Coop Exhibit R Date: Fri, 31 Aug 2001 10:16:26 -0600 To: ndonahu@qwest.com, From: Carl Oppedahl Subject: Rental of subloops by Ruby Ranch Internet Cooperative Association Cc: jleonar@qwest.com, axmcken@qwest.com, willm@perkinscoie.com, "Luba Hromyk" , This summarizes the events of the August 30, 2001 telephone conference. I am saddened by the latest turn of affairs, and am now under the impression that Qwest does not have anything constructive to offer that would be of any help in assisting our Coop in launching service before the ground freezes this October. A chief purpose for the August 30 conference call was that by that time, Qwest would have an answer to the question whether Qwest can drop the insurance requirement for the "interconnect" proposal. The Coop had proposed that the Coop would (a) pay for a protector to be installed in the "interconnect" relationship; (b) provide waivers from the Coop's member-subscribers waiving DSL-related claims against Qwest; (c) provide interconnect language that the insurance requirement is triggered if (a) the Coop seeks to collocate equipment in Quest facilities, or (b) the Coop seeks to have metallic connection with Qwest central office equipment. It was the Coop's hope that these three conditions would be sufficient for Qwest to drop the insurance requirement for the "interconnect" proposal. From the Coop's point of view, your answer yesterday was bad news. Qwest was standing by its requirement that we provide a $1 million insurance policy as a condition of renting subloops in an interconnect agreement. Qwest continued its position that if the Coop were to rent subloops under a retail tariffed individual-cost-basis arrangement, no insurance would be needed. This is, of couse, consistent with Qwest's long-standing policy that no insurance is needed to rent a LADS line or an alarm line. I pointed out that if we rent a subloop, the risk to Qwest arising out of that rental is no greater than that of rental of a LADS line or alarm line, and is probably less since subloops do not pass through the central office. Mr. Christiansen confirmed that the physical facilities proposed under Qwest's retail subloop rental proposal would be identical to the physical facilities in an interconnect subloop rental. I also pointed out that under either arrangement (interconnect or retail), Qwest would be mailing its bill for subloop rental to the Coop, not to anybody else, and that in our bills to our subscribers, we would not be listing the Qwest rental fee paid by the Coop as a separate line item. I asked if these factors would prompt Qwest to drop the insurance requirement for an interconnect subloop rental. You said no, Qwest's requirement of a $1 million insurance policy continued to be non-negotiable. I described to you that our Coop has been trying to get such insurance for some weeks now with no success. Our insurance broker says that he cannot find any insurance company that can even give him an application form for insurance for our situation. I offered to you to set up a three-way call so that you could hear for yourself the efforts that have been pursued by our broker. You said that would not be necessary, you believed me on this point. I asked you to join me in negotiating an interim agreement under your retail proposal, so that we could get our service launched before the ground freezes in October. I was disappointed to hear from Mr. Christiansen that neither he nor anyone else present in our conference call had authority to negotiate on Qwest's behalf for such an agreement. You and Mr. Christiansen each indicated that Qwest is engaged in continued internal meetings "at the highest level" to try to figure out if Qwest can rent subloops to us on terms that we can accept. You and he each said you planned to get back to the Coop when Qwest reached some internal agreement on this point. I asked if there was anything about Qwest's internal timetable that would permit us to schedule a next telephone conference to hear what conclusions Qwest might reach. You said no. For this reason, we finished without scheduling any future telephone conference. As I told you, I am quite disappointed that there was no progress in any way in Qwest's position between the August 27th conference and the August 30th conference. Our Coop moved our position forward, for example in the August 27th conference Qwest asked if we would be able to provide liability waivers from our subscribers, and before the August 30th conference we had drafted waiver language and provided it for Qwest's consideration. But Qwest's position on August 27th showed no movement toward the Coop, and indeed if anything there was backwards movement since the retail proposal made by Qwest on the 27th is now apparently off the table and not available for further negotiation efforts. I indicated that our Board would now have no choice but to consider whether to ask for help from the regulators, as we had previously planned to do before Ms. McKenney asked us to postpone it. Our Board is now considering this matter.