BEFORE THE WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION

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DOCKET NO. UT
-
003022

PUBLIC COUNSEL COMME
NTS

REGARDING QPAP FILED

BY QWEST
IN THE MULTI
-
STATE
§
271
PROCEEDING

1

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SPORTATION COMMISSIO
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COMMENTS OF PUBLIC COUNSEL IN RESPONSE TO THE PERFORMANCE
ASSURANCE PLAN FILED BY QWEST IN T
HE MULTIPLE STATE WORKSHOP
ADDRESSING QWEST’S POST
-
ENTRY PERFORMANCE PLAN


I.

INTRODUCTION

The Public Counsel Section of the Attorney General of Washington respectfully submits
these comments for consideration in the multi
-
state 271 proceeding considering Qwe
st’s
Performance Assurance Plan (hereafter referred to as the “QPAP”). On July 23, 2001, the
Washington Utilities and Transportation Commission (WUTC or Washington Commission)
issued an order stating that the WUTC will join the multi
-
state 271 proceeding
for the purpose of
considering the QPAP.
In the Matter of the Investigation into U.S. West Communications, Inc.’s
(Qwest) Compliance with Section 271 of the Telecommunications Act of 1996,
Docket No. UT
-
003022, 12
th

Supplemental Order Ordering Participati
on in Multiple State Workshop Addressing
Qwest’s Post
-
Entry Performance Plan (July 23, 2000), at 5
.


DOCKET NO. UT
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003022

PUBLIC COUNSEL COMME
NTS

REGARDING QPAP FILED

BY QWEST
IN THE MULTI
-
STATE
§
271
PROCEEDING

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Public Counsel did not participate in the Regional Oversight Committee Post
-
Entry
Performance Plan (PEPP) collaborative. Also, a Washington
-
specific revi
ew of the QPAP has
not yet occurred. Consequently, these comments represent Public Counsel’s initial comments on
the QPAP. We anticipate that there may be further opportunity to comment on the QPAP as part
of a Washington
-
specific review. We note, howev
er, that our comments are shaped by our
experience working with Qwest and WUTC on retail service quality issues. For example, the
settlement agreement in the U.S. West


Qwest merger, approved by the WUTC as being in the
public interest, includes several
commitments related to service quality, including a retail service
quality program composed of eight performance measures that places $20M at risk annually.
Wholesale service quality issues were also addressed, as part of a “Competitive Settlement
Agreeme
nt” approved and adopted by the WUTC in their order approving the merger.
In re
Application of US WEST, INC. and QWEST COMMUNICATIONS INTERNATIONAL INC. For
an Order Disclaiming Jurisdiction or, in the Alternative, Approving the US WEST, INC.
-

QWEST COMM
UNICATIONS INTERNATIONAL INC. Merger
, Docket No. UT
-
991358, Ninth
Supplemental Order Approving and Adopting Settlement Agreement and Granting Application.

The QPAP for Washington must include appropriate performance measures and
significant penalties to en
sure that Qwest does not engage in anti
-
competitive behavior after
obtaining FCC approval to provide interLATA long distance service in Washington State. A
Performance Assurance Plan is a critical element in evaluating whether approval for entry into
the
long distance market is in the public interest. We recognize that as a result of the PEPP
collaborative, Qwest and parties from eleven participating states were able to reach consensus on
many issues. We further understand, however, that Qwest unilateral
ly ended participation in this
collaborative process in May 2001 and that several issues were at impasse.

DOCKET NO. UT
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003022

PUBLIC COUNSEL COMME
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REGARDING QPAP FILED

BY QWEST
IN THE MULTI
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STATE
§
271
PROCEEDING

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Public Counsel has conducted an initial review of the QPAP filed by Qwest in the multi
-
state 271 proceeding. We have several concerns with the QPAP
, as discussed in these
comments. Our comments are in response to the QPAP filed by Qwest to the multi
-
state
proceeding on June 29, 2001 as Attachment K to its Statement of Generally Available Terms and
Conditions (hereafter cited as “Attachment K”). We f
ocus on the following issues:

1.

Auditing and Monitoring

2.

Timeline for Reporting and Payment

3.

Limitations of the QPAP

4.

Penalty Structure

5.

Reviews

As we discuss in more detail below, we recommend certain modifications to the QPAP
that we believe will protect the
integrity of the plan and will make the plan more effective in
deterring anti
-
competitive behavior in Washington.

II.

AUDITING AND MONITOR
ING

Qwest has outlined their proposed audit provisions in Section 15.0 of the QPAP. Our
understanding is that the audi
t provisions are among the list of unresolved issues from the ROC
PEPP collaborative, according to the final report issued by the Maxim Telecom Group (MTG)
and NRRI.
Post Entry Performance Plan: Final Collaborative Summary,
Prepared by Bob
Center of MTG a
nd Frank Darr of NRRI (June 5, 2001) at page 14 (hereafter cited as “Final
Report of MTG and NRRI”)
.

Public Counsel has several concerns and suggestions for
modification of Section 15.0.

The QPAP addresses three types of audits or investigations: (1) audi
ts of the financial
system created to calculate penalties; (2) investigations regarding the accuracy and integrity of
data collected, generated, and reported pursuant to the QPAP; and (3) investigations of
DOCKET NO. UT
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consecutive Tier 2 misses.
1

Qwest proposes to con
duct what they have described as an
“independent audit” of the financial system used to calculate payments according to the terms of
the QPAP.
Attachment K,
Section 15.1 at p. 15. Public Counsel questions whether such an audit
would be truly “independent
,” given that Section 15.1 of the QPAP further states that: “The
auditor will be chosen and paid for by Qwest.”
Attachment K
at p.15.

With respect to audits or investigations of the accuracy and integrity of Qwest’s
performance data, the QPAP as propose
d by Qwest would place strict limits upon the ability of
CLECs to request such audits. Section 15.4 states: “Neither CLEC nor Qwest may request more
than two audits per calendar year for the entire region composed of the Qwest in
-
region states.”
Attachme
nt K
at p. 16. The QPAP further proposes that each audit “shall be limited to no more
than two performance measurements [PIDs] per audit.”
Attachment K,
Section 15.4 at p. 16. In
addition, Qwest proposes that CLECs agreeing to the terms of Attachment K m
ust agree that
Qwest “shall not be required to conduct more than 3 audits at one time for the region composed
of the in
-
region states….”
Attachment K,
Section 15.4 at p.16. We also observe that Section
15.0 of the QPAP does not contemplate a review or re
quest for an audit of the reliability and
integrity of performance measurement data by state commissions or other interested parties such
as Public Counsel.

We do not believe that the audit provisions outlined in Section 15.0 of the QPAP will
provide suffi
cient opportunity to verify the accuracy and integrity of Qwest’s performance data
and penalty calculations. Although Liberty Consulting has recently conducted an audit of the
Performance Indicator Definitions (PIDs) included in the QPAP, that review does

not provide



1

Under the terms of the QPAP, “Tier 1” penalties accrue according to Qwest’s quality of service provided
to individual CLECs, and result in pay
ment to individual CLECs. “Tier 2” penalties accrue according to Qwest’s
wholesale service quality provided to CLECs on an aggregate basis, and result in payment to a state fund.

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continued assurance of the reliability of data reported by Qwest.
Report on the Audit of Qwest’s
Performance Measures,
Prepared by the Liberty Consulting Group (July 11, 2001) (hereafter
cited as “Liberty Consulting Qwest PMA report”)
.
Public
Counsel therefore requests that the
facilitator of the multi
-
state 271 proceeding and the Washington Commission, in its own review
in this docket, consider the audit provisions recommended by Mr. Phil Weiser in his capacity as
Special Master to the Colorad
o Public Utilities Commission. Docket No. 01I
-
041T
, In the
Matter of the Investigation into Alternative Approaches for a Qwest Corporation Performance
Assurance Plan in Colorado, Final Report and Recommendation,
see esp. Section II. A.
(hereafter referred

to as the “Colorado report”). The Colorado report recommends that upon
inception of the PAP, the state commission, with input from Qwest, CLECs and other interested
parties, shall select an outside firm to serve as an Independent Monitor, to perform a va
riety of
different auditing functions. In summary, the Colorado report recommends a multi
-
faceted
auditing process that includes the following:


1.

Basic Requirements Imposed on Qwest
. Qwest must not make a change in its
performance measurement and reportin
g system unless the state commission
approves such a change (through a PAP review or other process). For example, any
modification as to how a PID is measured or how data is reported should be approved
by the state commission. In addition, Qwest shall re
tain data records “in easy
-
to
-
access electronic form for 3 years after they have been produced and for an additional
three years in an archived format.”
Colorado report

at page 5. CLECs may request
access to raw data and Qwest must provide it to CLECs wit
hin two weeks of a
request.

2.

Regular Performance Audits
. The Independent Monitor selected by the state
commission shall conduct an annual audit to evaluate the reliability of the
performance data as well as the financial penalties calculated based on that
data.

3.

CLEC Reconciliation Process and Mini
-
Audits
. A CLEC may request a “mini
-
audit”
of Qwest’s wholesale measurement systems. The CLEC must pay for the expense of
this audit. If, however, the CLEC’s allegations are verified and require an additional
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pay
ment by Qwest, Qwest shall pay for the auditor’s fees and expenses.
2

Qwest
would also be subject to a late payment penalty. Prior to requesting a mini
-
audit, a
CLEC must first request access to the raw data and meet with Qwest to attempt to
reconcile any

discrepancies.

4.

State Commission Audits
. The state commission has the right to perform an audit, on
its own or with the assistance of the Independent Monitor, to examine any aspect of
Qwest’s performance measurement systems. If the audit finds any materi
al errors in
Qwest’s reporting, Qwest shall reimburse the costs of the audit and will also be liable
for additional payments and late payment penalties.
Colorado report, Section II. A., at
pp. 4
-
7.

To be effective, a PAP must include sufficient measures to

allow for verification of the
accuracy and integrity of Qwest’s performance data. Public Counsel believes that the audit
processes described above, and outlined more fully in the Colorado report, are much more likely
than Section 15.0 of the proposed QP
AP to help ensure that Qwest reports on its wholesale
performance in a reliable manner.

The audit provisions recommended in the Colorado report share similarities with those in
the Verizon
-
NY PAP. The Verizon
-
NY PAP includes the following audit provisio
ns: (1) an
annual audit conducted by Commission staff to assess whether Verizon is accurately recording
and reporting CLEC and Verizon service quality data, (2) the continuation of Commission staff’s
“Metric Replication Project” to help ensure that the mo
nthly data reported by Verizon accurately
reflects the quality of service provided to CLECs, and (3) a provision that CLECs may challenge
data accuracy and may request that an audit be conducted by an independent auditor. The
Verizon
-
NY PAP also includes
an annual review of the PAP by Commission staff to determine if
any modifications or additions should be made (e.g. distribution of dollars at risk, measures and
weights, data clustering, etc). This review is not subject to limitation.
Bell Atlantic
-
New Y
ork



2

The Colorado report recommends that Qwest bear responsibility for the aud
itor’s expenses and fees if the
mini
-
audit verifies the allegations and results in an additional payment of at least 10% more than the total amount
paid on the affected measures.
See Section II.A.(3) at p. 6
.

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PUBLIC COUNSEL COMME
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STATE
§
271
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(n.k.a. Verizon
-
NY) PAP,
filed with the New York Public Service Commission (April 7, 2000) at
pp. 19
-
21 (hereafter cited as “Verizon
-
NY PAP”).


In their final report on the audit of Qwest’s performance measures, Liberty Consulting
characterizes the “d
ata
-
accuracy testing provisions” of the Verizon
-
NY PAP as “the most
developed model available.”
Liberty Consulting Qwest PMA Report
at p. 135
.

We believe that
the New York audit and review provisions described above represent a substantial improvement
ove
r the provisions proposed by Qwest in the QPAP, and should also be considered by the
facilitator of the multi
-
state proceeding and the WUTC.

As a final comment related to auditing issues, we also recommend the inclusion of a
provision in the QPAP specify
ing that Public Counsel, other interested parties, and the general
public may petition the WUTC to request that the Commission initiate an audit or review of
Qwest’s performance measurement reporting.

III.

TIMELINE FOR REPORTI
NG AND PAYMENT

Section 14.0 of t
he QPAP outlines Qwest’s proposed procedures for reporting, and
Section 11.0 reflects proposed procedures for payment to CLECs and the state. Public Counsel
recommends the following modifications to those sections:



Mock Reports
. Public Counsel recommends

that the QPAP include a new provision
in Section 14.0 stating that Qwest shall submit sample or “mock reports” to
Commission staff prior to the PAP becoming effective. This would provide
Commission staff with an opportunity to review the reports and eval
uate their
adequacy prior to the PAP’s inception. These reports shall include three reports
reflecting monthly performance data from the most recent three
-
month period, and
should include a calculation of any potential penalties that would have been owed
to
CLECs or to the state. Performance data and penalty calculations shall be generated
based upon the final version of the QPAP approved by the WUTC.



Inaccurate Reports
. Inaccurate reporting on the part of Qwest may be unearthed as a
result of a regular p
erformance audit, a “mini
-
audit,” or a Commission audit. If the
inaccurate reporting results in an additional penalty to a CLEC or to the state, Qwest
shall be required to pay the applicable penalty, as well as an additional penalty of
100% on the amount
in question. We recommend that a portion of this additional
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penalty shall be paid into the state fund (Tier 2), and a portion shall be paid to the
relevant CLEC, if the amount in question is a penalty to an individual CLEC.



Late Reports
. Section 14.3 of t
he QPAP would establish a penalty of $500 for each
day Qwest’s report is late. We observe that in the Southwestern Bell
-
Texas (SWBT)
PAP, the penalties for delayed and incomplete reporting are substantially higher than
the $500 proposed by Qwest. The SWBT

penalties are as follows:

If no reports are filed, $5,000 per day past due

If incomplete reports are filed, $1,000 per day for each missing performance results.

Attachment 17: Performance Remedy Plan
-
TX

(T2A) at Section 10.1.

Public Counsel recommends tha
t the facilitator of the multi
-
state proceeding and the
WUTC incorporate higher penalties for delayed and incomplete reporting into the
QPAP. We believe the QPAP penalties should be comparable to those in the SWBT
PAP. We suggest that penalties for late

reporting be paid to the state fund (Tier 2).



Late Payment
. Public Counsel recommends the addition of a new provision to
Section 11.0, to create penalties for late payment. In the case of late payments,
including late payment that results from inaccurate

reporting, Qwest should pay
interest calculated at the rate of three times the annual U.S. Treasury rate on the
amount in question. In addition, Section 11.1 should be clarified to specify that Qwest
shall make payments to CLECs and the state no later tha
n the last business day of the
month after the relevant performance report is due.

As a final comment regarding reporting issues, we have a general recommendation
concerning making Qwest’s wholesale service quality performance data available to the public.

Any party should have an opportunity to analyze Qwest’s quality of service to wholesale
customers in Washington. Public Counsel urges the facilitator of the multi
-
state proceeding and
the WUTC to adopt provisions making Qwest’s wholesale service quality
performance data
available to the public. At a minimum, aggregate performance data used to calculate Tier 2
penalties should be publicly available, as well as dollar amounts that Qwest has paid under Tier 1
and Tier 2 penalties.

In summary, Public Counsel

believes that in order for a PAP to be effective and provide
meaningful assurance of continued compliance with the terms of the Telecommunications Act of
1996, it must include strict penalties for behavior that infringes upon the integrity of the
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Performa
nce Assurance Plan. Such penalties are necessary to ensure accurate and reliable
reporting and prompt payment on the part of Qwest. As we discuss below in the section on
Penalty Structure, Public Counsel does not recommend having a cap on Qwest’s penalti
es as part
of the QPAP. However, in the event that the QPAP does include a cap, we believe that any
penalties paid by Qwest for late reporting, late payment, or inaccurate reporting should be
excluded from the cap.

IV.

LIMITATIONS

Public Counsel has several c
oncerns with respect to the limitations of the proposed
QPAP, as outlined in Section 13.0. Our concerns focus on three areas of Section 13.0: (1) the
circumstances in which Qwest may seek a waiver of Tier 1 or Tier 2 penalties, (2) the
characterization o
f Tier 1 payments as “liquidated damages,” and (3) the WUTC’s jurisdiction
over wholesale and retail service quality.

A.

Waiver of Penalties

Public Counsel is concerned that Section 13.3 of the QPAP as proposed by Qwest is
constructed too broadly and does no
t clearly articulate the process by which Qwest shall seek a
waiver of penalties. For example, we believe the definition of “force majeure” as proposed is too
broad and includes ambiguous terms such as “government regulations” and “equipment failure.”
At
tachment K
at p. 12
.

In addition, Sections 13.3 and 13.3.1 of the proposed QPAP do not
clearly articulate a process and timeframe by which Qwest shall seek a waiver of penalties.
Section 13.3.1 states: “Qwest will have the burden of demonstrating that it
s non
-
conformance
with the performance measurement was excused on one of the grounds described in this PAP.”
Attachment K
at p. 13
.
There is no discussion of the process by which Qwest will seek to obtain
a waiver, the timeframe in which waivers can legi
timately be sought by Qwest, nor the
opportunity other parties may have to comment upon a waiver request.

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Public Counsel recommends that Section 13.3 of the QPAP should be revised in the
manner outlined below.



Qwest may seek a waiver of penalties in the
following circumstances:

1.

Events beyond Qwest’s control
. This would include “force majeure” claims, and
actions of a third party. However, waiver petitions in this category should pertain
only to benchmark measures, not parity measures. An event that is
beyond
Qwest’s control, such as a natural disaster, should impact retail and wholesale
service quality in a similar manner, and thus this waiver process should not be
available for parity measures.
See, e.g. Verizon
-
NY PAP
at pp. 17
-
19
.


2.

CLEC behavior
. Q
west may seek a waiver for inappropriate or unusual CLEC
behavior.



We recommend that any petition for a waiver of penalties should be filed with the
WUTC no later than the last business day of the month after the month in which
penalties are being disputed

(which is when payment would be due). The petition
must include a detailed description of the nature of the claim. CLECs and other
interested parties should have an opportunity to respond to Qwest’s petition. The
WUTC should determine whether a waiver r
equest should be granted.



In addition, Qwest must place the amount of payment in dispute into an interest
bearing escrow account. If this transaction is not completed by the day payments
become due then a late payment penalty should be assessed.

B.

Liquidat
ed Damages

Qwest has asserted that the QPAP and potential civil and anti
-
trust liability are sufficient
protections against anti
-
competitive conduct, and partially justify a finding that Qwest’s §271
application is in the public interest.
See Exhibit 1055
T (Direct Testimony of David L. Teitzel
), p.
49, lines 15
-
17
.

This being the case presented by Qwest, the multi
-
state facilitator and the
WUTC should assure themselves that characterizations regarding PAP penalties do not impair
any subsequent civil or an
ti
-
trust proceeding for which contractual damages are not sought.
Consultation with appropriate antitrust authorities regarding the characterizations of “liquidated
damages” and limitations on admissibility should be carefully scrutinized to assure future
, non
-
contractual causes of action are not impaired by the terms of the QPAP. It may be appropriate to
add a subsection to Section 13.4 to make explicit that acceptance of liquidated damages, or the
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contractual provisions providing for them, does not waiv
e an rights under state or federal
antitrust law.

C.

WUTC Jurisdiction Over Service Quality

As a final comment pertaining to the Limitations section of the QPAP, Public Counsel
recommends striking the current language in Section 13.8 of the proposed QPAP. S
ection 13.8
of the QPAP currently states: “Qwest shall not be liable for both Tier 2 payments under the PAP
and assessments, sanctions, or other payments for the same or analogous performance pursuant
to any Commission order or service quality rules.”
At
tachment K
at p. 14
.

Instead, we suggest
inserting the following language, which is similar to that contained in Verizon’s PAP for New
York: “Nothing in the Performance Assurance Plan can or will diminish Commission jurisdiction
over Qwest service.”
See V
erizon
-
NY PAP,
at p. 20.

V.

PENALTY STRUCTURE

Public Counsel has comments on the following aspects of the penalty structure of the
QPAP: (1) Qwest’s proposal to place a cap on payments, (2) Tier 2 penalties, (3) the inclusion
of a ‘severity function,’ (4) th
e escalation function, (5) the amount of per
-
occurrence and per
-
measurement penalties, and (6) the classification of the PIDs.

No Cap on Penalties
. Public Counsel does not believe there should be a cap on penalties
paid by Qwest under the terms of the Per
formance Assurance Plan. As long as Qwest provides
wholesale service at parity with their retail service, they will not be required to pay penalties to
CLECs or to a state fund. Removing the proposed cap would send an appropriately strong signal
to Qwest

that anti
-
competitive behavior can have major implications for the company.

In the event that Qwest’s PAP does include a cap on penalties, Public Counsel
recommends that the WUTC and the facilitator of the multi
-
state proceeding consider whether
the cap
should be structured as a “soft cap,” such that there is no cap on Tier 1 penalties to
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CLECs. Qwest has asserted that Tier 1 penalties are intended to compensate CLECs for harm
caused by inferior wholesale service from Qwest. A cap on Tier 1 payments wou
ld suggest that
there is a limit to the harm suffered by CLECs from deficient wholesale service. We are not
aware of any such limit. We recognize the difficulty associated with identifying an appropriate
dollar value on the market harm suffered by CLECs.

Instead of placing a cap on Tier 1 penalties
to CLECs, however, we would recommend that the amount and structure of the penalties be
examined as part of the periodic reviews of the QPAP (discussed below in Section VI of our
comments). This review would
help ensure those penalties are set at an appropriate level to deter
Qwest from providing inferior wholesale performance and to encourage Qwest to identify and
resolve any issues that hamper their ability to provide service to wholesale customers at parity

with their retail customers.

In addition, as we mentioned above, Public Counsel believes that payments made by
Qwest for late reporting, late payment, and inaccurate reporting

which are designed to uphold
the integrity of the PAP

should be excluded from
any cap on penalties (a “hard” cap or a “soft”
cap).

Finally, if Qwest’s PAP does include a cap on penalties that cap should serve as a trigger
for a review by the Washington Commission (conducted by Commission Staff or an Independent
Monitor). For exampl
e, if the QPAP includes a cap on monthly payments, we suggest that a
review should automatically be triggered if Qwest reaches the cap in three consecutive months or
any seven months during any year the QPAP is in effect. In addition, if the QPAP includes

an
annual cap we suggest that a review should automatically occur if the annual cap is reached after
the first three months of any year the plan is in effect, or if the cap is reached in any two
consecutive years.

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Tier 2 Penalties
. Public Counsel has se
veral concerns with Qwest’s proposed structure
for Tier 2 penalties. First, we note that Tier 2 payments are not triggered unless there has been
three consecutive months of non
-
conforming performance for a particular Tier 2 performance
measure.
Attachmen
t K

at Section 7.3. We do not understand why the payment of Tier 2
penalties should be any different from the Tier 1 penalties, which are to be paid on a monthly
basis for each month of poor performance. Second, Qwest has included only a limited set of
p
erformance measures in the Tier 2 penalties. For example, while there are 26 per
-
occurrence
performance measures in Tier 1, Qwest has proposed only 14 per
-
occurrence measures for Tier
2. Third, we note that the Tier 2 penalties do not include an escalati
on function, as Qwest has
proposed for Tier 1 penalties. Public Counsel recommends that the WUTC and the facilitator of
the multi
-
state proceeding closely evaluate the structure of Tier 2 penalties and consider whether
they should more closely resemble th
e Tier 1 penalties.

Severity Function
. Public Counsel recommends that the facilitator of the multi
-
state
proceeding and the Washington Commission consider whether it would be appropriate to include
a severity function for Tier 1 and Tier 2 performance mea
sures. A severity calculation would
increase the amount of the penalty

both for per
-
occurrence and per
-
measurement performance
measures

as the level of non
-
conformance within a given month becomes more severe. Thus,
while an “escalation function” penaliz
es Qwest for consecutive months of sub
-
par wholesale
service quality, a “severity function” reflects that the harm to CLECs increases as the degree of
non
-
conformance with parity or benchmark standards increases within a given month.

3


Escalation Functio
n
. Public Counsel has some concern with the escalation / de
-
escalation function described in Section 6.2.1 of the proposed QPAP. Our primary concern is



3

See, e.g. the Colorado report for a discussi
on of using a severity multiplier to calculate payments to
individual CLECs, Section III. A. at pages 13
-
14.

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PUBLIC COUNSEL COMME
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REGARDING QPAP FILED

BY QWEST
IN THE MULTI
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STATE
§
271
PROCEEDING

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whether the structure proposed would provide an opportunity for Qwest to “game” the PAP by
providing i
nferior wholesale performance every other month, so as to avoid any escalation of
penalties resulting from non
-
conformance for two or more consecutive months. One means of
addressing this concern might be to require two consecutive months of conforming se
rvice
before a payment “indicator” de
-
escalates. At a minimum, however, the escalation function
should be examined as part of the first QPAP review.

Amount of Per
-
Occurrence and Per
-
Measurement Penalties
. Public Counsel emphasizes
that it will be especia
lly important to make sure that Tier 1 penalties to CLECs for the first
month of non
-
conforming performance are sufficiently high to deter Qwest from accepting these
payments as a “cost of doing business,” and from alternating between good and bad wholesal
e
performance, as discussed above. Table 2 of the QPAP outlines Qwest’s proposed levels of
penalties to individual CLECs for the first month of non
-
conformance and for consecutive
months of non
-
conforming performance. As shown in Table 2, penalty amounts

for per
-
occurrence measures are proposed to be $25, $75, and $150 respectively for low, medium, and
high performance measures during “month one.” We encourage the WUTC and the facilitator of
the multi
-
state proceeding to consider whether the penalty amou
nts outlined in Table 2


particularly the penalty amounts for “month one”

are set at an appropriate level to effectively
deter Qwest from engaging in anti
-
competitive behavior. We further request that the WUTC and
the facilitator of the multi
-
state proce
eding also consider whether the Tier 2 penalty amounts set
forth in Tables 3 and 4 are set at sufficiently high levels to provide effective incentives to Qwest.
Attachment K

at Section 7.0.

Classification of Performance Measures
. It is Public Counsel’s

understanding that at the
conclusion of the PEPP collaborative, there were many areas of disagreement pertaining to
classification of Tier 1 and Tier 2 PIDs as “low,” “medium,” or “high.”
Final Report of MTG
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PUBLIC COUNSEL COMME
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REGARDING QPAP FILED

BY QWEST
IN THE MULTI
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STATE
§
271
PROCEEDING

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and NRRI at p. 13
. At this time we have only o
ne comment regarding the classifications
proposed by Qwest. As shown in Attachment 1 of the QPAP, a total of eleven per
-
occurrence
performance measures classified as “high” under Tier 1 payments are also included in the Tier 2
payments. However, of these

eleven measures, only three are classified as “high” under Tier 2,
the other eight are classified as “medium.”
Attachment K
at p. 18 We suggest that it may be
appropriate to classify more of these Tier 2 PIDs as “high.”

VI.

REVIEWS

The purpose of a PAP revi
ew is to assess the extent to which the plan effectively does
what it is intended to do

is it deterring anti
-
competitive conduct on the part of Qwest in the
most effective and reasonable manner possible? Thus, while an audit examines the integrity of
the
performance data provided by Qwest, a PAP review examines the integrity of the PAP itself.
We believe that the review provisions, as proposed by Qwest in Section 16.0 of the QPAP, are
much too limited in nature.

In Section 16.1, Qwest suggests that ever
y six months, CLECs, Qwest and the
Commission shall review the performance measures to determine whether: (1) any measures
should be added, deleted or modified, (2) any benchmark standards should be modified or
changed to parity measures, and (3) any measu
res shall be re
-
classified as Tier 1 or Tier 2, or
changed from low, medium or high. Public Counsel believes that the QPAP should be reviewed
in a comprehensive manner at pre
-
determined intervals, such as every two or three years. A
comprehensive review
would consider whether the penalty amounts should be refined, and
whether aspects of the penalty structure (e.g. escalation or severity functions) should be revised.
We particularly object to the final sentence in Section 16.1 of the QPAP, which reads: “Ch
anges
shall not be made without Qwest’s agreement.”
Attachment K
at p. 16
.

Qwest has asserted that
the existence of a performance assurance plan provides assurance that Qwest will continue to
DOCKET NO. UT
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PUBLIC COUNSEL COMME
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REGARDING QPAP FILED

BY QWEST
IN THE MULTI
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STATE
§
271
PROCEEDING

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comply with Section 271 requirements, and granting approval to

enter the in
-
region long distance
market is therefore in the public interest.
See Exhibit 1055T (Direct Testimony of David L.
Teitzel),
p. 48, lines 5
-
14
.

Given this assertion, we believe Qwest should be bound to make any
modifications to the PAP ordered

by the FCC, the WUTC, and any Independent Monitor that
may be appointed by the WUTC.

The WUTC must have the flexibility to initiate a review of the QPAP as it deems
necessary. We further believe that the review process should allow for the participa
tion of other
interested parties in the review process, such as Public Counsel. For example, interested parties
should maintain the right to petition the WUTC to initiate a review, and should also have an
opportunity to share their particular concerns rega
rding which issues should be examined during
a review with the WUTC.

VII.

CONCLUSION

In considering the question of the public interest element of Qwest's §271 application,
Public Counsel has recommended that the Washington Commission ensure a stable set of m
arket
opening conditions are in place, including OSS parity, cost
-
based UNEs, and a fully developed
PAP with which Qwest can demonstrate statistical compliance for 90 days.
See Exh.. 1070
-
T
(Direct Testimony of Dr. Mark N. Cooper
). An effective PAP will
impose sanctions for poor
wholesale service quality performance and provide an appropriate incentive to assure Qwest’s
continued compliance with the checklist items in §271.

Many of our recommendations focus on elements that we believe would promote the
integrity of the PAP, such as stronger audit and review provisions, and strict penalties for late
reporting, late payment, and inaccurate reporting. We have also requested that the facilitator of
the multi
-
state proceeding and the WUTC consider whether th
e dollar amounts at risk under the
DOCKET NO. UT
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PUBLIC COUNSEL COMME
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REGARDING QPAP FILED

BY QWEST
IN THE MULTI
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STATE
§
271
PROCEEDING

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Tier 1 and Tier 2 penalties are set sufficiently high to deter Qwest from engaging in anti
-
competitive behavior.


DATED this _____ day of
November, 2013
.


CHRISTINE O. GREGOIRE








Attorney General











ROBERT W. CROMWELL, JR.








Assistant Attorney General








Public Counsel