 with GTE in Washington that specifically states 30 9 percent of the traffic is transiting traffic. 10 Q. Ms. Malone, if I could just interject one 11 thing there. You said US West has presented a 12 transit traffic study. You didn't give the 13 percentage when you said that as one of your three 14 data points. 15 A. Oh, I'm sorry. 16 Q. Was that the 41 and a half percent from the 17 cellular study? 18 A. It is. Again, the 41 -- it's one of my 19 exhibits. If you'll tell me which number it's 20 marked, I can refer to it. 21 Q. It's Exhibit KM-2. 22 JUDGE BERG: KM-2 has been marked as 23 Hearing Exhibit 25. 24 THE WITNESS: In summary, US West has 25 performed sound proxy transit traffic studies for 00389 1 paging carriers and has provided analysis that 2 supports the circumstances unique to Washington that 3 increase the amount of transit traffic. I recommend 4 this Commission approve the 41.5 percent transit 5 traffic amount proposed by US West in this 6 proceeding. 7 JUDGE BERG: Mr. Devaney, would you like to 8 conduct questions and answers? 9 MR. DEVANEY: I don't believe so, Your 10 Honor. If I may just take one moment to confirm 11 that, I think we are done. We are. Thank you, Ms. 12 Malone. 13 THE WITNESS: Thank you. 14 JUDGE BERG: Mr. Keehnel. 15 MR. KEEHNEL: Mr. Busch. 16 JUDGE BERG: Thank you. Mr. Busch. 17 MR. BUSCH: Thank you. I do have some 18 exhibits that will need to be marked. 19 JUDGE BERG: All right. Why don't we do 20 that now. Why don't you distribute your exhibits in 21 a packet, if you can. 22 MR. DEVANEY: Your Honor, should we take a 23 moment to -- have we already moved all her exhibits 24 -- I think we just moved 26. Should we move all the 25 others into the record? 00390 1 JUDGE BERG: Yes, I think this would be an 2 appropriate time to do that. And Mr. Keehnel, I 3 understand that you may have an ongoing conditional 4 objection to several of the exhibits that have been 5 marked and offered. 6 MR. KEEHNEL: Yes, Your Honor. Very 7 quickly, Exhibit T-22, we continue to reserve our 8 objection as to the legal testimony embodied in the 9 prepared testimony. Other than that, we have no 10 objection. Exhibit 23, I believe, has already been 11 cleaned up with Ms. Malone's clarifications and 12 deletions. Exhibit 24, same objection as to 22, but 13 understanding the Commission's going to allow the 14 testimony subject to our reservation. Exhibit 25, no 15 objection. And Exhibit 26, you've already taken care 16 of. 17 JUDGE BERG: All right. Thank you very 18 much, Mr. Keehnel. Exhibits T-22 through Exhibit 25 19 will be admitted into the record. 20 MR. DEVANEY: Thank you, Your Honor. 21 JUDGE BERG: Thank you, Mr. Devaney. We'll 22 be off the record. 23 (Discussion off the record.) 24 JUDGE BERG: We'll be back on the record. 25 Off the record, there has been a distribution of 00391 1 proposed cross-examination exhibits. Those exhibits 2 have been marked. 3 Those exhibits consist of a Cross7 report, 4 which has been marked as Confidential Exhibit 27. 5 Transit Traffic and Call Routing, Exhibit Number 28. 6 Traffic Transit Analysis has been marked as Exhibit 7 C-29. State Percentage for Third Party Traffic has 8 been marked as Exhibit C-30. February '98 Error 9 Report has been marked as Exhibit C-31. March '98 10 Error Report has been marked as Exhibit C-32. 11 And there are three Cross7 type reports. 12 The report for the period 11/25/98 to 12/24/98 is 13 marked as Exhibit C-33. The report for the period 14 11/1/98 to 11/30/98 is marked as Exhibit C-34. And 15 the report for the period 12/1/98 to 12/31/98 has 16 been marked as Exhibit C-35. 17 Exhibit C-27 and Exhibits C-29 through C-35 18 are admitted into the record, and we'll address 19 Exhibit 28 separately when it comes up during 20 cross-examination. And Mr. Busch, I understand you 21 will be conducting cross-examination of Ms. Malone? 22 MR. BUSCH: Yes, Your Honor. 23 JUDGE BERG: All right, thank you. Please 24 proceed. 25 MR. BUSCH: Thank you. 00392 1 C R O S S - E X A M I N A T I O N 2 BY MR. BUSCH: 3 Q. Good morning, Ms. Malone. 4 A. Good morning. 5 Q. Who is Michelle Stire? 6 A. Michelle Stire is in the US West Product 7 Data Analysis Team with US West. 8 Q. Has she been involved in the gathering of 9 information for your transit traffic study? 10 A. Yeah, Michelle's primary responsibility is 11 the data gathering through the Cross7 reports that 12 are obtained from SS7 links. 13 Q. Is she a product manager? 14 A. She's not really a product manager; she's a 15 data analyst, I believe is her exact title. 16 Q. Okay. I want you to take a look at what 17 has been marked as Exhibit C-27. Could you take a 18 look at page 5-14 for me, please? 19 A. 5-14? 20 Q. Yes. 21 A. Okay. 22 Q. Can you identify what that document is for 23 us, please? 24 A. I'll have to take a moment to become 25 familiar with it. 00393 1 Q. That's fine. 2 JUDGE BERG: And I will indicate that any 3 questioning and answering of questions regarding a 4 confidential document should avoid disclosure of 5 confidential information. 6 To the extent that this is a cumulative 7 document, Ms. Anderl and Mr. Devaney, if you see 8 information on here that you think constitutes 9 confidential information and the witness needs to be 10 cautioned ahead of time before responding, if you 11 would go ahead and do so, I'd appreciate it. 12 MR. DEVANEY: Thank you, I will. 13 JUDGE BERG: And I'll just presume that 14 both you and Ms. Anderl are familiar with the terms 15 of the protective order outlining what constitutes 16 confidential information. Thank you, Mr. Busch. 17 MR. BUSCH: Thank you. 18 Q. Does US West consider this memorandum to be 19 -- first, I'm sorry, let's go back and answer the 20 question that was posed. Can you identify this 21 document for us, please? 22 A. Well, I haven't really seen it before. It 23 looks like some type of a memorandum, some type of a 24 note between two people. 25 Q. This document, as well as the other 00394 1 documents that we've labeled C-27 through C-35, 2 except for Exhibit 28, which you haven't seen before, 3 these were all provided to AirTouch in response to a 4 request for production from US West? 5 A. That's my understanding, yes. 6 MR. BUSCH: Your Honor, I'd like to have 7 the witness read into the record some information 8 from this document. 9 Q. And I'd like to find out if you consider 10 this to be confidential information on this page? 11 A. It's marked confidential. 12 Q. Do you consider it to be, in fact, 13 confidential information? 14 JUDGE BERG: Mr. Busch, to the extent that 15 -- well, let me go ahead and ask Mr. Devaney or Ms. 16 Anderl whether there's information on this particular 17 page that you would consider to be confidential? 18 MS. ANDERL: Your Honor. 19 JUDGE BERG: Yes, Ms. Anderl. 20 MS. ANDERL: We do believe that the 21 document, that page of the document is confidential, 22 and would just note that it also, in addition to the 23 fact that the document is confidential, would seem to 24 be needless to have the witness read something into 25 the record that is already admitted as part of the 00395 1 record. 2 JUDGE BERG: And what is the basis for the 3 characterization of -- I presume, Mr. Busch, you're 4 most interested in the third paragraph -- 5 MR. BUSCH: Yes. 6 JUDGE BERG: -- in the text block. What 7 would be the position as to why that paragraph 8 constitutes confidential information? In particular, 9 what sort of loss or unfair competitive disadvantage 10 would US West incur if that was disclosed? 11 MS. ANDERL: Well, I think Your Honor's 12 probably all too well familiar with US West's 13 position on slicing and dicing confidential documents 14 and our previously-stated position that we don't 15 think it's appropriate to try to find words or 16 sentences in confidential documents and have those 17 pulled out and designated as nonconfidential. 18 The memorandum, in its entirety, is an 19 internal strategy and planning document, and we 20 believe that, in fairness on that basis, it is 21 characterized as confidential to US West. We're not, 22 as I said, objecting to its admissibility. I believe 23 we've already agreed to the admissibility of the 24 document. 25 JUDGE BERG: Off the record for a moment 00396 1 while I take a look at the protective order. 2 (Recess taken.) 3 JUDGE BERG: We'll be back on the record. 4 Regarding the third paragraph, consisting of two 5 sentences on page 5-14 of Exhibit C-27, US West has 6 stated an objection to AirTouch's challenge. I'm 7 construing AirTouch's position as a challenge to the 8 confidentiality of that particular portion of this 9 document. 10 I would find that disclosure of that third 11 paragraph would not result in either loss or -- 12 including unfair competitive disadvantage to US West. 13 Under the terms of the protective order that was 14 entered in this case, if the presiding officer 15 determines challenged information is not entitled to 16 protection under this order, the information 17 continues to be protected for ten days thereafter to 18 enable the producing party, in this case, US West, to 19 seek Commission or judicial review of the 20 determination, including a stay of the decision's 21 effect pending further review. 22 So my determination that that third 23 paragraph is not confidential does not materially 24 alter its protection as confidential information in 25 this hearing. 00397 1 We have two options, Mr. Busch. One is 2 that if you have specific questions about this 3 document that can be asked in such a way that doesn't 4 require the disclosure of that confidential 5 information, I would direct you to ask the questions 6 in an appropriate fashion. 7 If the questions that you would feel 8 necessary to ask of Ms. Malone required the 9 discussion of that confidential information, then 10 what I would do is I would clear the room of all 11 parties who have not executed confidentiality 12 agreements pursuant to the protective order and we 13 would create a confidential transcript in this 14 proceeding. While that's not a desirable thing to 15 do, it's the most proper thing to do if, in fact, 16 it's necessitated by the questions you intend to ask. 17 MR. BUSCH: At this point, Your Honor, I 18 don't think I need to ask any questions that refer 19 specifically to the language in the document. All I 20 would like to do is call your attention to the 21 language in the third paragraph, as well as the 22 language on the following page, which is referenced 23 at the end of that third paragraph on 5-14. 24 JUDGE BERG: You're referring to page 5-15? 25 MR. BUSCH: Yes, the exhibit -- what is 00398 1 labeled at the top of the material at the top of the 2 page 5-15. 3 JUDGE BERG: And that would be the drawing? 4 MR. BUSCH: Yes. And the text within the 5 box, and it's referred to as Figure 1. 6 JUDGE BERG: And Ms. Anderl, I would just 7 presume that your objection to the box diagram and 8 information on 5-15 -- well, I shouldn't assume or 9 presume anything. 10 MS. ANDERL: I can tell you that we do 11 consider that portion of the document also to be 12 confidential. 13 JUDGE BERG: All right. 14 MR. BUSCH: We also challenge that 15 assertion, Your Honor. 16 JUDGE BERG: All right. I understand that 17 that's the position of AirTouch. I would find that 18 the diagram and the explanatory text in the boxed 19 area is consistent with paragraph three on page 5-14. 20 And for the same stated reasons, it is not entitled 21 to confidential protection, but shall continue to be 22 protected for an additional ten days, consistent with 23 the terms of the protective order. 24 And likewise, Mr. Busch, if there are any 25 questions that you would be asking that would in some 00399 1 way disclose that aspect of the diagram and text on 2 5-15 that would elicit testimony that would be likely 3 to result in a disclosure, that you err on the side 4 of caution. 5 MR. BUSCH: Very well. 6 JUDGE BERG: All right. 7 MR. BUSCH: I am mindful of the desire to 8 finish the hearings today, so I don't think I'll ask 9 that any of this information be put into the record 10 or read into the record or ask any more questions 11 about it. I just wanted to call your attention and 12 the Commission's attention to that section. 13 JUDGE BERG: All right. 14 MR. BUSCH: Thank you. 15 JUDGE BERG: Thank you. 16 Q. Ms. Malone, did I understand that you have 17 not seen this memo before today? 18 A. Not specifically, I haven't, no. 19 Q. But you're sponsoring this and all the 20 exhibits on the transit traffic study? 21 A. I'm sponsoring this? No. 22 Q. Okay. Then -- 23 A. I believe this was -- what I'm familiar 24 with this, and you can correct me if I have a 25 misunderstanding, is this was submitted to you in 00400 1 discovery when you asked for any piece of data or 2 information or whatever that had ever been associated 3 with US West's Cross7 studies or -- I'm not sure how 4 the interrogatory read, the discovery, but that's 5 where this information came from. 6 The transit study that I'm sponsoring is 7 attached to my direct testimony or my rebuttal 8 testimony. 9 Q. Okay. Can you tell me whether this 10 information in Exhibit C-27 is related in any way to 11 your testimony? 12 MR. DEVANEY: Your Honor, I guess I'm going 13 to register an objection, just on the grounds of the 14 word "related." It's difficult to answer that broad 15 a question. If the real inquiry is did Ms. Malone 16 rely on this document for her testimony, I have no 17 objection to that. 18 JUDGE BERG: I think, Mr. Busch, you can 19 maybe ask the question in another way or a series of 20 questions. 21 MR. BUSCH: Okay. 22 Q. I'll come back to your exhibit later. I'll 23 save tying this to your exhibit till another time. 24 A. Okay. 25 Q. I understand from your testimony that US 00401 1 West is offering a cellular transit traffic study in 2 support of its claim that 41.5 percent of the traffic 3 that goes to AirTouch Paging is transit traffic? 4 A. That's true. 5 Q. Do you believe that the study you submitted 6 is accurate? 7 A. To the best of my knowledge, I believe that 8 what the 41.5 represents is an average of several 9 months of cellular data that has been collected. 10 Q. Why do you believe that cellular data is 11 relevant when evaluating the transit traffic for a 12 paging carrier? 13 A. For the fact that a proxy for paging data 14 was required, and there's no other available data to 15 be recorded, US West made the decision to use the 16 cellular data as a proxy because of the similarities 17 in traffic patterns. 18 We also have this type of information 19 available with CLECs or ILECs, but US West chose the 20 cellular carriers because it was more representative 21 of both urban and rural areas in Washington. For 22 example, had we just chosen a CLEC, it would only be 23 unique to primarily urban areas. CLECs have 24 interconnected with US West in urban areas. And if 25 we had just used ILEC information, that information 00402 1 would only be predominantly rural areas. So it 2 appeared that a sound proxy for paging traffic was to 3 use cellular traffic. 4 Q. Okay. When you talk about the traffic 5 patterns or the calling patterns, you're specifically 6 referring to the inbound calling patterns; isn't that 7 correct? 8 A. Would you be a little more specific about 9 what your term "inbound" means? 10 Q. What you're trying to do is compare the 11 inbound calls to cellular and apply that to the 12 paging carrier. 13 A. Again, what do you mean by inbound? 14 Originating, terminating? Inbound is not a term 15 that's -- 16 Q. A call that originates from the public 17 switch telephone network and is directed toward the 18 cellular carriers. That is what your study evaluates 19 today; is that correct? 20 A. That's true. 21 Q. Did you perform any independent research to 22 confirm whether or not the inbound or the calls that 23 are directed to cellular customers are similar to the 24 types of calls that are directed to paging customers? 25 A. Again, would you be a little more specific? 00403 1 MR. BUSCH: I'd like you to read the 2 question back. 3 (Record read back.) 4 THE WITNESS: But I wanted a specific 5 example of what you're referring to for research. I 6 mean, that could cover a large area, and I just 7 wanted you to be a little more specific. 8 Q. I'll help you with that. Did you conduct 9 any type of traffic studies on paging carriers to 10 confirm whether it was similar to cellular carriers? 11 A. US West doesn't have the ability to do any 12 type of valuable recording with paging carriers. For 13 example, your witness, Mr. Bidmon, even, to my 14 understanding, his study represents a traffic or pay 15 count type study. All that you can identify with 16 that is a total lump of minutes, and then he tried to 17 do some type of definition between local and toll, 18 based on trunk groups. But it really didn't 19 specifically identify that large, large portion of 20 numbers of calls to where they had come from, if they 21 were transited over the network, if -- you know, it's 22 just too vague. 23 Q. So the answer to that is no? 24 A. Yes. 25 Q. Did you perform any market research, 00404 1 talking to customers of paging companies or cellular 2 companies? 3 A. I personally did not do market research. 4 Q. Are you aware of any US West studies? 5 A. That are associated with transit traffic? 6 Q. Market research by US West? 7 A. Well, I'm sure our product group does all 8 kinds of market research. 9 Q. But none that have been applied to 10 identifying the amount of transit traffic? 11 A. Not something that I'm aware of. 12 Q. Do you have any personal experience in the 13 paging industry? 14 A. No, I don't. 15 Q. If the inbound calling patterns to paging 16 customers are significantly different than the 17 inbound calling patterns to cellular customers, would 18 you still believe that the 41.5 percent is still 19 accurate for paging customers? 20 A. I think first I'd have to be convinced that 21 the patterns are significantly different. I believe 22 that our 41.5 percent that we're supporting for 23 transit traffic is a good representation of the 24 entire state of Washington. I think we're all aware 25 that because of the lack of actual data on the paging 00405 1 party's part that a surrogate has to be used. And 2 I'm still confident that the surrogate of cellular 3 traffic is as good as any other information 4 available, because it does provide actual accurate 5 usage of where that type of information is 6 originating. 7 MR. BUSCH: I'd like the court reporter to 8 read the question back to the witness and ask the 9 witness to respond to the question. 10 (Record read back.) 11 THE WITNESS: And I believe I answered the 12 question. 13 JUDGE BERG: It sounds like a hypothetical 14 is being posed, and so in that instance, it would be 15 appropriate to just assume the hypothetical, even if 16 it's something that you do not believe in, and then 17 try and give us as simple and direct a response to 18 the second half of the hypothetical as possible. 19 And I think that the response that I heard 20 went more towards your belief of the validity of the 21 proxy that US West had employed, rather than assuming 22 the hypothetical premise that Mr. Busch was 23 proposing. 24 So Mr. Busch, rather than requiring the 25 reporter to read the question again, would you make 00406 1 it clear, when you're presenting a hypothetical 2 situation, that there's a hypothetical premise to be 3 assumed, and then state your question. And if you 4 can do that once again, I'd appreciate it. 5 MR. BUSCH: Very well. Let me do that, 6 then, Your Honor. 7 Q. I'd like to offer a hypothetical situation 8 to you. Let's assume that a paging carrier has seven 9 percent of his traffic inbound from the toll tandem 10 and that cellular carriers have 35 percent of their 11 traffic coming from the toll tandem. Would you think 12 that difference is significant? 13 A. I would think there's a difference, yes. 14 Q. Is it significant? 15 A. I guess I'd have to know a little bit more 16 about the hypothetical situation. It depends on what 17 the whole is. Whether the difference in 22 percent 18 or whatever is significant depends on what the whole 19 is you're referring to. I will admit that there is a 20 difference. 21 Q. Yesterday, Mr. Devaney said in his opening 22 remarks that US West also had some anecdotal evidence 23 that the transit traffic percentage for paging 24 carriers was 41.5 percent. Can you tell me what that 25 anecdotal evidence is? 00407 1 A. I believe what Mr. Devaney is referring to 2 is our transit study that we're supporting. 3 Q. Very well. What I'd like to do is define 4 what transit traffic is by going through some 5 hypothetical calls. 6 A. Okay. 7 Q. And I'd like you to pick up what has been 8 labeled as Exhibit 28. I'm going to pose a series of 9 hypothetical telephone calls from one point to 10 another, and I'm going to ask you to identify whether 11 you consider that to be transit traffic or not, and 12 also, I'd like you to tell me, if you can, what 13 tandem that particular call would be routed through. 14 The first example is a call from Seattle on 15 the US West network directed to Seattle, an AirTouch 16 Paging customer. Would you consider that to be a 17 transit traffic call? 18 A. The only thing I need to clarify from you 19 before I can answer that is you're just saying that 20 it originated with a US West end user subscriber? 21 Q. That is correct. 22 A. And the call goes to a Seattle AirTouch 23 subscriber? 24 Q. That is correct. 25 A. I would not consider that a transit call. 00408 1 Q. Does that call go through any tandem 2 switches? 3 A. I'm sorry, I'm not familiar with the 4 network of -- I'm not a network person to begin with, 5 and I believe you'd have to be qualified to be 6 specific with the network here in Washington to be 7 able to answer those questions, and I don't have that 8 area of expertise. 9 Q. Let's go on, then, to the example of a US 10 West customer in Olympia calling an AirTouch customer 11 in Seattle. Do you believe that would be a transit 12 traffic call? 13 A. I would think not, but, again, it depends 14 on the routing. Unless you know the routing of these 15 particular offices, you can't just give hypothetical 16 answers. It does make a difference on how the calls 17 are routed, and it would take a network technical 18 person in the Washington area to be able to answer 19 some of these questions. I mean, the ones that are 20 very obvious, yes, I can give you an opinion on, but 21 the others do require -- 22 Q. So when you put together your transit 23 traffic study, did you familiarize yourself with 24 Washington and what calls would be considered transit 25 traffic? 00409 1 A. When the transit traffic study was put 2 together, I personally did not put it together. It 3 was a request of the market group, under my 4 direction, to have a transit study put together. 5 Q. Okay. So you don't have any personal 6 knowledge as to the accuracy of the information in 7 this report? 8 A. I do to the extent that, in some of these 9 other reports where you're showing all the 10 information for end offices, that all end offices 11 were verified through our network people. I did not 12 personally sit down and give a network design to have 13 this study put together. That was handled by our 14 network people that are specifically associated with 15 the routing and transiting of traffic in Washington. 16 Q. Okay. But you put together the transit 17 traffic study? 18 A. Under my direction, the transit -- 19 Q. It was under your direction. And you're 20 referring to some other exhibits that are spread 21 across the table in front of you? 22 A. No, I was just referring to, like, one of 23 these C-35s or whatever. It's giving end office -- 24 it's various types of information that needs to be 25 put together. 00410 1 Q. So you're -- 2 A. This was put together under the direction 3 of product and network people. 4 Q. So you're relying upon the information 5 provided by others? 6 A. Yes. 7 Q. Okay. Let's go to C-27 again. Let's look 8 at page 5-10. And I'd like to call attention to the 9 middle part of the page, where there is an entry 10 dated November 20th of 1998, under the category of 11 missing ORIG NPA-NXX. I'd like to call your 12 attention to the first line that talks about the 13 accuracy of the data. Can you tell me what deriving 14 means? 15 A. Deriving? 16 Q. That's correct. 17 A. I would say it's the ability to obtain. 18 Q. When someone talks about deriving some 19 information when it's missing, what does that mean? 20 A. Obtain, obtain missing information. 21 Q. Okay. If I was to tell you that some of 22 the information that was used to generate your report 23 was inaccurate, would that change the basis of your 24 confidence in the accuracy of that report? 25 A. I would like you to explain to me where 00411 1 it's inaccurate, so that I can make adjustments, if 2 necessary. 3 Q. Well, it appears that US West was 4 attempting to do that and -- 5 A. I mean, these months are for all different 6 reports, and it's going to depend on which month 7 you're looking at for what type of information. And 8 not being intimately familiar with each and every 9 line on this report, an 11/20/98 date is not one of 10 the dates that was used in our transit traffic study. 11 So that's why I would have to ask that you could be 12 very specific to me, you know, where the 13 information's flawed. It's the only way that I would 14 be able to try to make any corrections to my study. 15 Q. Quite frankly, I think the US West employee 16 who wrote that would be the best person to talk to, 17 wouldn't they? 18 A. But, see, what I'm saying is this has 19 nothing to do with the particular data that's in the 20 study that I'm supporting for the 41.5 percent. It's 21 an 11/20/98 date, and our information, I believe, 22 ends in June of '98. 23 MR. BUSCH: Your Honor, I think we're going 24 to need to delve into the detail of this particular 25 line item, and I'm going to ask if US West would 00412 1 stipulate that we can have a discussion of this 2 particular line item without clearing the room. 3 JUDGE BERG: It sounds to me that you're 4 looking to pose a hypothetical, Mr. Busch, that if a 5 certain category of information in the traffic study 6 that's been performed was changed to some extent, and 7 to whatever extent you would also hypothesize, would, 8 in this witness' testimony, would the results of that 9 study be reliable. 10 If that's what you're looking for, I think 11 you can still get there without the disclosure of 12 this information. On the other hand, if you're 13 looking to try and link the relevance of this 14 information to the study that was performed, I'd like 15 to hear a little bit more foundation as to why you 16 would believe there was a link that would require us 17 to otherwise go to the next step. And if am totally 18 missing your point, feel free to tell me. 19 MR. BUSCH: No, I'll lay the foundation. I 20 think that's -- 21 Q. Let's talk about how all of these data were 22 collected. My understanding is that US West wanted 23 to conduct a transit traffic study for the cellular 24 carriers; is that correct? 25 A. Yes. 00413 1 Q. And so it collected some information in the 2 first half of 1998? 3 A. That's correct. 4 Q. Collected the originating telephone number, 5 or at least the NPA-NXX, which is the first six 6 digits of a telephone number, if you include the area 7 code -- 8 A. And I just need to be specific, is that 9 it's only able to be collected on where there's SS7 10 capability from the interconnecting carrier. 11 Q. That's fine. You can wait till I ask a 12 question. So it was on SS7, and they captured the 13 originating NPA-NXX, and saved the data? 14 A. Yes. 15 Q. The data collection efforts were completed 16 at the end of June of 1998? 17 A. Now, are you asking me hypothetically or -- 18 Q. No, for this study that you're relying upon 19 in order to provide us with your transit traffic 20 study, the data collection effort stopped at the end 21 of June of 1998? 22 A. No. 23 Q. When did it stop? 24 A. The data collection is ongoing. 25 Q. For the purposes of your study, what 00414 1 bracket of time did you evaluate? 2 A. It was February, March, May and June of 3 1998. 4 Q. So the data collection efforts for your 5 study stopped in June of 1998? 6 A. For that particular study, yes. 7 Q. So the answer is yes? 8 A. You want to let me answer it, then? 9 JUDGE BERG: That's all right. There's a 10 little tension that's beginning to interject itself, 11 and I think part of it is just the establishing a 12 rhythm between the questions and the answers. And I 13 think you're doing a fine job of testifying. I would 14 say if you just let Mr. Busch sort of steer the car 15 and try and follow his lead, trust that your counsel 16 will make an objection if Mr. Busch steers off the 17 road. 18 And likewise, that your counsel will have 19 some opportunity to follow-up with you if there's 20 information that needs other explanation. I think it 21 will seem a lot less confrontational than it may at 22 this point. 23 THE WITNESS: Okay. 24 JUDGE BERG: And Mr. Busch, likewise, if, 25 to the extent that you can give some signals, you 00415 1 know, before you make a right turn or left turn, it 2 might also help this witness. 3 MR. BUSCH: Very well. Thank you. 4 JUDGE BERG: All right. 5 Q. So an entry that was made on November 20th 6 of 1998 would have been after the end of the study 7 period that you collected the data for for this 8 study? 9 A. That's correct. 10 Q. Okay. I'm going to ask you to take a look 11 at Exhibit C-27 again. And let me know whether it 12 refers to the study that you relied upon in order to 13 generate your analysis. 14 MR. DEVANEY: Your Honor, could we just 15 have clarity as to what is meant by the study you 16 relied upon to generate the analysis? I think, in 17 other words, my objection is the question is vague, 18 and I think if we have some definition, it might 19 provide a more accurate response. 20 MR. BUSCH: I'll rephrase it, just to move 21 things along. That's fine. 22 JUDGE BERG: Okay. Thank you, Mr. Busch. 23 And I understand, Mr. Busch, that a part of the 24 constraint on you is you're making a special effort 25 not to otherwise divulge any information that might 00416 1 be construed as confidential. 2 MR. BUSCH: That's correct. 3 JUDGE BERG: I understand that that's 4 sometimes a difficult thing to do. 5 MR. BUSCH: Very well. 6 Q. Document C-27, Exhibit C-27, is an 7 integrated document that was produced by US West as a 8 part of this proceeding; isn't that correct? 9 A. That's correct. 10 Q. The pages are numbered sequentially 5-1 11 through 5-22? 12 A. That's correct. 13 Q. Commencing at page 5-14, there's a 14 memorandum that talks about this very study that you 15 presented to us today as a part of your testimony; is 16 that correct? 17 A. If I could take just a moment, I'm going to 18 read this, if you'll allow me a moment. 19 JUDGE BERG: And just for my benefit, Mr. 20 Busch, are you referring to KM-2, which has been 21 marked as Exhibit 25, or the Cross7 report, which is 22 C-27? I'm presuming that it's KM-2, Exhibit 25, 23 attached to this witness' rebuttal testimony. 24 MR. BUSCH: That is correct. 25 JUDGE BERG: All right. 00417 1 THE WITNESS: Mr. Busch, I can't give you a 2 yes or no answer. Even when I read the documentation 3 here, it doesn't tell me that this -- it doesn't come 4 out and say this is done to produce a transit traffic 5 study. I mean, I will agree with you, yes, that this 6 appears to be the hypothetical that was used to 7 develop a transit study. But to be specific about 8 the months, the time frames, that's the part I can't 9 address. 10 Q. And then the documents that are attached, 11 starting at page 5-1 and going through page 5-13, 12 those documents relate to the study that's referenced 13 in the memorandum, which starts at page 5-14? 14 A. I would say that's true. 15 Q. Going back to page 5-10, do you know 16 whether the error in that first sentence that we've 17 been talking about has impacted the results of your 18 study? 19 A. Specifically, I can't address that. I 20 don't know. 21 Q. Do you know about the scope of the error 22 that was involved in this line item? 23 A. I do not. 24 Q. I'd like to call your attention now to 25 Exhibits C-29 and C-30. Does the information 00418 1 attached to your testimony as KM-2 incorporate the 2 data from these two exhibits? 3 A. Yes, it does. 4 Q. Okay. Do you have any reason to believe 5 why the dates on both of these exhibits, C-29 and 6 C-30, are incorrect? 7 A. No, I don't. 8 Q. These reports were generated on October 9 2nd, 1998; right? 10 A. Are you assuming that because of the date 11 here in the corner, or does it actually specify on 12 here somewhere you could direct me to saying that it 13 was -- 14 Q. On Exhibit C-29, there is a date just below 15 the header that says 10/2/98. 16 A. I guess I could assume as well as you can 17 that that's the date. 18 Q. These dates are before the date that we 19 just looked at in the other exhibit that identified 20 the accuracy problem; is that correct? 21 MR. DEVANEY: I'd object to the 22 characterization. 23 JUDGE BERG: Could you explain that, the 24 objection once more, Mr. Devaney? 25 MR. DEVANEY: Just the characterization. 00419 1 The document speaks for itself, and I think that the 2 characterization of it is somewhat prejudicial, and 3 that's the nature of the objection. 4 JUDGE BERG: All right. Mr. Busch, just 5 keep in mind, if you can actually, you know, refer to 6 the data itself, the argument -- the fact that it 7 certainly may be perceived one way or the other is 8 certainly, I think, an argument that's fair for you 9 to make, but it may make it more difficult for this 10 witness to answer. 11 MR. BUSCH: That's fair. 12 Q. As a part of this study, we also identified 13 that some of the NPA-NXXs could not be identified as 14 to their point of origin; is that correct? 15 A. That's correct. 16 Q. The reports that we've been provided call 17 those types of calls No CPN; is that correct? 18 A. That's correct. 19 Q. My understanding is that US West has 20 assumed that all of those calls that are considered 21 No CPN to be transit traffic calls? 22 A. That is true, because if a call is 23 identified as No CPN, it doesn't have a calling party 24 name associated with it. All of US West's trunks are 25 verified and SS7-capable, so US West knows that that 00420 1 has to be coming in from someplace other than their 2 own traffic. That's why that assumption is made. 3 Q. Okay. Just to be fair, it might not be 4 that there's no calling ID; it's just there's no 5 match between the number that shows up -- 6 A. No, it's my understanding that it actually 7 comes in with no calling party named. There isn't 8 any way you could identify the name, even if you 9 wanted to. 10 Q. Okay. Let's take a look at Exhibits C-31 11 and C-32, then. These are two reports called Error 12 Reports. C-31 is, for the time period from February 13 1st, 1998, through February 28th, 1998, and C-32 is 14 from March 1st, 1998, through March 31st, 1998. Do 15 you recognize these reports? 16 A. I've only seen them, again, in the context 17 that it was attached to a discovery request. 18 Q. Do you know what the purpose of an error 19 report is? 20 A. Yes. 21 Q. Can you tell me what that is? 22 A. For something that's erroring out. 23 Q. If I refer you to the header on the error 24 reports, it refers to the Call Code 110 Traffic 25 Study. Can you identify that particular traffic 00421 1 study as relating to this cellular traffic study 2 you're talking about? 3 A. The only identification I could have is 4 just the dates. It is in the time frame that the 5 study was used. 6 Q. Okay. As you look through the 20-some odd 7 pages in C-31 and C-32, can you tell me if there's a 8 list of NPA-NXXs on the report? 9 A. There appears to be. Yes. 10 Q. I'll ask again, is it possible that the 11 data in the No CPN column has some NPA-NXXs 12 associated with it, but they may not match to 13 anything that you recognize? 14 A. That could be a possibility, but it's my 15 understanding that when something comes through is No 16 CPN, it actually does not have a calling party name 17 associated with it. And either, you know, because it 18 requires the originating company to establish and 19 forward that type of information, if the company 20 chooses not to do it, then something will come 21 through without that identification. 22 Q. Let's go back to Exhibit C-27, page 5-21. 23 I'd like to call your attention to the second to the 24 last paragraph on that page where it talks about 25 error files and invalid NPA-NXXs. 00422 1 A. Okay. 2 Q. Exhibits C-31 and C-32, can you tell me if 3 those two exhibits are the error files that this 4 document refers to? 5 A. I really can't be certain the description 6 that the information on C-27 gives would fall into 7 that category. 8 Q. Let's assume that these error reports 9 relate to the data contained in No CPN column on 10 these studies, okay. Let's just get past that one. 11 A. Okay. 12 Q. When you look through Exhibits C-31 and 13 C-32, there's a wide variety of area codes listed 14 throughout there. 15 A. That's true. 16 Q. And we know that the area codes in 17 Washington are 206, 425, and so on, and when we look 18 through the list, there are area codes from inside 19 there, as well as outside, and you could figure out 20 where those area codes were and you could figure out 21 whether they were local or toll; is that correct? 22 A. The way I understand it, though, is that 23 there's not a match within the LERG. So if there's 24 not a match within the LERG, I'm not sure you'd know, 25 because the area code is one thing. That would 00423 1 identify the state for you, but then you also have to 2 have specific to the NXX, and if it's not listed in 3 the LERG, then I'm not sure you'd have a valid 4 checkpoint to be able to determine exactly where the 5 calls came from. 6 Q. Well, you could find out whether they're 7 from one state or another, assuming it matches -- 8 A. You could find out whether they're 9 interstate or not, yes. 10 Q. So to the extent that there's an area code 11 that matches an existing area code, you can get a 12 feel for where those numbers are located? 13 A. By area code, yes. 14 Q. Then you could also get a feel for whether 15 a call from that area code would be toll or local? 16 A. Well, now, my understanding, if it doesn't 17 come through identified, we can't identify -- it 18 doesn't have the detail on it to be able to identify 19 a call, so I'm not sure I can agree with you that it 20 can tell you whether it's local or toll. 21 Q. Well, if a call comes in from area code 22 503, and we're looking at a call to Seattle, can't 23 you assume that's a toll call? 24 A. You can, but I'm not sure you're depicting 25 the error report in relation to the LERG verification 00424 1 or No CPN information. There could be a LERG on here 2 that they can identify it to a particular party that 3 has originated the call, but if it doesn't have 4 anything on it, that's when it falls in No CPN. 5 Q. Just to be clear, you don't need to know 6 which particular party placed the call in order to do 7 the study; you just need to have the NPA-NXX; is that 8 correct? 9 A. No, for the purposes that this study is 10 being used for bill validation, you kind of need to 11 know the individual parties involved. 12 Q. But you're not proposing a bill validation? 13 A. No. 14 Q. You're proposing a transit traffic study? 15 A. Correct. 16 Q. For a transit traffic study, you just need 17 to know -- 18 A. How much is originating on the network 19 outside of US West. 20 Q. Okay. I'd like to go to Exhibit 26, which 21 is your local calling area exhibit that you produced 22 today. 23 A. I have that. 24 Q. In your testimony today, I believe you said 25 that there was a direct correlation between the 00425 1 percentages here and the amount of transit traffic. 2 Did I misunderstand your testimony? 3 A. No, you did not. 4 Q. The exhibit we're looking at is not minutes 5 of use; correct? 6 A. No, it is not. 7 Q. Transit traffic would be measured based 8 upon minutes of use, wouldn't it? 9 A. Yes, but if you'll recall, the reason I 10 used this exhibit was to further explain Mr. Bidmon's 11 testimony yesterday where he was referring to the 12 705,000 minutes of use. This was just to put into 13 perspective for him and for the Commission how many 14 exchanges -- other exchange carriers there are with 15 prefixes other than US West in the Washington local 16 calling areas. That's what this was used for. In no 17 way is it supposed to be a direct correlation that 18 this many minutes attests to this percentage. 19 Q. Okay. In fact, the simple assignment of an 20 NPA-NXX to another carrier doesn't mean there's 21 minutes of use coming from that NPA-NXX; correct? 22 A. That's true. 23 Q. For example, Voice Stream is a wireless 24 carrier in the Seattle area. They just launched 25 service not too long ago. They probably don't have 00426 1 as many minutes of use coming from their NPA-NXX than 2 US West has, for example, in downtown Seattle? 3 A. I mean, that's a possibility. It's just 4 trying to put it into perspective that there was a 5 much larger amount of local traffic originated from 6 parties other than US West than what Mr. Bidmon 7 wanted to recognize yesterday. 8 Q. That's fine. And just because an NPA-NXX 9 has been assigned doesn't mean that all of the 10 numbers are actually in use, generating minutes of 11 use? 12 A. No, my understanding is anything that was 13 being held for future use, I asked the product people 14 not to pull it. I do have some other information 15 where it shows future use and this type of thing, and 16 that's where somebody would just be more or less 17 holding one to open. That isn't included. 18 Q. That doesn't answer my question. My 19 question was just because an NPA-NXX has been 20 activated, that doesn't mean that all of the phone 21 numbers under that 10,000 block are actually serving 22 customers and generating minutes of use? 23 A. That's true. 24 Q. Okay. I'd like you to take a look at 25 exhibits that I forgot to mark, 33, 34 and 35. Are 00427 1 these the bill validations that we talked about 2 earlier? 3 A. I would have to assume that these are the 4 bill validations. The data on here is similar to 5 what was used to put the transit traffic together, so 6 I would assume this is the same type of information 7 for bill validation or what I categorized earlier, to 8 give it a name, was a bill validation record. 9 Q. Okay. To be fair, the carrier 10 identification code on two of the three of these 11 studies has been blacked out, so we couldn't tell 12 which carrier was involved in this, except for the 13 one that still shows? 14 A. Right. 15 Q. Okay. What's unique about these reports is 16 that it gives us call counts broken down in more 17 detail than you had in your study; isn't that right? 18 The first column is local US West, the second is US 19 West intraLATA toll. We don't have corresponding 20 columns on your study, do we? 21 A. Well, you do, because, I mean, the first 22 column in my study is where they've combined local 23 and toll together. So I mean, you don't have it 24 broken down individually, but they're unique in the 25 fact that they're both US West-originated minutes of 00428 1 use, whether it be local or toll. I believe -- 2 JUDGE BERG: Ms. Malone, why don't you hold 3 on just a moment to give the reporter a chance to 4 flex her fingers. 5 (Recess taken.) 6 JUDGE BERG: All right. We'll be back on 7 the record. 8 MR. BUSCH: Thank you. I'll try to be a 9 little bit more precise so we can get to the area of 10 real concern. 11 Q. Would you look at the bill validation 12 reports that we have in Exhibits 33, 34 and 35? 13 A. Yes. 14 Q. You'll see that we have two different 15 columns for Non-US West Local and Non-US West 16 intraLATA toll. Do you see where I'm referring to? 17 A. I see that. We're on the first page, like, 18 of C-34? 19 Q. They're consistent. 20 A. Okay. 21 Q. The difference between those two is 22 significant for local versus toll, isn't it? 23 MR. DEVANEY: I'm sorry, which exhibit 24 number are you looking at? 25 MR. BUSCH: Thirty-three, 34 and 35 are all 00429 1 similar. 2 MR. DEVANEY: Are you asking her to analyze 3 all three exhibits in response to your question or 4 are we focusing on one of the three? 5 MR. BUSCH: Let's just focus on 33, because 6 the rest are similar formats. 7 MR. DEVANEY: Okay. 8 JUDGE BERG: And just for another point of 9 clarification, would US West consider the percentage 10 difference between these numbers to be confidential? 11 MS. ANDERL: If somebody can do that math 12 in their head and put it on the record, I'd be 13 amazed. But certainly we can talk order of 14 magnitude. 15 JUDGE BERG: All right. So Mr. Busch, what 16 I'm thinking here is, rather than having a problem 17 over what's significant, if you wanted to do an 18 approximation, you know, within ten points or so of 19 what you perceive the difference to be and ask this 20 witness if that percentile difference is significant, 21 I think that that would be helpful. 22 MR. BUSCH: Your Honor, my left turn signal 23 is on. We're not going in that direction. We're 24 going somewhere else. 25 JUDGE BERG: All right, thank you. I'm 00430 1 sorry. I apologize for interjecting. 2 MR. BUSCH: That's okay. 3 THE WITNESS: Okay. I'm on Exhibit 33. 4 Q. Very good. Have you identified the columns 5 which distinguish between non-US West Local and 6 non-US West intraLATA toll? 7 A. In the middle of the page, yes, I have. 8 Q. That's correct, okay. Hypothetically 9 speaking, if local calls from non-US West companies 10 -- and let's just choose GTE as an example. If a 11 local call from GTE is routed to US West's local 12 tandem and if an intraLATA toll call from GTE is 13 routed through the toll tandem, you would not be able 14 to distinguish between those two types of calls on 15 the report attached to your testimony? 16 A. Tell me, again, if the GTE call is routed 17 through our local tandem; is that correct? That's 18 one of them? 19 Q. A local call from GTE. 20 A. Routed through our local tandem? 21 Q. Right. 22 A. And then a toll call -- 23 Q. A toll call from GTE is routed through the 24 toll tandem? 25 A. It would be identified on here. 00431 1 Q. Okay. Do you have two separate columns in 2 the studies attached to your testimony for those two 3 different types of calls? 4 A. I'm sorry, do I have two different columns 5 attached in my study? 6 Q. Let's look at your study attached to your 7 rebuttal testimony. 8 A. There's a column that says non-US West 9 originated intraLATA minutes of use. 10 Q. But we combine -- 11 A. And they're combined on there, yes, local 12 and toll. 13 Q. Local and toll calls are combined there? 14 A. Uh-huh. 15 Q. Okay. So I'm going to ask you to assume 16 that local calls go through the local tandem. 17 A. Right. 18 Q. Toll calls go through the toll tandem. 19 A. Right. 20 Q. And some of the toll calls may also go 21 through the access tandem. 22 A. I would agree. 23 Q. Okay. You could take Exhibits 33, 34 and 24 35 and calculate what percentage of calls come 25 through the local tandem versus a toll tandem, 00432 1 whether it's access tandem or toll tandem; correct? 2 A. I guess I will agree with you, subject to 3 check. I'd have to sit down and do the math and see 4 if that's really what it works back to. 5 Q. That's fair. But if I was to tell you that 6 I did that math -- 7 A. Okay. 8 Q. And if you assigned all of the No CPN calls 9 to toll, you get about 35 percent of the calls to a 10 cellular carrier go through the toll tandem? 11 A. (Nodding head.) 12 Q. Okay. Let's just assume that for now. 13 A. All right. 14 Q. If I remind you that seven percent of the 15 calls to paging carriers, to AirTouch Paging, go 16 through the toll tandem, would you consider that to 17 be a significant difference in the amount of traffic 18 that comes through the toll tandem? 19 A. Are we talking hypothetical here, because 20 I'm not sure I'm following your example. 21 Q. Sure. Let me see if I -- 22 A. Just hypothetically? 23 Q. I want to be fair about this. Let me see 24 if I can cast a simpler example. If Exhibits 33, 34 25 and 35 show 35 percent of the calls to cellular 00433 1 carriers come through the toll tandem and AirTouch's 2 study shows that seven percent of the calls come 3 through the toll tandem, is that a significant 4 difference? 5 MR. DEVANEY: Your Honor, I need to object 6 to the hypothetical in that Exhibits 33, 34, and 35 7 don't show calls to cellular carriers necessarily. 8 So the hypothetical is not one that's supported by 9 the documents. 10 JUDGE BERG: Well, I'm going to accept the 11 hypothetical that 33, 34 and 35 do. And the only 12 question I hear being posed to this witness is 13 whether she thinks a variance between seven percent 14 and 35 percent is significant. 15 MR. DEVANEY: Okay. 16 THE WITNESS: Between 35 and seven percent? 17 MR. BUSCH: Yes. 18 THE WITNESS: Yes, I do. I think, like I 19 responded earlier this morning, though, it depends on 20 what you're talking about for a whole, you know. 21 Q. Just one more point, Ms. Malone, and then I 22 think we'll be done for lunch. 23 A. Okay. 24 Q. I'd like to go back to your comment that 25 AirTouch appears to have signed an agreement with GTE 00434 1 where the transit traffic rate is 30 percent? 2 A. That's true. 3 Q. Do you know whether that transit traffic 4 rate is based upon Washington-specific information or 5 if it's a national agreement? 6 A. I did read the agreement and I really can't 7 say I specifically recall if it said it was based on 8 Washington or how the percent was derived. 9 Q. The agreement is silent on it, isn't it? 10 A. I believe it is, yes. 11 Q. And you're not aware of any particular 12 trade-offs that there may have been during the 13 negotiations that may have arrived at that 30 percent 14 figure? 15 A. I was not party to the negotiations. 16 MR. BUSCH: Thank you. No more questions, 17 Your Honor. 18 JUDGE BERG: Mr. Griffith, any questions 19 you'd like to ask? 20 MR. GRIFFITH: Yes, I do. 21 JUDGE BERG: Let me first -- Mr. Devaney, I 22 really should give you an opportunity. Do you have 23 any redirect at this point? 24 MR. DEVANEY: Yes, I do have some redirect, 25 and I know, from talking to Ms. Malone during the 00435 1 break, that she could use a lunch break fairly soon, 2 so I have probably 10 or 15 minutes on redirect, and 3 I'd rather not have to put Ms. Malone through that 4 right now. 5 JUDGE BERG: All right. What we'll do, 6 then, I'll have Mr. Griffith go ahead and ask his 7 questions now, and then we'll take a lunch break. 8 We'll take redirect, re-cross when we come back. 9 That will give the parties the opportunity to roll in 10 any questions that are derived from questions from 11 the bench, as well. 12 E X A M I N A T I O N 13 BY MR. GRIFFITH: 14 Q. I had a couple of questions on your local 15 calling area submittal, the Exhibit 26. 16 A. Yes. 17 Q. US West has been in this area for a number 18 of years and has a large number of NXXs that are on 19 this chart, but would it be correct to say that those 20 NXXs are generally fairly full, as far as the numbers 21 that can be assigned? 22 A. I think that would be a fair assumption. 23 Q. And that for the other NXXs, if it's a new 24 company, those numbers probably would not be very 25 well used at this time? 00436 1 A. You could assume that. I mean, it's all 2 very suspect. It just depends on what area the NXXs 3 are located, who they're owned by, and how much 4 volume is associated with them. So either way could 5 be an assumption. 6 Q. Okay. Does the number of other NXXs 7 include paging companies? 8 A. Yes, it would. 9 Q. And those numbers would not really be -- 10 those customers would not really be -- 11 A. No, I'm sorry, I'm sorry, I have to take 12 that back. It doesn't include paging companies. 13 Q. Oh, okay. Now, just looking at some of the 14 totals here, Tacoma and Auburn are both in the same 15 area code. If I total those NXXs up, that would tell 16 me that that area code is almost at exhaust, so I'm 17 wondering where the Auburn numbers came from? 18 A. I'm sorry, I'm not following what you mean. 19 Q. Well, I'm wondering if there's some double 20 counting going on or just how the table was made up? 21 A. The table was made up where I just asked 22 the product people to put together a representation 23 of NXXs in the Washington local calling area from 24 LERG, and identify how many NXXs belong to US West 25 and how many belong to other carriers. And we did 00437 1 exclude paging companies. 2 Q. So they would be the ones who would know 3 how it was decided whether an NXX belonged in Auburn 4 or not? 5 A. Right. Isn't there an identification in 6 the LERG, like the third digit over or something, 7 that gives you -- 8 Q. Well, I have a copy of the LERG here, and I 9 don't see Auburn in it very often, so I am sure they 10 put some other cities under it. I have a question 11 about the Cross7 report -- 12 A. Yes. 13 Q. -- that you referred to earlier. Is this 14 report referring to the study that you actually had 15 conducted for the determination of the transit 16 percentage? 17 A. I think Mr. Busch asked me that question. 18 I told him, because of the dates, that I couldn't be 19 specific. I think it was finally agreed that, in 20 general, those were probably the same types of 21 requirements that were done for the study that I 22 requested. Whether it was the exact same time frames 23 or not, I can't testify to that. 24 Q. Okay. So it may not be referring to your 25 study; it may be referring to another study? 00438 1 A. Well, I would say it's probably referring 2 to a Cross7 study, but to get very specific, like I 3 addressed with him, I can't say that, because of the 4 dates in here don't really pin it down enough to say 5 this is the exact information that was used in the 6 study. I would assume these were the general terms 7 that were used in the study. 8 Q. Okay. I'm taking a look at page 5-15 of 9 that study, and there's a figure at the top of the 10 page. 11 A. Right. 12 Q. And one of the circles in that figure says 13 WSP, which would be wireless service provider, and 14 then in parentheses is paging company. That 15 indicates to me that it would be possible to monitor 16 just paging companies using this type of setup; is 17 that correct? 18 A. The only way that that can happen is if the 19 paging company interconnects to US West through the 20 SS7 link. 21 Q. Are there any paging companies in 22 Washington that have SS7? 23 A. No, there aren't. 24 MR. GRIFFITH: Okay. I don't have any more 25 questions. 00439 1 E X A M I N A T I O N 2 BY MS. RENDAHL: 3 Q. I just had a question about the effective 4 date of the agreement, and Mr. Reynolds indicated 5 you'd be the witness. If we're not computing, we'll 6 try this after lunch. 7 Does the current agreement -- not the one 8 that's currently being negotiated. Does the current 9 agreement specify how that agreement will be treated 10 until a new agreement is decided upon? 11 A. Let me answer what I think you're asking, 12 and you can tell me if that's right or not. There is 13 a term to the agreement, but, like, if technology 14 changes, different rulings, Supreme Court rulings 15 come down, that type of thing, the contracts are 16 opened back up for negotiation and amendment to those 17 contracts. 18 Just because you would have a contract in 19 place, if there's industry changes or opinions, it 20 doesn't preclude you from abiding by or taking part 21 in those changes. 22 Q. Okay. 23 A. The contracts are opened and amended. 24 Q. Assuming no change, which, in this industry 25 is probably a real hypothetical, that the existing 00440 1 agreement remains effective until a new agreement is 2 finalized; is that correct? 3 A. No, they have terms, like two to three-year 4 terms on the agreements. 5 Q. Okay. But if a current agreement expires 6 before a new agreement becomes effective -- 7 A. Oh, then you -- 8 Q. That's what I'm asking about. How is that 9 treated under the existing agreement? 10 A. That the terms of the other agreement would 11 stay in place until something new is agreed upon. 12 MS. RENDAHL: Okay. Thank you. That's all 13 I have. 14 JUDGE BERG: Mr. Payne. 15 MR. PAYNE: Yes, I have a couple of 16 questions. 17 E X A M I N A T I O N 18 BY MR. PAYNE: 19 Q. Does US West currently provide any paging 20 services? 21 A. No, they do not. 22 Q. Have they provided them in the past? 23 A. Yes. 24 Q. Did the company have any historical traffic 25 records of when it provided paging services of the 00441 1 traffic, the paging traffic for its paging services, 2 do you know? 3 A. I really don't know. We haven't had any 4 involvement in paging for a while now, so I really 5 don't know what's available. 6 Q. So any paging-related records would not 7 have been reviewed? 8 A. Right. 9 Q. Thank you. Do you see US West, since it 10 doesn't provide paging services, as being in 11 competition with AirTouch Paging? 12 A. None whatsoever. 13 Q. You're familiar with how interexchange 14 carriers connect with US West; is that correct? 15 A. Right. 16 Q. And access charges apply to interexchange 17 carriers to compensate US West for the facilities and 18 to reach US West, as well as to -- and to terminate 19 the calls; is that correct? Do you see an analogous 20 situation here where facilities are being installed 21 -- one of the options for an IXC is, in fact, to 22 provide its own facility into the US West tandem, if 23 you will? 24 A. Right. 25 Q. Otherwise, they pay on a per-minute or some 00442 1 facility-related basis to get to US West for use of 2 US West facilities. In this instance, what I'm 3 looking at is an analogy with the paging situation. 4 US West is going to be placing facilities to reach 5 the paging provider and then handing off a call to 6 the paging service provider. 7 And I guess, do you see the analogy where 8 the paging service provider is not going to be 9 charging for that direct facility into a paging 10 network; US West is going to be providing that they 11 are requesting to pay or be paid for terminating that 12 call for their end of the transportation and 13 termination. 14 Do you see the analogy between the two 15 there and that the compensation that US West is 16 claiming that they're not receiving to provide that 17 facility to the paging service provider is similar to 18 the IXC trying to gain access into the LEC network? 19 A. I don't believe there's any comparison at 20 all. When an IXC -- I mean, they establish their 21 POP, and then they usually, buy dedicated facilities 22 from the POP to our tandems, and then they do pay the 23 terminating company, if it be US West, access charge 24 compensation. What, in my understanding of AirTouch, 25 is that they want us to provide the facilities for 00443 1 free and, basically, they want us to pay them to use 2 those facilities. 3 Q. Are they using those facilities? 4 A. Now, what do you mean by are they using? 5 Q. Well, in your answer, you just suggested 6 that they're using -- they're getting free facilities 7 and use of those facilities. As I understand it, the 8 traffic is one way and -- 9 A. That's true, but they have to have 10 facilities from US West in order for their business 11 to function. They have to be interconnected with US 12 West so that when somebody originates a call, it can 13 be delivered to their paging terminal. So they have 14 to have the facilities; otherwise, they don't have a 15 business, and you know, they need some way to get 16 that call from a US West end user to their paging 17 terminal. 18 So they need the facilities, just like an 19 IXC needs facilities, but, through access charge 20 compensation, we do receive something for the use of 21 our facilities from an IXC. 22 JUDGE BERG: All right. At this time, that 23 concludes questions from the bench. We'll take a 24 one-hour break. We'll resume at approximately ten 25 minutes after 2:00 in the afternoon. And at that 00444 1 point in time, Mr. Devaney will conduct redirect and 2 then Mr. Busch will conduct recross-examination of 3 this witness. We'll be adjourned for the lunch hour. 4 (Lunch recess taken.) 5 JUDGE BERG: All right. We'll be back on 6 the record. At this point, Mr. Devaney, I understand 7 you have some redirect you'd like to conduct? 8 MR. DEVANEY: I do, Judge Berg. One other 9 housekeeping item. If there's no objection from 10 AirTouch, Mr. Thompson has a flight out of Seattle, 11 something in the 5:30 range -- 12 MR. THOMPSON: It's 7:00, but if I could 13 leave then. 14 MR. DEVANEY: Seven. We would ask that Mr. 15 Thompson go next, before Mr. Peters, so he can get 16 out of here. Is there any problem? 17 MR. KEEHNEL: Makes no matter to us. 18 MR. DEVANEY: Okay. So if there's no 19 objection, we'll go ahead and just change that order 20 so that Mr. Thompson goes before Mr. Peters. Is that 21 -- I should ask Mr. Peters. Mr. Peters, is that -- 22 MR. PETERS: That's fine. 23 MR. DEVANEY: Is that a problem? 24 MR. PETERS: No, that's fine. Emotionally, 25 I was ready to go, though. 00445 1 JUDGE BERG: Mr. Keehnel, is there anything 2 else you wanted to say? 3 MR. KEEHNEL: No, Your Honor. 4 JUDGE BERG: All right. Go ahead and 5 proceed, Mr. Devaney. 6 MR. DEVANEY: Thank you. 7 R E D I R E C T E X A M I N A T I O N 8 BY MR. DEVANEY: 9 Q. Ms. Malone, could I ask you to please take 10 a look at Exhibit 27? 11 A. Okay, I have it. 12 Q. Please turn to page 5-10. And if you'll 13 recall, Mr. Busch asked you some questions about a 14 particular line on that page. Do you remember that 15 line? 16 A. Yes, I do. 17 Q. And there's a reference there to a 18 particular type of call code, a 119 call code. Do 19 you see that? 20 A. I do. 21 Q. And the suggestion was made that there was 22 a link between the reference here, the 119 call code, 23 and the transit traffic study that you've presented. 24 Is that a fair inference, that there is a link 25 between 119 call codes and your study? 00446 1 A. No, there isn't really a link at all. The 2 119 call code was not used in our transit study; only 3 the 110 call code. And if you look at my exhibit 4 attached to my rebuttal testimony, it does say, in 5 the left-hand corner, call code 110. 119 call codes 6 were not used in the study and would never be used in 7 a transit traffic study. 8 Q. So is the statement here relating to 119 9 call codes of any relevance to your study? 10 A. None whatsoever. 11 Q. Okay. Before you presented in this 12 proceeding your study of cellular traffic data, did 13 you confer with anyone at the product management 14 level within US West as to whether cellular traffic 15 was an appropriate proxy for paging traffic? 16 A. I did. I spoke with a person by the name 17 of Tamah Matejka, and she's the lead product person 18 for paging, and Tamah's response to me was that she 19 felt that the surrogate was definitely an appropriate 20 proxy because of the type of traffic patterns that 21 are encompassed within the state of Washington, both 22 by cellular carriers and paging. 23 MR. BUSCH: Objection, Your Honor. That's 24 hearsay. That witness is not here. 25 JUDGE BERG: I agree it's hearsay. I'll 00447 1 allow it into the record. 2 Q. Were you done? 3 A. I was just going to say that she felt it 4 was a good proxy, and for this reason is why I 5 decided it was, as well, an acceptable proxy. 6 Q. Ms. Malone, based on testimony you've heard 7 from AirTouch, the documents you've been presented 8 with from AirTouch, and questions you've been asked 9 by AirTouch, is your view on whether cellular traffic 10 is an appropriate proxy for paging traffic still the 11 same or has it changed? 12 A. No, my view is exactly the same as far as 13 paging goes, with the exception of when I really 14 started thinking about it, there might not be as much 15 toll associated with paging. There would be more 16 local, because of the use of FX lines, foreign 17 exchange service lines. 18 Q. When you say the use of FX lines, what are 19 you referring to? 20 A. Specific customers buy an FX line to avoid 21 paying toll charges. With the use of an FX line, it 22 converts a toll charge into local, and the paging 23 companies are taking advantage of that type of 24 service to eliminate toll calls for their customers. 25 Q. Okay. Excuse me one moment. Just going 00448 1 back a moment, you said that you spoke to -- I 2 believe it's Tamah Matejka from product management 3 about the use of cellular traffic. Is information 4 from product management and from a person in Ms. 5 Matejka's position something that you believe is 6 appropriate to rely upon? 7 A. Well, yes. With having the responsibility 8 for being the lead product manager, Tamah would have 9 the best knowledge available for a particular product 10 and know what is an appropriate surrogate, or if 11 there's anything you needed to know about that 12 product, that's the person you would go to for 13 validity of any type of questions you had. 14 Q. Would you please return to Exhibit C-27? 15 And in particular, if you would go to page 5-14. 16 A. Okay. 17 Q. This memo is written by Ms. Stire, who I 18 believe you testified earlier is a data analyst; is 19 that correct? 20 A. That's correct. 21 Q. And you were asked a question about the 22 third paragraph of this memo, written by Ms. Stire. 23 And in connection with that paragraph, I'd simply 24 like to ask, is Ms. Stire in a policy-making position 25 with US West? 00449 1 A. Absolutely not. 2 Q. I'll ask you now to take a look at Exhibits 3 31 and 32. 4 A. Okay. I have it. 5 Q. These reports, titled Error Reports, can 6 you tell us what these are? What data are included 7 in these, do you know? 8 A. Well, I believe I indicated earlier this 9 morning that this information was not used in our 10 study. This information errors out because of the 11 way the originating call was coded. In order for an 12 originating call to come through and to fall in the 13 proper categories, it needs to be coded correctly. 14 And it's kind of always been an industry issue, where 15 sometimes the originating carriers do not code 16 properly, for various reasons, to avoid billing or to 17 actually avoid being identified. 18 So that's what falls out on this report. 19 It's the error caused by the originating company, not 20 by the validity of our Cross7 data. It doesn't have 21 anything to do with that at all. It's strictly an 22 originating carrier error. 23 Q. And were any of the data included in 24 Exhibits 32 and 31 used in your transit traffic 25 report? 00450 1 A. No, they were not. 2 Q. If you would please look now at Exhibits 3 33, 34 and 35. Would you remind us of what these 4 are? 5 A. This is -- I think the name we assigned to 6 them this morning was a bill validation report. 7 Q. And how often is a bill validation report 8 generated for a particular carrier? 9 A. Just one per month per individual carrier. 10 Q. And so these three documents that we've 11 been presented by AirTouch, bill validation reports, 12 what percentage of the overall bill validation 13 reports that US West generates in Washington do these 14 three documents represent, roughly, do you know? 15 A. It wouldn't be that much, because if I look 16 at the dates on here, there is only -- there's 17 actually only three bills. And US West does produce 18 bill validation for more than this number of 19 carriers. And it looks like the same bill is for 20 actually a different time period, but for the same 21 carrier, so really, this is only representative of 22 two carriers within the state of Washington. 23 Q. And in your view, do these three documents 24 provide a sound representation of overall traffic 25 patterns among carriers in Washington? 00451 1 A. No, they do not. 2 Q. You were also asked about your NXX exhibit, 3 and the question was posed about whether it's likely 4 that US West's NXXs are full. And my question for 5 you, are there carriers in Washington who have been 6 established for a while, who originate local calls, 7 who also may have NXXs that are, if not full, close 8 to full, do you know? 9 A. There would probably be independent 10 telephone companies. They've been established for a 11 number of years within the state of Washington. 12 Their NXX codes might not be full. 13 Q. Is there any reason to believe that 14 carriers like AT&T Wireless or AirTouch or GTE or PTI 15 would have an NXX situation different from US West's? 16 A. No, not really. I think any carrier in the 17 state of Washington could have NXXs that are filled 18 to capacity and others that are not quite full. 19 Q. Do you have any understanding as to whether 20 all of US West's NXXs are full? 21 A. I don't believe they'd all be full, because 22 then we'd be totally out of numbers, and I'm sure 23 that's not the case. So all of US West's numbers 24 would not be necessarily full. 25 Q. Is there a distinction between rural and 00452 1 urban areas in your mind, as to whether NXXs are 2 likely to be full? 3 A. Yes, probably, when you think about it, a 4 rural area would have an assignment for an NXX code, 5 and due to the population density, there wouldn't be 6 as much of a fill on a code there as there would be 7 in an urban area. And the same could hold true for 8 independent telephone companies, because they 9 primarily serve rural areas. 10 Q. Okay. You were asked a question by Mr. 11 Busch, who referred to a statement I made in the 12 opening about anecdotal evidence about the amounts of 13 transit traffic. Just, if you would, the evidence in 14 support of US West's -- strike that. 15 You were asked a question about my 16 reference to anecdotal evidence in connection with 17 the amount of transit traffic. And my question for 18 you is is there evidence US West is relying upon 19 other than the transit traffic study you've presented 20 in support of the transit traffic figure that we're 21 advocating? 22 A. Well, really, more in line with the 23 question that you just asked me now would be the 24 local calling area exhibit that I submitted today. 25 That's in support of our transit traffic study. 00453 1 MR. DEVANEY: May I have one moment, Your 2 Honor? 3 JUDGE BERG: Yes, sir. 4 MR. DEVANEY: Thank you, Ms. Malone. No 5 further questions. 6 JUDGE BERG: Additional cross-examination, 7 Mr. Busch? 8 MR. BUSCH: Yes, thank you, Your Honor. 9 R E C R O S S - E X A M I N A T I O N 10 BY MR. BUSCH: 11 Q. Going back to the reference in Exhibit C-27 12 and the call codes, call code 119 is SS7 traffic, 13 isn't it? 14 A. Yes, it is. 15 Q. And these calls are SS7, aren't they? 16 A. Yes, but there's a difference in type of 17 call codes. You have to have the SS7 capability to 18 be able to do any type of recording, but then, like 19 the 119 call code does not transit the US West 20 network, where the 110 call code does. The 110 call 21 code comes in, and that's for a call leaving US 22 West's network. On one call, you could have both a 23 119 call code and a 110 call code. 24 If it comes in as a 119 and stays right in 25 US West's network, there's no other type of a code 00454 1 because there's no transiting involved. In order for 2 you to be able to identify the transiting, then a 110 3 call record is associated with that, and then, by 4 NPN-NXX, you can tell where that calls goes on to. 5 Q. Are you saying the 110 call code includes 6 the SS7 signaling information? 7 A. Yes. 8 Q. I will try not to mispronounce her name, 9 but I'm sure I will. You made reference to Tamah? 10 A. Matejka. 11 Q. Matejka, thank you. And she is the lead 12 product manager for paging services? 13 A. In the wholesale local market, yes. 14 Q. So she deals with paging carriers? 15 A. Yes, she does. 16 Q. To the best of your knowledge, has she ever 17 worked for a paging company? 18 A. I wouldn't know. 19 Q. Okay. You said she's the one who has the 20 best knowledge about transit traffic information of 21 paging carriers? 22 A. No, what I said is that the product manager 23 would be the most logical and reliable person to go 24 to if you wanted to know anything about the paging 25 service. 00455 1 Q. Okay. So she is not the best knowledge 2 available on the topic? 3 A. Can you be a little more specific? 4 Q. As I recall your testimony, it was the 5 product manager has the best knowledge available for 6 transit traffic for paging carriers? 7 A. What I -- let me clarify now. If that's 8 what I said earlier, what I believe the role of a 9 product manager is, if I would want to know anything 10 about that product, whether it be the validity of 11 transiting traffic or appropriate rates, no matter 12 what the scope of that concern would be, to me, the 13 most appropriate place to go would be to the lead 14 product manager or a product manager of that 15 particular service. 16 Q. So are you not the most knowledgeable 17 person about transit traffic for paging? 18 A. I am a policy person for US West. I am not 19 a product manager. 20 Q. Okay. So your responsibilities don't 21 include understanding the paging market at all? 22 A. They do, because in order to be a policy 23 witness, you have to have an understanding of the 24 product, but you are not necessarily the most 25 knowledgeable person. That's why you rely on -- just 00456 1 like Judge Berg does here, relies on his staff to 2 assist him in making decisions, I have to rely on 3 other people to help me make decisions. 4 Q. Why don't you tell us the sum total of your 5 training on paging? 6 A. I've been involved now for several months 7 in numerous meetings, conference calls, individual 8 sessions. 9 Q. What prompted the start several months ago? 10 MR. DEVANEY: Well, I would caution the 11 witness and I'd object on the grounds that if there's 12 attorney-client privileged or attorney work product, 13 which potentially could be included in a question 14 like that. A question like that could call for 15 conversations of counsel, so I would caution you to 16 not review any communication with counsel or anything 17 that might constitute attorney work product. 18 JUDGE BERG: I understand, but if, in fact, 19 she was retained as the result of preparation for 20 litigation or if she was retained for the purpose of 21 consulting on a particular legal matter, that, in and 22 of itself, would not be confidential. 23 MR. DEVANEY: I agree. I'm afraid we might 24 be heading there. That's all. 25 JUDGE BERG: All right. I understand. Do 00457 1 you understand the distinction? 2 THE WITNESS: I do. 3 JUDGE BERG: All right. 4 THE WITNESS: Can you phrase the question 5 again for me? 6 MR. BUSCH: I'll see if we can have the 7 court reporter find the question in the transcript. 8 (Record read back.) 9 THE WITNESS: What prompted it is I'm in a 10 responsibility with US West where I have the 11 responsibility for the advocacy of interconnection 12 products and services, and that encompasses a lot of 13 area. So I've been in the job now for probably 13, 14 14 months, and on a continual basis, I'm attending 15 training classes in different areas and fields, 16 because I communicate US West's policy and advocacy, 17 both internally and externally. 18 Q. Can you tell me about the paging-specific 19 classes or training that you've had? 20 A. Just to try to understand paging in 21 general, as a product. Several of these classes are 22 put on, informational type classes. 23 Q. Internal to US West, external? 24 A. Internal to US West. 25 Q. Has it been more one-on-one training 00458 1 sessions with people or formal training classes? 2 A. More -- I don't know. I'd have to say 3 maybe a little more one-on-one, but pretty much even. 4 Q. Referring back to the error reports, which 5 have been marked C-31 and C-32, if I recall 6 correctly, do I understand that you believe these are 7 not relevant to the studies you used to come up with 8 your analysis? 9 A. Well, that's true, because none of this 10 information was carried forward into the study. And 11 the other thing is, these errored out because it's 12 originating company error; they didn't error out 13 because of the validity of the Cross7 system that 14 gathered the data to produce the transit traffic 15 study. 16 Q. Okay. So these calls don't appear at all 17 on your study, is that what I'm understanding you to 18 say? 19 A. That's true, that's true. 20 Q. So there's another whole category of 21 information that didn't even make it into your study? 22 A. Well, I'm not sure why they're appropriate. 23 I mean, they errored out due to originating caller 24 error. The originating company is the one who has 25 the error here. So if we -- 00459 1 Q. I understand. 2 A. Again, I tried to explain to you this 3 morning that we can't identify that, whether it be -- 4 for whatever reason. They refer to it as false ANI, 5 and it's an error from the originating company that 6 -- sometimes it's done deliberately, so -- yes, to 7 avoid billing. 8 Q. Are these completed calls, though? Are 9 these entries on C-31 and C-32 representative of 10 calls that were completed through your system? 11 A. Yes, they are. 12 Q. So to the extent that your study tries to 13 talk about the source of origin for calls completed 14 through your system, they really ought to be included 15 in your study? 16 A. Well, they're calls that were completed -- 17 they're completed calls, but they didn't have the 18 necessary information to be completed -- to be 19 included in the Cross7 data. The transit traffic 20 study has information that was collected through the 21 Cross7/SS7 type software. So to me, that's the 22 distinction of why they're not included in. 23 Q. Just so I don't mischaracterize what you 24 said at a later time, the messages on the error 25 report, the entries on the error report represent 00460 1 calls that were actually completed through your 2 system to wireless carriers, and those calls did not 3 make it to your report attached to your testimony 4 because of an error that was detected by your Cross7 5 system? 6 A. I'm trying to think if it's an originating 7 record error. I'm not sure if -- I don't see any 8 reason why the call can't go through. 9 Q. But it did not make -- 10 A. It totally errored out of the Cross7 11 system, so it did not make it to our report. 12 Q. Okay, thank you. We also looked at these 13 billing validation reports that have been marked 14 Exhibits 33, 34 and 35. And you said that these are 15 reports pertaining to particular carriers? 16 A. Right. 17 Q. And if I understand you correctly, you also 18 believe that these carriers are not representative of 19 all wireless carriers? 20 A. Well, no, I'm not -- that isn't the way I 21 stated it. If that's the way you interpreted it, 22 that's incorrect. 23 Q. That's why I'm following up on it. 24 A. What we have here is three different 25 reports. You have two reports for one company for 00461 1 two different month periods. And for one company, 2 you have one month's report. So what I'm saying is 3 this isn't inclusive of all cellular companies, the 4 date on here; it's just company-specific for a 5 one-month period for each one of these reports we're 6 looking at. 7 Q. As I recall the question, though, you were 8 asked whether this was -- the data from these billing 9 validation reports were a sound representation of the 10 traffic patterns for all wireless carriers. So let 11 me ask you that specific question. Do you believe 12 the statistics reflected through these three billing 13 validation reports are reflective of the traffic 14 patterns for all cellular carriers? 15 A. I would have to say no. There isn't enough 16 data to come to that conclusion. 17 Q. Then the traffic patterns vary from carrier 18 to carrier even within an industry; right? 19 A. No, that isn't what I'm saying. What I'm 20 saying is you don't have enough data here to come to 21 any type of a conclusion as to how representative 22 this is of a traffic pattern. In the transit traffic 23 study, at least you have a number of carriers for 24 several months to make it more of a representative 25 study than what these three exhibits would represent. 00462 1 Q. I want to distinguish between whether three 2 reports is not a statistically significant quantity 3 or whether the results on these reports are 4 inconsistent with the industry trend. Can you help 5 me understand your answer? 6 A. I'm sorry, but I find your questions very 7 confusing. 8 Q. Okay. 9 A. If I were to answer what I thought you just 10 said, my answer would probably be no to both of them. 11 I'm not a statistician, so I wouldn't know if three 12 is quantitative of anything. And the way I've 13 described these reports, you don't have enough data 14 here to reach any conclusions. 15 MR. DEVANEY: When you say the reports, for 16 the record, you're referring to Exhibits -- 17 THE WITNESS: I'm sorry, I'm referring to 18 the exhibits. 19 MR. DEVANEY: -- C-33, C-34, C-35. 20 THE WITNESS: These exhibits right here. 21 Q. What's the likelihood the results from 22 these three billing validation reports varied 23 significantly from other cellular carriers? 24 MR. DEVANEY: Your Honor, I'm going to 25 object on the grounds that this effectively has been 00463 1 asked and answered. I think we've been plowing this 2 ground for a few minutes now. I think Ms. Malone's 3 testimony is clear that these three exhibits are not 4 a representative sample from which one could draw 5 conclusions about overall traffic patterns. I think 6 we're just going back over that same territory, so I 7 will object on that ground. 8 JUDGE BERG: Mr. Busch, help me. Where are 9 you going? 10 MR. BUSCH: US West provided these billing 11 validation summaries to support its claim of the 12 transit traffic amount, and I'm trying to find that 13 reference in their testimony. And now it appears 14 that she's saying that you can't rely upon these to 15 determine transit traffic, so I want to be able to 16 close that -- 17 THE WITNESS: But I think there's a 18 distinction. 19 JUDGE BERG: Hold on, hold on, please. 20 Q. Do you recall where in your testimony you 21 referred to these three documents? 22 A. Not offhand, I don't. Are you sure it 23 wasn't associated with your data request? 24 MR. BUSCH: I'm going to start looking 25 there. 00464 1 MR. DEVANEY: Your Honor, I do want to 2 register an objection to the last question, to the 3 extent that it implied that all that was produced in 4 support of our transit traffic figure are these three 5 reports. In discovery, I'm holding a stack that's 6 probably a couple inches thick of documents that we 7 did produce in support of our transit traffic figure 8 advocacy here. So to the extent the question implies 9 that it was only Exhibits 33, 34, and 35 that were 10 produced in support of the figure, we object to the 11 characterization. 12 JUDGE BERG: So noted. And Mr. Busch, 13 would you also help me understand how this is 14 something more than trivial to the issues that are in 15 dispute? I'm not saying that I think it's trivial, 16 but I'm telling you I don't understand how this fits 17 in right now. 18 MR. BUSCH: Obviously, the closing briefs 19 are the place where the parties try to close up all 20 the evidence that's been presented, but I'll address 21 your question now. 22 First, the quantity of transit traffic is 23 very important financially to AirTouch Paging because 24 it will dramatically impact their expense for 25 interconnection facilities under this agreement, 00465 1 which is why we're spending a significant amount of 2 time on this. 3 JUDGE BERG: Sure, I understand that. I 4 understand that's why you were essentially focusing 5 on all the NXX-related data. But I'm trying to 6 understand about these three documents right here, 7 and how establishing the extent to which this data is 8 pertinent to the US West study KM-2, Exhibit 25, is 9 important. 10 MR. BUSCH: US West provided us with these 11 summaries as additional support for their claims that 12 the transit traffic rate for wireless carriers is 13 around the range of 41.5 percent. We believe that 14 the inbound call characteristics of the paging 15 customers are dramatically different than cellular 16 customers, because pagers are used locally to create 17 a local presence for small business people who want 18 to be in touch, for someone who needs a plumber. 19 JUDGE BERG: I understand that's your 20 position, but I want to know what is it about these 21 documents that is going to get us there, or is this 22 just a matter of AirTouch trying to catch this 23 particular witness in a contradictory representation? 24 MR. BUSCH: The data on these three reports 25 are the only data points that can be compared 00466 1 directly to the information that AirTouch has 2 collected at its terminal. AirTouch has collected at 3 its Seattle switch the number of calls that come in 4 from local trunks versus toll trunks. 5 You can't get that analysis from any of the 6 other documents that US West provided, other than 7 these. We are relying upon these to show the 8 cellular carriers receive approximately 35 percent of 9 their incoming calls from toll trunks, which frankly 10 have a higher number of transit calls on them. When 11 AirTouch receives a dramatically lower number of 12 calls from the toll trunks, more on the local trunks, 13 there's dramatically fewer transit calls, and these 14 are the documents that give you the percentages to 15 compare 35 for cellular versus seven for paging. 16 JUDGE BERG: All right. 17 MR. BUSCH: And what I'm trying to do is 18 find out whether the witness believes that these are, 19 in fact, what US West represented them to be as 20 further support for the cellular transit traffic 21 rate. 22 JUDGE BERG: It wasn't clear to me the 23 extent to which AirTouch was relying upon these 24 documents for these numbers. 25 MR. BUSCH: I hope that helps. 00467 1 JUDGE BERG: Thank you. 2 Q. I'm going to move on to a different topic 3 for the time being. You made reference, during the 4 questions from the Staff, to AirTouch asking for free 5 facilities. I assume you're not implying that you're 6 going to waive your right to any transit compensation 7 by using the word free facilities? 8 A. No, we are entitled to transit, and 9 AirTouch acknowledges that. 10 Q. Right. So when you say free facilities, 11 you don't mean you won't be paid for any traffic on 12 these facilities; you'll be compensated for traffic 13 on the facilities? 14 A. What I meant by free facilities is the 15 provisioning of our facilities to interconnect to 16 AirTouch. 17 Q. What does that mean? 18 A. Well, you have to have our trunks to 19 interconnect to our network. 20 Q. And you'll be paid for those trunks; right? 21 A. Well, my understanding is, from your 22 position, is that those trunks should be for free. 23 Q. No, didn't we just acknowledge that we -- 24 A. There's a difference in the facilities and 25 in the compensation for transiting traffic. 00468 1 JUDGE BERG: Mr. Busch, it's really not 2 necessary to try and contradict that type of 3 hyperbole. I understand. 4 MR. BUSCH: Okay, good. That's all that I 5 have. Thank you. 6 JUDGE BERG: All right. 7 E X A M I N A T I O N 8 BY JUDGE BERG: 9 Q. Ms. Malone, what does a CIC stand for? 10 A. It's a CIC code. 11 Q. And what is a CIC code? 12 A. Carrier identification code. 13 Q. So there would be a code number there. For 14 example, I look at Exhibit C-34, and it shows a CIC 15 code of 9098. You would look somewhere else, and 16 9098 would tell you it was for one particular -- 17 A. Company. 18 Q. Company, okay. And then, when you say that 19 two of these three exhibits relate to the same 20 company, is that based upon something you see here on 21 the document or is that -- 22 A. It is, yes. Since this is company-specific 23 information, it is confidential. I know how to read 24 a code on here, so it identifies to me that two are 25 for the same carrier and one is for a different 00469 1 carrier. 2 Q. Okay. Because the copies I have are 3 blacked out. So you've had an opportunity to see 4 those codes and make that determination? 5 A. Right. 6 JUDGE BERG: Okay. Mr. Payne, any 7 questions? 8 MR. PAYNE: Yeah, I actually just have a 9 couple. 10 E X A M I N A T I O N 11 BY MR. PAYNE: 12 Q. And I apologize for not asking this before, 13 but when I was going through your testimony and 14 exhibits, you have an Appendix A and Appendix B? 15 A. Right. 16 Q. And I didn't understand why there was both. 17 Can you explain why those were in there and what 18 those clarifications were this morning? 19 A. Appendix B is from the service agreement 20 that exists here in the state of Washington. 21 Q. With AirTouch today? 22 A. Yes. And Appendix A is based on TELRIC 23 pricing, and then those rates were in there that we 24 withdrew, so that's the difference between. 25 Q. And is it US West's policy that calls to 00470 1 paging customers, that it is only the paging 2 customers and company that supplies service to that 3 paging customer that benefits? 4 A. I wouldn't say that that's the only 5 customer that benefits. You know, our position is, 6 as I'm sure you're well aware of, that we consider 7 them to be the cost causer in this situation. 8 Q. And in the Commission's generic docket, the 9 rates that are being looked at, the costs and the 10 prices that are to be established, are you aware if 11 those involve any paging customers or independent 12 telephone companies or other service providers? Or I 13 should reverse that and say was it basically just for 14 US West and general telecom at this point, do you 15 know? 16 A. And I would have to defer that question 17 back to Mark, Mr. Reynolds. I don't know if you were 18 here this morning when he gave his overview of what 19 the generic docket consisted of and -- 20 Q. Maybe we can strike that. 21 A. I'm sorry. 22 Q. Let me ask you this. Is it the company's 23 policy that it is inappropriate to have different 24 rates for different carriers who have different 25 costs? 00471 1 A. Whatever rate US West is approved by the 2 Commission is the rate that we would have to charge 3 the carriers for the services. 4 Q. If it is, in fact, established that US West 5 will have to pay reciprocal compensation to AirTouch, 6 should the rates be based upon US West's costs or 7 AirTouch's costs? Is that from a policy standpoint? 8 A. Well, from a policy standpoint and from 9 probably FCC rules, I would have to say that it's 10 probably appropriate that the compensation rates, the 11 end office switching or whatever, should not exceed 12 what US West has been granted in its generic cost 13 docket, just because that's the way the rules are 14 interpreted from the FCC, that they wouldn't expect 15 to see the costs of the paging company to be higher 16 than an ILEC. 17 MR. PAYNE: That's all I have. 18 JUDGE BERG: Any questions, Mr. Griffith? 19 MR. GRIFFITH: No. 20 JUDGE BERG: Any other follow-up, Mr. 21 Devaney? 22 MR. DEVANEY: No, thank you. 23 JUDGE BERG: All right. Mr. Busch. 24 MR. BUSCH: No, thank you. 25 JUDGE BERG: All right. Thank you, Ms. 00472 1 Malone. You're excused. Mr. Busch, there was this 2 exhibit that was marked C-28. 3 MR. BUSCH: We're not going to offer that 4 at this time, Your Honor. 5 JUDGE BERG: All right. Is it withdrawn? 6 MR. BUSCH: No, sir. 7 MR. KEEHNEL: We'll leave it on the table 8 for now. 9 JUDGE BERG: All right. At this time, the 10 issues matrix, which was prepared by AirTouch as to 11 the remaining unresolved issues, will be marked as 12 Exhibit 36. And that is an issues matrix with a 13 print date of 3/16/99, and it is admitted into the 14 record. 15 And there is a contract language with -- 16 excuse me. There's a proposed interconnection 17 agreement with competing contract language inserted, 18 which will be marked as Exhibit 37 and admitted into 19 the record. And I'll just indicate, Mr. Keehnel, 20 that while I had AirTouch share a copy of that with 21 US West, I did not have copies distributed to the 22 bench. And if you have three or four copies, now 23 would be an appropriate time to do that. 24 (Recess taken.) 25 JUDGE BERG: We'll be back on the record. 00473 1 At this time, Mr. Devaney, let's finish with some 2 housekeeping chores, and I'm going to have you go 3 ahead and qualify Mr. Reynolds with regards to the 4 direct testimony that he provided earlier today. 5 Mr. Reynolds, I'll just remind you that 6 you're still subject to the affirmation oath that you 7 took earlier on the stand. Go ahead, Mr. Devaney. 8 Whereupon, 9 MARK S. REYNOLDS, 10 having been previously duly sworn, was recalled and 11 was examined and testified as follows: 12 R E D I R E C T E X A M I N A T I O N 13 BY MR. DEVANEY: 14 Q. Mr. Reynolds, you filed direct testimony in 15 this case; correct? 16 A. Yes, I did. 17 Q. Is the testimony you provided true and 18 correct, to the best of your knowledge? 19 A. I did have one correction. 20 Q. Please tell us what that is. 21 A. And I apologize. There are no page 22 numbers, nor are there line numbers in my testimony, 23 so I'm going to have to count back. Counting the 24 cover page as page one, two, three, four, fifth page 25 -- or sixth page in, in the sentence that actually 00474 1 starts at the bottom of the fifth page, in the Q and 2 A that starts, Question: What is the current 3 standard for compensation between US West and local 4 service providers. 5 The second sentence in the answer that 6 starts "Although" reads currently, "Although US West 7 has negotiated reciprocal compensation agreements 8 with a number of CLECs, bill and keep is still the 9 predominant form of compensation." I would insert, 10 at the end of that sentence, "in agreements in which 11 reciprocal compensation was disputed." 12 So the full sentence now should read, 13 "Although US West has negotiated reciprocal 14 compensation agreements with a number of CLECs, bill 15 and keep is still the predominant form of 16 compensation in agreements in which reciprocal 17 compensation was disputed." 18 Q. With that correction, is your testimony 19 true and correct, to the best of your knowledge? 20 A. It is. 21 MR. DEVANEY: Thank you. 22 JUDGE BERG: All right, thank you, Mr. 23 Reynolds. I would ask US West to prepare and 24 distribute an errata sheet to assist in making that 25 correction in a copy for the Commission. 00475 1 MR. DEVANEY: We will do so. 2 JUDGE BERG: All right. And there is no 3 urgency to that. Possibly contemporaneous with the 4 filing of supplemental briefs -- excuse me, the 5 filing of closing briefs. 6 (Discussion off the record.) 7 JUDGE BERG: We'll be back on record. The 8 following exhibits have been marked in preparation 9 for the deposition of Mr. Thompson. Direct testimony 10 of Mr. Thompson is T-38. Rebuttal testimony is 11 marked as RT-39. The exhibit marked as JLT-1 shall 12 be Exhibit 40. The supplemental rebuttal testimony 13 of Mr. Thompson is marked as SRT-41. The US West 14 analysis of paging costs is marked as Exhibit C-42, 15 and the US West analysis of terminal costs is marked 16 as Exhibit C-43. 17 AirTouch has agreed to the admission of 18 these exhibits into the record, and they are so 19 admitted at this time. Mr. Thompson, if you'd stand 20 and raise your hand? 21 Whereupon, 22 JERROLD THOMPSON, 23 having been first duly sworn by Judge Berg, was 24 called as a witness herein and was examined and 25 testified as follows. 00476 1 JUDGE BERG: Thank you. And Mr. Devaney, 2 why don't you go ahead and qualify the witness to 3 start with, and then, Mr. Thompson, you can proceed 4 with your oral summary, and Mr. Devaney, you can then 5 engage in questions and answers. 6 MR. DEVANEY: Thank you, Your Honor. 7 D I R E C T E X A M I N A T I O N 8 BY MR. DEVANEY: 9 Q. Good afternoon, Mr. Thompson. 10 A. Good afternoon. 11 Q. Mr. Thompson, in the testimony you filed in 12 this case, are the answers you provided in it true 13 and correct, to the best of your knowledge? 14 A. Yes. 15 Q. Do you have any corrections you'd like to 16 make to your testimony? 17 A. The only thing I'd say is the studies we've 18 withdrawn will affect some of the testimony I've 19 provided in the written prefiled testimony, in that 20 we are no longer sponsoring those studies. 21 Q. Other than that, you have no corrections? 22 A. No. 23 Q. Okay. Would you please proceed, then, with 24 a summary of your testimony and begin with a brief 25 description of what your responsibilities are with US 00477 1 West? 2 A. Yes. I'm executive director of service 3 cost information. The service cost information 4 organization provides information about US West 5 products and services, both on a retail and wholesale 6 basis. We do that for regulatory purposes and then 7 also internal purposes. 8 Q. Please proceed. 9 A. Okay, thank you. I'm going to start off 10 this afternoon explaining a little bit about why 11 certain issues have become issues in the case. I'm 12 going to make them as clear as possible. 13 I'm going to start off a little bit with US 14 West's position on certain items and how that's 15 affected my testimony, and to some extent, the 16 testimony of some of the other witnesses. 17 First of all, it's US West's position that 18 AirTouch is not entitled to compensation because it 19 does not terminate nor transport calls. AirTouch 20 can't transport calls because the Glenayre equipment 21 is not a tandem switch, and transport is defined as 22 the delivery of traffic from a tandem to an end 23 office switch. AirTouch can't terminate calls 24 because neither the Glenayre equipment nor the CIT is 25 a local end office, nor equivalent to an end office. 00478 1 If the Commission, however, believes that 2 the Glenayre equipment is equivalent to an end office 3 switch, then the Commission should be consistent with 4 its application of TELRIC principles and find that 5 AirTouch's cost must be the following: 6 First, they should be limited to the cost 7 to terminate a call that ends when the originating 8 caller hangs up. This is the point where US West's 9 obligation to its subscriber ends and the point where 10 AirTouch's obligation to its subscriber begins. This 11 means that the cost for frame relay, CIT, and RF are 12 not eligible for compensation, as well as some of the 13 costs of the Glenayre equipment. 14 Further, the costs must be limited to the 15 costs of terminating a call only; not the costs 16 providing enhanced services. The costs should be 17 limited to costs that are consistent with the 18 Commission's findings in the cost docket, because 19 those findings create one standard for total element 20 long-run incremental costs on a forward looking 21 basis. One standard for US West and then another for 22 AirTouch is unfair and poor public policy. 23 The costs should be limited to costs that 24 have been proven, they should be verifiable, they 25 should not be the result of black box analyses, and 00479 1 they should be reasonable. Has AirTouch provided 2 costs that are all of these things? In my opinion, 3 they have not. 4 The FCC stated, in its First Report and 5 Order that there was a, quote, "lack of information 6 in the record concerning paging providers' cost to 7 terminate local traffic," end quote. That's 8 paragraph 1093. In my opinion, there's still a lack 9 of verifiable information in this proceeding. 10 Now, what do we know about the AirTouch 11 cost study? I've been listening to testimony 12 yesterday, from the AirTouch witnesses. AirTouch has 13 been providing information to me a little bit at a 14 time. I even got information today that we've been 15 seeking for some time. 16 But what we know is a long list of items. 17 First of all, the cost for the RF sites include sites 18 in different states, Idaho and Oregon, as well as 19 Washington. To me, it's still unclear what the RF 20 sites are in Hawaii and Alaska. 21 The cost study uses embedded costs for the 22 Chicago satellite system, not forward looking TELRIC 23 costs, but embedded costs. We heard the evidence 24 yesterday that described it being a balance sheet 25 allocation that is an embedded cost, not a forward 00480 1 looking cost. 2 We have seen large growth estimates, very 3 large, that are very -- that are quite unsupported. 4 And large growth estimates drive large up-front 5 capacities and large initial costs. The cost study 6 improperly includes costs for enhanced services that 7 have not been excluded. AirTouch agrees that voice 8 messaging costs should be excluded, but the exclusion 9 methodology rests solely on a matter of judgment 10 without rationale. 11 AirTouch has included all of its forward 12 looking costs of their network. Not their business, 13 but their network. The cost study has not supported 14 utilization rates. Over one-third of their RF sites 15 have unknown locations and have not been supported. 16 No study has been done to show why one switch is less 17 costly than two smaller switches and why this 18 departure from FCC guidelines is appropriate. 19 The cost study has included costs for 20 two-way paging, yet AirTouch has no plans to use it. 21 The study has not excluded all enhanced service 22 capabilities resident in the Glenayre equipment. The 23 study has improperly included retail agency software 24 costs. The study has improperly included costs for 25 the redundant TNP protocol as a transition cost. 00481 1 Cost drivers have been ignored for voice mail 2 exclusion. SS7 costs have been improperly included 3 in the study because AirTouch has stated that it has 4 no plans to deploy it. 5 There may be other items that further 6 inflate the cost. If we had enough time in this 7 docket and if there was enough information available, 8 it's very possible that there are additional items 9 that we would find about their cost study. 10 Just today, we have heard that AirTouch 11 revised their subscriber forecast and the size of 12 their RF system. We have not had time, obviously, to 13 review it. 14 In another regard, it is improper for 15 AirTouch to receive a financial windfall. AirTouch's 16 proposal is to have US West pay virtually all, with 17 the exception of the transit traffic, of its network 18 costs determined on a forward looking basis. This 19 includes not only costs incurred while the 20 originating caller is connected, but also costs that 21 AirTouch incurs to provide its own services to 22 forward encoded messages to its paging subscribers. 23 This proposal provides an improper financial windfall 24 to AirTouch. 25 My testimony demonstrates that if 00482 1 AirTouch's proposal is accepted, it will result in a 2 near doubling of AirTouch's estimated operating 3 income in Washington. The effect of the AirTouch 4 proposal is to shift costs from AirTouch's 5 responsibility to US West and its Washington 6 subscribers. This results in the creation of an 7 improper subsidy from US West's subscribers to 8 AirTouch, which is inconsistent with the Telecom Act. 9 The sensitivity analysis I performed is 10 limited in scope because of the short time frames in 11 this proceeding. The analysis is offered to show an 12 estimate of what AirTouch's cost would be if the 13 depreciation rate and cost of money ordered by the 14 Commission in the cost docket was used by AirTouch. 15 I also provide an estimate of the cost in 16 the AirTouch study if a voice mail exclusion were 17 made that more reasonably utilizes cost drivers 18 identified by AirTouch. 19 In addition, I have provided a calculation 20 that utilizes the calculation of switching costs, as 21 ordered by the Commission in the cost docket. I 22 provide this information to the Commission with the 23 belief, as I have stated, that the Commission should 24 be as consistent as possible in its view of TELRIC 25 costs. My analysis provides some benchmarks 00483 1 adjusting for the three cost elements identified for 2 comparison purposes. This analysis I performed is a 3 limited sensitivity analysis, due to the time 4 constraints of this proceeding. 5 I have also raised many questions about the 6 cost study and have been provided some information by 7 AirTouch. Some of the questions I raised have 8 resulted in AirTouch revising their cost study, but 9 many costs remain unsupported. New information is 10 being provided daily, much of which I have not had 11 time to review. My conclusion remains that 12 AirTouch's costs are significantly overstated and not 13 supported. 14 Now, the Commission has two benchmarks. 15 First, the FCC expected the costs of terminating a 16 basic paging call to be less than the incumbent local 17 exchange carrier's termination and transport rate. 18 In Washington's case, that would be no more than .169 19 cents per minute. 20 The only other proceeding where a cost was 21 found for a paging company was the Cook arbitration 22 case in California. That rate per minute was .468 23 cents. The range that is set is therefore something 24 less than .169, up to .468, using these two points as 25 benchmarks. AirTouch's proposed costs are many times 00484 1 greater than this range. Its costs are significantly 2 overstated, as I have stated. 3 Another point the Commission can look at is 4 that the GTE/AirTouch contract supplied by AirTouch 5 in their filing indicates a compensation amount that 6 is about .222 cents per minute. It is my 7 recommendation that if the Commission determines that 8 AirTouch is due compensation for the termination of 9 calls, the Commission should rule the same way it did 10 in the AT&T Wireless arbitration, Docket Number 11 UT-960381. 12 There, the Commission said first 13 compensation shall be limited to, and I quote, "the 14 end office rate for transport and termination of 15 traffic," end quote. And like the AWS decision, 16 AirTouch, quote, "did not meet its burden of proof," 17 end quote, and, quote, "failed to establish its 18 forward looking economic costs of terminating 19 traffic," end quote. 20 If some amount is determined to be 21 necessary, I would recommend the level established by 22 the Commission in the cost docket for local switching 23 at the .169 cent per minute rate. 24 JUDGE BERG: Mr. Devaney, before you 25 proceed, do you, in fact, intend to engage in some Q 00485 1 and A? 2 MR. DEVANEY: Very briefly, yes. 3 JUDGE BERG: All right. Approximately how 4 many minutes? 5 MR. DEVANEY: Probably no more than one or 6 two minutes. 7 JUDGE BERG: All right. Go ahead, and 8 we're going to take just a short break. 9 Q. Mr. Thompson, thank you for your summary. 10 With respect to the two sensitivity analyses that 11 you've provided, my question for you is do these 12 analyses take into account what you've just testified 13 to about the investment amounts included in the 14 AirTouch cost study that relate to states other than 15 Washington? 16 A. No. 17 Q. Do these analyses take into account the 18 extra facilities and equipment you've identified as 19 being in the AirTouch cost study, such as extra 20 protocols, agency software, and other items you've 21 identified? 22 A. No. 23 Q. Do your sensitivity analyses take into 24 account the fact that AirTouch has sized its 25 investment in its network for its cost study using 00486 1 subscribers for other states, such as Oregon? 2 A. No. 3 Q. Do your analyses take into consideration 4 what you've called the lack of support for the growth 5 rate of more than 140 percent included in its cost 6 study? 7 A. No. 8 Q. So are you recommending the results of your 9 sensitivity analysis as the rate that this Commission 10 should adopt? 11 A. Absolutely not. 12 MR. DEVANEY: Thank you. That's all I 13 have. 14 JUDGE BERG: All right. We'll be off the 15 record. 16 (Discussion off the record.) 17 JUDGE BERG: We'll be back on the record. 18 Mr. Keehnel, will you be conducting cross-examination 19 of Mr. Thompson? 20 MR. KEEHNEL: Yeah, I have a few questions. 21 JUDGE BERG: All right. Please go right 22 ahead. 23 C R O S S - E X A M I N A T I O N 24 BY MR. KEEHNEL: 25 Q. Hello, again, Mr. Thompson. 00487 1 A. Good afternoon. 2 Q. Unfortunately, not quite as nice a day as 3 when you were in Seattle, but at least we're not in 4 an interior conference room. 5 JUDGE BERG: Off the record for just a 6 second. 7 (Discussion off the record.) 8 JUDGE BERG: We'll be back on the record. 9 Q. Mr. Thompson, how many paging systems have 10 you designed in your life? 11 A. Zero. 12 Q. For how many paging companies have you 13 worked as an engineer? 14 A. None. 15 Q. Are you an engineer? 16 A. No, I'm a cost accountant in this capacity. 17 Q. Do you claim to be an expert on the 18 technical aspects of the paging industry? 19 A. No. 20 Q. Are you a paging industry expert in any 21 respect? 22 A. No. 23 Q. You never worked for a paging company in 24 any capacity, have you? 25 A. I have not. 00488 1 Q. Until you started working on the paging 2 study relating to AirTouch, you had never before 3 critiqued a cost study related to paging, had you? 4 A. I haven't critiqued a cost study for 5 paging. I have done and looked at a lot of cost 6 studies. 7 Q. But none others for paging, have you? 8 A. Not for paging. 9 Q. You've not performed a cost study for 10 paging, either? Putting aside critiques, you haven't 11 prepared a cost study for paging, either, have you? 12 A. No. 13 Q. For you, it's a new field, is it not? 14 A. Preparing cost studies is not. Working 15 with the paging industry is new for me. 16 Q. That's okay. It's new for me. 17 A. It's an interesting business. 18 Q. Let's establish a few other basics here. 19 You're not a lawyer, are you? 20 A. No, I'm not. 21 Q. You're not purporting to testify as a 22 lawyer, either today or in any of your three sets of 23 prefiled testimony, are you? 24 A. No, the thought of lawyers testifying is 25 quite unnerving. 00489 1 Q. Okay. Even as a lay person, you're not 2 purporting to testify as a legal expert, are you? 3 A. No. 4 JUDGE BERG: Also take note that being a 5 lawyer is not necessarily synonymous with being a 6 legal expert. 7 Q. Again, understanding you're not a lawyer, 8 Mr. Thompson, do you know this. Do you know what the 9 minimum standards of proof are in the proceeding that 10 we're engaged in? 11 MR. DEVANEY: Your Honor, I'll object to 12 the question. I don't think we're getting anywhere 13 with the questioning like that. 14 JUDGE BERG: Well, he may have some 15 knowledge, in spite of not being a legal expert, so 16 I'll go ahead and allow a few more questions along 17 these lines. 18 Q. Let me just repeat the question, then. Do 19 you know what the minimum standards of proof are in 20 this proceeding? 21 A. The only thing I can respond to that is the 22 instructions that the Judge gave us regarding the 23 reasonable standard that should be applied. Other 24 than that, I don't have anything further to add to 25 that. 00490 1 Q. Indeed, when you testified in your rebuttal 2 testimony at page three, lines 14 through 16, about 3 the minimum standards of proof, you were outside your 4 field of expertise, were you not? 5 A. If you'll just give me a moment. I think 6 the context I was talking about here is not a legal 7 standard, as I understood your question. What I was 8 talking about here, and maybe it's a poor choice of 9 words, if those have peculiar meaning in the legal 10 profession, but what I was thinking of is a standard 11 of proof in a proceeding like this one that deals 12 with a cost study that's reasonable, verifiable, and 13 the other attributes that I talked about in my 14 summary. 15 Q. Insofar as it had legal overtones, you're 16 withdrawing any such implication from that testimony? 17 A. I certainly did not intend that and I don't 18 intend that today. 19 Q. Thank you. In your opening summary today 20 that you read from, will you go back to your 21 reference to paragraph 1093 from the FCC's First 22 Report and Order and read that short excerpt again? 23 A. Quote, "Lack of information in the record 24 concerning paging providers' cost to terminate local 25 traffic," end quote. 00491 1 Q. We'll come back to that. In your opening 2 presentation today, you did more than summarize the 3 three sets of testimony. You got into a few new 4 areas, and let's start there. You made a reference 5 to costs associated with facilities outside 6 Washington. Specifically, you mentioned Oregon, 7 Idaho, Alaska and Hawaii. What's the point of that 8 summary testimony offered today? 9 A. I felt that it was important for me to 10 comment on information that I heard yesterday in the 11 examination of Mr. Bidmon, and for that matter, Dr. 12 Zepp. So I included information based on what I 13 heard in my summary. 14 Q. And not to invite you to recount your 15 entire summary, but what's the gist of the point 16 you're trying to make on the Oregon, Idaho, Alaska 17 and Hawaii issue? 18 A. The supporting documentation showed RF 19 sites that were outside the state of Washington. 20 Insofar that the information in those sites is 21 disproportional in cost or in demand, it could affect 22 the results of the cost study. We don't know, 23 because we weren't given information on that in time 24 to file testimony in this proceeding. 25 Q. Did you ask for that information? 00492 1 A. The information that we got, I don't have 2 the exact date, but that information just came, I 3 believe within the last week or so, probably less 4 than a week. We asked for information regarding that 5 kind of backup several weeks ago, and you've just 6 provided that in the last week. 7 Q. And in what form was it provided? 8 A. I believe that information was faxed to me 9 a few days later, after I got the primary package of 10 backup. 11 Q. As a general proposition, if the customer 12 base outside Washington is proportional to the RF 13 costs outside Washington, and both the RF costs 14 outside Washington and the customers outside 15 Washington are included in the study, does that 16 necessarily make the study improper? 17 A. In your hypothetical, and again, we don't 18 know the facts, but in your hypothetical, if 19 everything is proportional, it shouldn't make a 20 difference in the unit cost. 21 Q. Based on the information that you received 22 in the last week, did you attempt to run that 23 analysis yourself? 24 A. No, there is not enough time to do the work 25 that would be required for that. Given that we just 00493 1 got the information, just added a few days. 2 Q. Do you recall I made an offer to you that 3 if questions arose that you thought could best be 4 answered by you talking directly with Mr. Bidmon or 5 Dr. Zepp, you were invited to do that? 6 A. I remember you making that offer on Friday 7 afternoon of last week. 8 Q. Did you ever take me up on it? 9 A. No, I did not. And the reason I did not 10 was that I have been working nearly 15 hours a day on 11 testimony, Saturday, Sunday, Monday and Tuesday of 12 this week. I didn't have time to start over an 13 analysis and do that work. There isn't enough time 14 to do that kind of analysis given the proceeding that 15 we've got and the schedule. 16 Q. I'm not being critical; I'm just -- 17 A. I'm giving you an answer as straight as I 18 can. 19 Q. I understand. I don't want to get 20 adversarial or get you defensive; I just -- 21 A. I'm tired. 22 Q. You heard some information this morning 23 about the calculations that had been performed 24 overnight regarding the data about the population 25 base and RF sites outside the state. Do you recall 00494 1 that I noted that there was about 30 percent of the 2 MTA population outside the boundaries of Washington 3 and that the percentage of RF transmitters presently, 4 on a going forward basis outside Washington, were 5 actually -- I think I've got my numbers backwards. I 6 apologize. Just ignore what I just said and I'll 7 start again. 8 A. Go ahead. 9 Q. What I said about the RF was that 30 10 percent of the RF were not serving Washington 11 strictly, and that the Washington customer base was 12 63,215 out of 86,869, or 72.7 percent was Washington, 13 meaning 27.3 percent are outside Washington and 30 14 percent of the RF costs are outside Washington. 15 Knowing those rough figures, would you 16 expect that the inclusion of the RF facilities 17 outside Washington, as long as we're also including 18 the customer base outside Washington, would have a 19 material impact on the cost study? 20 MR. DEVANEY: Your Honor, I will object to 21 the question, in the sense that it assumes facts that 22 are not in evidence. If the question's being posed 23 as a hypothetical, I have no objection to it, but to 24 the extent that question suggests that's proven or 25 there are facts in evidence supporting it, I would 00495 1 object. I ask that it be phrased as a hypothetical. 2 MR. KEEHNEL: I adopt that it's a 3 hypothetical and we need to connect up. Now that we 4 have heard testimony on this specific subject raised 5 by US West, we will be offering, as rebuttal 6 witnesses, Dr. Zepp and Mr. Bidmon to supply those 7 specific figures, which will take just a few moments 8 at the end of the day. So I will commit to supplying 9 that in response to Mr. Thompson's testimony. 10 MR. DEVANEY: Just so the record's clear, 11 Your Honor, we did promise to get back to you on 12 whether we would stand by our earlier objection to 13 the admission of that single page that shows these 14 adjustments. We feel very strongly that it would be 15 improper to allow that to come in. We have no 16 opportunity to respond to it, we can't get behind 17 changes in the study, we have no supporting data, so 18 I just want to reaffirm our standing objection to the 19 admission of that. 20 JUDGE BERG: All right. I'm going to take 21 that up at the end of the day. But at this point, 22 Mr. Keehnel, I think it works just as well as a 23 hypothesis. 24 MR. KEEHNEL: I agree. 25 Q. And Mr. Thompson, I apologize. There's 00496 1 been so much colloquy here, it's not fair to you to 2 try to keep the question in mind, so let me try one 3 more time. 4 Assume with me, hypothetically, that the RF 5 percentage outside Washington; i.e., that does not 6 serve Washington, is 30 percent. Assume that the 7 customer base outside Washington is 27.3 percent. 8 Can you tell me whether you would expect there to be 9 material outcome -- a material difference in the 10 outcome of the cost study with both that outside 11 Washington customer base and outside Washington RF 12 costs included? 13 A. In all honesty, I can't say until I've seen 14 the data, but the two figures you gave me say that 15 there -- it's around 30 percent. Without knowing a 16 whole lot else, and I feel very reluctant about 17 reaching any kind of conclusions on it, I'd say -- 18 well, if that's all I've got, then I'd say there's 19 probably a 30 percent difference. 20 Q. Thirty percent difference, meaning what? 21 A. Well, the costs that we're dealing with 22 would be 30 percent lower. If I was doing it on a 23 customer base, and again, in the hypothetical, the 24 customer base and the costs are proportional to all 25 other costs, then my, if you will, the numerator 00497 1 would decrease by 30 percent and the numerator would 2 decrease by the 27.3 percent. 3 Q. And it would roughly be a wash? 4 A. It could be. 5 Q. Right. 6 A. I won't say. 7 Q. And I understand, and the numbers would 8 have to be linked up. But assuming that those facts 9 are accurate, it generally deals with your concern 10 that the inclusion of outside-Washington factors 11 might create a disproportionate effect, and therefore 12 cause a problem with the cost study; isn't that fair? 13 A. Yeah. What concerns me about it, and 14 again, as I keep mentioning the proportionality, and 15 I believe Mr. Payne, I think yesterday, asked a 16 question about proportionality, as well. 17 One of the issues with it is that the 18 demand that's here might not just affect the RF 19 sites. I need to look at that and see. If the 20 customers were included in the base, and therefore, 21 in that forecasted growth that's in the system 22 itself, then the system may be oversized by 30 23 percent, as well. And again, I don't know the 24 proportionalities of it, so it's a much more complex 25 question than I think can be answered with just two 00498 1 ratios. 2 Q. As you sit here now, do you know whether 3 those other possible effects exist? 4 A. I don't know. I haven't seen the work that 5 was done. 6 Q. You did not do any independent cost of 7 money work in this proceeding, did you? 8 A. No, I did not. 9 Q. In short, all you have done is suggest that 10 if US West is bound by a particular cost of money, 11 that AirTouch should also be bound by a particular 12 cost of money; is that fair to say? 13 A. No. 14 Q. Do you believe that AirTouch should be 15 required to use the 9.63 percent that US West is 16 required to use? 17 A. I'm not sure about that. The issue that 18 comes to me with this, and it's kind of an 19 interesting -- in a sense, a dilemma, perhaps for the 20 Commission. The approach, as I understand it, that 21 Dr. Zepp used to determine the cost of money is 22 nearly identical to the approach used by US West in 23 advocating its forward looking costs for a forward 24 looking TELRIC study. That methodology was not 25 adopted by the Washington Commission. It wasn't that 00499 1 there was a number that wasn't adopted; the 2 methodology wasn't adopted. Now it's being proposed 3 for AirTouch. 4 I think it's an interesting question. 5 Should the Commission adopt that methodology for 6 AirTouch when it effectively rejected that 7 methodology for US West, both of them being forward 8 looking cost proposals. I myself, I haven't really 9 come out where that is, where the Commission should 10 be. I don't have a recommendation. What I do 11 believe, and what I said in the summary, was that the 12 Commission should be consistent in its application of 13 TELRIC principles. 14 What we're trying to do here is mimic a 15 competitive environment, and we're doing it through a 16 very extraordinary effort. One of the things we're 17 trying to do with cost of money is figure out what is 18 the right cost of money, what is the cost of creating 19 and financing a forward looking network, what's the 20 right cost of that. 21 The Commission's made some initial 22 decisions in a very long proceeding, I think it's 23 taken over two years, and what I heard Mr. Reynolds 24 say this morning was that we still don't have a final 25 answer. We have to wait for a couple months for 00500 1 that. And it wasn't everyone's costs; it was, as I 2 understand it, US West and GTE that were primarily 3 the parties whose costs were being looked at. I 4 think it's a very difficult answer. 5 Q. And you just don't have an opinion one way 6 or the other? 7 A. Not at this time, no. 8 Q. Maybe in the closing briefs, huh? You 9 would accept that, as a general proposition, cost of 10 money rises as risk factor rises? 11 A. That's what the textbooks say, yes. 12 Q. Is that what Jerry Thompson says? 13 A. To me, the way I look at investments, it 14 does have something to do with risk. I don't know 15 that I would say I would rely all my investments or 16 retirement plans or whatever on a beta factor. I 17 think the market sometimes is somewhat irrational. 18 I've seen some stocks like -- well, there's a local 19 stock here, Amazon.com, that -- I don't know what its 20 beta is, but its stock has done very well. 21 Q. Do you recall -- 22 A. I don't think that there's a simple answer 23 to it. That's my short answer. 24 Q. That was your short answer? 25 A. The last sentence was the short part. 00501 1 Q. Do you recall in your testimony during your 2 deposition that you were able to provide an even 3 shorter answer? Do you recall that I asked you the 4 question, "As a general proposition, cost of money 5 rises as risk factor rises; correct?" Do you recall 6 that your answer was, "Yes"? 7 A. Yes, I also recall we were trying to keep 8 that deposition as short as possible, so Mr. Devaney 9 could catch an airplane. 10 Q. Are you saying you didn't give me complete 11 answers during your deposition? 12 A. I would say that that was -- in general, I 13 was giving you the first part of the answer, that 14 that's what the textbooks say. That is the classic 15 -- and I don't disagree with that. 16 Q. Okay. Are you familiar with the 17 Commission's Docket 950200? 18 A. I don't recognize the docket by the docket 19 number. Maybe if you could tell me which docket it 20 was. 21 Q. Let me just ask you this. Are you familiar 22 with the Commission having, in prior matters, taken 23 the position that the fact that a company is 24 regulated has an impact on risk factor? 25 A. As I understand your question, am I 00502 1 familiar that the Commission has taken that into 2 account? Is that what you're asking? 3 Q. Yes, sir. 4 A. I am familiar with that, yes. 5 Q. Specifically, are you familiar with the 6 Commission's prior finding that, and I'm quoting, 7 "The extent of unregulated markets participated in by 8 the regional holding companies creates a higher level 9 of business risk associated with the total operations 10 of the holding companies, as compared to the 11 regulated telephone operating companies," close 12 quote? 13 A. I think I've heard paraphrases. Can I ask 14 you a question? 15 Q. I don't know how I could say no, Mr. 16 Thompson. 17 A. What was the date of that decision? 18 Q. I apologize for only having an excerpt. 19 A. A year would be close enough. 20 JUDGE BERG: We'll go off the record for a 21 moment. 22 (Discussion off the record.) 23 JUDGE BERG: We'll be back on the record. 24 Mr. Devaney, your lead. 25 MR. DEVANEY: Mr. Keehnel. 00503 1 JUDGE BERG: Excuse me, Mr. Keehnel. Thank 2 you. 3 MR. KEEHNEL: Neither one of us knows who 4 should be insulted by that, Your Honor. 5 JUDGE BERG: That's a compliment to you 6 both. 7 THE WITNESS: I would say that, knowing 8 that it's a 1996 decision, that that would be at the 9 beginning of the Telecom Act implementation. It 10 sounds like it's a quote out of a rate case. 11 Q. I was reading from the same docket, Docket 12 UT-950200. 13 A. Is that a rate case docket? 14 Q. Yes. 15 MS. ANDERL: Your Honor, if we could 16 represent it is the US West general rate case, which 17 was filed in early 1995, and a decision rendered 18 approximately a year later. 19 THE WITNESS: Given that it is a sort of 20 traditional rate case, the traditional way of looking 21 at US West in that kind of environment, and even in 22 that time frame, the '95-'96 time frame, the way they 23 have looked at the company has been a very backward 24 looking. I don't mean that pejoratively. It's 25 looking historically at what the company has been, 00504 1 rather than what the future holds. 2 In a TELRIC environment, we're told that we 3 should be looking on a forward looking basis and what 4 holds for the future, not what has happened in the 5 past. Certainly, US West is becoming less and less a 6 predominant market provider every day. 7 Q. But US West is still a regulated company, 8 is it not? 9 A. Unfortunately, yes. 10 Q. And AirTouch Paging is not a regulated 11 company? 12 A. Fortunately for them, I believe that's 13 true. 14 Q. Are you generally familiar with the docket 15 proceeding that we've referenced, that we've quoted 16 from? 17 A. I'm not specifically familiar with that 18 rate case. I am with rate cases in general. 19 Q. Let's switch gears. Do you criticize 20 AirTouch for not performing a stand-alone study? 21 A. No, I did not. 22 Q. A moment ago, when you said you'd gotten 23 information today, what information were you 24 referring to? 25 A. Well, I think what I must have had in mind 00505 1 was the single sheet of paper. 2 Q. You're talking about Dr. Zepp's adjustments 3 for the out-of-Washington population in RF? 4 A. Yes. 5 Q. Mr. Thompson, you'll recall that I did take 6 your deposition on March 12th in Seattle; correct? 7 A. Yes. 8 Q. And you'll recall I went through a series 9 of questions to try to ascertain at that time 10 precisely what your criticisms were of the results of 11 Dr. Zepp's cost study. Do you recall that? 12 A. Yes, I do. 13 Q. I'm going to quickly go through that with 14 you, try to make sure that the questions you raised, 15 and you'll recall you raised a series of questions 16 and asked for additional information. I want to make 17 sure that the questions you raised have been 18 responded to, information you sought has been 19 received by you. I don't think it will take very 20 long, and I have copies for people track in 21 manuscript forms. Let me take a moment to hand the 22 transcript out. 23 JUDGE BERG: Mr. Keehnel, explain to me 24 once more what we're going to do. 25 MR. KEEHNEL: Your Honor, I'm going to use 00506 1 the deposition to track through some questions, 2 because, frankly, I gave Mr. Thompson an opportunity 3 during his deposition to raise any criticisms or 4 questions that he had. I want to track through that 5 now and make sure that AirTouch followed through and 6 responded to each of those questions. And if there 7 are remaining criticisms, I want to ascertain what 8 they are. 9 I heard a laundry list this morning that 10 went pretty fast in his summary. I frankly think 11 that much of that laundry list disappears if we go 12 item-by-item through the list of criticisms Mr. 13 Thompson had as of the time of his deposition. 14 JUDGE BERG: Well, here's my concern, that 15 the deposition transcript is not an exhibit at this 16 proceeding, so any questioning of this witness as to 17 the extent to which his current testimony either 18 conforms or differs from his deposition transcript 19 will -- while it may reveal to you how his position, 20 analysis, or even his testimony has changed, that 21 that's all it will mean to me, as well. 22 So if that's the whole purpose, is just to 23 use this as a document to ascertain whether his 24 testimony has changed at all from when he was 25 deposed, that's fine, but otherwise, it may be more 00507 1 -- it may be necessary to actually go into that 2 underlying question to give it any relevance to the 3 unresolved issues. 4 MR. KEEHNEL: I understand your question, 5 Your Honor. I think, as I get started here, if I 6 have any success in the approach that I have 7 envisioned, it will allay your -- or answer your 8 question, and I think it will be a productive 9 exercise. Let me get started here. If you find you 10 can't see brake lights, headlights, or turn signals, 11 let me know and I'll try to revamp the format. I 12 thought this will be a way to expedite, given that 13 it's quarter after 4:00 on the second day, and we're 14 not quite halfway through US West's witnesses. 15 JUDGE BERG: That's fine. We share the 16 same concerns. 17 MR. DEVANEY: Mr. Keehnel, I would remind 18 you we designated this deposition, I believe, 19 confidential. 20 MR. KEEHNEL: That's a good point, 21 actually, Mr. Devaney, and I appreciate you reminded 22 me of that. I will try to be sensitive of that as we 23 go through here. 24 JUDGE BERG: Then let me also, then, just 25 confirm with you that -- are you offering this as an 00508 1 exhibit? 2 MR. KEEHNEL: It may be -- it may make 3 sense at the end of this process to also include it 4 as an exhibit for the convenience of the Commission. 5 Indeed that may be a good idea, and if anybody thinks 6 that's a good idea, we can even do that now. I 7 hadn't intended to, just not to overburden the 8 record, but I have no objection doing that. 9 JUDGE BERG: I guess the objection would 10 probably be that of -- the right to object would be 11 that of US West. But since it hasn't been offered at 12 this point in time, why don't you go ahead and 13 proceed, Mr. Keehnel, and we'll cross that bridge 14 when we get to it. 15 MR. KEEHNEL: Let me add one other 16 cautionary note. The designation of the transcript 17 of Mr. Thompson's deposition was confidential at the 18 request of AirTouch, and we will take the risk as we 19 go along here, if information is disclosed that was 20 of a confidential nature, there's nothing in here 21 that's confidential to US West. 22 JUDGE BERG: All right, good. At least 23 that concern is allayed. 24 Q. Mr. Thompson, will you turn to page 62 to 25 start? You'll recall, at the bottom of page 62, I 00509 1 made a representation to you about changes that I 2 believed had been made to a cost study in its revised 3 form. 4 And it turns out my representation to you 5 was in error, because, in addition to the sales tax 6 adjustment and in addition to correcting the 7 inadvertant omission of equipment discounts, there 8 were three other revisions which were made in the 9 process of submitting the revised cost study. 10 Specifically, the items that Mr. Bidmon testified to, 11 the CIT adjustment, the interLATA price adjustment, 12 and an install cost adjustment for some equipment. 13 So I would have to amend the question as I 14 posed it on the 12th in the following way, and then 15 let's see if we have the same answer from you that 16 you provided on the 12th. 17 So accept as fact, and if I'm wrong, I'm 18 wrong, Mr. Thompson. I don't think I am, but accept 19 as fact that the only changes that were made to the 20 cost study and the supplemental study that was 21 provided to you is that the inadvertant omission of 22 some equipment discounts was rectified, a sales tax 23 issue was taken care of in a different way than it 24 had been previously, the CIT adjustment referenced by 25 Mr. Bidmon was made, interLATA cost adjustment was 00510 1 made, and the install cost adjustment was made. 2 Indulging my assumption those are the only 3 changes, are you able to say whether the cost study 4 is so fundamentally flawed in some way, in your 5 opinion, that it does not provide a basis for 6 ascertaining termination costs? And your answer was, 7 "With the assertions you made, taking that, I believe 8 a number of the costs in the study, notwithstanding 9 that I would believe there was some adjustments 10 necessary that form the basis of a cost study, I 11 still believe there may be costs that are not 12 supported in the study. I am not sure of that. But 13 with the proviso that everything was supported, it 14 could form the basis." Is that accurate testimony? 15 A. Yes. I might point out that the operative 16 word there that I am basing my recollection on, what 17 it sounds like to me, too, is the word "could." 18 Q. Okay. 19 A. I use it twice. 20 Q. Okay. Let's follow-up on that. I followed 21 up in your deposition by asking you to tell us, to 22 the best of your knowledge, which items don't have 23 support in the materials that have been provided to 24 you to date. You said there were some. 25 And you followed up on page 64 by saying, 00511 1 in addition to the discounts and sales tax at line 2 five, there are a few other things that didn't appear 3 to be reconcilable to the supporting documentation. 4 I followed to that answer with a question, "And what 5 are those, Mr. Thompson?" Your initial answer was, 6 "I can't think of one offhand. I would have to go 7 through each item to tell you more specifics." Is 8 that accurate testimony? 9 A. Yes. Since I didn't have the document in 10 front of me, I couldn't recall the specifics. 11 Q. Okay. And do you recall that, during the 12 deposition, then, you did pick up the exhibit and go 13 through it and we went through that material and, for 14 some time in your deposition, you pointed out to me 15 problems, questions, et cetera. Do you recall 16 generally that testimony? 17 A. Yes. 18 Q. It's that testimony that I really want to 19 focus on today. And that begins at line 19 of page 20 64. And again, I think this well expedites it, so 21 here we go. 22 JUDGE BERG: Mr. Keehnel, I'm really having 23 problems with this. Number one, I'm having trouble 24 following you. Number two, the fact that essentially 25 the deposition transcript is being read into the 00512 1 record just makes me a little uncomfortable. Even 2 though it may take a little bit longer, I think this 3 is one place where I'm just going to err on the other 4 side. And if your question to this witness is, Has 5 your testimony changed since the time of your 6 deposition, and it hasn't changed, and you want to 7 confirm what that is, that, I think, would cause me 8 less concern. 9 Likewise, if you just wanted to ask him the 10 question fresh and see if there's inconsistency and 11 refer to the deposition to impeach his testimony, you 12 know, that's certainly more traditional. I 13 appreciate your concern about trying to move this 14 along, but I just think I need to step back and put 15 it more in the present tense. 16 MR. KEEHNEL: Part of what I'm endeavoring 17 to do is not impeach the witness, Your Honor, but 18 make sure that we have honored our commitment to 19 answer the questions. And the vehicle I have to do 20 that is the enumerations of the questions and 21 criticisms that were posed by Mr. Thompson. The only 22 place he did that, to my knowledge, comprehensively, 23 was in the context of his deposition. 24 So accepting your recommendation, I am 25 going to move along. I am going to reference some of 00513 1 the pages in the deposition if there's some issue 2 that comes up between Mr. Thompson and me that will 3 most easily be reflected or resolved by reference to 4 the transcript, but understanding your point, I'm 5 going to move along. 6 JUDGE BERG: I know this was an unusual 7 setup, where not only was there rebuttal testimony, 8 but there was supplemental rebuttal testimony. And 9 to the extent there were matters that were discussed 10 in deposition that are not reflected in any of the 11 prefiled testimony, I think it is, you know, 12 certainly appropriate to find a way to work that into 13 this record, but I'm just looking for -- if you need 14 to repeat the question to elicit a similar answer, 15 that seems to me to be a more appropriate way to 16 proceed. 17 MR. KEEHNEL: Mr. Devaney, will you hand 18 Exhibit C-11 to the witness, please? 19 JUDGE BERG: We'll go off the record for a 20 moment here. 21 (Recess taken.) 22 JUDGE BERG: We'll be back on the record. 23 Mr. Keehnel. 24 Q. Mr. Thompson, you had a question at one 25 time about support for line 63 of the cost study. 00514 1 You now understand the support for line 63 of the 2 cost study? 3 A. I learned that information yesterday from 4 Mr. Bidmon. On cross-examination, Mr. Bidmon 5 explained, as I -- I don't know what page it is in 6 his backup, but what he explained was the same 7 question that I asked you on Friday, which was how 8 does this balance sheet-looking piece of paper have 9 anything to do with the number that's in the cost 10 study. And I believe the deposition would reflect 11 that you made some comment as to the fact that you 12 didn't understand that, either. 13 Q. Right. And you heard Mr. Bidmon's 14 testimony on that point now? 15 A. I heard that yesterday when he testified, 16 for the first time. 17 Q. So now do you understand how he got there? 18 A. Yes, sort of. He said he took the number 19 and divided it by 37, I think is what he said. And 20 I'm puzzled by why that should be in the study, as I 21 said, but I understand how the number was derived. 22 Q. Okay. Is it your point you don't 23 understand why it would be divided by 37? 24 A. No, I understand there was -- what I 25 understood Mr. Bidmon to say was there are 37 00515 1 different systems, I think he called them, that 2 utilize that uplink facility in the United States, 3 and so he just did an equal apportionment to which is 4 what appears to be an historical or embedded cost to 5 determine the allocated portion to Washington system. 6 That's what I understood. And that doesn't make 7 sense in a TELRIC study. 8 Q. Because it's based on an embedded cost 9 basis? 10 A. Yes. 11 Q. Why do you assume it's on an embedded cost 12 basis? 13 A. The document has every trapping of a 14 balance sheet report. And again, there wasn't a 15 whole lot of description about it; it was just a 16 single sheet of paper. Thank you. I am handed a 17 document. It's page 23 of the backup. 18 MR. DEVANEY: C-11. 19 THE WITNESS: C-11. It's a handwritten 23 20 at the bottom of the page. It says, AirTouch Balance 21 Sheets Summary, Period Ending 12/31/98. That sounds 22 like a historical accounting report to me. And then 23 the items that I believe he said he divided by 37 was 24 the current month actuals, which also sounds like an 25 accounting. I'm quite familiar with these kinds of 00516 1 reports. That's what it looks like. 2 And then it says transmission and other 3 technical, is a number there; general and 4 administrative; paging terminals -- I'm not sure what 5 that has to do with the CIT uplink -- and what 6 appears to be SIP and accrued assets. 7 Now, accrual is a dead giveaway. I don't 8 think we accrue much in TELRIC studies. But if you 9 add all those up, you get a big number, and he 10 divided that by 37 to get what was in the TELRIC 11 study. 12 Q. On a TELRIC basis, that is, on a forward 13 looking basis, can an historical cost be an accurate 14 prediction of future costs if there's no reason to 15 believe that that cost, on a monthly basis, would 16 change on a forward looking basis? 17 A. I'd say it's possible. I would say, in a 18 lot of cases, it may be unique. 19 Q. On a charge like CIT; i.e., a monthly 20 charge from a third party vendor based on a monthly 21 basis, do you have any reason to believe that the 22 historic and monthly charge would be any different 23 than a forward looking charge? 24 A. That isn't what this represents. That 25 isn't what we're talking about. What we're talking 00517 1 about is an asset. It's some kind of physical 2 equipment. That is true from the balance sheet 3 characterization and so forth. What you just 4 described was a monthly charge of some kind of 5 facility space. 6 Q. Okay. As a general proposition, though, 7 can the embedded cost be the basis for forward 8 looking if the same utilization is expected on a 9 forward looking basis? 10 A. I would allow that it can be. I have seen 11 it. It's something that can be done. But I think 12 you need much more than a balance sheet divided by a 13 number to say that. You need to show me why that is 14 true. And that's one of the characteristics with all 15 of this documentation. There's a number here. It's 16 not explained. The numbers eventually tie with the 17 revised cost study. 18 After I raised the point there's a lot of 19 discrepancies, we got a revised study right at the 20 last minute, less than 24 hours of when I was filing 21 my testimony, which I didn't have time to review. 22 Eventually, a lot of the numbers became reconciled to 23 the supporting documentation, but there is no basis 24 for why these are the right numbers. There isn't a 25 lot of information around it. That's one of the 00518 1 biggest problems I have with it. It hasn't been 2 supported why these are the right numbers to be used. 3 Q. For instance, Mr. Thompson -- actually, 4 bear with me one second. Could you read back Mr. 5 Thompson's answer for us, please? 6 (Record read back.) 7 MR. KEEHNEL: Thank you. 8 Q. In instances, Mr. Thompson, that you still 9 had a lingering question about the support for a 10 particular item -- strike that -- not the support, 11 for an explanation for a particular item, why did you 12 not have your counsel ask Mr. Bidmon during his 13 testimony about those issues? 14 A. Most of the issues that I raised today in 15 my summary were asked by counsel yesterday. 16 Q. In the process of looking at the material 17 which is now C-11, did you look at the business plan 18 that's included? 19 A. Yeah, I think we got that on Tuesday, the 20 night before the hearings, and I did have occasion to 21 look at it. I can't say I studied it. 22 Q. I don't know why you didn't get it till 23 Tuesday. I believe it was sent earlier, but I can't 24 account for the time gap. Have you looked at it in 25 the time you've had it now? 00519 1 A. No, I just answered that question. No, I 2 haven't studied it. I'm looking at it right at the 3 moment. 4 Q. In the last several days, you haven't 5 looked at it? 6 A. No. 7 Q. Was it not included in the material -- was 8 any form of the business plan included in the 9 material that you had available to you at the time of 10 your deposition? 11 A. No. 12 MR. DEVANEY: Counsel, if you'd like, we 13 can stipulate that I received the business plan on 14 Monday afternoon of this week by fax from Mr. Busch. 15 And I provided it to Mr. Thompson when I saw him on 16 Tuesday of this week. 17 MR. KEEHNEL: Okay. 18 MR. DEVANEY: The day after I received the 19 business plan. 20 Q. In the several days since the time that you 21 got the business plan, Mr. Thompson, why have you not 22 looked at it? You just haven't had the time? 23 A. Well, I got it Tuesday. And it wasn't, 24 obviously, the only thing I had to do on Tuesday. 25 There were a lot of things we were working on, not 00520 1 the least of which was my own testimony. But there 2 was no discussion around this, what it represents, 3 what the numbers mean, what the abbreviations are. 4 I'm not sure what all you could do with it. We 5 learned a little bit about it in cross-examination 6 yesterday. Mr. Bidmon -- and I emphasize little, 7 because it appears he doesn't know a lot about it, 8 either, from what I heard him say. 9 JUDGE BERG: I'm going to step in here. I 10 really don't like the way this is going. Let me just 11 say that, Mr. Thompson, to the extent that you 12 haven't had the time to do the job that meets your 13 own personal professional standards, I understand. I 14 think everybody in the room feels the same way. Mr. 15 Keehnel, to the extent that you think that this 16 witness hasn't made the effort that you would have 17 expected him to make in the time that he's had, it's 18 just something that you can make on argument. 19 If he is unable to respond to any 20 substantive question that you ask in a way that meets 21 your expectations, the reason as to why he can't is 22 not near as important as the fact he can't. And you 23 should just make what you can out of that without 24 spending a lot of time looking for explanations. 25 MR. KEEHNEL: Your Honor, just to explain 00521 1 the method to my madness here, I just wanted to 2 ascertain that it wasn't that the witness hadn't 3 received the information or, you know, certain pieces 4 of data were lacking, in which case I would feel 5 badly about that. If it's a temporal issue, we're 6 all under the same temporal pressures. I'm not 7 trying to make the witness to look bad. He hasn't 8 looked bad. I'm just trying to make sure that the 9 reason that he, as he said, has been prevented from 10 doing so isn't something that we could have cured. 11 That's all. 12 JUDGE BERG: Well, you have a stipulation 13 from Mr. Devaney. And I know if we wanted to sit 14 here and debate this, Mr. Devaney would register 15 complaints about the lateness in which it was 16 produced, and then we could go back to the fact that 17 there was other testimony that wasn't provided to you 18 in a reasonable time frame to integrate, and then we 19 could go all the way back to the Telecommunications 20 Act that only gave us 270 days within which for the 21 parties to complete negotiations and for us to come 22 up with a final resolution. And that just is a zero 23 sum gain. 24 To the extent that you want to confirm that 25 this witness' inability to perform any report or to 00522 1 provide any testimony that you would otherwise expect 2 him to that's not based on the absence of 3 information, I think that's legitimate for you to 4 inquire into, as to whether or not, in fact, there 5 was something missing, other than what you had 6 provided, that would prevent a more complete analysis 7 under other circumstances. 8 Q. Please understand, Mr. Thompson, I'm not 9 trying to be critical of your modes, either. I do 10 understand all the time pressures we're under. Let 11 me just ask this. In looking at the business plan 12 the little bit you've been able to look at, have you 13 been able to understand that the growth rates are 14 explained there by the figures for population, 15 population growth, market UIS, market growth rate, 16 AirTouch's market penetration, AirTouch's retail 17 outlets, AirTouch's marketing budget, including sales 18 staff, AirTouch's churn rate, and dollars devoted to 19 lowering churn rate? Have you had a chance to look 20 at any of that? 21 A. Not in any depth. I have read all of the 22 information that's entitled overall market 23 information. I have read that. Frankly, it raises 24 more questions to me than it answers. 25 Q. Mr. Thompson, you said, in general, there 00523 1 were two benchmarks. One is the FCC's statement 2 regarding paging companies. Do you recall that? 3 A. I do. 4 Q. This brings me back to the pithy quote from 5 paragraph 1093 of the First Report and Order, and you 6 quoted it yourself, that there was a "lack of 7 information in the record concerning paging 8 providers' costs to terminate traffic," close quote. 9 How much confidence do you put in the FCC's general 10 comments about LEC's termination costs versus paging 11 termination costs in light of the FCC's own 12 acknowledgement that there was a lack of information 13 in the record on the subject? 14 A. Not as much as I do many things the FCC 15 says in the First Report and Order. 16 Q. You're smiling, but the record's not going 17 to catch that. 18 JUDGE BERG: Oh, I was just smiling, 19 because it sounded like this witness was being asked 20 to give some form of expert legal opinion. 21 MR. KEEHNEL: Actually, Your Honor, it 22 wasn't your smile I was trying to get the record to 23 capture; it was the witness' own wry smile, and I 24 just wanted to flesh that smile out with some -- 25 JUDGE BERG: Pardon my confusion. 00524 1 MR. KEEHNEL: That's all right. 2 Q. Putting the levity aside for a moment, Mr. 3 Thompson, I take it from your smile and your look 4 that your point is that, in light of the FCC's own 5 acknowledgement that it didn't have much data on 6 paging termination costs, you're not putting much 7 weight on the FCC's general statements on that 8 subject, fair to say? 9 A. Let me answer it this way, and I'll be as 10 brief as I can with it. As I pointed out in the 11 testimony, there's very little information that we 12 have to go on with this. We have the comments from 13 the FCC, they've set up a situation that we are 14 living out today, and have been for a number of 15 months here. They said -- the FCC said, along with 16 those comments, that they also planned to have a 17 proceeding to deal with this, and we have yet to see 18 that proceeding take place. If that took place, 19 maybe there would be some more answers to some of the 20 questions that we're trying to wrestle out. 21 One of the big problems we have in this 22 room is that we're trying to do something that has 23 been very -- very few people have tried to do before. 24 We have the Cook arbitration case. Only one of 25 those. That proceeding took several months, close to 00525 1 a year, as I recall. We're trying to do it in a 2 matter of days or weeks, perhaps, at best. 3 I think that there's very little 4 information available and it's very difficult for all 5 of us to come to these conclusions and reach these 6 enormous problems that we have to solve. 7 Now, so what do we have to go on. What are 8 those grips that we have that we can tie onto and 9 look at and see whether things look reasonable. One 10 of them is what the FCC said. They were provided 11 information from the paging industry. They quote 12 that information. They give us the insights to their 13 belief on what should occur, and that was the basis 14 for why paging companies were not part of the 15 reciprocal proxy arrangement. 16 So can I put a lot of faith in it? Perhaps 17 I shouldn't, but I don't have a whole lot else to 18 latch onto. 19 Q. So for lack of something else, you resort 20 to that, essentially? 21 A. Yes. 22 Q. Despite the fact that we all know the FCC 23 didn't have very much information to go on, fair to 24 say? 25 A. They gave us that clue in that quote that I 00526 1 mentioned. 2 Q. You don't have an opinion as to whether 3 Cook came up with an appropriate determination of 4 costs; isn't that right? Isn't that what you said in 5 your deposition? 6 A. I believe so. 7 Q. I know you didn't use this as a benchmark, 8 but in passing, you mentioned AirTouch's agreement 9 with GTE. Do you know anything about the 10 negotiations that led up to the GTE agreement? 11 A. No, I don't. All I did was read the filing 12 that AirTouch made, and it was one of the things I 13 noted. I thought it was unique because it was a 14 Washington number. Now, I don't know the basis of 15 the number, but it's a Washington agreement. 16 Q. You don't know anything about any 17 trade-offs that were made in the negotiations? 18 A. No, I do not. 19 Q. You didn't study the commercial terms; 20 i.e., the nonmonetary terms? 21 A. No, none. 22 Q. In general, have you looked at the prices 23 that paging carriers have been reaching with wire 24 line carriers for interconnection for termination 25 compensation across the country? 00527 1 A. I think there was a number in the filing 2 here for PageNet that I saw, as well, but I don't -- 3 I don't recall right now what the number was. 4 Q. Given how little you've had in the way of 5 benchmarks, Cook, FCC -- you said you don't really 6 have an opinion on Cook; FCC, we don't put much 7 weight on -- why have you not taken the time -- and 8 I'm not being critical of your time, but why have you 9 not focused your energy on looking at benchmarks in 10 the other paging agreements that have been 11 negotiated? 12 A. Frankly, in my job, that isn't something 13 that I would normally do. As I mentioned, my 14 organization deals with costs. The whole world of 15 interconnection agreements and keeping track of all 16 of those nationwide isn't something that I would 17 normally do, and I don't know that it's something I 18 necessarily need to do. 19 Q. Do you give absolutely no weight whatsoever 20 -- I mean, you mentioned GTE, obviously, so you must 21 attach some importance to it, else you wouldn't have 22 mentioned it? 23 A. I just mentioned it. It's mentioned in 24 passing, trying to give the Commission some 25 information around some benchmarks. Again, we've got 00528 1 the Cook number, we've got the expectation the FCC 2 has, another number that you filed was the GTE 3 contract rate. I'm trying to give as much 4 information as I can. 5 What it looks like to me, in every one of 6 those cases, though, that the proposed numbers that 7 AirTouch has in this filing are extraordinarily large 8 compared to all of those. 9 Q. Okay. 10 A. Not just one, but all of them. 11 Q. Well, how do you know what AirTouch's 12 proposed number is? 13 A. It's the number that you proposed with your 14 cost study. 15 Q. That's a reflection of cost. How do you 16 know what amount of relief AirTouch intends to ask 17 for in the arbitration? 18 A. Well, I'm making an assumption. The 19 assumption is that the cost study that AirTouch filed 20 are the costs that it expects to -- that US West 21 should pay. 22 Q. I see, I see. 23 A. At least the amounts that are not the 24 transit amounts, or 93 percent of these numbers, 25 given the advocacy. Now, that is an assumption. 00529 1 I'll tell you, I'm not the only one that has that 2 assumption. 3 Q. Well, as long as we're looking at the GTE 4 notation or the GTE rate as something that you 5 thought the Commission might find interesting, let me 6 just get your reaction to some of the other -- maybe 7 the easiest way to do this is just to mark the 8 document, so you can see the document. 9 JUDGE BERG: We're going to go off the 10 record. 11 (Discussion off the record.) 12 JUDGE BERG: Mr. Keehnel, just a moment 13 ago, you were making the point that this witness 14 didn't have the background in the particulars of the 15 GTE case or the GTE/AirTouch agreement to know what 16 the trade-offs were that derived at a particular 17 percentage point, and the reason why you were doing 18 that was to dispute the reliability of that agreement 19 as any kind of benchmark in this proceeding. Are you 20 now proposing to present other agreements that would 21 be similarly unreliable from -- 22 MR. KEEHNEL: No, Your Honor. My concern 23 is this. The witness, in his testimony, is obviously 24 focused on a particular document because it has a 25 very low rate. Rather than just leaving the record 00530 1 in that distorted state, I thought, to balance the 2 teeter-totter just a bit, we ought to bring to the 3 witness' attention facts which I'm sure he'll 4 acknowledge that he knows from his activities in the 5 industry of the other kinds of rates that are being 6 entered into on negotiated bases across the country. 7 Not just with page data. There are a couple of 8 agreements that PageNet has reached, but also there 9 are agreements involving Ameritech, and all of those 10 have rates substantially above the GTE rate. 11 I just didn't want to leave the Commission 12 with the misimpression that somehow GTE is silently 13 an additional benchmark, in addition to the witness' 14 two that he's listed. It's that simple. 15 MR. DEVANEY: Your Honor, we object on a 16 couple of grounds. Number one is procedural. It's 17 one I'll quickly blow by. But we had an agreement 18 that any cross exhibits were to be distributed before 19 cross. And this is one that's coming in well into 20 the cross, and I think we should have seen it before 21 the cross. 22 Again, setting that aside, though, to ask 23 Mr. Thompson to go through agreements entered into by 24 other parties he's never seen before, that have 25 nothing to do with what's in evidence in this 00531 1 proceeding isn't fair. To try to introduce this 2 exhibit through Mr. Thompson, who's never seen it 3 before, who doesn't know anything about the 4 agreement, isn't proper. 5 If they desire to introduce this kind of 6 evidence in their case, they should have done it in 7 an affirmative case through their own witnesses, and 8 they didn't. To try to do it now through Mr. 9 Thompson is improper. 10 MR. KEEHNEL: Your Honor, all I can say is 11 it wasn't us who asked questions about GTE. Mr. 12 Thompson, in his own testimony, brought up the GTE 13 agreement. He's the one who opened the subject. I 14 wasn't originally intending to mark these as 15 exhibits, but just reference his general knowledge. 16 But now that we've gotten into the subject 17 of GTE and I now know how he's using it in his 18 testimony, having fleshed it out, I do feel it's 19 incumbent upon me to make an offer of two agreements 20 that we're familiar with that are really 21 contemporary, the PageNet series of agreements and 22 the Ameritech series of agreements, just to balance 23 that, to see if the witness has any knowledge. If he 24 doesn't, I'll move on. Indeed, I think I'm going to 25 be concluded. 00532 1 MR. DEVANEY: Your Honor, the other 2 objection I'd like to register is the GTE agreement 3 is with AirTouch. And are these agreements with 4 AirTouch that you're introducing or are they separate 5 -- 6 MR. KEEHNEL: No, but they're agreements 7 which the parties have spent hundreds of thousands of 8 dollars litigating issues, so they are agreements. 9 MR. DEVANEY: I object on relevance 10 grounds, in addition to the points I made before, 11 because these agreements don't even involve AirTouch. 12 JUDGE BERG: Mr. Keehnel, I'm one hundred 13 percent confident that if you were sitting in my seat 14 and you had to walk away from this hearing room and 15 make a decision as to what appropriate rates to set, 16 that you would not be looking to those agreements for 17 guidance. 18 To the extent that these agreements -- the 19 existence of these agreements may further underline 20 either the merits or the demerits of this witness 21 relying on the GTE agreement in his testimony, I 22 think that it's not relevant. I think you've made 23 your point regarding the GTE agreement. 24 If we were going to look to other 25 agreements for any kind of guidance at all, certainly 00533 1 I would be looking for agreements that either 2 AirTouch was a party to or US West was a party to. 3 And these agreements, to the extent that 4 they're being offered to support the AirTouch 5 position, are just not the kind of evidence that a 6 reasonable person would rely upon in the ordinary 7 course of their affairs. 8 To the extent that these are documents that 9 are otherwise intended to call this particular 10 witness' testimony or opinions into further question, 11 I just don't think they're relevant. I think you've 12 done that with GTE. 13 MR. KEEHNEL: Your Honor, just to protect the 14 record, I'll make a 30-second offer of proof. I 15 think I'll ask to have marked the two documents that 16 I was going to use. 17 JUDGE BERG: Sure. 18 MR. KEEHNEL: And we'll just mark those as 19 the next two exhibit numbers, and I'll hand out 20 copies to anybody who wants copies. 21 JUDGE BERG: Sure. No offer of proof is 22 necessary. What we'll do, Mr. Keehnel -- I 23 appreciate your suggestion. We really should, to the 24 extent that you're offering exhibits, we should mark 25 them, and then the record will just show that 00534 1 admission is denied. And then we're going to move 2 on. 3 MR. KEEHNEL: Thank you, Your Honor. Just 4 to identify for the record -- do you have handy the 5 next exhibit number, Your Honor? 6 JUDGE BERG: It would be Exhibit Number 44 7 and 45. 8 MR. KEEHNEL: Your Honor, what we would 9 have offered as Exhibit Number 44 are the agreements 10 involving Bell Atlantic and PageNet, Your Honor, for 11 the states of -- well, Washington, D.C. area, 12 Massachusetts, Maine, New Hampshire, Rhode Island, 13 Virginia, Vermont and West Virginia. 14 And the Ameritech agreement, Your Honor, 15 with PageNet, for Illinois, Ohio, Indiana and 16 Wisconsin. And I have a copy marked for the record 17 file of those two exhibit numbers. 18 JUDGE BERG: Okay, great. Thank you very 19 much. And please provide opposing counsel with a 20 copy, as well. 21 Q. Mr. Thompson, in collecting information, 22 making data requests, trying to get your hands around 23 AirTouch's costs in the same way that AirTouch has 24 been trying to get its hands around its costs for 25 purposes of the study, have you noted any just 00535 1 absolute refusal to cooperate, have you noted any 2 attitude that AirTouch doesn't want to assist you in 3 the process? Understanding that you haven't always 4 gotten information in the time you've wanted to, do 5 you believe that AirTouch has attempted to be 6 cooperative? 7 A. I wouldn't fault them for not being 8 cooperative; I would fault them for being very slow. 9 Q. And do you think that's, in part, because 10 of the tremendous time frame or the tremendous time 11 pressures that have been pressed upon the parties 12 through the wisdom or lack of wisdom of the FCC? 13 A. I would acknowledge that had probably a lot 14 to do with it. 15 MR. KEEHNEL: That's all I have. 16 JUDGE BERG: All right. Thank you, Mr. 17 Keehnel. Mr. Griffith, any questions? 18 MR. GRIFFITH: Yes. 19 E X A M I N A T I O N 20 BY MR. GRIFFITH: 21 Q. I believe you handed out a couple of 22 exhibits at the beginning of your testimony, C-42 and 23 C-43? 24 A. Yes, I have those. 25 Q. Is there any correlation between these two 00536 1 exhibits, that is, is there a number on one page that 2 could be transposed to the other page, or were they 3 arrived at using different methods? 4 A. The latter. 5 Q. Now, I wonder if you could step through 6 some of the numbers on C-43? 7 A. C-43, I attempted to replicate the 8 calculation that is in the cost docket, and I 9 referenced the paragraphs 316 through 320. Dr. Zepp, 10 yesterday, I'll acknowledge, had some -- an 11 alternative calculation to this, so you might look at 12 that, as well, in all fairness. 13 What the first column represents is the 14 methodology, down to line seven, that is sort of a 15 combination between what was done in the cost docket 16 for the switching costs in that proceeding, performed 17 on the calculation numbers, as proposed by AirTouch 18 in their revised cost study. 19 So if you take the Glenayre equipment, 20 which AirTouch says is a switch, if you took that 21 investment and used the same calculation in a 22 methodology sense, you would get these kinds of 23 numbers. So I don't want to quote the numbers, 24 because it's a confidential document, but if you take 25 the first number on line one and divide by the number 00537 1 of pages, you get the line three. 2 And I noticed there's a typo here. It says 3 one times two. It's supposed to be one divided by 4 two. And I apologize if that gave you any trouble 5 doing the math. That results in the capital 6 investment per page. 7 The Eighth Supplemental Order had an annual 8 charge factor that I believe and I -- subject to 9 check, but I believe this was a number that Dr. Gabel 10 got from some work that the FCC Staff did. But, 11 again, I would need to check that, but I believe 12 that's what the source is for that. 13 By multiplying the number -- by the way, 14 that factor is .2295, and that's in the order. You 15 multiply that number times the capital investment per 16 page and you get a cost per page on line five. Then 17 you need to convert that to a per-minute basis. I 18 used the same holding times that were proposed by 19 AirTouch, and got a cost per minute for that. 20 Lines eight through eleven are based, as I 21 say in the notes, on US West's advocacy. This would 22 correspond to the document that Mark Reynolds talked 23 about this morning. The cost on line seven does not 24 include, at least as the way US West looks at its own 25 costs -- and I have given AirTouch the benefit of the 00538 1 doubt by applying that same advocacy to their cost, 2 giving them the 4.05 relationship for common costs 3 and then what's termed as a markup of 18 percent, 4 getting to the number on line eleven. 5 I have performed that same calculation 6 based on the investment for the Glenayre equipment 7 that was developed on the C-42 exhibit, which is a 8 voice mail-excluded investment. 9 Q. Okay. So on the number of pages per 10 minute, does that exclude the voice messages, voice 11 mail? 12 A. No, it doesn't. 13 Q. It does not, okay. 14 A. No. And the investment related to voice 15 mail as a terminal cost probably would not be 16 excluded, either. 17 Q. I have a question on the first two items on 18 the list there. The Glenayre equipment has one 19 number under the AirTouch revised study, and then 20 there's a different one under US West-suggested 21 study. 22 A. Right. 23 Q. What was done to arrive at the new value 24 there? 25 A. I disagreed with the methodology that Mr. 00539 1 Bidmon used to exclude the voice mail capability of 2 the Glenayre switch. If you look at US West's 3 switches or GTE's or any of those traditional ILEC 4 companies, the voice mail capability is not inherent 5 in the switch. It -- well, for US West, for example, 6 we've used an OcTel piece of equipment that's 7 auxiliary to the switch, so it's not part of the 8 switch cost. So it's already been excluded. 9 You've heard some discussion about a 10 stand-alone cost study. If you did a stand-alone 11 cost study, in other words, a Glenayre switch that 12 did not have those capabilities, then that would be a 13 stand-alone study. 14 Now, as Dr. Zepp talked about, he thought 15 that that wasn't the right approach to use. And I'm 16 not disagreeing with that, but the issue that that 17 raises, then, is you have to exclude those costs 18 somehow, because those are enhanced service costs and 19 not part of the costs that should be in the costs for 20 termination. And AirTouch apparently agrees with 21 that, as well, because they tried to do, and they did 22 do, an exclusion. I just disagreed with their 23 exclusion, because it appeared to me to be very 24 arbitrary. 25 What I used was the data that AirTouch gave 00540 1 me when I asked them what the cost drivers were. 2 What were the things that caused the cost to be 3 incurred. And then, when I got that response, I used 4 that information as I thought it should be used, to 5 exclude the proportion of the voice mail equipment 6 that should be excluded because it's an enhanced 7 service. And that is the result that I have here. 8 That number in the right-hand column is 9 lower than the number on the left-hand column on line 10 one and represents my view of what a properly 11 excluded cost for voice mail should be. 12 Q. Now, on the number of pages, there was a 13 spreadsheet that was distributed yesterday that had 14 number of pages by year? 15 A. Yes. 16 Q. Which year was used for that? 17 A. I used the final year, and I'd point out 18 that's the issue -- one of the issues, I believe, Dr. 19 Zepp took issue with. I think it's the right 20 approach. He took the first year and contrasted it 21 with the approach I took. I think I still believe 22 it's the right thing to do, where you take the final 23 year, where you are looking at the fully-deployed 24 investment and you're giving them the advantage of 25 all the growth that that investment was designed to 00541 1 accommodate. 2 So I'm matching up all of the demand in the 3 final year with the equipment in the final year, and 4 I still believe that's a proper match. 5 MR. GRIFFITH: Okay, thank you. 6 JUDGE BERG: Ms. Rendahl, any questions? 7 MS. RENDAHL: No. 8 JUDGE BERG: Mr. Payne, any questions? 9 MR. PAYNE: No, I don't have any. 10 JUDGE BERG: Mr. Devaney, any redirect? 11 MR. DEVANEY: Just a few. Thank you, Your 12 Honor. 13 R E D I R E C T E X A M I N A T I O N 14 BY MR. DEVANEY: 15 Q. Mr. Thompson, with respect to Exhibit C-43, 16 the sensitivity analysis you conducted based on the 17 WUTC's Eighth Supplemental Order, I just want to be 18 clear. Is this the rate -- I know we went over this 19 before, but I want the record to be clear. Is this 20 the rate you're recommending for adoption in this 21 proceeding? 22 A. No. 23 Q. And when you did this analysis, did you 24 base it on the investment that AirTouch has included 25 in its study? 00542 1 A. Yes, the first column is the investment 2 used in the revised study that it submitted, and then 3 the right-hand column is the numbers that I adjusted. 4 Q. Okay. And you also used the demand that 5 AirTouch has in its cost study? 6 A. Yes, that's line two. 7 Q. And am I correct in understanding, from 8 earlier testimony, that you don't agree with either 9 the investment or the demand included in AirTouch's 10 cost study? 11 A. I think there's a lot of unexplained issues 12 around the way they've designed the switch and the 13 demand. 14 Q. Okay. Mr. Keehnel, during his 15 cross-examination of you, read from your deposition, 16 I think. It said something to the effect of -- I 17 quoted you as saying you believe that the costs in 18 the AirTouch cost study could form the basis of a 19 cost study. Do you recall that? 20 A. Yes. 21 Q. Given what you've learned as you've sat 22 here in the last two days, has your view on whether 23 the costs included in that study can form the basis 24 for a study changed at all? 25 A. No. What I said in the summary is, in my 00543 1 recommendation, that what they have supplied could 2 form the basis. What I conclude is that it doesn't 3 form the basis. 4 Q. Okay. 5 A. So given the answer to a hypothetical 6 versus what I'd recommend to the Commission, I'd say 7 the answer to the hypothetical's probably the same, 8 but my conclusion is different. 9 MR. DEVANEY: Thank you, Mr. Thompson. 10 That's all I have. 11 JUDGE BERG: Mr. Keehnel. 12 R E C R O S S - E X A M I N A T I O N 13 BY MR. KEEHNEL: 14 Q. Mr. Thompson, in choosing year seven for 15 number of pages in Exhibit C-43, you've ensured that 16 the costs are higher than they would be otherwise if 17 you'd chosen any other year; i.e., one through six; 18 correct? 19 A. I wouldn't characterize it that way. What 20 I've done is matched the demand that the switch was 21 designed for with the equipment that was in place to 22 serve that demand. 23 Q. If you had chosen any other year, the 24 number of pages would have been smaller and the costs 25 would have been higher; correct? 00544 1 A. Costs would have been higher because there 2 was excess capacity in the switch until the point 3 that I've synchronized the demand and the cost. 4 Q. So the answer is yes? 5 A. I suppose, the way you phrased it, the 6 answer is yes. 7 Q. Okay. You've only chosen here one of all 8 of the columns of costs that are included in 9 AirTouch's cost study; is that correct? 10 A. With regard to which exhibit? Can you 11 reference it? 12 Q. I'm still on C-43. 13 A. C-43, yes. And the reason was, among 14 others, one reason is that we have a calculation out 15 of the cost docket that can be used for the Glenayre 16 equipment. In that AirTouch deems their Glenayre 17 equipment a switch, it seemed to me it would be a 18 logical question, well, what would happen if you 19 applied the principles of the cost docket or 20 switching costs to what AirTouch believes is their 21 switch. So I attempted to replicate that 22 calculation. 23 Q. You made the determination to exclude all 24 of the other columns? 25 A. The other columns don't apply, because the 00545 1 switch, as AirTouch advocates it, is the Glenayre 2 equipment. An RF isn't a switch. 3 MR. KEEHNEL: Okay. I don't have any other 4 questions. 5 JUDGE BERG: All right. Any other 6 questions here? 7 MR. PAYNE: No. 8 JUDGE BERG: All right. At this time, 9 you're excused, Mr. Thompson. Have a safe trip home. 10 THE WITNESS: Thank you very much. 11 JUDGE BERG: All right. I need to take 12 just a short break to make a phone call. I'll want 13 to have exhibits for the next witness. That would be 14 -- 15 MR. DEVANEY: Mr. Peters. 16 JUDGE BERG: -- Mr. Peters marked and Mr. 17 Peters ready to go at 5:30. 18 MR. DEVANEY: We will be ready to go. 19 JUDGE BERG: Let's return these to Mr. 20 Busch and Mr. Keehnel. If they're going to be 21 offered as exhibits at some later time here, we'll 22 just redistribute them. 23 MR. BUSCH: Very good, Your Honor. 24 JUDGE BERG: All right. 25 (Recess taken.) 00546 1 Whereupon. 2 EDWARD A. PETERS, 3 having been first duly sworn by Judge Berg, was 4 called as a witness herein and was examined and 5 testified as follows: 6 JUDGE BERG: Thank you, sir. Before we 7 start on the record, I will indicate that the direct 8 testimony of Mr. Peters has been marked as Exhibit 9 T-46, and the rebuttal testimony of Mr. Peters has 10 been marked as Exhibit RT-47. 11 MR. DEVANEY: Thank you. 12 D I R E C T E X A M I N A T I O N 13 BY MR. DEVANEY: 14 Q. Mr. Peters, we are now in the position that 15 many of us have been in before, it's not one we like, 16 and that is to be saying good afternoon or good 17 evening, and I'll say good afternoon. 18 But would you please verify that you filed 19 both direct and rebuttal testimony in this case? 20 A. I did. 21 Q. And are the answers you provided in your 22 direct and rebuttal testimony true and correct, to 23 the best of your knowledge? 24 A. They are. 25 Q. With that, would you please proceed with a 00547 1 summary of your presentation and would you begin by 2 giving some background as to your experience and the 3 nature of the expertise you bring to this proceeding? 4 A. My name is Edward A. Peters. I am a 5 manager for US West in the interconnection planning 6 organization in our network department. My 7 experience has been 27 years in the wire line 8 telecommunications business, all of that time in 9 engineering, planning and operations of the network. 10 During that time, I have done both 11 engineering and planning of our outside plant 12 network, which connects our customers to our central 13 offices. I have also designed interoffice facility 14 transmission equipment, and during the last several 15 years, since the Telecommunications Act was passed, I 16 have worked in various capacities related to the 17 competitive markets. 18 That has to do with both negotiating 19 contracts between US West and competitive LECs with 20 respect to technical issues, which encompasses all 21 interconnection issues with respect to the networks 22 that exchange traffic, the operator services, 23 directory assistance networks, the E-911 networks and 24 so forth. 25 I have also been involved in strategy 00548 1 planning with respect to competitive entrants and 2 their interconnection with US West. As a 3 transmission equipment engineer, I read and studied 4 technical manuals to understand the equipment and how 5 the equipment should be engineered and designed and 6 built into a network, and also designed trunk 7 facilities between wire centers. 8 In the course of this experience, I've had 9 a number of training classes and I have worked 10 extensively in the areas interconnection, switching, 11 and so forth. 12 My summary today has to do with helping the 13 Commission with a full understanding of the network 14 as it exists for US West and AirTouch, how they 15 differ and how they compare, how traffic flows over 16 the network, how traffic gets from the US West 17 network to the AirTouch network, and what the 18 implications of that technical understanding is with 19 respect to the issues that AirTouch has brought 20 before the Commission for resolution. 21 I feel that those are very important to 22 understand this. In fact, Mr. Payne yesterday asked 23 the question of Mr. Bidmon whether or not it's 24 important whether or not the AirTouch equipment is a 25 switch. I think that is a critical question, and I 00549 1 think that is true because the FCC has indicated that 2 reciprocal compensation is dependent on the 3 termination and transport of traffic. 4 And I think that that has a very explicit 5 meaning, as defined by the FCC. I think that they 6 have identified that that terminology applies to 7 switching and has to do with switching traffic and 8 delivering traffic to another carrier for the 9 termination of that traffic on their network. 10 And understanding these concepts, I 11 believe, is very important to this Commission in the 12 determinations of how the disputed issues ought to be 13 resolved. 14 Now, I'm not here to identify, from a legal 15 perspective, what the legal determinations are. I am 16 here to talk about what my understanding is as to the 17 fact that the FCC has identified that switching is a 18 key element of this and transport is a key element 19 and what that means from a network perspective. 20 Switches in the public switch telephone 21 network take callers, users of the network, and 22 connect them to other lines so that circuits can be 23 completed. 24 The definition of switching, as the FCC has 25 recognized it, recognizes that connections need to be 00550 1 made and that circuits need to be established. They 2 have given a definition of switching that is related 3 to circuit switching. This is the type of switching 4 that takes place in the public switch telephone 5 network currently. 6 That switching either connects a line to a 7 trunk, which connects to other switches, and holds 8 that circuit open during the length of the telephone 9 call, or if it's a called party, the switch that 10 serves that called party brings a call or accepts a 11 call from another switch and connects it from the 12 trunk to the line. 13 It's important to understand that switching 14 has to do with the routing of traffic onto the 15 interoffice facilities between the switches, and the 16 ability of a switch to identify where that traffic 17 needs to go and to route it to the correct switch so 18 a circuit can be completed. 19 It's important to understand that that 20 function of transport uses certain types of equipment 21 that we refer to as multiplexing equipment and 22 terminating equipment. A terminal and a multiplexer 23 works to take many conversations, many circuits, and 24 multiplex them onto a facility. 25 And I think the best way to understand this 00551 1 is to give an example. A circuit can be over a pair 2 of wires, but by the use of electronics such as 3 multiplexing, you can put many circuits over that 4 pair of wires. For instance, what is normally called 5 a T-1 or a DS1 circuit may carry 24 circuits over 6 four copper wires. Twenty-eight DS1s can be 7 multiplexed into a DS3, and DS3s can be put onto 8 fiberoptic systems. 9 So this aspect of combining traffic is 10 transport. And it's important, because when I get 11 into talking about the AirTouch network, I will be 12 demonstrating that their equipment is transport 13 equipment and not switching equipment. And so it's 14 important that that concept be understood, and that's 15 why I've spent a few moments talking about it. 16 It's also important to understand that, 17 from a network perspective, that the AirTouch Paging 18 equipment looks to the US West network. We're not 19 talking about policy; we're talking strictly from a 20 technical perspective. 21 Their paging equipment looks to US West 22 like the type of equipment that will complete a call. 23 And in fact, the call is completed at their 24 equipment. Now, it's important to understand that 25 equipment that is used to complete calls is normally 00552 1 referred to as customer premise equipment. That 2 equipment receives information and it generates 3 information and routes it over the network. 4 I think the easiest example of that is a 5 fax machine. I suppose we've all had times when 6 we've misdialed, we grabbed the wrong number and we 7 tried to call somebody and we actually called their 8 fax number. And when we do that, we hear the beeps 9 and the squeals and the tones and all of those 10 signals. That is the fax machine sending information 11 back over the line to you, thinking that you're 12 another fax machine trying to make a connection to 13 set up a protocol so that your fax machine and that 14 fax machine is synchronized, and that fax machine is 15 able to receive the information. 16 So in doing so, those tones represent 17 information saying here I am, I'm ready to operate, 18 I'm ready to receive the fax, and by the way, here's 19 the protocol that I'm going to be using, here's the 20 speed that I can accept the data, send it at that 21 speed. So information goes back and forth. 22 And that happens when US West sends a call 23 to the AirTouch Paging equipment. The paging 24 equipment recognizes the calls coming in, it goes off 25 line, it may send information back to the switch that 00553 1 says, I'm ready, send the data, make the connection, 2 let the person talk to me. Our customer on our 3 network, or any other carrier's network, will 4 communicate with the pager by leaving a message. 5 That may be by sending information to the paging 6 equipment in the form of tones on a phone or it may 7 be by leaving a voice message, but that information 8 is then recorded by the paging equipment and the call 9 is terminated, and the US West customer is no longer 10 online with the paging equipment. 11 The AirTouch Paging equipment then takes 12 that recorded information and consolidates a number 13 of messages together and routes it over to the CIT. 14 It captures these messages and codes it, sends it out 15 over the network to the CIT. This function is a 16 transport function. It's the same thing that happens 17 in the public switch network of taking a lot of calls 18 coming in that has to go to the same destination, 19 packaging them together in a transport protocol, and 20 sending it to the CIT. 21 The CIT also is a transport mechanism. It 22 will take the calls that are coming in, set it up in 23 a batch of paging messages that needs to go to be 24 sent out over their network, which is to their 25 satellite and back down to the transmitters, and it 00554 1 does that by batching this information up and sending 2 it out in a shot to the satellite, and the satellite 3 amplifies it and returns it back to the ground to the 4 various transmitters. 5 Again, I emphasize that this is a transport 6 functionality; it is not a functionality that's 7 associated with switching. Switching is putting 8 lines together, making a new circuit so that there is 9 a talk path. And the CIT, nor the paging terminal 10 does that function. 11 It's important to understand that in a 12 normal, competitive environment, when a competitive 13 LEC or a cellular company or a PCS company comes in 14 and competes for services, that the calls that go to 15 them from the US West network goes to them in the 16 same protocol that is used by US West that's used 17 throughout the public switch telephone network. 18 The call can be routed to their end office 19 switch and connected to their customer so that the 20 call flows directly to that customer. 21 In the case of AirTouch, they do not use 22 the same protocols as the public switch telephone 23 network. They take the calls, they record them, they 24 change it to a different protocol structure, a frame 25 relay protocol structure, repackage the message, and 00555 1 send it off to their paging units. That is not the 2 message that US West sent them; it's a replication of 3 that message, and our customer is not online with 4 them at that time. And it's important to understand 5 this difference. 6 Mr. Bidmon, in his testimony, identified 7 the fact that tandem switches connects trunks to 8 trunks. This is important to understand, that a 9 tandem switch is like a hub a wheel. All of the end 10 offices in a given geographic area connect to the 11 tandem switch. And any subscriber on any network in 12 that area can contact any other subscriber by being 13 routed through the tandem. 14 The AirTouch Paging terminal does not serve 15 that the function, and it doesn't serve that function 16 because it's not connected to every other end office. 17 In fact, as far as I know, it's connected to no other 18 offices, other than US West's offices. Cellular 19 companies don't go directly to it, other competitive 20 LECs don't go to it. 21 AirTouch uses the US West tandem switch to 22 get access to those other companies. They do not go 23 to those companies directly. And indeed, the tandem 24 switch functionality could not exist in the paging 25 terminal, because the paging terminal, as Mr. Bidmon 00556 1 testified to yesterday, is not capable of connecting 2 trunks to trunks on a real-time basis. 3 If that functionality was substituted for a 4 tandem switch in the public switch network, it would 5 bring the public switch network down completely. It 6 doesn't make sense that a piece of equipment that has 7 a time delay or records a message and then connects 8 to something else and sends that message on would be 9 meaningful in any way, shape, or form as a switching 10 device. And again, as I've illustrated earlier, it's 11 not a switching device; it is a transport device. 12 By the same token, the CIT is not an end 13 office, it does not do switching, and certainly, in 14 Mr. Bidmon's testimony, he testifies that an end 15 office is on the public switch network and it 16 connects trunks to lines. If that is truly an end 17 office, I would submit to you that US West ought to 18 be able to route traffic directly to their end 19 office, which it's not capable of doing, simply 20 because that device is not a device that is 21 compatible with the public switch network. 22 Q. Mr. Peters, when you said that device, were 23 you referring to the CIT? 24 A. Yes, I was, to the CIT. Due to the hour, 25 I'm not going to go through that part of my summary 00557 1 to any further detail, but there are a couple other 2 issues I would like to touch upon. 3 One is the grade of service trunks that 4 AirTouch has brought as an issue to the Commission. 5 I feel that the only dispute on this is really 6 between the wording of whether or not the trunks 7 should be engineered to a P.O1 grade of service or 8 whether US West should be required to always provide 9 a P.01 grade of service. 10 It is US West's opinion that the industry 11 standard, which is that trunks are engineered to a 12 grade of service, is what is appropriate in this 13 situation. US West is willing to engineer to that 14 grade of service, but the actual grade of service 15 will fluctuate, based on the type of calls that are 16 being generated. For instance, Mother's Day, 17 everyone's calling their mother, and I don't know 18 that that would necessarily affect a paging network, 19 but we certainly see that in our own network. 20 And so these kind of abnormalities we 21 certainly can't engineer to. We certainly can't 22 engineer to things that we're not aware of. And we 23 are dependent on the data and the quality of the data 24 that we receive from AirTouch, are more than willing 25 to cooperate with them and to design the network to 00558 1 not block, but we certainly don't want to be put in a 2 position where we're held to a standard of absolutely 3 never exceeding a standard. 4 We want -- we think that it's appropriate 5 that AirTouch and other carriers all be put on the 6 same footing and that AirTouch not insist on 7 something that puts them in a more favorable 8 situation than other carriers. 9 With respect to single point of 10 interconnection, I think that is an important issue. 11 It's an important issue because today AirTouch gets a 12 local point of presence in a lot of different 13 locations. That's important to them, as it is to 14 many businesses. Businesses who are located in one 15 community, for instance, in Seattle, and they want to 16 have a point of presence in another community, such 17 as Olympia, oftentimes get either a local number that 18 they're willing to pay for, and they will pay the 19 toll charges so people can call that local number, 20 but the call actually goes over the network to their 21 home location, which, in my example, is Seattle. 22 Or they may buy an 800 number so that their 23 users that they want to have call them get the 24 opportunity to call them over a toll-free 25 arrangement. 00559 1 If AirTouch wants that arrangement, we 2 certainly are willing to comply. We have complied 3 with that in the past. We simply don't feel that 4 it's appropriate for US West to pay the costs of 5 doing that. 6 AirTouch has given testimony, both in 7 written testimony and in or oral testimony, regarding 8 the rating and routing technology. I think that that 9 is not an easy concept to understand, even for those 10 of us in the industry, but let me try to make that a 11 little bit simpler to understand. 12 Basically, to use my analogy or my example, 13 AirTouch would like customers in Olympia to be able 14 to call them in Seattle and have it treated as if it 15 was a local call in Olympia for the purposes of the 16 people calling them, but have US West route it to 17 Seattle and hand it off to them in Seattle and treat 18 it as if it was a local call to AirTouch in Seattle. 19 Bottom line is that US West would pay the 20 cost of those facilities and receive no revenues. We 21 would not be allowed to charge a toll call to the 22 calling party and we would not be able to charge 23 AirTouch for the use of that facility. We simply 24 think that that is inappropriate. 25 AirTouch has implied that they are burdened 00560 1 with the fact that US West customers call to paging 2 customers, and that puts a burden on their network. 3 And yet, they are saying, but, at the same time, we 4 want free calling opportunities for people who do 5 want to call us, because people are not as inclined 6 to call our paging customers unless they can do it on 7 a toll-free basis. 8 We certainly don't think it's appropriate 9 for US West to have to provide that toll-free basis 10 to increase the number of calls going to them while 11 paying for the facility that got the call to them and 12 also paying the reciprocal comp rates on that call, 13 as they would have us do. 14 And I think, at this point, it's important 15 to point out that we are talking about two different 16 costs here. We are talking about the costs of the 17 facility, and that is different than the reciprocal 18 comp rates that could be established in this hearing 19 and that could require US West to pay AirTouch the 20 reciprocal comp rates. 21 The cost of the facility is what I'm 22 talking about, since I'm in the network organization, 23 and that is something that we would have to build and 24 provide. If AirTouch wants to have that capability, 25 we're certainly willing to work with them. We have 00561 1 private line services, hub mux arrangements. There's 2 different ways, from a technical perspective, that 3 they can get a local point of presence in various 4 communities, although we think that the local -- the 5 definition of local and the definition of toll should 6 not be changed for their use. We think that it's 7 appropriate that all carriers and all customers have 8 the same definition of what a local area is and what 9 a toll area is. 10 We don't think it's appropriate that people 11 in Olympia can call AirTouch in Seattle for free, and 12 that US West pays for that cost, while the same 13 customer wanting to call a different customer or a 14 different business or a different competitive carrier 15 in Seattle would have to pay for that call. That 16 certainly doesn't seem to be reasonable and fair, 17 from our perspective. 18 If we had to do that, there would be costs 19 for both the transport facilities and possibly 20 switching costs to redesign our network to implement 21 either a rating or routing solution or to simply take 22 trunks and dedicate them to AirTouch, or we would 23 have to change our billing structure and our toll 24 network to not charge a toll charge when the toll 25 network was used for calls going to AirTouch. All of 00562 1 those solutions would cause US West to incur new 2 costs. 3 I believe that that sufficiently summarizes 4 what is the most critical, and due to the time 5 constraints, I'm not going to expand my summary to 6 any further issues. 7 MR. DEVANEY: Thank you, Mr. Peters. Mr. 8 Peters is available for cross-examination. 9 JUDGE BERG: All right. Mr. Keehnel, 10 before you begin cross-examination, are there any 11 objections to the admission of Exhibits T-46 and 12 RT-47? 13 MR. KEEHNEL: No, Your Honor, other than 14 just, again, to note our general contention that 15 switching testimony is irrelevant and there's a lot 16 of legal testimony, but we think it should be 17 admitted for whatever value it has. 18 JUDGE BERG: Thank you. Those exhibits 19 will be admitted into the record. Go ahead, Mr. 20 Keehnel. 21 MR. KEEHNEL: Your Honor, may I borrow a 22 clean copy of Exhibit 28 that was used with Ms. 23 Malone? I've marked on mine. 24 JUDGE BERG: I have one, and maybe two 25 clean copies. 00563 1 (Discussion off the record.) 2 JUDGE BERG: We'll be back on the record. 3 C R O S S - E X A M I N A T I O N 4 BY MR. KEEHNEL: 5 Q. Good evening, Mr. Peters. 6 A. Hello. 7 Q. Exhibit 28 is a document which has an 8 uncompleted matrix, which we attempted to have Ms. 9 Malone fill in, as we thought she was the possessor 10 of the knowledge. Do you have the knowledge 11 necessary to fill in the matrix? 12 A. I think I could help you on that. 13 Q. Okay. Let me just quickly go down one 14 column and then the other, and we'll just fill in. 15 As a matter of fact, you could even fill it in in 16 your own handwriting. Do you mind doing that? 17 A. I will do that, although we will need to 18 discuss each one of these. 19 Q. Okay. Let's have you fill them in. 20 Actually, let's do it this way. 21 JUDGE BERG: Well, we want to keep one 22 clean copy. If we're going to have him fill in, we 23 could always admit that as a separate exhibit, but 24 I'd be concerned unless the parties were of a like 25 mind of -- 00564 1 MR. KEEHNEL: Your Honor, we haven't 2 offered Exhibit 28. We were proposing to offer it in 3 the form once it's completed; i.e., filled in. So we 4 would never offer it in the blank form; we only want 5 to offer it if the data can be collected, and it 6 sounds like Mr. Peters can do that for us. 7 JUDGE BERG: All right. Let's go ahead and 8 proceed on that basis and see where we go. 9 Q. Would you mind if I pulled a chair up so I 10 could see, as you're writing, what you're writing? 11 A. That's fine. 12 JUDGE BERG: Here's what we'll do, Mr. 13 Devaney. Mr. Peters, would you go ahead, if you can, 14 fill in that document to the best of your ability, 15 then I'm going to make copies of it and distribute 16 it, and then we'll all talk from that copy of the 17 document. 18 THE WITNESS: I don't believe I can fill 19 this in ahead of time, because there's too many 20 variables that have not been identified here for me 21 to fill it in. 22 MR. KEEHNEL: We will try to help you. 23 JUDGE BERG: All right. 24 Q. Indeed, what I was thinking, as we went 25 through each box, you could tell us if you have 00565 1 inquiries that I and Mr. Busch could answer for you, 2 and then maybe we could fill it in on that basis. 3 Starting with the transit column, going 4 from top to bottom, if a call comes from a Seattle US 5 West customer to a Seattle AirTouch customer, is that 6 a transit call? 7 A. A call that originates on the US West 8 network would not be a transit call, so by 9 definition, this would not be a transit call. 10 Q. Could you just put in your own handwriting 11 a no in that box, please? How about if it's in 12 Olympia? 13 A. Well, let's finish this example, because 14 you have another column over here marked tandems. 15 Q. Right. 16 A. And if you want that filled in, we need to 17 talk, because we haven't defined how the call gets 18 between the two numbers. 19 Q. Do you think it would be best, then, to go 20 to the tandem column instead of first completing the 21 transit column? 22 A. Yes. 23 Q. Okay. Let's do it that way, then. What 24 information do you need to know to fill in the tandem 25 box for the call in which the Seattle US West 00566 1 customer calls to a Seattle AirTouch customer? 2 A. How is your network configured and how does 3 it interconnect with the US West network? 4 MR. BUSCH: Let's assume that there are 5 Type Two interconnections in Seattle for all of the 6 call-to destinations and there are connections 7 between US West and AirTouch at the Seattle Main and 8 the Seattle toll tandems -- or the switches, I'm 9 sorry. 10 THE WITNESS: I'm confused by what you just 11 said, because you said to the call-to, which I assume 12 would be AirTouch in every case. 13 MR. BUSCH: Call to the AirTouch customer. 14 Is that what you're questioning? 15 THE WITNESS: Yeah, you said let's assume 16 it's Type Two-A connections for the call-to, which 17 says to me the call-to party would always be the 18 AirTouch customer, right, in this scenario, because 19 call-to is AirTouch in this column. 20 MR. BUSCH: That's correct. 21 THE WITNESS: So do you want to assume the 22 call always goes over a Type Two-A facility? 23 MR. BUSCH: That's correct. 24 THE WITNESS: Okay. Then that's easy. 25 Tandem, yes. 00567 1 Q. Would you insert yes in that column? 2 A. Now, understand that you could have other 3 connections where the answer would be no. 4 Q. Why don't you explain. 5 A. If you have a Type One connection to an end 6 office and a phone number for your customer 7 associated with that end office, the call would go to 8 that end office over the Type One trunk and would not 9 go through the tandem. 10 Q. Thank you for your explanation. 11 MR. BUSCH: But for our purposes, we're 12 going to assume Type Two interconnections. 13 THE WITNESS: Okay. 14 MR. BUSCH: Could you identify for me -- 15 MR. DEVANEY: Could we indicate that on the 16 document, though, so there's no confusion? I think, 17 if we want this to be an accurate representation -- 18 THE WITNESS: What I will do is put 19 asterisks by the yes in the tandem column and I will 20 write down here "based only on the scenario given." 21 MR. DEVANEY: Which is? 22 THE WITNESS: Is that sufficient? 23 MR. DEVANEY: Type Two? 24 THE WITNESS: Which is using a Type Two-A 25 connection. 00568 1 JUDGE BERG: I think I like this type of 2 cooperative effort. 3 THE WITNESS: To the Seattle local tandem. 4 Okay. 5 Q. Okay. Do you mind if I show this to my 6 colleague for one second? 7 A. That's fine. 8 MR. BUSCH: Would it be easier for you, Mr. 9 Peters, if in the tandem column, we would designate 10 which tandem for each call type? 11 THE WITNESS: That would be helpful, yes. 12 MR. BUSCH: Feel free to put a tandem type 13 in there, then. 14 THE WITNESS: Okay. 15 MR. BUSCH: So do you wish to modify your 16 footnote? 17 THE WITNESS: In this case, the footnote is 18 the information I would put in that box, so we would 19 leave it the way it is. 20 JUDGE BERG: Let's go off the record 21 momentarily. 22 (Discussion off the record.) 23 JUDGE BERG: Let's go back on the record 24 momentarily. Mr. Keehnel, off the record there has 25 just been some discussion about the complexity of 00569 1 making the determination of how to fill in the tandem 2 box on Exhibit 28. 3 And at this point in time, I think, before 4 we get into that complex joint effort, I would just 5 ask if you could help me by explaining the importance 6 of this box to the disputed issues that need to be 7 resolved. 8 MR. KEEHNEL: May I defer to Mr. Busch? 9 JUDGE BERG: Yes, sir. 10 MR. BUSCH: Thank you. One of the issues 11 is the percent of transit traffic. And AirTouch's 12 measurements reflecting seven percent of the traffic 13 coming from the toll tandem requires us to define 14 what type of traffic, in fact, comes through the toll 15 tandem, as opposed to the local tandem or some other 16 type of switch. 17 So what we are asking Mr. Peters to do is 18 identify for us, for each of these examples, what the 19 serving tandem would be if there is a tandem serving 20 that call. 21 JUDGE BERG: And then, if I understand you, 22 Mr. Busch, this would then somehow be projected back 23 onto the other data that has been developed by 24 AirTouch to either validate the number it's 25 advocating or to adjust it as part of a best final 00570 1 offer? 2 MR. BUSCH: That's correct, Your Honor. 3 JUDGE BERG: Mr. Devaney, I see you leaning 4 forward. 5 MR. DEVANEY: Thank you, Your Honor. Your 6 Honor, this is a complex exercise we're going 7 through, and I'm going to ask for something that's a 8 little unusual. I think this is one where, if we 9 have, in addition to Mr. Peters, Mr. Reynolds join 10 Mr. Peters and both work their way through this 11 document, because I think they can bring information 12 to it that's relevant and will help fill in the 13 blanks. So I'm going to ask that we do that unusual 14 step, of having both Mr. Reynolds and Mr. Peters talk 15 through this document. 16 THE WITNESS: And if I could, Your Honor, 17 already looking at the second scenario here, I will 18 come up with three or four different answers just for 19 that one scenario. Obviously, I cannot be held 20 accountable in this exercise to anticipate every 21 particular scenario that might exist, and so I would 22 like to have it on the record that this is not to be 23 used to purport that it's an all-inclusive answer; 24 only that it represents some of the ways that a call 25 could be routed between these locations and AirTouch. 00571 1 MR. DEVANEY: And Your Honor, Mr. Peters' 2 comment just triggers in my mind an objection that I 3 really do want to get on the record, that this is 4 precisely the type of thing that should be brought up 5 in prefiled testimony, because it is very complex, 6 and it's the type of thing that we ought to have an 7 opportunity to respond to. 8 Ideally, this would have been proffered in 9 some form of prefiled testimony and we would rebut 10 it, either in prefiled testimony or at least in some 11 way that allows us to prepare for it and respond to 12 it. But to do this on the spot right now really puts 13 us in a difficult spot. So I object to the exercise 14 in its entirety. If it's going to go forward, I 15 would ask that both Mr. Reynolds and Mr. Peters be 16 permitted to respond to the questions relating to it. 17 JUDGE BERG: I think it does have some 18 merit, and while it may have been something to come 19 out on either deposition or some other format, these 20 are US West's experts, and this is information that 21 may be beyond the AirTouch experts to develop. 22 I think that, in any situation like this, 23 it's understood that the testifying witnesses are 24 only testifying to, you know, the best of their 25 ability and present understanding, and to the extent 00572 1 that they're actually asked, Is this it, is there 2 nothing else out there, then the witness would have 3 an opportunity to, of course, explain whatever 4 limitations there were. For example, the very thing 5 that Mr. Peters has just stated. 6 And I understand, Mr. Peters, your 7 reluctance to get painted into a corner on this. And 8 if, in fact, you're asked a question that might 9 otherwise put you in that position, then you just 10 respond to it to the best of your ability. But at 11 this point in time, we're just going to go forward 12 and try and answer it as best as can be answered. 13 I am going to set up a panel for this 14 portion of the testimony consisting of both Mr. 15 Peters and Mr. Reynolds to respond to the inquiry, 16 but I would probably be most comfortable, Mr. 17 Keehnel, if you were asking questions from the 18 counsel table and Mr. Reynolds and Mr. Peters were 19 working together at the witness table. 20 MR. KEEHNEL: May I make a suggestion, Your 21 Honor? 22 JUDGE BERG: Yes, sir. 23 MR. KEEHNEL: Could we try to take five or 24 ten minutes off the record and caucus with the US 25 West people, counsel and witnesses, and see if 00573 1 there's an easy way, if we're able to provide them 2 certain assumptions, that may limit the complexity 3 that will allow us to fill in the matrix without 4 going till the wee hours? I think it might be worth 5 it trying to make the effort. 6 MR. DEVANEY: Your Honor, I'm very 7 cognizant of Mr. Peters' statement earlier. This 8 ought to be done on the record because there are so 9 many variables. I really think that we ought to work 10 this out in a way that's transcribed, so that if it's 11 used by AirTouch for any purpose, the entire context 12 is understood. So I'm not comfortable going off the 13 record with this. 14 JUDGE BERG: What I hear Mr. Keehnel 15 telling me is there may be some context that they 16 really aren't concerned about or there may be some 17 arrangements that they aren't concerned about. 18 MR. KEEHNEL: I mean, I could be incorrect, 19 Your Honor, but I think there might be a way to limit 20 the complexity to allay some of Mr. Peters' concerns 21 about capturing every permutation and also responding 22 to Mr. Reynolds' comment a moment ago about a 23 particular permutation. I may be wrong, but I would 24 just suggest we try the exercise. If it fails, we go 25 back on the record and complete it in a more 00574 1 laborious fashion. 2 JUDGE BERG: Yes, Mr. Peters. 3 THE WITNESS: I think there is another way 4 we could get to the same information, and that is a 5 line of questions that would ask under what 6 situations would it be transit traffic and under what 7 situations would it not, and I think follow-up 8 questions would help narrow the scope as to what 9 transit traffic is and when it is transit and when 10 it's not, without using this matrix. 11 MR. KEEHNEL: I renew my request to give it 12 a shot off the record. 13 JUDGE BERG: I understand. I don't see any 14 reason why the parties can't work off the record to 15 do this. If it's to the extent that there is some 16 development or some extra characteristics to any 17 given scenario that needs to be identified, I think 18 it can be done off the record, as well as on the 19 record, and so I would like to just go off the record 20 for about five minutes and have the parties attempt 21 to do that. 22 And if, in fact, it proves to be 23 unmanageable, then we'll come back on the record and 24 work it out. So we'll be off the record at this 25 time. 00575 1 (Recess taken.) 2 JUDGE BERG: We'll be back on the record. 3 For the next part of the cross-examination, there has 4 been a panel established between Mr. Peters and Mr. 5 Reynolds to respond to certain questions by Mr. Busch 6 relating to what has been marked as Exhibit 48, a 7 transit traffic matrix. 8 I'll indicate that the parties have 9 stipulated that Exhibit 48 will be admitted into the 10 record, and it is so admitted at this time. Mr. 11 Busch, go right ahead. 12 MR. BUSCH: Thank you. 13 C R O S S - E X A M I N A T I O N 14 BY MR. BUSCH: 15 Q. Gentlemen, during the break, we asked you 16 to put together the transit traffic matrix, which is 17 Exhibit 48, and you have graciously put together a 18 series of telephone calls from certain destinations 19 that are to be delivered to an AirTouch Paging 20 customer through Seattle through a Type Two 21 interconnection, okay. 22 And we've asked you to identify for each 23 call scenario whether that particular example would 24 be a transit traffic call or a nontransit traffic 25 call, and whether it comes through the local tandem, 00576 1 access tandem, or some other type of facility. 2 What I'd like you to do is describe for us 3 your abbreviations and, to the extent you feel like 4 you need to qualify your answers, feel free to do so 5 at this point. 6 A. (BY MR. REYNOLDS) I'll start off. We 7 have, first, the originating and terminating point of 8 the call on Exhibit 48, and then two columns called 9 Transit and one called Nontransit, and what we listed 10 under each specific call are the possibilities for a 11 transit call and the possibilities for a nontransit 12 call. 13 In the Seattle to Seattle example, starting 14 with the US West customer and terminating to AirTouch 15 in Seattle, the only transit possibility is one of a 16 dial tone -- or a dial-around possibility, where a 17 customer dials a carrier access code, which typically 18 starts with the digits 10-10, and then dials the 19 AirTouch number after they reached the carrier's dial 20 tone and completes to the carrier's POP back through 21 US West, and then to AirTouch. And that would be a 22 transit call. It would be billed as a long distance 23 call, even though it's a local distance. 24 So it is probably a rarity, but it is a 25 possibility for transit. The more likely possibility 00577 1 is a direct-dialed call, either seven or ten digits, 2 depending on whether the switch has been upgraded. 3 Most of Seattle local calling area requires ten-digit 4 calling now, so it would be ten digits. It would be 5 completed nontransit over US West's network, routed 6 through the local tandem, and terminated to AirTouch. 7 Q. Excuse me for interrupting, but just to 8 confirm your abbreviations, the AT abbreviation 9 refers to the access tandem? 10 A. That's correct, and LT would be the local 11 tandem. 12 Q. Thank you. 13 MR. DEVANEY: Mr. Reynolds, would it make 14 sense to have originating over the first column on 15 the left-hand side and write terminating in the 16 second column? 17 THE WITNESS: I think that would be fine. 18 That would be a good designation, sure. 19 JUDGE BERG: All right. I'm going to just 20 hand-write that in on the exhibits, the copies of the 21 exhibits that I have for the record. So we'll set up 22 two additional columns or column headings. We will 23 add -- the first column will have a heading that will 24 say originating. 25 MS. ANDERL: How about from and to? 00578 1 MR. DEVANEY: From and to, so we don't have 2 any legal significance attached to the terms. Is 3 that okay? 4 MR. BUSCH: No objection. 5 JUDGE BERG: Sure, it is. That's fine. 6 We'll set the first column as "from" and the second 7 column as "to." Thank you, Mr. Devaney. 8 MR. REYNOLDS: Should I continue on? 9 MR. BUSCH: Yes. 10 MR. REYNOLDS: The second scenario would be 11 what ordinarily constitutes a long distance call from 12 Olympia to Seattle, once again originating with a US 13 West customer. The options under a transit scenario 14 would be, once again, dial-around, and it's a much 15 more likely option now, because many carriers are 16 promoting dial-around, 10-10-321, et cetera. And so 17 that would be routed to the carrier, it would be 18 routed back to US West's access tandem, and 19 terminated to AirTouch, and that would be a transit 20 call. 21 The customer could be presubscribed to a 22 particular carrier, and it would be routed to the 23 carrier, the same as the dial-around call, back to US 24 West through the access tandem and onto AirTouch. 25 And the final scenario is probably not too 00579 1 likely a scenario, but AirTouch could contract with a 2 CLEC to provide a foreign exchange circuit between 3 Olympia and Seattle and the CLEC switch in Seattle 4 and then route it back through US West to terminate 5 to AirTouch. The more likely scenario there, of 6 course, would be for the CLEC to have a direct 7 connection directly to AirTouch. So that's kind of a 8 remote possibility, but it is a possibility, so we 9 put it down. 10 On the nontransit side, it still is within 11 the calling area where US West could provide long 12 distance service, and so we listed US West's toll 13 would be intraLATA toll, one plus the area code, and 14 that would be routed through the access tandem and 15 terminated to AirTouch. 16 We listed that as nontransit. We 17 understand there's maybe some issues associated with 18 how that's designated in the wireless or paging 19 world. We looked at a contract between -- I think it 20 was GTE and AirTouch, where they actually designate 21 transit calls as being, you know, all non-local calls 22 and local third party. And so I just wanted to add 23 that to the record so it's complete. For US West, 24 because no third party was involved, we would not 25 call that a transit call, and that's why Mr. Peters 00580 1 and I designated that as nontransit. 2 The other possibility would be for a direct 3 connection between AirTouch and the local calling 4 area in Olympia so that no toll charge is applied to 5 that particular customer, and that would also be 6 nontransit. 7 The next scenario was one in the same local 8 calling area. For example, Redmond to Seattle would 9 be in the Seattle local calling area. However, it 10 could involve another local telephone company, an 11 incumbent local telephone company like GTE, it could 12 involve a competitive provider, for example, like 13 Electric Lightwave, or a wireless provider. 14 And in those scenarios, the customers have 15 options associated with dial-around, much the same 16 way as the first example, probably a remote 17 possibility that they would do that, because it is a 18 local call. Or if it was local direct, in this 19 scenario, it's transit, because it originates on a 20 third party's network and it's routed to US West's 21 local tandem and then terminated to AirTouch, and 22 that is a transit call. 23 And there is no nontransit scenario here, 24 because in every circumstance, it's originated by a 25 third party. And so it would always transit the US 00581 1 West network. 2 Q. Very good. In order to save time -- 3 A. Well, the last scenario is the same for all 4 the rest, so I mean, that will really speed it up. 5 So I'll just walk through the Denver-Seattle, and 6 that applies for New York-Seattle, it applies for 7 Spokane-Seattle. And that's a situation of an 8 interLATA, whether it's interstate or intrastate. 9 The options are dial-around, and it's 10 routed through the access tandem; presubscribe to a 11 carrier, and it's routed directly to that carrier, 12 terminated to US West's access tandem and then on to 13 AirTouch; and then a third party foreign exchange 14 line that -- and that would only be a scenario if it 15 were routed back through US West's access tandem. 16 Once again, the more likely possibility is it would 17 be directly connected to AirTouch. So New York and 18 Seattle, Spokane to Seattle are the same. 19 Q. One final question. When you refer to the 20 access tandem, is it also sometimes referred to as a 21 toll tandem? 22 A. Yes, it is. For US West, those are one and 23 the same. 24 MR. BUSCH: Very good, thank you. 25 MR. PETERS: The only other comment, if I 00582 1 could, when Mark and I put this together in the short 2 break that we had, we tried to anticipate the various 3 scenarios that might exist. We certainly want to 4 leave the possibility open that we may have missed 5 something and that this accuracy is somewhat based on 6 the limited time that we had to put it together. We 7 believe it to be correct, though. 8 MR. BUSCH: Very good. Thank you. 9 JUDGE BERG: Any other questions of this 10 panel? 11 MR. BUSCH: Not of the panel, nor of the 12 exhibit. 13 MR. KEEHNEL: Half the panel can now be 14 dismissed. 15 JUDGE BERG: All right. Mr. Reynolds, 16 thank you. 17 MR. REYNOLDS: You're welcome. 18 MR. DEVANEY: I'm sorry, one last thing on 19 this exhibit, Exhibit 48. Can we make it clear on 20 the record what I think is correct, that this assumes 21 a Type Two connection? 22 MR. BUSCH: We mentioned that. That was on 23 the record. 24 MR. PETERS: Yes. 25 MR. DEVANEY: Was that on the record? 00583 1 MR. PETERS: I believe it was, but we did 2 assume a Type Two connection. 3 MR. DEVANEY: Okay. 4 C R O S S - E X A M I N A T I O N (CONTINUING) 5 BY MR. KEEHNEL: 6 Q. Mr. Peters, in working with Mr. Reynolds on 7 the panel, you've shown a very keen knowledge of US 8 West's network, and let me just turn to the paging 9 side now. Have you ever designed a paging system? 10 A. I have not. 11 Q. Have you ever prepared a cost study for a 12 paging system? 13 A. I have not. 14 Q. Prior to this time, have you ever assisted 15 in the critique of a cost study for a paging carrier? 16 A. No. 17 Q. Have you ever worked for a paging company? 18 A. No. 19 Q. Would you agree with me that the FCC is a 20 somewhat sophisticated entity with respect to paging? 21 A. I don't know that I could render an opinion 22 on their sophistication. 23 Q. Okay. Accept for me, just as an assumption 24 -- we'll use hypotheticals, so that will make it 25 easier for us. 00584 1 A. Okay. 2 Q. Accept my assumption that, as this 3 Arbitrator ruled in the AT&T/US West matter, that the 4 FCC is a somewhat sophisticated entity with respect 5 to paging. Indulge in another assumption. Assume 6 that the FCC has determined that, based upon the 7 functions that paging companies actually perform, 8 that paging companies are entitled to termination 9 compensation, okay? 10 A. Assuming that as a hypothetical? 11 Q. Yes. 12 A. Okay. 13 Q. I'm asking you just to indulge these 14 assumptions. Now, let me state the hypothetical 15 fully. Assuming that the FCC, as a sophisticated 16 entity with respect to paging, has determined that 17 based upon the functions the paging companies 18 actually perform, paging companies are entitled to 19 termination compensation. If all those assumptions 20 were actually true, what would be the relevance of 21 your testimony in this matter about switches? 22 MR. DEVANEY: Your Honor, I'll object. It 23 calls for a legal conclusion and it's laden with 24 legal conclusions. 25 JUDGE BERG: Mr. Keehnel, you don't get to 00585 1 say that witnesses should not testify about legal 2 matters because it's beyond their expertise and then 3 pose hypotheticals that assume they have that legal 4 expertise to reach an expert conclusion. 5 I understand that that is an argument that 6 AirTouch intends to make, but I don't think you're 7 going to be able to put those words into this 8 witness' mouth. 9 But if you want to say something else to 10 try and convince me why this witness should be 11 interpreting his testimony in the context of legal 12 assumptions, I'm willing to give you just a little 13 bit more room to explain it, but I just don't think 14 that it's going to be helpful to me. At least I 15 don't think it's going to be any more helpful than an 16 argument that you would make on behalf of your own 17 client. 18 MR. KEEHNEL: And Your Honor, it may not be 19 helpful to you. I have to look at the next step down 20 the road, which is that it may go to the full 21 Commission on the record. And I also have to indulge 22 in the possibility that it will go to the United 23 States District Court for the Western District of 24 Washington, and I have to indulge in another 25 possibility, in that it could go to the Ninth Circuit 00586 1 Court of Appeals. 2 Given that the Commission has determined 3 that the -- what I think is generally 4 legally-oriented testimony, this witness will not be 5 stricken, but will remain part of the record. In 6 order to complete the record, I think this nicely 7 ties up that testimony, as long as the first part of 8 the -- what I think is legally-oriented testimony 9 remains on the record. 10 JUDGE BERG: I'm not going to require this 11 witness to answer any questions that are based upon 12 assumptions of the law which he is otherwise not 13 qualified to make. 14 I feel that the Commissioners are a lot 15 smarter than I am to begin with, and whether you 16 achieve your objectives with me or not, you're going 17 to have three other very, very bright people to 18 consider your arguments before it goes to a district 19 court judge or an appellate bench, where they may not 20 be as familiar with the technical issues that are 21 involved here. And I just think that this isn't 22 productive. 23 I understand that it would look nice if, in 24 fact, a US West witness would in some way connect the 25 dots for you, but I just don't think that it's 00587 1 appropriate to ask this witness, who has demonstrated 2 considerable expertise in the engineering area, to 3 take a position on behalf of US West that's based 4 upon legal assumptions that he otherwise is not 5 qualified to address. 6 MR. KEEHNEL: I have no more questions for 7 this witness, Your Honor. 8 JUDGE BERG: Thank you. 9 MS. ANDERL: Your Honor. 10 JUDGE BERG: Before you go, Mr. Peters, 11 though, we're going to consult here. We may have 12 some questions. Yes, Ms. Anderl. 13 MS. ANDERL: I have it on good authority 14 and I'd like it placed on the record that Gonzaga 15 beat Florida 73-72. My witness told me, and he's 16 still under oath. 17 JUDGE BERG: We'll be off the record. 18 (Discussion off the record.) 19 JUDGE BERG: We'll be back on the record. 20 Mr. Payne and Mr. Griffith, I'll check with you to 21 see if you have any questions. 22 E X A M I N A T I O N 23 BY MR. PAYNE: 24 Q. Mr. Peters, on page ten of your direct 25 testimony, in response to a question on 00588 1 functionalities of a switch, that you use a reference 2 to the Code of Federal Regulations, and you have a 3 definition of switching. And I would like to turn or 4 refer to that on page ten of your testimony. 5 A. I have it. 6 Q. Is this your understanding of what the 7 definition of switching is, the FCC's definition? 8 A. It is. 9 Q. I have a copy of the CFR, and I will let 10 you take a look at this. May I approach the witness? 11 JUDGE BERG: Yes, and what section? 12 MR. PAYNE: We're looking at Section 13 51.309(c), discussing switching capability. 14 Q. Do you see that? 15 A. Yes, I do. 16 Q. And would you look at the top paragraph 17 that starts that entire section? 18 A. I'm looking at that. 19 Q. And could you read that, please? 20 A. An incumbent LEC shall provide 21 nondiscriminatory access in accordance with Section 22 51.311 and Section 251(c)(3) of the act to the 23 following network elements on an unbundled basis to 24 any requesting telecommunications carrier for the 25 provision of a telecommunications service. 00589 1 Q. And would you agree, then, that what the 2 FCC is discussing there is the requirements of what 3 an ILEC must conform to in terms of providing 4 interconnections, and that it is discussing, in that 5 subparagraph D, is discussing the switching 6 capability as -- is it C or D? 7 MR. KEEHNEL: C. 8 MR. PAYNE: Is it C? Excuse me. 9 Q. That is just discussing the switching 10 capability that the ILEC must provide on an 11 interconnection basis? 12 A. I would agree that the definition of 13 switching is a part of the provision here that 14 unbundled elements must be provided, and the 15 description that was provided was in accordance with 16 the unbundled switching element that had to be 17 provided, but it also provides a description of what 18 switching is. 19 Q. But that, in itself, is not a definition of 20 switching, but a definition, if you will, of the 21 switching capability that an ILEC must provide to an 22 interconnector. And I'm not trying to play words 23 here, but I just want to try to clarify that. 24 A. Well, it seems to me a fine distinction. 25 It seems to me that this is a description of what 00590 1 switching is and what must be unbundled, which seems 2 to me to also be a description of what switching is. 3 Q. Very well. 4 A. Could I add to that answer? It seems to me 5 the FCC was attempting to identify, from a local 6 telecommunications perspective, the opening up of the 7 network to competition, and certainly to the extent 8 that switching is a part of local telecommunication 9 services, it seems to me that they were defining what 10 switching is so that it could be made available to 11 competitors. 12 Q. If you'll indulge me here, I'm in another 13 section here, and I will let you read this, but I 14 will read it off first. This is Section 51.701, 15 paragraph D. And it says here, Termination. For 16 purposes of this subpart, termination is the 17 switching of local telecommunications traffic at the 18 terminating carrier's end office switch or equivalent 19 facility and delivery of such traffic to the called 20 party's premises. 21 And I'll let you look at that. It's easier 22 to read it for yourself. 23 A. I'm sorry, which section am I looking for 24 here? 25 Q. You're looking at 51.701, paragraph D. 00591 1 A. Okay. And this is under the title Scope of 2 Transport and Termination Pricing Rules? 3 Q. That's correct. And I just wanted you to 4 read that. And do you accept that as a part of the 5 requirements for transport and termination of traffic 6 and what constitutes reciprocal compensation? 7 JUDGE BERG: All right. Mr. Peters, I'm 8 going to just interject and say that the bench is not 9 going to ask you to make any interpretations of what 10 legal duties are. If, in fact, there's a question 11 here as to whether or not this is an accurate 12 description of a network function, then I would be 13 willing to allow you to respond. 14 And to be fair, I did not follow the full 15 context of this particular cite, so Mr. Payne, if you 16 would take another look at that and see if you can 17 rephrase your question in such a way that it doesn't 18 require this witness to interpret the legal 19 obligations or duties of a local exchange carrier 20 under the act, if there's something relevant there in 21 terms of defining a key term such as switching or 22 something else that's relevant, I'd be interested in 23 knowing whether or not that's a definition that this 24 particular witness accepts. 25 MR. PAYNE: I will try. 00592 1 Q. And pardon me, I'm not trying to get a 2 legal position out of you. All I'm trying to get at 3 here is the text on this page suggests that the 4 traffic is being handed and delivered to a 5 terminating carrier's end office switch or equivalent 6 facility, not just a switch, but an equivalent 7 facility, and it also discusses the delivery of such 8 traffic to the called party's premises. 9 And would you agree that that's what this 10 language says, with no legal interpretation of that? 11 A. I don't think any reasonable person could 12 deny that the words on the page are the words on the 13 page. 14 MR. PAYNE: That's all I wanted to say. 15 MR. DEVANEY: Mr. Payne, would you mind 16 giving me that CFR section? 17 MR. PAYNE: Yes, that was Section 51.701, 18 paragraph D. 19 MR. DEVANEY: Thank you. 20 MR. PAYNE: CFR 47. 21 MR. GRIFFITH: Or 47 CFR. 22 JUDGE BERG: And I'm just going to state 23 that my understanding of the whole issue is whether 24 or not, in fact, the Glenayre equipment constitutes 25 an equivalent facility. Although we may not have 00593 1 used the actual word equivalent facility, it's my 2 understanding that that's the disputed issue between 3 the parties. Does counsel agree with me on that? 4 MR. DEVANEY: That was going to be my 5 follow-up question to Mr. Peters, do you consider any 6 of the Glenayre equipment to be the equivalent of an 7 end office. 8 JUDGE BERG: All right. Then hold that 9 question. I just wanted to, you know, clarify that 10 that was my understanding of the issue between the 11 parties. But I'll also state my understanding that 12 all of the testimony that I've heard regarding 13 whether or not the Glenayre equipment is a switch is 14 also testimony relevant to whether or not it's an 15 equivalent facility. Do you feel that that's an 16 overstatement? 17 MR. DEVANEY: I think that's correct. I do 18 want to reserve the right on brief to address the 19 issue squarely, but I think the way you've described 20 it is accurate. 21 JUDGE BERG: All right. And Mr. Keehnel, 22 do you perceive the testimony -- the issue on which 23 testimony has been provided that whether or not the 24 Glenayre equipment is a switch is also testimony as 25 to whether or not it's an equivalent facility? 00594 1 MR. KEEHNEL: I probably would phrase the 2 issue differently from Your Honor. I probably would 3 phrase it in this way. First, has the FCC already 4 made a determination whether what the paging 5 companies do requires the terminating compensation be 6 paid by the LECs, and if the FCC has not made that 7 decision, then the subsidiary issue would be does -- 8 if there's some quantum of proof required to 9 demonstrate that a Glenayre switch or any other 10 paging carrier's switch is it performs the similar 11 functions or rubric to that effect would be at issue, 12 and I understand this witness' most recent testimony 13 goes to that subsidiary issue. 14 JUDGE BERG: All right. I'll allow the 15 parties to go ahead and ask some follow-up questions, 16 but certainly I think that it's appropriate for 17 briefing, as well, to argue whether or not the 18 Glenayre equipment is an equivalent facility based 19 upon the testimony and evidence that's already in the 20 record. Mr. Griffith, any questions? 21 MR. GRIFFITH: Yes, I have a few questions. 22 E X A M I N A T I O N 23 BY MR. GRIFFITH: 24 Q. Mr. Peters, in your opening remarks, you 25 mentioned something about the P.01 blocking factor 00595 1 for trunks? 2 A. Yes. 3 Q. And that US West's position is it should 4 not be an absolute standard; is that correct? 5 A. It should be an absolute with respect to 6 engineering to it, but not to being required to never 7 allow the facilities to drop below that level. 8 Q. Are you familiar with the Washington 9 Administrative Code requirements for trunk blocking? 10 A. I am not. 11 Q. The standard in Washington is P.O1. 12 A. May I ask for a clarification? Is the 13 standard an engineering standard or is it an absolute 14 standard? 15 Q. I think it says that the blocking, the 16 local company shall provide, and I don't know if it 17 says engineering or not. I think it just says 18 provide P.O1 service. My understanding is that that 19 allows that number to be exceeded on occasion; i.e., 20 on Mother's Day, but not for a prolonged number of 21 days. Would that be consistent with your 22 understanding of how it should be applied in this 23 case? 24 A. I believe so. My testimony was that we 25 would engineer to maintain a P.O1 or better grade of 00596 1 service, but there may be occasions when 2 circumstances beyond our control would have that 3 blockage rate be exceeded, but we certainly would not 4 engineer for it and we would correct it. You know, 5 as part of our normal course of business, we would 6 attempt to keep it above that, and we would certainly 7 correct it when things changed. 8 Q. Okay. I have a couple of questions 9 somewhat related to the matrix that we just went 10 through. 11 A. Okay. 12 Q. But I have an additional example, but I'm 13 not interested in whether it's transiting or not. 14 This would be the case where there is a US West 15 caller here in Olympia, and that caller wants to call 16 a paged number that's also here in Olympia. Now, 17 would that call be routed first up to the AirTouch 18 Glenayre terminal in Seattle? 19 A. It's my understanding that the only way you 20 can get into the Glenayre paging network is through 21 their paging terminal, wherever it's located, and I 22 believe it's in the Seattle area, and therefore, the 23 call would have to be routed up to their network in 24 Seattle. 25 Q. Is it your understanding that AirTouch 00597 1 feels that US West should be providing that transport 2 of the call from Olympia to Seattle at its own cost? 3 A. It is my understanding that their proposal, 4 which is not the way it's done today, but their 5 proposal would be that US West would provide that 6 without a charge to AirTouch. 7 Q. Okay. If AirTouch maintains having only 8 one point of connection in this state, would one way 9 to get around that be requiring them to have more 10 points of interconnection so there wouldn't be as 11 much transport on US West's side? 12 A. I'm sorry, would you ask the question 13 again? 14 Q. Okay, let me rephrase it. I think one of 15 the points that was brought out was that US West 16 would like AirTouch to have more than one point of 17 connection in the state. In fact, I think they 18 mentioned one in each extended area -- or each 19 calling area. 20 A. Well, from our perspective, whether 21 AirTouch has one point of connection in Seattle; 22 i.e., whether or not they have a Seattle number and 23 only a Seattle number or whether they have local 24 numbers in multiple calling areas is and should be a 25 business decision that AirTouch would make. 00598 1 Our position is that if they want local 2 calling numbers in each calling local calling area, 3 they ought to pay for the costs of those facilities. 4 It's my understanding AirTouch wants to be able to 5 have a local presence, so to speak, but design a 6 network that allows customers throughout the state to 7 call AirTouch without AirTouch having to pay for toll 8 facilities, private line facilities, FX facilities, 9 whatever you want to call it. They don't want to 10 have to pay for the cost of a call going from Olympia 11 to them or from Bellingham to them or from other 12 points in the state. 13 Today, they do pay for that, because they 14 do have, as I understand it, they have leased 15 facilities from us so that they have a local point of 16 presence in Olympia and other locations. 17 Q. Okay. Assuming that things stay as they 18 are today, is there an issue between US West and 19 AirTouch on the number of points of connection in the 20 state? 21 A. If I understand your question, it's if 22 there was no change, if it was business as usual, we 23 will provide them whatever services they want out of 24 our tariffs. So they could have as many points of 25 connection, as many local points of presence as they 00599 1 would like to have. 2 MR. GRIFFITH: Thanks. 3 JUDGE BERG: Mr. Devaney, redirect. 4 MR. DEVANEY: Thank you, Your Honor. 5 R E D I R E C T E X A M I N A T I O N 6 BY MR. DEVANEY: 7 Q. Mr. Peters, just following up on Mr. 8 Griffith's last line of questioning, if you assume 9 for a moment that AirTouch had increased number of 10 points of connection in the state of Washington, 11 would that decrease the amounts of dedicated 12 facilities that US West would have to provide to 13 AirTouch? 14 A. If they had more points of presence? 15 Q. Yes. 16 A. It would -- are you talking about today, 17 the way it's done today or -- 18 Q. Hypothetically. Let's say that a year from 19 now, AirTouch triples or quadruples the points of 20 connection it has in Washington. Would that 21 decrease the amounts of dedicated facilities that US 22 West would have to provide to AirTouch? 23 A. To the extent that they leased facilities 24 from us, either through FX services or a MUX 25 arrangement, those facilities are not part of the 00600 1 toll network, and so there would be less toll 2 facilities that we would have to provide, as opposed 3 to a situation that they're proposing, where we would 4 have to provide more toll facilities. 5 Q. Okay. Changing the subject, on the P.O1 6 standard, if US West were required to provide a 7 guaranteed P.O1 standard to AirTouch, would that 8 service be superior to what US West provides for 9 similarly-situated paging carriers? 10 A. Yes, it would be. 11 Q. Why? 12 A. Because to ensure that the grade of service 13 never fell below that standard, we would have to 14 provide more trunk elements between us and them to 15 ensure that there was never a blocked -- incident of 16 blocking. Whereas today we, on a P.O1 standard, we 17 understand that there will be some blocking. We 18 anticipate it, under our engineering standards, to be 19 -- to not exceed one percent during the busiest hour. 20 And I think that's an important distinction. 21 A P.O1 is a busy hour grade of service, 22 which may mean that the other 23 hours of the day, 23 there is zero blocking. But to make sure that during 24 the busiest hour, that it doesn't ever become a one 25 and one-tenth percent blocking, we would have to add 00601 1 additional trunk elements to make sure of that. 2 And part of that has to do with the fact 3 that there are a lot of variables that can't be 4 accounted for. We don't know when they're going to 5 have surges in their network, and that surge could 6 potentially push it over the one-tenth of one percent 7 or the one percent blocking level. And so to ensure 8 against that, we would simply have to build more 9 facilities, which would be a superior service to what 10 we do to other carriers. 11 Q. Just two more questions for you. Exhibit 12 48, the matrix that you and Mr. Reynolds put 13 together. 14 A. Yes. 15 Q. If you look at the -- there's a From and a 16 To column. If you look at the To column and if you 17 assume for a moment that in place of AirTouch under 18 the To column, that we put in a cellular carrier, 19 would the transit and nontransit columns change at 20 all? A cellular carrier in Seattle, just to clarify. 21 A. Okay. 22 Q. Would the transit and nontransit columns 23 change at all? 24 A. I don't believe it would. 25 Q. Okay. And my final area of inquiry goes to 00602 1 Mr. Payne's question of you relating to 47 CFR 2 51.701(d). The language -- I don't have the CFR in 3 front of me, but I wrote down the language that Mr. 4 Payne quoted, and I think it was switching of traffic 5 at an end office switch or equivalent facility. And 6 I know you've touched on this, but I do want the 7 record to be clear as to whether you believe any of 8 the Glenayre equipment or any of the other AirTouch 9 equipment in its network constitutes the equivalent 10 of an end office switch. Could you please address 11 that? 12 A. Well, I will address it, and I will say 13 that I need to first speak about the term equivalent 14 facility. That may have legal connotations. I'm 15 here to answer network questions, so I will speak 16 from a network perspective on that issue. 17 I don't believe the FCC has defined what an 18 equivalent facility is. At least, if they have, I 19 have not seen anywhere, in any of their orders and 20 reports, as to what an equivalent facility is. 21 Therefore, in evaluating that, I have to judge 22 equivalency by the functionality of the equipment 23 itself. 24 In telephony, there are different types of 25 equipment, and I talked about the fact that transport 00603 1 equipment is a defined type of equipment that takes a 2 lot of different calls, multiplexes them up, which is 3 another way of saying condenses those so that you can 4 have more traffic, telecommunication traffic over a 5 physical facility based on the electronics that you 6 use to concentrate that signal. That is an 7 established piece of gear in the telecommunications 8 industry today. 9 It is my opinion, from having engineered 10 that equipment and having gone through the Glenayre 11 technical publications and manuals that talks about 12 their equipment, reading through Mr. Bidmon's 13 testimony as to what happens at the paging equipment, 14 that that paging equipment has the same function as 15 multiplexing equipment, transport equipment. It 16 takes calls that comes in, it stores information, it 17 puts those calls together, it sends all these 18 messages from the paging terminal to the CIT just 19 like transport equipment does in the telephony 20 network today between switches. It is not the switch 21 that does that; it is the transport equipment. 22 I don't see how the paging equipment can be 23 defined as a switch when it has very few attributes 24 of what a switch equipment has, and the attributes 25 that it does have are not directly related to 00604 1 switching. It has other attributes, such as storing 2 messages, which our switches also store messages, but 3 that is a vertical function, a vertical service. It 4 is not a switching functionality. 5 So I can only say that, from all of the 6 functionality of the paging equipment, is that it is 7 transport equipment; it is not comparable to the 8 switch. And I would also say the same for the CIT. 9 From what I know about the CIT, it takes the pages 10 and it uplinks it to the satellite and that is a 11 transport methodology or functionality. 12 MR. DEVANEY: Thank you, Mr. Peters. No 13 further questions. 14 R E C R O S S - E X A M I N A T I O N 15 BY MR. KEEHNEL: 16 Q. Mr. Peters, if US West were to provide for 17 multiple points of connection for AirTouch, wouldn't 18 that actually require the provisioning of additional 19 facilities? 20 A. Well, facilities to new locations that 21 don't exist today would have to be established. We 22 would use facilities that's in our toll network to 23 make those available to AirTouch on a dedicated basis 24 as a finished service. 25 MR. KEEHNEL: That's all I've got. Wait. 00605 1 JUDGE BERG: Late breaking news. 2 MR. KEEHNEL: I was right the first time. 3 JUDGE BERG: All right, thank you, Mr. 4 Keehnel. Any further questions? 5 MR. GRIFFITH: No. 6 JUDGE BERG: All right. Thank you, Mr. 7 Peters. You're excused. 8 THE WITNESS: Thank you. 9 JUDGE BERG: Off the record. 10 (Discussion off the record.) 11 JUDGE BERG: We'll be back on the record. 12 The direct testimony of Dr. Taylor has been 13 designated Exhibit T-49. Exhibit WET-1 has been 14 designated as Exhibit 50. And the rebuttal testimony 15 of Dr. Taylor has been marked as Exhibit RT-51. 16 Exhibit 50 has been stipulated as admitted into the 17 record, and is so admitted at this time. Dr. Taylor, 18 if you'd stand. 19 Whereupon, 20 WILLIAM E. TAYLOR, 21 having been first duly sworn by Judge Berg, was 22 called as a witness herein and was examined and 23 testified as follows: 24 JUDGE BERG: Mr. Devaney. 25 MR. DEVANEY: Thank you. 00606 1 D I R E C T E X A M I N A T I O N 2 BY MR. DEVANEY: 3 Q. Good evening, Dr. Taylor. 4 A. Good evening. 5 Q. Dr. Taylor, you filed both rebuttal and 6 direct testimony in this proceeding. Do you have any 7 corrections you'd like to make to either? 8 A. Yes, I have one correction to my direct 9 testimony. At page 11, line three, the line should 10 read, "obvious adverse economic consequences. One, 11 failure to compensate by the true cost causer." 12 Insert the word by, b-y. 13 Q. Anything else? 14 A. No. 15 Q. And with that correction, are the answers 16 that you provided in your testimony true and correct, 17 to the best of your knowledge? 18 A. Yes, they are. 19 JUDGE BERG: One moment, please. 20 MR. DEVANEY: Your Honor, we would ask that 21 Exhibits 49, 50 and 51 be admitted. 22 JUDGE BERG: Fifty has been admitted. Mr. 23 Keehnel, any objections to the admission of Exhibit 24 T-49 or RT-51? 25 MR. KEEHNEL: Yes, Your Honor. We renew 00607 1 our objection that Dr. Taylor's been put in the 2 position of providing, in many instances, legal 3 testimony. We understand that we asked for a ruling 4 in advance on that, and the Commission determined to 5 allow the testimony subject to the caveat that it 6 wouldn't be read to really be legal testimony. And 7 with that renewed objection, we have no other 8 objections. 9 JUDGE BERG: All right. I'm going to go 10 ahead and admit the exhibits. To the extent that 11 there is legal testimony in either Exhibit T-49 or 12 RT-51, which seem to go beyond the expertise of Dr. 13 Taylor, it will be considered as to weight, but 14 otherwise not to admissibility. 15 MR. DEVANEY: Thank you, Your Honor. 16 Q. With that, Dr. Taylor, if you would please 17 provide us with a brief description of your 18 background and a summary of your testimony? 19 A. Surely. I've been an economist for about 20 25 years, and maybe the last 15 in the 21 telecommunications, been an academic. I spent about 22 15 years at Bell Labs and at Bellcore. My areas of 23 expertise are econometrics, telecommunications 24 economics, microeconomics. 25 My experience since I've been consulting 00608 1 since 1988 has been a wide range of mostly legal and 2 regulatory issues, clients have been local exchange 3 carriers, long distance carriers, regulatory 4 commissions. I've been involved in antitrust cases, 5 in damages cases, in proceedings such as this. 6 I've done work, though not recently, in the 7 paging industry in antitrust cases and commercial 8 litigation. That's my background. 9 My testimony in this case brings an 10 economic perspective. As you heard from Mr. Edwards, 11 he gave you an engineering view of what at least some 12 of the big issues in the case are, and I'll look at 13 some of the same issues, but from an economics 14 perspective. And given the hour, I will give you the 15 short version. 16 Q. Dr. Taylor, you said Mr. Edwards. Mr. 17 Peters? 18 A. I'm sorry, Mr. Peters, yes. It is late. 19 The two big issues that make a difference 20 economically are should US West pay reciprocal 21 compensation for traffic that is sent to AirTouch, 22 and secondly, should US West provide dedicated 23 transport and termination facilities to AirTouch, and 24 under what terms should they do that. So I'll cover 25 those two quickly, and then a little bit of response 00609 1 to what I learned yesterday about TELRIC. 2 First, reciprocal compensation. The 3 engineering story was that AirTouch is not entitled, 4 because whatever it is that it does, it doesn't 5 terminate local exchange traffic on its network. 6 That's the engineering point of view. 7 From an economist it's a very different 8 story. It's that AirTouch isn't entitled to 9 compensation and wouldn't receive it in an 10 unregulated competitive market because it is 11 AirTouch's paging customers that cause the costs to 12 be incurred. My example in my testimony is it's like 13 800 service. It's a service that the called, the 14 called party purchases for the convenience of its 15 customers. Now, so in an unregulated competitive 16 market, if that's the story, US West's telephone 17 customers wouldn't bear those costs, because they 18 don't cause them. 19 All right. Why is this? Is this just a 20 semantic argument? You may remember that Dr. Zepp 21 stated yesterday that US West, the US West caller, 22 that is the originating party, was the cost causer in 23 his opinion. So do we have just a semantic argument 24 here? Dr. Zepp also stated that the paging market 25 was objectively a competitive market. 00610 1 I guess what I would like to share with you 2 is the sort of economic insight that says both those 3 statements can't be true. That is, if paging is a 4 competitive market and works out the way it has 5 today, then the originating caller, the US West 6 telephone subscriber, is not the cost causer. Why is 7 that? 8 Suppose US West customers did cause those 9 costs and the Commission then correctly assigned 10 those costs to US West to be recovered. Under those 11 -- think of it that the telephone customer wants to 12 call his plumber, and that's what's causing these 13 costs to be incurred. 14 What would happen? Well, since paging is a 15 competitive market, all paging companies, not just 16 AirTouch, would of course be in here and ought to 17 receive the same treatment. We can't have 18 discriminatory treatment across different paging 19 companies. And if the market for paging services 20 were competitive, paging prices, the retail prices 21 that the plumber pays to AirTouch, would fall to 22 reflect the fact that AirTouch's cost, net of what 23 they receive in compensation from US West, had 24 fallen. 25 What would happen then? Well, if the 00611 1 Commission and US West followed the pattern of cost 2 causation, the six or seven cents a minute that 3 AirTouch is asking for here would then be charged by 4 US West to customers who call its paging to make 5 calls to paging customers. If those calls cost six 6 or seven cents a minute, then that's a cost that 7 would be passed through if you're following cost 8 causation. 9 That's what we do for toll, for example. 10 Toll costs more, so customers who make toll calls are 11 charged more. That's cost causation. What would 12 have happened, then, if all of that happens, then 13 regulatory forces, plus the competitive market that 14 Dr. Zepp spoke of, would have effectively shifted 15 cost recovery from where it is today on the paging 16 subscriber, that is, the plumber, to the people, the 17 plumber's customers, the folks who called the 18 plumber. That's what would have happened, game would 19 be over, nothing would be different except the onus 20 of payment would fall to the callers and not the 21 subscriber. 22 But the important thing is that in the 23 paging market, we learn that it's very important for 24 paging companies to make sure that the calls that 25 come to their paging terminal are local calls. 00612 1 Today, AirTouch and other paging companies incur 2 costs to buy FX facilities so that they have a local 3 presence in Olympia, even though the call has to go 4 to Seattle. So that's an important element of the 5 market that the paging customer, the plumber in my 6 example, wants to be sure that his customers don't 7 incur a cost. 8 If that's the characteristic of the market, 9 then what we've shown is that the competitive market 10 is telling you that the cost causer is the paging 11 customer and not the person who makes the call. 12 Okay. If you ignored that and if you did 13 shift these costs to US West, then, from an economic 14 perspective, you'd get some forms of perverse 15 behavior that my testimony goes into. You would 16 effectively be setting up a subsidy flow from 17 telephone users to paging subscribers. That subsidy 18 flow creates incentives to have more paging services, 19 fewer telephone calls, assuming that the telephone 20 customers have to pick up the costs, beyond what 21 would happen in an unregulated competitive market. 22 That's inefficient. 23 And sort of worse, if there were any error 24 in the cost study, that is an error like, say, excess 25 capacity snuck into the AirTouch or to any other 00613 1 paging company's cost study so that the compensation, 2 the six or seven cents a minute they receive actually 3 exceeded their traffic sensitive costs, then we'd 4 create really perverse incentives, incentives on the 5 part of the paging companies to pump traffic down 6 their network because they would be receiving more in 7 compensation from US West than it would cost them to 8 terminate the page. Well, that's the story on 9 reciprocal compensation from an economist's point of 10 view. 11 Quickly, for the question of compensation 12 for dedicated trunks. Trunks or services that are 13 dedicated to AirTouch, that is, aren't shared with 14 anyone else, but are used exclusively by AirTouch 15 should be paid for by the cost causer, which is 16 AirTouch. That's a basic economic premise. I think 17 Section 252 of the act reflects that notion of cost 18 recovery. 19 If it isn't done that way, then AirTouch 20 faces the wrong incentives for ordering the quantity 21 and quality of the services, the trunks that they 22 demand. If you don't have, if you don't face -- if 23 any consumer of anything doesn't face the proper 24 price for the services he uses, he won't use the 25 correct -- the economically efficient level or 00614 1 quality of those facilities. 2 Now, the evidence of that comes from, as I 3 explain in my testimony, comes from Mr. Bidmon. He 4 points out, I think correctly, that US West today and 5 in the past has charged AirTouch for these 6 facilities. AirTouch, when it buys an FX today, pays 7 US West the tariffed rate for that and, Mr. Bidmon 8 says, "AirTouch, therefore, has an economic incentive 9 not to order inefficient facilities." He says their 10 network's probably pretty efficient, and I would 11 agree. 12 But, of course, that logic works the other 13 way around. That is, if AirTouch is efficient 14 because today it faces the correct prices for the 15 facilities it orders from US West, then tomorrow, if 16 it doesn't face those correct prices, I presume, 17 then, the network that it would produce, following 18 its own self interest, would not be an efficient 19 network. 20 My last comments are sort of three quick 21 issues on TELRIC, and I say that sort of out of an 22 anguish of the soul, because, like many of you, I've 23 been working on TELRIC issues for CLECs for the last 24 year or so, and have been through those issues at 25 great length. 00615 1 And this is, I have to admit, the first 2 study that purports to be a TELRIC study for a paging 3 company, and I would like to make very sure that the 4 standards for TELRIC studies that we've all devised 5 and worked with and worked around for CLECs and for 6 ILECs are the same standards in the same economic 7 perspective that is done here for a paging company. 8 Let's remember what TELRIC is trying to do, 9 either TELRIC for US West or TELRIC for MCImetro or 10 TELRIC for AirTouch. TELRIC is supposed to be the 11 efficient forward -- the forward looking cost of an 12 efficient firm. Not a particular firm, not US West, 13 not AirTouch. 14 The idea is -- the FCC's idea of TELRIC is 15 that it is the cost basis towards which competition 16 would push prices if the market were competitive. Of 17 course, the market, at least some of these markets 18 probably aren't competitive, the paging market 19 probably is competitive, but it doesn't matter. 20 The standard is what is the most efficient 21 firm's costs, forward looking, if it could start 22 over, to produce the entire level of service. And 23 that's what TELRIC is in economics and it ought to be 24 the same standard for CLECs, for ILECs, and for 25 anyone else who uses the public switch network. 00616 1 Now, the one exception to that that I read 2 is in the First Report and Order. When you get out, 3 way out to paragraph 1092, you discover that the FCC 4 thinks that the ILEC's TELRIC costs, which it uses as 5 a proxy, which I take it to mean the standard of what 6 an efficient firm would do, which the FCC is happy to 7 use as a proxy for costs of terminating traffic for 8 everybody else, for CLECs and for other types of 9 users of the network. It doesn't think it would be a 10 good idea to use those costs, at least as a default, 11 for terminating paging calls. 12 And the reason is because, the FCC says, 13 the LEC's costs are likely to be higher than a paging 14 provider's costs. And if that were true, then we'd 15 be in the position I talked about earlier, where the 16 paging company would have this perverse incentive to 17 pump traffic down its network because it would be 18 receiving more in compensation than its additional 19 costs. 20 From this discussion, I take several things 21 -- two, I guess, I'll limit myself -- that I found 22 yesterday to be awkward about the application that 23 AirTouch has made of the TELRIC standard. First, 24 their cost of capital and their depreciation 25 parameters were specific, as I understood it, to 00617 1 AirTouch itself. The calculation was like you would 2 do for a regulated firm's cost of capital. It was 3 the characteristics of AirTouch. For depreciation, 4 it was the book depreciation that AirTouch thought 5 was appropriate to tell its stockholders. 6 I think, in the TELRIC concept, the use of 7 different standards for regulated and unregulated 8 competitors is wrong. I think asymmetric regulation 9 when firms compete leads to inefficient competition, 10 and I think that's the wrong application of the 11 TELRIC standard. 12 My second sort of big question is one of 13 capacity utilization for -- I assume you've been 14 looking at the TELRIC wars for wire line companies, 15 and you realize, in those networks, capacity 16 utilization is a very, very important number. How 17 full the network has to be, on average, is a large 18 determinant of what the unit costs are. 19 In paragraph 682 of the First Report and 20 Order, the FCC very clearly says per unit costs shall 21 be derived from total costs using reasonably accurate 22 fill factors. 23 My problem with the study, I guess, is in 24 marked contrast to all of the studies that I have 25 seen, good, bad and indifferent, among wire line 00618 1 companies, I don't know today what the average fill 2 factor in the AirTouch study is, and if I heard 3 cross-examination yesterday correctly, I don't 4 believe AirTouch knows either. 5 They know what the objective fill is. I 6 think that was the 90 percent number that was used. 7 But I didn't hear -- I think I heard Dr. Zepp say 8 that he did not know what an average fill factor was. 9 And that's so important in a telecommunications 10 network, which you're building in this hypothetical 11 TELRIC world, because if you build it too big, then 12 the unit costs that use that network are going to be 13 too high, and in this particular example, if they are 14 too high, then AirTouch will make a profit, will make 15 money on every page that goes down its system based 16 solely on the compensation that it receives from US 17 West. And that's a terrible incentive, as the FCC 18 told us in paragraph 1092. That concludes my 19 summary. 20 MR. DEVANEY: Thank you very much, Dr. 21 Taylor. Dr. Taylor is available for cross. 22 JUDGE BERG: All right. Mr. Keehnel. 23 C R O S S - E X A M I N A T I O N 24 BY MR. KEEHNEL: 25 Q. Good evening. 00619 1 A. Good night. 2 Q. Well, except you've been out here for so 3 many days, so I guess you're adjusted to our time. 4 This won't take very long, Dr. Taylor. Have you ever 5 designed a paging system? 6 A. No. 7 Q. Have you ever, in your long career, 8 prepared a cost study for a paging carrier? 9 A. For a paging carrier, no. I have testified 10 on -- or I've calculated paging costs for damage 11 estimates, so I guess, to some extent, yes, but I 12 haven't done a cost study of this sort for this 13 purpose. 14 Q. Have you ever, before this particular 15 matter, critiqued a cost study that was prepared for 16 a paging carrier? 17 A. Yes. 18 Q. In what context was that? 19 A. Again, this was commercial damages from an 20 allegation that one company had driven a competitor 21 -- no, I guess it was -- this was about seven or 22 eight years ago. I guess it was that a company had 23 driven one of its -- not subsidiaries, but different 24 -- an agency had driven an agent out of business, and 25 the issue was what was the profit potential for the 00620 1 agent in doing that. A part of that calculation of 2 lost profits is what costs are. 3 Q. Was that a TELRIC study? 4 A. No. 5 Q. Was it for rate purposes? 6 A. No, it was forward looking economic costs, 7 total service long run economic or incremental cost. 8 Q. You're not an engineer, are you? 9 A. No. 10 Q. Did you assist Mr. Thompson in his critique 11 of AirTouch's cost study? 12 A. Yes. 13 Q. He did not name you as one of the people 14 who assisted -- was that assistance of a very late 15 date? 16 A. Yes. 17 Q. In the last just couple days? 18 A. For my own participation, yes. 19 Q. Will you turn for a moment to your opening 20 testimony? 21 A. Yes. 22 Q. Page two. 23 A. Yes. 24 Q. Please look at the sentence that begins at 25 line 20. Let me just read it so everybody's on the 00621 1 same page, in case they don't have the testimony 2 right in front of them. Correct me if I misread it. 3 "The nature of interconnection between an ILEC, US 4 West, and a provider of paging services, AirTouch, is 5 fundamentally different from interconnection between 6 an ILEC and a competitive local exchange carrier, 7 CLEC, or even between an ILEC commercial radio mobile 8 service, CMRS, or wireless carrier," close quote. 9 In that testimony, you seem to be 10 distinguishing AirTouch from the CMRS. Am I reading 11 that correctly? 12 A. No, I'm distinguishing interconnection with 13 AirTouch from interconnection with the CMRS. 14 Q. I apologize, I apologize. I was being not 15 precise enough. Okay. So you're distinguishing, 16 then, between interconnection between an ILEC and 17 AirTouch and an ILEC and CMRS; correct? 18 A. Correct. 19 Q. Is AirTouch not a CMRS? 20 A. For some purposes, I'm sure it's classified 21 as one. My meaning, if you read the next sentence, 22 is clear what I mean. 23 Q. Did you know that, in this proceeding, 24 AirTouch has stated in response to a data request, 25 and I quote from US West's response, "AirTouch is 00622 1 classified as a commercial mobile radio service 2 provider?" 3 A. I believe your question was turned around. 4 Is that a US West admission or an AirTouch admission? 5 Q. I may have misspoke. It's late in the 6 evening, as we both acknowledged. Are you aware that 7 US West has admitted, in response to a data request, 8 quote, "AirTouch is classified as a commercial mobile 9 radio service provider," close quote? 10 A. I believe I'm actually aware that they 11 acknowledged that, yes. 12 Q. Were you aware of that at the time you 13 prepared your opening testimony? 14 A. Sure. Well, I'm not sure I know that US 15 West had admitted it at the time, because I don't 16 know the date of that admission. So I guess the 17 answer is no, I'm not sure I was aware of what US 18 West had admitted on the day that I wrote this 19 testimony. 20 Q. So let me understand. Is AirTouch CMRS or 21 not? 22 A. Interconnection is different with a paging 23 company than with a CMRS, and maybe I'm being 24 imprecise here, in the two features that I named, 25 namely one-way and namely that a paging service 00623 1 provider doesn't terminate in the conventional sense. 2 Q. Do you generally distinguish between a 3 paging company and a CMRS provider? 4 A. In these two respects, yes, I do. As I 5 say, I'm just an economist. There may be some legal 6 definition of CMRS that I'm not aware of. I don't 7 mean to contradict it, but I think it's clear from my 8 testimony what I mean. 9 Q. At least I understand now. Is it more 10 costly for CMRS carriers to terminate traffic than 11 for ILECs to terminate traffic? 12 A. I guess I don't know. If, by CMRS, you 13 mean, for example, cellular companies, just so we 14 don't get -- 15 Q. Okay, we'll accept that. You just don't 16 know one way or the other? 17 A. That's correct. 18 Q. You've never testified to that effect? 19 A. I don't think so. 20 Q. Did you testify by affidavit in an 21 interconnection proceeding between local exchange 22 carriers and commercial mobile radio service 23 providers? 24 A. May have, but it certainly doesn't ring a 25 bell. 00624 1 Q. It would have been in March of 1996? 2 A. Again, could have been, but it doesn't ring 3 a bell. 4 Q. See if this rings a bell. Do you recall 5 that you were criticizing a fellow economist, a Dr. 6 Brock, in that proceeding? 7 MR. DEVANEY: Your Honor, if I may 8 interject, I thought we had an agreement that any 9 cross exhibits would be distributed? 10 MR. KEEHNEL: I don't believe I'm going to 11 introduce an exhibit, Mr. Devaney. 12 MR. DEVANEY: Well, I guess maybe I 13 misunderstood the intent. I thought the intent was 14 we would have exhibits to be used or documents to be 15 used with cross of an exhibit before cross. That was 16 certainly how we interpreted it. 17 JUDGE BERG: It's a fair line of 18 questioning. If, at some point in time, this type of 19 follow-through, where there's actually a question 20 followed up on the -- 21 MR. DEVANEY: Your Honor, I'll withdraw the 22 objection. 23 JUDGE BERG: All right. And I was actually 24 trying to think of the legal term for when you would 25 offer up a particular piece of evidence to challenge 00625 1 or contradict a statement that was made in testimony, 2 but that's the -- 3 MS. ANDERL: It's an overused word these 4 days. Impeach. 5 JUDGE BERG: I guess that's probably both 6 overused and appropriate. But I think it's a 7 legitimate line of questioning. And if at some point 8 in time it's appropriate for an exhibit to actually 9 document the discrepancy, then we'll need to see 10 that. 11 MR. KEEHNEL: I think that's a good 12 approach, Your Honor. 13 Q. Again, because it's late, let's bring 14 ourselves back to the line of questioning, both you 15 and I. Do you recall in a proceeding in which you 16 filed sworn testimony by affidavit in March of 1996, 17 criticizing a fellow economist named Dr. Brock? 18 A. No, I still don't recall. 19 Q. Do you recall this statement made by you: 20 "The study he relied upon does not appear to account 21 for the fact that it is more costly for CMRS 22 providers to terminate phone calls," close quote? 23 A. Well, if you're asking me if I wrote it, I 24 would have to look at the testimony to see. I don't 25 remember writing it. 00626 1 Q. It doesn't ring any bells with you? 2 A. No. 3 Q. Let me, then, be fair to you and see if I 4 have enough copies of the document -- I think I 5 brought some -- 6 JUDGE BERG: Let's try this first, Mr. 7 Keehnel. Would you identify the proceeding and the 8 parties, and let's see if that sounds more familiar 9 to Dr. Taylor. 10 Q. Yes, I'll give you some more detail. Maybe 11 that would jog your memory. 12 A. How about just a copy? 13 Q. Whichever you prefer. 14 MR. DEVANEY: I'd like the witness to see a 15 copy. 16 MR. KEEHNEL: I'll grab a copy. 17 JUDGE BERG: Off the record for a moment. 18 (Discussion off the record.) 19 Q. Dr. Taylor, are you the William E. Taylor 20 who's the author of Exhibit 52? 21 A. Yes, I am. 22 Q. Does having the affidavit in your hand 23 again remind you that you testified in this matter, 24 which has a Docket Number 95-185 in March of 1996? 25 A. Yes, it begins to look familiar. 00627 1 Q. If you want to see the statement that I 2 asked you about, it's at the bottom of page 19, the 3 top of page 20. It's the carry-over sentence. And 4 again, for the record, it reads, "Also, the study he 5 relied upon does not appear to account for the fact 6 that it is more costly for CMRS providers to 7 terminate phone calls," close quote. Does that now 8 jog your memory that you so testified three years 9 ago? 10 A. Yes, it appears to be what I said. I'm now 11 looking for the context, if that's all right. 12 Q. If your counsel wants to follow up with the 13 context, he can, but I want to move on and get us out 14 of here tonight, so with your permission, I'm going 15 to do so. Would you turn from your affidavit to your 16 testimony on this matter, please. I'd like to direct 17 your attention to your opening testimony at page 18 seven. 19 A. Yes. 20 Q. To give us context, would you mind reading 21 these into the record, beginning at line 21 of page 22 seven, to the end of your answer to that question? 23 A. But doesn't the FCC also recognize that 24 reciprocal compensation should be paid even under 25 ILEC pager provider interconnection? Answer: Yes, 00628 1 but the matter is in dispute and remains unresolved. 2 As pointed out by US West witness Kathryn Malone, 3 since the release of the local competition order, 4 which first envisioned reciprocal compensation, even 5 under ILEC pager provider interconnection, the FCC 6 has agreed to revisit the issue, but even after two 7 years, further rule-making is still pending. For 8 that reason, I agree with Ms. Malone that the present 9 arbitration proceeding is not the most appropriate 10 forum for resolving this issue. However, as a 11 theoretical matter, I believe it remains useful to 12 examine why the payment of compensation to a paging 13 service provider like AirTouch is without a firm 14 economic foundation. 15 Q. And just to follow-up on that, Dr. Taylor, 16 when you say the matter is in dispute and it remains 17 unresolved, are you referring to the fact that US 18 West filed a petition for review of the -- what's 19 popularly known as the Metzger letter? 20 A. Well, yes, that's part of it. Part of it 21 is also the statement that the FCC said that it 22 didn't know what costs were and that it would revisit 23 the issue. 24 Q. It didn't know what pager costs were? 25 A. Right, which I interpreted to mean didn't 00629 1 know what the costs of terminating a call on a paging 2 network, which is what the ILEC would be responsible 3 for compensation for, and that is to say -- well, 4 we'll leave it at that. 5 Q. Okay. Dr. Taylor, when you say at the top 6 of page eight in what you just read from your 7 testimony that, as a theoretical matter, you believe 8 it would remain useful to examine the economic 9 issues. 10 And am I understanding your perspective, 11 then, correctly, is what you're saying is if we 12 accept what the FCC -- or your understanding. I 13 don't want you to testify as a legal expert, just 14 your understanding what the FCC has done. If we 15 accept your understanding of what the FCC has done, 16 then termination compensation must be paid, but as an 17 economic matter, you just don't think that's 18 appropriate policy? 19 A. No, I think you've gone one step further 20 than this testimony goes. It says that the matter is 21 in dispute and remains unresolved. Now, I'm not a 22 lawyer and so I'm not sure what -- I mean, I can't 23 speak to what US West's legal obligations might be. 24 All I'm saying in this paragraph is, not speaking to 25 those, seems to me to make sense in this proceeding 00630 1 to try to understand what the economics of paying 2 compensation to AirTouch entailed. 3 Q. If it weren't an open issue, if there 4 weren't further proceedings and the reciprocal 5 compensation issue had been fully decided, then your 6 testimony would basically be a policy argument for 7 why that rule was wrong? 8 A. Well, or right, depending upon how it had 9 been decided. 10 Q. Right. Assume it comes out for the moment 11 in AirTouch's favor, then what your testimony is is 12 argument for why, economically, that would be bad 13 policy? 14 A. That would be part of it, yes. That's what 15 this paragraph would say. But then, simply because 16 compensation is hypothetically due for termination 17 doesn't mean the game is up. That is, the Commission 18 still has to understand what the costs are, what the 19 economic costs are, and what the consequences are of 20 various ways of compensating AirTouch for what those 21 costs are. I think this is still a useful item, even 22 if the rules were clear and unambiguous. 23 MR. KEEHNEL: Thank you for your testimony. 24 THE WITNESS: Thank you for your time. 25 JUDGE BERG: Any questions, Mr. Griffith? 00631 1 MR. GRIFFITH: I think I might just have 2 one. 3 JUDGE BERG: All right. 4 E X A M I N A T I O N 5 BY MR. GRIFFITH: 6 Q. Mr. Taylor, in your direct testimony on 7 page eleven -- 8 A. Yes. 9 Q. -- you have a question that starts on line 10 ten. Is it your testimony that US West subscribers 11 are not benefited by calls that are completed to 12 AirTouch's network? 13 A. No, not at all. It's that benefits don't 14 matter for determining who should pay, is what my 15 testimony is. 16 MR. GRIFFITH: Okay, thank you. 17 JUDGE BERG: All right. I have no 18 questions. Any redirect, Mr. Devaney? 19 MR. DEVANEY: Very briefly. 20 R E D I R E C T E X A M I N A T I O N 21 BY MR. DEVANEY: 22 Q. Just to follow-up on your last statement, 23 you said the benefits don't matter in determining who 24 should pay. Just to be clear, what does matter? 25 A. What matters are the costs and who causes 00632 1 them. We all benefit -- I benefit when my neighbor 2 paints his house. He doesn't charge me for it. 3 Benefits are not the way that goods and services are 4 allocated and people are charged in unregulated 5 competitive markets, which are sort of the standard 6 that we'd like to hold regulated markets to. It's 7 costs that matter. 8 Q. Dr. Taylor, with respect to Exhibit 52, the 9 affidavit that you were provided, did that case 10 involve a paging provider, do you recall? 11 A. Not specifically, no. These, I think, if I 12 recall, and it's been three years, it was generic 13 CMRS. And to me, that meant cellular, but I'm sure 14 the legal definition probably in the case included 15 paging customers, but I don't think, and I've been 16 looking through it to see, but I don't think there's 17 any recognition in my affidavit that paging 18 companies -- that is, companies that have the two 19 unique characteristics that I talked about in my 20 testimony in this docket -- that paging companies 21 were being considered. 22 Q. If you look at page 19 of Exhibit 52, 23 toward the bottom of the page, you refer to CMRS 24 MTSOs. Do you see that? 25 A. Yes. 00633 1 Q. Is that a piece of cellular equipment? 2 A. Yes. 3 Q. And so would you then go on to talk about 4 the costs related to CMRS providers to terminate 5 phone calls. Do you have an MTSO in mind and can you 6 discuss that? 7 A. Yes, as I say, I think this entire docket, 8 in my mind, and I'd have to read the affidavit again 9 to be absolutely positive, but was a docket involving 10 cellular carriers, even though I concede that the 11 rules probably apply to all CMRS providers. 12 Q. Is an MTSO different from a Glenayre 13 terminal, do you know? 14 A. Yes, very much so. It's a switch. 15 Q. And then you prepared this testimony, I 16 see, on March 4th, 1996, the affidavit? 17 A. Yes. 18 Q. Is it correct that was some five months 19 before the FCC's First Order and Report came out, in 20 which the FCC said it expected paging company 21 termination costs to be less than ILEC costs? 22 A. Yes, that was October of '96, I think, was 23 the First Report and Order. 24 MR. DEVANEY: Thank you. No further 25 questions. 00634 1 JUDGE BERG: Any recross-examination, Mr. 2 Keehnel? 3 MR. KEEHNEL: No, Your Honor. Given the 4 testimony that we've had on Exhibit 52 and its 5 identification by the witness, I'd offer it. 6 JUDGE BERG: Any objection, Mr. Devaney? 7 MR. DEVANEY: Yeah, we'll not object. 8 JUDGE BERG: All right. Exhibit 52 is 9 admitted into the record. Dr. Taylor, you're 10 excused. Thank you. 11 THE WITNESS: Thank you. 12 JUDGE BERG: Off the record. 13 (Discussion off the record.) 14 JUDGE BERG: Back on the record. And Mr. 15 Keehnel, if you would please restate your request to 16 present supplemental witness testimony in this 17 proceeding. 18 MR. KEEHNEL: Yes, Your Honor. You will 19 recall that one of US West's witnesses, Mr. Thompson, 20 testified during his summary statement to a criticism 21 of AirTouch's cost study for its inclusion of out of 22 state equipment, and that testimony was fleshed out 23 during his examination. 24 That is not testimony that was provided at 25 any point earlier by Mr. Thompson in either his 00635 1 opening testimony, prefiled testimony, or in his 2 rebuttal to the cost study prefiled testimony, or in 3 his supplemental rebuttal prefiled testimony. The 4 first testimony we heard about that subject from US 5 West was today. 6 What we're asking for is a very brief 7 opportunity to put on some information, it shouldn't 8 take more than about two minutes for each witness, in 9 which Mr. Bidmon first would respond to Mr. 10 Thompson's testimony by providing some specific 11 figures dealing with Mr. Thompson's general attack on 12 that front, to be followed by Dr. Zepp, who would 13 explain what the economic impact, if any, is of the 14 out-of-state -- of the inclusion of the out-of-state 15 population and RF equipment. 16 JUDGE BERG: Two questions before Mr. 17 Devaney or Ms. Anderl responds. With regard to 18 Exhibit C-11, containing a series of pages that have 19 a designation Seattle/Portland in the upper left-hand 20 corner of the document, and the exhibit containing a 21 list of AirTouch RF sites, can you reconfirm for me 22 the dates upon which those documents were provided to 23 US West? 24 MR. KEEHNEL: Yes, Your Honor. I think Mr. 25 Devaney has told me, and I accept his word, that he 00636 1 received the data on the business plan, 2 unfortunately, only Monday of this week. 3 JUDGE BERG: All right. And that would be 4 -- 5 MR. KEEHNEL: That's the -- 6 MR. DEVANEY: March 15th. 7 JUDGE BERG: All right. 8 MR. KEEHNEL: And sorry, Your Honor, do you 9 have another question? 10 JUDGE BERG: Yes, there was the list of RF 11 sites that included Idaho, Oregon, and references to 12 RF sites in Alaska and Hawaii. 13 MR. KEEHNEL: I believe that was provided 14 much earlier. As we've received information, we've 15 attempted to provide it to Mr. Devaney on a nearly 16 real-time basis. And I see that the fax cover line 17 here has a March 8 date. I'm not going to represent 18 to the Commission that it was exactly on that date, 19 because I can't be sure of that, but I believe it was 20 shortly thereafter. 21 JUDGE BERG: Mr. Devaney, do you have any 22 documentation as to when that was received? 23 MR. DEVANEY: I also see March 8th on 24 there. I just -- March 8th at 17:07. What I don't 25 know is whether that was a fax to me or -- I don't 00637 1 know. I do believe, though, that it was in that time 2 frame probably. It was not received, I'm quite sure, 3 this week. It was received last week, during the 4 week of March the 8th, probably the first half of the 5 week. 6 JUDGE BERG: All right. And Mr. Keehnel, 7 were both of those documents provided to US West 8 pursuant to a data request? 9 MR. KEEHNEL: I think that is right, Your 10 Honor. I believe that is right. 11 JUDGE BERG: All right, thank you. Mr. 12 Devaney, would you state any objection that US West 13 has to the proposed supplemental testimony? 14 MR. DEVANEY: Yes, Your Honor. Our 15 objection is based on the fact that this is, in 16 effect, a fairly significant revision of the cost 17 study, we believe, that we've been presented with on 18 the last day of the hearing. It changes the 19 investment that underlies the cost study, it changes 20 the demand that underlies the cost study, and it was 21 given to us literally on the morning of the last day 22 of the hearing, and it's a single page. 23 There is no underlying data, no underlying 24 work papers from which we can sort of trace what's 25 been done. We have a representation of what's been 00638 1 done, but without backup information and without 2 discovery, inquiry to this, and without time for us 3 to analyze what's been done, we're really handcuffed 4 in terms of how to respond to it. And so we believe 5 it's prejudicial for us to have to respond to this 6 evidence at this point. 7 And as I stated earlier this morning or 8 this afternoon, whenever it was, this is something 9 that AirTouch could have done from the start. They 10 could have presented a cost study that did not 11 include costs and demand from another state. They 12 didn't do that. 13 With respect to the timing of all this, 14 certainly with respect to the RF sites -- I'm sorry, 15 with respect to the demand showing that there's 16 Oregon demand included in the cost study, we didn't 17 know that until -- really, until Mr. Thompson and I 18 looked at these documents on Tuesday of this week, 19 March 16th. And so this isn't a matter of us sitting 20 on our hands raising this. 21 The other documents with backup information 22 we did receive last week, but the RF sites -- I'm 23 sorry, the growth and the Oregon demand that's built 24 into the cost study, we just received literally a 25 couple of days ago. So it's not a dilemma of our own 00639 1 making, and we would be highly prejudiced if this 2 were to come in. We would literally have no ability 3 to respond. I'm not sure how I would be able to 4 cross-examine on it, particularly since Mr. Thompson, 5 the cost witness, doesn't have the backup, has not 6 had the opportunity to really understand what's been 7 done. 8 And we think it's a very important issue in 9 the case. We think it's a significant problem with 10 their cost study. If this were to come in without us 11 being able to properly respond to it, we think, would 12 be highly prejudicial to our position in the case. 13 JUDGE BERG: Mr. Keehnel, has AirTouch in 14 any way modified its methodology of its cost study? 15 MR. KEEHNEL: My understanding is that it 16 has not, Your Honor. It has merely used -- it has 17 merely made adjustments to data points in the model 18 that has been supplied to US West for quite some 19 time. 20 JUDGE BERG: All right. We're going to 21 take a small recess so I can discuss this matter with 22 my advisers across the hall. I would appreciate it 23 if the parties would stay, if not in the room, then 24 at least in this wing of the building. I understand 25 if you need to use the rest rooms, but then come on 00640 1 back and we'll try and reach a decision on this just 2 as soon as possible. We'll be off the record. 3 (Recess taken.) 4 JUDGE BERG: We'll be back on the record. 5 I've had an opportunity to consider the arguments of 6 the parties and to consult with my advisers, Mr. 7 Griffith and Mr. Payne. 8 As I perceive the situation, Mr. Bidmon, 9 working at the direction of Dr. Zepp, sought out to 10 create what might be considered the paging equivalent 11 of a scorched node network. That is, to look at not 12 necessarily the way the current network works, but to 13 look at what would go into creating that least cost, 14 most efficient, forward looking network design. 15 Part of that design involved what we might 16 call a footprint that was based upon a district that, 17 in fact, extends beyond the state boundary. It also 18 involves creating what AirTouch characterizes as an 19 end office switch or functional equivalent of an end 20 office switch in a foreign jurisdiction, that being 21 Illinois. 22 And on that basis, they worked up the cost 23 study. It was a cost study that was created based 24 upon those -- they developed the inputs based upon 25 those principles and upon the otherwise methodology 00641 1 that they chose for developing the study. 2 It certainly is my perception that this was 3 not done haphazardly and that it was done 4 purposefully, that there was a conscious decision not 5 to run their study on a state-specific basis, but to 6 run it on those other parameters. 7 The objective of the current request for 8 supplemental testimony is to respond to objections 9 that are being made because the study was not 10 performed on a state-specific basis. My primary 11 concern is that any other assessment or evaluation 12 that would be done to modify the cost study to 13 state-specific parameters involves data which is not 14 presently in the record. 15 And I understand, in fact, part of the 16 workup that was performed by the expert witnesses 17 Bidmon and Zepp last night did, in fact, involve some 18 research and some development of data points that 19 aren't presently in any of the exhibits or have not 20 been present or previously produced to US West. 21 There are two hurdles certainly that 22 AirTouch would need to get over in order to establish 23 a rate in this proceeding. First, there's the 24 overriding issue of methodology, whether, in fact, 25 the methodology that is employed is appropriate and 00642 1 is likely to lead to a figure that is legally 2 justifiable, a number that is legally justifiable as 3 a rate, and then there's the question of inputs 4 themselves. 5 To the extent that the cost study 6 previously performed by AirTouch conformed to the 7 parameters that it felt met its legal duty, and to 8 the extent that there is a real concern on my part 9 that any additional workup of an alternative cost 10 study involves other data points which aren't part of 11 this record and which have not been provided to US 12 West and US West has not had an opportunity to 13 develop a responsive position to a 14 Washington-specific cost study, but has only had an 15 opportunity to develop a response to a scorched node 16 type network, it does seem that it would be unfair to 17 US West at this point in time to allow that 18 additional cost study version into the record. 19 I will just repeat some of the comments 20 I've made before, that this Commission reserves the 21 opportunity that if, in fact, it finds that there is 22 an appropriate methodology that has been developed by 23 AirTouch on which to produce an appropriate rate, but 24 takes some exception with the inputs or the 25 parameters, that the Commission will seek to achieve 00643 1 a proper and fair conclusion to this proceeding by 2 entering a decision that would otherwise specify what 3 those parameters are and that a rate to be 4 recalculated in the same way that I've reserved the 5 opportunity to make a decision on an issue by issue 6 on the unresolved issues without necessarily choosing 7 one party's language over another party's language. 8 And so for those reasons, the request to 9 conduct supplemental testimony in this record on the 10 basis of a revised cost study that would be 11 Washington-specific is denied. 12 Anything else from the parties, Mr. 13 Devaney? 14 MR. DEVANEY: No, thank you, Your Honor. 15 JUDGE BERG: Mr. Keehnel. 16 MR. KEEHNEL: Yes, Your Honor. For the 17 record, I should note that I think that the parties 18 have an inherent right to put on rebuttal witnesses 19 in response to new information presented during the 20 course of the Respondent's case in chief. 21 And in this instance, as I think I may have 22 noted before, the deadline was imposed for US West to 23 provide any challenge to AirTouch's cost study, and 24 that testimony came in ultimately in three waves. 25 The third wave was allowed by the Commission on a 00644 1 date long after US West had received indications that 2 out-of-state equipment was being deployed in the RF 3 column only, of course, and also after US West had 4 received the specific data regarding the fact that 5 some Oregon customers are included in the customer 6 base. 7 Respectfully, Your Honor, I object to the 8 ruling insofar as it deprives, I think, AirTouch of 9 fundamental due process and an inherent right to put 10 on testimony responsive to an attack on its cost 11 study, which was launched today by a witness for US 12 West for the first time. 13 JUDGE BERG: I understand. And I have also 14 considered that the Exhibit C-11, portions of the 15 Exhibit C-11 appear to have been received subsequent 16 to the dates for filing of testimony, rebuttal 17 testimony, and supplemental rebuttal testimony in 18 this record. 19 MR. KEEHNEL: One last point, and then 20 maybe we can all go home. Earlier today, US West 21 gave us for the first time a statistical analysis 22 presented through a witness, Ms. Malone. There was 23 new data. It was based on NXX codes, as I recall. 24 We had no opportunity to cross-examine it, no backup 25 data was supplied whatsoever, and it was accepted 00645 1 into the record. 2 I cannot find a principal distinction 3 between the admission of that information and what I 4 think should have been the admission of the 5 information that we offered today. 6 JUDGE BERG: I understand. And I would 7 just reiterate, again, that I perceive the cost study 8 that was developed by AirTouch in cooperation between 9 Mr. Bidmon and Dr. Zepp to have been an effort that 10 was undertaken with certain principles and certain 11 objectives in mind, and that the fact that it covered 12 the parameters that it did was a conscious decision, 13 and that, in doing so, I'm also expressing my belief 14 that the fact that it was not Washington-specific was 15 also a conscious decision by the AirTouch experts. 16 And that is not meant to indicate in any 17 way whether or not that was either a right decision 18 or a wrong decision. I just believe that it was done 19 intentionally and that the evidence that was 20 developed and presented in the form of a cost study 21 was purposeful, and I believe that, to the extent 22 that Mr. Keehnel, you've also represented that these 23 revisions don't affect the methodology of the study 24 leads me to believe that the most appropriate 25 approach to take and the most fair approach to take 00646 1 is the one which I've stated. 2 MR. KEEHNEL: Yes, and indeed you're 3 correct, Your Honor. And lest it be misconstrued, we 4 do believe the cost study that's been submitted to 5 the Commission and accepted in evidence correctly 6 states the approach, but we thought, given that 7 questions had been raised, an attack had been made, 8 it would be helpful to have the additional 9 information. 10 Given the lateness of the hour, my memory's 11 failing me, so I can't recall if I've completed my 12 offer of proof. I've stated to you what the 13 witnesses would state, so I think I've covered that, 14 and the other part of the offer of proof, of course, 15 is marking of the exhibit, but not to be admitted per 16 the ruling of the Commission. Somebody remind me, 17 did I get the exhibit marked? 18 JUDGE BERG: No, and I think that would 19 probably be an appropriate thing to do. 20 MR. DEVANEY: Your Honor, US West is 21 prepared to make a few comments in response to Mr. 22 Keehnel's comments, but only if Your Honor is 23 interested in having our comments on the record. 24 JUDGE BERG: No, to the extent that my 25 decision is consistent with the objection of US West, 00647 1 I think I'd just like to leave it at that. 2 MR. DEVANEY: Very well. 3 JUDGE BERG: Unless you're also objecting 4 to my decision. 5 MR. DEVANEY: No, I'm not. 6 JUDGE BERG: All right. It wouldn't be the 7 first time that both sides found something to take 8 exception to. The confidential exhibit entitled -- 9 we'll just call this the exhibit making adjustments 10 to the cost study. It will be marked as Exhibit 11 C-53. And Exhibit C-53, having been moved into 12 admission, the request for admission is denied. 13 One other item that I did want to address 14 on the record, and then we'll take a short -- we'll 15 go off the record to just discuss any other details 16 we need to clean up, but the one detail that I do 17 want to put on the record is that with regards to the 18 decision during the proceeding that certain portions 19 of Exhibit C-27 are nonconfidential, I will be 20 issuing a supplemental order that deals exclusively 21 with the challenge to confidentiality and with my 22 decision on that matter, but I do want the parties to 23 understand that the decision that was made in the 24 date of the order is today's date, even though the 25 written memorialization of the challenge and the 00648 1 arguments and the decision may not actually be 2 received and served upon the parties until possibly 3 as late as March 24th. 4 MS. ANDERL: We understand that, Your 5 Honor. 6 JUDGE BERG: All right. We'll go off the 7 record. 8 (Discussion off the record.) 9 JUDGE BERG: We'll be back on the record. 10 The last administrative details to take care of at 11 this point in time is that Bench Request One, 12 relating to identification of the 37 operating 13 systems relating to the backup to line item 63 in the 14 AirTouch cost study is designated as Exhibit C-54. 15 AirTouch has previously agreed to produce 16 the response to Bench Request One contemporaneous 17 with filing and serving its last best offer on 18 Wednesday, March 24th. 19 All parties shall serve and file their last 20 best offer on that date. Closing briefs will be 21 served and filed on Wednesday, March 31st. US West 22 shall also state whether it has any objections or 23 would be willing to stipulate that C-54 is admitted 24 into the record on or before March 31st, as well. 25 Before we recess, Mr. Keehnel, anything else? 00649 1 MR. KEEHNEL: I can't think of a thing, 2 Your Honor, except my desire for a soft pillow. 3 JUDGE BERG: All right. Mr. Busch. 4 MR. BUSCH: Nothing, Your Honor. 5 JUDGE BERG: Mr. Devaney. 6 MR. DEVANEY: No, thank you. 7 MS. ANDERL: Thank you, Your Honor. 8 Nothing. 9 JUDGE BERG: Thank you, everyone, for an 10 excellent two-day hearing. We will be adjourned at 11 this time. 12 (Proceedings adjourned at 9:26 p.m.) 13 14 15 16 17 18 19 20 21 22 23 24 25 14 15 16 17 18 19 20 21 22 23 24 25