Coop Exhibit N
Ruby Ranch Internet Cooperative Association Oppedahl & Larson LLP P.O. Box 5088 Dillon, CO 80435-5088 970-468-6600 carl@rric.net
August 2, 2001
Via Email — ndonahu@qwest.com and Federal Express 7901 2071 5151 Nancy J. Donahue, Lead Negotiator Qwest Corporation 1801 California Street, Room 2410 Denver, CO 80202
Dear Ms. Donahue:
This letter summarizes our second negotiating session held yesterday afternoon, on August 1, 2001. Please advise me immediately if you believe my summary is inaccurate or incomplete in any way.
I was, quite frankly, disappointed by our session. We appeared to take a step backward, rather than a step forward. Although we were on the phone for two hours, we actually talked for less than one hour because there were numerous instances where you put our discussions “on hold” while you made calls to others in an attempt to find answers. As I thought was obvious, the purpose of my July 26 email, July 27 email, and July 29 email was so you could obtain this and other information before our meeting, thereby making the session more productive.
Mr. Willard opened the session with the statement that Qwest is now questioning whether it even has an obligation to negotiate with the Ruby Ranch Coop. He said that interconnection provisions of the Communications Act, Sections 251 and 252, may not apply and that Qwest may not have to deal with the Coop if the Colorado Commission does not license the Coop as a telephone company (even though we do not intend to provide voice telephony services).
So the record is clear, we do not care what law governs our arrangement. Our interest is (1) getting the services we need from Qwest, (2) getting them promptly (before the construction season closes), and (3) getting them at reasonable prices and terms. We are not particularly interested in debating the details of telecommunications law that appear rather arcane to us. Nevertheless, I am confident that Mr. Willard is familiar with Sections 201 and 202 of the Communications Act:
Given FCC orders and rules requiring Qwest to provide subloops to competitors, it would appear to constitute a reasonable request for our Coop, which will not compete with Qwest, to use subloops that are available and that Qwest would never use. Indeed, from a business perspective, Qwest’s reluctance to lease subloops is baffling since our proposal would generate revenues for an embedded investment that Qwest has yet to generate a single dollar in revenue. What would your shareholders say if they learned of the company’s apparent position?
You promised that within the next week, Qwest will advise us of its “official position” whether it is going to deal with us in good faith. We ask you to keep this promise. We also ask that Qwest share its views over the governing law and regulatory authority (e.g., this is an interstate issue so the FCC has authority; this is an intrastate issue so the CoPUC has authority; or this is an interstate issue but the CoPUC nonetheless has jurisdiction). We do not want to be in a position where we seek regulatory intervention, only to have Qwest later object that we are using the wrong procedure or are in the wrong forum. We want to talk about the substance of our request, not debate procedural legal issues.
As volunteers with regular full time jobs, we do not have the time to waste on negotiations if your company believes the exercise is pointless. We also do not have time to sit on the phone while your team pursues answers to questions that we pose before the meeting. Is Qwest going to deal with us in good faith? We really need to know the answer as soon as possible so we can evaluate our next steps.
The To-Do List. I was really disappointed at how little Qwest accomplished over the past week. We finished our first July 26 session with a to-do list that I emailed to you later that day. During yesterday’s meeting you held up my July 26 email message as authoritative regarding what was to be done during the session. In fact, you refused to discuss a new topic — Qwest’s requirement in its “customer questionnaire” that we have a toll-free telephone number — because this topic was not in my July 26 email message. Yet, despite holding that my email list was authoritative regarding what was to be done in yesterday’s meeting, I was disappointed to find that Qwest failed to do many of the important things contained in that list.
I will address the issues in the order they are discussed in our July 29, 2001 letter, after which I will address other unanswered topics.
Baseline Contract Document. We have submitted to Qwest a four-page contract proposal that meets our needs and recommended that Qwest propose changes and additions to this draft. Qwest refuses to pursue this sensible approach. It requires that we volunteers “red line” its 280-page contract draft, most of which admittedly has little relevance to our narrow and limited request. Qwest takes the firm position that we must redline its document notwithstanding its threat that it may announce that it intends to withdraw from good faith negotiations (thereby rendering in vain our time-consuming efforts).
We could engage in gamesmanship, by redlining all 280 pages and inserting our four pages of proposed text. This seems silly (absurd may be more accurate given the time that would be involved to perform this task). But is this what you want us to do? Will this step convince Qwest to identify the particular provisions in its own standard contract that it believes are important to our contract?
Insurance. During our first session, Qwest appeared sympathetic to the hurdle that its proposed $11 million insurance requirement would impose on our small Coop, and we left with the understanding that Qwest was going to have something constructive to offer regarding this problem. Mr. Willard agreed to draft contract language to address our concern. Mr. Willard did not do what he said he would do, and you postponed this deadline to our next session, two weeks from now. If fact, if I understood Qwest correctly, Qwest instructed Mr. Willard not to draft a counterproposal.
Mr. Willard stated during the session that he had spoken with a Qwest “risk manager,” who apparently took the position that Qwest would not budge from its $11 million requirement, suggesting that Qwest may not be flexible as we had understood. This gives the impression that Qwest is not negotiating in good faith – that the real decisionmakers regarding your insurance requirement are elsewhere and that those who are with us on the conference calls do not have negotiating authority.
During yesterday’s session, Qwest did not provide a meaningful answer to my question: what risk it wants the Coop to insure against that is different from a customer plugging in an ordinary telephone. Kindly explain in writing the following:
During our discussion yesterday, I asked if Qwest could explain where I was mistaken in my suggestion that our equipment connected to rented subloops would not come into metallic contact with Qwest equipment other than the subloops. I also asked if Qwest could explain where I was mistaken in my suggestion that Qwest’s NID protectors (carbon gap and gas discharge devices) do not activate until some 1000 volts, and thus that the NIDs would not protect, for example, against a POTS customer inadvertently connecting 110-volt wiring to a POTS telephone line. No one on the call knew about these things. I do hope that you can bring in an appropriate person within Qwest to educate the members of your negotiating team about these points. We are perplexed that your negotiating team is demanding we secure a $11 million insurance policy, yet the team has no understanding of the risks that Qwest thinks it is potentially facing.
In summary, after two meetings, Qwest has been unable to provide any justification for its proposed $11 million insurance requirement, yet it has not agreed to modify or eliminate the requirement, much less offer a specific proposal for the Coop’s review. Does this situation seem reasonable to Qwest?
Subloop Prices. In our first session, when you dropped the bombshell that Qwest’s price for our subloops was $21 rather than $8.33, we asked for some substantiation for the much higher price. You were not able to provide it in our first meeting, but we agreed it was on your to-do list for the second meeting. Qwest did not have an answer during the second meeting. Instead, you used our conference time to pursue an answer. Specifically, more than half of the minutes of yesterday’s meeting were spent with me “on hold” listening to silence as you placed various tardy telephone calls to unnamed Qwest personnel on this subject.
As for the subloop pricing issue, the second meeting ended like the first — no explanation or substantiation of Qwest’s claim that our subloops are in Zone 3, and no explanation over how a distance to the central central office is relevant in pricing of subloops when the subloops do not touch the central office (and are more than three miles from the office).
Feasibility Fee/Quote Preparation Fee. You clarified that the CoPUC did not approve your proposed fee of $1,707, but that we would have to accept the fee on a “take it or leave” basis, despite the showing in our July 29 letter as to the unreasonableness of that fee amount.
Activation Fee. Without answering the questions posed in our July 29 letter, you stated that the $129 Qwest nonrecurring charge for installation of a subloop was also offered on a “take it or leave it” basis.
New Cross-Connection Box. During our second meeting, Qwest confirmed what it said in our first meeting about who will incur costs if Qwest moves its interconnection point. Qwest confirms that it would pay all costs the Coop might incur in moving the interconnection point from the current cross-connection box to any new terminal Qwest may install on the Ranch. Qwest did not indicate, however, when it would install a new terminal and additional facilities to provide basic telephone services to all Ranch residents.
Ordering Process. You indicated that Qwest would accept orders by facsimile regardless of what the contract may say about ordering. If this is the case, we would understandably like the contract to state explicitly that we can place our handful of orders by facsimile.
Contract Term. We proposed four years. You countered with three years. We will accept three years, assuming that the remaining Qwest terms and conditions can be negotiated to a point at which we can sign an agreementn. We need to begin reaching consensus on some points.
Interim Agreement. Our scheduled two hours expired before we had an opportunity to discuss this subject. It appears possible, if not likely, that we will need to seek regulatory intervention since Qwest is offering certain provisions on a “take it or leave it” basis, but offer no justification or explanation for the terms or prices. We want to commence our DSL service in the immediate future, because Ruby Ranch residents want this capability (and Qwest will not offer it) and because we need to bury our own cable before winter arrives. We therefore propose the following interim arrangement while we obtain regulatory resolution of our differences:
A number of other questions that we have raised have thus far gone unanswered, including questions posed in my July 27 email to you Among them are the following:
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Our next (third) session is scheduled for August 15 beginning at 1 p.m. Mountain Time. My hope is that over these two weeks, Qwest will have time to complete the tasks it agreed to perform last week and that it will respond meaningfully to the points we made in our July 27 email message, July 29, 2001 letter, and above.
Sincerely,
Carl Oppedahl, Board Member
Ruby Ranch Internet Cooperative Ass’n
cc: Martin Willard, Perkins Coie, willm@perkinscoie.com