BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF COLORADO
Ruby Ranch Internet Cooperative Association,
Petitioner,
v.
Qwest Corporation,
Respondent.
DOCKET NO. 01B-493T
PREFILED DIRECT TESTIMONY OF CARL OPPEDAHL ON BEHALF OF THE RUBY RANCH INTERNET COOPERATIVE ASSOCIATION
(with corrected Arabic numeral exhibit numbers)
Please note that as of the date of this prefiled testimony, there are discovery requests outstanding to be answered by Qwest. The Coop thus necessarily reserves the right to add direct testimony depending on the resolution of the outstanding discovery requests.
The exhibits are being filed in a separately bound package. Please note that the exhibits referred to herein are, for the reader's convenience, also available at http://www.rric.net/arbitration/pdexhibits.htm . This testimony is also available in HTML format on that page.
Table of Contents
Why the Coop's proposed activities do not harm Qwest in any way 28
What's wrong with the nonrecurring price for activating a subloop 54
What's wrong with the Quote Preparation Fee 57
Q. Please state your name, occupation, and connection with the Ruby Ranch Internet Cooperative Association ("the Coop")?
A. My name is Carl Oppedahl. I am a patent lawyer, practicing with the patent law firm of Oppedahl & Larson LLP in Dillon, Colorado. I am a volunteer serving as a member of the Board of Directors of the Coop.
Q. What do you plan to discuss in your testimony here?
A. Among other things, I will explain why Qwest's requirement of a million-dollar insurance policy is unreasonable and discriminatory. I will explain why Qwest's proposed nonrecurring charge for activation of a subloop is unreasonable and discriminatory. Finally, I will explain why Qwest's proposed Quote Preparation Fee is unreasonable and discriminatory.
Q. Why should the Commission believe your testimony about the absence of risks to Qwest's network and the rates Qwest should charge?
A. I have a bachelor's degree in physics, and I have substantial knowledge and experience relating to telephone systems. I am the author of The Telephone Book, published by Consumer Reports Books. I have done a lot of telephone inside wiring. I administer the telephone system and data networks for my patent law firm. I have written many patent applications on electronics and electrical engineering subjects including telecommunications and telephone systems. I hold two US patents for computer and electronic systems.
I am very familiar with the technology of DSL (digital subscriber line) systems. I personally designed and installed the point-to-point microwave system linking the Ruby Ranch neighborhood with a T1 line in my Dillon office. I personally designed the data network which interfaces between my law firm's T1 line and the microwave link, and I personally programmed the Cisco router that is central to this network. I personally designed and installed the proof-of-concept DSL system that now serves a small part of the Ruby Ranch neighborhood. I maintain and monitor all of these systems.
I am quite familiar with the "outside plant" work which telephone companies do generally when installing telephone service, having worked closely with many telephone company installers in many locations over the past twenty-five years. I am also particularly familiar with the "outside plant" work which Qwest necessarily performs when installing telephone service to the Ruby Ranch neighborhood, having worked very closely with many Qwest installers in the Ruby Ranch neighborhood over the past five years. I am likewise very familiar with the Qwest installed plant and equipment (for example, buried cables and cross-connect and loop carrier boxes) that serve the Ruby Ranch neighborhood, for the same reasons.
Q. What are the usual ways that people obtain Internet access in the United States?
A. The majority of Internet users in the United States use V.90 modem connections over ordinary voice lines to reach the Internet, at speeds reaching 49K to 53K bits per second.
The second most commonly used form of Internet access is cable modem Internet access.
The third most commonly used form of Internet access is DSL (digital subscriber line).
Q. Is V.90 modem Internet access available to people in the Ruby Ranch neighborhood?
A. No. It is not possible to obtain the speeds of V.90 modems in the Ruby Ranch neighborhood. The telephone service in the Ruby Ranch neighborhood is of poor quality -- while Qwest customers in some areas are able to make modem connections as fast as 53 thousand bits per second ("53K"), in our neighborhood it is impossible to make modem connections any faster than about 26K.
Q. Why is it not possible to make modem connections faster than 26K?
A. As in most parts of Summit County, telephone customers in the Ruby Ranch neighborhood are not served by lines that connect the customers to the Qwest central office. Instead, the customers are served by a "remote terminal," also called an SLC ("subscriber loop carrier") box or "digital loop carrier" box, a photograph of which may be seen in Exhibit CO-1. The remote terminal serving the Ruby Ranch neighborhood is on Badger Road in Summit County, as shown in Exhibit CO-1. The SLC box provides an inferior quality of telephone line as compared with connections direct to the central office, and this inferior line does not support speeds faster than about 26K.
Q. Does Qwest offer dialup (modem) Internet access in Summit County at any speed, even 26K?
A. Apparently not. The Qwest web site lists dialup access numbers for its Internet access service in Colorado at http://www.qwest.net/nav4/acct_tools/basic_roaming.html#colorado , but the list does not include any telephone number that is a local call from Summit County.
Q. Is cable modem Internet access available in the Ruby Ranch neighborhood?
A. No. The cable provider is AT&T and AT&T does not provide such service in the neighborhood. It has not said when, if ever, it will provide such service. I have asked AT&T about this on several occasions and have been told they cannot say when, if ever, they will offer such service.
Q. Does Qwest offer DSL service in the Ruby Ranch neighborhood?
A. In its monthly bills for voice telephone service to customers in the Ruby Ranch neighborhood, Qwest often includes billing inserts inviting customers in the Ruby Ranch neighborhood to sign up for Qwest DSL service. The billing inserts talk about how "slow" dialup service is, and how its 256K DSL service is up to "five times faster" than dialup service (which in many locations is at 53K bits per second). A recent Qwest billing insert sent to customers in the Ruby Ranch neighborhood may be seen in Exhibit CO-3.
The brochure offers "free activation." The brochure says:
Need more speed? With MSN Broadband powered by Qwest, you'll fly from site to site, so you can get more from the Internet. Just point, click, and you're there.
No more slow downloads or busy signals.
Fast and always connected. No more dial-ups.
Up to five times faster! 256K DSL service downloads in 13 seconds compared to 1 minute with standard dial-up.
But if you call the number on the billing insert, you will be told that Qwest does not actually offer DSL in the Ruby Ranch neighborhood.
It is frustrating to receive such billing inserts from Qwest, and residents of the Ruby Ranch neighborhood have received many such DSL advertisements from Qwest in recent years. It seems like a waste of money and postage for Qwest to knowingly mail DSL advertisements to people who cannot get DSL from Qwest.
Q. Is 256K DSL service "five times faster" than dialup service in the Ruby Ranch neighborhood?
A. No, due to the poor quality of the telephone lines which Qwest provides in the neighborhood, the 256K speed is actually about ten times faster than dialup service.
Q. Does any company other than Qwest offer DSL service in the Ruby Ranch neighborhood?
A. No. Vailnet has said it plans to provide DSL in Summit County by means of equipment to be placed in the Dillon Central office, but it says that with such equipment it can only offer service to customers who have telephone lines connected directly to the central office. It says it cannot offer service to customers who are on the "wrong side" of an SLC and thus do not have lines connected directly to the central office. For this reason, it says it cannot offer service to customers in the Ruby Ranch neighborhood.
Q. Given the unavailability of DSL or cable modem service in Summit County, are there any other ways in Summit County to get high-quality Internet access?
A. In the past, in parts of Summit County it has been possible to obtain high-speed Internet service from a company called NetBeam. NetBeam has used fixed microwave links in the unlicensed 2.4-GHz band, with microwave antennas and transceivers at user locations. The service is only available to those who have a direct line of sight to a NetBeam antenna. Many Ruby Ranch residents lack a direct line of sight to any NetBeam antenna, and so would be unable to use the service for that reason. The service has not been completely reliable, and NetBeam is now in bankruptcy.
Yet another way to obtain Internet access is via frame relay data lines provided by Qwest. Qwest offers frame relay data lines at T1 speed and 56K speed. A typical T1 frame relay data line from Qwest passes data at a committed information rate of about 770K, with rates bursting to 1.54 megabits per second ("1.54M"). Such a line has a recurring monthly cost of about $360 paid to Qwest and additional costs paid to an Internet service provider. However, Qwest has told me that it lacks facilities to provide such a T1 service to locations in Ruby Ranch.
A second frame relay service provides is at 56K speed.. Actually, the frame relay data line from Qwest passes data at a committed information rate of about 28K, with rates bursting to 56K. Such a line has a recurring monthly cost of about $80 paid to Qwest and additional costs paid to an Internet service provider.
It is noteworthy that the Federal Communications Commission (FCC) has defined "advanced telecommunications capability" as used in Section 706 of the Telecommunications Act of 1996 as having the capability of supporting, both upstream and downstream, 200K. See Second Section 706 Report, 15 FCC Rcd 20913, 20919-21 (2000). Qwest's 56K frame relay service does not meet this definition.
Qwest has said that it lacks facilities to be able to provide T1 service to locations in Ruby Ranch.
Thus, in the Ruby Ranch neighborhood, it is not possible to obtain high-quality Internet access from Qwest, nor from any other would-be provider.
Q. What does the Coop hope to do about the lack of high-quality Internet access in the Ruby Ranch neighborhood?
A. The Coop hopes to provide DSL service to residents of the neighborhood.
Q. What has the Coop done already toward this goal?
A. The Coop was incorporated on May 29, 2001, and it formally sought rental of copper pair subloops ("interconnection") from Qwest about three days later. The Coop naively believed that Qwest would engage in good-faith interconnection negotiations and that it would be able to bury its own cable, and launch DSL service, before the ground froze for the winter in 2001. After all, Qwest has ample spare subloops that it is not using and will never use, so our proposal would enable Qwest to generate revenue that it would not otherwise realize. Present events evidence that the Coop was mistaken.
The Coop has received a commitment for the provision of a DSL access multiplexer (DSLAM), as well as commitments for provision of a number of DSL modems and a DSL router. The Coop, through its volunteers, has made detailed technical studies and has performed site surveys to determine the feasibility of its operations. With the use of donated cable that closely matches the pairs that would be rented from Qwest under an interconnect agreement, the Coop has performed proof-of-concept testing providing a high confidence level that its service will work. In particular the Coop's proof-of-concept testing has taken into account the maximum distance from any subscriber to the proposed DSLAM location.
For any DSL service provider, an important requirement is the ability to connect the DSLAM to the Internet, typically by means of a T1 data line. The DSLAM is and will be within the Ruby Ranch neighborhood, and as I mentioned earlier, Qwest says it is unable to provide T1 service to any location within the neighborhood. This presented a challenge to the Coop. Residents of the neighborhood have set up a point-to-point microwave data relay link between the neighborhood and an office in Dillon, Colorado, where Qwest has been able to install a T1 data line. The Coop has made arrangements to connect the DSLAM via the point-to-point microwave link to the T1 line and thence to the Internet.
The proof-of-concept field tests have confirmed that the DSLAM-to-microwave-to-T1-to-Internet connection works well with multiple users and with typical subscriber usage levels.
Q. What remains to be done for the Coop to launch DSL service for residents of the neighborhood?
A. While there are a few very minor remaining needed preparations, the sole remaining substantial roadblock to launching of service is Qwest. Qwest is the monopoly provider of subloops (spare copper pairs within the neighborhood) and it refuses to rent spare subloops to the Coop on reasonable terms and conditions. If Qwest had been reasonable from the outset, rather than unreasonable, service would have been launched many months ago.
Q. What organizational steps has the Coop taken?
A. The Coop was incorporated on May 29, 2001 with the Secretary of State of Colorado. It was incorporated as a nonprofit corporation. It is a cooperative association, meaning that its owners are its members. If there were ever to be any profits, they would be distributed to the members in proportion to their payments to the Coop for services provided to them.
The Coop has applied for and obtained a Federal Tax Identification number, also called an Employer Identification Number. The EIN is 84-1591921.
The Coop has been assigned a Dun & Bradstreet number by Dun & Bradstreet. The D&B number is 07-3614336.
Qwest has stated that the Coop must obtain an Access Customer Name Abbreviation, also called an ACNA. The Coop paid the necessary fees to Telcordia for the ACNA, and the ACNA assigned to the Coop is RRV.
The Coop has applied with the Internal Revenue Service for recognition as a nonprofit organization under Internal Revenue Code section 501(c)(12). This process takes many months and is in progress at the present time.
Q. What, if anything, has the Coop done to inform Qwest of its organizational structure?
A. On August 23, 2001, the Coop posted a copy of its incorporation document (endorsed by the Colorado Secretary of State) on its web site. The Coop provided the URL (web link) for this document to Qwest by email on August 23, 2001. The Coop has also explained its organizational structure several times, by telephone, to Qwest. Despite this, Qwest has repeatedly professed not to know what sort of organization the Coop is, as recently as during the preliminary hearing of December 12, 2001.
Q. Why doesn't the Coop use a wireless system to provide high-quality Internet access?
A. The neighborhood is very hilly. The Coop's volunteers have done detailed site surveys and have found that there is no single location where a base antenna could be positioned that would provide line-of-sight to all of the homes and vacant lots in the neighborhood. Indeed it seems that even as many as four base antenna sites would fail to serve all homes and vacant lots in the neighborhood.
In addition, while unregulated bands such as the 2.4-GHz band arewell suited to point-to-point links, there are drawbacks to its use in omnidirectional applications such as providing service to a large number of homes in many directions, including the risk of causing interference to other systems and vulnerability to interference from other systems. Even if such a system were to function satisfactorily at the outset, there can be no assurance that later-installed systems will not interfere and cause later degradation of or loss of service.
Q. Why doesn't the Coop bury its own cable so that it would not need to rent subloops from Qwest?
A. The excavation cost would be many tens of thousands of dollars, and probably over a hundred thousand dollars, far beyond the finances of the Coop. Such excavation would also tear up the roads of the neighborhood, posing problems with fire and other emergency access to homes in the neighborhood during the time of such excavation. Given the many spare subloops in the existing telephone cables, it would be extremely economically inefficient to bury even more such loops, given the prodigious expense.
Q. Please describe the different types of DSL as they relate to the extent and nature of their connection to Qwest's equipment.
A. Some types of DSL employ "line splitting." With line splitting, a copper pair is used both for voice telephone service and for data communications. The voice telephone service is passed over the low-frequency portion of the spectrum (below about 3KHz) and the data service is passed over a higher-frequency portion of the spectrum. Such line splitting is commonly used with ADSL (asymmetric DSL). When line splitting is employed, the DSL equipment at both ends (the DSLAM and the customer's DSL modem) are both in direct metallic contact with telephone company equipment. It is conceivable, though extremely unlikely, that unwanted signals from the DSL equipment could harm the telephone company equipment. It is also possible, and occasionally it actually happens, that miswiring or malfunction in the DSL equipment or its wiring can cause a loss of the voice telephone service for the particular customer.
In contrast, some other types of DSL avoid line splitting, and instead a dedicated copper pair is used, separate from any copper pair providing voice telephone service. SDSL (symmetric DSL) systems use such a dedicated copper pair. In an SDSL system, then, there is no metallic electrical connection between any of the SDSL equipment (the SDSL modem and the DSLAM) and any Qwest equipment. Likewise there is no metallic electrical connection between any of the SDSL equipment and the customer's own voice telephones. This reduces the already-very-small risk of harm to the Qwest network to essentially zero, and likewise reduces to essentially zero the risk of harm to the customer's voice telephone service.
Q. Since SDSL service poses less risk to the Qwest network than ADSL line-splitting service, why would anyone ever use ADSL service? Why would Qwest permit the use of ADSL service?
A. A chief advantage of ADSL line-splitting service is that it can be installed even if there is a shortage of copper pairs at some point between the central office and the customer. The ADSL service is simply "piggy-backed" onto existing voice service. Another advantage is that the internet service provider may be able to avoid having to do a "truck roll" to install the service, since an existing copper pair is being used. Likewise the internet service provider may be able to avoid having to pay the telephone company to do a "truck roll" to install the service.
Most of the DSL which Qwest provides to its own DSL customers is ADSL line-splitting service. Qwest, by its conduct, indicates that it finds the risks of ADSL line-splitting service to be outweighed by the benefits.
Q. Which type of DSL does the Coop plan to launch?
A. The Coop plans to launch SDSL service, using dedicated copper pairs that are separate from any copper pairs providing Qwest services in the neighborhood. The equipment which the Coop has obtained (the CopperEdge CE-150 and the DSL modems) are all SDSL equipment.
Q. Why did the Coop choose SDSL service?
A. If there had been a shortage of copper pairs (subloops) within the Ruby Ranch neighborhood, there might have been no choice but to employ ADSL line-splitting service. As mentioned above, however, it turns out that Mountain Bell grossly overbuilt the buried cable plant within the neighborhood, and there are more than twice as many spares as there are lines in use. This permits employing SDSL with dedicated copper pairs, while still leaving as many spares as there are lines in use.
Choosing SDSL permitted the Coop to avoid having to worry about the splitter which would otherwise have to be installed at the point where the DSLAM connects to the voice telephone lines. Because there will be no connection between the DSLAM and the voice telephone lines, no splitter is needed.
Another factor prompting the Coop to select SDSL rather than ADSL is a factor that has nothing to do with technology but is merely political. Qwest has made it quite clear that its justification for requiring the Coop to purchase an insurance policy naming Qwest as a beneficiary is a professed fear by Qwest that the Coop's activities would somehow present some risk to Qwest's equipment. While ADSL equipment would connect with Qwest's electronic equipment, SDSL service would not. Thus the choice of SDSL should reduce or eliminate Qwest's professed fear of risk to its network.
Likewise, while ADSL service would present only an extremely small risk of interference with voice telephone service, SDSL represents essentially no risk of interference with voice telephone service. This, too, was a factor prompting the Coop to choose SDSL service despite its drawbacks.
Q. How does the Coop's proposed SDSL (symmetric DSL) service work, from the technical point of view?
A. The service works by connecting DSL modems to a DSLAM. The DSLAM and modems are shown in Exhibit CO-4. From a technical point of view the connections are like connecting speakers to a stereo. In particular, it is necessary to connect two wires (a pair of wires) from each modem to the DSLAM. This is just like connecting two wires (a pair of wires) from each speaker to the stereo amplifier.
Q. Are the DSL wires that the Coop proposes to use, connected to telephone wires that are used for voice telephone service?
A. No, there is no electrical connection between any of the DSL equipment and any voice telephone equipment. The pairs which the Coop hopes to be able to rent from Qwest are pairs which are not connected to any voice telephone equipment, but are simply "spares" buried under the roads of the neighborhood, pairs that would otherwise not be put to any use at all.
If Qwest were to permit the Coop to launch service, Qwest's use of subloops would be very much like LADS service. Just as LADS lines have no connection with Qwest electronics, so do subloops have no such connection. The installation price for LADS lines is much higher (indeed, unconscionably higher) then the installation price for a subloop, and the monthly rate to rent an LADS line is unconscionably higher than the monthy rate in Qwest's SGAT for a subloop.
Q. Please show, on a map, where a typical DSL wire would be in the Ruby Ranch neighborhood.
A. Exhibit CO-5 shows two typical DSL wires. A first pair of wires, called "typical subloop A," goes between the Cross-Connect Box and subscriber/member A. A second pair of wires, called "typical subloop B," goes between the Cross-Connect Box and subscriber/member B. Qwest calls these "distribution subloops." I will often refer to them as "subloops."
By way of comparison, you could connect a stereo amplifier at the Cross-Connect box and connect a speaker at each of the subscriber/member locations A and B, and the music would come out at each speaker. It's the same type of wiring and (roughly speaking) it uses the same sorts of signals. The comparison is not completely apt, since the SDSL equipment uses smaller voltage signals than stereo signals, as I mentioned above. Stereo music signals, being largely in the same range of frequencies as voice telephone signals, could possibly interfere (with some possible measurable "crosstalk"). But the SDSL signals are higher in frequency and so don't generate audible crosstalk.
I draw the comparison with stereo speakers to emphasize that the DSL connections are not mysterious or dangerous or complicated. It's no more mysterious or dangerous or complicated than hooking up speakers to your stereo.
Q. How many of these subloops does the Coop wish to rent?
A. One per member/subscriber. As mentioned above, if all vacant lots were built upon, and if everyone chose to join the Coop, then there would be a maximum of sixty member/subscribers, using sixty of these subloops. More realistically, the Coop only hopes to have ten or perhaps twelve member/subscribers at service launch.
Q. What does the Cross-Connect Box look like?
A. Exhibit CO-6 is a photograph of the Cross-Connect box, taken last Spring when the Coop first asked Qwest for the rental of subloops. It looks different now, of course, since there are several feet of snow on the ground around it.
Q. What is inside the Cross-Connect Box?
A. Exhibit CO-10 shows the interior of the Cross-Connect box, in a photograph taken recently in cooperation with Qwest's counsel.
The parts of the Cross-Connect Box are labeled in Exhibit CO-11. At the top left are two screw terminal blocks, each having 100 pairs, which connect with a so-called F1 cable. The F1 cable goes down Ruby Ranch Road toward State Highway 9. There are four screw terminal blocks for F2 cables, on block on the left and three blocks on the right, each block again having 100 pairs. One 200-pair F2 cable exits toward Emerald Road. Another 200-pair F2 cable exits toward Ruby Road. There are two "spare" areas, one on the bottom left and one on the bottom right, as shown.
Q. What kinds of electrical signals pass over the wires between the DSLAM and the DSL modems?
A. The signals in our equipment are very small, under one volt.
Q. How do you know this?
A. I measured the voltage with a voltmeter.
Q. How many volts are in the wiring of a flashlight?
A. Most flashlights contain two cells, and thus use three volts.
Q. How does the voltage in the Coop's DSL equipment compare with, say, the signals used in stereo speaker wires?
A. Fifty watts of power into eight-ohm speakers represents 20 volts.
Q. Does this mean that stereo systems are twenty times more dangerous than the Coop's DSL system?
A. In some respects it may be said that higher voltages are more dangerous than lower voltages. But most people who are knowledgeable about physics and electricity would not consider stereo speaker wiring to be dangerous at all in everyday life, and would say the same about the Coop's DSL system.
Q. What kinds of electrical signals pass over the wires in POTS (plain old telephone service) voice telephone service?
A. When the telephone is not in use ("on-hook"), the voltage on the pair is about 48 volts.
When the telephone is in use ("off-hook"), the voltage on the pair may be in the range of five to twelve volts, depending on a number of factors including the distance to the central office and the number of telephones that are off-hook.
When the telephone is ringing, the voltage on the pair is typically ninety volts of alternating current.
Q. Are the voltages on POTS lines dangerous?
A. They surely present more risks than the Coop's SDSL lines. A person who touches a POTS line while the ringing voltage is present may be startled and frightened by the ninety-volt signal. Telephone company employees, and others who have experience with telephone wiring and the installation of telephone jacks, all encounter the ringing voltage every now and then with no ill effect. But the ringing voltage is more startling than life-threatening.
Q. What wiring and construction will be needed for the Coop to launch service?
A. Qwest says it will need to construct a Field Connection Point at or nearby to the Cross-Connect Box. This is shown in Exhibit CO-2. Qwest will probably say it needs to install a block of 100 pairs of screw terminals inside the Cross-Connect Box, in one of the spare locations shown in Exhibit CO-11.
The Coop will then run a 100-pair buried cable from the Field Connection Point to the Barn, also shown in Exhibit CO-2. The 100-pair cable may connect to the new 100-pair terminal block. Alternatively, Qwest may require that a protector be installed. In that case, a short 100-pair cable would connect the 100-pair block with one side of the protector. The Coop's 100-pair cable would connect with the other side of the protector.
The DSLAM will be located within the Barn and will be connected to the 100-pair cable. The actual distance from the Cross-Connect Box to the DSLAM and to the Field Connection Point will be about 300 feet.
Q. What steps will the Coop take toward electrical safety?
A. Among the steps the Coop will take toward electrical safety are:
- the DSLAM will be grounded in the manner specified by its manufacturer.
- the metallic shield of the 100-pair cable will be grounded at both ends according to standard telephone company practice.
- the DSLAM will be powered by, and electrically protected by, a UPS (uninterruptable power supply).
- the DSLAM will be wholly enclosed by a metal cabinet which will itself be electrically grounded.
- the 100-pair buried cable will be gel-filled armored cable designed for direct burial, of a type routinely used by telephone companies for buried cable installations.
In addition, if Qwest feels that a protector is needed, the Coop has offered to pay (as part of the construction cost of the Field Connection Point) for a multiline protector as part of the Field Connection Point. The Coop expects that such a protector would have five-pin gas-discharge tube elements, one for each pair being connected.
Q. What steps are involved in installing service for a new member/subscriber?
A. For service to be installed for a new member/subscriber, four things need to happen:
One, Coop will place an order to have a new subloop activated;
Two, Qwest will provide the new subloop between the Field Connection Point and the Network Interface Device at the home of the new member/subscriber;
Three, Coop will connect the new subloop, available at the Field Connection Point, to an available port in its DSLAM, by means of one of the pairs of its 100-pair buried cable;
Finally, the member/subscriber will arrange for "inside wiring" from his or her Network Interface Jack to the place where the SDSL modem is to be placed.
Q. What is a Network Interface Device?
A. A Network Interface Device is mounted to the exterior of a home in the neighborhood. It provides a point of demarcation between "inside wiring" within the home, and the "outside plant" wiring of Qwest.
Q. What does a Network Interface Device look like?
A. Two photographs of a typical Network Interface Device such as found in the neighborhood are shown in Exhibit CO-9. On the left is an NID with its cover closed, which is the usual condition. On the right is an NID which has its cover open, showing the screw terminals of the NID to which the homeowner may connect inside wiring.
Q. To which locations must the Qwest installer travel to activate a new subloop for a member/subscriber?
A. In the worst case, the Qwest installer would have to travel:
One - to the Cross-Connect Box at the corner of Ruby and Emerald Roads (shown in Exhibit CO-2) to make a cross-connection between a subloop and a pair at the Field Connection Point;
Two - to the pedestal at the edge of the property of the member/subscriber, to make a cross-connection between a subloop and a spare pair in the "drop" between the pedestal and the house;
Three - to the Network Interface Device at the house, to connect the spare pair in the drop wire to a pair of screw terminals in the NID.
In many cases, for example if there had been previously connected telephone lines in the house, it might turn out that no work is needed at the pedestal or at the NID.
Q. Please demonstrate the DSL system.
A. [demonstration to be conducted on January 31, 2002 at the hearing]
Why the Coop's proposed activities do not harm Qwest in any way
Q. Are there really enough spare copper pairs in the Qwest cables presently buried beneath the roads of the neighborhood to permit the Coop to launch service while leaving a reasonable number of spares for future Qwest needs?
A. Yes. The neighborhood was built in two parts, called Filing 1 and Filing 2. Filing 1 is the southern part, served by a 200-pair cable which branches to serve the approximately thirty homes that would be present if all vacant lots in Filing 1 were built upon. Filing 2 is the northern part, served by another 200-pair cable which branches to serve the approximately thirty homes that would be present if all vacant lots in Filing 2 were built upon.
The forty now-existing homes of the neighborhood average about three telephone lines per home, making them very good customers of Qwest. As such, they use about 120 pairs out of the 400 pairs that are present in the cables, leaving 280 spare pairs. If the theoretical maximum number of additional homes were built, bringing the total to sixty homes, and if the number of telephone lines per home stayed the same, then about 180 pairs would be in use, leaving 220 spare pairs.
The Coop's service would use one pair per subscriber, or a theoretical maximum of sixty pairs. This is only a small fraction of the present 280 spares, and is much less than one-third of the projected future 220 spares.
There is no danger that the Coop's activities would interfere with possible future activities of Qwest in the neighborhood.
Q. How much spare copper does this amount to?
A. The 280 spare pairs average between half a mile and over a mile in length. So there is something like 210 miles of unused copper pairs under the roads of the neighborhood, most of which will never make any money for Qwest. If Qwest ever permits the Coop to launch its DSL service, the Coop will rent somewhere between five and forty-five miles of this 210 miles of unused pairs.
Q. Why are there so many spare pairs in the Qwest cables buried under the roads of the neighborhood?
A. It appears that when Qwest's predecessor Mountain Bell buried its cables under the roads of the neighborhood a quarter of a century ago, it "overbuilt" the facilities. I think the word is called "gold plating," a practice telephone companies pursued to pad the rate base and to increase their profits.
Q. Who paid for this extra 210 miles of copper pairs?
A. I assume that the cost of the overbuilding was paid by Mountain Bell's ratepayers over the past two and a half decades, and presumably this cable plant was fully amortized some years ago. But I don't really know who paid for it.
Q. Will the Coop's proposed activities subject the Qwest network to significant risks?
A. No. There are several independent reasons why it will not. To see this, it is important first to have some understanding of the (very limited) risks that Qwest already assumes every time it serves a POTS (plain old telephone service) customer, a LADS (local area data service) customer, or an alarm line customer.
Q. What risks to Qwest's network are presented by POTS (plain old telephone service)?
A. A POTS customer has a copper pair provided by Qwest, which runs between the customer's location and a "line card" which provides an analog dial tone to the customer. For some customers the line card is located in the telephone company central office. For customers in the Ruby Ranch neighborhood, the line card is located in the "subscriber loop carrier" box on Badger Road that I mentioned earlier, and which is shown in Exhibit CO-1.
More than about twenty years ago, nearly all POTS customers of Qwest (more accurately, of its predecessor Mountain Bell) used only inside wiring installed and maintained by Qwest and used only telephone instruments rented from Mountain Bell. The rental of such telephone instruments and the maintenance of such inside wiring was a lucrative revenue source for telephone companies, and this revenue source was protected by telephone company claims that connection of "foreign" wiring and equipment posed unacceptable risks to the telephone network. But about twenty years ago the Federal Communications Commission concluded otherwise, and ordered that telephone customers could provide and maintain their own inside wiring, and could attach telephones to the network that were not from the telephone company.
The FCC established a program of so-called "Part 68 certification" whereby a telephone manufacturer could have its telephones certified under Part 68 of the FCC rules. Such a telephone would be marked with an "FCC registration number" showing that it had been certified to the satisfaction of the FCC. To be certified, the telephone has to pass a number of stringent tests designed to detect whether the telephone poses appreciable risk to the telephone company network. The tests are performed with the telephone in its "out-of-the-box" condition and also after a number of types of abuse such as drop tests. Such a telephone would also be marked with a "ringer equivalence number" or REN indicative of the amount of current required to make the particular telephone ring. During the early 1980's it was routine for telephone companies, including Mountain Bell, to require any customer who planned to install his or her own telephone to provide the FCC registration number as well as the REN to the telephone company as a precondition of plugging in the telephone.
While an ever-diminishing fraction of POTS customers use only inside wiring installed by Qwest, by now the vast majority of POTS customers use inside wiring which was installed by personnel other than Qwest personnel. In many cases the customer has installed the inside wiring himself or herself.
Likewise, while a small fraction of POTS customers still use only telephone instruments rented from Qwest, the vast majority now use telephone instruments obtained elsewhere.
The supposedly unacceptable risks to the telephone network which the telephone companies felt would follow if third-party telephone wiring and third-party telephones were allowed to be connected to the telephone network turned out to be illusory. It is unheard-of for any customer-provided wiring or customer-provided telephone to cause any damage to telephone company equipment. Instead, the only consequence (if any) of faulty or defective customer-provided wiring or telephones is loss of telephone service for the customer. In a house with several telephone jacks, such a fault or defect may merely disable one jack, leaving the other ones working. Presumably that is a risk which each customer can assess for himself or herself, and the FCC policy of the past twenty years permitting customers to make such choices is by now uncontroversial and unquestioned.
It should also be borne in mind that telephone customers routinely connect a variety of types of other equipment to telephone lines, such as answering machines, caller-ID boxes, fax machines, computer modems, satellite and cable television set-top boxes, and self-installed DSL modems. All are (or are supposed to be) FCC registered.
The customer-provided telephones and wiring do have actual metallic contact (through the copper pair) to actual Qwest equipment, namely the line card in the central office (or, in the case of neighborhoods served by loop carrier boxes, to the line card in the loop carrier box). Any of a variety of actions by a telephone customer could cause electrical signals to reach the line card, and at least in principle, could damage the line card. Such actions could include:
- improper installation of inside wiring
- failure to maintain inside wiring properly
- installation of a defective piece of telephone equipment
- installation of a telephone or other piece of equipment that is not FCC registered
- failure to maintain a telephone or other piece of equipment properly
There are a number of reasons why, despite such metallic contact from the customer to Qwest equipment, harm to the Qwest network doesn't appreciably happen. First, the telephones are FCC-registered, meaning that they have been tested and found to be extremely unlikely to pass any harmful signal to the Qwest equipment. Second, the Qwest equipment (here, the line cards) is designed to be unharmed by any of a wide variety of electrical signals, including those which do on rare occasions reach the Qwest equipment when equipment or wiring malfunctions. Third, Qwest often (although not always) installs a so-called "protector" between the customer wiring and telephones on the one hand and the Qwest copper pair on the other hand. Until recently nearly all of the protectors used a so-called "carbon gap" which was intended to provide a harmless bypass to an electrical ground for high-voltage electrical signals. More recently, many of the protectors installed by Qwest use a so-called "gas tube" or "gas discharge" element which serves the same function.
The historical reason why telephone companies, including Mountain Bell, installed protectors was to protect their rental telephones (on customer premises) from any lightning which might strike the telephone line on telephone poles serving the customer. A related reason was to minimize risk to the telephone customer who might be holding a telephone during a lightning strike. The risk against which the protector was installed was a risk of something dangerous entering the home from outside. The voltages to be protected against would be hundreds of volts.
Because the telephone companies (including Qwest) strictly controlled everything inside the house that connected to the protector, there was little reason for the telephone company to fear that anything dangerous would leave the home and reach the telephone company outside wiring.
Now that most telephone instruments in customer's homes are not owned by the telephone company any more, the urgency of protecting such telephone instruments from lightning has, from the telephone company's point of view, diminished. But the telephone companies still install protectors, and the reason they now give for such protectors is that they protect the telephone network from possibly dangerous electrical signals leaving the customer's home and reaching the telephone company equipment such as the line card.
Q. Does Qwest require a POTS customer to purchase a million-dollar insurance policy naming Qwest as beneficiary, as a condition of signing up for POTS service?
A. No.
Q. Does Qwest actually fear risk to its network due to POTS customers?
A. Qwest's own actions make clear that it does not fear damage to its network from such activities. For example, although Qwest's predecessor Mountain Bell initially required anyone connecting telephones or other equipment to its network to provide an FCC registration number and ringer equivalence number, for the last decade it has dropped this requirement. A present-day new POTS telephone customer of Qwest can order and obtain POTS telephone service without ever being asked for the FCC registration number or REN number.
Another aspect of Qwest's actions provides independent evidence that Qwest does not fear damage to its network from such activities, namely that Qwest does not require a new POTS customer to purchase a million-dollar (or eleven-million-dollar) insurance policy naming Qwest as beneficiary, as a precondition of installing POTS service. Likewise, Qwest does not require a new POTS customer to post bond or pay a damage deposit relating to possible damage to Qwest's network as a condition of installing POTS service. (Qwest does sometimes require a new customer who lacks a good credit rating to pay a deposit as a condition of obtaining service, but such a deposit is refunded after a year if the customer pays his or her monthly bills on time.)
Q. Does anyone now rent subloops from Qwest in the Ruby Ranch neighborhood?
A. Yes. The Willow Brook Metropolitan District rents subloops from Qwest in the neighborhood. You can see them in Exhibit CO-7. It uses them to pass signals indicating when to turn pumps on and off for the District's water system.
A first subloop provides a connection between Well Number 1 of the District's water system and a storage tank connected to that well. A second subloop provides a connection between Well Number 2 and a storage tank connected to that well. A third subloop provides a connection between a booster pump and a storage tank connected to that well.
Q. How long has the Willow Brook Metropolitan District been using these subloops?
A. It has been using these subloops since the water system was first put into service more than fifteen years ago.
Q. Has Qwest ever required the Willow Brook Metropolitan District to obtain a million-dollar insurance policy naming Qwest as a beneficiary, as a condition of using these subloops?
A. No.
Q. What equipment does the Willow Brook Metropolitan District connect to these subloops?
A. The equipment that is connected is equipment used for controlling pumps.
Q. What voltages are on these subloops as a consequence of the District's equipment being connected to the subloops?
A. I don't know today, but I intend to measure it and to provide this information when it is available.
Q. Has the District's use of subloops ever caused harm to Qwest's network?
A. Not within the past five years; if it had I would have heard about it. Indeed I think it is quite likely that if it had ever caused such harm, I would have heard about it.
Q. Has the District's use of subloops ever caused harm to anyone's voice telephone service?
A. No.
Q. Is there anything else about Qwest's actions that suggest its perceived risks to its network are imaginary?
A. Qwest suggests that if anyone connects anything to subloops, this poses unacceptable risks to its network. Yet it does not secure its subloop connection points, such as pedestals and the Cross-Connect Box, in any way. The Cross-Connect Box came from the factory with a place for a padlock, yet Qwest has never put a padlock on the Cross-Connect Box during the five years (starting in 1996) when I first lived in the Neighborhood. I am told by residents who have lived in the neighborhood longer than I have that Qwest has never locked the Crossbox.
Q. What risks are presented to Qwest's network by LADS (local area data service) customers?
A. A LADS customer rents a copper pair from Qwest. It goes from one customer location to the telephone company central office, and from there to some other customer location. The copper pair does not "carry a dial tone" but is a mere metallic connection from one customer location to another. It never connects to a line card nor does it connect to any other Qwest network equipment. The pair is insulated from any other pairs in the Qwest cables.
Since the LADS pair has no metallic connection to any Qwest equipment, the electrical signals which the LADS customer passes over the wires are not able to cause damage to any Qwest equipment.
Q. Does Qwest require a LADS customer to purchase a million-dollar insurance policy naming Qwest as beneficiary, as a condition of signing up for LADS service?
A. No.
Q. Please compare the risks to Qwest's network arising out of the Coop's proposed SDSL service with the risks to Qwest's network arising out of POTS service.
A. The Coop's proposed SDSL service, which uses dedicated copper pairs, poses a much smaller risk to Qwest's network than the risk posed by POTS service. With POTS service, the customer's inside wiring and telephone instruments all have an actual connection with Qwest equipment, namely the line card. In contrast, with the Coop's proposed SDSL service, none of the DSL equipment (not the DSL modem, not the inside wiring, not the DSLAM) would have any actual connection with Qwest equipment.
Q. Please compare the risks to Qwest's network arising out of the Coop's proposed SDSL service with the risks to Qwest's network arising out of LADS service.
A. The Coop's proposed SDSL service, which uses dedicated copper pairs, poses a smaller risk to Qwest's network than the risk posed by LADS service. While it is true that LADS lines are dedicated pairs, just like SDSL dedicated pairs, the LADS line actually does pass through a telephone company central office. To the extent that Qwest might perceive some risk from a LADS line due to its mere physical proximity, such risk is absent with an SDSL subloop, since the SDSL subloop never gets anywhere near to the central office or to any other Qwest equipment. In the case of the Coop's proposed service, there is a separation of more than a mile between the SDSL subloop (which is wholly within the Ruby Ranch neighborhood) and the loop carrier box on Badger Road (which is the nearest Qwest equipment). There is a separation of more than three miles between the SDSL subloop and the Qwest central office in Dillon.
Q. Is the Coop proposing to connect something to the subloops that is not intended by its manufacturer to be connected to subloops?
A. No. The DSLAM the Coop plans to use (a CopperEdge CE-150) is intended by its manufacturer, Copper Mountain Networks, Inc., for connection to exactly this type of telephone cable subloops. The SDSL modems which the Coop plans to use are likewise specifically intended for for such connections.
Q. Is the Coop proposing to use its DSL equipment against standard practice or against the manufacturer's instructions?
A. No. The Coop proposes to use the DSL equipment according to standard DSL practice and in complete compliance with the manufacturer's instructions. The Coop wants to provide a reliable service, and one way to further this objective is to use equipment in accordance with the specifications of the manufacturer.
Q. Is there anything else about the equipment the Coop plans to use that should reassure Qwest that the equipment is not dangerous or ill-suited for its purpose?
A. The CE-150 DSLAM is FCC registered under Part 68, meaning it is certified for connection to telephone wiring. It is also UL-approved for electrical safety.
Q. Does anyone other than the Coop use, or plan to use, the Copper Mountain DSLAM and the associated SDSL modems?
A. Yes. Until it went bankrupt, the Internet Service Provider NorthPoint used Copper Mountain DSLAMs and associated SDSL modems. They worked well for their intended purpose of providing DSL service. Many other DSL providers and telephone companies use Copper Mountain DSLAMs.
Q. Has the Coop asked Qwest to identify, in technical terms, the risk to its network supposedly posed by the Coop's proposed activities?
A. Yes. The Coop asked this of Qwest in July of 2001 verbally and in writing, and on several occasions thereafter.
Q. During its negotiations with the Coop, did Qwest ever identify, in technical terms, the risk to its network supposedly posed by the Coop's proposed activities?
A. No. This has been a topic of great frustration for the Coop. In its discovery responses of January 3, 2002, Qwest for the first time purported to give an answer to this question. Qwest stated that "risks to the Qwest network presented by the Proposed Service include fire, overvoltage, lightning, electrical shock, and equipment damage." Qwest went on to say that "in addition, any placement of physical plant or equipment increases risk to the network."
Q. Please explain how the Coop's proposed service presents a risk of fire to the Qwest network?
A. I am unable to explain this statement by Qwest. Except for wiring within the neighborhood, nothing that Qwest owns is within a mile of anything that the Coop will do. It is difficult to take seriously the suggestion that fire in the Coop's DSLAM would go a mile or two to the Qwest remote terminal or the Qwest central office in Dillon.
Even if Qwest were to point to the cross-connect box as being at risk, the nearest Coop equipment would be some 250 feet away in the barn, separated by open ground for well over a hundred feet. Qwest might fear that a forest fire would harm the cross-connect box, but the barn which is some 250 feet away does not intelligibly change that risk.
Q. Please explain how the Coop's proposed service presents a risk of overvoltage to the Qwest network?
A. I am unable to explain this statement by Qwest. The only Qwest equipment that has any sensitivity to overvoltage that is relevant here is equipment in the remote terminal on Badger Road or the Dillon Central Office. That equipment is, however, designed to survive any of a wide range of voltages that could reach the equipment over copper pairs.
What's more, the Dillon Central Office has no copper connection to anything in the neighborhood. Its only connection to the neighborhood is through the Remote Terminal, to which it connects by fiber optic cable, not copper. Fiber optic cable does not conduct electricity and thus cannot carry any voltages, let alone "overvoltage."
This leaves the Remote Terminal on Badger Road. As mentioned above, its equipment (line cards) is designed to survive any of a wide range of voltages that could reach the Remote Terminal over copper pairs. But no Coop equipment will have any electrical connection to the Remote Terminal. The subloops which the Coop will use are electrically insulated from any wiring that goes to the Remote Terminal.
During the August 1, 2001 negotiation session, Qwest explained that the reason it did not require POTS customers to have million-dollar insurance policies was that with a POTS customer, an electrical "protector" separates the customer's equipment from Qwest's equipment. The Coop offered to pay Qwest to install a protector between the Coop's equipment and any Qwest wiring. Assuming Qwest was telling the truth about why the protector makes insurance unnecessary for POTS customers, then providing a protector between the Coop's equipment and any Qwest wiring ought to eliminate any anxiety remaining in Qwest's mind about such risks. Qwest has ignored the Coop's offer to pay for a protector.
The fact is, however, that the Coop's equipment would never be connected to any Qwest equipment. They will be on separate dedicated pairs, electrically isolated and insulated from any Qwest service or equipment.
Q. Please explain how the Coop's proposed service presents a risk of lightning to the Qwest network?
A. I am unable to explain this statement by Qwest. Right now the Coop has no connection to the Qwest network. Yet lightning could, in the sense that anything is possible, strike any part of the Qwest network right now, including Qwest wiring within the neighborhood. Such a strike is not particularly likely since (a) the wiring in the neighborhood is all buried, (b) the neighborhood has restrictive covenants requiring that it be buried, and (c) the sole above-ground Qwest facilities in the neighborhood are all electrically grounded.
If Qwest were to allow the Coop to launch service, nothing about this would change. The risk of lightning striking within the neighborhood and somehow reaching Qwest equipment that could conceivably be damaged by the lightning is unchanged.
Historically, Qwest (and its predecessor companies US West and Mountain Bell) have chosen to use protectors to address questions of lightning risk. And the Coop has offered to pay Qwest to install such a protector between the Coop's equipment and any Qwest wiring. This ought to remove Qwest's anxieties on this point.
Q. Please explain how the Coop's proposed service presents a risk of electric shock?
A. I am unable to explain this statement by Qwest. As I mentioned above, anyone who has worked in the field for a telephone company, or who has experience installing telephone jacks, knows that it is easy enough to get shocked by the 90-volt ringing current that is on the line whenever a POTS telephone is ringing. It happens from time to time and does not result in injury or fatality.
Qwest could worry that, say, an answering machine that connects to house current (for electric power) and that connects to the telephone line could malfunction in a way that would pass the house current to the telephone line. This risk, though quite vanishingly small, presents itself every time Qwest installs another POTS dial tone to a house or business. There are several reasons why a telephone company manages to stay in business despite this risk. First, the answering machine (like the Coop's DSLAM) is tested and certified under Part 68 of the FCC Rules. Second, the house current that might leak through an answering machine in this unlikely event is limited to the voltage in the house, namely 110 volts. This is a little more than the ringing voltage for a POTS telephone, but not a lot more.
What's more, as mentioned above, during the August 1, 2001 negotiation session, Qwest explained that the reason it did not require POTS customers to have million-dollar insurance policies was that with a POTS customer, an electrical "protector" separates the customer's equipment from Qwest's equipment.
Again, as mentioned above, the Coop has repeatedly offered to pay Qwest to install a protector between the Coop's equipment and any Qwest wiring. If the protector protects against real or imagined risk of overvoltage from POTS customers (as Qwest says it does), then it likewise protects against real or imagined risk of overvoltage from the Coop's equipment.
Q. Please explain how the Coop's proposed service presents a risk of equipment damage?
A. I am unable to explain this statement by Qwest. The nearest Qwest equipment is over a mile away on Badger Road.
Q. What reason has Qwest given for its requirement that the Coop purchase an insurance policy naming Qwest as beneficiary, as a condition of obtaining service?
A. Qwest has said that it makes other interconnecting companies purchase such insurance, and thus it must likewise make the Coop purchase such insurance. Qwest has said that it is worried that if it treated the Coop fairly and dropped the insurance requirement, there is the risk that other interconnecting companies might try to "opt in" to the Coop's interconnect agreement.
It its answer to the Coop's interrogatory, Qwest says its reasons for requiring the Coop to purchase an insurance policy naming Qwest as beneficiary, as a condition of obtaining service are as follows.
a. the Coop supposedly seeks to be a Competitive Local Exchange Carrier (CLEC)
b. the Coop supposedly seeks to lease loops
c. the Coop seeks to lease subloops
d. the Coop supposedly seeks to lease pedestals
e. the Coop supposedly seeks to lease "other Qwest property."
f. the Coop supposedly seeks to have its own employees "connect [Coop] electrical equipment to Qwest facilities."
g. the Coop supposedly seeks to have its subcontractors "connect [Coop] electrical equipment to Qwest facilities."
h. the Coop supposedly seeks "to connect [the Coop's] equipment to the public switched network."
Q. Is Qwest mistaken about any of these?
A. Yes. The Coop does not seek to be a CLEC and does not seek to provide telephone service. The Coop does not seek to lease loops, but only subloops. The Coop does not seek to lease pedestals or any other Qwest property. The Coop does not plan to have employees at all, nor does it plan to have subcontractors. While the Coop seeks to connect DSL equipment to Qwest subloops, it does not seek to connect the Coop's equipment to any Qwest facilities other than subloops. Finally, the Coop does not seek to connect its equipment to the public switched network.
Q. Does Qwest's mistake about whether the Coop seeks to lease loops make a difference regarding the alleged risk to Qwest's network presented by the Coop's proposed activities?
A. Yes. If the Coop were seeking to lease loops (rather than subloops), such loops would connect to Qwest central office equipment. Since the Coop does not seek to lease loops, nothing that the Coop proposes will connect in any way to Qwest central office equipment. Qwest's mistake on this point puts into question whether Qwest has correctly assessed the risks to Qwest's network posed by the Coop's proposed activity.
Q. Has the Coop ever explained to Qwest that it does not seek to lease loops?
A. Yes. In the Coop's letter to Qwest of July 2, 2001 the Coop explained that it was interested only in subloops. This was repeated in the Coop's letters to Qwest of August 2, 2001 and August 20, 2001. I also explained this in several of our conference calls. Regrettably, in most of the conference calls, Qwest did not, apparently, have any person in attendance who was actually knowledgable about their own network. During one call Qwest did seem to have a knowledgeable person on the call, and that person did not question what I said.
Q. Does Qwest's mistake about whether the Coop seeks to connect its equipment to the public switched network make a difference regarding the alleged risk to Qwest's network presented by the Coop's proposed activities?
A. Yes. If the Coop were seeking to interconnect with Qwest to reach the public switched network, this would require connecting the Coop's equipment to Qwest central office equipment. The Coop has said repeatedly that it does not plan to carry voice traffic, that it does not plan to connect to the public switched network, and that it does not seek to connect in any way to Qwest central office equipment. Qwest's mistake on this point likewise puts into question whether Qwest has correctly assessed the risks to Qwest's network posed by the Coop's proposed activity.
Q. What reason has Qwest given for its reducing the required level of insurance from eleven million dollars to one million dollars?
A. Qwest has said that its reason for the eleven-million-dollar insurance requirement was that some interconnecting companies actually "collocate" (place equipment in Qwest central offices). Qwest says it recognized that the Coop's proposed activities never come anywhere near a Qwest central office, and thus that the risk (as perceived by Qwest) is enough lower to permit Qwest to reduce the insurance requirement from eleven million dollars to one million dollars.
Q. What has the Coop done to try to help Qwest overcome its concerns about "opting in"?
A. The Coop suggested that the interconnection agreement containing language that insurance would be required only at such time as the Coop had actual connections to Qwest equipment (rather than dedicated subloops) or at such time as the Coop sought to collocate.
Q. What else has the Coop done to try to help Qwest overcome its concerns about insurance?
A. The Coop offered to obtain releases from all of its member/subscribers, releasing Qwest from any liability arising out of the DSL service. In addition, the Coop has provided detailed information on the DSL equipment it plans to use, including the fact of the DSLAM being FCC registered and UL approved. Finally, during each of several telephone conversations the Coop tried to help Qwest understand that the risks posed by the Coop's services are smaller than those presented by other services, such as POTS and LADS service, for which Qwest does not require insurance. It appears to the Coop that at no time during the negotiations did Qwest actually provide negotiating personnel with knowledge or experience permitting a meaningful discussion of such risks.
The Coop has diligently pursued several avenues to see whether it might be possible to obtain the insurance policy that names Qwest as a beneficiary. None of these avenues has been successful. Quite frankly, if the PUC were to uphold Qwest's requirement about an insurance policy naming Qwest as a beneficiary, the most likely result is simply that the Coop will not be able to obtain the required insurance, and thus will simply not be able to launch service.
The Coop was turned down by nearly all whom it contacted on this subject. The one possible but unconfirmed insurance option was saddled with a $780 annual premium. Even if the insurance were available, with ten member/subscribers, that premium would cost some $70 annually, forever.
What's wrong with the nonrecurring price for activating a subloop
Q. What does Qwest propose to charge for activating a subloop?
A. At the outset of negotiations, Qwest said its nonrecurring price for activating a subloop would be $126.49. Within the past couple of weeks, Qwest has dropped this price to $120.67.
Q. What's wrong with this price?
A. It is unreasonable and discriminatory. It cannot possibly be reasonably based on Qwest's costs to activate a subloop in the Ruby Ranch neighborhood. My explanation on this point will refer to Figure I.
Again, as for the nonrecurring price proposed by Qwest for installation of a distribution subloop, Qwest has stated that the Coop will be required to pay $120.67 to activate each subloop, including when the field personnel activate several subloops at one time (even though the total time needed to activate a dozen lines at the Cross-Connect Box might take 30 minutes total). Despite the requirement of federal law that it do so, Qwest has been unable (or unwilling) to justify this cost. Nor has Qwest identified the amount it imputes to itself when it activates one of its own DSL customers. (Qwest often has promotions where it offers potential DSL customers free activation.) Qwest nonetheless takes the position that the $126.49 (and now $120.67) fee is being offered on a "take it or leave it" basis. Qwest also indicated it might discount the fee were the Coop to accept the "retail" arrangement it tentatively proposed, suggesting that the $120.67 wholesale charge was intended as a barrier to a wholesale relationship.
The Coop believes that an activation fee of $27 per subloop would be reasonable. Qwest charges $54 to activate an ordinary business line. To activate such a line to our neighborhood, Qwest technicians might well need to carry out work at five locations (see Exhibit CO-9): (1) the central office in Dillon, (2) the subscriber line carrier ("SLC") box on Badger Road, (3) the Cross-Connect Box, (4) the pedestal at the edge of the subscriber's property, and (5) at the NID at the individual residence. Only the last three locations need work carried out to activate the subloops we seek to rent, and those three locations are quite nearby to each other. Thus, activating subloops for the Coop will take only half the work and half the time of activating an ordinary business line. It would therefore appear to us that an activation fee of $27 per subloop -- half of the rate to activate a business line -- would be fair and reasonable.
In fact, a per subloop activation fee of $27 would be more than generous to Qwest. Much of the work Qwest must perform to activate a subloop for the Coop involves connecting its subloops to the screw terminals in its Cross-Connect Box. We hope to have at least ten member/subscribers at service launch. The time needed to make the necessary screw terminal connections in the Cross-Connect Box for ten customers should at most consume 30-45 minutes.
We also note that the installation fee which Qwest charges for a business telephone line necessarily includes the time-consuming process of taking a telephone order from a customer, a process in which the Qwest order representative must obtain a billing address and find out whether the customer wants optional calling features, which long-distance carrier the customer chooses, etc. In contrast, the order-taking process with the Coop for a subloop takes very little time of any Qwest order representative.
In some cases it will turn out that a previously installed and disconnected dial tone will still be connected. In such a case it might well be possible to have a new dial tone installed whilst reusing an old connection. In such a case there is no need for a "truck roll" at all. Of course, the ability to reuse old connections helps to bring down the cost (or should bring down the cost) of installing a Coop subloop just as it would bring down the cost of installing a voice line.
In any event, Qwest has not, to date, responded in any way to the Coop's repeated requests for a cost justification for this activation fee, other than to point to the SGAT as somehow authoritative as to costs. However, the SGAT is based on Qwest's averaged costs for all CLECs. While I have no basis on which to question the amount the PUC approved based on averaged costs, a $120.67 fee is clearly unreasonable as applied to the work Qwest needs to perform on Ruby Ranch. If Qwest's hourly rate is $78, a fee of $120.67 would mean that Qwest gets paid for an hour and a half of work, when in fact the activation of a single subloop could take twenty minutes and the activation of two subloops (to different residents) should take approximately thirty minutes. (There are labor savings with multiple orders because the Crossbox work can be done once.)
What's wrong with the Quote Preparation Fee
Q. What's wrong with the Quote Preparation Fee?
A. To connect our DSLAM to the rented subloops, it is necessary to install a extra block of screw terminals in the Cross-Connect Box. Qwest calls this block of screw terminals a "Field Connection Point" or FCP. The Coop has also offered to pay for a "protector" which, if installed, would connect to this block of screw terminals and would connect to the Coop's 100-pair buried cable to the barn. The proposed connection would assist the Coop in moving forward.
Qwest has repeatedly and consistently refused to disclose the approximate cost of such an FCP, but the Coop believes that the cost would be several hundred dollars (including installation).
But before Qwest will install the FCP, Qwest wants to be paid in advance for the construction cost of the FCP. And before Qwest will tell us the construction cost of the FCP, Qwest demands to be paid a "Feasibility Fee/Quote Preparation Fee" or QPF.
Q. What price has Qwest set for the QPF in its negotiations?
A. Qwest initially said the QPF was a non-negotiable price of $1707.09. Within the past couple of weeks, Qwest has dropped what it said was a non-negotiable price to $1107.09, a drop of exactly six hundred dollars.
Q. What's wrong with those prices?
A. It is unconscionable to have to pay $1107.09 for the privilege of being told a price that will probably be far smaller than $1107.09.
The Coop questions whether any "quote preparation fee" can be cost-justified (e.g., the cost of preparing a bill and recording payment would likely exceed the amount of work involved). However, if such a fee is appropriate, the fee should be based on the actual time Qwest incurs in preparing its price quote, using tariffed labor prices. The time needed to prepare a price quote should take less than one hour (and more likely 15-30 minutes). Qwest has hundreds of Western Electric crossboxes like the one on Ruby Ranch throughout its service area, and it likely has in stock hundreds of screw terminals needed for installation in these crossboxes. The Coop feels Qwest should be required to cost-justify any QPF exceeding $100.00.
Any price which Qwest proposes to charge is, by federal law, supposed to be cost-based. It seems remarkable, or even suspicious, to learn that the task of preparing a quotation somehow had its costs drop in a way that gave rise to exactly six hundred dollars less in the price. Not a penny more nor less than exactly six hundred dollars. It seems all too likely that the QPF is the result of some rough guesses or political compromises in the SGAT process.
When the PUC approved the $1107.09 QPF in the latest SGAT, it said this:
given that the QPF eventually is deducted from the construction costs, the differences between caged, cageless and virtual collocation construction costs are sufficient to differentiate between those various forms of collocation. The differences in cost need not be accounted for in the QPF.
The PUC seems to be saying that it doesn't matter whether the QPF is right or wrong, because later it gets deducted from construction costs.
The QPF shows up four times in the latest SGAT, and in three of the four places there is language that it gets deducted from construction costs. The fourth place where it appears is in connection with the Field Connection Point (which is what the Coop needs). Oddly, and without explanation in the record, the language about deducting the QPF from the construction cost is missing.
Was there a mistake? Did the PUC and the parties intend that the QPF for FCPs would be deducted from construction costs, just like the other three QPFs, and is the absence of the deductibility language an oversight? I don't know.
What is clear is that the PUC approved the QPF in reliance on the assumption that it would be deducted from later construction costs, and thus that it did not really matter if it was too high or too low.
There's another problem with the QPF. It appears that the PUC, in approving the amount of the QPF, was assuming that any and all projects for which a quote needs to be prepared are projects that will cost a lot more than the QPF. (Otherwise it makes no sense to speak of "deducting" the QPF from the later construction cost.) And many projects involving central office collocation (installing power supplies, building cages, providing ventilation airflow, installing racks, bringing in fiber optic cable, installing ADSL splitters) probably cost so much money that the QPF is not even noticeable.
But the project for which the Coop must pay is a very small project -- installing a hundred-pair screw terminal, and maybe installing a protector. The Coop believes this project should have a parts-and-labor cost of well under a thousand dollars. As such, it is mathematically impossible to "deduct" a $1107.09 fee from, say, a seven-hundred-dollar fee.
In any event, Qwest has not, to date, responded in any way to the Coop's repeated requests for a cost justification for this QPF, other than to point to the SGAT as somehow authoritative as to costs.