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					                                   STATE OF VERMONT
                                 PUBLIC SERVICE BOARD



Docket No. 6959

Investigation into a Successor Incentive          )
Regulation Plan for Verizon                       )
New England, Inc. d/b/a Verizon Vermont           )


Docket No. 7142

Investigation into Tariff Filing of Verizon New   )
England, Inc. d/b/a Verizon Vermont, in re:       )
Compliance Filing in Docket 6959                  )



                            PREFILED TESTIMONY OF
                           CHRISTOPHER J. CAMPBELL
                              ON BEHALF OF THE
                     VERMONT DEPARTMENT OF PUBLIC SERVICE

                                        March 16, 2006




Summary:      The purpose of Mr. Campbell’s testimony is to support the Memorandum of
              Understanding between the Department and Verizon that proposes to modify the
              Successor Incentive Regulation Plan established by the Board in its order of
              September 26, 2005.
                                                                                                      Department of Public Service
                                                                                                  Christopher J. Campbell, Witness
                                                                                                                Dockets 6959/7142
                                                                                                                   March 16, 2006
                                                                                                                      Page 1 of 20

 1                                                        Prefiled Testimony

 2                                                                     of

 3                                                    Christopher J. Campbell



 4                                                        Table of Contents

 5
 6   Introduction ......................................................................................................................... 1
 7   Modifications to the Plan .................................................................................................... 3
 8   Consistency with Statutory Telecommunications Purposes ............................................. 16
 9


10                                                            Introduction


11   Q.               Please state your name and occupation.

12   A.               My name is Christopher J. Campbell. My business address is 112 State Street,

13                    Drawer 20, Montpelier, VT 05620. I am the Director for Telecommunications

14                    for the Vermont Department of Public Service.


15   Q.               Please summarize your professional background and experience.

16   A.               I received a Bachelor of Arts degree in Economics and Environmental Studies

17                    from the University of Pennsylvania in 1993. In 1995 I received a Master of

18                    Regional Planning degree from the University of Massachusetts-Amherst. In

19                    associated research I focused on the use of telecommunications for rural

20                    community development. Subsequent to joining the Department I was a

21                    participant in the 1997 Annual Regulatory Studies Program at Michigan State

22                    University.
                                                                  Department of Public Service
                                                              Christopher J. Campbell, Witness
                                                                            Dockets 6959/7142
                                                                               March 16, 2006
                                                                                  Page 2 of 20

 1        I have worked for the DPS since February 1997, with a hiatus during part of

 2        2005. I held the positions of Consumer Affairs and Public Information

 3        Specialist and then Senior Consumer Affairs and Public Information

 4        Specialist until October 2000. I then became the Department’s

 5        Telecommunications Planner, a post I held through January 2005. I left the

 6        Department at that time to become Deputy Commissioner of the Department

 7        of Information and Innovation. I returned to the Department as the Director

 8        for Telecommunications in October 2005. Prior to joining the Department, I

 9        worked for the Rutland County Telecommunications Planning Project as its

10        Project Coordinator. During the same period I also provided consulting

11        services related to community development and telecommunications to a

12        variety of groups in the Northeast. Prior to and for a period after my

13        graduation from the University of Massachusetts, I worked for the Center for

14        Rural Massachusetts primarily doing research related to rural

15        telecommunications and rural regional planning, and writing publications for

16        the Center.


17   Q.   Have you testified previously before the Public Service Board?

18   A.   Yes. I provided testimony on behalf of the Department in Dockets 6533,

19        6521, 6331, 6209, 6120 and 6018, as well as providing prior testimony in

20        Docket 6959. I have assisted other staff members of the Department in

21        preparing portions of the Department’s positions in Dockets 6742 and 5903. I

22        have participated on behalf of the Department in a workshop setting with
                                                                   Department of Public Service
                                                               Christopher J. Campbell, Witness
                                                                             Dockets 6959/7142
                                                                                March 16, 2006
                                                                                   Page 3 of 20

 1        Board staff on matters related to telephone numbering, namely the

 2        development of rules and procedures governing 1000 number blocks and N11

 3        codes in Vermont. Also, I have testified on behalf of the Department before

 4        legislative committees and administrative bodies, such as the Vermont

 5        Economic Progress Council.


 6   Q.   What is the purpose of your testimony at this time?

 7   A.   I will explain why it is in the public interest and consistent with statutory

 8        requirements for the Board to accept the modifications to Verizon’s current

 9        Incentive Regulation Plan that the Department has negotiated with Verizon.



10                             Modifications to the Plan


11   Q.   What are the ways that the MOU filed by the Department and Verizon would

12        modify the Plan ordered by the Board?

13   A.   The significant modifications would be: (1) extension of the term of the plan

14        from three to five and one-half years while preserving an option for the Board

15        to terminate the plan early if the company fails to perform under the plan; (2)

16        replacing the optional Network Investment Incentive Offset mechanism with a

17        non-optional obligation by Verizon to qualify 80% of its lines for broadband

18        service by the end of the plan and to meet interim milestones of 65% of lines

19        qualified by the end of 2007, 75% of lines qualified by the end of 2008, and

20        77% qualified by the end of 2009; (3) elimination of scheduled rate reductions

21        for the term of the plan; (4) replacement of the requirement that Verizon
                                                                   Department of Public Service
                                                               Christopher J. Campbell, Witness
                                                                             Dockets 6959/7142
                                                                                March 16, 2006
                                                                                   Page 4 of 20

 1        maintain a level of at least $40 million in annual investment with a

 2        requirement that, during the term of the plan, Verizon maintain at all times a

 3        level of infrastructure investment and operating expenditures sufficient to

 4        maintain the ongoing integrity of its network and the reliability and

 5        availability of its services; and (5) modification of the definition of

 6        “broadband services” under the Plan.


 7   Q.   Did the Department support the Network Investment Incentive Offset

 8        mechanism contained in the current Plan?

 9   A.   The offset mechanism contained in the Plan is substantially similar to the one

10        supported by the Department in the prior phases of this docket.


11   Q.   Why, then, does the Department now support modification of this

12        mechanism?

13   A.   Essentially, it became clear to us in the compliance phase of the proceeding

14        that the offset mechanism would not, in the end, produce the best results for

15        Vermont.


16   Q.   Was the approach of ordering rate reductions coupled with the Network

17        Investment Incentive Offset mechanism, as contained in the current plan, a

18        mistake?

19   A.   I do not believe so. In the absence of a negotiated settlement with the

20        company, it was very difficult to assure specific outcomes in the area of

21        additional broadband deployment. The Network Investment Incentive Offset
                                                                  Department of Public Service
                                                              Christopher J. Campbell, Witness
                                                                            Dockets 6959/7142
                                                                               March 16, 2006
                                                                                  Page 5 of 20

 1        mechanism was a reasonable approach in the absence of such a settlement. I

 2        believe it was also instrumental in creating the environment in which a

 3        settlement could be achieved, by creating clarity of outcomes for what would

 4        happen in the absence of an agreement. It was only after it became clear to

 5        the Department that Verizon was in fact not going to take advantage of the

 6        Network Investment Incentive Offset mechanism that we decided to explore

 7        other possibilities for achieving broadband deployment.


 8   Q.   Did the Department need to make compromises in order to reach an

 9        agreement?

10   A.   Yes.


11   Q.   Do you believe they were reasonable compromises?

12   A.   Yes.


13   Q.   Did those compromises allow the Department to achieve important public

14        benefits that it would not have been able to achieve without an agreement?

15   A.   Yes, most significantly, they allowed the Department to obtain commitments

16        from Verizon to provide very substantial levels of broadband service

17        throughout the state, including to locations that would lack it otherwise.

18        One hundred percent broadband availability by 2010 is the Department’s

19        ultimate objective, whether Verizon or another company provides that

20        broadband service. While obviously we would have liked to obtain a

21        commitment from Verizon for 100% availability by 2010, we were not able to
                                                                    Department of Public Service
                                                                Christopher J. Campbell, Witness
                                                                              Dockets 6959/7142
                                                                                 March 16, 2006
                                                                                    Page 6 of 20

 1        do so. However, we were able to obtain commitments that were of large

 2        enough magnitude that we believed on balance it was in the public interest to

 3        accept the levels set forth in the agreement in exchange for the concessions

 4        made to the company.


 5   Q.   Why is it so important to ensure that broadband deployment reaches the areas

 6        of the state that currently cannot get it at an affordable price?

 7   A.   As broadband Internet access becomes ever more commonly interwoven with

 8        the fabric of everyday activity in work, education, commerce, news, health

 9        care, politics and civic life, entertainment, and social interaction, those areas

10        without affordable access to service are left at a distinct disadvantage. If we

11        step back and look at how much broadband Internet access has grown in

12        importance in the past five years alone, it is not hard to imagine that in another

13        five years, lack of availability of broadband Internet access in a community

14        will be considered a serious handicap for the people who live and work there.


15   Q.   Would this plan provide broadband service only in areas that do not already

16        have it?

17   A.   Probably not, but neither would have the offset mechanism under the current

18        Plan. The current Plan allows broadband investments to qualify for offsets, as

19        long as new investments that serve locations that already have broadband are

20        also necessary to serve locations that do not. As a practical matter, there are

21        at least pockets of unserved territory in nearly every community in Vermont,
                                                                     Department of Public Service
                                                                 Christopher J. Campbell, Witness
                                                                               Dockets 6959/7142
                                                                                  March 16, 2006
                                                                                     Page 7 of 20

 1        even in the more thickly settled towns of Chittenden County. (See Exhibit

 2        DPS-CJC-1.) Furthermore, because the territory covered by Verizon’s DSL

 3        deployment already largely overlaps the areas of greatest concentration of

 4        cable plant, it would probably be difficult and most likely foolish for Verizon

 5        to deploy facilities that allowed it to cover only those locations that already

 6        have a cable modem option. Similarly, wireless broadband service at this time

 7        in Vermont tends to produce a pattern of coverage with some pockets of poor

 8        coverage, and it also seems unlikely that new Verizon broadband deployments

 9        in a general area with existing wireless broadband service would not pick up

10        at least some people who could not already get broadband service. In regards

11        to the area in Verizon’s Vermont territory seemingly most likely to approach

12        truly ubiquitous broadband service, the Burlington wire center, the MOU does

13        state that Verizon does not intend to meet its commitment through the addition

14        of qualified lines or line equivalents in that area.


15   Q.   Are you knowledgeable about the state of broadband deployment in Vermont

16        and the prospects for future deployments?

17   A.   Yes, as part of my present position and past experience I am very well

18        positioned to understand what the current state of broadband service is in

19        Vermont and its future prospects.


20   Q.   Why do you feel that you have a well-informed opinion about the prospects

21        for future broadband deployment in Vermont?
                                                                  Department of Public Service
                                                              Christopher J. Campbell, Witness
                                                                            Dockets 6959/7142
                                                                               March 16, 2006
                                                                                  Page 8 of 20

 1   A.   As part of the Department’s activities, we track the ongoing expansion of

 2        broadband services, in cooperation with the Agency of Commerce and

 3        Community Development. I have compared our efforts to map the expansion

 4        of broadband with that of other states, and I believe we have done one of the

 5        most thorough and fine-grained state-level efforts here in Vermont. One of

 6        my important current responsibilities, and a responsibility when I was the

 7        Department’s Telecommunications Planner, is to speak with a variety of

 8        service providers on an ongoing basis about their current and future activities,

 9        including broadband deployments. I have done this on an ad-hoc basis, and in

10        a structured manner, as part of the development of the Vermont

11        Telecommunications Plan. During the period when I was the Deputy

12        Commissioner at the Department of Information and Innovation, I and my

13        staff made requests and inquires from a range of companies when we sought

14        to purchase a variety of high-speed data communications services on behalf of

15        state government and K-12 schools. I am in regular contact with other state

16        employees, primarily in the Agency of Commerce and Community

17        Development (ACCD), who are able to supplement the information I have

18        about the current and future state of broadband deployment in Vermont.

19        ACCD has a program of telecommunications infrastructure development and

20        wireless business assistance that has been especially useful in cultivating

21        contacts and information-sharing with Wireless Internet Service Providers

22        (WISPs) not under the supervision of the Board. I have also had the
                                                                     Department of Public Service
                                                                 Christopher J. Campbell, Witness
                                                                               Dockets 6959/7142
                                                                                  March 16, 2006
                                                                                     Page 9 of 20

 1        opportunity to advise some number of state programs, specifically the

 2        Broadband Grant Program (funded from the capital bill over the last two

 3        years) and the ConnectVermont Fiber project (primarily federally funded

 4        through the Intelligent Transportation Systems initiative). My interactions

 5        with these programs have given me additional insights into the economic and

 6        other challenges for broadband deployment in Vermont.


 7   Q.   In your opinion, are there other, equally likely, ways that broadband service

 8        might be made available to as substantial a number of Vermonters over the

 9        next five years?

10   A.   It is difficult to anticipate the future, but I can say that potential alternative

11        paths to achievement of this level of broadband service deployment are highly

12        speculative at this point. There are essentially three types of broadband

13        service providers that appear to be taking steps to expand broadband service to

14        residential and small business consumers. The first type is the cable TV

15        companies. We have excellent information about where these companies are

16        now and are likely to deploy their services in the near future, due to the

17        supervision of line extension requirements by the Board. There are substantial

18        portions of Vermont’s population that these companies are unlikely to reach,

19        even after line extensions required by the Board. The second type is Verizon

20        and the other incumbent LECs. The extent of Verizon’s broadband service, is

21        of course what is at question here. The third type is the wireless ISP. The

22        companies of this type currently in Vermont are small, young companies that
                                                                    Department of Public Service
                                                                Christopher J. Campbell, Witness
                                                                              Dockets 6959/7142
                                                                                 March 16, 2006
                                                                                   Page 10 of 20

 1        have not yet shown the financial depth to add customers rapidly. As start-up

 2        companies, there is a real risk that some if not many of them will fail. While

 3        it is certainly possible that one or more of these companies will wind up

 4        providing a service to a substantial number of those people who are currently

 5        unserved, to rely on that would be risky. Furthermore, wireless broadband

 6        deployments in Vermont have typically left pockets of unserved population,

 7        even in the communities they do serve. Accepting a commitment from

 8        Verizon to provide service to 80% of its lines by 2010 reduces the risk that

 9        Vermonters will remain unserved.


10   Q.   Is this agreement an important part of an overall strategy for achieving

11        broadband availability for all Vermonters?

12   A.   Yes. Vermont faces significant challenges in getting broadband to all of its

13        residences, businesses, organizations, and institutions. These include low

14        population density, rough terrain, and competition for limited capital available

15        for investment. Achieving full coverage will require flexibility, multiple

16        tools, and a willingness to take advantage of available opportunities. Efforts

17        to address the costs of deployment, the availability of financing, the readiness

18        of demand, as well as the regulatory incentives are all pieces of the total

19        strategy for achieving this important goal. The Board and the Department

20        have acted in the past to affirm the state’s interest in the availability of

21        broadband services, most significantly in the settlements with Adelphia and

22        Comcast that ensure major expansions in the availability of cable modem
                                                                 Department of Public Service
                                                             Christopher J. Campbell, Witness
                                                                           Dockets 6959/7142
                                                                              March 16, 2006
                                                                                Page 11 of 20

 1        service. Achieving this sizable commitment from Verizon may very well be

 2        the largest opportunity that the Department and the Board have to further

 3        influence the expansion of broadband services in Vermont over the life of the

 4        plan. Not achieving it would make successful achievement of the overall goal

 5        substantially more difficult and uncertain.


 6   Q.   Do you know what Verizon will spend in order to achieve the broadband

 7        availability milestones contained in the proposed modified Plan?

 8   A.   No, I do not. In fact, movement from a dollar-based offset (i.e. “How much

 9        money did Verizon spend on broadband investments?”) to an outcome-based

10        offset mechanism (i.e. “On how many lines did Verizon make broadband

11        available?”) was one of the key and necessary compromises that was made in

12        order to reach an agreement.


13   Q.   Why do the proposed modifications include replacement of the current Plan’s

14        $40 million annual capital investment floor with an alternate provision?

15   A.   As I mentioned previously, elimination of provisions of the plan that called

16        for a specific dollar amount of spending was a necessary compromise in order

17        to reach agreement.


18   Q.   What is your understanding of the reasons why this provision is in the current

19        plan?

20   A.   A $40 million capital investment floor was part of the Department’s proposal

21        in the original case. Because the Department’s network investment offset
                                                                     Department of Public Service
                                                                 Christopher J. Campbell, Witness
                                                                               Dockets 6959/7142
                                                                                  March 16, 2006
                                                                                    Page 12 of 20

 1        mechanism depended on Verizon spending more money on investments that

 2        made additional broadband service available, we felt that it was necessary to

 3        establish a “backstop” of sorts to ensure that the company did not qualify for

 4        offsets simply by shifting capital spending from its investments needed to

 5        support its legacy services to broadband services. Therefore, the

 6        Department’s proposal at that time included a minimum level of total capital

 7        investment that the company would need to spend each year in order to

 8        qualify for offsets. The Board accepted this part of the Department’s proposal

 9        and actually expanded it, specifying that Verizon must make at least $40

10        million in capital investments annually over the life of the plan, regardless of

11        whether or not it availed itself of offsets. As best as I can tell, it did so

12        because of a concern that Verizon might otherwise allow its spending to

13        decline to the point that it would not adequately be replacing and updating its

14        infrastructure.


15   Q.   If the Plan is modified so that the broadband commitments are measured by

16        expansion of service instead of dollars spent, is the $40 million capital

17        investment floor still necessary as part of the offset mechanism?

18   A.   No, the original reason that the Department proposed the capital investment

19        floor goes away.
                                                                  Department of Public Service
                                                              Christopher J. Campbell, Witness
                                                                            Dockets 6959/7142
                                                                               March 16, 2006
                                                                                 Page 13 of 20

 1   Q.   How does the proposed modification to the Plan address the other rationale for

 2        the $40 million capital investment floor, which is adequate investment by

 3        Verizon in its infrastructure?

 4   A.   The proposed modification substitutes a non-dollar-specific requirement that

 5        Verizon make infrastructure investment and operating expenditures sufficient

 6        to maintain the ongoing integrity of its network and the reliability and

 7        availability of its services.


 8   Q.   Does this provide consumers with at least as much assurance that Verizon will

 9        provide sufficient money to its Vermont operation?

10   A.   Yes. First, it is important to recognize that $40 million was chosen by the

11        Department to represent a low level of capital spending for Verizon

12        historically. The Department came up with the $40 million figure by looking

13        at the lowest level of gross capital expenditures that the company had made

14        between 1992 and 2003. As I previously mentioned, this number was

15        intended to represent a backstop as part of the network investment offset

16        mechanism, and the Department never intended that it would be used as a

17        measure of adequate capital spending in any given year. Indeed, given

18        historical trends it is quite possible that $40 million could be quite inadequate

19        in any given year. Therefore this component of the current plan requirement

20        gives consumers only a relatively low level of assurance. The Department

21        always intended that Verizon’s performance on matters of service quality and

22        reliability be measured primarily by performance under the service quality and
                                                                   Department of Public Service
                                                               Christopher J. Campbell, Witness
                                                                             Dockets 6959/7142
                                                                                March 16, 2006
                                                                                  Page 14 of 20

 1        reliability plan, which these modifications do not propose to alter, except to

 2        require more frequent reporting, and to require Verizon to report on planned

 3        actions to address service quality benchmarks missed in a prior year.

 4        Furthermore, while the proposed modifications remove a specific dollar figure

 5        from the plan requirement, they add a requirement that the company spend

 6        what is necessary (whether that be above or below $40 million), and that it do

 7        so not only for capital spending, but for operating spending as well.


 8   Q.   Why does the proposed modification to the Plan include changes to the

 9        definition of broadband used in the Board’s order?

10   A.   Essentially, retaining the definition of broadband as it currently appears in the

11        Plan, without modification, would have had the effect of excluding DSL

12        services that most people would recognize as broadband and would have

13        made it very difficult to come to a common understanding of how much

14        qualifying broadband deployment Verizon had done.


15   Q.   Why is this?

16   A.   The best example is the variability of DSL speeds depending on factors such

17        as loop length. The capability of a DSL line to support a faster data

18        transmission rate declines as loop length increases. As represented to the

19        Department by Verizon, when the company deploys DSL facilities in a central

20        office or remote terminal, some of the lines, especially those with shorter

21        lengths, are capable of providing broadband service meeting the definition of
                                                                  Department of Public Service
                                                              Christopher J. Campbell, Witness
                                                                            Dockets 6959/7142
                                                                               March 16, 2006
                                                                                 Page 15 of 20

 1        the current Plan, while others, especially those with longer lengths, are not.

 2        (See the prefiled testimony of Pam Porell in support of the MOU.) A similar

 3        degradation of achievable data rates due to factors such as distance or foliage

 4        is also a possibility with wireless broadband services. It would have been

 5        very difficult for the Department and Verizon to agree on a percentage of

 6        broadband-qualified lines that did not allow Verizon to count as broadband

 7        lines those lines that it currently counts as “DSL-qualified.” Furthermore, the

 8        Department did not feel that we ought to defer the expansion of broadband

 9        equal in performance to that which Vermonters commonly now enjoy to

10        people who did not have any because it was not “good enough.”


11   Q.   Did you have any concerns about changing the definition?

12   A.   Yes. Primarily, we were concerned that Verizon not substitute an inferior-

13        quality form of broadband as it expanded broadband service.


14   Q.   How does the new proposed definition deal with this concern?

15   A.   First, the modifications are made by specifying that broadband deployments

16        capable of providing data transfer rates equal to DSL service that Verizon

17        currently provides qualify as broadband. This assures that new Verizon

18        broadband deployments made by Verizon under this plan will support data

19        transmission rates at least as high as those supported by current Verizon DSL

20        deployments. Verizon will need to employ equipment that is capable of

21        providing data transfer rates higher than the low end of the range of DSL
                                                                    Department of Public Service
                                                                Christopher J. Campbell, Witness
                                                                              Dockets 6959/7142
                                                                                 March 16, 2006
                                                                                   Page 16 of 20

 1        service tiers the company currently provides. Deployments must be capable

 2        of providing data transfer rates equivalent to the broadband data transfer rates

 3        specified in the current Plan, 1.5 Mbps downstream and 200 kbps upstream,

 4        although loop or link limitations may mean that not all customers can achieve

 5        these speeds.



 6           Consistency with Statutory Telecommunications Purposes


 7   Q.   Do these modifications to the Plan meet the statutory criteria for approval of

 8        an alternative regulation plan?

 9   A.   Since the Board has already found the current plan to be consistent with the

10        statutory criteria, and these proposed modifications let stand a substantial

11        portion of the current plan, I will provide an answer that goes only to those

12        criteria among the eleven criteria of 30 V.S.A.§ 226b(c) that are affected by

13        the proposed modifications. These are criteria 1, 2, 3, 5, 6, and 7.


14   Q.   How are the modifications to the Plan consistent with criterion 7, that the plan

15        reasonably supports economic development in the affected service territory?

16   A.   The modifications to this Plan are consistent with this criterion because they

17        commit Verizon to expansion of broadband service in Vermont. A Vermont

18        that lacks broadband availability in a substantial part of its territory is a

19        Vermont that is in a tough spot when it comes to economic competitiveness.

20        Ensuring that Vermonters throughout the state, including those in rural areas,

21        had access to broadband for their economic future was a key principle that the
                                                                  Department of Public Service
                                                              Christopher J. Campbell, Witness
                                                                            Dockets 6959/7142
                                                                               March 16, 2006
                                                                                 Page 17 of 20

 1        Department sought to uphold in pursuing these modifications to the Plan. In

 2        my opinion, the broadband expansions that this modified plan would produce

 3        are more important for economic development than the rate reductions that

 4        would otherwise occur.


 5   Q.   How are the modifications to the Plan consistent with criterion 6, that the plan

 6        provides reasonable incentives for the creation of a modern

 7        telecommunications infrastructure and the appropriate implementation of new

 8        cost-effective technology?

 9   A.   If the Plan is not modified and Verizon forgoes taking advantage of the offset

10        mechanism, the Plan will resemble the prior Incentive Regulation Plan in this

11        way: it will implement rate reductions and largely rely on the company’s

12        freedom from the requirements of traditional regulation during the life of the

13        plan to provide it the incentive to make infrastructure investments. (It is true

14        that Verizon would have the opportunity to offset the $1.26 million rate

15        reduction scheduled for July 1, 2007 and possibly the $1.80 million rate

16        reduction scheduled for July 1, 2008 but these are small in comparison to the

17        $8.18 million rate reduction that would be put into effect.) As the Board noted

18        in its September 26, 2005 order, relying on a non-specific commitment to

19        invest in broadband services did not produce satisfactory results under the

20        prior plan. It is hard to see how one can call “modern” a telephone company

21        infrastructure that cannot support mass-market broadband services, especially

22        by 2010. By negotiating an MOU that modifies the Plan, the Department has
                                                                  Department of Public Service
                                                              Christopher J. Campbell, Witness
                                                                            Dockets 6959/7142
                                                                               March 16, 2006
                                                                                 Page 18 of 20

 1        been able to obtain firm commitments to modernize infrastructure through

 2        reasonable incentives.


 3        In addition, because the modifications would change the plan so that Verizon

 4        must meet a certain level of performance (i.e. percentage of lines qualified)

 5        instead of providing it an incentive to spend money on certain types of

 6        investment, regardless of outcome, the modification of the Plan will provide

 7        Verizon a greater incentive to seek out the most cost-effective technologies in

 8        meeting its goal.


 9   Q.   How are the modifications to the Plan consistent with criterion 5, that the plan

10        is consistent with the goal of protecting or promoting universal service to

11        residential users of telecommunications?

12   A.   Although universal service has traditionally meant access to telephone service,

13        the Vermont Telecommunications Plan recognizes that broadband is an

14        emerging universal service issue. (See p. 5-7.) The fundamental goal of

15        universal service is that there not be “haves” and ”have nots” when it comes to

16        essential telecommunications service. These modifications would commit

17        Verizon to closing just that type of gap.


18   Q.   How are the modifications to the Plan consistent with criterion 3, that the plan

19        be consistent with the Vermont Telecommunications Plan?

20   A.   The Vermont Telecommunications Plan contains an especially relevant policy

21        in the subsection dealing with alternative regulation plans. This policy states:
                                                                  Department of Public Service
                                                              Christopher J. Campbell, Witness
                                                                            Dockets 6959/7142
                                                                               March 16, 2006
                                                                                 Page 19 of 20

 1           Network modernization and investment expectations should be an
 2           important element of any alternative regulation plan over the next five
 3           years. Alternative regulation plans should use milestones for marking and
 4           evaluation the company’s ongoing progress toward transformation of
 5           telecommunications networks consistent with the infrastructure and
 6           service goals and specific desired improvements contained in this plan. (p.
 7           8-5).

 8        Through an agreement with Verizon, these modifications contain specific

 9        modernization and investment expectations consistent with the universal

10        broadband availability goals of the Telecom Plan. These expectations are

11        measured by performance milestones.


12   Q.   How are the modifications to the Plan consistent with criterion 2, that the plan

13        is consistent with the state telecommunications purposes established under

14        Section 202c of Title 30?

15   A.   While not reducing the extent to which the Plan is consistent with the other

16        state telecommunications purposes, these modifications improve the Plan’s

17        ability to “Support the universal availability of appropriate infrastructure and

18        affordable services for transmitting voice and high-speed data,” purpose

19        number 2, for the same reasons I identified in addressing criterion 5

20        previously.


21   Q.   How are the modifications to the Plan consistent with criterion 1, that the plan

22        promotes the general good of the state?

23   A.   For all of the reasons I have previously mentioned, the modifications promote

24        the general good of the state. Specifically, they ensure that a very substantial
                                                                 Department of Public Service
                                                             Christopher J. Campbell, Witness
                                                                           Dockets 6959/7142
                                                                              March 16, 2006
                                                                                Page 20 of 20

 1        number of Vermonters will be able to receive broadband services from

 2        Verizon. Areas of the state that might well not have any access to mass-

 3        market broadband services at the end of 2010 will. Communities will be more

 4        economically viable, making Vermont a better place to live and work.

 5        Organizations and individuals will have improved access to the information,

 6        communication opportunities, goods, and services available through the

 7        Internet. Vermonters will have improved means with which to interact with

 8        other Vermonters as well as the rest of the world in their economic,

 9        educational, civic, and social life.


10   Q.   Does this conclude your testimony?

11   A.   Yes, it does.

				
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