IN THE MATTER OF THE BOARD’S DOCKET NO.: 5 …€¦ · IN THE MATTER OF THE BOARD’S DOCKET NO.: 5 INVESTIGATION REGARDING THE TX1109057& PECLASSIflCATION OF INcumnrr 6 LOCAL EXCHANGE

Notice of AppealAttachment 4

:i.

STATE 0? NEW JERSEY2 BOARD OW PUBLIC UTILITIES

3

4IN THE MATTER OF THE BOARD’S DOCKET NO.:

5 INVESTIGATION REGARDING THE TX1109057&PECLASSIflCATION OF INcumnrr

6 LOCAL EXCHANGE CARRIER (nEC)SERVICES AS COMPETITIVE-

7 PHASE II

8

‘S BEFORE: COMMISSIONER NICHOLAS ASSEITA,HEARING EXALCENER

10COMMISSIONER JEANNE M. FOX

3.1 COMMISSIojq~~ MARY-ANNA HOLDEN

12 ALEX MOREAU, DEPUTY ATTORNEY GENE~Z2~L

13~ TRANSCRIPT of the stenographic notes o-~ the

14 proceedings in the above-entitledinatter, heir: at the

15 office of the Board of Public Utilities,

16 44 South Clinton Avenue, Trenton, New Jersey C~625 on

17 July 17, 2012, commencing at 9:55 a.m.

18

19

20 ij& —

21 ~L. JUt262012

J.H. BUEHRER & ASSOCIATES24 2295 BIG ENOUGH WAY

TONS RIVER, NJ 0875525 (732) 557—4755

EPU INVESTIGATION RE; ILEC SERVICES

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OPENING

BY

BY:

BY:

WITNESS

PAUL B.

BY:

BY:

MARX B.

BY:

BY:

SUSAN H.

BY:

STATE ~2NT

MR. SMITH

MS. BENEDEK

~m. WHITE

VASINOTON

MR. SMITH

MR. WHITE

HARPER

MS. BENEDEK

MR. WHITE

BZ.LDWXN

MR. WHITE

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Page 2APPEARANCES:

VERIZON NEW JERSEYBY: WILLIAM 0. SMITH ESQ.40 West Street, 27t1, hoarNew York, New York 10007On behalf of Verizon, New Jersey

CENSURY LINKBY: SUE BENEDEK, ESQ.240 North 3rd StreetSuite 300Harrisburg, Pennsylvania iiioiOn behalf of CenturyLink

SAUL EWING, UPBY: COLLEEN A. FOLEY, ESQ.1037 Raymond BoulevardSuite 1520Newark, New Jersey 07102-5426On behalf of CanturyLink

STATE OP NEW JERSEYDIVISION OP THE RATE COUNSELBY: MR. CJ4RISTOWER J. WHITE, ESQ.BY: HR. JOSE RIVERA-BENflEZ, ESQ.BY: HR. MARIA NOVAS-RUlE ESQ.31 Clinton Street, lit), FloorPa BO* 46005Newark, New Jersey 07101tn behalf of Rat. Counsel

STM’E OF NEW JERSEYDEPARThENT OP LAW S PUBLIC SAPETYDIVISION OF LAWBY: T • DAVID WAND, DEPUTY ATTORNEY GENERAL124 Halsey StreetPG Box 45029Newark, New Jersey 07101-6029On behalf of the Board of Public Utilities

July 17, 2012Page 4

EXHIBZTS CONTINUED.

WA~BER OESCRIflXQH I. 0. 5VID.

CL-i Initial Testimony of Mark 0. 1j5 ~Harper, public version

CL-2 ~nitial Testimony of Mark 0. ije 180Harper, confidential version

Ct-S Reply Testimony of Hark 0. 1j~ 180Harper, public version

CL-4 .wpiy Testimony of Hark 0. 118 l~oHarper, confidential version

CL-S .:ebuttai Testimony of Hark D. 118 ~Harper, Public Version

Ct-6 ebuttal ?estinony of Mark 0. lie ~Harper, confidential version

PC—i initial Testimony of Susan H. 27 i8~Baldwin end Sarah N. Basely,public version

PC-IA ~nitial testimony of Susan H. 27 180Baldwin and Sarah H. Basely,confidential version

RC-2 ~ep1y Testimony of Susan H. 27 leoBaldwin and Sarah H. Basely,public version

RC-2A ::eply Testimony of Susan H. 27 ~eoBaldwin and Sarah H. Bosely,confidential version

RC-3 ebuttal testimony of Susan H. 27 180Baldwin and Sarah H. Basely,public version

Bc-ak .ebuttal Testimony of Susan H. 28 leaBaldwin and Sarah H. Basely,confidential version

BC—I verizon mixed public and 20 leoconfidential discovezy responses

Page 3INDEX

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:anturl,Link mixed public and 28confidential discovery responses

‘erizon SEC 10—K, VerizonFinancial reports, VerizonQuarterly reports, andCenturyLink lO—Q

.‘JSA cites sad 65Communications Act of 1934

Only a Pew Cotipanies Daninate 74New Jersey’s TelecommunicationsMarkets, State Assessments:WY 2011—2012

?.C-CLEC Survey 74

2012 Cable RatepayerAssesanents

Docwrient re Rc—’4NG-34

Access Order by AppellateDivision

NPS Survey - Retail Ok -

Internal Survey

Article, Cospetition Worries 74Snag Verilon Deal on Airwaves,dated July 13, 2012

The CoBsonweaitk of 74 150Massachusetts HouseDocket No. 04S02

Selected Statistical Data iaz ~Re Annual Reports riledBy CenturyLink

2011 477 Report 132 ~eoFiled By Centurytink

NTEIEER

VWJ01C

VNJ-O1p

VNJ-02C

VNJ-02P

VNJ-03C

VNJ-03P

EXHIBITS

DESCRIPTION 1.0. EVID.

Direct testimony of Paul 8. 28 180Vasington, proprietary version

Direct Testimony at Paul B. 28 180Vaoinqton, public version

Reply testimony of Paul B. 29 180Vasington, proprietary version

Reply Testimony of Paul B. 29 180Vasington, public version

Rebuttal Testimony of Paul 8. 29 180Vasington, proprietary Version

Rebuttal Testimony of Paul B. 29 180

Pd n—I JHBUEHRER Sc ASSOCIATES (l)Pages2..5

BPLI INVESTIGATION RE; ILEC SERVICES

Page 7XsAflNG EXAMINER ASSflTA: Coed morning,

everyone. ~y name is Commissioner Nicholas Asselta and

I will preside over these evidentiary hearing. in the

matter of the Board’s investigation regarding the

reclassification of incumbent local exchange carrier

services as competitive, Docket No. TXl109O570.With me today ii Deputy Attorney General

Alex Moreau who will be advising ae on this matter and

also Commissioner Jeanne Fox is Supposed to attend and

Commissioner Holds.. may also attend. So we’re not going

to wait for them. We’re going to begin.

Pursuant to N.J.S.A. 40,2-Zl.lgs, the Board,

prior to determining whether a service is competitive,

must at a minimum evaluate, number One, ease of market

entry; number two2 presence of competitors; and, number

three, the availability of lae or substitute services

in the relevant geographic area.

Should the Board ultimately dean any service

to be conpetitive, the Board would no longer regulate

the rates or terms and conditions of such services.

In addition to evidentiary hearings, the

Board will schedule three public hearing, in this matter

in order to provide an opportunity for the public to

comment.

25 May I have the appearances, please.

July 17, 2012Page $

MS. SMITH: William D. Smith for Verison,

its. BENEDEX: Sue Benedek for Centuryt4nk

HR. WHITE: Christopher White, Jose

Rivera-Seniter • and Maria Novas.-Rujz for rate counsel

HR. WAND: Deputy Attorney General David

Wand on behalf of board staff ftc.. the Division of taw,

HR. SMITH: With me today is Ave-Marie

Hadesa, counsel of record.

MS. BENEDEK: And with me, ~ Honor, is

Colleen Foley from Saul Ewing.

MEARING EXAMINER ASSELTA: Are there any

preliminary matters that need to be addressed before we

begin?

HR. WHITE: We have one, your Honor

We• Ye met and discussed among the paflie,,

we want to propose modifying the briefing sched.ne that

is laid out in the procedural order and under that we

would propose to change initial briefs to October 2nd

and reply briefs to November 1st.

this is due to several factors, including

the order that was issued yesterday requiring certain

documents be provided by July 25th. It would also

enable the parties to further explore settlesent

negotiations between the parties and we’d ask your itonor

Opening Statement Page 9

to approve that modification.

2 flEMING EXM4XNER ASSELfl., okay. Approved

3 Bill?

HR. SMITH: I have rio ob3ecuo~.

MS. BENEDEK: No ob~ectjon.

HEAPING EXAMINER ASSEtTA: Does any Party

wish to make a brief opening statemen~

HR. SMITH: Verizon wishes to make an

opening statement. We will keep it as brief aa

possible.

MS. BENSOn: And Centurytink as well,

HR. WHITE: And rate counsel as

HEARING EXAMINER ASSELTA: Mr. Saith

HR. SMITH: Good morning.

My name i$ William Smith end ~ am a

assistant general counsel for Verizon, New Jersey.

We are here this morning for Ph... II of the

Board’s investigation regarding reclassification or

incumbent local exchange carrier services as

competitive.

Thank you for giving me the opportunity to

make this brief opening statenent. During my statement

I will make reference to four confidential charts that

we are now distributing to the parties that executed the

non—disclosure agreements. I will not mention any

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Pago 6 Colloquy7 R A N S C R I P T A B Q U B S T:

DESCRIPTION

verison annual reports filed with the BPU

Verixon CISC revenues reported in 10-0 andunder what bueinesa entity

Document Hr. Vaaington referenced

Identify and supply transcript ofproceedings where Mr. Harper andDr. Stairn both provided testimony

12 New JerseyPAGE

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in—li —ScriptO~~ JHBUEHRER & ASSOCIATES


Opening Statement

1 confidential data during my statement.

2 The purpose of Phase II of this proceeding

3 is to reevaluate the competitiveness of certain services

4 and products that were addressed in respective

5 stipulations that the parties and the board staff

6 reached at the conclusion of Phase X.

7 Pursuant to the Verizon stipulation, all

S mass market retail services that were still subject to

9 rate regulation were classified as competitive, except

10 for four services: Residential basic exchange service,

11 including usage; single-line basic exchange service;

12 nonrecurring charges for installation of residential

13 services; and residential o. services.

14 These tour services which we refer to in

15 testimony as Verizon’s legacy landline services remained

16 rate regulated but were subject to certain stipulated

19 allowed rate increases aver a three—year period at the

18 discretion of Verison. The stipulation provided for a

19 review of the clasaification of the tour legacy landline

20 services after three years which gave rise to this

21 proceeding.

this proceeding provides the Board with

another Opportunity to promote communications

competition to the benefit of the New Jersey consumers

and to further the Board’s leadership in the

Opening Statement Page 111 oammunication~ industry by continuing to recognise the

2 profound impact that competition ie having on the state.

3 Almost four years ago in the order approving the

4 stipulations, the Board specifically found that it is

5 evident that sufficient competition exists to relieve

6 both Verizon and Embarq from the Board’s existing

7 regulations for mass market retail services articulated

S in the stipulstions.

9 By the conclusion of this hearing, the

10 evidence will demonstrate that there is now more

11 competitive entry and growth, more competitors in the

12 market, and more substitution for legacy landline and BA

13 services than there were four years ago as customers

14 have continued to adapt the technological innovations to

15 their individual corsaunications needs.

16 The evidence will also make clear that the

17 communications industry in New aersey continues to be

18 subject to an ever—increasing competitive pressures as

19 traditional carriere, like Verizom, face direct and

20 unrelenting conpetitive pressure from an array of

21 established and nell service providers and services,

22 including cable television providers, wireless

23 providers, von providers, and yoU-established arcs.

24 These competitors which include Vonage,

25 msgicJack, Skype, a division of Microsoft, AT&T, Sprint,

July 11, 2012,

Page 12Comcast, Cablevision, and an ever-increasing array of

other innovative competitor. have continued to take tens

of thousands of lines and CA calls from Verison since

the conclusion of the Phase I Proceeding.

For example, at the end of Phase I Verizon

controlled 100 percent of the Lifeline customers in its

territory end received ico percent of Universal Service

Funding for these customers. Today the picture has

changed drastically as wireless no, have entered the

market and are competing vigorously for these customer,.

As a result, Verizon now receives less than 25 percent

of the LFSF Lifeline funding for Lifeline customers.

More than twenty years ago when it passed

the 1992 ?elec~mmunications Act, the New Jersey

legislature recognized that regulated carriers like

Verizon would be facing this type of significant

competition sad should be allowed to cospeta on a Level

playing field with unregulated, nontraditional

competitors.

That is why the New Jersey legislatne set

up a simple but, effective test to determine when, as a

matter of economics and sound public policy, it makes

sense to remove unnecessary rate regulation and allow

the market to eetahlish the appropriate rates for

services that have been found to be competitive


That teat has three prong, that the Board

has repeatedly applied without addition or Supplemental

criteria in past reclassification Proceedings,

The first prong of the test, ease of market

entry, is conclusively satisfied by the fact that

existing and potential ccapetitors have bean successful

in entering the market and expanding the scope of the

services that they offer and increasing the scale of

their businesses. As noted, the entry of the wireless

ETCe since the conclusion of ?haee I is just one good

example of how innovative carriers have continued to

seek competitive opportunities in New Jersey and are

providing alternatives to Verizon’s residential basic

exchange service customers.

The second prong of the test, the presence

of competitors, is easily satisfied for Verizan New

Jersey’s legacy landline services. As I’ve already

indicated, there is an array of both traditional and

nontraditional competitors that are vigorously cc.vc~eting

for Verizcn’s legacy landline and residential oi.

servicee. Competitive carriers, wireless carriers,

cable companies, and Var? providers are all present in

Hew Jersey.

The evidence in this case will demonstratethat these competitive carriers now control over

Page 10 Opening Statement

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fri iit~t ~ScripiCR’ JHBUEHRER & ASSOCIATES (3) Pages 10-13

BPU INVESTIGATION RE; ILEC SERVICES

‘Opening Statement

50 percent of the lines to New Jersey’s 3 million plus

households. This evidence is sunsnari,ed in Chart A. As

can be seen from a small rod slice on the pie chart,

only a small percentage of the households in New Jersey

continue to purchase Verizon’s legacy landline services

that are the subject of this hearing.

The record will show that the third and

final prong of the test, availability of like or

substitute services i. also easily satisfied, The

evidence of Venison’s line losses to competitors

demonstrates conclusively that substitute services are

readily available for legacy landline services that are

under review in this proceeding.

In fact, in th, past ten years Verison has

lost four times more residential legacy landlines than

it currently has in service. Chart B clearly

demonstrates the significant loss of residential basic

exchange line,. Chart C demonstrates the significant

loss of single—line business basic exchange service

lines and Chart B demonstrates the astounding decline in

calls handled by Verizon’s directory assistance

operators.

23 This overwhelming evidence of competition

24 also belies rate counsel’s efforts to move policy

25 backwards by arguing that certain competitive vertical


1 services, such as call forwarding, should be

2 reclassified as noncompetitive and subject to future

3 rate regulation.

4 In fact, no matter what arguments rate

5 counsel may seek to employ to confuse th, issues in this

6 case, it will be impossible to get around two simple

7 facts:

First, the demand for traditional legacy

landlin, and CA services had been dropping like a stone

since the earl? 2000s and that trend has continued as

new cospetitors and services enter the market, Indeed,

if there were no substitute, avails$l, for Verizon’s

legacy landline services, as rate counsel contends, then

the demand for those services would have been static or

have grown along with the population in New Jersey. But

the charts I have distributed clearly show that the

demand for residential basic exchange service,

single—line business basic exchange service, and

residential 01 services baa declined sharply in recent

years.

21 Second, the demand for substitute means of

22 coatunication has been growing by leaps and bounds. In

23 fact, even rate counsel recognizes that a fundamental

24 revolution has reshaped the way in which customers

25 corniunicate. It is readily apparent that customers are

July 17, 2012Page 14 Opening Statement Page 16

in charge and customers are driving companies to invest

and innovate in figuring out how best to meet oustomars’

evolving needs and demands. As a result, VoIp carriers,

such as zsagicjack, and wireless carriers, like Tracpone,

have entered the market to compete for low income

customers, while an array of established competitive

carriers, such as Concast, Cablevision, and AT&T

wireless, continue to innovate and take lines from

Verizon’s legacy landline business as is denonstratea in

the charts.

Finally, the scope of this proceeding must

be kept in perspective. While outdated legacy rules and

regulations should be eliminated so that incumbent

companies can compete on a level playing field with

their numerous nonregulated competitors, these are

issues for another day.

The mona initiated Phase XX for the sole

purpose of evaluating whether any of the few remaining

noncompetitive services should be declared competitive

and tree from rate regulation and whether any

competitive serv~ces that rate counsel challenged should

be found to be noncompetitive and subject to rate

regulation in this phase.

Thus, this proceeding does not alter things

such as Veriton’s PAR—Il obligations, tariffs, or the

Opening Statement Page 171. floard’s telecomeunications rules. All that happens if

2 the Board finds, as it should, that Verizon legacy

3 landline and residential Dl services, as well as its

4 vertical services, are competitive is that such services

5 would not be subject to rate regulation,

6 Thank you. This ends my statement.

7 HEARING BXShNINER A.SSELTA: Thank you.

8 E,et the record show commissioner Fox has

9 entered the hearing.

10 ca.4ISSXONER FOX: And missed most of the

11 testimony.

15 Asselta.

HEARING EXAIflNER ASSELTA: Century.

MS. BENEDEX: Thank you.

Good morning, Commissioner Fox, Commissioner

My name is Sue Benedek and I am senior

counsel with centurytink New Jersey. We co,smen,i the

Board for its continuing efforts to examine whether all

participants in the telecommunication market, including

my client, the ILEC, centurytink, which, along with its

customers have -— that they have regulatory flexibility

as authorized under New Jersey competitive

classification statute.

we thank the Commissioners, we thank DJM3,

and staff for giving us this opportunity and this time

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I~1 n—il—Sc ri1ltc’! JHBUEHRER & ASSOCIATES (4) Pages 14-17


Opening Sta tement

1 to do an opening statement.

2 I want to echo -- S have two point.. I want

3 to echo the coxriants made by verizon regarding the three

4 criteria. re believe that the statute -— that th. New

5 Jersey Board must ensure that the New Jersey competitive

6 statute is honored as written. The criteria

7 uncomplicated should not be expanded to include

$ additional requirements, either directly or indirectly

9 via how the criteria are applied as rate counsel ham

10 recommended.

Second point: The Board should continue to

complete the work begun in the Phase I proceeding and

deem the four remaining rate regulated service, of

CenturyLink, the RI, the Bl, installation charges for

the Al, and directory assistance competitive and keep

the services that were deemed competitive from Phase I

as competitive. That’s th, relief we are asking.

The reason we are asking for that is Hew

Jersey today includes a vibrant and competitive

telecommunications lsndscape consisting of a wide array

of mass market competitors. As Verison noted, we have

traditional CLEcs, cable companies • wireless carriers,

VcXP providers.

By way of reference, CenturyLink in New

Jersey, which serves the northwestern parts of the

Opening Statement

1 state • we have approximately today 11$ • 000 acces, lines

2 depending upon how you count an access line. When I

3 started with the company eleven years ago, it was

4 245,000.

CenturyLink now serves only a little more

than 56 percent of the retail residential households

within our northwestern portion of our footprint,

That’s txhibit NDI’I—5 in the testimony of Hark Harper.

moe, 44 percent of the households in our

little service territory do not purchase any services

from CenturyLink. Competitors with like or

substitutable retail, business services are present,

That market has been preempt for many many years, Find

as demonstrated by the fact that we have eroded in our

-— business access lines have eroded by approximately

40 percent, as Hr. Harper testified in the prefiled

testimony which you have, Commissioner, and also which I

will, get to Commissioner Fox shortly.

It defies logic and ignores reality that

this decline in Centurytink’s residential and business

lines results from any other reason than a thriving

marketplace in New Jersey. Moreover, based upon the

data provided by broadband providers and pertinent to

Hew Jersey every Centurytink exchange, that is every

exchange had anywhere from three to nine wirelirie

July 17, 2012

1 broadband providers and an enrage of seven, that is

2 seven wirelees broadband service providers available,

3 every single one of our exchanges,

4 Cement, Csblevis,,n, Service Electric cover

5 over 99 percent of the square miles within our

6 exchanges. Wireless service is widely available

7 throughout the service area with over 99 percent

S coverage in our New Jersey market.

9 AdditionalLy, wirniess Lifeline provider, in

10 t~ew Jersey now receive 75 ;crcent of the low income

11 support from the federal Lifeline fund which arcs12 receive only the remaining 25 percent. Noncable, VoIP

13 providers are ubiquitously ‘Ivailable and offer

14 residential phone plans rar.~,g from $4.95 to $19.95 per

15 month based upon the featu.,es and other terms of

16 offerings, they offer busint’.s plan, ranging from ~l5

17 to $39.95, lie have thai i, Exhibit ICH-.j4.

18 The record dev.’n.strates that declining

19 access lines for both standalone and bundle services,

20 that based upon reporting ~ata Since that Phase I

21 proceeding, since the proce.’aing with the order that we,

22 entered in • 08, consumers htn, been leaving CenturyLipic

23 in droves. It’s been a stcedy flow of customers

24 selecting other providers oa . bsti.tutable services in

25 our market.

Contrary to rat.. uns assertion,, the

record clearly demonstrates th’tt cable companies compete

in the cossaunjoation, -— a, t:~. communications provider

for any and all Centurytiak customer,, They can serve

irrespective of whether the austcmer currently purchases

a bundle service or a standalone service from

centuryr.ink. And you will hear throughout this hearing

whet ie the product market, the standalone concept

versu, a bundled service.

Xt is our positic., that cable competes for

any and all. They’re not out there competing for one,

The market ha, to be defined to not be so narrow. Based

on reporting data, msaning the data that customer, when

they leave us, we report numbers which is what we can

know of what they leave, in Hxhibit ~ Cable

companies are the top requesters of the number that goes

with the customer for centurytink’s customers.

Simply etated, every time a cent~sryLi~

basic residential customer chooses to pilrchsse XPXNIfl

voice or a similar service from another cable provider,

it demonstrates the service is substitutsble, that they

are in that same market.

Finally, numerous alternatives and methods

of accessing na services are available in Hew Jersey

today. With the highest percentage of brcadbana

Page 18 Opening Statement -— —~Page 20

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SPU INVESTIGATION RE; ILEC SERVICES

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connection, in th, nation, 78 percent, New Jersey

consumers are well—suited to be familiar with and

utilize internet base4 DR competitors. Moreover, with

wir.Iess phones nearly ubiquitous among the New Jersey

population, the ability to dial 411 on a wireless phone

on other networks other than the IX.EC are familiar to

many New Jersey citizens.

In sum, the Hoard should remain consistent

with prior reclassification orders and apply only the

three criteria as written, request to create new

criteria or expand the existing criteria by squeezing in

new requirements or how it’s supplied should be promptly

rejected.

As the record amply demonstrates, the sate

regulated centurflink retail services, the four thp.t I

discussed earlier, plus what had been deemed ooncetitjve

in Phase I, should be affirmed by this Board.

thank you very much for this opportunity,

Commissioners, and DIG, thank you.

WEHAING EXAMINER ASSELTA: Let the record

show that Commissioner Holden has now entered the

hearing.

Mr. White.

am. WHITE: Good morning, Commissioners.

NEARING EXAMINER ASSELTA: Good morning.

Opening Statement - - Page 23

MR. WHITE: Rate counsel believes that the

four core services that are issued in this proceeding

should remain rate regulated, that vertical features

should be reclassified as rate regulated, that

multi-line business of Centurytink should be

reclassified as rate regulated as well.

The relevant product market and geographic

market should be limited as advocated by rate counsel.

Rate regulated services are inelastic, and mac carriers

have market power which is the ability to sustain price

increases and any loss of customer does result in

overall loss of revenue.

Competitive safeguards require carriers to

offer standalone basic service which is a proteoted

service under our statute. Rate regulated services when

sold as part of a bundle, they have to offer standalone

service to Customers.

the elimination of rate regulation for these

services would essentially end the obligation to offer

standalone service to customers. There are a

significant number of customer, in New Jersey that only

want standalone.

Verisor. controls 97 percent of the

standalone voice market, 04 percent of the standalone

Vex? market. CenturyLinli controls the vast majority of

July 17,2012Page 24

basic stamd,,<.ne markets. What is characterized as loss

is after nigntion to another Verizon or CentuzyLinic

product which doe, not provide competitive pressure.

Again, this is reflected in what we will

show is the iaelasticity of the service, sought to be

reclaseifiod.

tS.re needs to be a sizable core of legacy

landlines that need protection. They include the

elderly, ~ income, those in rural areas. They are

vulnerable an.i they need the protection of this board.

And we think when you look at the entire

record as a whole that the four rate regulated services

should renai,~ rate regulated and additional services

that are ne sompetitive should be reclassified.

thank you very much.

SEAMING EXAMINER ASSflTA. Thank y~

Any questions, commissioners?

h~ WRITE: Commissioner, I have extra sets

for the ot’,.,- commissioners it they want to have

binder,.

24 Cosnissio:,ot,

hEARING EXAMINER ASSELTa: Sure.

~fl ‘staff, is there any opening statement?

:~a. wapo: No opening statement,

25 ‘ZARXNG EXAMINER ASSELTA: Thank you.

Colloquy Page 25

‘DNMIS$IONER POX: The attorneys for

companies, u.~qn Mr. White commented about standelone

voice ser’vi~’eu, that elimination of rate regulation

would eliwin,.te landline voice services, do you have a

position on that?

iS. SMITH, Can 70fl repeat?

COIS4ISSIONER POX, What Mr. White said was

if we elim~nat, rate regulation for the basic service

that you cou.~d, in fact, and I think this is true,

eliminate standalone voice service that people eight

have to take a bundle.

b~. SMITH: Mt. Vasingtor, is my witness

addressing that in detail but, you know, basically what

we will be doing is looking at what, you know, the

marketplace is looking for as a way of products and

service.. XE there’s a market for standalone basic

service, I would think that we would continue to provide

it. And that’s, you know -— the view of Mr. Vaaington

can opine more on it as our expert witness.

HEA~ING EXAMINER ASSELTA: Let’ a go to your

witness.

Ms. ~EN~DtX: May I, your Honor, real quick,

As in terms of framing the answer to that question, the

relationship between the Board and the XLEC, my client,

or Verizon, doesn’t go away with competitive

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BPU INVESTIGATION RE; KIJEC SERVICES

Colloquy Page 26

1 classification. And so, you know, the regulation, as

2 applicable, the PAR plans that my client and Yeriron

3 have, there are other requirements. So I don’t -— I

4 don’t know how to answer your question, I don’t have a

5 crystal ball, but that relationship would seem to

6 preclude sort of drastic changes, but it would give

7 us —- but would give us the pricing flexibility to

8 compete I mean which we desperately need.

9 Nfl. 94175, Right. And~~ Cossisaionn, may I

10 also add, as I said also in my opening statement, and as

11 sue was iust saying, we are subject to all of our

12 obligations under PaR-TX and we have the tariff, and

13 what could be a complicated legal ‘question, how to you

14 untangled those current obligations which is certainly

15 involved.

COZ24XSSIOUER POX: Thank you.

HEARING CXANINER 15551.7k: it. Smith, would

you like ta call your witness?

I~. SMITH: Yes. r

would like to call Paul a. Vasington to

the stand.

22 HR. WHITE: Commissioner, should we identify

23 the exhibits that we’ we already pra,arked and given to

24 you.

25 HEARING EXAMINER ASSELtA: Yes.

Colloquy

July Il, 2012Page 28

1 Baldwin and Sarah H. Basely, public version, marked for

2 identification.)

3 CRC-fl, Rebuttal Testimony of Susan N.

4 Baldwi,. and Sarah N. Basely, confidential version,

5 marked for identification.)

6 CRC-I, Verison mixed public and confidsntial

7 discovery responses, marked for tdentificatian)

B (PC-5, Centuryr,ink mixed public end

9 confidential discovery responses, Barked for

10 identification.)

11 HEARING EXAMINER ASSEt’??.: Okay. Bill.

12 HR. SMITH: And, Commissioners, what you

13 have in front of you for Verison what Hr. Vasingtom has

14 in front of him is his direct, reply, and rebuttal

15 testimonies, You have the proprietary and the public

16 versions, And if you look at the upper let t—hap4

17 corner, you’ll see the exhibit numbers that starts with

18 exhibit Verizon Hew Jersey CXC for confidential and 01?

19 for public and so forth, that’s the testimony for

20 Hr. Vasington.

(VNJ’-Ojc, Direct Testimony of Paul 8.

Vasington, proprietary version, marked for

identification.)

CVNJ—Olp, Direct Testimony of Paul B.

Vasington, publio version, marked far identifics,ao~,

Page 29

(VNJ-02c, Reply Testimony of Paul B.Vasington, proprietary version, marked foridentification.)

(VNJ-02P, Reply Testimony of Paul B.Vasington, public version, marked for identification.)

(VNJ-03C, Rebuttal Testimony of Paul B.Vasington, proprietary version, marked foridentification.)

(VNJ-03P, Rebuttal Testimony of Paul B.Vasington, public version, marked for identification.)

PAUL B. VASINGTON,IjfreetorState Public Policy for Verizon, having a businessaddress of 125 High Street, Oliver Tower, Boston,Massachusetts 02110, having been duly sworn by theNotary, testified as follows:DIRECT EXAMINATION OF MR. VASINGTON BY MR. SMITH:

Q. Mr. Vasington, state your full name, businessaddress, and business title.A. My name is Paul B., B as in boy, Vasington, V, as

in Victor, a-s-i-n-g-t-o-n.My business address the 125 High Street, Boston,

Massachusetts. And my title is director, state publicpolicy.

24 MR. SMITH: Mr. Vasington is available for25 CrOss-examination.

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Page 27 Direct- Vasirigton1. HR. emITs: For rate counsel Exhibit 1, 1?.

2 ia the initial testimony. Exhibit 2, 2k is the reply.

3 rxhibit 3, 3* i. the rebuttal. The first one is the

4 red.acted end the second one is the confidential. We

5 have discovery responses for Cpnturytink which is

6 Exhibit 4 and discovery responses for Verizon.

7 Excuse me. It a reversed. Centurytink is

S five and Verison is four. And those are our prenarked

9 exhibits.

10 And we had one change to the initial

15. testimony which I distributed to you and Alex Korea,, and

12 the court reporter one small change.

13 CRC-I, Initial Testimony of Susan H. Baldwin

14 and Sarah 14. Basely, public version, marked for

15 identification.)

16 (RC—lA, Initial Testimony of Susan H.

17 Baldwin and Sarah ii. Basely, confidential version,

18 marked for identification.)

19 (EC-2, Reply Testimony of Susan H. Baldwin

20 and Sarah 11. Bosely, public version, marked for

25. identification,)

22 CRC-21, Reply testimony of Susan H. Baldwin

23 and Sarah K. nosely, confidential version, marked for

24 identification.)

25 (RC—3, Rebuttal Testimony of Susan 14.

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Cross - Vaslngton

2. CROSS-EXAMINATION OF tv~. VASLNGTON BY MR. WHITE:2 Q. Thank you.

Good morning, Mr. Vasington. How are you?A. Good morning. Doing well.Q. Good.

You filed direct, reply, and rebuttal testimonyin this proceeding. Correct?A. Yes.Q. When were you contacted regarding providing

testimony in this proceeding?A. It was in the fall. I don’t recall what --what

month, but it was in the context of the provisions ofthe settlement approved by the Board in 2008 providedfor a review three years later. So I was contacted withthe indication that that time period was coming up andthat the Board would probably be opening a newproceeding.Q. And when did YOU start preparing testimony forthis proceeding?A. BOY, I don’t recall an exact date. It was around

the time that the docket was open. I don’t rememberexactly.Q. Subject to check that’s about October?A. Subject to check, sure, that’s Sounds about

right.

July 17, 2012

from you, we have to look to various different peoplewithin Verizon to get responses. So in that process wehave to identi& other people who we need to seekinformation and data from.Q. Do you have an estimate of how many hours you’ve

expended to basically compile your entire three piecesof testimony in this case?A. Oh, boy, no, not off the top of my head. I mean

we had three pieces of testimony, several hundred pagesof testimony, your witnesses’ testimony was three piecesround a hundred pages or more each time so it was a lotof time spent reading and drafting. And the three timeperiods just before the filing of my three pieces oftestimony, you could say full-time and then some fordrafting. I couldn’t tell you exactly how many hounthat would be, but it’s a lot of work.Q. Now, did — did you draft all your own testimony

or did you have assistance from people from your staffthat did initial drafts and provided those to you forreview and edits?A. No. I did all the initial drafts and then I

provided it to other people for edits and review.Q. So essentially you were responsible and did, infact, write each of the three pieces of testimony thatyou submitted here today. Correct?

Page 31 Cross - VasingtonCross . Vasinyton

Q. So shortly thereafter you started preparing tofile testimony in this proceeding.A. Yeah. I mean we started preparing the data first

and then I started writing testimony after that.Q. Okay. How many people did you have assist you in

that?A. Well, the attorneys have some input into the

drafting of testimony and there are probably half dozenother people who touched at some point data sets orediting with drafting.Q. But you started out with data sets. Correct?A. Started out with compiling data sets, yes.Q. How many people worked on that?A. I think in the first instance there were two

people directly involved in that. I’m not sure how manypeople they contacted to also work on it.Q. So you delegated that to those individuals to

compile data that you would need for this proceeding.Correct?

A. Yes.Q. Did that number grow during the other phases of

this proceeding?A. The number of people helping out?Q. Yes.A. Yeah, because once we started getting discovery

Page 33

1 A. Yes.2 Q. Do you own stock in Verizon?3 A. Yes.4 Q. Do you participate in a -- in a bonus plan with5 Verizon?6 A. Yes.i Q. Doyou get-a MR. SMITH: Objection, your Honor.9 HEARING EXAMINER ASSELTA: ,,...,,

10 object also first. For clarification, Mr. Vasington,ii. have you adopted all your testimony as filed?12 THE WITNESS: Yes, sir.13 HEARING EXAMINER ASSELTA:~., cm,,.

14 MR. SMITH: Your Honor, I object.15 I’m not quite sure what the relevance of16 this to any of his direct or reply or rebuttal. It17 seems to be outside of the scope of testimony.18 HEARING EXAMINER ASSELTA: apw.g,~,is Why are you going that way?20 MR. WHITE: Well, to the extent that he has21 financial interest in Verizon stock, he has financial22 interest and that’s appropriate to go into on23 cross-examination whether it could effect his testimony,24 whether he would profit depending on how this proceeding25 came out. So it’s an area that’s legitimately

in—I i.Script(A) JHBUEHRER & ASSOCIATES (8) Pages 30-33


(Cross:

appropriate for cross-examination.HEARING EXAMINER ASSELTA: Sus~,ü,~d.

Move forward.BY MR. WHITE:Q. Now, you participate in a bonus plan. Correct?A. Yes.Q. This is a different question.

Do you -- as part of that bonus, did you get paidin stock?

MR. SMITH: Pm going to object again. Ithought you sustained instead of overruled my objectionso.

HEARING EXAMINER ASSELTA:,~,~the best you can.A. No. My bonus is not paid in stock.Q. ICs all paid in cash or deferred comp?

HEARING EXAMINER ASSELTA: ,.,_.,

compensation let’s say.Move forward, please.

Q. That’s fine.You state on page 2, lines I through 5 ofyour

initial testimony that you looked at three criteria.Correct?

24 A. Let me get there.25 Yes.

Cross . Vasington

Q. These are the only criteria that you looked at inyour direct testimony. Is that correct?A. That is correct.Q. And you did not do any analysis of whetherVerizon has market power, did you?A. Yes, I believe I did.Q. And where is that?A. My whole testimony. I clarified that in the

rebuttal testimony where rate counsel’s witness in theirreply said that I didn’t make any evaluations of marketpower and I addressed that pretty squarely in my finalround of testimony.Q. Didn’t -- you addressed residential service and

whether or not you did analysis for residential.Correct?

A. I did an analysis of all four of the legacylandline services, most of which are residential butalso include single-I Inc business.Q. And Ms. Baldwin did an analysis of business as

well. Right?A. Yes. She did the four services at issue, plus

discretionary services, plus multi-Tine business forCenturyLink.Q. And her determination of the multi-line businessis it was inelastic and that you were able to properly

________ July 17, 2012

Page 34 Cross . Vasington Page 36

increase rates, is that correct, for business cut lines,single-line business?A. Well, you started your question with multi-line

and finished with single-line.Q. Well, single-line is what we’re talking about for

Verizon because multi-line is not in this case forVerizon. So let me rephrase that.

Let’s limit it to single-line business.Is it correct?

A. Rephrase the question.HEARING EXAMINER ASSELTA:~

question again, Mr. White.Q. Ms. Baldwin did analysis for single-line businessfor Verizon. Correct?A. Yes.Q. And her conclusions about that, number one, was

inelastic and also you were able to properly raise rateswithout losing revenue, is that correct, in heranalysis?

20 A. Her analysis in her rebuttal testimony was that21. the single-line business services is relatively22 inelastic and I think she said that we’re both able to23 increase our revenues and to increase our profits which24 are not necessarily the same thing. I don’t think that25 price elasticity is -- determines whether or not a

service is competitive. But in any event if the purposeof that analysis is to say that we can raise rates to alevel where we’re going to generate monopoly profits, Ithink the Board shouldn’t be concerned about that;because if you look at our business rates from the 2008stipulation, we were allowed to raise rates to certainlevels in that stipulation and we didn’t even takeadvantage of all that freedom for business services. Sowe left revenue on the table already for competitivereasons. So there really isn’t a concern that we’regoing to be able to generate monopoly profits in thebusiness or residential customers.Q. Market power is not one of the three criteriathat you identified that should be looked at in thisproceeding in your initial testimony. Is that correct?A. No, not really because I think what I said in

my -- I know what I said in my testimony was that thethree criteria together constitute a pretty good test ofmarket power.Q. What about market share, is that relevant? Isthat one -- strike that.

Is market share one of the three designatedcriteria in the statute?A. No, it’s not. And the Board has already said in

earlier orders that market share has limited use in this

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Cross - Vasington Page 38

1 context of applying the statutory criteria. I explained2 in my testimony that market share information can be3 valuable to the extent that it demonstrates compliance4 with the three criteria. But in and of itself, it’s as static picture of a point in time that has limited value6 in a market power study, especially when you’re talking7 about an industry with rapid technological and marketa changes.9 Q. Okay. On page 2, lines 14 to 20, you state that

to the four services of which reclassification is sought11 are now referred to as legacy Iandline.12 Is that correct?13 A. Yes.14 Q. These four services are part of mass market15 services. Correct?16 A. Correct.17 Q. Did you forecast demand for services in the localis market, including basic local service?19 A. No.20 Q. Did you produce elasticity studies and economic23. quantitative analysis for each of these four services?22 A. In effect the three criteria being evaluated are23 supply and demand elasticity studies. I did not do a24 quantitative assessment of price elasticity of demand.25 In other words, I didn’t fly to say if price goes up by

July 17, 2012Cross - Vaslngton —

1 what governments are.2 Q. See your direct testimony at pages 3 and 4.3 A. Okay.4 MR. SMITH: Do you have a specific,5 Mr. White, line references for those pages?6 MR. WHITE: No. I just have three and four.7 1 am handing the witness some documentsa we’re going to mark as Rate Counsel Exhibit 6 and there9 are four documents in here. 6A which is the Verizon SEC

to 10-K, Verizon financial reports, Verizon quarterly11 reports, and CentuiyL,ink I0-Q. This will be marked Rate12 Counsel Exhibit 6.13 If you give us a Ic.-:, minutes so we can14 distribute them.‘5 HEARING EXAM!NER ASSEL,TA: Sure.16 (RC-6, Verizon SEC 10-K, Verizon financial I17 reports, Verizon quarterly reports, and CentuiyLink Iis 10-Q, marked for identification.)19 MR. SMITH: Mr. White, am I correct as far I20 as the documents in front anne relate to Verizon that21 they are documents related to -- I see -- it’s Verizon I22 New Jersey, Inc.23 THE WITNESS: One of them.24 MR. SMITH: One of them. The other is25 Verizon Communications and the PowerPoint is --

Page 39 Cross - Vasirigton

MR. WHITE: Is the first quarter reports of2 2012 earnings of Verizor~ Corp.a MR. SMITH: So tw9 out of three are Verizon4 Corp. which is not a part of this proceeding.5 THE WITNESS: Vou gave me CenturyLink. IS MR. WHITE: Keep it, it’s part of the7 exhibit. Ia MS. BENEDEK: Maybe. I9 MR. WHITE: Because the exhibit covers all A

10 three and I will use it again when CenturyLink is a I1.1 witness.12 THE WITNESS: Fair enough. I13 BY MR. WHITE: I14 Q. Now, if you go to Verizori New Jersey documenti15 which should be identified as page I of 50 which is 6A16 and if you go to page 43 of that document.li A. This is the one for the year end 2003.is Q. Yes.19 A. Whatpageagain?20 Q. Forty-three.2]. And to your knowledge, does Verizon New Jersey22 file IQICs any longer?23 A. Jdon’tknow.24 Q. Take subject to check they do not.25 A. Subjecttocheck.

Cross . Vaslngton

X percent, demand will decrease by Y percent.In these types of proceedings typically supply

elasticity and demand elasticity are more qualitativeassessments. Supply elasticity is the willingness andability of competitors to provide additional services oradditional scope and scale of services. Demandelasticity is the willingness of customers to switch tothese other substitutes.

So in the sense of the terms elasticity studies,I did do that for supply and demand elasticity. But forquantitatively trying to estimate the price quantityrelationship, I did not do that.Q. And to determine whether a product is a

substitute is some type of quantitative analysisrequired?A. No.Q. That’s your opinion.A. Yeah. And that’s been the precedent of the Board

and other commissions that have done these types ofevaluations.Q. Are you familiar with the term enterprise market

services and government markets?A. I don’t know that I’ve heard them used exactly

that way. But I know what enterprise is generallyindustrial companies, big, big companies. And I know

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8W INVESTIGATION RE; ILEC SERVICES

July 17, 2012cross - Vasington Page 42 Cross - Vasingtc.n Page 44

MR. SMITH: Subject to check. 1 the middle of the page?2 Q. Okay. Ifyou go to page 43 that list identifies 2 A. Yeah.3 transactions with affiliates and it lists operating 3 Q. Got a heading wireline. It’s got a total of4 revenues. And alsogo to page45 which is F-2l and over 4 4.103.s to page 46. . A. Oka1. Yep.6 And just to explain to eveRyone the reason that Q. You add the two together.7 there’s a skip in pages is because when you print this A. Yep. I see that now. Thank you.8 out on the printer, page 44 was blank so we just didn’t Q. Okay. It is confusing. I admit. You would9 include it in the package, but all the information in think the, would do it differently, but they didn’t.

10 this filing are contained. There’s nothing left out. And then under global enterprise, the strategic11 HEARING EXAIVONER ASSELTA: services in core and add up to 3.852. Do you see that?12 for the witness?‘3 MR. WHiTE: Yes.14 Q. I want you to identi&, are all these affiliatesis still operating for Verizon; does Verizon New Jersey16 have transactions with these affiliates today?17 A. I have no idea. i-i18 MR. WHITE: You will be providing rate 1819 counsel pursuant to an order of Commissioner Asselta all ag20 the affiliates that do operate here in New Jersey. 2021 Correct? 2122 MR. SMITH: You have made -- there’s a 2223 discovery request. There was a motion to compeL and 2324 there was an order and we will follow what the order has 2425 told us to do.

12 A. Yes.13 Q. Then you see that’s under global enterprise and14 then global wholesale, you see that number which is15 1.861?16 A. Yes. Million.

Q. And then you have other which is 129.Do you see that?

A. Yes.Q. Nov.’. if you go to the next page which is 27,

under these definitions of mass market, globalenterprisc global wholesale, and others, there’s adescription of what services are, do you see that, andwhat services are included?

25 A. You’ie going to have to give me a moment to read

Crass - Vasingtop Page 45

1 them.2 Okay.a MR. SMITH: commissioner, at this time I4 would like to object. I’m really not quite sure wheres the line is going.6 HEARING EXAMINER ASSELTA: c.,~7 specific, Mr. White?8 MR. WHiTE: This is essentially laying the~ foundation for later. Verizon has claimed that they’re

10 suffering overwhelming losses in the annual reports that11 they filed and specifically this thing will show that on12 a company-wide basis that they’re showing positive13 EBITDA, which is earnings before interest, taxes,14 depreciation, and amortization and that they’re actually15 showing a net profit which is actually skipped ahead.16 It might be easier, it’s on page 29 of 38.17 It shows 1.6 operating income margin in EBITDA margin of18 22.6. And again what the table of content show is how19 they group their markets and what services are included.20 And our position is tha.t this is directly relevant to21 their claim of losses, because if grouped together,22 they’re making money. They have failed to explain why23 New Jersey would be any different than the composite of24 all their operations.25 MR. SMITH: I’m still going to renew my

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1 Mr. White, I would just like to point out2 that this document appears to be dated from December 31,3 2003. I’m not sure if you clarified that on the record.4 It’s almost nine years old.

MR. WHITE: Yes. It’s the last annual6 report that Verizon New Jersey filed with the SEC.7 After that, they did not file annual reports any longer.a But this is probably available on the Edgar website and9 reflects a synopsis of Verizon’s business in 2003 which

10 is right after the PAR-Il was extended and identifiesax the affiliates that operated then.12 Q. If we go to the next document which is the 10-Q13 which is for the first quarter of 2012.14 A. Okay.15 Q. And you refer to page 20 -- what’s page 27 of 3816 at the top, but at the bottom you’ll see page 26.17 A. Oh, okay.18 Q. It identifies various groupings. What defines19 see where it says mass market?20 A. Yes.21. Q. Which is comprised of consumer retail and small22 business.23 A. Where does it say that?24 Q. Well, you put dollars and million, operating25 revenues and selected operating statistics. See that in

M in—I —Sen lufo’ JHBUEHRER & ASSOCIATES (II) Pages 42 .- 45


1 when you’re talking about out global wholesale segment,2 if it’s even included in that, would be a pretty small3 piece.4 MR. WHITE: Could we make a transcript5 request for them to ideñti& where their CLEC revenues6 are reported in their lO-Q and under what business7 entity?a HEARING EXAMINER ASSELTA: ~._

910 MR. SMITH: Commissioner, I would have to11 check, I don’t know if that is easily identifiable on12 the lO-Q. We would just have to take it back which may13 be we’re not able to provide.14 Sitting here today, I am not familiar with15 all these documents. I can only see the SEC statements16 periodically. But it’s something that we usually deal17 with in the regulatory realm.is Q. Let me ask it a somewhat different way as well.19 The Board has set UNE rates here in New Jersey20 for Verizon New Jersey. Correct?21 A. Yes.22

July 17,2012Cross . Vasinglon Page 46 Cross - VasMgton Page 48

1 objection. It seems very tenuous the relationship i A. Global wholesale, yes, I see that.2 between Verizon Communications, Inc., on this basis of 2 Q. Okay. And specifically this is -- this would be3 financial connection. There’s no breakdown here that I s wholesale served revenue resolved from CLEC operations.4 can see Mr. White’s pointed out for Verizon New Jersey, ~ Correct?5 Inc., or any possible explanations and it’s going to be s A. No. This is primarily our global Internet6 pure speculation, hypothesis of the connection between 6 backbone my understanding. When we merged with MCI, MCI7 what’s reported in this document and the testimony that 7 was the fourth largest what they call Tier I -- Tier 1a Mr. Vasington can supply. a backbone provider for Internet services with facilitiesp MR. WHITE: Can we ask for the annual e that MCI had obtained when MCI took over a company

10 reports? Their discovery response is see our investor to called UUNET a number ofyears ago. They have a global11 reports. The next report is investor report. Investor ii IP network that is used as a backbone for a Jot of12 report shows the same 22.6 and 1.6 percent. 12 different services and I believe that global wholesale13 HEARING EXAMINER ASSELTA: And cbisis 13 primarily refers to that, those services in that14 company-wide basis. Correct? 14 Organization.is MR. WHITE: This is company-wide and that’s is Q. Do you see the reference in the second line,16 what they say to look at. 16 other carriers that use our facilities provide services17 MR. SMITH: Just clari& when we say 17 to their customers?is company-wide, that term can be conthsing sometimes. is A. Yes.is Verizon Corporation. 19 Q. Wouldn’t that be CLECS that purchase UNEs or20 MR. WHITE: Corporation which includes their 20 resale from Verizon?21 wireline operation which includes Verizon New Jersey as 21 A. That might be also be in that but that is not all22 well. 22 that it is. A lot of carriers would purchase dark fiber23 HEARING EXAMINER ASSELTA: Okay. 23 capacity or high capacity on our global IP network and24 MR. WHITE: In fact, this might be a good 24 could also fit into that description. So CLEC type25 time, I would make a transcript request that they 25 services could be a part of it, but my understanding is

Cross . Vaslngton Page 47 Cross - Vasingiori Page 49

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provide to us the annual reports that they filed withthe Board for the years in which they’re claiminglosses. They did they not provide that information andI think it’s appropriate if they’re going to rely on thenumbers they assert shows a toss that we have a fullreport so 1 ask for a transcript request.

HEARING EXAMINER ASSELTA:~that. That seems fair. Okay.

MR. SMITH: Commissioner, I understand.Which years, asked by my backup staff?MR. WHITE: Personally the periods in which

you reported losses in your testimony which is 2008,2009,2010, and 2011.

MR. SMITH: So the reports that comport withwhat part of the testimony is in the reply, whateveryears may be.BY MR. WHITE:Q. I would like to refer you, Mr. Vasington, back --

and again a lot of this is foundational and I apologizefor going through it, but it will help later when we getto other issues and that is the reason why I’m raisingit really is foundation now because it helps set thestage later.

Global wholesale, do you see that description onpage 28 at the top, page 27 at the bottom?

\l iu—( .Scrip(!h

Q. And there’s approximately 130 CLECs that have23 been given authority to operate here in New Jersey.24 Correct?

~25 A. That sounds about right.

SHBUEHRER & ASSOCIATES(12) Pagest~ -49


Cross Vasington

Q. Do the revenues that Verizon receives fromproviding IJNEs are those reported by Verizon New Jerseyincluded by them or is the CLEC revenues they receivereported in a different affiliate of Verizon New Jerseyhere in New Jersey?

MR. SMITH: Objection. The question seemsambiguous to me. Reported where?

HEARJNG EXAMINER ASSELTA:RCnF~LQ. Let me rephrase it.

Does Verizon New Jersey include CLEC revenue whenit reports revenue here in New Jersey?

MR. SMITH: In the annual report.Q. Uh-uh. Forget whether it’s in the annual report.

How do they report CLEC revenue here in NewJersey?

HEARING EXAMINER ASSELTA: Thn,bwe

way of saying.A. I’m not sure. Pretty sure iCs not an affiliate.

It’s Verizon New Jersey, the telco, that provides theservices. How it gets reported, I’m not sure.

(START CONFIDENTIAL PORTION OF TRANSCRIPt)

Q. Let me go into this. Single-line business,you’ve identified a number in the course of thisproceeding, subject to check I believe it’s about 79,000lines or single-line business lines.

Cross - Vasington

(END CONFIDENTIAL PORTION OF TRANSCRIPT.)A. That is proprietary.Q. Yes. But everybody here has signed the

proprietary agreement, I assume.MR. SMITH: I’m not so sure about that. Has

everyone in the room signed a proprietary?MR. WHITE: The ones in the back row are

interns so they’d be covered by rate counsel’s.MR. SMITH: Has anyone not signed it?But the record should reflect so the

transcript is going to be a public document so if we’regetting into confidential information we will need tomake that designation. I don’t want to be presumptuousand speak for the Commissioners, but we make thatrequest.Q. Now, if you have a single-line business customer,

Mr. Vasington, Verizon New Jersey currently serves it.A. Is that a question?Q. Yes. Take that as a--A. Yes. We have single-line business customers thatVerizon New Jersey currently serves.Q. That customer decides it wants to order a secondbusiness line.A. From Verizon New Jersey?Q. Yes.

July 17, 2012Page 52

A. Yes.Q. Who provides that?A. Verizon New Jersey.Q. Or is it -- what about MCI doing business as

Verizon business?A. Your premise to your question is you have a

single-line customer obtaining service from Verizon NewJersey who asks Verizon New Jersey for a second line soVerizon New Jersey provides that second line, not MCI --

not former MCI.Q. Let me ask it a different way.

What services does --

HEARING EXAMINER ASSELTA: _~

answer again?THE WITNESS: My answer was if Verizon New

Jersey is providing a customer with their first businessline and that that customer asks Verizon New Jersey fora second business line, then that second business lineis also provided by Verizon New Jersey.

HEARING EXAMINER ASSELTA: m...,~,,,

answer, Mr. White.Can we move on to another question?MR. WHITE: I’m trying to get back to this

point of Verizon -- I have another question.Q. Verizon business, do you know who that is, MCI

1 Communication doing business as Verizon business2 services?3 A. Yes.4 Q. Do they provide business lines to customers?5 A. I believe so. r haven’t looked at their tariff,6 but I believe they do.7 Q. And MCI would presumably purchase UNEs, correct,e from Verizon New Jersey?g MR. SMITH: Your Honor, I’m going to object

to based upon the Boards prior rulings that affiliates11. matters and transactions are really outside the scope of12 these reclassifications proceedings. I’m not quite suren where Mr. White is going with this as far as the14 criteria involved.is MR. WHITE: Again, this in part, your Honor,16 relates to their issue of claimed losses. One way you17 can have losses is if revenue previously captured by18 Verizon New Jersey is now being captured by affiliates.19 And one of those areas is MCI doing business as Verizon20 business. And the question is what business lines do21. they provide.22 It is my understanding and I’ve heard23 different testimony to contrary that multi-line lines24 businesses are provided through Verizon business. If25 you have more than one line, that’s a service you get

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MCIAnd, in fact, if you look at the assessments

that are issued by this Board which we will get intolater there are $64 million of revenue associated withMCI and MCI Metro Access which is another MCI affiliateis roughly $8 million. So the question is has revenuebeen shifted. And this is what I’m trying to layfoundation for. And that’s why I think it’s relevant tothe scope of this proceeding because it impacts directlyon whether or not there is claimed losses or, in fact,losses orjust shifting of revenues and profits to otheraffiliates.

MR. SMITH: The whole issue of shifting ofrevenues would require almost a whole separate case toexamine financial records, affiliates, and Verizon NewJersey, Inc., and it just seems to be totally outsidethe scope.

HEARING EXAMINER ASSELTA: I think itsinside the scope of trying to ascertain your~*ofitability and whether this hearing is necessary ornot and that’s what he’s trying to do here to establishthat.

It’s a pretty simple answer. Either youassume this revenue or you subcontract it out to MCI.

Mr. Vasington, do you or don’t you?THE WITNESS: If a customer isa customer of

Verizon New Jersey, then the revenue goes to Verizon NewJersey. If they’re customer of Verizon business whichis former MCI, then it goes to that entity which is alsolosing money in New Jersey. So the notion that we’reshifting revenue and somehow hiding profits is not true.Q. Let me go through this. Consider this as ahypothetical.

MCI would purchase IJNEs from Verizon, correct,for New Jersey, services of Verizon in New Jersey?A. I don’t know that.Q. For business lines.A. No, I don’t know that because I know before the

merger MCI was both the facilities based provider andhad a wholesale -- what we call a wholesale advantageagreement which is where you buy UNEs through.

Pm not sure today if they still have a wholesaleadvantage agreement. They may, but I haven’t looked atthat as part of my evaluation.Q. So you didn’t exam that?A. I didn’t exam the wholesale advantage agreement.Q. If there was a wholesale advantage agreement,

July 17, 2012Page 54 cross - Vasington Page 56

1 they would purchase unbundled network elements from2 Verizon. Correct?3 A. Yes.4 Q. And one of the issues, the revenues generated5 from that purchase, we’ve already asked previously where6 does that revenue go and who reports it. Correct? And7 you don’t know at this point in time. Correct?a A. Yeah, I don’t know. But that number as We’ve9 seen in this proceeding and, as your witnesses have

to testified, is shrinking and is becoming a smaller partii of the market that fewer and fewer people are using12 resale or wholesale advantage agreements to provide13 services to competitors.14 Q. Let’s go to the next statement under UNE15 arrangement, when unbundled network element, there’s16 subscriber line charge. Are you familiar with that?17 A. Yes. That’s a retail charge.is Q. Yes. And who captures the subscriber line charge19 when a CLEC buys a tiNE from Verizon and then sells it to20 their customer, who gets to keep the subscriber line21 charge?22 A. The CLEC.23 Q. And in resales environment when youjust resale24 services to a CLEC, who gets to keep the subscriber line25 charge?

A. ACLEC.Q. No.

Would you take subject to check that in resaleVerizon --

MR. SMITH: Mr. White.Q. Pm trying to -- to get at that point.

Do you believe there’s a difference betweenresale and wholesale in terms of the subscriber linecharge? Let me phrase it that way.A. No. My understanding was that subscriber line

11 charge is what the retail provider bills to their end12 user customer and they get the money. We’re not the1.3 retail biller in that environment.14 Q. In resale market is what you’re saying.15 A. Right.16 Q. Next question in this line: If Verizon provides17 a single-line business line to its customer, Verizonis keeps the subscriber line charge. Correct?19 A. Yes. And be clear that’s a federal charge. That20 federal charge is billed by the retail provider to its21 customer under federal tariffs and the company that22 bills that charge will keep that money.23 Q. Okay. If we can go to 6C which is quarter 200024 earnings report and if you go to page--25 MR. SMITH: Mr. White, the PowerPoint?

Cross - Vaslngton

from Verizon business which is MCI. And if ifs asingle-line, it’s provided by Verizon. And the questionis I would expect that the revenues would show up under

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July 17, 2012Page 58 Cross - Vasington

MR. SMITH: Objection. The document speaks2 for itself. Do you have a question related to thoses specific things? Do you want to point to the specific

s Q. My specific question when I got started was that I6 the investor report refers to EBITDA, it does not have a Ii number in it for like the 0-Q has with respect toa actual operating income margin.9 MR. SMITH: Ob;ection. It hasn’t been

10 established that this is thr~ investor report. This is a I11 PowerPoint that Fran Shamino uses perhaps as part of the12 investor report. When we refer to the investor13 report--14 HEARING EXAMINER ASSELTA: It’s not I15 specific. It’s just a snapshot.16 MR. SMITh: Arid would be more details. F17 MR.. WHITE: TI,~s is a public document that18 was produced by Verizon given as part of their earningsis release in the fIrst quartvw 2012 highlighting their20 performance. So it’s part and partial of what’s in the121 1O-Q.22 MR. SMITH: We’re not challenging obviously23 the adversity of what our company put out by our chief I24 financial officer. What wtt’re saying is that it could25 be taken out of context because we don’t know what the


1. in total investor reports are and, quite frankly, what I2 the connection is to the testimony that Mr. Vasington I3 put in on the revenue situation based upon the reports I4 filed by the Board. I believe its getting pretty5 tenuous.

COMMISSIONER FOX:i Chink what Mr. While is I7 saying is this is used by your CFO to sell Verizon and Ia in there it says there’s 22.6 percent operating profit I~ for the company. I think that would be relevant. I

10 THE WITNES5~ EBITDA is a very impoJ~nt I11 measure. A lot of investors look at. Ifyou ever watch I12 CNBC or listen to earnings calls and transcripts to I13 folks who follow the stocks, always ask what happening I14 to your EBITDA margin. So it’s a very important number. I

So when our CFO is reporting on our earnings I16 on a quarterly basis, he is answering ahead of time the I17 questions that are going to come up from the investment Iis analysts. He’s not saying this is the only information I19 that’s important or relevant.20 If you go into the lO-Q, you’ll find an21. income statement, you’ll find a balance sheet, you’ll22 find statement of cash flows. There’s a Jot of23 information that is relevant. But for this document,24 the PowerPoint, this is the presentation you’re giving25 to investors. So he’s trying to answer ahead of time

Cross - Vasington

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Q. The PowerPoint, page II and 12. Again, onpage 11 it shows for the wireline revenue andprofitability it shows a positive 22.6 EBITDA forVerizon wireline.

Is that correct?A. Yes. That’s -- roughly speaking that’s a proxy

for the cash flow margin, revenues in cash expenses.Q. And your loss analysis that you put in your

testimony is based upon the annual reports which is --

which in -- which is not based upon EBITDA, is it?A. No, it’s not cash flow. Utility regulators have

never used cash flows as a measure of earnings becausemoney cost money and regulators have to ensure a returnon investment for one thing, payment of interest foranother thing.

Annual reports whether they’re filed by telephonecompanies, electric companies, or gas companies aren’tmeasures of cash flow. They’re measures of totaloverall earnings and whether the company is earning itscost of capital.Q. So it’s your position that Verizon does not rely

on EBITDA and average revenue per user as a proxy forthe health of its operation.A. No, not at all. EBITDA is very important measurefor a lot of reasons, but it’s not telling you the whole


story. It’s telling you whether or not on aforward-looking basis you’re positive on your cash flow.It says nothing about whether or not you’ve actuallyearned a return on your invested capital, paid taxes, orpaid your interest, for example, which is much differentfrom what the traditional utility standard and theconstitutional standard on utility regulations.Q. Well, then can you tell ins why in their investor

reports in the first quarter they only report EBITDA andthey don’t report net operating income?A. We don’t report net operating income to theinvestors in our quarterly report?Q. Look at the report. Show me where it talks about

net margin.A. Well, this isn’t the report. This is a

PowerPoint handout that goes along when our CFO andwhoever else is reporting our quarterly earnings toinvestors reports a snapshot of some of the informationwhich is included in a quarterly report.Q. In your quarterly. And your quarterly shows both

the EBITDA and the gross margin from operations.Correct?

A. The gross margins?Q. It shows the 22.6 and 1.6 percent net operatingprofit after all other expenses.

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BPU INVESTIGATION RE; ILEC SERViCES

document, the black one.Q. Do you see the big black -- blackened column at

the bottom that reads continued strong FiOS growth andlower line loss.A. Yes.Q. And then if you look at consumer ARPLJ,.there’s a

number there only shows it’s growing. See that?A. Yes. Our average revenue per user is growingprimarily due to FiOS and our rate of loss, we’re stilllosing lines, but our rate of loss is not quite as greatas it was in the prior quarter, prior year. It’sactually year over year in this show.Q. If you go to page 2, line 15 of your initial

testimony, can you briefly describe what businessservices reclassii~ in each of the priorreclassification proceedings you reference in page 2,line IS?A. Probably be easierjust to define it as

everything but single-line business exchange service has

Cross . Vasington

been reclassified in prior proceedings.Q. Well, let’s go -- let’s start from the bottom.Prior to -- what was the level of lines that were rateregulated prior to single-line business being the onlyone that was rate regulated?A. I believe it was two or more, but I think I have

discussion of the history in my testimony. Ijust wantto confirm that if you could bear with me for a moment.

Okay. On page 13 in my testimony I point outthat in the PAR-Il order in 2003 the Board reclassifiedbusiness services for customers with more than fivelines as competitive and 2005 the Board classifiedbusiness services for customers with two to four linesas competitive. So prior to that, it would have beenanything more than two was already classified ascompetitive. Prior to this is anything more than twolines.Q. Okay. And as part of that reclassification,

those -- these dealt with the general subject ofbusiness lines. Correct?A. I’m not clear what you mean by the general

subject of business lines.Q. They were all under business lines. Correct?A. The two to four -- the more than two businesslines were all business lines?

Q. And five and more were all business lines.Right?

A. Right. Five or more business lines were allbusiness lines. Correct.Q. So ?nsed upon what thç Board did previously, they

considered that within -- would you say that within thebusiness line marketplace that they drew distinctionsbetween the relevant product market within the generalcategory business lines?A. Yes.Q. On page 3, lines Ito 13, can you state that

three of the services are in the same product marketthat product market is retail mass market?

Is that correct?

and

Cross -Vasingtcr. Page 65

1 A. They are classified as competitive.2 Q. And you refer to that as page 5, lines I through3 16. Correct?4 A. No. That would be on page 13 which gives you thes history of the prior proceeding where everything but6 these four remaining services were classified as7 competitive.

MR. WHITE: I’m going to happened out thenext exhibit, bear with me a second. We’re going markthis and what it is, let me identi& it for the record.

Ifs N.J.S.A. 42-21.17 (sic). It’s also48:2-21.18. It’s also 48:2-21.19. And it’s alsoSection 254 of the Communications Act of 1934 andspecifically as Subsection K. And we’ll mark this --

it’s in the-- Ws going take couple of minutes to pullthese. And we’re going to mark this as rate coun~l

17 Exhibit 12.is (RC-l2, N.J.S.A cites and Communications Act19 of 1934, marked for identification.)20 MR. SMITH: Do you have a set for me?21 MR. WHITE: Yes. Just bear with us.22 HEARING EXAMINER ASSELTA: ~

23 material?24 NEW SPEAKER: Yes, I am.25 (A discussion is held off the record.)

July 17, 2012Page 62 Cross .

what questions they’re normally going to answer— or 1 Q. Yes.going to ask. 2 A. Yes.

HEARING EXAMThIER ASSELTA: Mr. 4Th11c. 3

Q. Actually, if you go to page 12 again. 4MR. SMITH: Which document? . 5MR. WHITE: This is the Verizon investor 6

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A. Yes.Q. And you treat DA as being a separate productmarker. Is that correct?A. That’s correct.Q. So it. is possible to have different product

markets for different services. Correct?A. Is it possible, yes.Q. Okay. Do you know how the BPIJ treats bundled

sewice~?

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1 HEARING EXAMINER ASSELTA:2 are we ready to go?3 MR. WHITE: Yes.4 BY MR. WHITE:5 Q. Mr. Vasington, did you take a look at these6 documents which we’ve marked Rate Counsel Exhibit 12?7 If you turn to the second page, there’s aa definition of protected telephone service.

Do you see that?to A. Yes.ii. Q. Okay. If you now go to the third page which is12 48:2-21.1(a), look at paragraph (c).13 A. 8(c)?14 Q. Yes.15 A. Okay.16 Q. Does that provide that no .local exchange17 telecommunications company may use revenues earned or18 expenses incurred in conjunction with noncompetitive19 services to subsidize competitive services?20 A. You’ve read that correctly.21 Q. Now, you’re claiming That Verizon New Jersey is22 incurring losses, substantial losses. Correct?23 A. Yes.24 Q. Is it your position that rate regulated services25 that are still rate regulated are PAR below cost?

Cross - Vasington ~ag~ 67

A. I haven’t looked at it in this case.In the prior access case we did show that they

were below cost in 2009. Cost meaning total cost.That’s not the same as a subsidy test. If you’reapplying the statutory provision of the subsidy test,you only count direct costs for that. And there’s a lotof Board orders and testimony discussing thosedistinctions.Q. So it’s your position that Date regulated

services are profitable, just the subset of rateregulated services.

MR. SMITH; Commissioner, I’m going toobject. Just the most recent rulings costs weredetermined to be outside the scope of the proceeding.I’m not sure where Mr. While is going. But it seemsthat he has entered into that area that is outside asopposed to inside the scope. So I object.

MR. WHITE: Where I’m going with this is youhave a statutory prohibition that rate regulatedservices can’t subsidize competitive services. I submitthat the losses that they’re claiming they’re incurringif you believe them means that their competitiveservices which is 90 percent of their services arecompetitive, they must be performing at a loss and,therefore, they’re in violation of this prohibition.

July 17,2012Cross - Vasington Page 68

And I’m trying to explore this with this witnesswhether, in fact, that is not in fact, the case.

Because the other side of that coin is Ithink we can also demonstrate that the rate regulatedservices are above costs. And if you look at UNE ratesthis Board established which is a statewide average isten-twenty-one which included a reasonable profit, the Irates that they’re currently charging above that so the Irate regulated services must be generating a profit. IAnd if they’re generating a profit and overall they’re Igenerating a loss, that means that they’re subsidizing Icompetitive services and that’s in violation of the Istatute. I

14 HEARING EXAMINER ASSELTA:m,~, Iis expert opinion and assumption. I16 MR. WHITE: Yes. I17 HEARING EXAMINER ASSELTA: Okay. I

MR. SMITH: I continue to object based upon I19 the fact that it was ruled that costs were outside the I20 scope of the proceeding.21. COMMISSIONER FOX: You can’t make the I22 decision unless you know what the costs are. I23 MR. SMITH: No. There was a ruling that the I24 costs--25 COMMISSIONER FOX: Maybe the chair need3 to


reconsider that ruling if, in fact, we need the costs tobe able to look at whether there’s subsidization

MR. SMITH: But that is unfair to Verizonand CenturyLink because --

HEARING EXAMINER ASSELTA; In thisproceeding, as counsel has said, we can’t go there andcan’t ask for that in this particular proceeding.

COMMISSIONER FOX: So we can do our ownproceeding --

HEARING EXAMINER ASSELTA: Yes.COMMISSIONER FOX; -- to see if, in fact,

they violated a Board order.HEARING EXAMINER ASSELTA: Co~ci.MR. WHITE: Then the only question I would

have, your Honor, how do they bring losses into thiscase at all. If they’re going to claim losses, thenthat -- that leads you to the next question is whatservices sustained those losses and are those lossesconsistent with statute.

Now, we can brief that point and we’re morethan happy to do it and move on. But I would justsuggest that that is, you know, that they can’t have itboth ways. They can’t be claiming losses and then tryto hide where the losses are and whether or not it’salso a violation of statute.

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(Cross - Vasinglon Page 70

MR. SMITH: We’re providing the annualreport to rate counsel. We’ve provided our tax returnsto rate counsel. And it was ruled early on that thecosts are outside of the proceeding. If Mr. White wantsto brief it, let him brief it We will respond in ourbriefs. We think it’s outside of the scope.

HEARING EXAMINER ASSELTA: o.,_.brief that?

MR. WHITE: Yes, I’ll brief it, and I’mhappy to do that.Q. And then if you go to the last page of that

exhibit, look at Subsection K of Section 254 of theCommunications Act, do you see there’s also aprohibition at the federal level that you can’t use --

there’s a provision that says the carriers may not useservices that are not competitive to subsidize servicethat are subject to competition?A. Again, you’ve read that correctly.Q. And did you do any analysis in this proceeding

whether or not you complied with that?MR. SMITH: Again, I’m going to raise the

same objection related to the scope of the proceeding.If the--

MR. WHITE: We will brief that one as well.MR. SMITH: And we’re going to reserve the

Cross - Vasinglon

right as part of the briefing of the process our firstargument is going to be it’s outside the scope of theproceeding.

COMMISSIONER FOX: And we’re going to takeit from there as well.

MR. SMITH: The Board has wide jurisdiction.MR. WHITE: Can we take a short break?

Would that be all right?HEARING EXAMINER ASSELTA:

you have?MR. WHITE: I’ve got probably I’d said 2 to

3 hours on this. I expect, your Honor, to be able toget done today with both witnesses. Thaes my goal.

HEARING EXAMINER ASSELTA: menw~o,i

too.MR. WHITE: And I’m willing to stay as late

as necessary to do that. But I mean, you know, we areprepared to move this along and this thing should speedup.

MS. BENEDEK: I’d like to know to whatextent -- what do those statements mean relative towhether we get out of here today. We do have ratecounsel witnesses that will be subject to cross and thequestion of whether we actually conclude today, if hewouldn’t mind please elaborating.

Cross - Vaslngton

HEARiNG EXAMINER ASSELTA: Yes.MR. WHITE: In terms of this there was two

days of hearing scheduled. I anticipated that todaywe’d spend most of the entire day on their witnesses.

Ms. Baldwin is here today. Ms. Bosely isnot coming in until tomorrow night, figuring that wewould spend the full day. If we have time left overtoday, we are prepared to put Ms. Baldwin on withoutMs. Bosely if that is acceptable to the other parties..

MS. BENEDEK: It is acceptable toCenturyLink.

MR. SMITH: It is acceptable.MR. WHITE: If it can be done. And we’re

also prepared to come back Thursday. I know that we’dhave to convene hearings at one o’clock because ofcommitments that Anthony has to brief the Governor on anissue, and that’s also fine with us. If it’s necessary,it all depends on how far we get today. But my goalhere today is to finish up with Mr. Vasington andMr. Harper.

HEARING EXAMINER ASSELTA: .

half hour. Okay. Thirty minutes.MR. WHITE: Thatts fine.(A lunch recess is taken.)HEARING EXAMINER ASSELTA:,~,,

1 ready to resume here, Mr. White.2 Mr. White, let’s start with you again,3 MR. WHITE: Thank you, your Honor.4 1 have a series of exhibits I’ll identif~,s them. Rate Counsel Exhibit 8, and it’s a three part6 exhibit, it includes the list of companies by revenuei based upon the assessments.B Those are Rate Counsel CLEC Survey which SB,9 and SC is the assessment for cable companies in the

10 state.Exhibit RC-lO is a colored document dealing

with RC-VNG-34. It purports to address variouscategories of line loss.

Exhibit II is the recent order by theAppellate Division, the access order case.

Exhibit 13 is the NPS survey retail -

internal survey which was provided by Verizon inresponse to RC-VNJ-203.

There’s a Wall Street Journal article whichidentifies RC Exhibit 14.

Exhibit 15 is legislation proposed inMassachusetts.

And these are all documents I’ll be askingthe witness questions on.

HEARING EXAMINER ASSELTA: Okay.

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I Crass - Vasington Page 74(RC-SA, Only a Few Companies Dominate New

Jerseys Telecommunicat ions Markets, State Assessments:FY 2011-2012, marked for identification.)

(RC-8B, RC-CLEC Survey, marked foridentification.)

(RC-SC, 2012 Cable Ratepayer Assessments,marked for identification.)

(RC- ID, Document re RC-VNG-34, marked foridentification.)

(RC-1 1, Access Order by Appellate Division,marked for identification.)

(RC-13, NPS Survey - Retail DA - InternalSurvey, marked for identification.)

(RC- 14, Article, Competition Worries SnagVerizon Deal on Airwaves, dated July 13,2012, markedfor identification.)

(RC-I5, The Commonwealth of Massachusetts,House Docket No. 04302, marked for identification.)BY MR. WHITE:Q. Mr. Vasington, tell me when you’re ready we’ll

begin.A. I’m ready.Q. If we look at Exhibit 8A, B, and C.A. A is the assessment.Q. Yes.

Cross - Vaslngtori

A. And the B is the CISC survey.Q. Yes.A. And I don’t know if I’ve seen C before.Q. C is the cable assessment.A. Can you explain?

I don’t know -- what is cable assessment?Q. Cable companies get assessed just like telephone

companies.A. Oh, the Board assessment.Q. Yes.A. Okay. All right.Q. And if you go to the last page of Exhibit SA,

there’s a total telecommunications revenue.Do you see that number?

A. Total for intrastate services.Q. Yes. Correct. Exactly. Intrastate.A. Or wireless or VoW.Q. Right.A. Right.Q. The only services revenue reported by these

companies.A. Yes.Q. And you see that if you take the Verizon revenuewhich is roughly $1.2 billion. Do you see that?A. Yes.

July Il, 2012cross- Vasington Page 76

Q. You have MCI as well, MCI Access.A. Yes. MCI Communications.Q. Right, which is 64.

But then there’s also Metro Access, MClinetroAccess, further on down, 8 million 2.A. Okay.Q. You see AT&T on that list for 120 iaillion,

And does Teleport report separately becausethat’s AT&T.Q. That’s separate. You’re correct.

And subject to check, AT&T does not provideresidential or business customers -- strike that.

AT&T does not currently accept new customers forresidential and single-line business customers,

Is that correct?A. I don’t know. I haven’t looked at their tariff.Q. Subject to check, would you accept chat as

correct?A. Subject to check, yeah.

22 You said residential and single-line, they don’t23 take a single-line business customer that ccin~s to them.24 Q. New customer.25 In fact, MCI has a provision in its t2riff,

1 doesn’t it, that has grandfathered exisunz Customers2 but not accepting new customers for rt;identjala services. Is that correct?4 A. Subject to check. I haven’t looked at theirs tariff.6 Q. So as a percentage of gross revenue, ‘/erizon’s by7 and large is one of the -- is a significant provider ofa telecom services in New Jersey. Correct?9 A. Well, the statement is correct. But there’s a

10 limitation to this exhibit that I discussed in my reply11 testimony which is that it’s not all telecommunication12 services. It’s a subset of services. It does not13 include IP services which are all of the telephone14 services offered by the cable companies who are single15 largest competitor and also does not include wireless16 services which is another significant competitor to us.17 So within the context of this document we’re18 certainly a significant number. But I think the Board19 needs to be clear that this is only a subset of all20 telecommunication services in the state.21 Q. The second entry is Comeast Business22 Communications. Correct?23 A. Yes.24 Q. That could capture all telecommunications25 services, their intrastate services._~__j

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Cross - Vasington Page 78 Cross - VasinglonJuly 17, 2012

Page 80i A. Yes. a intrastate service anywhere.2 With clarification that VoIP, V-o-I-P, voice-over 2 Q. So this $168 million reported for Comcast3 Internet protocol, Internet protocol based services are 3 Business Communications, what communications services4 not categorized as intrastate, So when you say this 4 would they be other than VoIP?5 does not include intrastate services, you’re essentially 5 A. I don’t know. My understanding is they don’t6 saying it doesn’t include a vast majority of their 6 have a tariff so I don’t know what services they’re7 telecommunication services. 7 talking about there.a COMMISSIONER FOX: Could I just clarifr? o Q. And then there’s abe entry for Cablevision9 Are you saying that the voice-over -- does 9 Lightpath. Correct?

10 Verizon have voice-over Internet protocol? io A. Yes.ii. THE WITNESS: Yes. 11 Q. And that’s 47 million12 COMMISSIONER FOX: That’s the Ff05. Right? 12 A. Right.13 THE WITNESS: Well) some of FiOS. FiOS 13 Q. The second group of documents is Rate Counsel14 voice is provided in two ways. One is what we call 14 Exhibit 88 which is our CLEC survey.15 traditional circuit switched or to get real technical 15 A. Okay.16 time divisioned multiplexing. So some FiOS voice 16 Q. And this categorizes the various CLECs that17 customers get service over a circuit switch. It’s just 17 operate and the servicet: they provide. Correct?as the way they did in the past with copper wires. Other 18 A. Yes. Ratecounsel p~ovided this with its19 PiOS voice customers get the service from a product that 19 testimony.20 we call FIOS digital voice. And FiOS digital voice 15 20 Q. Okay. Now, I refer y’iu to SC, if you go to the21 an IEP, Internet protocol based service. So that’s VoW 21. very last line, you see the entry?22 more like cable companies provide VoW. 22 A. Wait. Wait. I’m not .here yet.23 COMMISSIONER FOX: DocsVcriänprovidema,e 23 The last page, last !i.i.~.

24 VoIP than it does the traditional landline? 24 Q. Page 1 of Exhibit 8C25 THE WITNESS: No. The numbers are in the 25 A. Oh, page 1.

Cross . Vasington Page 79 Cross - Vaslngton — Page 81

a record, Commissioner, if you want to look at them. We 1 Q. Yes.2 have the number of FiOS digital voice customers in there 2 A. ATC Outdoor DA.S?3 and the number of traditional landline, both from our 3 Q. Yes.4 legacy landline and from other services. 4 A. Okay.s COMMISSIONER FOX: Thank you. S Q. You see the last line?s THE WETNESS: You’re welcome. 6 A. Yep.7 Q. Isn’t it true that the FCC hasn’t finally 7 Q. There’s a number for Verizon, $476 million.a determined what the proper classification of VoIP 8 MR. SMITH: I’m going to object to the entry9 traffic is in terms of interstate or intrastate? ~ of this exhibit because this is-- these are all files,

10 A. For intercarrier compensation that’s true. But io cable TV numbers, aren’t they, if! understand you?11 for purposes of regulatory jurisdiction, no,! don’t is. MR. WHITE: This is amount of video services12 believe that’s true. 12 which they’re assessed under Section 5A of the Cable13 Q. Well, isn’t there a proceeding in 2005 that was 13 Act. This is reported intrastate cable revenue here in14 intended to address that? Are you aware of that 14 New Jersey.is proceeding? as A. I apologize for one second, I was looking at the16 A. There have been a lot of proceedings that have 16 CLEC survey.17 addressed that. I don’t know which one you’re referring 17 MR. SMITH: I still object to the --

is to in 2005. But I know that IP based services are not as HEARING EXAMINER AS5ELTA~ YoWre no4

19 state regulated in any state. 19 accepting these numbers?20 Q. But that’s not true. I can give you an example. 20 MR. SMITH: No. I’m objecting to the entry21 In New Jersey we have a statute dealing with Vot? that 21 of evidence related to FIOS television and video which22 says it’s not regulated. Correct? 22 is outside the scope of the proceeding. It doesn’t have23 A. I’m telling you my opinion and my understanding 23 anything to do with the three criteria or the four24 is that there’s no state that regulates VoIP service as 24 services that are being examined, five, if you get25 an intrastate service. It’s not tariffed as an 25 discretionary.

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BPU INVESTIGATiON RE; ILEC SERVICES VICross - Vasington Page 82

HEARING EXAMINER ASSELTA: Okay.2 Q. Mr. Vasington, isn’t it true3 MR. SMITH: I’m sony. I didn’t hear a4 ruling.5 HEARING EXAMINER ASSELTA:~6 relevant?

MR. WHITE: Two reasons, your Honor. Firstof all, the telecom plant that the cable plant they useto provide video is considered to be telecom plant soit’s reflected as telecom plant under the statewidefranchise. So, therefore, the cost associated With thatis in their telephone plant. So if looking at theirrevenues and their profits or losses, you bav&to alsoportion out -- you’ve got to allocate out the revenuethats earned from video based upon the use of thetelecom plant and this is what this thing enables you to

21 brief it?

I-TEARING EXAMINER ASSELTA: Brief it.MR. WIUTE: What?HEARING EXAMINER ASSELTA: ~.

22 MR. SMITH: Thank you, we will just-note our23 objection raised in the brief.24 Q. Next exhibit is RC-10, we’re high-tech on this25 one. We have this in color. This is their response

Cross - Vaslngton

RC-VNJ-34 which purports to address line loss based uponinward and outward line loss.

Are you familiar with this exhibit,Mr. Vasington?A. Yes, lam.Q. All right. Now, let’s-- I’d like to go to

page 4 first dealing with business access tines.A. Okay.Q. First of all, do these numbers include data onlegacy lines as well?A. Single-line business customers?Q. Yes.A. I believe that it does not distinguish between —

it’s all business lines.Q. It’s all business lines. So it’s competitive andnoncompetitive lines.A. Right.Q. All right. Now, let’s go back to page 1.

For residential at least you’ve got competitivewins and you go from January’09 to December’11 whichis pages 1,2 and 3 of the exhibit. Correct?A. And this also includes competitive and

noncompetitive lines. As classified in New Jersey.Q. So it would include bundles.A. It includes packages, bundles, and legacy

July 17, 20.12Cross - Vasington -- Page 84

land lines.Q. Now, competitive wins, those are -- could you

explain what that is?A. My understanding from this document is it is

generated by our customer service reps who have tocategorize both additions and losses under somecheckbox. And so if a— if they believe a customer iscoming from a competitor, then they check off thecompetitive win category. If it’s just coming fromgrowth, sr.meone moving into the territory or calling toinitiate a rv~w service, they would click the growth box.Q. And what about competitive driven ports out?A. That would be where the customer’s telephone

number is being ported to a competitor where acompetitor has initiated a transfer of that customer’stelephon~ number to their own services so it’s not acall from a customer itself, ies coming in from thecompetitive provider.Q. And. again, this would include both regulated and

nonreg..thted residential service. Correct?A. Yes. It would even include wireless because

numbers ‘an be ported to wireless service.Q. Under customer-driven, there’s a category there.A. Yep.Q. And r:ere’s some subcomponents listed, do you see

that?A. Yes,ido,Q. Can you explain what is customer initiated?

MR. SMITH: Can I just have one second withthe witness?

REARING EXAMINER ASSELTA: Sure.MR. SMITH: Can we havejust one moment

because we have a document we would like to refer to.A. All right. Do you want me to go through thesubcategories --

Q. Yes.A. -- and explain what they are?Q. And what are you basing that on?A. I didn’t know myself when reviewing this document

so Tasked the person we got the document from if he candefine the terms for us.Q. Have you provided that document to rate counselin discovery?A. No.

MR. WHITE: Can I make a transcript requestfor that document, please.

HEARING EXAMINER ASSELTA: Okay.Q. Okay. Go ahead.A. Customer initiated is the customer tells the

service rep that they’re moving within Verizon franchise

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of Verizon territory but doesn’t want Verizon at the newlocation. Substitution is when the customer tells therep that they are going to use another service providerfor their-- for their service. Customer is if moveslost is -- no, I apologize. I messed that up.

Substitution is the customer tells the rep thatthey’re going to use a different service provider. Ifmoves lost is the customer telb the rep that they’removing within the Verizon territory but doesn’t wantVerizon at the new location. Uncontrollable is twothings, either the customer is moy•içg out of the Verizonservice territory or ther&s the customer has died.Utilization adjustment is essentially a catchall -- myunderstanding is that it’s a catchall for when the repdoesn’t input a disconnect, a reason for doing it.Q. And the last category customer-driven nonpay.A. That’s company-driven nonpay, that’s for

disconnect for nonpayment of service.Q. And you will notice that that’s a pretty

consistent number from ‘09 to December 2011, it rangesanywhere from -- well, you can see for yourself.A. Well, pretty consistent is a subjective term. I

see there’s -- -,

Q. It certainly exceeds on average 5,000 per month,doesn’t it, on an average basis?

Cross . Vasington Page 87

A. Eyeball basis, yes, it looks like it.Q. And then if you take-A. Well, actually, I’m not sure about that because

you get into 2011 and you have numbers in 3,0008 and the2,000s and there’s quite a few numbers under 5,000s soin the 4,000s.Q. All right. In terms of inward growth there’s

also that significant variation as well and it ramps upand then starts ramping down in April ‘10. Correct?A. I’m not sure you can make.conclusions on trends

based on this data. It appears to be fairly “ariable.I mean the numbers are what the numbers are.Q. Give you an example, for 2011, with the exception

of August and December, the numbers are-- if you roundup, they’re 6,000 lines per month with the exception ofJuly, August, and -- and October and November they’reover five. Right?A. What year?Q. December2011.A. Inward growth?Q. Yes. Total.A. Inward subtotal, total.Q. SubtotaL. Yes.A. Yeah, on that I think it’s very clear and it’s

consistent with the data we’ve shown in our testimony

July 17, 2012PagThil

that we’re adding fewer lines and we’re losing many morelines and that trend continued all the way from 2009through 2011. That is why you see our number of linesshrinking.Q. Well, let’s just take for an example, let’s look

at January ‘09.A. Okay. We gained 13,000 lines and we lost 38,000lines.Q. Well, you lost 15 to the competition. And thenif you add back in the nonpay, which is not competition,is it?

12 A. No.13 Q. And utilization adjustment can’t be necessarily14 competition either. Right?15 A. No, it could be.16 Q. But you can’t tell, can you?17 A. Right. The rep did not code anything in.18 Q. And you have the burden of proof in this19 proceeding, don’t you, to establish a position?20 MR. SMITH: Objection. You’re asking for a21 legal conclusion.22 Q. Is it your understanding that you have the burden23 of proof in this proceeding?24 A. Yes. And you’ll also notice that the utilization25 adjustment number shrinks over time as we get into 2011.

cross - Vasington Page 89

The reps did a betterjob of coding things because thatnumber starts to go down quite a bit. Some of thosecould be competition, some of those may not becompetition.Q. But again this is all lines, correct, both

competitive and noncompetitive? Correct?A. Yeah. Our number of lines are shrinking in both

our competitive category and our noncompetitivecategory. In fact, they’re shrinking more in ournoncompetitive category.Q. I’d like to show you Exhibit RC- II next.A. Which -- can you identi& which one?Q. ft’s the appellate decision in the mater of theinvestigation and review of local exchange intrastateexchange access rates.A. Okay.

MR. SMITH: This --

Q. I refer you to go to page 54.MR. SMITH: I’m going--

Q. And 55.MR. SMITH: I’m going to object on the

relevance grounds just because I don’t think it’srelevant because I don’t have an understanding of whatthe purpose of the document is in this case.

HEARING EXAMINER ASSEL,TA: _,

Cross - Vasington

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Cross - Vasington - Page 90

that?MR. WHITE: What I’m going to point him to

the end of the decision where there were claims theywere losing money as a result of access charge reform.And in here the Court specifically addressed the NewJersey law and statute that basically says theprohibition on subsidization of services only appliesfrom regulated subsidizing competitive, not competitivesubsidizing rate regulated.

MR. SMITH: Well, the document states whatit states and it stands for itself.Q. fs that your understanding, Mr. Vasington?

MR. SMITH: Have you seen this before?THE WITNESS: No.

Q. You didn’t read this decision?A. No.Q. Were you involved in the access case in this

proceeding?A. I was a witness in the evidentiary case before --

before the Board. Verizon doesn’t let me write briefsto appellate courts so I’m not involved in that portionof the proceeding.Q. So you didn’t care what the outcome of those

appeals were?MR. SMITH: Objection, your Honor. That’s

Cross - Vasirigton Page 91

argumentative.HEARING EXAMINER ASSELTA: Sast.in,,j.

Q. Are you aware that Verizon appealed the decision?A. Yes.Q. Are you later aware that they withdrew it?A. Yes.Q. And-- fine. P11 move on.

Pm now going to go to Exhibit 13 which i~ aresponse you did to RC-VNJ-203. It deals with directoryassistance.A. Okay.Q. This exhibit was also subject to the motion to

compel. But for this purposes, I’ll refer you to thelast page, page 10.A. The last page is the survey script.Q. 411 usage by age group.A. Yes.Q. Do you see 65 plus?A. Yes.Q. It has the highest usage by age group. Correct?A. Actually, no. Glad you brought this up, because

as I was reviewing this document, ft became clear to methat the heading of the graph on the bottom of thesheet, the second half of the picture, does not actuallymatch what the data are showing.

July 17, 2012Cross - Vasingtori Page 92

1 What the data are showing are 411 usage by age2 and length of time. So, for example, what this is3 showing is that for different age groups how many years4 have you been using Verizon DA, not usage by age group.S It’s measuring how many years you’ve been using it. And6 naturally as you get older, the older people are thei more years they’ve been using the service.a And if you look at the script itself on the~ following page, you can see that the question this is

10 referring to is Question 8, which is, for how long have11 you been using Verizon 411 services. So whoever put12 this chart together. I don’t think the heading they put I13 on the chart actually matched the data that they were14 referring to.as Q. You didn’t correct that, did you, in your16 testimony or in a subsequent letter to rate counsel?17 A. It’s not a correction. You asked for a document.18 This is actually what the documents represents. My19 opinion is the person who put the document together was20 kind of sloppy in how they labeled things, but that’s21 not a correction.22 Q. The-next exhibit is RC Exhibit 14. This is an23 article that appeared in the Wall Street Journal. I’m24 going to refer you to page 29 in your rebuttal25 testimony.


A. Wait a minute. Can I read the article, please?MS. BENEDEK: What was the page reference?

Q. Page 29 and 30 of your rebuttal testimony.When you’re through reading the article, let me

know and then we can turn to your testimony.MR. SMITH: Actually, we can turn to my

objection first because that’s the appropriateprocedural order. We object to any line ofquestioningthat goes into the cross-marketing agreement betweenVerizon affiliates.

The cross-marketing agreement doesn’tinvolve Verizon New Jersey, Inc., at all. Mr. Vasingtonactually points that out on his testimony starting onpage 28. We don’t see the relevance and we also notethat neither Mr. Vasington nor I certainly not involvedin the cross-marketing agreement case.

I know that there has been an exchange ofproprietary documents in that case. I know that ratecounsel and his witnesses have access to those. Wedon’t. So besides the fact that it’s not relevant, outof a matter of fairness, they have the upper hand on usin the sense they know more than we do about this.

HEARING EXAMINER ASSELTA: Okay.MR. WHITE: On page 29 and 30, they

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Cross - Vasin9ton

to the Board’s analysis and they go into quite somedetail and they cite to an executive vice president andgeneral counsel for Verizon rational for Verizon toenter the joint marketing agreements and we’ve raisedissues about whether joint marketing agreements distortscompetition. And, in fact, that it also effects thelevel of competition across a whole range of services.And they brought it into this proceeding. And thisarticle clearly supports rate counsel’s position,Department of Justice is seriously looking at this, theanticompetitive effects.

MR. SMITH: Well, it’s for the Department ofJustice and the FCC to make a determination. If you’regoing to go to a newspaper article, we’re not involvedin the nitty-gritty in the legal case. We get clips allday saying that, you know, there may be conditionsimposed, it may be approved, but it’s really in thebailiwick of the Department of Justice and the FCC.

And if we have questioning here in two weeksfrom now, they approve the deal without any conditions,then we’re -- we also, as I said, it’s a matter offairness. Rate counsel and its witnesses they havesigned nondisclosure agreements in that case. They putin comments. They know much more about underlyingagreements then we certainly do. And the essential

Cross - Vaslngton‘7

thing is that it’s not relevant.MR. WHITE: This directly undermines the

witness’s credibility, the statements in his rebuttaltestimony about significance of these marketingagreements so it’s relevant for those purposes and wewill brief it accordingly.

And even if they do come out with asubsequent decision approving the transaction, they cancertainly allude -- they can point that out in theirbriefs as well. It doesn’t mean they’re not going toimpose conditions on any deal that is ultimately doneand those conditions could also effect what the effecthere is in New Jersey and the independence of themarketplace.

HEARING EXAMINER ASSELTA: Okay.Q. Okay. The last exhibit which is Exhibit IS, this

is legislation that was proposed in Massachusetts. It’ssome legislation that was proposed last year here in NewJersey to have legislation declare services competitive.

Mr. Vasington, if you take a look at it, tell mewhen you’re finished and then I have questions for you.A. I’m familiar with it.Q. Did you participate in these Massachusettsconsideration of this Massachusetts legislation?A. Yes.

Q. Did you support it?A. Yes.Q. Okay.A. I lobbied in favor of it.Q. Okay. If you go to page 1 dealing with telecom

companies and common carrier offering telephone service.Do you see that?

A. Yes.Q. This legislation focused on an

exchange-by-exchange basis. Correct?A. Legislation focused on a lot of things. The

primary thing it did was exempt wireless service fromregulation. In fact, the latest version of thislegislation -- proposed legislation was changed to beonly the provision in Section 8 to exempt wirelessservice from regulation.Q. So they decided to keep regulation of local

exchange service and same issue we have here in thisproceeding. Correct?A. Backup for a second. First of all, this

legislationjust had a hearing last week so nothing hasbeen decided by anybody.Q. But you supported this legislation at the time.

Right?A. Yeah.

Q. And you supported that if you’re going to dealwith telecom regulation, you would look atexchange-by-exchange basis. [s that correct or not?A. What I would support as a legislative basis

doesn’t mean I think it’s necessarily the appropriateeconomic way to evaluate things. This -- anylegislation is designed in context of what is feasibleand achievable in the legislative context which may bevery different from what! would advocate, say, as awitness advocating for what I think the correct policyis. The legislative arena is very different from anadministrative arena in my opinion.

HEARING EXAMINER ASSELTA: So yourestablishment here is a similar piece of legislationthat passed the New Jersey State Legislature is alsoworking its way through the Massachusetts legislaturewhich exempts the regulatory powers ofthis body here.

MR. WHITE: Actually, it’s a little broaderthan, it’s the fact that they attempted to getregulatory relief through legislature. They wereunsuccessful here in New Jersey. And then they didsimilar recently in Massachusetts, introducedlegislation. The significance of this legislation is itcounters the whole thing. You look at the whole stateas a market which is what their position has been in

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their testimony. You don’t look at the wire center orlocal exchange basis. And this legislation theysupported, specifically addressing that you look at thelocal exchange and this counters and conflicts with hisstatements here and it’s appropriate forcross-examination and the inconsistency can be used toundermine his credibility at this point.

MR. SMITH: We don’t obviously think it’sanother state, has no bearing on the particularstandards. You know, we think it’s not relevant to thisproceeding. If we open the door for that, we’re goingto go out and survey fifty states and we’re going to gothrough all of the states. What’s before the Board arethree statutory criteria.

HEARING EXAMINER ASSELTA: How flfl

questions do you have relative to this?MR. WHITE: I have no further questions. I

just point out what it says.HEARING EXAMINER ASSELTA: All right.

BY MR. WHITE:Q. Okay. Mr. Vasington, I want to refer you toVerizon New Jersey statistics and sources ofinformation.

You have a number that you set forth inRC-VNJ-l66 for residential FiOS lines?

Cross - Vasington Page gg

A. I don’t have that discovery in front of me.166?

HEARING EXAMINER ASSELTA:record here regarding the briefings moved that areoutside the scope of this Board order, I will laterdetermine whether such briefings should occur eventhough we’re agreeing now, we’ll save that determinationfor later.

MR. SMITH: Thank you.(START CONFIDEWflAL PORTION TRANSCRIPT.)

Q. I can show-- I prepared an exhibit which I --

MR. SMITH: What’s the number again?Q. You reported 561,170 residential FiOS lines.

(EN!) CONFIDENTIAL PORTION TRANSCRIPT.)MR. SMITH: We’re getting into the

confidential.MR. WHITE: It is proprietary so we’ll put

it under seal.MR. SMITH: Is everyone in the room -- has

anyone in the room not signed the nondisclosureagreement. Okay. Thank you.Q. The numbers will be confidential. After thenumbers, then it ends and we’ll go on to the nextnumber.A. So these are form --Form 477 submissions that

______ July 17, 2012

Page 100

Verizon provides to the FCC and which page are welooking at?Q. It deals with residential FIOS as reported. If I

can show you an exhibit that we prepared.Let me back up. Yc.u identified number of

households in the New Jersey in your testimony.Correct?

A. We identified the nir ~ of households in ourservice territory.Q. Right. And you also identified retail primary

residential lines in your t~stimony as well. Right?A. Yes.Q. And residential priam~rj lines. Correct?A. I think those are the -ime things.

What was the first quostion?Q. You have two diffens,,t numbers. I can tell

you --

MR. SMITH: P;; eference to the testimony?Q. One’s attachment RC .a-~achment RC-VNJ-6A, B, D,

N-R, supplemental, Maref. 19, 2012.The next category yot had was residential primary

lines which was differer,; La the cite for that initialat 7 -- initial testimony a: 7.A. Yes.

My direct testimony w~s filed in February and we

cross - Vaslngton Page 101

updated that response to 6 r.s of March [9, 2012. So thenumbers might not correspond exactly.Q. No, I understand.

The 477 reports, if you go to 2011 on page two ofthe report. You have it t!..re?A. What do I have there?Q. Under broadband opt’rnum fiber end user categorytotal connections.A. You’re going to have to slow down because Pm not

familiar with Form 477 and it’s very small and dense sohelp me out on what I’m koking at.Q. Do you have the 477 report?A. Yeah. And I have page 2 of 6. It says page 2 of

6 on the top.Q. Yes.A. And where am I looking from there?Q. On page 3 of 6 go down to Part IA, broadband,

optical carrier.A. Okay.Q. Do you see the number that’s there under grade

equivalent measure?A. Under grade equivalent, the words grade

cross - Vaslngton

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July 17, 2012Cross - Vasington Page

i Q. And then if you go to Column 5, there’s a percent 1 that are used for IP VolE telephony from PbS -- Pbs2 of that which are residential users. 2 customers.3 A. Percentage. That first category that connect to 3 HEARING EXAMINER ASSELTA: bUIaIdnfl’

4 residential end users and have information &ansfer 4 Mr. White, move on.

i s rates succeeding 200 kilobits per second in both 5 Q. So the FiOS digital voice lines you now say6 direction. 6 should probably be included in the number of lines that7 Q. Right. And there’s a percentage there. Right? 7 Verizon provides. Correct?8 A. Right . a A. Wei, what I said was that it depends on what

i 9 (START CONFIDENTh4I PORTION OF TRANSCRIpT.) ~ questior you’re asking. If you’re asking how many~lo Q. Ifyou multiple-- subject to check, if ycu 10 regulated telephone lines we have, then the numbers I

111 multiply that percentage times the number, you’ltconje La. had in my direct testimony were what they were.out with approximately -- proprietary began -- 12 After reading rate counsel’s reply testimony, Ifive-six-one-one..seven_oh. End proprietary. 13 thought it would also be useful for the Board to see.~.

114 (END CONPIDENTIAL, PORTION OP TRANSCRIPT.) 14 to answer the question, how many primary-- how manyA. Okay. Okay. as telephone lines -. how many households in our service

116 Q. You also report F1OS digital voice lines in your 16 territory h?s Verizon telecom telephone line sol added117 testimony. Correct? 17 in P105 .igital voice lines as well.

A. More space. •. a~ Q. And again the Internet number that you provided,Yes, in my reply testimony. .. 19 broadband, again that’s provided over the plant and the

120 Q. I believe it’s in your rebuttal. , 20 equipnlcr.t that Verizon New Jersey operates here in New~21 A. It’s in both I think. 21 Jersey. Correct?~22 MR. SMITH: Do you have a page number on the 22 A. Wel, it’s provided over our P105 network. The’23 rebuttal testimony? I’m curious where this is,all 23 P105 nuint~er in the 477 report is provided over our fiber

~24 going, Mr. White. I know it’s your cross-examination 24 optic nehnork which is not same as our core copper

25 networl.:.

Cross . Vasinglon Page 103 Cross - Vasinglo,,

1 MR. WHITE: Page 33 of his rebuttal. J. Q. But at is all part of Verizon New Jersey’s plant2 MR. SMITH: Say again, please. 2 and eq’.Iipment under the statewide franchise statute.3 MR. WHITE: Page 33 of his rebuttal. 3 Corre.ct?4 MR. SMITH: Mr. White, I’m going to object 4 MR. SMITH: It’s asking for a legal5 on relevancy because I don’t see where this is going at s conclusion. I object.6 this point. You’re throwing out a lot of numbers. s Q. Yo’.t’re understanding is that it’s provided, that7 HEARING EXAMINER ASSELTA:~ i is what the requirement--a you trying make here, Mr. White? a MR. SMITH: Still objectionable It’s still

MR. WHITE: In his testimony originally said 9 asking for a legal conclusion.10 you don’t include FiOS lines that they served. He to HEARING EXAMINER ASSELTA:~ii. subsequently changed that in his rebuttal and provided a ii. Q. I’ll roove on.12 number. 12 Can you return to your rebuttal testimony,13 Q. Now, the question I have is under the 477 v~ page 13, lines 19 through--14 reports, there’s this other number that we just went 14 A. I have a lot of testimonies. Hold on a second.15 through, I’m trying to find out what is the difference. is Rebuttal?16 HEARING EXAMINER ASSELTA:~ 16 HEARING EXAMINER ASSELTA: ,

17 A. The 477 is broadband service. This is P105 vi with this particular witness do you predict?‘a digital voice. I’m saying this. 18 MR. WHITE: I’m making pretty good progress.‘9 Sorry about that, Commissioners. 19 HEARING EXAMINER ASSELTA: .ni,.~,

20 HEARING EXAMINER ASSELTA: frs okay. 20 little haggard.21 A. The 477 report is reporting broadband service so 21 (A discussion is held off the record.)22 P105 Internet, people buying FiOS Internet which gives 22 A. Okay. Rebuttal testimony. Got it.23 theni crazy fast speeds to use the Internet. 23 Q. Page 13 and 14 on page 13, lines 19 to the end of24 In my reply testimony on page S is our number of 24 page and on page 14, lines I through 12.25 P105 digital voice lines. So the number of our lines 25 A. Okay. Yes.

Mitl-tI-Scrjj)I0’ mBuEBRER & ASS0CIAT~s (26) Pages 102 -


Q. This is your position in this section that you’rebasically unable to sustain any profits. Correct?A. I’m not in the same place. Maybe I am getting

haggard. I’m in my rebuttal, page 13.MR. SMITH: The question, please explain

what you mean when you say that rate counsel’s positionhas been muddled. That’s what I have in the middle ofpage 13. Do I have the right place?

MR. WHITE: No. We’re going to have to geta correct cite.Q. You did an elasticity study, correct, forresidential basic local service?

MR. SMITH: I’m going to object. Asked and14 answered.15 HEARING EXAMINER ASSELTA: Dia.tm&

16 beginning.17 MR. WHITE: What I’m trying to go do now 17is with this line of questioning is that if you--that was 1819 done in a subset of lines that they offer. And if you iø20 include other lines, including the FiOS lines and other 2021 types of lines, including the requirements that are 2122 under state law that for bundles you have to include the 2223 price of the basic local exchange service that his 2324 analysis is -- that they are unprofitable is incorrect. 2425 MR. SMITH: Objection. WeYre getting into 25

1 issue of cost again.2 MR. WHITE: This is not an issue of cost3 This directly relates to his testimony that it was4 unprofitable. Unprofitable is not related to cost in5 any way. It’s a question of whether or not the revenues6 that they earned when you take into account line loss is7 still positive revenue. It has nothing to do witha whether it’s a profit or loss. He’s referring to it as~ unable to sustain revenues, let alone profits is what

10 his initial testimony was on this.ii So all I’m trying to do is go over what12 happens to his analysis if you include other lines.13 MR. SMITH: We’re getting into issues of--14 MR. WHITE: Other revenues, what happens to

other revenues to his analysis.HEARING EXAMINER ASSELTA: .~

to answer that?THE WITNESS: That is a big word concerning

what he just said. I’m not really following what he’stalking about. He asking -- I provided testimony in myreply testimony that in annual reports we show we arenegative net income for the past number of years.

HEARING EXAMINER ASSELTA: ~._

report.THE WITNESS: I can clari& it. If he

July 17, 2012Page 106

1 thinks adding in FIOS revenues is going to make us2 profitable, we pointed out that in the last few years3 where negative net income even on a total company basis4 and that includes FiOS cost and revenues because both5 intrastate and interstate.6 MR. WHITE: He’s again mixing revenues with7 profits. We’re talking about revenues now. The testa for market power is a revenue generated basis, not a9 profit generated basis.

10 HEARING EXAMINER ASSELTA: ~_.

11 what’s market power? Explain to me.12 THE WITNESS: Market power is the ability to13 sustain an above market price and earn monopoly profits14 from that Profits is different than revenue. You can

have a service that generates a ton of revenues. And if16 it’s got really high costs, you’re not going to generate

any profits. You have another service that you only get$10 from and it costs you a dollar to provide, you’regoing to have a lot of profits. So profits and revenuesaren’t the same thing at all.Q. I’m going to refer you to page 4 of your rebuttaltestimony.A. Yep.Q. Lines I through 12, that’s the corrected cite and

I apologize for the erroneous cite previously.

Page 109

A. Okay. I’m there.MR. SMITH: Some of this is proprietary,

confidential.MR. WHITE: I’m not going get into the

numbers.(START CONFIDENTIAL PORTION OF TRANSCRIPT.)

Q. Other than the fact that your bottom line -- andthis a proprietary, begin proprietary, unable to sustainrevenues, let alone any profits, end proprietary.

(END CONFIDENTIAL PORTION OF TRANSCRIPT.)A. Correct. And I testified earlier that our

expenses have declined at slower pace than our revenueshad. So if we’re not even able to sustain revenues andour expenses aren’t declining by as much, that bydefinition, would decrease our profits.Q. But again this analysis is based upon a subset oflines. Correct?A. Yeah. This analysis is the subset of lines that

are subject to this proceeding for residential servicesfor Verizon.

So I’m rebutting. Rate counsel is saying that wewould be able to generate monopoly profits from legacylandline residential customers in this case. And i’mpointing out that even when we had the rate increasesfrom the prior settlement, we weren’t even able to

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sustain our revenues, our revenues went down. Andbecause our expenses haven’t been going down by the sameproportion, our profits -- our losses are increased.Q. The year ending number for 2010 shown in your

testimony, do you see that?A.Q. Is that only legacy lines?A. Yes, it is.

Those are the only lines that the rate increaseswere applied to.Q. In your opinion.A. Inourtariff.Q. What about the statute that requires you to --

MR. SMITH: Objection.Q. -- impute the residential standalone rate in your

bundles?MR. SMITH: Objection. He’s asking for a

legal conclusion. We’ve also been over this groundearlier today.

HEARING EXAMINER ASSE[,TA: Move on,

MR. WHITE: Okay.MR. SMITH: Commissioner, is it all right

if we take 5 or 10 minutes break for, just 5 or10 minutes.

Cross - Vasington

1 HEARING EXAMINER ASSELTA: All right.

2 Where were we, Mr. White?3 Ready. Okay.4 BY MR. WHITE:5 Q. Okay. Mr. Vasington, are you aware that the FCC6 issued another report on competition in the wireline7 market?

A. Yes.Q. Do you know the date of that report?A. No.Q. Would you take subject to check it was June 30thof 2011?A. That’s the date as of June 30th, 2011, or date

issued the report?Q. The report was issued June 30th, 2011.A. I’m going to guess you mean to say ‘12.Q. I mean 2012. Excuse me.A. I’ll take that subject to check, yes.Q. Have you seen it?

20 A. Yes.21 Q. Did you analyze it?22 A. I looked to see if the-- I didn’t analyze the23 entire report. I looked to see if the numbers I quoted24 in my testimonies from that report and the broadband

port were substantially different from the numbers

July 17, 2012

that were updated in the new FCC report. Off the top ofmy head, I know what the numbers are if it would help toupdate them.Q. Yes.A. In my testimony 1 refer to the FCC’s localcompetition report on the percentage of the wirelinemarket that is represented by CL.ECs in New Jersey. Inmy testimony I said it was 46 percent. In the latestFCC local competition report, it’s 49 percent served byCLECs. In other parts of my testimony, I quoted theFtC’s broadband report as showing that 78 percent of NewJersey households have broadband service and that numberis now 80 percent as of FCC reports.

COMMISSIONER FOX: Actually have.THE WITNESS: Actually have broadband

1.6 service, yes.17 Q. So under that report the ILEC still serviceis 51 percent of the market?is A. No. The ILECs-20 Q. For total switched access lines and VoW21 subscriptions?22 A. That’s not the market, quote, unquote. The23 market is bigger than that as I point out in my24 testimony.25 In that report that shows out of segment that

1 reports to the FCC, the publicly reported data which is2 the regulated wireline market, CLEC still had — CLECs3 had 49 percent, we had SI -- ILECs had 51 percent of the4 market.5 Now, even that data from the FCC is from an6 earlier time period. I provided some data in my7 testimony showing that as of end of 2011 we actuallya served half-- less than half of even that wireline9 subsegment.

10 MR. WHITE: I have no further questions,your Honor.

HEARING EXAMINER ASSELTA: Okay.MR. SMITH: Commissioners, if I may?HEARiNG EXAMINER ASSELTA: Sure.MR. SMiTH: I have just one redirect

question for Mr. Vasington.HEARING EXAMINER ASSELTA: Okay.

is Hold on.19 The scope of costs, profits, and revenues is20 limited by our June 14th, 2012, order.21 I just want to make that clear.

MR. SMITH: Thank you, as I said,Commissioner, 1 just have one brief question onredirect.

Yes.

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Redirect - Vasihgton

REDIRECT EXAMINATION OF MR. VASINOTON BY MR. SMITH:Q. Mr. Vasington, and it goes back to the very

beginn ing this morning when Commissioner Fox asked me aquestion, and I gave my answer and I also deferred toMr. Vasington because Mr. Vasington has some testimony.

Now, Mr. Vasington, do you recall the questionthe Commissioner asked you related to our lines?A. Yes, I do.Q. And it had to do with our basic standalone lines.

Correct?A. That’s correct.

12 Q. Do you want to add to my answer and provide your13 opinion related to that issue?14 A. Yes.

HEARING EXAMINER ASSELTA: AIIdjk. La,

me interject this. For the record, counsel’s responsesare evidentiary for classifications -- I can’t read your

19 MR. MOREAU: The testimony you had given20 that’s not evidentiary.21 MR. SMITH: Right. It was my opinion as22 back-and-forth between Commissioner and that’s one of23 the reasons why we were bringing it over to24 Mr. Vasington to explain it further and touched on his25 testimony.

THE WITNESS: My understanding of theCommissioner’s question was whether or not if the Boardgrants competitive classification of legacy landlineservices, what the possibility that we would no longerprovide legacy landlirte services. And I have sometestimony in response to some points made by ratecounsel pointing out that in State of Rhode Island where 7we were given full pricing flexibility as long ago as asix years ago in 2006, today we actually serve a higher gpercentage of our lines as legacy landline type services ioin that state than we do in New Jersey. 11

So there’s an example for six years we’ve 12had an ability to effectively price and provide those isservices in a manner that we want. And we not only 14continue to provide them, but we actually provide them asas a higher proportion of our total services than we do 16here today. 17

Q. And the rate increase was?A. There was one rate increase in Rhode Island.

After we were given full pricing flexibility, there wasone rate increase that year in 2006 of$I and therehasn’t been any subsequent rate increases.

COMMISSIONER FOX: In Rhode Island.THE WITNESS: In Rhode Island, yes.MR. WHITE: Redirect.

July 17, 2012

1 HEARING EXAMINER ASSELTA: Redirect.2 RECROSS EXAMINATION OF MR. VASINOTON BY MR. WHITE:s Q. Does Rhode Island have the same statutory4 framework as New Jersey regarding that bundleds standalone has to be offered separately from a bundle?6 MR. SMITH: I object. He’s asking for a7 legal conclusion.B MR. WHITE: Hejust testified to what9 they’ve done in Rhode Island. He’s a regulatory expert.

10 If he doesn’t know, he can say he doesn’t know. But ifii he doesn’t know, then I question how much of a12 regulatory expert he is.13 MR. SMITH: He’s testil5’ing to the facts,14 even as the best regulatory ex-commissioner in the15 United States which I think he’s among, he still is not16 a lawyer and he’s not allowed to opine on legal issues.17 HEARING EXAMINER ASSELTA: m,(5 fair

18 Q. Rhode Island -- Rhode Island is a completely19 different state in terms of economics than New Jersey.20 Isn’t the correct?21 A. A totally different state --

Q. Economically.A. No. Both relatively densely populated eastern

seaboard states.Q. What’s a relative income of Rhode Island versus

Page 117

1 New Jersey?2 A. I don’t know that.3 Q. Think it’s higher or lower than New Jersey?4 A. Don’t know that either.5 Q. Do you know what unemployment rate in Rhode6 Island is?

MR. SMITH: Objection. Going beyond thescope of the redirect testimony.

HEARING EXAMINER ASSELTA: ,_.

your point.BY MR. WHITE:Q. By the way, is Verizon losing money in Rhode

scope.

MR. SMITH: Objection. Beyond the scope.HEARING EXAMINER ASSELTA: ,.~,

MR. WHITE: Your Honor, the reason it’sis relevant, he’s pointed to Rhode Island that they kept19 standalone. If they’re not losing money, that’s fine.20 In New Jersey they’re claiming to losing21 money which means they have a different incentive here22 in New Jersey to basically increase-- to require people23 to buy bundles to overcome their alleged losses they’re24 claiming here and that’s a distinction I’m trying to25 bring out in whether or not we’re having apples to

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apples comparison between Rhode Island and New Jersey.MR. SMITH: Still object on the relevancy.HEARING EXAMINER ASSELTA: ,._.

expertise?THE WITNESS: I don’t know.MR. WHITE: Done.HEARING EXAMINER ASSELTA:~MS. BENEDEK: We are going to switch chairs.Call Mark IX Harper.CenturyLink calls Mark D. Harper.(A short recess is taken.)(CL-I, Initial Testimony of Mark D. Harper,

public version, marked for identification.)(CL-2, Initial Testimony of Mark D. Harper,

confidential version, marked for identification.)16 (CL-3, Reply Testimony of Mark D. Harper,17 public version, marked for identification.)is (CL-4, Reply Testimony of Mark D. Harper,19 confidential version, marked for identification.)20 (CL-5, Rebuttal Testimony of Mark 0. Harper,21. Public Version, marked for identification.)22 (CL-6, Rebuttal Testimony of Mark 0. Harper,

confidential version, marked for identification.)MARK 0. HARPER,Director,

Regulatory Operations and Policy, Embarq Management

1 Company, dMa Centurytink, having a business at2 100 CenturyLink Drive, Monroe, Louisiana 11203, having3 been duly sworn by the Notary, testified as follows:4 DIRECT EXAMINATION OF MR. HARPER BY MS BENEDEK:5 Q. Mr. Harper, with respect to -- let the record6 reflect that we have previously provided to the7 Commissioners and the court reporter copies of what hasa been marked as CenturyLink Exhibits I through 69 consisting of the prefiled testimony of Mr. Mark 0.

to Harper.ii Mr. Harper, with respect to what has been12 identified as CenturyLink Exhibits I through and13 including 6, your initial, reply, and rebuttal14 testimonies, were those exhibits prepared by you underis your direct supervision and control?16 A. Yes, they were.17 Q. And, Mr. Harper, what is your present title?18 A. Director of regulatory operations.19 Q. And for how long have you been employed in the20 telecommunications industry?21 A. Twenty-nine years.22 Q. Have you submitted written testimony or testified 2223 in other state regulatory proceedings? 2324 A. Yes. As identified in my testimony and my CV, 2425 I’ve submitted testimony and been on the stand in seven 25

July 17, 2012

1 states and at least 27 different cases.2 Q. And, Mr. Harper, are you familiar with the3 Board’s 2008 order in the first phase of this4 proceeding?5 A. Yes. I reviewed it in preparation.6 Q. Now, as to your exhibits, what have been7 premarked as Exhibits I and 2, do you have any changes,a corrections, additions, or deletions?~ A. Yes, I do. I have several.

to Q. Can you please turn to your first one.ii. A. Page 25 -- excuse me.12 Page 24, line 15, the word our, should have been13 or.

Page 26, line 2, strike the word directory andjust replace it with DA.

Page 30, line 12, the word are should have beenarea, just add an “a”. CenturyLink serving area.

Page 32, line 6, after the word wireless, theword only should be inserted.

Page 36, line 8, everything should have insteadjust been every. Strike thing.Q. Now, with those corrections if I were to askyou--

24 A. Sue, there was one more.25 Q. Oh, there’s one more.

Page 121

1. A. There’s one more. I’m sony.2 Page 38, line 9, after the word of it should read3 competitors-- of competitors at a pace. The word4 competitors was left out.s Q. Now, with those corrections, if I were to ask you6 the same questions in your testimony today, would your7 answers be the same?a A. Yes, they would.~ Q. Now, with regard to your reply testimony, do you

10 have any corrections to your reply testimony?ii A. Yes, just two.12 In the reply testimony on page 33, line 17, we13 should replace the word to, t-o, with it should not be.14 I’m sorry leave off be. It should not.15 And then, finally, just a simple change on line16 35, mistakenly referred to reply testimony -- on17 page 35, line 15, it should say reply instead of18 initial.19 Q. Now, if! were to ask you the questions in the20 reply testimony, would your answers be the same?21 A. Yes, they would.

Q. Now, finally, turning to your rebuttal testimony,do you have any changes, corrections, additions, ordeletions?A. Just two. On page II, line 2, it should be--

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“5” should be inserted after offering. So it’sofferings from CLECs.

And on page 12, line 6, the word continued thereat the beginning should be struck.

MS. BENEDEK: Thank you, Mr. Harper.Mr. Harper is available for

cross-examination.HEARING EXAMINER ASSELTA: w WII$IC.

CROSS-EXAMINATION OF MR. HARPER BY MR. WHITE:Q. Good afternoon, Mr. Harper.A. Hello, Mr. White.Q. I’ll start off, you filed direct, reply, and

rebuttal testimony in this proceeding. Correct?A. Yes, I did.Q. When were you contacted regarding providing

testimony in this proceeding?A. As part of my job, Pm the support team for New 17

Jersey so during the regular course of our--we have isweekly calls, talking about what’s going on in the 19

region. And during that process, probably sometime in 20

the summer, fall, Dave Bonsick let me know this case was 21

going to come up again. It was time. 22

Q. Did you start collecting data to prepare 23testimony in this case?A. No, not at that time.

Cross - Harper

Q. When did you start getting data to use inpreparation of your testimony?A. I engaged in the data collecting after the --

began in intensity after the final list of services weresubmitted by ourselves and by rate counsel.Q. That would be December2011, subject to check.A. I think would be about in that time line.Q. Did you draft and prepare all your testimony?A. Yes, I did.Q. No one assisted you in preparation and draftingofyourtestimony?A. Drafting and preparing testimony, I work closely

with counsel on the sections dealing with the statutesand how to interpret that to make sure that as anonlawyer that my discussion of that was accurate.Q. Okay. Do you own CenturyLink stock?A. Yes,Ido.Q. Now, you alluded to your educational experience.

Correct?A. Yes, it was listed in my qualifications, CV.Q. Do you know when your CV was provided to ratecounsel?A. It was provided in discovery. I don’t remember

the specific date. I’m sony.Q. Subject to check, would you--July 13th, 2012?

July 17, 2012Page 124

1 A. Yes, subject to check.2 Q. Now, what courses did you take dealing with3 economics when you were in college?4 A. That was a while ago. But when I was in college,5 I took a number of economics courses. I was a finance6 major. And it’s part of the course of business, we had7 to take micro, macroeconomics, various other classes.a Q. Do you have an advanced degree in economics?9 A. No, I do not.

to Q. Now, you referred to a number of regulatory11 proceedings which you participated in.12 A. Correct.is Q. I’d like to go over those for a minute.14 A. Sure. Okay. I don’t have a copy of it.is Q. Curriculum vitae.16 A. Itwas provided in discovery I think it’s-

Q. It’s RC --

A. One fifty-four I think.Q. One fifty-four.

MS. BENEDEK: May I approach the witness,your Honor?A. Thankyou.

Yes, sir.24 Q. Just for the ease of the Commissioners, you list25 Kansas proceedings, Missouri proceedings, Nebraska

1 proceedings, New Jersey, Pennsylvania, Texas, and2 Virginia. Is that correct?

A. Yes.Q. In the first Kansas proceeding that you list that

dealt with Kansas 1.1SF and establishing a state fund forUSF. Correct?A. Yes, it did. That was the primary subject of

that.g Q. It did not involve whether services be

10 reclassified as competitive. Correct?11 A. Not specifically. The aspects of competition and12 the need for support in rural areas certainly were an13 aspect of that case.14 Q. Focused on 1.1SF. Correct?is A. Yes. That was the outcome. That was the focus.16 Q. That was in 1999.17 A. That case continued for several years. ‘99 wouldis have been the year it was initiated. Their fiscal year,19 as they count it, ‘99.20 Q. And in the next docket that you list generic21 investigation and recip comp should be paid to traffic22 to an Internet service provider.23 A. Right.24 Q. That’s also not dealing with reclassification.25 Right?

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A. No, not in that case. No.Q. In the next one that you list which is an ‘07

docket, review of commissions federal USF certificationrequirements. That’s doesn’t deal with -- that dealswith ETCs not--A. That dealt with ETCs and competitive equity of

how federal support should be distributed.Q. And the last one listed on that page isinterstate access charges. Correct?A. Intrastate access charges.Q. Intrastate access.A. That ease had -- again you asked about

classification, but it certainly had competitiveaspects. A large part of the case was competition.Q. In the ‘06 case that’s listed on the next page

was a merger case.A. It was the separation of Embarq from Sprint.Q. Okay. And then the last docket was a ‘94 docket.A. Yes.Q. Which was an investigation, 1994, into the

competition within the telecommunications industry inthe State of Kansas.A. Right.Q. That proceeding did not involve reclassificationof regulated services competitive, did it?

A. That proceeding involved many different aspects,but one of which was the standards upon which exchangescould be reclassified, a following proceeding, a numberof exchanges we petitioned and were granted competitiveclassification in Kansas for them.Q. But this reclassification occurred on

exchange-by-exchange basis. Correct?A. That was the basis of the statute in Kansas, yes.Q. And you’re advocating something different here in

New Jersey. Correct?A. Yes.Q. Okay. And to move along, in the four proceedings

you had in Missouri, again, the second one dealtessentially with exchanges in Missouri. Correct?A. Yes, it did. There was a statute that had been

passed in Missouri that allowed exchanges to beessentially price deregulated with the presence of onecable -- or one facility base provider and one wirelessprovider. And we had to submit evidence and I supportedevidence to show that we had that presence in eachexchange.Q. Were you the one filing testimony in thatproceeding on behalf of Sprint?A. You know, I don’t recall. I mean I definitely

was the lead witness in the case, but there may have

1 been other people. We may have involved other witnesses2 and set with the initial case under that law.3 Q. Do you know a Dr. Stairh?4 A. Yes, I know Dr. Stairh.5 Q. Did any of these cases involve his testimony as6 well?

A. It’s hard to recall which ones. But at times,yes, we testified together.Q. Pd like a transcript request of those

proceedings which you participated with him and providedtestimony. And this would include any of these otherstates that you listed where you participated.A. Okay. Specifically dockets where both he and I

testified?Q. Correct.A. Okay.

17 Q. And copies of the testimony that you provided.1$ A. Ithink-19 MS. BENEDEK: We will see if there is any.20 A. -- we have supplied some testimony in answer to21 another request, but! don’t think any of Dr. Stairh’s22 testimony.23 Q. Were you involved in the filing by CentuiyLink24 for forbearance regarding enterprise Ethernet services25 before the FCC?

Page 129

A. No, I was not.Q. Are you generally involved in any FCCproceedings?A. Not in the actual -- I’m involved in theimplementation if it impacts the states, very involvedin the implementation of the ICC 1.1SF reform order we’regoing through now but not in the advocacy before theFCC.Q. Are there other parts of CenturyLink that do

that?A. Yes. We have people that are dedicated to ortheir primary job responsibility is the federaljurisdiction.Q. That is not one of your responsibilities.A. No.Q. Now, the ILEC reclass Phase I, you didn’t submit

any testimony in that, did you?A. No. I believe Dr. Stairh was our witness in that

case.Q. Did you assist him in preparation of his

21. testimony in that case?22 A. I didn’t in some aspects because at that time I23 did not have direct responsibility for New Jersey. But24 he and I had testified to similar issues in various25 states. We talked about .- collaborated about data that

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could be supplied sources of data. That type of thing.Q. Dr. Stairh was essentially CenturyLink’s economic

expert. Correct?A. That was one of the roles he played, yes.Q. On page 8, line 24 to 26 of your initial

testimony, when you get there let me know and then I’llask my question.A. I’m sorry. Which lines?Q. Should be lines 24 to 26,A. I am there.Q. Says you contend CenturyLink remains subject to

outdated regulatory constraints that continue to inflictharm to New Jersey economic interest and to New Jerseyconsumers. Is that correct?A. Correct. That’s what it says.Q. What studies, analysis, or factual support do you

have for that statement?A. I don’t have a specific study regarding -- I meanit’s difficult to monetize harms. We’re talking aboutone entity within the marketplace being restricted interms of its pricing actions and responses.Q. On page 9, lines 12 to2O on page l0ofyourinitial testimony.A. Yes.Q. You have figures that purport to show market

Cross . Harper Page 131

share. Correct?A. Yes, I do.Q. So in your opinion market share is a factor toconsider in evaluating whether a service should bereclassified as competitive or reclassified to rateregulated status. Correct?A. I think the market share in this case helpsinform the success of and presence of substitutableproducts and demonstrates the decisions of our customersand the result.Q. On page 34 of your initial testimony--A. Yes.Q. -- you refer to -- you state that customersported numbers to 12 different CLECs in the past14 months. Correct?A. Is that on line 14? Okay.Q. It’s on page 34 somewhere,A. I think it’s this line here.

Yes, I see it.Q. Do you know what the total lines ported during

that 14-month period was?A. I can add it up, but I don’t know, I don’trecall. Its on that schedule, but I don’t recall thetotal,Q. Okay. And those CLECs purchased UNEs from

CenturyLiak. Is that correct?A. They may be purchasing liNEs. They may be

customers that left. The CLEC provides its ownfacilities. Simply a measure of customers that left andwanted to take their telephone number to a competitor.

MR. WHITE: Urn going to mark two exhibits.One is Exhibit RC-7 which is selected statistical datarelating to annual reports filed by CenturyLink in thiscase. And the first four pages are summary sheets fromwithin the report and behind it are the full reports.

I’m also going to have proprietary exhibit,RC Exhibit 16, which is the 2011 477 report filed byCenturyLink.

MS. BENEDEK: May I ask a question, Counsel?On the top you have Verizon FCC 10-Q on the

right-hand corner.MR. WHITE: Just ignore it.MS. BENEDEK: Thank you.(RC-7, Selected Statistical Data Re Annual

Reports Filed By CenturyLink, marked foridentification.)

(RC-16, 2011 477 Report Filed ByCenturyLink, marked for identification.)BY MR. WHITE:Q. Do you have copies of those before you?

Cross - Harper Page 133

A. Yes,Tdo.

well? Okay.Q. Let’s go to Exhibit 16, go to the second page andif you go to the far right-hand portion of the page, yougot -- you got a row that starts off with five digit zipcodes and goes down all the UNE-L, UNE-P-2.

Do you see that?A. Yes,! do.Q. Do you know what VGE stands for?A. Voice grade equivalent.Q. And there’s a total at the bottom. Correct?

MS. BENEDEK: Which is confidential.A. Yes.

MR. WHITE: Yes. I’m going to try to gothrough this without addressing with confidentialbecause you guys all have copies.

MS. BENEDEK: Thank you.Q. And then there’s various breakdowns.

Do you see that?A. Yes.Q. And if you go down where you have single-linebusiness by zip?

24 A. Yes, I see that.25 Q. And there’s a number at the bottom of that as

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well. Right?A. Yes.Q. Okay. Now, I want to refer you to RC Exhibit 17.

MS. BENEDEK: Seven?A. Seven you mean?Q. Seven. Excuse me.

You’re wearing me out, Sue.MS. BENEDEK: About time.

Q. All right. If you look at the number of accesslines -- business access lines that are reported --

A. Correct.Q. -- in 2011 you -- and this is proprietaiy.

Correct?MS. BENEDEK: Hold on. I don’t-

Q. It’s not marked, but I believe annual reports areconsidered proprietary and not public.

MS. BENEDEK: Yes, we have.I am getting a nod from Mr. Roberts in the

back so, yes, they are.Q. But you see the number there, there’s a highernumber for 2010. Correct?A. Yes. Yes.Q. Okay. There’s a lower number for 2009.A. Yes.Q. And for 2011, 2009, 2010, you were able to

increase your rates for your business lines, correct,under the stipulation that was entered into?A. Yes, we were.Q. Okay. And then if you go to 2008--A. Yes.Q. -- there’s another number which is pretty much

equivalent to the number in 2011 you listed for businesslines. Is that correct?A. Right.

Now-- I mean I’d like to explain something aboutthe reports.Q. Okay.A. Okay. Is that I’ve determined after doing

reviews similar to what you’ve done here is that we hadeither interpretational difference or somemisunderstanding of the instructions in the 2008, 2009period. Those line counts for number of business accessline do not include our trunk numbers.

A better measure, more accurate measure is thetable that’s on page 22 on my testimony. When I wentback and tried to reconcile this in preparation for thehearing, these are, in fact, what were put on the annualreports but data is missing a piece of our businesslines. I provided the full data in MOH-6 and on page 22of the testimony.

July 17, 2012Cross-Harper Page 136

But that’s why you see this anomaly in businessrates, our lines looking like they dropped and then wentback up again when, in fact, they did not. It wasduring that time period that people doing the reportmistakenly left off trunks and other types of businessservices.

MS. BENEDEK: That is your initial testimonyyou referenced at page 22.

THE WITNESS: I’m sony. Yes, it is.HEARING EXAMINER ASSELTA: w~,ia~

n corrected?12 THE WITNESS: In the annual reports.

MS. BENEDEK: We can correct the annual13reports, certainly.Q. If they are corrected, would the numbers go up ordown?A. The numbers would go up.Q. So you would have more lines than you claim.A. I understand that. But it would not reflect that

we gained lines during a time of increasing prices. Infact, lines went down every year.Q. Which lines went down every year?A. The 2010 and 2011 numbers are inclusive of all

lines. They were done correctly. 2009 and 2008 numberswere not. So it’s a misleading trend using that data.

Q. Well, are the average residential monthly billand average business bill correct, the numbers in eachof these reports?A. To the best of my knowledge, they are. The onlyline where I discovered an anomaly is the businessaccess lines.Q. I’m going to transition back to Exhibit 16 now,

under the column total service retail residential lines.A. Total service resell?Q. Resale residential lines.A, Yes.Q. Third--third column from the bottom.A. I see it.Q. If you want to call it a row or a column.A. I see it.Q. You see the number there?A. Yes, I do, the total.Q. Do you see the next one over subtotal serviceresell?

For business.For business.Yes, I do.And do you see (JNE-L, UNE-P lines--Yes, I do.-- next one over?

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Would you agree that those total less than onepercent of your total access lines?A. For that specific count, yes, of lines providedunder resell or UNE, yes.Q. So the CLECs that do operate in your service

territory essentially are providing these number oflines under resale or tiNEs?A. Those two are not equivalent. They clearly have

their own facilities and they can purchase facilitiesfrom each other and other wholesale providers which theyregularly do in the marketplace. This is just ademonstration of where they’ve utilized my network toprovide their services.Q. A good example is Level 3, isn’t it?A. Yes. Level 3 is a wholesale provider, as well as

a retail provider.Q. And then Level 3, at least according to our CLECsurvey, does not serve the residential and single-linebusiness market. Is that correct?A. If the question is does Level 3 from a retail

perspective focus on the marketplace, the answer is no.Does a Level 3 facilitate other companies to provideservice to residential and single-line business, yes.Q. Do you know what the current number of standalone

business lines that are -- let me back up.

Do you have the number-- most recent data on howmany residential customers only have standaloneresidential service?A. I -- the most recent number I have is the number

I provided in my initial testimony on page 25 as ofNovember 2011.Q. And you have no updated numbers--A. No.Q. --at this point in time?A. No. I have not updated that number.Q. Now, if we go back to your table on Exhibit?-

or Exhibit 16, excuse me, these other columns startingwith the third, they really differentiate between linesthat are a bundled component. In fact, if you look atlines with both inter and intra LD service.

Do you see that?A. Yes, I see that line--column.Q. And you have a total down at bottom is which

approximately 90 percent or more of the total of what’sthere under column --Column 1.A. That does not equate to customers with bundles.Q. Well, doesn’t the Board consider --

A. I’m sorry. Go ahead.Q. Are you aware whether the Board considersresidential service bundled -- or residential service

July 17, 2012

toll and long distance when sold as a package as abundle?A. But this doesn’t necessarily imply or does notimply that these are sold as packages. You can buystandalone residential service. You can buy tollseparately, but not as a bundle. So this is everybodywhether they’re bundled, standalone, or not that haslong distance service in the manner indicated, should behigh proportion of customers.Q. Doesn’t the data line say lines with inter andintra long distance service?

MS. BENEDEK: Objection.A. It would be highly unusual for customers not tohave any long distance service.Q. That’s a bundle, isn’t it?

MS. BENEDEK: Objection. Asked andanswered.Q. What do you define as a bundle?A. Bundle would be the combination of those products

at a single price. This does not say that. Itjustsays you have the capability to make intrastate andinterstate long distance calls and you have localservice.

HEARING EXAMINER ASSELTA: ,

answered it.

Page 141

Q. Can we go to residential for a second. The lineswith both inter and intraLAtA service, these lines wouldhave both toll and long distance service. Correct?A. Yeah. I think that’s what that indicates. Now

that is not-- another reason that line is higher too isbecause that’s business and residence that particularrow. Because the next column over is residentialequivalent lines by zip code and it shows a smallernumber. But I think we talked about it before that thatcolumn is people that have a line and have a capabilityof making interstate and intrastate long distance calls.Q. Which means they would have a toll carrier and along distance carrier on the line. Correct?A. Correct.Q. They would have made a selection of their

16 carrier.17 A. Right. Not necessarily be CenturyLink and would18 not necessarily be in a bundle.19 Q. Do you know how many of your-- these are your20 customers, right, the amount of total that is showed21 through the VGE lines, those are your customers. Right?22 A. Correct.23 Q. You have what percentage of your customers24 subscribe to both long distance and toll?25 A. I have not done that analysis. I know the rough

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percentage of our customers that have bundles versusstandalone, but I didn’t look at it from the perspectiveof toll.Q. Okay. On page 28 of your testimony.

MS. BENEDEK: Initial?MR. WHITE: What?MS. BENEDEK: Initial testimony?MR. WHITE: initial testimony.

A. Yes.Q. You have data on the two top competitors.

Correct?A. Yeah, I note who the two top competitors werefrom reporting data.Q. Cable companies do not offer standalone service,

do they?A. They primarily otter bundled service, yes.Q. They require you to purchase toll and long

distance as well as their basic phone service. Correct?A. I didn’t investigate every one of their offerings

so I’m not sure if they do have something that lookslike a standalone product offering. What I’mdemonstrating here is our customers are going to cablecompanies regardless of what products that they offer,including our standalone customers.Q. Now, the cable companies offer a VolP product.

Right?A. Yes.Q. And to utilize a VoIP product, you also have to

have Internet access. Correct?MS. BENEDEK: Objection, is he talking

about what cable companies offer and therefore is heknowledgeable about it; or is he talking generally, doesthe witness have any knowledge about how cable companiesprovision VoIP?Q. First of all, do cable companies provide VoW

services in CenturyLink’s territory?A. Yes. They provide an interconnective VoIP

service. Yes.Q. Do you know whether that runs over --you needInternet connection to have a voice service inCenturyLink’s territory?A. You know, I am not -- I’m sifting here thinking

about the ads I read and the various information. Ithink generally, but there may be some that offer voiceon a separate basis, as long as you buy their video, Iam not certain.Q. Okay. I’m going to go to your reply testimony.

You state on page 4 that the scope of this proceeding islimited to three statutory criteria. Correct?A. i’m sorry. What page was it?

Q. Page 4.A. Thank you.Q. in your reply testimony.A. Right there at the top. Yes.Q. Did you review the order of VerizonfCentulyLink’smotion to strike rate counsel’s testimony in this case?A. Yes, I did read that order.Q. That order doesn’t limited the criteria to just

three, does it?MS. BENEDEK: Objection. He’s asking for a

conclusion regarding the order and he can ask whetherhe’s read it, but he’s not an attorney.Q. What’s your understanding of that order?A. I think that order left open the possibility of

other items in addition or to enhance the threecriteria. But I’d have to go back and reread it intotal.Q. Your testimony points to line loss as evidence of

competition. Is that correct?A. I utilize line loss, reporting data which

determines specifically what customers left and wherethey went.Q. On page 8, lines I through 9 of your reply

testimony, you submit that affordable economicsubstitute is an academic exercise and not part of the

three criteria. Is that correct?A. I submit that the evidence of our customers

finding substitutes in competitor’s products is ademonstration that there are like or substituteproducts. The exercise of separately trying todetermine of what an affordable economic substitute is,is not necessary when you’ve got the facts thatdemonstrate that people are making the choice to movetheir services to competitors.Q. You do refer to it as academic exercise, right,

and not part of the three criteria. Right?A. Yes, I did.

13 Q. Did you review any economic literature in making14 that determination?15 A. No, I did not.16 Q. When was the last time that you reviewed economic17 literature dealing with economic principals as it18 relates to-- hold on --

19 MS. BENEDEK: Can you define economic20 literature? Is it the economist? The magazine?21 MR. WHITE: See if he can answer the22 question, then we can go into the next phase.23 HEARING EXAMINER ASSELTA: .. —

24 it.25 A. A bit of a pause. I don’t remember now what you

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1 asked.2 Q. What economic literature have YOU reviewed3 relating to cross elasticity of demand and substitutes?4 A. I didn’t choose to review economic literature. I5 chose to look at the statistics and facts of what6 happened in the marketplace. I didn’t feel like in this7 case it was necessary to get into those types ofa arguments to demonstrate that customers are makin9 choices.

10 Q. Are you aware of the Department of Justice-ii U.S. Department of Justice defines relevant product12 markets?is A. I didn’t see that criteria in the statutory14 criteria that I was reviewing. I didn’t review that. Iis mean your witness mentioned it. I read through it.16 Q. So you’re not familiar with the treatise by17 Thomas and Harrison entitled Understanding Antitrust Law18 and Its Economic Implications, third edition, 1998.19 A. No. I didn’t hold myself out as being familiar20 with that. I’m familiar with what’s happening in New21 Jersey regarding our customers.22 Q. And you would assume you’re not familiar with23 Dennis W. Carlton and Jeffrey M. Perloff, Modern24 Industrial Organization, third edition of 2000.25 Correct?

1 A.No.2 Q. Or Scherer, F.M. Scherer and David Ft Ross,3 Industrial Market Share and Economic Performance, third4 edition, 1990?5 A.No.6 Q. You suspect Mr. Stairh would be aware of these?7 MS. BENEDEK: Objection. Mr. Stairh is nota in this room nor is he being offered as a witness.9 Q. I’m asking --

zo A. I don’t know. He’s no longer an employee of11 CenturyLink. I don’t know what he’s doing these days.12 Q. All right. I want to -- I have some questions13 for you. If you go to your initial testimony page 2214 and page 25 and Exhibit 6 of your initial testimony.15 A. Yes.16 Q. Also go to CenturyLink response to one--17 RC-CTL- 179. And also CenturyLink’s response tois RC-CTL-94 which are the annual reports which we19 previously identified here as.20 A. l’vegot those, 179.21 MS. BENEDEK: These are--22 THE WITNESS: One seventy-nine.23 Q. Now, my understanding this number on page 22 is24 public. Is that correct?25 A. Yes.

July 17, 2012Page 148

1 Q. You’ve had a business line count of 44,578?2 A. As of November of 201 I.3 Q. Now, turning to page 25 the same testimony, you4 have numbers for nonbundled and business bundled line5 counts.

A. Correct.Q. And that totals twenty-eight-five-twenty_six.A. Yes.

9 Q. And let’s turn to Exhibit MDH-6, page I.A. Yes.Q. And you explain why there’s a difference between

the two numbers. Correct?A. Can I explain?Q. No, you do explain.

MS. BENEDEK: In MDH-6. Clarification ofwhat was requested?Q. If you go to your confidential Exhibit MD-6 --

A. Yes.Q. -- look under November II.A. Yes.Q. Do you have the Bl service listed and then youhave other types of services that gets you to theforty-four-five-seventy-eight number. Corre~t?A. I see it, yes.Q. It includes PBX, ISDN, Payphone, Centrex, and

FXXL, and there’s also a key systems.A. Yes, I see that designation. I see that.Q. Okay.

Page 149

HEARING EXAMINER ASSELTAZ is there aquestion associated with that?Q. No. Just that he’s verif5ting it.

HEARING EXAMINER ASSELTA: Jwnaw.~it. Okay.Q. Yes.

10 Now, what is your understanding of the quantity11 of business lines that are an issue in this proceeding?12 A. If I understand the -- okay.13 Let’s go simple. It’s the single-line, BI, and14 then BI is provided at two or more in total using MDI-l-6is it would be in this — in that number of 201 I column, it16 wouldbe2s,723.17 I’m sony. That was confidential.la MS. BENEDEK: The number of the top row19 there under total in right-hand column.20 A. The confidential data on MDH-6 was divided by21. exchange. The totals we chose for the purpose of the22 proceeding to try to be open as possible and have totals23 being used. Normally, we don’t go around with product24 set numbers, but competitors would like to see what I25 offer in every exchange and we try to keep that

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confidential.MS. BENEDEK: Okay. Your Honor, to clari&

for the record the 28,000 is not confidential. We neednot put that in there. It’s the numbers -- and forcounsel -- for rate counsel, it’s the information on theleft-hand side of this exhibit that causes this tobecome confidential.

MR. WHITE: But we didn’t identify whatthose numbers were.

MS. BENEDEK: Correct.Q. Okay. The 14,542 nonbundled business lines-A. Yes,onpage2s.

-- are those the business lines that are at issuein this proceeding?A. I didn’t understand your earlier question.

Yes. I’m sorry.Q. So that’s the subset of lines that you think are

relevant to this --

A. Thank you for asking again.That would be the one that are in bundles would

be considered competitive still are not subject to

Nonbundles?Nonbundles are noncompetitive now.And its also possible that a customer may have a

Cross~ Harper Page 151

single-line in multiple locations such as a chain ofpizza shops. Correct?A. Yes.Q. Because -- is it your understanding that if asingle location, a single customer has two businesslines that those business lines are deemed competitive?A. Yes. They are today.Q. If we address the quantity of single-line

business lines only, none of these are bundles, right,the numbers that you specify for those. Correct?A. I’m not sure which number you’re looking at,Mr. White.Q. Single-line business lines that you report onRC-CTL- 179.A. [haven’t looked at that yet Give me a minute.

Your question was?Q. Single-line businesses -- shows the quantity of

single-line business lines is a proprietary number.Correct?

A. Yes.Q. And irs somewhat higher than the number shown on

the 477 that we reviewed?A. Yeah, but you’re using different data sources

with different definitions.Q. I understand.

__________ July 17, 2012

Page 152

A. I’m not sure they’re using the same definition.Q. Have you ever performed an elasticity study?A. No.Q. Do you know how to?A. Do I know how to?Q. Yes.

7 A. I’d have to read up on how to do it. I knowa roughly what it’s going to measure, but, no, I have not9 done.

Q. I’m going to run you through an exercise.A. Okay.Q. In 2008 there were --

Point of clarification, are the number ofbusiness lines proprietary or no?

MS. BENEDEK: Not in total.Q. Notintotal.

You list 55,580 business lines, take that subjectto check?A. Which schedule are you looking at now?

MS. BENEDEK: And which year?Q. 2008.

22 HEARING EXAMINER ASSEL,TA: What--23 Q. Page 22 ofyour testimony.24 HEARING EXAMINER ASSELTA: .~

25 to prove with this exercise? /Cross - Harper Page 153

MR. WHITE: The net result of this will showthat for both residential and business lines inCenturyLink territory, there’s a negative inelasticityof demand which means that these services are inelastic.We’ll also show as we go through this exercise that therevenues that-- they’ve had positive revenues resultingfrom the increases in rates notwithstanding theiralleged line loss.

HEARING EXAMINER ASSELTA: ,..._..

that exercise?MS. BENEDEK: Not to the extent that he has

12 articulated. The witness has identified that he has not13 done an elasticity study. He can certainly write that14 in his brief and say my witness doesn’t know anythingis about elasticity studies. But now he’s getting into is16 a demonstration of what would be an elasticity study,17 again, using his hypotheticals and using whatever datais he has. So I think it’s a mismatch here of what he’s19 intending to prove to somebody and my witness has20 indicated he has not done such a study.

MR. WHITE: My position here is this witnesswas offered as their witness. And it’s clear to me that

23 he’s not an expert in economic matters. And the issues24 before this Board are economic. You’re entitled to give25 his testimony whatever weight you deem is appropriate.

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I’m perfectly willing to brief the elasticity studiesbecause the numbers upon which it’s based are all on therecord. Based upon what we put in, I can save some timeand effort in that regard.

I think the bottom line here is this witnessdoes not have a sufficient economic background to opineon the satisfaction of the three criteria. That isgoing to rate counsel’s position.

HEARING EXAMINER ASSELTA: w,.u

with that?MS. BENEDEK: 1 cant agree with that. My

witness has never offered himself to be an economist inthis case. He hasn’t submitted testimony so what he’ssaying is--

HEARING EXAMINER ASSELTA: Correct.MS. BENEDEK: --something that my witness

isn’t here to provide. He has provided data,information about the three criteria. That is where Ican’t agree with Mr. White.

COMMISSIONER FOX: But those types ofstudies are relevant. He might not be an expert, but Iwould think that your company should have some evidenceabout whether it is elastic or not.

MS. BENEDEK: And they have asked us forthat information — or they have asked us whether we’ve

done elasticity studies and we said no. So what he isgetting into now the third time asking the samequestion.

COMMISSIONER FOX: I think the point hasbeen made that you have not provided us with anyinformation on elasticity.

MS. BENEDEK: We have not.COMMISSIONER FOX: So we have to rely on—MS. BENEDEK: The testimony.COMMISSIONER FOX: -- the testimony of

others.MS. BENEDEK: But I can’t agree with

characterization of what that means as Mr. White hastestified or stated.

HEARING EXAMINER ASSELTA: Ltts move

forward. You’ve made your point.BY MR. WHITE:Q. We’re going to go back to Exhibit 6 which isCenturyLink’s annual I O-Q that was filed. It’sExhibit 6D of the package I handed out earlier.

Do you have that available to you?A. Yes, I do.

MS. BENEDEK: I missed that.MR. WHITE: It’s 6D, lO-Q, part of the four

sets of documents that I handed out way earlier this

__________ July 17, 2012

Page 156

morning which seems like a lifetime ago.Q. I will start off if you go to page 21 of 84.A. Yes, I’m there.Q. This talks about how your business is organized.You’ve got regional markets. You’ve got businessmarkets, wholesale markets, and you have the SavvisOperations.A. Correct.Q. Is that a yes?A, Yes.Q. If turn to page 23 of 84 at the top which is

marked 21 at the bottom, you see the margin percentagethat’s listed there?A. Yes,! did.Q. It’s 58 percent. Correct?A. Yes. As the margin refined, yes.Q. And would that be an EBITDA?A. No.Q. What’s your understanding the difference between

EBITDA and how you express margin in your 10-Q report?A. Again, I’m -- I haven’t studied the document, butif I’m looking at page 22, it talks about directexpenses, specific incremental expenses incurred as adirect result of providing services and products tosegment customers. It doesn’t talk about allocated

Page 157

expenses. So it’s looking for direct costs associatedwith the segment but not the general overhead costs thatget allocated from the corporation.Q. There’s a percent -. margin percentage for

business as ~vell.A. Yes, there is.Q. In wholesale.A. Yes, there is.Q. And for Savvjs as well?A. Yes.

11 Q. And company-wide that average is 54 percent.12 A. That’s what the exhibit says.13 Q. That concludes my questions on this exhibit.14 Can I purchase installation services from another15 entity if! want CenturyLink’s local service?16 A. No, you cannot.17 Q. And can I purchase vertical features?19 A. No. No, there’s not a market for vertical19 features on standalone basis.20 Q. Now, is it your understanding that CenturyLink is21 subject to an alternate form of regulation here New

Jersey?A. Yes. Subject to a PAR plan.Q. If DA was declared competitive as a result of

this proceeding, would that be an exogenous event under

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your plan of alternative regulation?MS. BENEDEK: Objection. That is pure legal

conclusion.MR. WHITE: What about his understanding?MS. BENEDEK: What is his understanding

about whether it is?MR. WHITE: Yes.MS. BENEDEK: Again, I renew the objection.

Q. Flow is that legal-HEARING EXAMINER ASSELTA: RepIisanii.

COMMISSIONER FOX: It’s not legal. He’s asmart man.Q. Under your plan of alternative regulation is--

do you understand there’s an exogenous event clause inyour PAR?A. Yes.Q. Do you know what that exogenous event clause is

triggered by?A. You know, I’ve read it and I have an

understanding of what! think it means. Again, it’s notbeen to my knowledge tested at this point by us oranybody and New Jersey to know exactly, but I have notthought of-- generally exogenous events are eventswhere it’s beyond the company’s control, somethinghappens to it, either through a cost, an act of God,

through a rule change at the FCC. That type of thing.Q. It could also be a tax change. Correct?A. Yeah. It’s been used for tax changes back in the

past. But as far as a service being deemed competitive,it’s difficult for me to connect that with an exogenousevent and what action that would take in a PAR.Q. Now, when your basic local exchange services were

set, were free DA calls part of the--free DA callspart of basic service package at that time.

Correct?A. Are you talking about way back when there was a

rate case the last time?HEARING EXAMINER ASSELTA:,,,M,,,,,~,,,

Q. When they were originally set under your lastrate case.A. I don’t have -- I don’t have that history. I can

answer it in general based upon experience in otherstates, yes, in a rate case it would recognize all theservices being offered and generally free DA or anallowance for a given number of calls as part of thatmix.Q. In 2008 you entered into an alternate plan ofregulation. Correct?A. Yes.Q. Prior to that plan, you were giving two free DA 25

J~y 17, 2012Cross - Harper Page 160

calls. Correct?A. No, the number was higher. During the course of

the plan, the plan allowed us to lower the number offree DA calls to two.Q. Totwo.

So you had a higher amount initially.A. Yes.Q. And now you’re providing two free?A. Yes.Q. And you’re seeking to reclassify that as rate

regulated?A. Yes, we are.Q. Do you think that your basic service rates would

have to be adjusted for an exogenous event if the Boardchanges a regulatory treatment of DA services?

MS. BENEIJEK: I renew my objection. I don’tthink this witness is qualified to answer whether aparticular happenstance qualifies under specific termsof our PAR agreement.

MR. WHITE: Well, first of all, heidentified regulatory changes.

HEARING EXAMINER ASSELTA: He’s notqualified to answer that question.

MR. WHITE: That’s fine. I asked it andthat’s all.

Page 161

Q. On page 23 of your reply testimony you discusshome phone connect service. Correct?A. Yes.Q. Do you know how many CenturyL.ink customers havesubscribed to that service?A. No. We have no ability to determine specifically

what product is purchased when they leave.Q. On page 20 you discuss Lifeline and number ofwireless providers. Is that correct?A. Yes.Q. You’re not seeking reclassification of Lifelinein this proceeding, are you?A. No. We’re not seeking anything related to --

changes related to Lifeline in this proceeding.Q. It’s not a service identified by you for whichreclassification is sought. Correct?A. Correct.Q. On page 15 of your rebuttal, 15, 16, you claim

that the inability to quantify the harms of rateregulation is maintained is not one of the-- is not

21 maintained I think is not one of the three criteria.22 Is that what you say?23 A. That’s a fair summary of that series of24 sentences, yes.

Q. And you provide no quantification. Correct?

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A. We talked about before, my testimony initial andvarious rounds talks about the harm, but I don’t haveany specific monetary quantification.Q. You have no study analysis.A. Yes-- no.

MR. WHITE: If I could have five minutes togo over, see if I have any additional questions.Otherwise, I may be done,

(A short recess is taken.)HEARING EXAMINER ASSELTA:~

have anymore questions?MR. WHITE: No more questions.HEARING EXAMINER ASSELTA:Staff, do you have any questions?COMM1SSIONER FOX: Copper hnes, how much

remain in your system of copper lines? Copper linesfrom my opinion are safe. I-low do copper lines fit intoI guess this position, petition because I think a lot ofseniors want copper lines because of that securityissue?

MR. VASINGTON: We haven’t eliminated anycopper facilities, but they remain out there. They’reless full than used to be because so many customers havedropped us. When the customer drops us, we don’t takeaway the copper drop. It’s a drop from the line to the

customer’s house so we leave it in place. So we haven’tremoved any copper facility even though they’recurrently not being used to the extent that they were.

COMMISSIONER FOX: Say somebody wants ogoback in, say somebody has FIOS and sell homes and wantthe copper back, can they have the copper back?

MR. VAS1NOTON: The copper is still there.We have to roll a truck to switch from the terminal onthe house. A fiber served customer is served by what wecall an optical network terminal, an ONT, on the side ofthe customer’s house, and that has got a fiber opticcable going into that ONT which then serves thatcustomer. If they previously had copper service withus, that copper service is still hooked up to thenetwork interface device, or MD. So if that customer’slocation wants to switch back to copper, we have to rolla truck back to the house so a technician can hook upthat copper line.

COMMISSIONER FOX: Do you offer that as analternative or would they have to ask for it?

MR. VASINGTON: You mean do we say to thecustomer --

COMMISSIONER FOX: You warn a landline oryou want FiOS, you say that?

MR. VASINGTON: We’re talking about a

July 17, 2012Page 164

1 situation where a customer moves into a house and2 decides what service they want. When they call the3 service rep, the 1(800) Verizon service rep, I don’t4 know if we ask them which do you prefer, FIOS or copper?

MR. HARPER: Answer similar, we don’t have6 FiOS related product in the marketplace here and our~ primary method is to try and get fiber closer to the8 homes, fiber to the node so the copper link at the end9 stays into the customer’s home. So the idea of being

to able to get power to copper where it’s important toit people, it’s there. In fact, we just had an issue with

some good press from Hunterdon County when there was abig storm and the power company was out, somebody saidin the article but my phone works.

COMMISSIONER FOX: I dont bundle because ofthat.

Another question, another topic. Servicequality. My personal belief is having talked to ourcustomer assistance people and have talked to a lot ofpeople who complained to me about service quality thatVerizon has a lot of complaints and, in fact, one of theissues seems to be if you want to get your regular oldphone service repaired or get installed it takes twoweeks to do that. And so my personal belief is havingtalking to a lot of people about this, well, I can just

Page 165

1 use cell phone then because Pvc lived for two weeks2 without it and I don’t need. It’s also a real pain in3 the neck for people because they have to literally wait4 two weeks at least to get that service.5 Do you have any feeling how that might6 impact your line loss?7 MR. VASJNGTON: To the extent that the$ customer is dissatisfied with us and all the myriad9 options that they have in the marketplace and

10 substitutes certainly doesn’t help us if we haven’t11 satisfied their concerns over our service quality. They12 can go to other places.13 For purposes of this proceeding, we know you14 have another docket open on Verizon service quality.15 For purposes of this proceeding, we clarified that none16 of the PAR-Il requirements would change for us if we17 were to be reclassified as competitive services here.18 That those service quality requirements that exist in19 PAR-lI don’t go away simply as a result of20 reclassification.21 COMMJSSIONER FOX: In the PAR-Il22 requirements, do we actually know how much time we have23 to respond if somebody wants to hook up a phone service24 or if they have a problem with the phone and need25 somebody to come out in the truck and repair it? I

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don’t think that is there, is it?MR. VASINGTON: I don’t know. There’s a

list of metrics in the PAR-Il order.MR. SMITH: We have 2! or 22 PAR-lI metrics

and I think installation is one of them. Off the top odmy head, I can’t recall what it is. But there are-therets 2) metrics, 22 metrics, a lot of metrics to beevaluated.

MR. HARPER: First, from a complaintperspective, we haven’t had very many, particularlyrelated to this issue, although I would agree thatquality is one of the aspects a customer is going toconsider in choosing their provider, clearly we’redriven in a competitive marketplace to provide what thecustomer needs.

COMMISSIONER FOX: Verjzon’s numbers arepretty good. Okay. Thank you.

HEARING EXAMINER ASSELTA; ,.r.n~n

as a matter of record and just to let Verizon know thatI know the Board here and [know my fellow commissionersreally do care about copper wire and )andlines and ratecounsel probably shares that same belief.

How important it is was illustrated abouttwo weeks in my home town. We went through a horriblestorm. We were devastated. A community of about 70,000

people, total electricity blackout for eight days andthe only thing that worked was the copper line and theonly way we could communicate outside of our communitywas those copper lines that were still in some people’shomes, in this case my mother’s home.

It’s still a valuable asset to have. Weknow where technology is going, but we still think andwe feel that we want to maintain that copper line aslong as possible, just in case of those emergencysituations so I want to let you know that.

MS. BENEDEK: May I ask, I thought you weregoing to go there on the initial question you asked whenthis hearing opened.

COMMISSIONER FOX: That would be good ecceptI can’t remember exactly what it was so if you can,Counsel.

MS. BENEDEK: Just because we’re counsel, Iresponded which is not evidence so I want my witness torespond.

Would you eliminate the RI, that standaloneLine, if we deemed -- if you deemed the service ascompetitive, I believe was your question. And to makesure that we do have an answer for the record, wouldyou, Mr. Harper, like to respond to Commissioner Fox’squestion?

July 17, 2012Colloquy Page 168

MR. HARPER: Certainly. And I like topreface it with I’m not an attorney interpreting the PARplan, but I’ve certainly read it and I believe we wouldremain under the PAR conditions. We’d have to filecompetitive tariffs. We have that relationship or thatneed to go through the commission if we were to want toremove basic service.

What I can say, we talked about in some ofthe testimony, there’s a number of states where we’vebeen able to gain price deregulation or even pretty muchtotal deregulation of basic service. And throughout our37 state footprint, we have not riled anywhere to removethe provision of standalone basic service today.

COMMISSIONER FOX: Directory assistance, youboth provide two free calls for residential fordirectory assistance and it went down from what it wasbefore. Do you have in your testimony or in theappendices to it regarding directory assistance who arethe customer classes who use it-- not the customerclasses-- who are the individuals who use it, seniors,that kind of thing, who uses those two calls?

MR. VASINGT0N: We don’t have thatinformation in our testimony and Verizon doesn’t haveit.

COMMISSIONER FOX: Do you have any

Page 169

information from Verizon on who uses those two freecalls?

MR. HARPER: Not really.MR. VASINOTON: The only evidence we have is

the study that Mr. White referred to earlier that yousaw that looked at how many years have you been using bydemographic.

COMMISSIONER FOX: Do you have inrormationon other states in directory assistance? I know we hadthat five years ago, whenever we did the last program.

MR. HARPER: In terms of the status ofregulation and the number of free calls, we can do asurvey.

MS. BENEDEK: We will look.COMMISSIONER FOX: It would be nice to know

Staff got it together for us, whenever itwas, five years ago, but it would be nice to have that.

MS. BENEDEK: So the question is the use of19 the two free --

COMMISSIONER FOX: What are the status ofother states for directory assistance that are free orthat are competitive -- or not competitive -- that arenot competitive? What is the status of noncompetitiveDA in the states where you operate?

HEARING EXAMINER ASSELTA: wwi,jw,

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OPU INVESTIGATION RE; ILEC SERVICES

Direct- Baldwin

1 witness.

3 cross.HEARING EXAMINER ASSELTA: Abdefing?

MR. SMITH: No. We just want to talk aboutthe DA question.

MS. BENEDEK: And I want to double-checkwhether I have cross.

MR. SMITH: But in the meantime are ourwitnesses excused for today?

HEARING EXAMINER ASSELTA: Yes.(A short recess is taken.)SUSAN M. BALDWIN, I7Arlington

Street, Newburyport, Massachusetts 01950, having beenduly sworn by the Notary, testified as follows:

DIRECT EXAMINATION OF MS. BALDWIN BY MR. WHITE:THE WITNESS: Mr. White, should I have all

my pieces of testimony here sal can make corrections?Q. Make corrections, any modifications, corrections

that you need to make. And they need to put you underoath?

22 A. I was just put under oath.23 Yes, I do have a few corrections. And I’d like24 to start with my initial testimony and I believe a25 document has been distributed. Rate counsel could

July 17, 2012

1 residential DA, there’s an end parenthesis should goafter the word DA. And end parenthesis similarly on

3 pages 11, line 7, page 13, line 10. That’s the4 identical change.s We’ve talked about pages 21 and 22so lets turn6 to page 96 of my initial testimony. The changes I7 discussed a few moments ago about pages 21 and 22 anda the lack of information on the quantity of business~ customers that Verizon serves in New Jersey, this

to ripples through lines 6 through 35 on page 96,11 specifically on line 8 there’s a confidential number12 that should be replaced with the word unknown. Line II13 the confidential number should be replaced with the word14 unknown, and line 13 the confidential number should be15 replaced with the word unknown.is Turning next to page 100, line 8, the word form17 at the end of the line should say from.18 Turning to 113, line 13, let me read the sentence19 that begins on page 12. I’m going to be changing on20 line 13 the word that says want to the word that says21 to, but this is substantive change so I want to make22 sure I got this correctly here.23 Table 23 below summarizes monthly rates for some24 of Verizon’s New Jersey discretionary features and shows25 that for all but two of the features Verizon NJ charges

1 perhaps advise me of the exhibit number which replaces 12 pages 2! and 22 of my initial testimony. 2

3 Q. There’s not an exhibit number for it, wejust 3

4 distributed an errata sheet added to the testimony. 4

5 A. What I’ve done there is to redline the changes 5

6 that appear on the text of page 21 of my initial 6

7 testimony. And if you turn to page 22 of chat document, 7

a I will not be divulging any proprietary information, a9 Table Cl, entitled Verizon New Jersey Business

zo Customers, you’ll notice that the difference between to1’ this errata Table Cl and my original Cl that I put the is.12 words not available in several spots, several 12

13 categories, because upon further reflection of the is14 source of the information, I determined that I could not 14is tell the unique number of business customers. I was not is16 able to find out in the record of this proceeding how 1617 many unique business customers Verizon serves. So based 17

18 on that revised understanding, I revised that table. is19 Now, what I’d like to do is go back to the20 initial testimony as flied and make changes, most of 2021 which are simply typos. If you turn to pages, now 2122 we’re going to find out if my pagination is the same as 2223 yours, and if it is not, I’d like to take a second to 2324 get the same version you have. 2425 Page 5, line 13 begins residential services and 25

Page 173

residential customers more than it does businesscustomers.

Turning next to page 115, footnote 186.HEARING EXAMINER ASSELTA: r,,o.w

one second. We need to before we go any further, ratecounsel needs to address the unavailability Sarah Boselyfor the record.

MR. WHITE: Right. Just the understandingthat we’re making Ms. Baldwin available today for crosson the assumption it does not effect the panel testimonyoffered by Ms. Baldwin and Ms. Bosely and that itremains in the case as joint testimony and that theirwaiver of the cross of Susan is also waiver of theircross of Ms. Bosely.

THE WiTNESS: And, Commissioner, if it’shelpful, on pageS of-- if it’s helpful, on page 5 ofour initial testimony, line 8, we say each member of thepanel has reviewed and supports the testimony in itsentirety.

HEARING EXAMINER ASSEL,TA: m.n~

THE WITNESS: Shall I continue on?HEARING EXAMINER ASSELTA: Yes.THE WITNESS: Just a few more corrections.So in footnote 186, on page 115 the word

confidential should precede the word exhibit. It’s

2 MS. BENEDEK: Two minutes. We may not have 2

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confidential Exhibit SMB-30.On page 121 the question that begins on

line 4, instead of saying that it offers, the questionshould read that they offer to residential customers.

On 123, line 16, instead of use, it shouldsay used, u-s-e-d.

And, finally, for the initial testimony onpage 131, the line 7 the question that begins on line 7,toward the end of the line it should say still have theoption. So have should be inserted after still.

And I just have two minor edits on reply andI will be finished with the corrections to the threepieces of testimony.

Turning to reply testimony, page 8, line 2,that line should read CenturyLink was unable to quantifythe harms of continued rate regulation or the benefit,instead of, of the benefit.

Further down that page on line 10, the word“a” that precedes competition should come out, should bedeleted.

And with those corrections, the testimony isaccurate to the best of my knowledge and belief.BY MR. WHITE:Q. Ms. Baldwin, I refer you to RC Exhibit 13 which

is NPS survey retail DA that we previously discussed.

You have some comments where respect to page ID thatyou’d like to share with the hearing officer?A. Yes. And to be clear this is the document that

we’ve included as confidential rebuttal Exhibit SMB-C-3and it’s dated December 2011.

Earlier we heard discussion by Mr. Vasington of achart that appears on page 10 about the possiblyconfusing presentation of the data from the survey. AndI have a slightly different understanding of what thenumbers are.

As Mr. Vasington says, the numbers are thenumbers, but the way I read them is a bit different fromthe way Mr. Vasington does.

Specifically, if we ignore for a moment what theintention of the author was which was to focus on howlong have you been using this service and that grandtotal column is captured in a chart. Let’s not look atthe chart. I mean, let’s not look at the line chart.Let’s not look at the grand total. Let’s assume thatall the other data is accurate, however, and let’s talkabout the four individual columns which correspond withhow long you’ve used 411 service. Maybe you’ve used itbetween zero and one years, that is first column. Maybeused it between one and five years, that’s a secondcolumn and soon. Maybe you’ve used it more than ten

July 17, 2012Direct- Baldwin Page 176

1 years, and that’s fourth column.2 Now, if go to the rows, that’s how old you are,3 presumably a responsive survey, and you can see that for4 each of these four stratifications, each of these four5 categories, in every instance the probability of you6 using DA increases as you get older. So to me, the7 statistics are very clear. Elderly people are morea likely to rely on DA and this is not surprising. We all9 know elderly people and they all grew up using DA. So I

10 don’t think that that’s a startling fact, but it’sii certainly empirical evidence.12 So I wanted to add my different interpretation of13 these data to the record for the benefit of the Board.14 HEARING EXAMINER ASSELTA: m.ayou.15 MR. WHITE: We’re done.16 HEARING EXAMINER ASSELTA: .~17 MR. WHITE: We are done.18 HEARING EXAMINER ASSELTA:~19 COMMISSIONER FOX: Question ahouL directory20 assistance.

THE WITNESS: That was the question, thankyou, Commissioner.

COMMISSIONER FOX: Do you know orany otherinformation out there about directory assistance?

THE WITNESS: This is exactly the concern I

Page 177

have throughout this proceeding whether it’s thedirectory assistance or whether it’s the legacy. Whoare they?

The Board in my view has a strongresponsibility to protect the most vulnerable citizensin the state, whether using DA or legacy service andneither Verizon or CenturyLink has been able to shedlight on this demographic. And this is a sizable numberof customers who use DA and use legacy landline and Iwould be concerned if we stopped protecting them withoutknowing more about it, would be turning our backs onthem.

COMMISSIONER FOX: That’s always a Concernto legacy service used by seniors and probably firstgeneration ethnic groups, by poor, working class peoplewho are not Lifeline and I would assume -- maybe Fmwrong -- that if the numbers proved out well forVerizon, we would have a study.

THE WITNESS: Actually, I would like toclarify, there is some data that bears on thisproceeding that we do have on demographics that may behelpful to the Board and we include that in ourtestimony.

For example, Verizon is quick to point outthat the incremental cost of adding voice if you have I

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broadband that is what you should look at. And I havevarious issues with bundles verses standalone and that Iwon’t go over, but on the demographic issue based on --

on the FCC data we have about 41 percent of elderlysubscribe to broadband verses 80 percent based on thenew FCC local competition report. So income alsodirectly attracts broadband adoption, the lower theincome, the less likely the broadband adoption. Thelowest income decile is about 35, 36 percent. Thehighest income decile is about 79 percent.

So to the extent that one were, and I don’tthink you should, look at the incremental cost of addingVoIP to your triple play, to your broadband, well, ifyou don’t have broadband, you’re looking at the fullcost. So that is relevant demographic information.

Thank you.HEARING EXAMINER ASSELTA: Any other

questions? Anybody? Okay.This concludes the evidentiary portion.I agree with the parties offer of the filing

of the initial briefs on October 2nd and then the replybriefs by November 1st. (think we are all in agreementwith that.

MR. WHITE: We need to move all the exhibitsinto evidence.

Direct Baldwin Page 179

HEARING EXAMINER ASSELTA: Aaarns

that, I encourage everyone to keep communicating andlet’s come to some kind of resolution in the very nearfuture.

MR. SMITH: Commissioner, we definitely planon communicating. But the Board move all the exhibitsin, we still would like to based upon the commentearlier related to cost object to the admission ofExhibit 6B which is Verizon Communications, Inc., FormI 0-G, and the investor report which both are for anaffiliate which is Verizon Communications) Inc., notaparty to this proceeding.

COMMISSIONER FOX: Mr. Chairman, can I?I looked at the order, it’s not going to do

costs. It says no cost study. It doesn’t say nodiscussion of costs.

MR. SMITH: Another order said no costs.COMMISSIONER FOX: We have the order here.

I read it to read no cost studies. It didn’t say nodiscussion of costs.

MR. SMITH: Basically, this a rejection onthe affiliate aspect. This is Verizon Communications,Inc., is an affiliate.

HEARING EXAMINER ASSELTAZ Ithi,ki~

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MR. SMITH: Be allowed in.HEARING EXAMINER ASSEL,TA: ~.

and we’ll move forward from there.MR. SMITH: Thank you.HEARING EXAMINER ASSELTA: Th.akyco,

everybody, for coming.(Verizon, CenturyLink, and Rate Counsel, all

exhibits moved into evidence.)(Proceedings concluded at 2:56 p.m.)

I, Lorin Thompson, a Notary Public and

Shorthand Reporter of th. stat. of New Jersey, do hereby

certify that prior to the commencement of the

examination PAVL B. ‘ThSXNGTON, laRK 0. liMPER, SUSAfl H.

DAlflflI, were êily sworn to testify the truth, the whole

truth and nothing but the truth.

I DO FURThER CERTIFY that the foregoing is a

true and accurate transcript Of the testimony as taken

stenogflphicajly by and before me at the time, place and

on the date hereinbefore set forth.

I DO PURThER cERTIFY that I em neither a

relative nor enployee nor attorney nor counsel of any of

the parties to this action, and that I a neither a

relative nor employee of such attorney or counsel, and

that I am not financially interested in the action.

20

2t, o~ stew arsey23 Ky commission e ires July 26, 2016

1819

24Dated: July 17, 2012

Page 178 Dire ci - Baldwin

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(45) Pages 178- 181~i in—I —Seript~ JHBUEHRER & ASSOCIATES


0

01950(1)170: 14

02110(I)29:14

04302(1)74:18

06(1)126:15

07(I)126:2

09 (3)83:20;86:20;8$:6

I

I (19)34:21;41: 15;48:7,7;64:1 3;65:2;80:24,25;83:18,21 ;96:5;lO5:24;I08:24;I I9:8,12;120:7;139:20;144:23; 148:9

1.6 (3)45: 17;46:12;59:24

1.861 (I)44:15

10(9)87:9;91:14;I 10:23,24;130:22;172:3;174: IS;175: 1,7

100(2)I 19:2;172:16

10-C (I)179: 10

10-K (2)40:10,16

lOKs (1)4 1:22

I0-Q (12)40:1 I,18;43:12;49:6,12;60:7,2 I;61 :20;(32: IS; 155: 19,24;156:20

Il(S)

12(12)58: (;62:4;65:I7;66:6;105:24;108:24;I 11:16;120:16;122:3;I 30:22;13 I:14;172:19

120(I)76:7

121 (1)174:2

123(1)174:5

125 (2)29: 13,2 I

129(I)44:17

13(17)63:9;64: 13;65:4;73: 16;74:]5;91:8;105: 13,23,23;106:4,8;Ill :25;172:3,14,I8,2o;174:24

13,000 (1)88:7

130(1)49:22

131 (I)174:8

13th (I)123:25

14(7)38:9;73:20;92:22;105:23,24; 13 I: 15,16

14,542 (I)150:11

14-month (I)131:21

14th (I)113:20

15(10)62: 19,23;73:21;88:9;95: 16; 120: 12;121: Il;161: 18, 18; 172: 10

16(7)65:3;132:12; 133 :4;(37:7; 139: I2;1 61:18;174:5

166(1)99:2

17(3)(21: 12;134:3; 170:13

179(1)147:20

1800(l)164:3

186(2)173:3,24

19(4)

2

2(13)34:21 ;38:9;62: (9,22;71:1 I;76:5;83:21;I01:13,13;120:7,14;121:25;174:14

2,00(1)87:5

2:56 (1)180:9

20 (4)38:9;43: I5;l 30:22;161:8

200 (1)102:5

2000 (2)57:23; 146:24

2003 (4)41:17;43:3,9;63:I0

2005 (3)63 : 12 ;79: (3, (8

2006(2)115:9,21

2008(10)30: 13;37:5;47: 12;(20:3; (35:4, 16; 136:24;152: 12,2 1; 159:22

2009 (7)47:13;67:3;88:2;134:23,25; 135: 16;136:24

2010 (5)47:13;I I0:4;134:21,25;136:23

2011(23)47:1 3;86:20;87:4,1 3,19;88:3,25;I0I :4;II I:12,13,15;I 13:7;123:6;I 32:12,22;134:12,25;135:7;136:23;139:6;148:2; 149: 15;175:5

2011-2012(1)74:3

2012 (10)41:2;43:13;60:19;

24 (3)120: 12; 130:5,9

25 (5)120:1 l;139:5;(47:14;148:3;150:12

254 (2)65:13 ;70: 12

26(4)43: 16; 120: 14;130:5,9

27 (4)43: 15;44:20;47:25;120:1

28(3)47:25;93: 14;J42:4

28,000(1)150:3

28,723 (1)149:16

29 (4)45: 16;92:24;93:3,24

2nd (1)178:21

3(10)40:2;64: 13;71: 12;83:21; I0I:17;138:14,15,17,20,22

3,000s (1)87:4

3.852 (1)44:11

30 (3)93:3,24; 120:16

30th (3)111:11,13,15

31(1)43:2

32(1)120:18

33 (3)103 : 1,3;12 I: 12

34 (2)13 I: 11,17

35 (3)121: 16,17;178:9

36 (2)

4.103(1)44:4

41 (1)178:4

411 (4)91:16;92:l,1 I;175:22

42-21.17 (1)65:11

43 (2)41:16;42:2

44(1)42:8

44,578 (1)l48:1

45(1)42:4

46 (2)42:5;( 12:8

47(1)80:11

477 (II)99:25; 101:4, 10, 12;(03: 13,17,2 I;104:23;132:12,22; 15 1:22

48:2-21.18 (1)65:12

48:2-21.19(1)65:12

48:l-21,Ia (I)66:12

49 (2)I 12:9;l 13:3

5 (9)34:21;65:2;102:I;I l0:23,23;171:21,25;(73: 16, 16

5,000 (1)86:24

5,00(1)87:5

50(1)41:15

51(3)I 12:I8;1 13:3,3

54 (2)

July 17, 2012‘i73J~g3:2o7 i00:20;I0l:l;I05:13, 74:6,15;I00:20;l0l:l; 120:20;I78:9 —.

~ 121:25;148;19;172:3,12 23 II1:17;113:20;123:25 37(1)113(I) 1934 (2) 21 (8) 168:12

$1 172:18 65:13,19 156:2,12;166:4,7; 38(3)115:21 115(2) 1990(1) 17I:2,6;172:5,7 43:15;45:I6;121:2

$1.2 (1) 173:3,24 147:4 22(13) 38,000 (1)75:24 1994(1) 135:20,24;136:8; 88:7

$10(1) 126:20 147:13,23;152:23;108:18 1998 (1) 156:22;166:4,737I:2,7; 4

$168 (1) (46:18 172:5,780:2 1999(1) 22.6(5) 4(6)

$476 (I) 125:16 45:18;46:12;58:3; 40:2;83:7;I08:21;81:7 IA(l) 59:24;61:8 143:23;144:1;174:3

$64(1) 101:17 23(3) 4,000s(1)54:7 Ist(1) 156:II;16I:I;I72:23 87:6

$8(1) 178:2254:9

3

5

NI in - ti—Sc ripU!!’ JHBUEHRER & ASSOCIATES (182) $1 -54

BPLJ INVESTIGATION RE; ILEC SERVICES

____________________ July 17, 2012

89:18;157:lI SB(2) 159:6 affihiate(6) 59:16;7l:I8;l27:1255(1) 73:8;80:l4 actions (1) 50:4,I8;54:$;179:l I, alternate (2)

89:20 8c(4) 130:21 22,23 157:21;159:2255,580 (1) 66: l3;73:9;80:20,24 actual (2) affiliates (tO) alternative (3)

152:17 60:8;129:4 42:3,14,16,20;43:l I; l58:l,13;163:20561,170 (I) 9 actually (21) 53:l0,18;54:15,18;93:l0 although (I)

99:13 — 45:14,15;59:3;62:4, affordable(2) 166:1158(I) 9(3) I 8;7l:24;87:3;91:21,24; 144:24;145:6 always (2)

156:15 121:2;130:22;l44:23 92:l3,lS;93:6,l3;97:Ig; afternoon (1) 61:13;177:135A (I) 90(2) I 12:14,15;1 13:7;I 15:9, 122:10 ambiguous (1)

81:12 67:23;139:19 15;I65:22;177:19 again (31) 50:794(I) add (7) 34:10;36:12;41:l0,19; among(I)

6 126:18 44:6,ll;88:I0;l14:12; 45:18;47:19;52:14; 116:1596(2) 120:17;131:22;176:12 53:15;58:I;62:4;70:18, amortization (1)

6(13) 172:6,10 added(2) 21;73:2;84:19;89:5; 45:1440:8,l2;l0l:l,13,l4, 99(2) 104:I6;171:4 99:12;I03:2;l04:18,I9; amoun((3)17;l19:8,13;120:lS; 125:17,19 addlng(4) l07:I;108:6;109:16; 81:11;141:20;l60:6122:3;147:14;I55:l8; 88:1;108:l;l77:25; 122:22;126:12;127:13; analysis (21)172:10 A 178:12 136:3;I50:l9;153:I7; 35:4,I4,16,l9;36:13,

6,000(1) addition (I) 156:21 ;1 58:8,20 L9,20;37:2;38:2l;39:l4;87:15 ability (4) 144:15 age (5) 58:8;70:I9;94:I;I06:24;

64(1) 39:5;108:12;115:13; addltlonal(3) 91:16,20;92:1,3,4 107:l2,l5;109:16,18;76:3 161:6 39:5,6;162:7 ago(8) l30:l6;l4h25;I62:4

65(I) able (15) additions (3) 48: I0;l I 5:8,9;124:4; analysts (1)91:18 35:25;36:I7,22;37:ll; 84:6;I20:8;l2l:23 I56:1;l69:I0,17;172:7 61:18

6A(2) 49:I3;69:2;7I:12; address(s) agree(8) analyze(2)40:9;41:I5 I09:l3,22,25;134:25; 29:l3,18,21;73:12; 138:I;I53:9;154:9,II, 111:21,22

68(I) 164:10;I68:lO;17l:I6; 79:14;83:1;15I:8;J73:6 19;I55:12;l66:I I; annual (19)179:9 177:7 addressed (4) 178:20 43:5,7;45:I0;46:9;

6C (1) above (3) 35:1 I,l3;79: l7;90:5 agreeing (1) 47:1 ;50:12,13;58:9,16;57:23 68:S,8;108:13 addressing (2) 99:7 70:l;I07:21;I32:8,I9;

6D(2) acadernic(2) 98:3;I33:l6 agreement(1I) 134:15;135:22;I36:12,155:20,24 144:25;145:I0 adjusted(1) 5I:4;55:19,2I,24,25; I3;l47:I8;l55:I9

accept (2) 160:14 93:9,11 ,16;99:21; anomaly (2)7 76:15,19 adjustment (3) 160:19;178:22 136:1;137:5

acceptable (3) 86: 13;88: 13,25 agreements (6) answered (3)7(6) 72:9,10,12 administrative (I) 56: 12;94:4,5,23,25; 106: l4;140:17,25

100:23,23;139: II; accepting (2) 97:12 95:5 Anthony (I)172:3;174:8,8 77:2;81:l9 admission (1) ahead (5) 72:16

70,000(I) Access (22) 179:8 45:lS;61:16,25;85:23; anticipated (I)166:25 54:8;67:2;73:lS; admit (1) 139:23 72:3

71203(1) 74:10;76: I,4,5;83:7; 44:8 Airwaves (I) anticompetitlve (1)119:2 89:15;90:4,l7;93:19; adopted(1) 74:15 94:11

78(I) 112:20;126:9,lO,ll; 33:11 alleged (2) Antitrust(1)112:11 134:9,T0;135:17;137:6; adoption(2) 117:23;153:8 146:17

79(1) 138:2;143:4 178:7,8 allocate (I) Anymore (2)178:10 according (I) ads(I) 82:14 42:1I;162:11

79,000(I) 138:17 143:18. allocated (2) apologize (4)50:24 accordingly(1) advanced (I) 156:25;157:3 47:19;8l:l5;86:5;

95:6 124:8 allowance (1) 108:258 account (1) advantage (6) 159:20 appealed (1)

107:6 37:8;55: 18,21,24,25; allowed (6) 91:38(12) accurate(4) 56:12 37:6;116:l6;l27:16; appeals(1)

73:5;76:5;92:I0; 123:lS;135:19; adversity (1) 160:3;l80:l,2 90:2496: l5;103:24;120:20; I 74:22;l 75:20 60:23 allude (1) appear (I)130:5;I44:23;172: II, achievable (1) advise (1) 95:9 171:6l6;173:17;l74:14 97:8 171:1 alluded(1) appeared(I)

80(2) across (1) advocacy (1) 123:18 92:23I l2:13;l78:5 94:7 129:7 almost (2) appears (3)

84(2) Act (5) advocate (1) 43:4;54:l7 43:2;87:l l;175:7156:2,11 65:13,l8;70:13;81:l3; 97:9 alone (2) Appellate (4)

BA (2) 158:25 advocating(2) 107:9;109:9 73:15;74:lo;89:l3;74:23;75:12 action (I) 97:lO;127:9 along (3) 90:21

Miii~ WSerip(c~) JHBUEHRER & ASSOCIATES (183)55- Appellate


____________________________________________ ______ July 17, 2012

appendices (1) 45:6;46:13,23;47:7; 178:7 I 32:6;90:6;I06:2; I I7:7,14,15;158:24168:18 49:8;50:8,16;52:l 3,20; August (2) I J7:22;179:2 I bIg (5)

apples (2) 54:21;60:l4;62:3;65:22; 87:14,16 basing (1) 39:25,25;62:8;l07: IS;l17:25;ll8:I 66:l;68:l4,17;69:5,l0, author(1) 85:13 164:13

applied (1) 13;70:7;71:9,I4;72:I,2I, 115:15 basis (18) bigger (I)110:10 25;73:25;SI:18;$2:l,5, authority (1) 45:12;46:2,14;59:2; 112:23

applies (I) I8,20;85:6,22;89:25; 49:23 61:16;86:25;87:l;96:I0; bill (2)90:7 91:2;93:23;95:I5;97:13; available (6) 97:3,4;98:2;108:3,8,9; 137:1,2

applying (2) 98:I519;99:3;103:7,l6, 29:24;43:8;122:6; 127:7,8;143:20;157:19 billed (1)38:I;67:5 20;104:3;105:10,16,19; l55:2l;171:12;173:9 bear(3) 57:20

approach (1) 106:15; 107:16,23; average (8) 63:8;65:9,21 biller (1)124:20 i08:lO;1 I0:20;I 11:1; 58:22;62:14;68:6; bearing (1) 57:13

appropriate (7) 113:12, 14,l7;1 14:15; 86:24,25;137:l,2;I57:l I 98:9 billion (1)33:22;34:l;47:4;93:7; I 16:I,17;1l7:9,15; aware (7) bears (1) 75:2497:5;98:5;153:25 118:3,7;122:8;I36:IQ; 79:14;91:3,5;lll:5; 177:20 bills(2)

approve (1) 140:24;145:23;149:4,7; 139:24;146:10;I47:6 became (1) 57:11,2294:20 152:22,24;153:9;154:9, away (2) 91:22 bit (3)

approved(2) 15;155:15;lsS:l0; 162:25;165:19 become(I) 89:2;145:25;I75:1230:13;94:17 159:13;I60:22;162:lO, 150:7 Bl(I)

approving (1) 13; 166: 18;169:25; B becoming (1) 149:1395:8 170:4,1 I;173:4,20,22; 56:10 black(2)

approximately (3) I76:l4,l6,I8;178:l7; B! (2) began (2) 62:7,849:22;l02:12;139:I9 179:l,24;180:2,5 148:21;149:I4 102:l2;I23:4 blackened (1)

April (I) assert (1) back (27) begin (2) 62:887:9 47:5 47:18;49:12;51:7; 74:21;109:8 blackout(1)

area (4) assessed (2) 52:23;72: 14;83: is; beginning (3) 167:133:25;67:l6;I20:17, 75:7;8I:12 88:I0;96:20;I00:5; 106:16;1 14:3;122:4 blank (I)17 assessment (6) 114:2;l34:19;135:21; begins (4) 42:8

areas (2) 38:24;73:9;74:24; 136:3;137:7;138:25; 171:25;172:19;l74:2, Board (32)53:19;125:12 75:4,6,9 l39:ll;144:I6;155:l8; S 30:13,16;37:4,24;

arena (2) assessments (5) 159:3,1 I,13;163:5,6,6, behalf(1) 39:I8;47:2;49:19;54:6;97:11,12 39:4;54:5;73:7;74:2,6 16,17;17l:19 127:23 61:4;63:I0,12;64:7;

argument (I) asset (I) back-and-forth (1) behind (I) 67:7;68:6;69:12;71:6;71:2 167:6 114:22 132:10 75:9;77:13;90:20;98:I3.

argumentative (1) assIst (2) backbone (3) belief (4) 99:5;104:13;I 15:2;91:1 31:5;129:20 48:6,8,11 164:18,24;166:22; 139:22,24;153:24;

arguments (I) assistance (11) background (1) 174:22 160:14;166:20;176: 13;146:8 32:18;91:I0;164:19; 154:6 below(3) 177:4,22;179:6

Arlington (1) 168:14;16,I8;l69:9,21; backs (1) 66:25;67:3;I72:23 Board’s (3)170:13 176:20,24;l77:2 177:11 BENEDEIC (52) 53: I0;94: l;l20:3

around (3) assisted (1) backup (1) 41 :8;71 :20;72:10; body (1)30:20;32:I 1;149:23 123:10 47:10 93:2;IlS:8;l19:4;122:5; 97:17

ARPIJ (I) associated (4) bailiwick (1) 124:20; 128:19;! 32:14, Bonsick (1)62:12 54:7;82:lI;I49:5; 94:18 18;133:13,18;134:4,8, 122:21

arrangement (I) 157:1 balance (I) 14,1 7;136:7,13; 140:12, bonus (4)56:15 assume (5) 61:21 i6;142:5,7;143:5; 33:4;34:5,$,15

article(S) 51:4;55:2;146:22; Baldwin (8) 144:10;145:19;147:7, Bosely(5)73:19;74:14;92:23; I75:l9;177:16 35:19;36:13;72:5,g; 21;148:15;149:18; 72:5,9;173:6,ll,1493:l,4;94:9,14;164:14 assumption(2) 170:16;173:9,I1;I74:24 150:2,1O;152:15,20; Boston(2)

articulated(1) 68:15;173:10 base(1) 153:IJ;154:1i,16,24; 29:13,21153:12 AT&T (4) 127:18 155:7,9,l2,23;158:2,5,8; both (22)

ascertain (I) 76:7,11,13,15 based (22) 160:16;167:ll,17; 36:22;55:17;59:20;54:22 ATC (1) 53:10;55:17;58:9,I0; 169:14,18;170:2,7 69:23;71:13;79:3;84:6,

a-s-i-n-g-t-o-n (1) 81:2 61:3;64:7;68:lS;73:7; benefit (3) 19;89:s,7;I02:5,21;29:20 attachment (2) 78:3,21;79:l8;82:15; 174:l6,l7;176:13 108:4;! 16:23;128:I3;

aspect(2) 100:19,19 83:I;87:II;109:16; besides(1) I39:15;i4I:2,324~125:13;179:22 attempted (1) 154:2,3;159:17;l7I:17; 93:20 153:2;J68:I5;l79:lo

aspects(S) 97:19 178:3,5;l79:7 best(S) bottom (Ii)125:1 I;126:l4;127:l; attorney (2) basic (11) 34:14;I I6:14;l37:4; 43:16;47:25;62:9;129:22;166:12 144:12;168:2 38:l8;I06: 12,23; I74:22;179:25 63:2;91:23;I09:7;

ASSELTA (106) attorneys (1) 1 14:9;142:18;I 59:7,9; better (3) I 33:12,25;137:12;33:9,13,18;34:2,13,17; 31:7 160:13;168:7,ll,I3 50:16;89:l;135:19 i39:18;154:5;156:1236:11 ;40: I 5;42: 11,19; attracts (I) basically(S) beyond (4) box (1)

Mm-U-Script® JHBUEHRER & ASSOCIATES (184) appendices -box

BPU INVESTIGATION RE; ILEC SERVICES— __________________ _________________ _________________ July 17,2012

84:11 20,21;l38:19,23,25; capability(2) 123:16;128:23;129:9; cholce(1)boy (3) 141.6,148.1,4,149.11, 140.21,141.10 130.11,132.1,8,13,20, 145.8

29.19,30.20)32.8 150.l1,13,l51.5,6,9,I3, capacity(2) 23,141,17,147.11,16, choices(1)( BPU (1) 18,152.14,17,153.2, 48.23,23 153.3,157.20,161.4, 146.9

64:24 156:4,5;157:5;171:9,15, capital (2) 174:l5;177:7;l80:7 choose (1)break (3) 1 7;I 72:8; 173:1 58:20;59:4 Centuryt,ink’s (6) 146:4

7) :7;72:2 I; 110:23 businesses (2) capture (1) 130:2;143:1 1,16; choosing (I)breakdown (I) 53:24;151:17 77:24 147:17;155:19;157:15 166:13

46:3 buy(S) captured (3) certain (2) chose (2)breakdowns (I) 55:19;) 17:23;140:4,54 53:17,18;175:17 37:6;143:21 146:5;149:21

133:19 143:20 captures (1) certaInly (13) circuit (2)brief (14) buying (1) 56:18 77:18;86:24;93:15; 78:15,17

69:20;70:S,5,8,9,24; 103:22 care (2) 94:25;95:9; 125:12; cite(S)72:16;82:18,21,23;95:6; buys (I) 90:23;166:21 126:J3;136:14;153:13; 94:2;I00:22;105:I0;I 13:24;153:14;154:l 56:19 Carlton (1) 165:I0;168:1,3;l76:1I 108:24,25

briefing (2) — 146:23 certification (1) cites (1)71:I;170:4 C carrier (5). 126:3 65:18

briefings (2) , 96:6;IOl:18;141:12, CEO (3) citizens (I)99:4,6 CI (3) 13,16 59:16;6l:7,l5 177:5

briefly (1) 171:9,11,11 carriers (3) chain (1) CL-I (I)62:20 cable(19) 48:16,22;70:15 151:1 118:12

briefs (5) 73:9;74:6;75:4,6,7; case (40) chair (I) CL-i (1)70:6;90:20;95:I0; 77:14;78:22;81: 10,12, 32:7;36:6;54:17;67:I, 68:25 118:14178:21,22 13;82:8;127:18;142:14, 2;68:2;69:16;73:15; Chairman (1) CL-3 (1)

bring(2) 22,25;143:6,8,I0;163:12 89:24;90:17,19;93:16, 179:13 118:1669:15;l 17:25 Cablevision (I) 18;94:15,23;109:23; chain (1) CL-4 (I)

bringing(I) 80:8 122:21,24;125:13,17; 118:8 118:18114:23 call (9) 126:1,12,14,15,16; challenging (1) CL-S (I)

broadband (15) 48:7;55:18;78:14,20; 127:25;128:2;129:19, 60:22 118:20I0l:7,17;103:17,2I; 84:17;118:9;137:14; 21;131:7;I32:9;144:6; change(7) CL-6(1)104.19,llI.24,1l2.lI, 163.10,164.2 146.7,154.13,159.12,15, 76.8,121.15,159.1,2, 118.2212,l5,178.l,5,7,8,l3,l4 called (1) 18,167.5,9,173.12 165.16,172.4,21 claIm (4)

broader(1) 48:10 cascs(2) changed (2) 45:21;69:16;136:18;97:18 callIng (I) 120:I;128:5 96:14;103:1 1 161:18

brought (2) 84:10 cash (8) changes (10) claimed (3)91:21;94:8 calls(I4) 34:16;58:7,7,ll,12,18; 38:8;120:7;121:23; 45:9;53:16;54:13

bundle(s) 61:12;l 18:l0;122:19; 59:2;61:22 159:3;160:15,21; claiming(6)116:5;140:2,6,I5,l8, 140:22;141:Il;l59:8,8, catchall(2) 16l:14;l7l:5,20;172:6 47:2;66:21;67:21;19;141:18;164:15 20;160:l,4;168:15,21; 86:13,14 . changing(l) 69:23;117:20,24

bundled (7) 169:2,12 categories (3) 172:19 claims (I)64:24;! 16:4;139:14, came (1) 73:13;17l:13;176:5 characterization (1) 90:325; 140:7;142:16;148:4 33:25 categorize (1) 155:13 clarification (4)

bundles (10) can (76) 84:6 charge(12) 33:10;78:2;148:15;83:24,25;106:22; 34:14;37:2;38:2; categorized (1) 56:16,17,18,21,25; 152:13I 10:16;l 17:23;139:21; 40:13;45:6;46:4,8,9,I8; 78:4 57:9,11,18,19,20,22; clarified (3)142.1,150.20,151.9, 49,8,15,52.22,5317, categonzes (1) 90.4 35.8,43.3,165.15178:2 57:23;59:8;62:20;64:13; 80:16 charges (3) claril~ (5)

burden (2) 68:4;69:8,20;7!:7; category (10) 126:9,I0;172:25 46:l7;78:8;107:25;88:18,22 72:13;75:5;79:20;84:22; 64:1 I;84:9,23;86:l6; charging (1) 150:2;177:20

business (104) 85:3,4,7,! 5,20;86:2 I; 89:8,9, l0;100:2 I ;l 01:7; 68:8 class (1)29.12,17,18,21,35.18, 87.10,88,16,89.12,25, 102.3 chart (6) 177.1519,22,24;36:l,2,8,13,21; 92:9;93: l,5,6;95:8,9; causes (1) 92:12,13;175:7,17,l8, classes (3)37:5,8,12;43:9,22;49:6; 98:6;99:l I;I00:4,16; 150:6 18 124:7;168:19,2050:22,25;5 1:16,20,23; 105:12; 107:25;10$: 14; cell (I) check (20) classification (4)52:4,5,l6,l8,18,25;53:l, l16:l0;120:I0;131:22; 165:1 30:23,24;41:24,25; 79:8;1l5:3;I26:l3;l,4,19,20,20,24;54:l; 136:13;138:9;l40:4,5; center (I) 42:1;49: I 1;S0:24;57:3; 127:555:6,15;57:17;62:20,25; 141:l;144:lI;145:19,21, 98:1 76:13,19,21;77:4;84:8; classifications(1)63:4,11,13,20,22,23,24, 22;l48:13;153:13; Centrex (1) 102:lO;III:lI,l3;123:6, 114:1725,64.3,5,6,9,11,76.14, 154.3,157.14,17, 148.25 25,124.1,152.18 classified (5)16,23;77:21;80:3;83:7, 159:16;l63:6,l7; CenturyLink (31) checkbox (I) 63:12,lS;65: L,6;83:23II,14,l5;119:l;124:6; 164:25;165:12;l67:15; 35:23;40:ll,17;41:5, 84:7 clause(2)133:23;134:10;135:l,7, 168:8;169:l2;170:18; 10;69:4;72:11;118:10; chief(1) 158:14,1717,23,136.1,5,137.2,5, 176.3,179.13 119.1,2,8,12,120.17, 60.23 clear (10)

Miii-U-St’ripI® JHBUEHRER & ASSOCIATES (185) boy - clear


— July 17,2012

57:1 9;63:2 I ;77: 19; Commissioner (SO) compensation (2) 157: 13;1 78:19 context (6)87:24;91:22;l04:3; 42:19;45:3;47:9; 34:18;79:IO conclusion (7) 30:12;38:l;60:25;I 13:21;153:22;175:3; 49:l0;6l:6;67:12;68:21, competition (18) 88:21;105:5,9;i 10:18; 77:17;97:7,8

4 176:7 25;69:8,l I;7l:4;78:8,12, 70:17;74:14;88:9,jO, 1 16:7;144:l 1;158:3 continue (4)clearly (3) 23;79:l,5;l 10:22; 14;89:3,4;94:6,7;j 11:6; conclusions (2) 68:I8;I l5:15;130:12;

94:9;138:8;l66:)3 112:14;113:24;114:3,7, 112:6,9;125:ll;125:14, 36:16;87:10 173:21CLEC (17) 22;1 I5:23;154:20; 21;144:19;174:)9;I18:6 conditions (5) continued (5)

48:3,24;49:5;50:3,10, l55:4,8,l0;158:l I; competitive (43) 94:16,20;95:l 1,12; 62:9;88:2;122:3;14;56:19,22,24;57:I; 162:15;163:4,19,23; 37:I,9;63:12,14,16; 168:4 125:17;174:1673:8;75:l ;80:14;81:16; 164:l5;165:21;166:16; 65:l,7;66:19;67:2t3,22, CONFIDENTIAL (29) contrary (1)I I3:2;l32:3;138:I7 167:l4,24;168:14,25; 24;68:l2;70:l6;83:15, 50:21;Sl:l,12;99:IO, 53:23

CLECs (10) 169:8, I5,20;173: IS; 19,22;84:2,9,12,I8;89:6, 14, 16,22;102:9,14; control (2)48:19;49:22;80:16; 176:19,22,23;I77:13; 8;90:8,8;95:19;115:3; 109:3,6,l0;lI8:I5,19, 119:l5;158:24I 12:7,l0;I 13:2;122:2; 179:5,13,18 125:lO;126:6,13,25; 23;133:13,16;148:17; convene (I)13I:14,25;138:5 Commissioners (7) 127:4;13I:5;150:21; 149:17,20;I50:I,3,7; 72:15

clfck(1) Sl:14;103:19;l13:13; 151:6;157:24;159:4; I72:1I,l3,14;173:25; copies(4)84:11 1l9:7;124:24;133:2; 165:17;166:14;167:22; 174:l;175:4 I19:7;I28:l7;l32:25~

clips (1) 166:20 168:5;169:22,22,23 confirm (I) 133:1794:15 Commissioner’s (I) competitor (6) 63:8 copper (24)

closely (1) 115:2 77: 15,16;84:8,14, IS; conflicts (1) 78: 18;104:24;162:15,123:12 commissions (2) 132:5 98:4 l6,16,17,19,22,25;I63:2

closer (I) 39:1 9;126:3 competitors (9) confusing (3) 6,6,7,13,14,l5,Ig;164:4,164:7 commitments (1) 39:5;56:13;121:3,3,4; 44:8;46:l8;l75:8 8,I0;166:21;167:2,4,g

CNBC (I) 72:16 142:l0,12;145:9;149:24 conjunction (1) copy (1)61:12 common (I) competitor’s (1) 66:18 124:14

code (2) 96:6 145:3 connect (3) core (2)88;17;141:8 Commonwealth (I) compile (2) 102:3;159:5;161:2 44:1 I;104:24

codes (I) 74:17 31: 18;32:6 connection (4) corner (1)133:7 communicate (1) compiling (I) 46:3,6;61 :2;143: 15 132:16

coding(I) 167:3 31:12 connections(2) Corp(2)89:1 communicating (2) complained (1) 101:8,24 41:2,4

coin (1) 179:2,6 (64:20 Consider (4) Corporation (3)68:3 Communication (I) complaint (1) 55: I0;1 31:4; 139:22; 46: 19,20;157:3

collaborated (I) 53:1 166:9 166:13 corrected (3)129:25 Communications (12) complaints (1) consideration (1) 108:24; 136:11,15

collecting (2) 40:25;46:2;65: 13,18; (64:2) 95:24 correction (2)122:23;123:3 70:13;76:2;77:22;gQ:3, completely (I) considered (4) 92:17,21

college (2) 3; 179:9,11,22 116:18 64:8;82:9;134:l6; corrections (12)124:3,4 community (2) compliance(I) 150:21 120:8,22;12l:5,lO,23;

color (I) 166:25; 167:3 38:3 considers (1) 170:l8,19,19,23;l73:23;82:25 comp(2) complied (I) 139:24 174:12,21

colored (I) 34:16; 125:21 70:20 consistent (4) correctly (4)73:11 companies (21) component (1) 69:l9;86:20,22;87:25 66:20;70:l$;136:24;

column (16) 39:25,25;58:l7,17,l7; 139:14 consisting (1) 172:2262:8;102:l;137:8,l2, 73:6,9;74:l;75:7,8,21; comport (1) 119:9 correspond (2)l4;139:l7,20,20;141 :7, 77:l4;78:22;96:6; 47:14 constitute (I) lOl:2;175:2lI0;149:15,19;175:I 7,23, 138:22; 142:14,23,25; composite (I) 37:18 cost (18)25;l76:l 143:6,8,10 45:23 constitutional (I) 58:13,2o;66:25;67:3,

columns (2) company (10) comprised (1) 59:7 3,3;82:l l;l07:1,2,4;l39:12;175:21 48:9;57:21 ;58:l9; 43:21 constraints (1) I08:4;l5&25;177:25;

combination (I) 60:23;61:9;66:17;108:3; concern (3) 130:12 178:l2,l5;179:8,35,I9140:19 119: l;154:22;l64:13 37:10;l76:25;177: 13 consumer (2) costs (17)

Comcast (2) company-driven (I) concerned (2) 43:21;62:12 67:6,13;68:5j9,22,24-77:21;80:2 86:17 37:4;177:10 consumers (1) 69:I;70:4;108:16,lg;

coming (6) company’s (1) concerning (1) 130:14 I l3:19;l57:1,2;l 79:15,30:l5;72:6;84:8,9,17; 158:24 107:18 contacted (4) 16,17,20180:6 company-wide (5) concerns (I) 30:9,1 4;3 1:16; 122:15 Counsel (32)

comment (1) 45: 12;46:14, 15,18; 165:11 contained (I) 40:8, 12;42: 19;65: 16;179:7 157:11 conclude (I) 42:10 66:6;69:6;70:2,3;71:23;

comments (2) comparison (1) 71:24 contend (1) 73:5,8;80:I3,la;85:l7;94:24;175:I (18:1 concluded (I) 130:11 92:16;93:19;94:3,22;

commission (1) compel (2) 180:9 content (I) 109:21;I 15:7;123:5,13,168:6 42:23;91:13 concludes (2) 45:18 22;132:14;l50:5,5;

Miii-U-ScrijWF) JHBUEI-IRER & ASSOCIATES (186) clearly - Counsel

BPU INVESTIGATION RE; 1I2EC SERVICES

July 17,2012166:22;167:16,17; ~85:3,24,24;86:2,4,6,8,1l, 72:4,7;94;16 deleted (1) 166:25170:25;173:6;l8Q:7 12;150:25;l5l:5; days(3) 174:20 device(1)

counsel’s (8) 162:24;l63:9, 13,22; 72:3; 147:1) ;167: I deletions (2) 163:15( 35:9;51:8;94:9; 164:l,19;165:8;166:12, dcal(6) 120:8;121:24 dled(I)

104:12;106:6;114:I6; lS;168:19,19 49:16;74:15;94:20; demand (9) 86:12144:6;154:S customer-driven (2) 95:11 ;97:1 ;126:4 38:1 7,23,24;39: 1,3,6, difference (6)

count(4) 84:23;86:16 dealing(8) l0;146:3;153:4 57:7;103:15;135:l5;67:6;125:l9;138:3; customers (47) 73:11;79:21;$3:7; demographic (4) 148:11;156:l9;171:Io148:1 37:12;39:7;48:l7; 96:5;123:13;124:2; 169:7;177:8;178:3,l5 different(31)

counters (2) 51 :20;53:4;63:I 1,13; 125:24;145: 17 demographics (1) 32:1;34:7;45;23;97:24;98:4 76:14,15,16;77:I,2; deals (3) 177:21 48;12;49:I$;5o:4;52:l I;

counts (2) 78: 17,l9;79:2;83: II; 91 :9;l00:3;126:4 demonstrate (3) 53:23;59:5;64:21,22;l35:l7;148:5 104:2;109:23;131:9,13; dealt(4) 68:4;145:8;146:8 ‘ 86:7;92:3;97:9,lI;

County (I) 132:3,4;139:2,21;)40:9, 63:19;125:5;126:6; demonstrates (2) l00:l6,22;108:l4•164:12 13;141:20,21,23;142:I, 127:13 38:3;131:9 I11:25;116:19,21;

couple (1) 22,24; 144:21 ;145:2; December (7) demonstrating (I) 117:21; 120:1; 127:1,9;65:15 146:8,21;I55:25;161:4; 43:2;33;20;86:20; 142:22 131:14;151:23,24;175:9,

course (4) 162:23;171:1O,15,17; 87:14,19;123:6;175:5 demonstration(3) l2;176:12S0:23;122:18;124:6; 172:9;173:I,2;174:4; declded(Z) 138:12;145:4;153:16 differentlate(1)160:2 177:9 96:17,22 Dennis(1) 139:13

courses (2) customer’s (6) decides (2) 146:23 differently (I)124:2,5 84:l3,l5;163:l,11,ls; 51:22;164:2 dense(l) 44:9

Court(2) 164:9 decile(2) 101:10 difficult(2)90:5;) 19:7 cut (1) 178:9,10 densely (I) 130:19;159:5

courts (I) 36:1 decision (6) 116:23 digit (1)90:21 CV(3) 68:22;89:13;90:3,15; Department(s) 133:6

covered(I) 119:24;123:20,21 91:3;95:3 94:I0,12,18;146:Jo,jI digital(s)51:8 decisions(t) dependingØ) 78:20,20;79:2;l02:l6;

covers(1) D 131:9 33:24 103:18,25;104:5,1741:9 declare(l) depends(2) DIRECT(16)

crazy(1) d)bla(I) 95:19 72:18;104:8 29:16;30:6;33:l6;103:23 119:1 declared (1) depreciation (I) 35:2;40:2;67:6;Ioo:25;

credibility (2) DA (21) 157:24 45:14 104:1 I;l 19:4,15;95:3;98:7 64:18;74:12;92:4; declined (1) deregulated (1) 122:l2;l29:23;I56:22,

criteria (21) 120:I5;157:24;159:$,8, 109:12 127:17 24;157:I;170:1634:22;35: I ;37: 13,18, 19,25; 160:4,15; 169:24; declining (I) deregulation (2) direction (1)23;38:I,4,22;53:14; 170:6;172:I,2;174:25; 109:14 168:10,11 102:681 :23;98: 14; 143:24; 176:6,8,9; 177:6,9 decrease (2) describe (I) directly (6)144:8,16;145:l,ll; dark(1) 39:1;109;15 62:20 31:15;45:20;54:12;146:13,14;154:7,18; 48:22 dedicated (1) description (3) 95:2;107:3;17$:7161:21 DAS (1) 129:11 44:23;47:24;48:24 Director (4)

cross (7) 81:2 deem (1) designated (1) 29:11,22; 118:24;71:23;146:3;170:3,8; data(39) 153:25 37:22 119:18173:9,13,14 31:3,9,ll,12,I8;32:4 deemed(4) designation(2) directory(1o)

cross-examination (8) 83:9;87:l I,25;91:25; l51:6;159:4;167:21, 51:13;149:2 91:9;l20:14;168:14,29:25;30:l;33:23; 92:1,13;l 13:1,5,6; 21 designed (I) 16,18;169:9,2I;176:lg34:I;98:6;102:24;l22:7, 122:23;123:l,3;129:25; deferred (2) 97:7 24;177:29 130:l;132:7,19;135:23, 34:16;114:4 detail(1) disconnect(2)

cross-marketing (3) 24;136:25;139:I; define (4) 94:2 86:15,1893:9,11,16 140:10;142:I0,13; 62:24;85:16;140:I8; details (I) discovered (1)

curious (I) 144:20;149:20;l51:23; 145:19 60:16 137:5102:23 153:1 7;i 54:17; 175:8, defines (2) determination (4) discovery (7)

current (1) 20;176:13;177:20;178:4 43:18;146:I 1 35:24;94: 13;99:7; 31:25;42:23;46:10;138:24 date (5) definitely (2) 145:14 85:I8;99:I;123:23;

currently(s) 30:20;III:9,13,13; 127:24;179:5 determine(4) 124:1651:17,21 ;68:8;76: 15; 123:24 definition (3) 39: 13;99:6;l45:6; discretionary (3)163:3 dated (3) 66:8;109:15;152;I 161:6 35:22;8l:25;172:24

Curriculum (I) 43:2;74: 15; 175:5 definitions (2> determined (4) discuss (2)124:15 Dave(1) 44:21;ISl:24 67:14;79:a;135:13; 161:1,8

customer (39) 122:21 degree (1) 171:14 discussed (3)51:16,22;52:7,16,17; David (1) 124:8 determines (2) 77:I0;l72:7;174:2553:4,4,6;56:20;57:12,17, 147:2 delegated (I) 36:25;144:21 discussing (1)21 ;76:23,24;84:5,7,17; day (3) 31:17 devastated (1) j 67:7

Miti-t-Script~ JHBUEHRER & ASSOCIATES (187) counsel’s - discussing

BPLJ INVESTIGATION RE; ILEC SERVICES

______________ July 17,2012

discussion (7) down (15) 116:23 else (2) errata (2)63:7;65:25;105:21; 76:5;87:9;89:2;10I:9, EBITDA (13) 59:17;l76:16 171:4,11123:15;175:6;179:J6,20 17;) 10:1,2;I33:7,22; 45:13,17;58:3,I0,22, Embarq (2) erroneous (1)

( dissatisfied (I) 136:16,2I,22;139:)s; 24;59:9,21;60:6;61:lO, I 18:25;126:17 108:25165:8 168:16;174:I8 14;156:17,20 emergency (I) especially (I)distance (10) dozen (I) economic (17) 167:9 38:6

140:1,8,11,14,22; 31:8 38:20;97:6;130:2, 13; empirical (1) essential (I)14l:3,II,13,24;142:j8 Dr(5) I44:24;145:6,J3,16,17, 176:11 94:25

distinction (1) 128:3,4,2 I;129:18; I 9;146:2,4,l8;147:3; employed (I) essentially (8)117:24 130:2 153:23,24;154:6 119:19 32:23;45:8;78:s;

distinctions (2) draft (2) Economically (1) employee(I) 86:13;127:l4,l7;130:2;64:9;67:8 32:17;123:8 116:22 147:10 138:6

dIstinguish (1) drafting (6) economics (4) enables (1) establish (2)83:13 31:8,10;32:12,15; 116:19;124:3,5,8 82:16 54:24;88:19

distorts (1) 123:10,12 economist (2) encourage (1) established (2)94:5 drafts (2) 145:20;154:12 179:2 60:I0;68:6

distribute (1) 32:19,21 Edgar (I) end (18) establIshing (1)40:14 drew(I) 43:8 41:17;51:1;57:jj; 125:5

distributed (3) 64:9 editing (1) 90:3;99:14;l0l:7;l02:4, establishment (I)126:7;170:25;l71:4 Drive (I) 31:10 13,14;105:23;109:9,10; 97:14

divided (I) 119:2 edition (3) 1 13:7;I64:8;172:I,2,17; estimate (2)149:20 driven (2) 146:18,24;l47:4 174:9 32:5;39:l I

Division (2) 84:12; 166:14 edits (3) endIng (1) ETCs (2)73: I5;74: 10 drop (2) 32:20,22;174: II 110:4 126:5,6

divisioned (I) 162:25,25 educational (1) ends (1) Ethernet (I)78:16 dropped (2) 123:18 99:23 128:24

divulging (I) 136:2; 162:24 effect(S) engaged (1) ethnic (I)17 1:8 drops (I) 33:23;38:22;95:12,12; 123:3 177:15

docket (7) 162:24 173:10 enhance (I) evaluate (1)30:2l;74: IS; 325:20; due (1) effectively (1) 144:15 97:6126:3,18,I8;165:14 62:15 115:13 enough (I) evaluated (2)

dockets(1) duly(3) effects (2) 41:12 38:22;l66:$128:13 29:14; I 19:3;170:15 94:6,11 ensure (I) evaluating (1)

document(29) during(7) effort(1) 58:13 131:441:14,1 6;43:2,12; 31:21; 122:18,20; 154:4 enter (1) evaluation (I)46:7;5l:1l;60:I,l7; 131:20;136:4,20;160:2 eight(I) 94:4 55:2261 :23;62:5,7;73: II; 167:3 entered (3) evaluations (2)74:8;77:17;84:4;85:8, £ Either (6) 67:16;l35:2;159:22 35:10;39:2014,15,17,21 ;89:24; 55:1;86:l I ;88: 14; enterprise (6) even (14)90:I0;91:22;92:17,19; earlier(IO) 117:4;135:l5;158:25 39:21,24;44:l0,13,22; 37:7;49:2;84:21;95:7;156:2l;170:25;l71:7; 37:25;109:I I;l 10:19; elaborating(I) 328:24 99:6;108:3;109:I3,24,175:3 1l3:6;I50:15;155:20, 71:25 entire(3) 25;113:5,8;Ilo:l4;

documents (II) 25;169:5;175:6;179:8 elastic (I) 32:6;72:4;I 11:23 l63:2;I68:lo40:7,9,20,2l;49:15; early (I) 154:23 entirety (1) event (6)66:6;73:23;80:33;92:18; 70:3 elasticity (19) 173:19 37:l;157:25;158:14,93:18;155:25 earn (I) 36:25;38:20,23,24; entitled (3) I7;l59:6;I6o:14

dollar (1) 108:13 39:3,3,4,7,9,10;106:l I; 146:17;153:24; 171:9 events (2)108:18 earned (4) 146:3;l52:2;153:13,l5, entity (4) 158:23,23

dollars (1) 59:4;66:l7;82:I5; l6;154:1;155:I,6 49:7;55:7;130:20; everybody (3)43:24 107:6 Elderly(3) 157:15 51:3;I40:6;38o:6

Dominate (1) earning (1) 176:7,9; 178:4 entry (5) everybody’s (1)74: I 58:19 electric (1) 77:21 ;80:8,2 I ;8 3:8,20 179:25

done (18) earnings (9) 58:17 environment (2) everyone (4)39: l9;71:13;72: 13; 41:2;45:l3;57:24; electricity(l) 56:23;57:13 42:6;51:6;99:19;179:295:1I;106:19;Il6:9; 58:12,19;59:l7;6o:l8; 167:1 equate(1) evidence(11)II8:6;135:14;136:24; 61:12,15 element(1) 139:21 81:21;127:19,20;141:25;152:9;153:l3, ease(1) 56:15 equipment(2) 144:18;145:2;l54:22~20;l55:l;l62:8;171:5; 324:24 elements(I) 104:20;105:2 167:l8;169:4;176:11;176:15,17 easier (2) 56:) equity (1) 178:25;I8o:g

door (1) 45:1 6;62:24 eliminate (1) 126:6 evidentiary (4)98:11 easily (1) 167:20 equivalent (7) 90:19;i 14:17,20;

double-check (1) 49:11 eliminated (1) 101:2 l,22,23;133: Ii; 178:19170:7 eastern (1) 162:21 135:7;138:8;141:8 exact (I)

Miii-ti-Sctip~® JHBUEHRER & ASSOCIATES (188) discussion - exact


____________________ ____________________ July 17, 2012

30:20 j 139:12 68:1 FCC’s (2) I l7:19;160:24exactly (8) excused (2) express (I) 112:5,11 finish (1)

30:22;32: 15;39:23; 162: 13;170: 10 156:20 feasible (1) 72:1975:16;l0l:2;158:22; executive (1) extended (1) 97:7 finished (3)167:l5;l76:25 94:2 43:10 features(4) 36:4;95:21;174:12

exam (2) exempt (2) extent (7) 157:17,19; 172:24,25 Ff08 (33)55:23,24 96:12,15 33:20;38:3;7I :21; February (1) 62:9,I5;7&12,I3,13,

EXAMINATION (5) exempts (1) 153:11 ;163:3; 165:7; 100:25 16,I9,20,20;79:2;8j :21;29:l5;114:I;II6:2; 97:17 178:11 federal (7) 98:25;99:13;lOO:3;I l9:4;170: 16 exercise (7) Eyeball (1) 57: 19,20,21;70: 14; I02:16;103:IO,l7,22,22,

examine (I) 144:25;145:5,lO; 87:1 126:3,7;129: 12 25;104: 1,1,5,17,22,23;54:18 152:I0,25;l53:5,l0 feel (2) 106:20;108:l,4;163:5,

examined (I) Exhibit (56) F 146:6;167:8 24;164:4,681:24 40:8, 12;4 I :7,9;65:9, feeling (I) first (25)

EXAMINER (105) 17;66:6;70:I2;73:5,6,Il, F-lI (1) 165:5 3I:3,14;33:l0;41:l;33:9,13,18;34:2,I3,l7; 14,16,20,21;74:23; 42:4 fellow(I) 43:13;52:I6;59:9;60:I9;36:1I;40:15;42:II;45:6; 75:12;77:I0;80:14,24; facilitate(1) 166:20 71:l;82:7;83:7,9;93:7;46: l3,23;47:7;49:8; SI :9;82:24;83:3,21; 138:22 few (7) 96:20;I00:15;l02:3;50:8,16;52:I3,20;54:21; 89:1 I;91:8,12;92:22,22; facilities (7) 40:13;74:I;87:5; 120:3,I0;125:4;132:9;60:14;62:3;65:22;66:l; 95:16,l6;99:Il;I00:4; 48:8,I6;55:17;132:4; 108:2;l70:23;l72:7; 143:l0;160:20;166:9;68:I4,I7;69:5,I0,I3; 132:7,1 l,12;133:4; 138:9,9;162:22 173:23 175:23;l77:1470:7;71:9,14;72:I,21,25; 134:3;137:7;139:1l,12; facility(2) fewer (3) fiscal (1)73:25;8I:l8;82:I,5,I8, 147:14;I48:9,17;150:6; 127:18;163:2 56:Ii,ii;88:I 125:1820;85:6,22;89:25;9 1:2; 155:1 8,20;1 57:12,13; fact (23) fiber (7) fit (2)93:23;95:15;97:I3; I71:1,3;173:25;I74:I, 32:24;46:24;54:5,13; 48:22;l0l:7;104:23; 48:24;162:1798:15,19;99:3;103:7,16, 24;175:4;179:9 68:2,2,19;69:I,II;76:25; I63:9,11;164:7,8 five (10)20;104:3;l05:L0,l6,I9; exhibits(l0) 89:9;93:20;94:6;96:13; fifty(1) 63:Il;64:3,5;81:24;l06:I5;107:16,23; 73:4;119:8,12,14; 97:19;109:7;135:22; 98:12 87:17;133:6;162:6;108:l0;lI0:20;1I1:l; 120:6,7;132:6;178:24; l36:3,21;l39:l4;l64:II, flfty-four(2) 169:10,17;l75:24113: 12,l4,17;I 14:15; 179:6;I80:8 21;176:I0 124:18,19 flve-sx-cne-one-sevcn.h (1)116:I,17;l17:9,l5; exist(1) factor(I) figures(1) 102:13

C ll8:3,7;l22:8;136:l0; 165:18 131:3 130:25 flexibillty(2)140:24;145:23; 149:4,7; existing (I) facts (3) figuring (1) 115:8,20152:22,24;153:9;154:9, 77:1 I 16:13;145:7;146:5 72:6 flow (4)15;155:15;158:I0; exogenous(6) factual(I) file(4) 58:7,l1,l8;59:2159:13;l60:22;162:I0, l57:25;158:14,17,23; 130:16 31:2;41:22;43:7;168:4 Ilows(2)l3;l66:l$;169:25; I59:5;160:14 failed (1) IlIed (16) 58:I2;61:22170:4,11; 173:4,20,22; expect (2) 45:22 30:6;33: II ;43:6; FM (1)176:14,16,18;l78:17; 54:3;71:12 Fair(4) 45:1I;47:l;58:16;6l:4; 147:2179:1,24;180:2,5 expended (1) 41:12;47:8;l 16:17; l00:25;I22:12;132:8,12, focus (3)

example (8) 32:6 161:23 20,22;155:19;168:12; 125:15;138:21;175:1559:5;79:20;87: 13; expenses (9) fairly (I) 171:20 focused (3)88:5;92:2;115:12; 58:7;59:25;66:18; 87:11 files (1) 96:9,iI;125:l4138:14;177:24 109:12,14;Il0:2;156.23, fairness(2) 81:9 folks(I)

exceeds(1) 23;157:I 93:21;94:22 filing(S) 61:1386:24 experience (2) faIl (2) 32:1 3;42: lO;1 27:22; follow (2)

except(1) 123:l8;159:17 30:lI;122:21 128:23;178:20 42:24;61:l3167:14 expert (6) familIar (11) final (2) following (3)

exception (2) 68:I5;116:9,12;130:3; 39:21;49:14;56:16; 35:1l;l23:4 92:9;107:19;127:387:13,15 I53:23;154:21 83:3;95:22;lOI:I0; finally (4) follows (3)

exchange (13) expertise(I) l20:2;l46:l6,19,20,22 79:7;121:I5,22;l74:7 29:l5;i 19:3;170:1562:25;66:16;89:14,l5; 118:4 far(6) finance(I) fuotnote(2)93:l7;96:l8;98:2,4; Explain (IS) 40:L9;53:13;72:18; 124:5 173:3,24106:23;127:2I;149:21, 33:18;42:6;45:22; 133:5;159:4,13 financial (7) footprint (1)25;159:7 75:5;84:3;85:3,12; fast(1) 33:21,21;40:l0,16; 168:12

exchange-by-exchange (3) 89:25;I06:S; 108:11; 103:23 46:3;54: 18;60:24 forbearance (1)96: 10;97:3;127:7 I 14:24;135:1O;148:l I, favor (1) find (6) 128:24

exchanges (4) 13,14 96:4 61:20,21.22;l03:l5; forecast (1)127:2,4,14,16 explained(I) FCC(17) 171:16,22 38:17

ex-commissioner (1) 38:1 79:7;94: 13,18;IO0: I; finding (1) Forget (1)116:14 explanations(1) IIl:5;1I2:l,9,I3;l13:I, 145:3 50:13

Excuse (4) 46:5 S;128:25;I29:2,8; fine (6) form (7)Il1:17;120:lI;l34:6; explore (I) 132:15;159:l;178:4,6 34:20;72:l7,23;91:1; 34:l7;99:25,25;

Min-U-ScripIl~) JHBUEHRER & ASSOCIATES (189) exactly - form

BPU INVESTIGATION RE; IL,EC SERVICESJuly 17, 2012

l0I:l0;157:21;l72:16; I14:24;171:l3;173:5; l05:l8;l22:I0;l38:14; handing(2) I75:2;176:14,16,lg;179:9 174:18 I64:12;I66:17;157:14 40:7;65:22 l78:l7;179:l,24;I80:2,5

former (2) future (I) government (1) handout (1) hearings (1)52:I0;55:7 179:4 39:22 59:16 72:15

forth (I) FXXL (I) governments (I) happened (2) held (2)98:24 149:1 40:1 65:8;146:6 65:25;105:21

roriy-rour-nve-sevcaly-eigIu(I) FY (I) Governor (I) happenIng (2) Hello (1)148:23 74:3 72:16 61:13;146:20 122:11

Forty-three (I) grade (4) happens (3) help (4)41:20 0 l0l:20,22,22;133:ll 107:I2,14;158:25 47:20;l01:1l;112:2;

forward (4) grand (2) happenstance (1) 165:1034:3,19;155:16;I80:3 gain(1) 175:16,19 160:18 helpful(S)

forward-looking (1) 168:10 grandfathered (1) happy (2) 173:16,16;) 77:2259:2 gained (2) 77:1 69:21;70:l0 helping (I)

foundation (3) 88:7; 136:20 grant (1) hard (1) 31:2345:9;47:22;54:l I gas (1) 47:7 128:7 helps (2)

foundational (1) 58:17 granted (I) harm (2) 47:22;131:747:19 gave(2) 127:4 130:13;162:2 hlde(1)

four(17) 41:5;114:4 grants (1) harms (3) 69:2435:16,21;38:10,14,21; general(6) 115:3 l30:19;16l:19;174:16 hiding(1)40:6,9;63:l3,24;65:6; 63:19,21;64:10;94:3; graph (1) Harper (25) 55:981:23;127:12;132:9; l57:2;159:17 91:23 72:20;118:9,10,12,14, High(s)155:24; 175:21; 176:4,4 generally (6) Great (2) 16,18,20,22; 119:4,5,10, 29:13,21 ;48:23;

fourth(2) 39:24;129:2;143:7,19; 33:13;62:16 ll,17;l20:2;122:5,6,9, 108:16;140:948:7;176:l 158:23;159:19 grew(1) I0;164:5;166:9;167:24; higher(s)

FOX(36) generate(4) 176:9 168:l;169:3,Il l15:9,16;117:3;61:6;68:21,25;69:8, 37:3,1 I;108:16; gross (3) Harrison (1) 134:20;141:5;15l:21;I l;71:4;78:8,12,23; 109:22 59:21,23;77:6 146:17 160:2,679:5;i 12: 14;I 14:3; generated (4) ground (1) head (3) highest (2)lI5:23;l54:20;lSS:4,8, 56:4;84:5;108:8,9 110:18 32:8;112:2;166:6 91:20;178:I010; 158:11;) 62:15; generates (I) grounds (1) heading (3) highlighting (1)163:4,19,23;164:15; 108:15 89:22 44:3;91:23;92:12 60:19165:21; 166: 16;167: 14; generating (3) group(S) health (I) highly (1)168:14,25;l69:8,15,20; 68:9,10,11 45:19;80:13;91:16,20; 58:23 140:13176:19,23;l 77:13; generation (1) 92:4 hear (1) high-tech (1)179:13,18 177:15 grouped (1) 82:3 82:24

Fox’s (1) generic (1) 45:2 I heard (3) himself (I)167:24 125:20 groupings (1) 39:23;53:22;175:6 154:12

framework (1) gets (4) 43:18 HEARING (111) history (3)116:4 50:20;56:20,24; groups(2) 33:9,13,18;34:2,13,17; 63:7;65:5;l59:16

Fran (1) 148:22 92:3;177:1 5 36:1 l;40:l5;42:I l;45:6; Hold (6)60:11 given (6) grow (1) 46:1 3,23;47:7;49:8; 105:14;I 13:18;

franchise(S) 49:23;60:18;114:19; 31:21 50:8,16;52:13,20;54:21, l34:I4;145:lg;146:19;82:11 ;85:25;105:2 I 15:8.20;159:20 growing (2) 23;60:14;62:3;65:22; 173:4

frankly(I) gives(2) 62:13,14 66:l;68:14,17;69:5,l0, home(4)61:1 65:4;l03:22 growth(s) 13;70:7;71:9,14;72:l,3, 161:2;164:9;l66:24;

free(11) giving(2) 62:9;84:I0,J1;87:7,20 21,25;73:25;8l:l8;82:l, 167:5159:8,8, 19,25;160:4,8; 61:24; 159:25 guess (2) 5,18,20;85:6,22;89:25; homes(S)168:15;169:l,12,19,21 Glad (1) II1:l6;162:18 9I:2;93:23;95:15;96:2l; 163:5;164:8;l67:5

freedom (1) 91:21 guys (1) 97:13;98:lS,19;99:3; Honor(13)37:8 global (12) 133:17 103:7,l6,20;104:3; 33:8,14;53:9,lS;

front(2) 44:10,13,14,21,22; 105:I0,16,19;106:l5; 69:15;7l:l2;73:3;82:7;40:20;99:l 47:24;48:l,5,10,12,23; H 107:16,23;l08:I0; 90:25;1l3:lI;117:17;

full (9) 49:1 1 l0:20;l I 1:l;I 13:12,14, 124:21;l50:229:17;47:5;72:7; goal(S) haggard (2) 17;114;l5;l 16:1,17; hook (2)115:8,20;132:10; 71:13,14;72:l8 105:20;106:4 117:9,l5;118:3,7;122:8; 163:17:165:23135:24;162:23;l 78:14 God (1) half(S) 135:22;136: I0;140:24; hooked (1)

fuIl4ime (I) 158:25 31:8;72:22;91:24; 145:23;149:4,7;152:22, 163:1432:14 goes(7) 113:8,8 24;153:9;154:9,15; horrible(1)

fund (I) 38:25;55:5,7;59:I6; hand (1) 155:15;158:l0;159:13; 166:24125:5 93:9;114:2;133:7 93:21 160:22;162:I0,13; hour(1)

further (7) Good (II) handed (2) 166:18;167: 13;169:25; 72:2276:5;98:17;l 13:10; 30:3,4,5;37:18;46:24; 155:20,25 170:4,1 l;173:4,20,22; hours(3)

P’ JHBIJEHRER & ASSOCIATES (190) former. hours

BPIJ INVESTIGATION RE; lL,EC SERVICES

____________________ July 17,2012

32:5, l5;71 :12 important (6) 141:4 153:19 investigate (1)House(6) 58:24;61:I0,14,I9; indication(1) intenslty(I) 142:19

74:18;163:l,9,ll,17; 164:l0;166:23 30:15 123:4 investigation (3)164:1 impose (1) individual (I) Intention (1) 89:14;125:21;126:20

households (4) 95:11 175:21 175:15 investment (2)lOO:6,8;104: IS; imposed (1) indivIduals (2) inter (3) 58:I4;6I :17112:12 94:17 31:17;163:20 139:15;140:10;141:2 investorQl)

hundred (2) impute (1) industrial (3) intercarrier(I) 46:10,11,1 1;59:8;32:9,11 110:15 39:25;146:24;147:3 79:10 60:6,l0,12,l2;ol:l;62:o;

Hunterdon (I) inability (I) industry (3) interconnectlve (I) 179:10164:12 161:19 38:7;119:20;126:21 143:12 investors(4)

hypothesis (I) Inc (8) inelastic (4) interest (6) 59:12, I8;61 :11,2546:6 40:22;46:2,5;54:19; 35:25;36:17,22;153:4 33:21,22;45:13;58:14; involve (4)

hypothetical (1) 93:12;179:9,l 1,23 inelasticity (1) 59:S;130:l3 93:12;l25:9;126:24;55:11 incentive (1) 153:3 interests (1) 128:5

hypotheticals (1) 117:21 inflIct (1) 179:25 involved (12)153:17 include(18) 130:12 Interface(t) 31:15;53:l4;90:17,21;

35:18;42:9;50:10; inform (1) 163:15 93:I5;94:I4;I27:1~I 77:13,15;78:5,6;83:9,24; 131:8 interject (1) 128:1,23;129;2,4,5

84:19,21;103:lQ;106:20, information (23) 114:16 inward (4)ICC (I) 22;107: 12;128: II; 32:4;3$:2;42:9;47:3; internal (2) 83:2;87:7,20,22

129:6 135:18;177:22 5l:12;59:I8;61:18,23; 73:17;74:12 IP(5)idea (2) included (8) 98:23;102:4;143:I8; Internet(13) 48:1 l,23;77:13;79:18;

42:17;164:9 44:24;45:19;49:2; l50:5;154:18,25;l55:6; 48:5,8;78:3,3,l0,21; 104:1identical (I) 50:3;59:19;68:7;104:6; 168:23;169:1,8;171:8, 103:22,22,23;104:18; ISDN (I)

172:4 175:4 14;172:8;l76:24;l78:15 125:22;143:4,15 148:25identifiable (1) includes (7) initial (33) Interns (1) Island (13)

49:11 46:20,21;73:6;83:22, 32:19,21;34:22;37:l5; 51:8 115:7,l9,23,24;116:3,identification (22) 25;lOS:4;148:25 62:19;I00:22,23; interpret (1) 9,I8,I3,25;l 17:6,13,13;

29:3,5,8,I0;40:I8; including(s) 107:lO;118:12,l4; 123:14 118:165:19;74:3,5,7,9,1I,13, 38:18;106:20,21; 119:13;121:I$;12$:2; interpretation(l) issue(14)~ 16,18;l 18:13,15,17,19, I 19:13;142:24 130:5,23;131:Il;136:7; 176:12 35:21;53:l6;54:16;

~ 21,23;132:21,23 inclusive (I) 139:5;142:5,7,8;141:l3, interpretational (I) 72:17;96:l8;I07:I,2;identified (12) 136:23 14;162:l;l67:12; 135:15 114:13;l49:ll;l50:13.

37:14;41:l5;50:23; income (12) 170:24;171:2,6,20; Interpreting (1) 162:20;164:l l;l66:I I;l00:5,8,I0;119:l2,24; 45:17;59:lO,1l;60:8; 172:6;173:17;174:7; 168:2 178:3147:19;153:12;l60:2I; 61:21;107:22;I08:3; 178:21 interstale(5) Issued (4)161:15 1I6:25;178:6,8,9,lO initially(t) 79:9;I08:5;126:9; 54:6;lll:6,14,15

identifies (4) inconsistency (I) 160:6 140:22;141:I I issues (9)42:2;43:l0,18;73:20 98:6 initiate(I) into(33) 47:21;56:4;94:5;

identify (7) incorrect (1) 84:11 3I:7;33:22;48:24; l07:13;l 16:16;l29:24;32:3;42: 14:49:5; 106:24 initiated (4) 50:22;51:12;54:6;6I:2Q; 153:23;164:22;178.265: IO;73:4;89:12;150:8 increase (8) 84:I5;85:3,24;125:18 67:16;69:15;84:l0;87:4; items (1)

IEP(I) 36:I,23,23;I 15:18,19, input(2) 88:25;93:9;94:l,8; 144:1578:21 21;1I7:22;135:I 31:7;86:i5 99:15;106:25;l07:6,13;

ignore (2) increased (I) inserted (3) 109:4;l26:20;135:2; J132:17;175:14 110:3 120:19;122:l;174:Io 145:22;146:7;153:15;

ILEC (2) increases (5) inside (2) I55:2;159:22;162:17; January (2)I 12:17;129:16 109:24;I I0:9;l 15:22; 54:22;67:l7 163:I2;164:I,9;178:25; 83:20;83:6

ILECs (2) 153:7;I76:6 installation (2) 180:8 Jeffrey (1)112:19;113:3 increasing(1) 157:14;166:5 intra(2) 146:23

illustrated(t) 136:20 installed(l) 139:l5;140:lI Jersey(74)166:23 incremental (3) 164:23 intraLATA (I) 40:22;41:14,21;42:Is,

impact (I) l56:23;177:25;178:l2 instance (2) 141:2 20;43:6;45:2a;46:4,21;165:6 incurred (2) 31:14;l76:5 intrastate (15) 49:19,20,23;50:2,4,5l0

impacts (2) 66:I3;156:23 instead (6) 75:15,16;77:25;78:4, ll,l5,19;51:17,2I,24;54:12;129:5 incurring (2) 34:1 J;120:20;121 :17; 5;79:9,25;80:l;81:I3; 52:3,8.8,9,I6,I7,I9;53:g

implementation (2) 66:22;67:21 174:3,5,17 89:14;108:5;126:10,1 1; 18;54:l9;55:5,6,3,13,13;129:5,6 independence (I) instructions (I) l40:21;141:1 I 66:2I;77:8;79:21;81:l4;

Implications (1) 95:13 135:16 introduced (1) 83:23;90:6;93:12;95:l3,146:18 indicated (2) intended (1) 97:22 19;97:15,21;9$:22;

imply (2) 140:8;153:20 79:14 invested (I) 100:6;l04:20,2I;l 12:7,140:3,4 indicates (I) intending (I) 59:4 12;I 15:11 ;l 16:4,19;

Miii- V-Script® JHBUEHRER & ASSOCIATES (191) House - Jersey


I 17:1,3,20,22;! 18:1;122: 18;125:l;127:l0;129:23;130:13,13;146:2 1; I57:22;158:22;17h9;172:9,24

Jersey’s (2)74:2; 105: I

job (3)89:1; 122: 17; 129: 12

joint (3)94:4,5;173:12

Journal (2)73:19;92:23

July (3)74: I5;87: 16; 123:25

June (4)111:11,13,15;! 13:20

jurisdictIon (3)71:6;79:I I;129:13

Justice (5)94:I0,13,18;146:I0,I I

Keep (7)4! :6;56:20,24;57:22;96:17; 149:25;! 79:2

keeps (1)57:18

kept (I)117:18

key (I)149:1

kilobfts (I)102:5

kind (3)92:20; 168:21; 179:3

knowing (1)177:11

knowledge(S)41:21;137:4;143:8;158:21;174:22

knowledgeable (1)(43:7

labeled (I)92:20

lack (1)172:8

landline (II)35:17;38:I I;78:24;79:3,4;I09:23;l 15:3,5,10; 163 :23;177:9

landlines (2)84:!; 166:2

large (2)77:7; 126: 14

largest (2)

48:7;77:l5last (20)

43:S;70:l I;75:12;80:2 l,23,23;8l :5;86:16;91: 14,l5;95: 16, 18;96:21;1Q8:2;126:8,l$;145: 16; 159: 12, 14;169: 10

late (1)71:16

later(s)30: 14;45:9;47:20,23;54:7;91:5;99:5,8

latest (2)96:13;I 12:8

law(4)90:6;106:22;128:2;146: 17

lawyer (1)116:16

lay (1)54:10

laying (1)45:8

LD(l)139: 15

lead (I)127:25

leads (1)69:17

least (4)83: 19;I20: I; 13 8: 17;165:4

leave (4)121: 14; 161:7;] 63: I;166:18

left (9)37:9;42: l0;72:7;121 :4;I 32:3,4;136:5;144: 14,2 I

left-hand (1)150:6

legacy (t4)35:16;38:i 1;79:4;83:l0,25;109:22;I 10:7;I 15:3,5,l0;I77:2,6,9,I4

legal (10)88:21;94:15;105:4,9;110:18;! 16:7,16;158:2,

legislation (16)73 :2 I;95: 17, 18,19,2496:9,11,14,14,21,23;97:7, 14,23,23;98:2

legislative (3)97:4,8,11

Legislature (3)97:15, 16,20

legitImately (1)33:25

length (1)92:2

less (4)

1 13:8;138:l;162:23;178:8

letter (1)92:16

level (9)37:3;63:3;70: 14;94:7;138:14,15,17,20,22

levels (I)37:7

LIfeline (4)t61:8,l I,14;177:l6

lifetime (1)156:1

light (I)177:8

Lightpath (1)80:9

likely (2)176:8;178:8

limit (I)36:8

limitation (1)77:10

limited (5)37:25;38:5;1 13:20;143:24;144:3

line ($9)40:5;45:5;48: IS;51:23 ;52:8,9, (7, 18, 18;53:25;56: 16,18,20,24;57:8,10,16,1 7,18;62:I0,19,23;64:9;73: 13;80:21,23;81 :5;83:l,2;93:8;104:16;106:18;107:6;109:7;120:12,14,! 6, 18,20; 121:2,12,15,17,25;(22:3; 123 :7; 130:5;13): 16, 18; 135: (7, 18;137:5;139: 17; 140: 10;141:5,10,13; 144: 18,20;148:1,4; 153:8;! 54:5;162:25;163: 18;165:6;167:2,8,21 ;171:25;172:3,3,11,12,14,16,17,18320; 173:17; 174:3,5,8,8,9,14,15, 18;175: 18

lines (120)34:21;36:l;38:9;50:25,25;53:4,20,23;55:lS;62:16;63:3,12,l3,I 7,20,22,23,25,25;64:3,5,6,1 l,13;65:2;83:7,I0,14, 15,16,23;87: IS 88: I,2,3,7,8;89:5,7;98:25;99:13;I00:l 1,13,22;102:16;103: 10,25,25;104:5,6,10,15,17;105:13,23,24; 106:19,20,20,2 I; 107: 12; 108:24;109:17,18;I 10:7,9;I 12:20;l 14:7,9;l 15:10;130:8,9,22;13 1:20;134: (0, 10; 135: 1,8,24;

136:2,18,20,21,22,24;137:6,8,10,23; 138:2,3,7,25;139:13,15;I40:I0;141: 1,2,8,2 1;l44:23;149:l1;l50: 11,13,1 7;151:6,6,9, 13, 18; 152: 14,l7;I53:2;l 62: 15,16,16,17, 19;167:4; 172: 10

link (1)164:8

list (10)42:2;73:6;76:7;123:4;124:24; 125:4,20;126:2;152: 17; 166:3

listed (8)84:25; 123:20; 126:8,IS ;128 : 12; 135 :7;148:2l;l56:13

listen (1)61:12

lists (1)42:3

literally (1)165:3

literature(S)145: 13, 17,20;146:2,4

little (2)97:18;105:20

lived (1)165:1

lobbied (1)96:4

local (15)38:17,18;66:15;89:I4;96:1 7;98:2,4; 106:12,23;1 12:5,9;140:22;I57:I5;159:7; 178:6

location (4)86:2, I 0; 15 1:5; 163: 16

locations (I)151:1

long (17)92:10;! 15:$;l 19:19;140:1,8,1 I,14,22;141:3,I I,13,24;l42:17;143:20;167:9;175:16,22

longer (4)41:22;43:7;J 15:4;147: 10

look (32)32: l;37:5;46: I 6;54:5;59:13;61:1 I;62:12;66:5,12;68:5;69:2;70: 12;74:23;79: I ;88:5;92:8;95:20;97:2,24;98: 1,3;I 34:9;I 39: 14;142:2;(46:5; 148:19; 169:14;175:17,18, l9;l78: 1,12

looked (13)34:22;35: I ;37: 14;53:5;55:21 ;67: I ;76: 18;77:4;II I:22,23;I51:15;169:6;179:14

July 17, 2012

looking (13)81:IS;82:12;94:10;100:2;IOI:l 1,16;105:19;136:2;lsl :11;152 : 19; 156:22;157: I;178: 14

looks (2)87:1;142:20

losing (8)36:18;55:8;62:l6;88:l;90:4;1 17:12,19,20

loss (16)47:5;58:8;62: 10,15,16;67:24;68:I l;73:l3;83:I,2;107:6,8;l44:l 8,20;153:8;165:6

losses (21)45:10,21 ;47: 3,12;53: 16, 17;54: 13, 14;66:22,22;67:2 I ;69: 15,16,18,18,23,24;82: 13;84:6;I l0:3;I 17:23

lost (4)86:5,8;88:7,9

lot (19)32:1 I,16;47:19;48:l I,22;58:25;61 :11 ,22;67:6;79:16;96:I l;103:6;105: 14;) O$:I9;I62:lg;164: 19,21,25; 166:7

L.ouisiana (1)119:2

lower(S)62:l0;I l7:3;134:23;160:3;l78:7

lowest (1)178:9

lunch (1)72:24

M

macroeconomics (1)124:7

magazine (1)145:20

maintaIn (1)167:8

maintained (2)161:20,21

major (1)124:6

majority (1)78:6

making (7)45:22;105:l8;141:1 I;145:8,13; 146:8; 173:9

man (1)158: 12

Management (I)118:25

manner (2)I lS:14;140:8

K

Kansas (6)124:25;125:4,5;126:22; 127:5,8

9,11

al iii— I —Script’i~ SHBUEHRER & ASSOCIATES (192) Jersey’s - manner

OPU INVESTIGATION RE; ILEC SERVICES

_________________ July 17, 2012

many(2I) jmay(22) middle(2) more(35) nearQ)3l:5,13,15;32:5I5; I 47:16;49:12;55:21; 44:l;106:7 32:lI;39:3;53:25; 179:388:l;92:3,5;98:15; 66:17;7O:I5~89:3;94:l6, might (6) 60:l6;63:6,I 1,15,16,24; Nebraska (1)104:9,14,14,15;127:l; 17;97:8;113:I3;124:20; 45:16;46:24;48:21; 64:3,5;69:20;71:9; 124:25139:2;141:19;161:4; 127:25;128:l;132:2,2, lOl:2;154:21;I65:5 78:22,23;88:l;89:9; necessarily (6)162:23;I66:l0;169:6; l4;143:19;150:25; million (9) 92:7;93:22;94:24; 36:24;88:13;97:5;171:17 162:8;167:1l;170:2; 43:24;44:16;54:7,9; 102:18;l05:16;120:24, 14O:3;l41:17,18

March (2) 177:21 76:5,7;80:2,l1;81:7 25;121:1;135:19; necessary (5)l00:20;10I:I Maybe(7) mind (I) l36:18;139:19;149:14; 54:23;71:17;72:17;

margin (11) 41:8;68:25;106:3; 71:25 162:12;173:1,23; 145:7;146:745: 17,17;58:7;59:14, 175:22,23,25;177:16 mijior (1) 175:25;176:7;177:f I neck (I)21 ;60:8;61:14;156:12, MCI (23) 174:11 MOREAU (1) 15:316,20;157:4 48:6,6,9,9;52:4,9,10, minute (3) 114:19 need (14)

margins(l) 25;53:7,19;54:l,4,8,8,8; 93:l;124:13;151:15 morning(4) 31:I8;32:3;51;12;59:23 55:2,7,12,17;76:I,I,2,25 minutes(7) 30:3,4;l14:3;l56:l 69:l;125:12;143:14•

mark (14) MClmetro (1) 40:1 3;6S: I 5;72:22; most (7) 150:3; 165:2,24;16$:6;40:8;65:9,14,16; 76:4 1 l0:23,24;162:6;170:2 35:17;67:13;72:4; l70:20,20;l73:5;I7g:241I8:9,lO,12,14,16,l8,20, MD-6 (1) misleading (1) 1 39:l,4;I 71:20; 177:5 needs (4)22;1 19:9;132:6 148:17 136:25 mothers (I) 68:25;77: 19;I66: IS;

marked (27) MDH-6 (5) mismatch (I) 167:5 173:629:2,5,7,I0;40:l1,18; l35:24;148:9,15; 153:18 motion (3) negative (3)65:19;66:6;74:3,4,7,8, 149:14,20 missed (I) 42:23;91: 12;144:6 107:22;108:3;153:3II,13,I5,18;118:13j5, mean(18) 155:23 Move(17) neither(2)17,19,21,23;119:8; 31:3;32:8;63:21; missing(I) 34:3,19;52:22;69:21; 93:15;177:7132:20,23;134:15; 71:17,21;87:12;95:l0; 135:23 71:18;91:7;104:4; net(8)156:12 97:5;106:6;IIl:16,17; Missouri(4) 105:10,l1;lIO:20; 45:l5;59:l0,II,14,24;

market (41) 127:24;130:I8;134:5; 124:25;127:13,14,16 127:12;140:24;145:8; 107:22;108:3;153:I35:5,I0;37:13,19,20, 135: l0;146:15;163:21; mistakenly (2) 155:15;178:24;179:6; network (10)22,25;38:2,6,7,14,I8; 175:18 121:I6;136:5 180:3 48:II,23;56:l,I5~39:21;43:19;44:21; meaning (1) misunderstanding (1) moved (2) 104:22,24,25;138:12;56:Il;57:14;64:I0,14, 67:3 135:16 99:4;l80:8 163:10,15I5,15,19;97:25;108:8, means (7) mix (I) moves (3) new(86)l0,lI,12,13;III:7; 67:22;68:l1;117:21; 159:21 86:4,$;I64:I 30:I6;40:22;41:I4,21~112:7,18,22,23;113:2,4; 141:12;153:4;155:13; mixing(I) moving (4) 42:l5,20;43:6;45:23;130:25;131:3,7;138: 19; 158:20 108:6 84:J0;85:25;86:9,l I 46:4,21;49:I9,2o,23;147:3;157:l8 meantime (1) Modern (1) much (10) 50:2,4,5,10,11,14,19;

marketing (3) 170:9 146:23 59:5;71 :9;94:24; 51:17,21 ,24;52:3,7,g,9,94:4,5;95:4 measure (8) modifications (1) 105:16;109:14;I 16:11; 15,17,19;53:8,I8;54:Ig;

marketplace(9) 58:12.24;61:1I; 170:19 135:6;162:15;165:22; 55:5,5,8,13,I3;65:24;64:9;95:14;130:20; l01:21;132:4;135:19, moment(4) 168:10 66:21;74:I;76:I5,24;138:1 l,21;146:6;164:6; 19;152:8 44:25;63:8;85:7; muddled (I) 77:2,8;79:21;SI:14;165:9;166:14 measures(2) 175:14 106:7 83:23;84:Il;86:i,Io;

markets(S) 58:18,18 moments (I) multI-line(S) 90:5;93: 12;95:13, IS;39:22;45:19;64:22; measuring (I) 172:7 35:22,24;36:3,6;53:23 97:l5,21;98:22;Ioo;6;74:2;146:12;156:5,64 92:5 monetary(I) multiple(2) 104:20,20;105:I;I12:I

mass(4) member(I) 162:3 102:I0;151:l 7,II;II5:lI;l1o:4,I9~38:L4;43:19;44:21; 173:17 monetize(1) multiplexing(I) 117:I,3,20,22;ll8:I;64:15 mentioned (1) 130:19 78:16 122:17;125:I;j27:10;

Massachusetts (10) 146:15 money (10) multiply (1) 129:23;130:13,13;29:14,22;73:22;74:17; merged (1) 45:22;55:8;57:12,22; 102:11 146:20;157:21;155:22;95:17,23,24;97:16,22; 48:6 58:13,13;90:4;117:)2, must(2) 171:9;172:9,24;178:6170:14 merger (2) 19,21 67:24;68:9 Newburyport (1)

match (1) 55:17;126:)5 monopoly (4) myriad (1) 170:1491:25 messed (1) 37:3,1 1;108:13; 165:8 newspaper (I)

matched (1) 86:5 109:22 myself (2) 94:1492:13 method (1) Monroe (1) 85:14;146:19 next (22)

material(I) 164:7 119:2 43:12;44:20;46:II;65:23 metrIcs(S) month (3) N 56: 14;57: 16;65:9;69: 17;

matter (5) 166:3,4,7,7,7 30: 12;86:24;87: IS 82:24;89: ii ;92:22;89:13;93:2l;94:21; Metro(2) monthly(2) name(2) 99:23;I00:21;Il8:7;99:3;166:19 54:S;76:4 137:I;172:23 29:17,19 125:20;126:2,15;I37:Ig,

matters (2) micro (I) months (1) naturally (1) 25;141:7;145:22;53:11;153:23 124:7 131:15 92:6 172:16;173:3

~1iii-ti-Scripi JHBUEI4RER & ASSOCIATES (193) many - next

BI’U INVESTIGATION RE; ILEC SERVICES

— __________________ _________________ __________________ July 17,2012nice (2) 84:l4,l6;86:20;88:3,25; od (I) 30:21;98: 11 ;I44: 14; out (51)

169:15,17 89:2,7;98:24;99:l2,24; 166:5 149:22;165:14 31:1 I,12,23;33:25;NW (1) l00:5,8;l01:20;102:I I, off(1l) opened (1) 41:3;42:8,I0;43:I;46:4;

163:15 22;l03:12,14,24,25; 32:8;65:25;84:8; 167:13 49:l;55:2;60;23,25;night (I) 104:6,18,23;107:22; 105:21;l 12: l;121 :14; opening(1) 63:9;65:8,22;71:22;

72:6 I IO:4;lI2:)2;124:5j0; 122:l2;133:6;136:5; 30:16 82:14,14;84:12;go:l I;nine (I) 127:3;132:5;133:25; l56:2;166:5 operate (5) 93:13,20;95:7,9;98:l2,

43:4 134:9,20,21,23;l35:6,7, offer (11) 42:20;49:23;80:17; l8;IO1:i l;I02:12;nitty-gritty (I) I7;137:16;138:6,24; 106:19;I42:14,16,23, 138:5;l69:24 l03:6,l5;I08:2;109:24-

94:15 I39:I,4,4,I0;141:9; 25;143:6,19;149:25; operated (1) l12:23,25;lI5:7;NJ (I) 147:23;148:23;149:15, I63:19;174:4;178:20 43:11 I 17:25;I2l:4;134:7;

172:25 l8;I51:Il,I8,2I;152:13; offered(7) operates(1) l46:19;155:20,25;NJSA(2) 159:20;160:2,3;161:8; 77:l4;116:5;147:8; 104:20 162:22;164:13;165:25;

65:11,18 168:9;169:l2;171:1,3, 153:22;154;12;159:l9; operating (10) I71:I6,22;l74:I9;nod(l) 15;172:lI,13,14;177:8 173:11 42:3,15;43:24,25; 176:24;177:17,24

134:18 numbers(41) offering (3) 45:1 7;59: 10,11 .24;60:8; outcome (2)node (I) 47:5;78:25;8I:I0,19; 96:6;122:1;142:21 61:8 90:23;125:l5

164:8 83:9;84:22;87:4,5,12,12, offerings (2) operation (2) outdated (1)nonbundled (2) I4;99:22,23; (00:16; 122:2;142:19 46:21 ;58:23 130:12

148:4;150: II 101:2; 103:6;104: to; offers (I) operations (6) Outdoor (1)Nonbundles (2) 109:5;I I l:23,25;1 12:2; 174:3 45:24;48:3;59:21; 81:2

150:23,24 131:14;I35:1 8;136:15, officer (2) I 18:25;l 19:18;156:7 outside(12)noncompetitive (8) 17,23,24;137:2;139:7; 60:24;175:2 opine (2) 33:I7;53:l l;54:19;

66:l8;83:16,23;89:6, 148:4,I.2;149:24;l50:4, old(3) 116:l6;154:6 67:14,16;68:l9;7o:4,6;8,l0;150:24;169:23 9;l5l:l0;154:2;166:16; 43:4;164:22;176:2 opinion (10) 71:2;81:22;99:5;l67:3

nondisclosure (2) 175:10,11, 12;177: 17 older (3) 39: 17;68: l5;79:23; outward (1)94:23;99:20 — 92:6,6;176:6 92:19;97:12;I 10:1 I; 83:2

none(2) 0 Oliver(I) 114:13,21;131:3;162:17 over(21)15l:9;165:15 29:13 opposed (1) 42:4;48:9;62:13;72:7;

nonlawyer(I) oath (2) once (I) 67:17 78:17;87:17;88:25;123:15 170:21,22 31:25 optic(2) 104:19,22,23;)07:IJ;

nonpay (3) object (18) one(64) 104:24;163:l I 110:18;) 14:23:124:13;86:16,17;88:I0 33:l0,l4;34:l0;45:4; 36:16;37:13,21,22; optical(2) 137:I8,25;141:7;

nonpayment(I) 53:9;67:13,17;68:18; 40:23,24;41:17;53:16, IOI:18;163:I0 143:14;162:7;165:Il;86:18 81:8,17;89:21;93:g; 19,25;56:4;58:14;62:7; optimum (1) 178:3

nonregulated (I) I03:4;105:5;106:13; 63:5;70:24;72:15;77:7; 101:7 overall (2)84:20 116:6;118:2;179:g 78:14;79:17;81:15; optionQ) 58:19;68:10

nor (2) objecting (1) 82:25;85:4,7;89: 12; 174:10 overcome (1)93:I5;147:8 81:20 113:15,24;I 14:22; options(1) 117:23

normally (2) Objection (24) I l5:l9,21;120:IQ,24,25; 165:9 overhead (I)62:l;149:23 33:8;34:II;46:I;50:6; 121:l;123:IO;124:18, order(24) 157:2

Notary (3) 60:l,9;70:22;82:23; 19;126:2,8;127:2,13,17, 42:19,24,24;5I:22; overruled (1)29:l5;119:3;170:15 88:20;90:25;93:7; l8,I8,22;129:14;(30:4, 63:I0;69:12;73:14,15; 34:LI

note (3) 106;25;l I0:l4,17;I 11:7, 20;132:7;137:I8,25; 74:l0;93:8;99:5;I 13:20; overwhelming (I)82:22;93:14;142:12 14;140:12,16;143:5; 138:I;142:19;147:16, 120:3;129:6;144:S,7,8, 45:10

notice(3) 144:I0;147:7;158:2,8; 22;150:20;161:20,21; I l,13,14;166:3;179:14, own(7)86:19;88:24;171:l0 160:16 164:21;166:5,l2;l73:5; 17,18 32:!7;33:2;69:$;

notion (I) objectionable (I) 175:23,24;I78:1I orders (2) 84:l6;I23:16;1323•55:8 105:8 ones (2) 37:25;67:7 138:9

notwithstanding (1) obtained (1) 51:7;I28:7 organization (2)153:7 48:9 One’s (I) 48:14;146:24 P

November (5) obtaining (1) 100:19 organized (I)87:16;139:6;148:2,19; 52:7 only (24) 156:4 pace (2)178:22 obviously (2) 35:I;49:15;59:9; original (1) 109:12;121:3

NPS (3) 60:22;98:8 61:1 8;62:13;63:4;67:6; 171:11 package (4)73:16;74:12;174:25 occur (1) 69:14;74;1;75:20;77:19; originally (2) 42:9;140:1;J5s:20;

N-R(l) 99:6 90:7;96:15;I0X:17; 103:9;159:14 159:9100:20 occurred (I) I 10:7,9;l I5:14;120:19; others (2) packages (2)

number (81) 127:6 l37:4;139:2;ISI:9; 44:22;I55:1I 83:25;140:431:21 ,23;36: I6;44: 14; o’clock (I) 167:2,3;169:4 Otherwise (1) page (127)48:l0;50:23;56:8;60:7; 72:15 ONT ~) 162:8 34:21;38:9;41:I5,16,61 :14;62: 13;75:14; October (3) 163:10,12 ourselves (1) 19;42:2,4,s,8;43:J 5,15,77:18;79:2,3;8l:7; 30:23;87:16;178:21 open (5) 123:5 16;44:l,20;45:I6;47:25

Min-l!-Sc,ijn(~ JHBUEHRER & ASSOCIATES (194) nice - page

BPIJ INVESTIGATION RE; ILEC SERVICES

___________________ July 17, 2012

25;57:24;58: I ,2;60:4; particularly (1) periods (2) 155:4,16; 158:21; 171:24 premise (1)62:4,19,22;63S;64:13; 166:10 32:13;47:ll pointed (3) 52:665:2,4;66:7, 11 ;70: 11; parties (2) Perloff (I) 46:4; I 08:2;1 17:18 preparation (5)75:12;80:23,24,25;83:7, 72:9;l78:20 146:23 pointIng (2) 120:5;123:2,l0;18;89: I 8;91 :14114,15; parts (2) person (2) 109:24;l 15:7 129:20;135:2 I92:9,24;93:2,3,14,24; I 12:l0;129:9 85:15;92:19 points (3) prepare (2)96:5;l00:l,I8;101:4,13, partyfi) personal(2) 93:13;Il5:6;144:l8 l22:23;I23:813,17;102:22;103:I,3, 179:12 164:18,24 Policy(4) prepared(7)24;l05: 13,23,23,24,24; passed (2) Personally (1) 29:12,23;97:I0; 71:18;72:8,14;99:1 I;106:4,8;108:21;120:II, 97:15;127:l6 47:1! 118:25 I00:4;107:16;I19:1412,14,16,18,20;121:2,12, past (4) perspective (3) poor (1) preparing (4)17,25;!22:3;126:8,I5; 78:I8;107:22;131:14; 138:21;142:2;166:lO 177:15 30:18;31:I,3;123:I2130:5,22,22; I 31:11,17; 159:4 petitIon (1) populated (1) presence (3)133:4,5;135:20,24; Paul (5) 162:18 116:23 127:17,20;131:8136:8;139:5;142:4; 29:1,4,6,9,19 petitioned (I) ported (4) present(I)143:23,25; 144:1,23; pause (1) 127:4 84: 14,22;131:14,20 119:17147:13,14,23;148:3,9; 145:25 phase (3) PORTION (12) presentation (2)150:12;152:23;156:2,II, payment (1) 120:3;129:16;145:22 50:21;51:I;82:I4; 61:24;175:822;161:I,8,18;171:6,7, 58:14 phases(1) 90:21;99:l0,14;102:9, president(l)2l,25;172:3,6,10,16,19; Payphouc(I) 31:21 14;109:6,IO;L33:5; 94:2173:3,16,16,24;174:2,8, 148:25 phone (7) 178:19 press (1)14,I8;175:I,7 PBX(1) 142:18;161:2;164:14, ports(I) 164:12

pages(I1) 148:25 23;165:1,23,24 84:12 presuniably(2)32:9,1 l;40:2,5;42:7; Pennsylvania (1) phrase (1) position (13) 53:7;176:383:21;i32:9;l7i:2; 125:1 57:9 45:20;58:21;66:24; presumptuous (1)172:3,5,7 people (28) pIcture (2) 67:9;88: I 9;93:25;94:9; 51:13

pagination (I) 31:5,9,13,15116,23; 38:5;91:24 97:25;106:1 ,6;153:21; pretty (12)171:22 32:l,3,18,22;56:I I;92:6; piece(3) 154:8;162:l8 35:1 l;37:18;49:2;

paid (6) 103:22;117:22;128:l; 49:3;97:14;l35:23 positive(s) 50:l8;55:l;61:4;86:19,34:8,15,16;59:4,5; 129:lI;l36:4;141:I0; pieces(7) 45:12;58:3;59:2; 22;lOS:18;135:o;125:21 145:8;164:Il,19,20,25; 32:6,9,10,13,24; lOl:7;153:6 166:17;168:10

C pain (1) 165:3;167:l;176:7,9; 170:l8;174:13 possibility (2) previously (8)165:2 177:15 pizza (1) 115:4;144:14 53:17;56:5;64:7;panel (2) people’s (1) 151:2 possible (6) l0&25;l 19:6;147:19;

173:10,18 167:4 place (3) 46:5;64:2 l,23;149:22; 163:13;174:25PAR(7) per(S) 106:3,8;163:1 150:25;l67:9 price(l0)

66:25;157:23;158:15; 58:22;62:14;86:24; placesØ) possibly(I) 36:25;38:24,25;39:I I;159:6;160:19;168:2,4 87:15;102:5 165:12 175:7 106:23;)0g:I3;)15:I3;

paragraph (1) percent (23) plan (II) power (11) 127:1 7;140:20;168: 1066:12 39:I,1;46:12;59:24; 33:4;34:5;l57:23; 35:5,Il;37:13,19; prices(I)

parenthesis (2) 61:8;67:23;102:1;I 12:8, 158:l,13;159:22,25; 38:6;I08:8,I0,l 1,12; 136:20172:1,2 9,1 I,13,18;i 13:3,3; l60:3,3;168:3;179:5 164:10,13 pricing (3)

PAR-Il (7) 138:2;139:19;156:15; plant(8) PowerPoint(6) I l5:8,20;130:2143:I0;63:l0;165:16, l57:4,1I;178:4,5,9,IO 82:8,8,9,10,12.16; 40:25;57:25;58:I; primarily (4)19,21;166:3,4 percentage (10> l04:19;105:l 59:16;60:Il;61:24 48:5,13;62:15;I42:16

part (26) 77:6;102:3,7,i I; play (I) powers (1) primary (8)34:8;38:14;41:4,6; 112:6;115:l0;141:23; 178:13 97:17 96:12;l00:I0,13,21;47:I5;48:25;53:15; 142:l;156:12;157:4 played(1) precede(1) I04:14;125:7;129:I2;55:22;56:l0;60:1 1,18, perrectly (I) 130:4 173:25 164:720;63:18;71:1;73:5; 154:1 please (7) precedent (1) principals (1)l0I:17;105:I;122:17; perrormance (2) 34:19;71:25;85:21; 39:18 145:17124:6;126: 14;144:25; 60:20;147:3 93:1;I03:2;106:5; precedes (1) print (1)145:1 l;155:24;159:8,9, performed (1) 120:10 174:19 42:720 152:2 plus (3) predict (I) printer (I)

partial (1) performIng (I) 35:21 ,22;91 :18 105:17 42:860:20 67:24 pm (1) preface (1) prior (13)

participate (3) perhaps (2) 180:9 168:2 53:I0;62: 17,17,21;33:4;34:5;95:23 60:1 l;171:1 point(23) prefer(1) 63:l,3,4,l4,16;65:5;

participated (3) period (5) 31:9;38:5;43:I;52:24; 164:4 67:2;109:25;)59:25124:II;128:I0,12 30:15;1l3:6;13l:21; 56:7;57:6;60:3;63:9; preflled(1) probability (1)

L particular(s) 135:I7;136:4 69:20;90:2;95:9;9$:7, 1)9:9 176:569:7;98:9;l 05:17; periodically (I) I 8;103:6,7; 112:23; prernarked (I) probably (9)14I:6;160:18 49:16 l17:I0;139:9;I52:13; 120:7 30:16;31:8;43:8;

Min-L -Sn pPP JHBUEHRER & ASSOCIATES (195) pages - probably


July 17,201262:24;7l:1 l;I04:6; proper (1) proxy (2) 4l:1;43:13;57:23; 174:24122:20;166:22;177:14 79:8 58:6,22 59:9;60:l9;62:17 RC-IO (3)

problem (1) properly (2) public (ii) quarterly (8) 73:1 I;74:8;82:24165 :24 35:2$;36:l7 29:5,10,12,22;51:I I; 40:10,17;59:12,17,19, RC-11 (2)

procedural (1) proportion (3) 60: l7;l 18:13,17,21; 20,20;61 :16 74: I0;89:i I93:8 1 I0:3;1 l5:16;140:9 134:l6;147:24 quick (I) RC-12 (I)

proceeding (55) proposed (4) publicly (1) 177:24 65:1830:7,10,I7,19;31:2,18, 73:21;95:17,18;96:14 113:1 quite(S) RC-13(I)22;33:24;37:15;4I:4; proprietary (19) pull (1) 33:15;45:4;53:12; 74:1250:24;54:12;56:9;65:5; 29:2,7;51:2,4,6;93:18; 65:15 6I:1;62:16;87:5;89:2; RC-14(1)67:14;68:20;69:6,7,9; 99:11;102:12,l3;I09:2, purchase (10) 94:) 74:1470:4,19,22;71:3;79:13, 8,8,9;132:ll;134:12,l6; 48:19,22;53:7;55:12; quote(l) RC-15(I)15;81:22;88:19,23; 15I:l8;152:I4;171:8 56:1,5;l38:9;142:17; 112:22 74:1790:! 8,22;94:8;96: 19; protect (1) 157:14,17 quoted (2) RC46 (1)98:ll;109:19;L20:4; 177:5 purchased (2) 111:23;112:1O 132:22122:13,16;l25:4; protected (1) 13I:25;161:7 RC-6(I)126:24;l27:l,3,23; 66:8 purchasing (1) R 40:16143:23;I49:ll,22; protectlng(1) 132:2 RC-7(2)150:14;157:25;161:12, 171:10 pure(2) RI (1) 132:7,1914;165:13,15;171:16; protocol(4) 46:6;158:2 167:20 RC-8Ag)177:l,2I;179:l2 78:3,3,10,21 purport(I) raise(4) 74:1

proceedings (I4) prove (2) 130:25 36:17;37:2,6;70:21 RC-8B (1)39:2;53:12;62:22; l52:25;153:I9 purports (2) raised (2) 74:463:l;79:16;l 19:23; proved (1) 73:12;83:I 82:23;94:4 RC4C(1)124:1 1,25,25;125: I; 177:17 purpose (3) raising (1) 74:6127: 12;128:10;129:3; provide (29) 37:I;89:24; 149:21 47:2! RC-CLEC (I)180:9 39:5;47: l,3;48: 16; purposes(S) ramping (1) 74:4

process (3) 49:8,13;53:4,21;56:12; 79:1 l;91:l3;95:5; 87:9 RC-CTL-179 (2)32:2;71:I;l22:20 66:16;76:13;78:22,23; 165:13,15 ramps (1) 147:17;151:l4

producc(1) 80:I7;82:9;108:I8; pursuant(1) 87:8 RC-CTL-94Q)38:20 I 14:12;Il5:5,l3,15,15; 42:19 range (1) 147:18

produced (1) l38:13,22;143:l0,12; put (16) 94:7 RC-VNG-34 (2)60:18 154:17;161:25;166:14; 43:24;58:8;60:23; ranges (I) 73:12;74:8

product (14) 168:15 61 :3;72:8;92: 11,12,19; 86:20 RC-VNJ-166 (1)39:13;64:10,14,l5,18, provided (31) 94:23;99:17;135:22; rapid (1) 98:2521;78:19;142:21,25; 30:13;32:19,22;52:19; 150:4;154:3;170:20,22; 38:7 RC-VNJ-203 (2)143:3;146:Il;l49:23; 53:24;54:2;70:2;73:17; 171:11 rate(59) 73:I8;9l:916l:7;164:6 78:14;80:18;85:17; 35:9;40:8,l1;42:18; RC-VNJ-34(I)

products(6) 103:II;104:18,l9,22,23; Q 5I:8;62:15,16;63:3,5; 83:113 1:9;140:19;142:23; 105:6;107:20;1 13:6; 65:16;66:6,24,25;67:9, RC-VNJ-6A (I)145:3,5;156:24 I 19:6;123:21,23; qualifications (I) l0,19;68:4,9;70:2,3; 100:19

profit (9) 124: l6;128:10,17; 123:20 71:22;73:5,8;80:13,I8; re(2)33:24;45:l5;59:25; 135:24;138:3;139:5; qualified (2) 85:l7;90:9;92:16;93:18; 74:8;132:1961:8;68:7,9,l0;107:8; 149:l4;154:l7;155:5 160:17,23 94:9,22;104:12;l06:6; read(20)108:9 provider (14) qualifies (1) 109:21,24;) 10:9,15; 44:25;66:20;70:Ig;

profitability (2) 48:8;55:17;57:1 1,20; 160:18 115:6,18,19,21,22; 90:15;93:l;l 14:17;54:23;58:3 77:7;84:18;86:3,7; qualitative (I) I 17:5;l23:5,21;131:5; 12l:2;143:l8;144:7,12;

profitable (2) 125:22;127:18,19; 39:3 144:6;l50:5;154:8; 146:15;l52:7;158:l9;67:lO;108:2 138:I5,16;166:l3 quality(6) l59:12,I5,l8;l60:I0; 168:3;172:l3;l74:4l5;

profits (19) providers(2) 164:18,20;165:I 1,14, 161:19;166:21;170:25; 175:12;179:19,1936:23;37:3,l I;54:14; 138:10;161:9 18;l66:12 173:5;174:16;I80:7 reading(3)55:9;82:13;106:2;107:9; provides (7) quantification (2) Ratcpayer(l) 32:12;93:4;104:12108:7,13,14,17,19,19; 50:19;52:2,9;57:l6; 161:25;162:3 74:6 reads (1)109:9,15,22;) 10:3; 100:1; 104:7; 132:3 quantify (2) rates (15) 62:9113:19 providing (9) 161:19;174:15 36:l,17;37:2,5,6; ready(s)

program (1) 30:9;42:l8;50:2; quantitative (3) 49:l9;68:5,8;89:lS; 66:2;73:l;74:20,22;169:10 52:16;70:l;122:15; 38:21,24;39:l4 102:5;135:I;l36:2; 111:3

progress (1) 138:6;156:24;160:8 quantitatively (1) 153:7;l60:13;172:23 real (2)105:18 provision (6) 39:11 rational (1) 78:15;165:2

prohibition (4) 67:5;70: 15:76:25; quantity (5) 94:3 really (II)67:19,25;70:l4;90:7 96:15;l43:9;168:13 39:LI;149:l0;151:8, RC(7) 37:lO,16;45:4;47:22;

proof (2) provisions (1) l7;172:8 73:20;92:22;I00: 19; 53:! 1;94:I7;107:19;88:18,23 30:12 quarter(6) 124:17;132:12;I34:3; 108:16;139:13;166:21;

ii JHRUEHRER & ASSOCIATES (196) problem - really

BPLJ INVESTIGATION RE; 1LEC SERVICES

____________________ ____________________ ____________________ July 17, 2012

(69:3 records (1) I 13:2;126:25; 131:6; remove (2) 112:7realm (I) 54:18 160:11 168:7,12 represents (1)

49:17 RECROSS (1) regulates (1) removed (I) 92:18reason (5) 116:2 79:24 163:2 reps (2)

42:6;47:21;86:15; redirect (6) regulatIon (II) renew (3) 84:5;89:I117:17;141:5 113:15,25;114:I; 96:13,16,17;97:2; 45:25;158:8;160:16 request(s)

reasonable (1) 115.25,116.1,117.8 157.21,158.1,13, rep (8) 42.23,46.25,47.6,68.7 redline (1) 159.23,161.20,169.12, 85.25,86.3,6,8,14, 49.5,51.15,85.20,128.9,

reasons (4) 171:5 174:16 88:17;164:3,3 2137:1 O;5&25;82:7; refer (16) regulations (I) repair (1) requested (I)114:23 43:15;47:18;60:12; 59:7 165:25 148:16

Rebuttal (26) 65:2;80:20;85:8;89:1 8; regulators (2) repaired (1) require (3)29:6,9;30:6;33:16; 91:13;92:24;98:21; 58:11,13 164:23 54:17;1 17:22;142:I735:9;36:20;92:24;93:3; 108:21;112:5;13l:13; regulatory(14) rephrase(7) required(I)95:3;102:20,23;103:1,3, 134:3;145:I0;l74:24 49:17;79:ll;97:17,20; 36:7,10,11;50:8,9; 39:15II ;105: 12,15,22;i06:4; reference (4) 1 16:9,12,14;I 18:25; 145:23;158:10 requIrement (1)108:21;l 18:20,22; 48:15;62:22;93:2; I 19:18,23;l24:l0; replace (2) 105:7l19:13;121:22;122:13; 100:18 130:12;160:15,21 120:15;121:13 requirements(s)161:18;l75:4 referenced (I) rejection (1) replaced (3) 106:21;126:4;165:16,

rebuttlng(1) 136:8 179:21 172:12,13,15 18,22109:21 references (I) relate (1) replaces (1) requires (I)

recall (8) 40:5 40:20 171:1 110:1330:1 l,20;l 14:6; referred (4) related (12) Reply (28) reread (I)127:24;128:7;l31:23, 38:Il;l21:l6;124:l0; 40:21;60:2;70:22; 29:l,4;30:6;33:16; 144:1623;l66:6 169:5 81:2l;107:4;114:7,l3; 35:10;47:15;77:l0; resale(S)

receive (I) referring (4) 161.13,14,164.6, 102.19,103.24,104.12, 48.20,56.12,23,57.3,50:3 79:17;92:l0,14;107:8 l66:ll;l79:8 107:21;118:l6,18; 8,14;137:lQ;138:7

receives(1) refers(2) relates(3) 119:13;121:9,10,12,16, resales(1)50:1 48:13;60:6 53:16;107:3;l45:18 17,20;122:12;143:22; 56:23

recent(4) reflned(1) relating(2) 144:3,23;16l:1;l74:Il, resell(3)67:13;73:14;139:I,4 156:16 132:8;146:3 14;178:21 137:9,19;138:4

recently (I) reflect (3) relationship (3) report (49) reserve (I)97:22 5I:l0;llg:6;136:l9 39:12;46:I;l68:5 43:6;46:lI,ll,12; 70:25

recess (5) reflected (1) relative (3) 47:6;50:12,13,14;57:24; residence (t)72:24;1I0:25;l18:11; 82:10 7l:2l;98:16;116:25 59:9,10,11,12,13,15,19; 141:6162:9;170: 12 reflection (1) relatively (2) 60:6,10,12, 13;70:2; residential (40)

recip(I) 171:13 36:21;l16:23 76:l0;101:5,12;102:16; 35:13,14,17;37:12;125:21 reflects (1) release (1) 103:21;104:23;107:24; 76:l4,l6,22;77:2;83:19;

reclass (I) 43:9 60:19 111:6,9,14,15,23,24,25; 84:20;98:25;99:13;129:16 reform (2) relevance (3) 112:1,6,9,11,17,25; I00:3,lI,13,2I;102:2,4;

reclassification (9) 90:4;l29:6 33:l5;89:22;93:14 132:10,12,22;136:4; 106:l2;109:19,23;38:lO;62:22;63:lS; refute (1) relevancy (2) 15l:13;156:20;l78:6; llO:l5;137:l,8,l0;125:24;126:24;127:6; 93:25 l03:5;l 18:2 179:10 138:l8,23;139:2,3,25,161:1 l,l6;165:20 regard (2) relevant (19) reported (14) 2s;l40:s;14l:l,7;153:2;

reclassilications (1) 121:9;154:4 37:20;45:20;54:1 I; 46:7;47:12;49:6;50:2, 168:15;171:25;172:l;53.12 regarding (9) 61.9,19,23,64.10,82.6, 4,7,20,75.20,80.2, 173.1,174.4

reclassified (7) 30:9;99:4;l 16:4; 89:23;93:20,25;95:1,5; 81 :l3;99:l3;l00:3; resolution (1)63:I,l0;125:lO;l27:3; 122:15;l28:24;130:18; 98:lO;117:18;146:11; 113:l;134:l0 179:3131:5,5;165:17 144:Il;146:21;168:18 150:18;154:21;178:15 reporter(1) resolved(l)

reclassify (2) regardless (1) relief (1) 119:7 48:362:21; 160:10 142:23 97:20 reporting (5) respect (4)

recognize(1) region(1) rely(4) 59:17;61:l5;103:2l; 60:7;119:5,li;175:j159:18 122:20 47:4;58:2 I ;1 55:8; 142: l3;144:20 respond (4)

reconcile (1) regional (1) 176:8 reports (34) 70:5;165:23;167: (9,135:21 156:5 reinain(3) 40:lO,1l,17,17;41:l; 24

reconsider (I) regular (2) 162:16,22;168:4 43:7;45: 10;46: 10,11; responded (1)69:1 122:18;164:22 remaining (I) 47:l,14;50:ll;56:6; 167:18

record (16) regularly (1) 65:6 58:9,l6;59:9,I 8;6 1:1,3; response (8)43:3;51:I0;65:l0,25; 138:11 reinains(2) l0I:4;103:14;107:21; 46:lO;73:18;82:25;79:1;99:4;105:21; regulated(19) 130:ll;173:12 112:13;113:I;132:8,10, 91:9;I01:l;115:6;114.16,119.5,150.3, 63.4.5,66.24,25,67.9, remember (4) 20,134.15,135.11,23, 147.16,17154.3,166.19,167.23, 11,19,68.4,9,79.19,22, 30.21,123.23,145.25, 136.12,14,137.3,147.18 responses (3)171:16;I73:7;176:13 84:I9;90:8,9;104:lO; 167:15 represented (I) 32:2;114:16;130:2l

Miii-1i-Sci’i1,i@ JHBUEHRER & ASSOCIATES (197) realm - responses


July 17,2012responsibilities (1) I 96:24;98: 19; 100:10,11; 154:7 selection (1) 66:19,1 9,24;67: 10,11,

129:14 l02:7,7,8;106:8;J 10:22; satisfied (1) 141:15 20,20,23,23;68:5,9, 12;,-— responsibility (3) II I:l;l 14:15,21;125:23, 165:11 sell (2) 69:l8;70:l6;75:15,20;

( l29:12,23;177:5 25;126:23;134:l,9; save (2) 61:7;163:5 71:3,8.12,12,13,14,16,responsible (I) l35:9;141 :11,20,21; 99:7;154:3 sells (1) 20.25,25;78:3,5,7;79:4,32:23 l43:1;l44:4;145:lo,ll; Savvis(2) 56:19 l8;80:3,6,17;Bl:1l,24;

responsive (1) 147:12;151:9;173:8 156:6;157:9 seniors (3) 84:16;90:7;92:I 1;94:7;116:3 right-hand (3) saw (I) 162:19;168:20;177: 14 95: l9;109:19;I 15:4,5,

restricted (1) 132:16;l33:5;149:19 169:6 sense (2) l0,14,16;{23:4;125:9;130:20 ripples (1) saying (12) 39:9;93:22 126:25;12$:24;136:6;

resült(6) 172:10 50:17;57:14;60:24; sentence(J) 138:13;l43:ll;145:g.90:4;131:10;133:I; Roberts(I) 61:7,18;78:6,9;94:l6; 172:18 l48:22;153:4;156:24~156:24;157:24;165:19 134:18 103:18;109:21;154:14; sentences(1) 157:14;159:7,l9;

resnlting(I) roles(1) 174:3 161:24 160:I5;165:l7;171:25153:6 130:4 scale (1) separate (4) serving (1)

resume(J) roll(2) 39:6 54:17;64:18;76:12; 120:1773:1 163:8,16 scheduleç2) 143:20 set(S)

retail (13) room (4) 131:23;152:19 separately (4) 47:22;49:19;65:20;43:2l;56:17;57:I 1,13, 51:6;99:19,20;147:8 scheduled (1) 76~l0;l l6:5;140:6; 98:24;128:2;149;24;20;64:15;73:16;74:12; Ross(I) 72:3 145:5 159:8,14100:l0;137:8;138:l6, 147:2 Scherer(2) separation (I) sets (4)20;174:25 rough (1) 147:2,2 126:17 31:9,1 I,12;155:25

return (3) 141:25 scope (19) series (2) settlement (2)58:13;59:4;l05:12 roughly(4) 33:17;39:6;53:1l; 73:4;161:23 30:l3;l09:25

returns (1) 54:9;5&6;75:24; 152:8 54:1 2,20,22;67: 14,17; serIously (1) seven (4)70:2 round (2) 68:20;70:6,22;7l:2; 94:10 l19:25;134:4,5,6

revenue (27) 35: l2;87: 14 81:22;99:5;I 13:19; serve (2) seventy-nine (1)36:l8;37:9;48:3; rounds (I) I l7:8,14,l6;l43:23 I 15:9;138:18 147:2250:I0,ll,l4;53:17;54:7, 162:2 script(2) served(6) several(5)9;55:2,5,9;56:6;58:2,22; row(S) 91:15;92:8 48:3;l03:l0;l12:9; 32:9;120:9;125:l7;6l:3;62:14;73:6;75:13, 51:7;133:6;137:14; seaboard(1) 113:8;163:9,9 171:12,1220,23;77:6;Sl:13;82:14; 141:7;149:18 116:24 serves (5) Shall(J)107:7;108:8,14 rows(I) seal(1) 51:17,21;163:12; 173:21

revenues(31) 176:2 99:18 171:17;172:9 Shammo(1)36:23;42:4;43:25; rule (I) SEC (4) service (92) 60:1149:5;50:l,3;54:3,14,17; 159:1 40:9,l6;43:6;49:I5 35:13;37:l;33:I8; share(9)56:4;58:7;66: l7;82: 13; ruled (2) second (22) 52:7;53:25;62:25;66:8; 37:20,22,25;38:2;107:5,9,14,15;1O8:l,4,6, 68:19;70:3 48:15;51:22;52:8,9, 70:16;78:17,19,21; 131:l,3,7;147:3;175:27,l5,l9;l09:9,12,13; ruling (3) I8.l8;65:9;66:7;77:21; 79:24,25;80:l;84:5,1 1, shares (I)ll0:l,l;113:19;153:6,6 68:23;69:l;82:4 80:13;81:15;85:4;91:24; 20,22;85:25;86:3,4,7,12, 166:22

review (9) rulings (2) 96:20; 102:5;105:14; 18;92:7;96:6,12,16,18; shed (1)30:14;32:20,22;89:14; 53:I0;67:13 127:13;133:4;14l:I; 100:9;103:l7,21; 177:7126:3;144:5;145:l3; run (1) 171:23;173:5;175:24 104:15;106:12,23; sheet(3)146:4,14 152:10 Section(S) l08:15,17;112:12,lo,l7; 61:2l;91:24;17l:4

reviewed (5) runs (1) 65:13;70:12;Sl:12; 125:22;13I:4;137:8,9, sheets (1)l20:S;l45:16;i46:2; 143:14 96:l5;106:1 l8;138:5,23;139:3,I5, 132:9l5I:22;173:l8 rural (1) sections (1) 25,25;140:5,8,ll,l4,23; shifted(1)

reviewing (3) 125:12 123:13 141:2,3;142:14,16,18; 54:1085:l4;91:22;146:l4 security(1) l43:13,15;l48:21; shifting(3)

reviews (I) S 162:19 157:15;159:4,9;160:13; 54:14,16;55:9135:14 seek (1) 161:2,5,lS;163:13,14; shops(I)

revised (2) safe (1) 32:3 164:2,3,3,17,20,23; 151:2171:18,18 162:17 seeking(3) 165:4,11,14,18,23; short(S)

Rhode (13) same (21) 160:10;161:ll,13 l67:21;168:7,l 1,13; 7l:7;110:25;l 18:11;I l5:7,19,23,24;l 16:3, 36:24;46:12;64:14; seems(S) 175:16,22;177:6,14 162:9;170:I29,l8,18,25;1 17:5,12,18; 67:4;70:22;96:l8; 33:17;46:l;47:$;50:6; services (99) shortly (I)118:1 l00:14;104:24;l06:3; 54:19;67:15;156:l; 35:17,21,2236:2I; 31:1

right (51) 108:20;110:2;1 16:3; 164:22 37:8;38:I0,14,T5,17,21; show(14)30:25;35:20;43:lO; 121:6,7,20;148:3;i52:I; segment (4) 39:5,6,22;44:l 1,23,24; 45:1 l,I8;54:3;59:13;49:25;57:l5;64:4,5; 155:2;166:22;l71:22,24 49:1;! 12:25;lS6:25; 45:19;48:8,12,13,l6,25; 62:18;67:2;89:I l;99:l I;7l:l,8;75:I l,18,19;76:3; Sarah (1) 157:2 50:20;52:12;53:2;55:l3; 100:4;107:21;l27:20;78:12;80:12;83:6,ll,18; 173:6 selected (3) 56:13,24;62:2l;63:11, 130:25;l53:l,585:9;87:7,17;88:14,17; 1satisfaction (I) 43:25;132:7,19 13;64:14,22,25;65:6; showed (I)

JHBUEHRER & ASSOCIATES (198) responsibilities - showed

BPU INVESTIGATION RE; ILIEC SERVICES

July 17, 2012141:20 sJower (1) source (1) standby (1) 164:9

showing (7) 109:12 171:14 107:23 still (23)45:12,I5;91:25;92:I, small (3) sources(3) stands (2) 42:15;45:25;55.20;3;1l2:ll;l13:7 43:21;49:2;l0I:Io 98:22;130:l;151:23 90:ll;133:IQ 62:15;65:22;66:25;

shown (3) smaller (2) space (I) start (12) 81:17;l05:8,8;I07:7;87:25;Il0:4;151:21 56:l0;141:3 102:18 30:l8;50:2I;63:2; 1I2:17;113:2;116:15;

shows (12) smart (1) speak (I) 732;99:l0;102:9;109:6; I 18:2;150:21;163:7,14;45:17;46:12;47:5; 158:12 51:14 122:12,23;123:l;156:2; 167:4,6,7;174:9,Io;58:2,3;59:20,24;62: 13; SMB-30 (I) SPEAKER (1) 170:24 179:7112:25;141:8;15I:17; 174:1 65:24 started(S) stipulatlonQ)172:24 SMB—C~3 (1) speaking (1) 31:1,3,4,11,12,25; 37:6,7;135:2

shrinking (4) 175:4 58:6 36:3;60:5 stock(S)56:lO;88:4;89:7,9 SMITH (93) speaks (I) starting (2) 33:2,21;34:9,15;

shrinks(I) 2916,24;33:3,14’ 60:1 93:13;139:12 123:1688:25 34:10;40:4,I9,24;41:3; specific (12) startling (1) stocks (I)

sic(1) 42:1,22;45:3,25;46:17; 4O:4;45:7;60:3,3,5,j5 176:10 61:1365:11 47:9,14;49:[o;50:6,12; 123:24;130:l8;138:3; starts(3) stopped(l)

side (3) 5l:5,9;53:9;54:16;57:5, l56:23;160:l8;162:3 87:9;89:2;133:6 177:1068:3; 150:6; 163:10 25;60: 1,9, 16,22;62:5; specifically (12) State (27) storm (2)

signed (5) 65:20;67:l2;68:lg,~; 45:1 l;48:2;65:14; 29:12,17,22;34:21; 164:l3;166:255!:3,6,9;94:23;99:20 69:3;70:1,21,25;71:6; 90:5;93:25;9$:3;125:I I; 38:9;64:13;73:lo;74:2; story (1)

significance (2) 72:12;ShS,17,20;32:3, 128:13;144:21;i61:6; 77:20;79:19,19,24; 59:195:4;97:23 22;85:4,7;88:20;89:17 172:1 I;175:I4 97:15,24;98:9;106:22; strateglc(1)

significant (4) 19,21;90:I0,13,25;93:6; specify (I) 115:7,1 I;I 16:19,21; 44:1077:7,I6,18;87:8 94:12;98:8;99:9,12,I5, 151:10 i 19:23;125:5;126:22; stratifications (1)

similar(S) I9;I00:I8;102:22; speculation (1) 13I:13;143:23;l68:12; 176:497:14,22; 129:24; I 03:2,4;l 05:4,8;1 06:5, 46:6 177:6 Street(S)135:14;164:5 13,25;107:13;109:2; speed (1) stated (1) 29:13,2I;73:19;92:23;

similarly (1) I I0:i4,l7,22;l 13:13,15, 71:18 155:14 170:14172:2 23;1 14:1,21 ;l 16:6,13; speeds (1) statement(S) strike (5)

simple (3) 117:7,14;118:2;166:4; 103:23 56:14;61:21,22;77:9; 37:21;76:j4;120:1455.1,121.15,149.13 l70.5,9,179.5j7,21, spend(2) 130.17 21,144.6

Simply (3) 180:1,4 72:4,7 statements (4) strong (2)132:4;165: 19;171:21 Snag (I) spent (I) 49:15;71:2I ;95:3;98:S 62:9;I77:4

single (4) 74:14 32:12 states (15) struck (1)77:14; 140:20; 151:5,5 snapshot (2) spots (I) 90:10,1 1;98:12,13; 122:4

single-line (29) 59:I8;60:I5 171:12 I 16:15,24;l20:1; studied (1)35:18;36:2,4,5,8,I3, sold (2) Sprint(2) )28:12;129:5,25; 156:2121;50:22,25;51:I6,20; 140:1,4 126:17;127:23 159:18;168:9;l69:9,21, studies(9)52:7;54:2;57:l7;62:25; somebody(6) squarely(I) 24 38:20,23;39:g;130:l6;63:4;76:16,22,23;83:II; 153:19;163:4,5; 35:11 statewide(3) l53:l5;154:1,21;lss:l.133:22;138:l8,23; 164:i3;165:23,25 staff (4) 68:6;82:l0;105:2 179:19149:13;151:l,8,13,17,Ig somehow(1) 32:18;47:10;i62:I4; static(1) study(11)

Sitting (2) 55:9 169:16 38:5 38:6;l06:j I;130:I8;49: 14;143:17 someone (I) stage (1) statistical (2) I 52:2;153:13,16,20;

situation (2) 84:10 47:23 132:7,19 162:4;169:5;l77:lg;61:3;164:l sometimeQ) Stairh (6) statistics(4) 179:15

situations (1) 122:20 128:3,4;l29:lg;l30:2; 43:25;98:22;146:5; subcategories (1)167:10 sometimes(1) i47:6,7 176:7 85:10

six (2) 46:18 Stairh’s (I) status (4) subcomponents (1)115:9,12 somewhat (2) 128:21 13 1:6;169:j 1,20,23 84:25

sizable (I) 49: l8;15j :21 stand (1) statute (10) subcontract (1)177:8 somewhere (1) 119:25 37:23;68:13;69:19,25; 55:2

skip (1) 131:17 standaione (16) 79:21;90:6; 105:2; Subject (29)42:7 sorry (11) I I0:I5;114:9;1 16:5; I lO:13;127:8,Is 30:23,24;4I:24,25;

skipped (I) 82:3;103:19;12l:1,I4; 117:19;138:24;139:2; statutes(1) 42:l;50:24;57:3;63:1945:15 123:24;I30:8;136:9; 140:5,7;142:2,14,21,24. 123:13 22;70:17;7l:23;76:13

slightly(l) I39:23;I43:25;149:I7; 157:19;167:20;i68:l3; statutory(7) l9,2l;77:4;9I:l2;175:9 150:16 173:2 38:l;67:5,i9;98:14; 102:I0;IO9:I9~III.jl

sloppy (1) sought (2) standard (2) I 16:3;143:24;I46:l3 lS;123:6,25;124:!;92:20 38:!0;16I:I6 59:6,7 stay(l) 125:7;I30:II;I5o:21;

slow (1) sounds (2) standards (2) 71:16 152:17; 157:21,23101:9 30:24;49:25 98:10;127:2 stays (1) subjective(I)

JHBUEHRER & ASSOCIATES (199) showing - subjective


July 17, 201226:22 sufficient (I) 85:24;86:2,o,g I 3,14,21; 177:23

submissions (I) 154:6 T ten (1) Texas (1)99:25 suggest (I) 175:25 125:1

submit(S) 69:22 table (8) ten-twenty-one (I) thereafter (1)67:20;127:19;l29: 16; summarizes (1) 37:9;45:lS;135:20; 68:7 31:1l44:24;I45:2 172:23 l39:1I;I71:9,Il,Ig; tenuous(2) therefore(3)

submitted(s) summary (2) 172:23 46:l;6l:5 67:25;82:lj;143:632:25;I19:22,25; 132:9;16I:23 talk(3) term (3) thinking(I)l23:5;154:J3 summer 0) 156:25;170:5;175:20 39:21;46:I8;86:22 143:17

subscribe (2) 122:21 talked (7) terminal (2) third(S)141:24;178:5 supervision (1) 129:25;14I:9;162:I; I638,l0 66:l1;137:12,12;

subscribed (1) I 19:15 164: l8,19;168:8;l 72:5 terms (10) 139:13; 146:18,24;161:5 supplemental (1) talking (13) 39:9;57:8;72:2;79:9; 147:3;155:2

subscriber (7) 100:20 3~:5;35:~;49:p~Ø:7; 85:16;87:7;l 16:19; Thirty (1)56:l6,18,20,24;57:g, supplied (2) 107:20;l08:7;)22:19; 1302l16018169:j I 72:2210,18 128:20;130:l 130:19;143:5,7;l59:11; terrltory(l0) ThomasØ)

subscriptlons(1) supply(s) 163:25;164:25 84:10:86:1,9,12; 146:17112:21 38:23;39:2,4,IO;46:g talb (4) lOO:9;l04:16;138:6; though (2)

Subsection (2) support (6) 59:13;156:4,22;l62:2 143:1 l,l6;l53:3 99:7;163:265: 14;70:l2 96:1;97:4; 122:17; tariff (6) test (4) thought (4)

subsegment (1) 125:l2;126:7;130:16 53:5;76:l8,25;77:5; 37:l8;67:4,5;108:7 34:1 I;104:13;I58:23;113:9 supported (4) 80:6;l 10:12 tested (1) 167:11

subsequent(3) 96:23;97:1;98:3; tariffed(1) 158:21 three(29)92:16;95:8;l 15:22 127:19 79:25 testified (II) 30:14;32:6,9,lO,12,l3

subsequently (1) supports (2) tariffs (2) 29: 15;56: lO;109: 11; 24;34:22;37:1 3,18,22;103:11 94:9;173:1g 57:21;l68:5 116:8;119:3,22;l28:g, 38:4,22;40:6;41;3,lo;

subset (7) sure (24) tax (3) 14; 129:24; 155:14; 64:14;73:5;3 1:23:98:14;67:l0;77:12,l9; 30:24;31:15;33:1s; 70:2;159:2,3 170:15 l43:24;144:9,l5;145:j106:l9;109:16,18; 40:l5;43:3;45:4;so:18, taxes(2) testifying (1) i1;154:7,lg;l61:21;150:17 lR,20;51:5;53:12;55:20; 45:13;59:4 116:13 174:12

subsIdization (2) 67:1 5;85:6;87:3, ~ team (I) testimonies (3) throughout (2)69:2;90:7 113:14;l23:14;124:14; 122:17 l05;14;11I:24;119:14 l68:Il;177:I

subsidize (3) 142:20;l 51:11:152:1; technical (1) Testimony (156) throwing (1)66:19;67:20;70:16 167:23;172:22 78:15 29:l,4,6,9;30:6,lo,lg; 103:6

subsidizing (3) surprising (1) technician (1) 3l:2,4,8;32:7,9,Io,lo,l4 Thursday (1)68:ll;90:8,9 176:8 163:11 l7,24;33:II,17,23; 72:14

subsidy (2) Survey (16) technological (I) 34:22;352,8,9,12;36:20; Tier (2)67:4,5 73:8,I6,17;74:4,12,l3; 38:7 37:15,17;38:2;40:2; 48:7,7

substantial (I) 75:l;80:l4;8I:lo;91:I5. technology (1) 46:7;47:12,ls;53:23; times (2)66:22 98:I2;l38:18;l69:13; 167:7 58:9;61:2;62:20;63:7,9; 102:1 l;l2$:7

substantially (I) 174:25;175:8;176:3 telco (1) 67:7;77:I l;80:l9;87:25; title (3)111:25 Susan 0) 50:19 92:1 6,25;93:3,5,l3;95:4; 29:1 8,22~ I 19:17

substantive (I) l73:l3 telecom (8) 98:1:100:6,11,18,23,25; t—o (1)172:2 I suspect 0) 77:8;82:8,9,10,16; 102:17,19,23:103:9,24; l21: l3

substitutable (1) 147:6 96:5;97:2; 104:16 104:1 I,12;105: 12,22; today (20)131:8 sustain (6) telecommunIcation (3) 107:3,10,20,21; 108:22; 32:25;42: I 6;49: 14;

substitute (4) 106:2;107:9;I08: 13; 77:1 l,20;78:7 I I0:5;l 12:5.8,10,24; 55:20;71:13,22,24;72:339:l4;144:25;145:4,6 109:8,13;l10:I telecomniunications(6) Il3:7;l14:5,19,25; S,$,lg,l9;l1o:Ig;lIs:9

substitutes (4) Sustained (4) 66:17;74:2;75:l3; 115:6;1I7:8;IIg:]2,14, Il;121:6;I51:7;l68:13;39:8;145:3;146:3; 34:2,1 l;69:lS;9l:2 77:24;j 19:20;126:21 l6,la.zo,22;IIg:9,2224 l70:10;l73:9165:10 switch (5) telephone (12) 25;12l:6,9,l0,l2,l6,20, together(7)

Substitution (2) 39:7;78:17;l 18:8; 58:16;66:8;75:7; 22;122:l3,I6,24;123:2, 37:12:44:6:45:21;86:2,6 l63:8,l6 77:l3;32:l2;84:13l6; 8,lI,I2;127:22;l2$:5, 92:12,19;128:g;169:16

subtotal (3) switched (2) 96:6:104:10 15 l6;132:5 I l.I7,20,22;129:17,21; told (I)87:22,23;13718 78:l5;l 12:20 telephony (1) 130:6,23;131:l l;135:20, 42:25

succeeding (1) sworn (3) 104:1 25;136:7;139:s;l42:4,7, toIl (7)102:5 29:14;) 19:3;170:15 Teleport (I) 8;143:22;l44:3,6,l8,24; 140:l,5;l41:3,l2,24;

success(1) synopsis(I) 76:10 147:13,14;148:3; 142:3,17131:8 43:9 television(1) 152:23;l53:25;154:l3; tomorrowØ)

Sue(2) system (I) 81:21 155:9,10;161:I;l62:l; 72:6l20:24;134:7 162:16 telling (3) 168:9,17,23;170:lg,24; ton (1)

suffering (1) systems (I) 58:25;59: l;79:23 171:2,4,7,20;] 72:6; 108:1545:10 149:1 tells(4) l73:l0,12,17,I8;l74:7, took(2)

-t• JHBUEHRER & ASSOCIATES (200) submissions~ took

BPU INVESTIGATION RE; IL,EC SERVICES

________________ July 17, 2012

48:9;124:5 triggered (I) 106:2;107:9;109:8; 13 l:22;136:3,I5,I7; valuable (2)top (12) J 158:18 174:15 138:25;152:7;l63:14, 38:3;167:6

32:8;43:16;47:25; triple (1) unavailabilIty (1) 17;165:23;l76:9 value (I)I0I14;112:l;132:l5; I 178:13 173:6 update(1) 38:5142:10,12;144:4; truck(3) unbundled(2) 112:3 variableQ)149:lS;156:ll;166:5 163:8,17;165:25 56:1,15 updated(4) 87:1!

topic (1) true (6) Uncontrollable (1) 101:!;! 12:1 ;l39:7,10 variation (1)164:17 55:9;79:7,IO,12,20; 86:10 upon (16) 87:8

total (32) 82:2 under (37) 53:10;58:9,l0;61:3; various (10)44:3;58:18;61:l;67:3; trunk (1) 44:10,l3,21;49:6; 64:7;68:l$;73:7;82:l5; 32:l;43:18;73:12;75:13,l5;37:2I,22; 135:18 54:3;56:14;57:21;63;23; 83:1;109:16;127:2; 8O:16;124:7;129:24;l0l:8;108:3;l 12:20; trunks (I) 81:12;82:1O;84:6,23; 154:2,3;159:I7;171:13; 133:19;143:l8;162:2;I I5:16;131:20,24; 136:5 87:5;99:l8;lOl:7,20,22; 179:7 178:2133: 12;137:8,9, 17; try (6) 103:13;105:2;106:22; upper (1) Vasington (46)138:l,2;139:I8,19; 38:25;69:23;133:15; 112:17;119:14;128:2; 93:21 29:2,5,7,I0,16,I7,19,141:20;144:17;149:14, 149:22,25;l64:7 135:2;137:8;138:4,7; usage (4) 24;30:I,3;33:l0;46:g;19;152:15,16;167:I; trying(14) 139:20;l48:19;149:19; 91:16,20;92:I,4 47:18;51:17;55:3;61:2;168:11 ;175:17,19 39:1 1;52:23;54:I0,22, 157:25;158:l3;159:14; use (19) 66:5;72:19;74:20;82:2;

totally (2) 24;57:6;61:25;68:l; 160:18;168:4;l70:20,22 37:25;41:I0;48:16; 83:4;90:l2;93:l2,I5;54:19;lI6:21 103:8,I5;106:17; underlyingØ) 66:17;70:14,15;82:8,l5; 95:20;98:21;Ilj:5•

totals(3) 107:1I;lI1:24;145:5 94:24 86:3,7;103:23;l23:l; 113:l6;114;l,2,5,5,o,24;148:7;149:2 1,22 turn (9) undermine (1) 165:1; 168:19,20; I l6:2;162:21 ;163:7,21,

touched (2) 66:7;93:5,6;120i0; 98:7 I69:18;174:5;177:9,9 25;l65:7;166:2;168:22;31:9;114:24 148:9;156:II;171:7,21; undermines(I) usedØ6) l69:4;l75:6,ll,13

toward (I) 172:5 95:2 39:23;48:I l;5$:12; vast(1)174:9 turnIng (7) UNE (5) 61:7;98:6;l04:I;l49:23; 78:6

Tower (I) 12I:22;i48:3;172:16, 49:19;56:l4,19;68:5; l59:3;162:23;163:3; verifying (2)29:13 18;I73:3;174:14;l77:l I 138:4 I74:6;175:22,22,24,25; 149:6,7

town(I) TV(1) UNE-L(2) 177:14 Verlzoii(Izl)166:24 81:10 133:7;137:23 u-s-c-d(I) 29:12;32:2;33:2,5,21;

traditional (4) twcnty-cIght-flve.lwcney.six (‘) unemployment (I) 174:6 35:5;36:6,7, 14:40:9,10,59:6;78:15,24;79:3 148:7 117:5 useful(1) I0,16,16,l7,20,21,25;

traffic (2) Twenty-nine (1) UNE-P (I) 104:13 41:2,3,14,2l;42:15,15•79:9;125:2l 119:21 137:23 user (4) 43:6;45:9;46:2,4,19,21;

transactiou(1) two (40) UNE-P-2(1) 57:12;58:22;62:14; 48:20;49:20;so:l,2,4,Io,95:8 31:14;41:3;44:6;63:6, 133:7 101:7 19;5l:17,21,24;52:3,5,7

transactions (3) 13,15, 16,24,24;72:2; UNEs (8) users (2) 8,9,15,1 7,19,24,25;53: I,42:3,16;53:Il 78:14;82:7;86:lO;94:l9; 48:19;50:2;53:7; 102:2,4 8,18,19,24;54:l,2l8.

transcript (14) l00:16;l0I:4;121:lI, 55:12,19;13l:25;132:2; uses(3) 55:5,5,6,12,1356:2 1946:25;47:6;49:4; 25;132:6;I38:8;142:Jo, 138:7 60:I1;168:2l;169:1 57:4,16,17;58:4,21;50:21;5I:l,I1;85:20; 12;148:12;149:14; unfair(1) USF(5) 60:l8;61:7;62:6;66:21;99:I0,14;102:9,I4; l5I:5;159:25;160:4,5,8; 69:3 I25:5,6,14;I26:3; 69:3;73:17;74:ls;75.23;I09:6,l0;128:9 I64:23;l65:I,4;I66:24; uniquc (2) 129:6 78:I0,23;sI:7;g5:25~

transcripts(1) 168:15,2l;I69:l,19; 171:15,17 uslng(16) 86:I,l,9,l0,Il;go:20;61:12 l70:2;I72:25;174:1l United(1) 56:II;92:4,5,7,1); 91:3;92:4,I1;93:Io,12;

transfer(2) type(S) 116:15 136:25;149:l4;151:23; 94:3,3;98:22;100:l;84:15;102:4 39:14;48:24;115:Io; unknown (3) 152:I;153:17,I7;169:6; 104:7,I6,29;105:l;

transition(l) 130:I;159:I 172:12,14,15 I75:I6;176:6,9;177:6 109:20;117:l2;l32:)5;137:7 types(7) unless(l) usually(I) 164:3,21;l65:l4;

treat (I) 39:2,19;l06:21;l36:5; 68:22 49:16 166:I9;168:23;169:J;64:18 146:7;l48:22;154:20 unprofitable (3) Utility (3) 171:9,17;I72:9,25;

treatise (1) typically (I) 106:24;107:4,4 58:1 l;59:6,7 177:7,l8,24;179:g,l I,146:16 39:2 unquote (1) Utilization (3) 22;180:7

treatment (I) typos (I) 112:22 86:1 3;88: 13,24 Verizon/CentuI,iI,inkts (1)160:15 171:21 unsuccessful (I) utilize(2) 144:5

treats (I) 97:21 143:3;l44:20 Verizon’s (4)64:24 U unusual (1) utilized (I) 43:9;77:6;166:16;

trend (2) 140:13 138:12 172:2488:2;136:25 Wi-uk (I) up (24) UUNET (1) verses (2)

trends (I) 50:13 30:l5;38:25;44:I 1; 48:10 178:2,587:10 ultimately (1) 54:3;61 :17;71:19;72: 19; version (12)

tried(1) 95:11 86:5;87:8,15;91:21; V 29:2,5,7,l0;96:13;135:2) unable(4) 96:20;lOO:5;122:22; 118:13,15,17,19,2l,23;

Min-U-Scr,1)r(~D JHBUEHRER Sc ASSOCIATES (201) top - version

BPU INVESTIGATION RE; ILEC SERVICESJuly 17, 2012

171:24 33:19;39:24;49:18; 35:8;54:16,17;58:25; 107:I8;120:12,14,l6,versus (2) 50.17,52.11,53.16,57.9, 94.7,97.24,24 18,19,121.2,3,13,122.3,

116.25,142.1 78.18.88.2,97.6,16, wholesale (18) 172.2,12,13,1s,I6,20,20.vertical (2) l07.S,I17.12,155.25, 44.14,22,47.24,48.1, 173.24,25,174.18

157:17,18 l59:ll;167:3;175:12,13 3,12;49:i;55:l8,i8,20, words(3)VGE (2) ways (2) 24,25;56:12;57:8; 38:25;101:22;171:12

i33:I0;141:21 69:23;78:14 138:l0,i5;156:6;157:7 work (3)vice(1) wearing(1) wide(1) 3I:16;32:16;123:12

94:2 134:7 71:6 worked (2)Victor (1) website (1) willing (2) 31 :13;167:2

29:20 43:8 71:16;154:l working (2)video (5) week (I) willingness (2) 97:16;177:15

8l:ll,2l;82:9,15; 96:21 39:4,7 works(I)143:20 weekly (1) win (I) 164:14

view (I) 122:19 84:9 Worries (1)177:4 weeks (5) wIns (2) 74:14

violated (1) 94:19;164:24;165:1,4; 83:20;84:2 write (3)69:12 166:24 wire (2) 32:24;90:20;153: 13

violation (3) weight (1) 98:1; 166:21 writing (2)67:25;68:12;69:25 153:25 wireless (9) 31:4;l 14:18

Virginia (1) welcome (1) 75: 17;77:15;84:21,22; written (1)125:2 79:6 96:12,I5;120:18; 119:22

vitae (1) weren’t (I) 127:18;161:9 wrong (1)124:15 109:25 wireline(S) 177:17

VNJ-02C (1) what’s (12) 44:3;46:2l ;58:2,4;29:1 43:15;46:7;60:20; I ll:6;112:6;113:2,8 Y

VNJ—02P (I) 98: 13;99: 12;108:l I; wires (1)29:4 l16:25;122:19;139:19; 78:18 year(13)

VNJ-03C(I) 144:13;146:20;156:I9 wish(I) 41:17;62:17,I8,l8;29:6 whenever(2) 152:24 87:l8;95:18;1 10:4;

VNJ—03P(I) 169:10,16 withdrew (1) I l5:21;125:18,18;29:9 WHITE (127) 91:5 136:21,22;I52:20

voice (IS) 30:l;33:9,20;34:4; within (tO) years (21)78:14,16,19,20,20; 36:12;40:5,6,I9;41:1,6, 32:2;64:8,8,l0;77:17; 30:14;43:4;47:2,l0,79.2,102.16,103.18,25, 9,13,42.13,18,43.1,5, 85.25,86.9,126.21, 16,48.10.92.3,5,7,104.5,17,133.11,143.15, 45.7,8,46.9,15,20,24, 130.20,132.10 107.22,108.2,115.9,12,l9;177:25 47:1 l,17;49:4;51:7; without (6) I 19:21;125:17;l69:6,I0,

voice—over (3) 52:21,23;53:13,l5;57:5, 36:18;72:8;94:20; 17;175:23,24;176:l78.2,9,10 25,60.17,61.6,62.3,6, 133.16,165.2,177.10 Yep (5)

VoIP (17) 65:8,21;66: I ,3,4;67: IS, WITNESS ($7) 44:5,7;8 I :6;84:24;75: 17;78:2,21,22,24; I 8;68: l6;69:14;70:4,9, 33: 12;35:9;40:7,23; 108:2379.8,21,24,80.4,104.1, 24,71.7,11,16,72.2,13, 41.5,11,12,42.12,52.15,112:20;l42:25;143:3,9, 23;73:I,2,3;74:19; 55:4;61:l0;68:I;73:24; Zl0,12;178:l3 81:ll;82:7,19;85:20; 78:lI,I3,25;79:6;85:5;

V-ø-I—P (1) 90:2;93:24;95:2;97:I8; 90:14,19;97:lO;105:l7; zero (1)78:2 98:l7,20;99:I7;l02:24; 107:18,25;108:12; 175:23

vulnerable(1) 103:I,3,4,8,9;104:4; 112:IS;115:I,24;ll8:5, zip(3)177:5 105:18;106:9,17;107:2, 7;124:20;127:25; 133:6,23;141:8

14,108.6,109.4,110.21, 129.18,136.9,12,143.8,W II 1:2,4;l 13:I0;I 15:25; 146:15;l47:8,22;I53:12,

I 16:2,8;I 17:11,17; 14,19,21,22;154:5,12,Wait (4) l186;122:8,9,Il;I32:6, 16;160:17;167:18;

80.22,22,93.1,165.3 17,24,133.2,15,I42.6,8, 170.I,17,173.15,21,23,waiver (2) 145:21;150:8;l5I:12; 176:21,25;I77:19

173:13,13 153:i,21;l54:19;155:I3, witnesses(8)Wall (2) I 7,24;158:4,7;160:20, 56:9;71 :1 3,23;72:4;

73:19;92:23 24;162:6,10,12;169:5; 93:19;94:22;128:I;wants (5) 170:l6,17;173:8; 170:10

SI :22;70:4;I63:4,16; 174:23;176: 15,17; witnesses’ (1)165:23 178:24 32:10

watch (1) White’s (2) witness’s (I)61:11 46:4;l69:25 95:3

way (18) whole (7) word (20)

JHBUEHRER & ASSOCIATES (202) versus - zip

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