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 BEFORE  THE  FEDERAL  COMMUNICATIONS  COMMISSION 
 WASHINGTON,  D.  C.  20554 


 In  the  Matter  of  )  ) 
 Application  by  SBC  Communications  Inc.,  )  Nevada  Bell  Telephone  Company,  and  )  WC  Docket  No.  03-  10 
 Southwestern  Bell  Communications  Services,  )  Inc.  for  Provision  of  In-  Region,  InterLATA  ) 
 Services  in  Nevada  ) 


 REPLY  AFFIDAVIT  OF  J.  GARY  SMITH 
 REGARDING  THE  STATUS  OF  LOCAL  EXCHANGE  COMPETITION 
 TABLE  OF  CONTENTS 


 SUBJECT  PARAGRAPH(  S) 
 INTRODUCTION  1 
 BUSINESS  MARKET  ENTRY  2 
 RESIDENTIAL  MARKET  ENTRY  3 
 UNE-  P  4 
 RESOLD  LINES  7 
 BROADBAND  PCS  10 
 CONCLUSION  17 


 SCHEDULE  OF  ATTACHMENTS 
 Attachment  A  WorldCom  July  29,  2002  Press  Release  from  Webpage. 
 Attachment  B  Leap  Wireless  Dec.  11,  2002  Press  Release  from  Webpage. 
 Attachment  C  PUCN  Instructions  and  Form  for  Telecom  Relay  Surcharge 
 Attachment  D  Cricket  3rd  and  4th  Quarter  2002  Telecom  Relay  Surcharge  filings 
 Attachment  E  Analysis  of  ATG  Facilities-  Based  Residential  White  Page  Listings 
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 I,  J.  GARY  SMITH,  being  of  lawful  age  and  duly  sworn  upon  my  oath,  do  hereby  depose  and 
 state  as  follows: 
 INTRODUCTION 
 1.  My  name  is  J.  Gary  Smith.  I  am  the  same  J.  Gary  Smith  that  previously  filed  an  Affidavit 
 Regarding  the  Status  of  Local  Exchange  Competition  in  this  docket  on  January  14,  2003,  in 
 support  of  Nevada  Bells  Application.  1  This  affidavit  replies  to  the  Comments  filed  in  this 
 proceeding  by  WorldCom,  Inc.    the  only  party  to  assert  that  Nevada  Bell  has  failed  to 
 demonstrate  compliance  with  Track  A  under  47  U.  S.  C.    271(  c)(  1)(  A).  2 
 BUSINESS  MARKET  ENTRY 


 2.  It  is  first  worth  noting  what  is  not  in  dispute.  No  party    including  WorldCom    has 
 challenged  Nevada  Bells  showing  with  respect  to  local  competition  in  the  business  market. 
 Indeed,  as  my  opening  affidavit  demonstrated,  CLECs  have  captured  over  20%  of  that 
 lucrative  market    with  a  substantial  majority  of  the  lines  served  by  facilities-  based 
 providers. 


 RESIDENTIAL  MARKET  ENTRY 
 3.  WorldCom  is  the  only  party  to  challenge  Nevada  Bells  Track  A  showing  with  respect  to 
 local  competition  in  the  residential  market.  Although  I  will  address  Worldcoms  comments 
 in  detail  below,  it  is  essential  that  this  Commission  not  lose  site  of  the  bigger  picture  in 


 1  See  Affidavit  of  J.  Gary  Smith  attached  to  Application  by  SBC  Communications  Inc.,  Nevada  Bell  Telephone 
 Company,  and  Southwestern  Bell  Communications  Services,  Inc.  for  Provision  of  In-  Region,  InterLATA  Services  in  Nevada,  WC  Docket  No.  03-  10  (FCC  filed  Jan.  14,  2003)  (App.  A,  Tab  19). 


 2  See  Comments  Of  WorldCom,  Inc.  On  The  Application  By  SBC  For  Authorization  To  Provide  In-  Region, 
 InterLATA  Services  In  Nevada  at  1-  7,  Application  by  SBC  Communications  Inc.,  Nevada  Bell  Telephone  Company,  and  Southwestern  Bell  Communications  Services,  Inc.  for  Provision  of  In-  Region,  InterLATA 


 Services  in  Nevada,  WC  Docket  No.  03-  10  (FCC  filed  Feb.  4,  2003)  (  WorldCom  Comments). 
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 considering  these  comments.  As  I  candidly  stated  in  my  opening  affidavit,  competition  for 
 residential  customers  in  Nevada  Bells  local  service  territory  has  not  yet  developed  to  the 
 same  extent  as  competition  for  business  customers.  But  that  does  not  change  the  fact  that 
 where  carriers  have  chosen  to  compete  in  the  residential  market    through  UNE-  P,  resale  and 
 broadband  PCS    they  have  been  able  to  do  so.  3 


 UNE-  P 
 4.  WorldCom  first  challenges  Nevada  Bells  reliance  on  my  opening  affidavit,  which 
 established  that  as  of  November  2002,  Nevada  Bell  was  providing  28  UNE-  P  access  lines  for 
 residential  service.  WorldCom  summarily  argues  that  those  lines  do  not  reflect  a 
 commercial  alternative.  4  WorldCom  goes  on  to  argue  that  it  has  contacted  *** 
 ***,  the  carrier  at  issue,  and  further  argues  that  the  carrier  is  not  offering  local 
 service.  I  will  address  these  arguments  in  reverse  order. 


 5.  First,  notwithstanding  its  unsupported  assertion  regarding  its  contact  with  the  carrier  at 
 issue,  WorldCom  is  simply  wrong  if  it  is  suggesting  that  these  UNE-  P  lines  do  not  exist.  5 


 3  As  an  initial  matter,  I  note  that  WorldCom  generically  criticizes  Nevada  Bell  for  treating  as  confidential  the 
 identity  of  the  carrier  providing  residential  service  via  UNE-  P  as  well  as  the  carrier  providing  resold  residential 
 service  in  addition  to  facilities-  based  business  service.  This  criticism  is  ridiculous.  WorldCom  well-  knows  that  Nevada  Bell  has  kept  the  identity  of  the  carriers  confidential  solely  to  avoid  public  disclosure  of  those  carriers 


 line  counts.  This  data  isnt  treated  as  confidential  for  Nevada  Bells  benefit    it  is  treated  as  confidential  for  the 
 protection  of  the  CLECs  .  Had  the  information  not  been  treated  confidentially,  Nevada  Bell  may  have  been  accused  of  improperly  disclosing  specific  carrier  information    indeed  WorldCom  would  likely  have  been  the 


 first  party  to  complain.  In  any  event,  the  information  was  obviously  made  available  under  the  protective  order 
 and  WorldCom  clearly  took  advantage  of  access  to  the  information. 
 4  WorldCom  Comments  at  2.  I  note  that  as  of  January  2003,  the  number  of  UNE-  P  lines  has  decreased  to  24. 


 5  WorldComs  rhetoric  is  particularly  vile  when  it  appears  to  claim  that  evidence  I  presented  in  my  opening 
 affidavit  regarding  UNE-  P  and  resold  residential  service  is  untrue.  See  id.  at  7  &  n.  13.  It  is  WorldCom,  however,  that  should  check  its  facts.  As  for  WorldComs  reference  to  misstatements  in  its  state  case,  these 


 appear  to  relate  to  several  residential  facilities-  based  numbers  CLECs  had  entered  into  the  E911  database. 
 These  lines  were  initially  presented  by  Nevada  Bell  as  facilities-  based  residential  lines  in  the  state  proceeding.  During  the  proceeding,  however,  the  CLECs  claimed  that  the  lines  were  in  fact  business  listings  that  the  CLECs 


 had  erroneously  entered  into  the  residential  database.  Accordingly,  because  Nevada  Bell  had  no  way  to  verify 
 or  dispute  that,  Nevada  Bell  dropped  reliance  upon  those  listings.  Notably,  two  of  those  lines  still  remain  in  the  residential  E911  database    the  CLEC  still  has  not  bothered  to  correct  them. 
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 These  are  actual  UNE-  P  lines  that  Nevada  Bell  is  provisioning  and  that  ***  ***  is 
 utilizing  to  provide  local  residential  service.  WorldCom  presents  no  evidence  to  the 
 contrary.  Instead,  WorldCom  seems  to  be  focusing  on  whether  the  carrier  at  issue  is 
 offering  or  marketing  its  local  service  in  Nevada.  But  again,  Nevada  Bell  has  no  control 
 over  CLECs  current  business  and  marketing  plans.  Whatever  those  plans  may  be,  this 
 Commission  has  previously  made  clear  that  qualification  for  Track  A  is  not  dependent  on 
 whether  a  competing  provider  is  soliciting  or  accepting  new  customers.  6 


 6.  As  for  WorldComs  argument  that  the  UNE-  P  lines  do  not  represent  a  commercial 
 alternative,  7  I  simply  disagree.  Although  I  recognize  that  the  Commission  has  interpreted 
 the  statute  to  require  a  showing  that  CLECs  are  serving  more  than  a  de  minimis  number  of 
 residential  customers,  the  Commission  has  consistently  dismissed  the  notion  that  Track  A 
 compliance  requires  any  particular  showing  of  market  share.  8  Whether  the  UNE-  P  lines  at 
 issue  are  more  than  de  minimis  is  obviously  subjective  under  any  circumstances    and  that  is 
 particularly  so  given  Nevada  Bells  small  market.  Nevertheless,  I  continue  to  believe  that 
 these  lines  represent  more  than  a  de  minimis  number  of  customers  and  demonstrate  that 
 CLECs  can  serve  residential  customers  utilizing  UNE-  P  where  they  choose  to  do  so. 


 6  See  Memorandum  Opinion  and  Order,  Joint  Application  by  SBC  Communications  Inc.,  Southwestern  Bell 
 Telephone  Company,  and  Southwestern  Bell  Communications  Services,  Inc.  d/  b/  a  Southwestern  Bell  Long  Distance  Pursuant  to  Section  271  of  the  Telecommunications  Act  of  1996,  to  Provide  In-  Region,  interLATA 


 Services  in  Arkansas  and  Missouri,  16  FCC  Rcd  20719,    119  (2001)  (rejecting  arguments  that  a  competing 
 provider  must  necessarily  be  accepting  new  customers  in  order  to  qualify  for  Track  A). 
 7  WorldCom  Comments  at  2. 


 8  See,  e.  g.,  Memorandum  Opinion  and  Order,  Application  by  Verizon  New  England  Inc.,  Bell  Atlantic 
 Communications,  Inc.  (d/  b/  a  Verizon  Long  Distance),  NYNEX  Long  Distance  Company  (d/  b/  a  Verizon  Enterprise  Solutions),  Verizon  Global  Networks  Inc.,  and  Verizon  Select  Services  Inc.,  for  Authorization  to 


 Provide  In-  Region  InterLATA  Services  in  Vermont,  17  FCC  Rcd  7625,    10  (2002). 
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 RESOLD  LINES 
 7.  WorldCom  next  challenges  Nevada  Bells  reliance  on  the  evidence  in  my  opening  affidavit 
 that  ***  ***  is  providing  resold  residential  service  in  addition  to  facilities-  based 
 business  service.  9  Once  again,  WorldCom  is  mistaken.  And  once  again,  WorldCom 
 presents  no  evidence  to  the  contrary.  ***  ***  is  indeed  providing  resold  service  to 
 residential  customers  as  outlined  in  my  opening  affidavit.  WorldCom  may  again  be 
 confusing  the  concept  of  providing  service  with  the  concept  of  soliciting  or  offering 
 service    CLEC  business  decisions  over  which  Nevada  Bell  has  no  control.  Notably,  even 
 WorldCom  is  forced  to  admit  that  the  Commissions  precedents  indicate  that  Track  A  could 
 be  satisfied  by  a  CLEC  who  provides  residential  service  via  resale  when  it  also  provides 
 business  service  via  its  own  facilities.  10  Although  I  will  leave  the  argument  regarding  the 
 legal  standard  to  the  Brief,  I  simply  note  that  I  believe  the  Commissions  precedent  on  this 
 issue  is  far  clearer  than  WorldCom  would  choose  to  admit. 


 8.  Moreover,  there  is  significant  evidence  that  this  carrier  is  also  providing  facilities-  based 
 residential  service    which  WorldCom  appears  to  concede.  11  As  noted  in  Attachment  D  to 
 my  opening  Affidavit,  ***  ***  has  entered  approximately  40  facilities-  based  residential 
 lines  in  the  white  page  database  but  has  entered  these  as  business  listings  in  the  E911 
 database.  In  light  of  WorldComs  criticisms,  and  through  further  investigation,  Nevada  Bell 
 has  confirmed  that  ***  ***  clearly  appears  to  be  providing  residential  service  to  at  least 
 20  of  these  customers.  Indeed,  Nevada  Bells  investigation  demonstrates  that  these 


 9  WorldCom  Comments  at  2. 
 10  Id.  at  3. 
 11  Id.  at  3  n.  5  (noting  that  the  CLEC  explains  to  inquirers  that  it  is  willing  to  sell  its  business  service  to  anyone 
 willing  to  buy  them  and  this  somehow  explains  the  appearance  of  some  residential  listings  in  the  white  pages). 
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 customers  have  disconnected  previously  existing  Nevada  Bell  residential  service  at  the 
 addresses  in  question    all  of  which  are  residential  homes  located  in  residential 
 neighborhoods.  12  Thus,  no  matter  how  the  carrier  may  designate  these  lines  in  the  E911 
 database,  it  appears  that,  in  fact,  these  lines  are  being  used  to  provide  service  to  residential 
 customers. 


 9.  Finally,  WorldCom  says  that  Nevada  Bell  stretches  the  law  by  arguing  that  pure  resellers 
 may  satisfy  a  BOCs  Track  A  obligation  and  further  that  the  modest  number  of  lines  sold  by 
 pure  resellers  does  not  show  the  existence  of  an  actual  competitive  alternative.  13  Again, 
 this  is  largely  a  legal  issue  that  will  be  addressed  in  the  Brief.  However,  I  note  that 
 WorldCom  does  not  challenge  Nevada  Bells  evidence  that  there  are  over  1,300  resold 
 residential  lines  in  Nevada  Bells  local  service  territory    more  than  a  de  minimis  number 
 under  any  conceivable  standard.  I  also  disagree  with  WorldComs  assertion  that  Nevada 
 Bell  has  stretched  the  law  on  this  issue.  Indeed,  I  believe  the  Commission  was  clear  on  this 
 issue  when  it  previously  wrote: 


 We  note,  however,  that  reading  the  statutory  language  to  require  that  there  must  be  facilities-  based  service  to  both  classes  of  subscribers  to  meet  Track  A  could 
 produce  anomalous  results,  and  there  appear  to  be  overriding  policy  considerations  that  lead  to  a  contrary  construction  of  the  statutory  language.  In 
 particular,  if  all  other  requirements  of  section  271  have  been  satisfied,  it  does  not  appear  to  be  consistent  with  congressional  intent  to  exclude  a  BOC  from  the  in- 


 12  See  Attachment  E. 
 13  WorldCom  Comments  at  3-  4. 
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 region,  interLATA  market  solely  because  the  competitors  service  to  residential  customers  is  wholly  through  resale.  14 
 BROADBAND  PCS 
 10.  WorldCom  next  takes  issue  with  Nevada  Bells  evidence  regarding  broadband  PCS 
 competition.  Ironically,  although  WorldCom  admits  that  the  Commission  has  held  that 
 BOC  applicants  may  rely  on  the  presence  of  a  PCS  provider  to  satisfy  Track  A,  15 
 WorldCom  nevertheless  chooses  to  ignore  this  reality  by  arguing  at  length  regarding  alleged 
 technical  limitations  inherent  with  broadband  PCS.  16  WorldComs  argument,  at  bottom,  is 
 that  broadband  PCS  shouldnt  qualify  for  Track  A    notwithstanding  the  Commissions 
 unambiguous  precedent  to  the  contrary.  17  It  seems  to  me  that  WorldCom  would  do  well  to 
 heed  its  own  statement  that  it  is  late  in  the  271  process  to  be  seeking  new  standards.  18 


 11.  Presumably  recognizing  the  futility  of  its  argument  that  broadband  PCS  cant  satisfy  Track 
 A,  WorldCom  offers  a  brief  challenge  to  Nevada  Bells  evidence  regarding  Leap/  Cricket.  19 
 The  primary  thrust  of  this  challenge  is  that  Nevada  Bells  reliance  upon  press  releases  and 


 14  Memorandum  Opinion  and  Order,  Application  of  BellSouth  Corp,  et  al.,  for  Provision  of  In-  Region,  InterLATA 
 Services  in  Louisiana,  13  FCC  Rcd  20,599,    48  (1998)  (  Second  Louisiana  Order)  (emphasis  added).  See 
 also  Memorandum  Opinion  and  Order,  Application  by  SBC  Communications  Inc.,  Southwestern  Bell  Telephone  Company,  and  Southwestern  Bell  Communications  Services,  Inc.  d/  b/  a  Southwestern  Bell  Long 


 Distance  for  Provision  of  In-  Region,  interLATA  Services  in  Kansas  and  Oklahoma  ,  16  FCC  Rcd  6237,    43 
 n.  101  (2001)  (  Based  on  the  totality  of  circumstances  presented  by  this  application,  and  based  on  our  conclusions  regarding  checklist  compliance,  we  likely  would  not  have  denied  this  application  on  Track  A 


 grounds,  and  would  have  relied  on  the  existence  of  competitors  service  to  residential  customers  through 
 resale.)  (emphasis  added). 
 15  WorldCom  Comments  at  5.  (citing  the  Second  Louisiana  Order). 


 16  Id.  at  6. 
 17  See  Second  Louisiana  Order    25. 
 18  WorldCom  Comments  at  4. 
 19  As  noted  in  paragraph  15  of  my  opening  affidavit,  Cricket  Communications,  Inc.  is  a  subsidiary  of  Leap 
 Wireless  International,  Inc.,  and  operates  in  the  Reno,  Sparks  and  Carson  City  markets  in  Nevada,  an  area  that  falls  almost  entirely    if  not  entirely    within  Nevada  Bells  local  service  territory.  In  this  affidavit,  I  will  refer 


 to  the  competitor  as  Leap/  Cricket. 
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 other  advocacy  materials  of  Cricket  and  its  parent  is  somehow  misplaced.  Of  course, 
 WorldComs  muted  complaint  begs  the  question:  If  the  Commission  should  not  rely  upon  the 
 statements  of  Nevada  Bells  competitors,  then  what  should  it  rely  upon?  Moreover, 
 WorldCom  does  not  attempt  to  call  into  question  the  veracity  of  Leap/  Crickets  statements. 
 Accordingly,  the  evidence  Nevada  Bell  has  provided  in  regard  to  Leap/  Cricket  stands 
 entirely  unrebutted.  20 


 12.  Argue  as  it  might,  WorldCom  has  not  presented  a  shred  of  evidence  to  rebut  Nevada  Bells 
 reliance  upon  Leap/  Crickets  broadband  PCS  service.  WorldComs  argument  instead 
 appears  to  be  that  Nevada  Bell  somehow  hasnt  shown  enough.  WorldCom  is  mistaken.  The 
 Second  Louisiana  Order  did  not  establish  any  litmus  test  for  competitive  evidence  based  on 
 broadband  PCS  providers.  As  set  forth  in  paragraph  14  of  my  opening  affidavit,  in  that  order 
 the  Commission  merely  provided  guidance  on  evidence  a  BOC  could  include  on  this  issue. 


 13.  In  any  event,  my  opening  affidavit  provided  each  type  of  evidence  the  Commission  identified 
 as  probative  in  the  Second  Louisiana  Order.  My  affidavit  provided  specific  [  e]  vidence  of 
 marketing  efforts  by  Leap/  Cricket  which  are  designed  to  induce  replacement  of  landline 
 phones.  Noting  that  the  Commission  believed  [  t]  he  most  persuasive  evidence  concerning 
 competition  between  PCS  and  wireline  local  telephone  service  is  evidence  that  customers  are 
 actually  subscribing  to  PCS  in  lieu  of  wireline  service  at  a  particular  price,  paragraphs  15- 


 20  Maybe  the  most  astounding  argument  presented  by  WorldCom  is  that  the  Commission  should  somehow 
 discount  evidence  regarding  Leap/  Cricket  because  its  future  is  somewhat  uncertain    based  upon  its  recent  delisting  from  NASDAQ.  See  WorldCom  Comments  at  6.  I  find  it  more  than  passing  ironic  that  WorldCom, 


 who  has  filed  for  bankruptcy  protection  and  who  itself  was  delisted  from  NASDAQ  in  July  2002,  is  now 
 complaining  about  the  viability  of  Leap/  Cricket  based  upon  its  NASDAQ  delisting.  See  Attachment  A.  In  any  event,  whatever  Leap/  Crickets  future  may  be,  it  is  certainly  a  competitor  in  the  current  market.  Indeed,  the 


 very  press  release  WorldCom  relies  upon  quotes  Leaps  Chairman  as  confirming  the  decision  will  not  affect 
 our  day-  to-  day  operations  and  does  not  change  our  strategic  focus.  See  Attachment  B.  Moreover,  information  Leap  has  filed  with  the  Public  Utilities  Commission  of  Nevada  (  PUCN)  for  the  third  and  fourth  quarters  of 


 2002  demonstrates  that  it  continues  to  increase  its  subscriber  base  in  Nevada.  See    15  &  n.  23  below. 
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 21  of  my  opening  affidavit  describe  in  detail  Leap/  Crickets  success  in  this  regard.  And 
 although  WorldCom  criticizes  the  use  of  Leap/  Crickets  own  public  statement,  I  continue  to 
 believe  the  use  of  Leap/  Crickets  public  statements  should  be  viewed  as  exceptionally 
 probative  evidence.  Leap/  Cricket  is  the  party  that  says  it  is  a  landline  replacement.  See 
 opening  affidavit    15-  16.  Leap/  Cricket  is  the  party  that  advertises  in  Reno  by  asking,  is  it 
 a  home  phone  or  a  mobile  phone?  See  opening  affidavit    17.  And  Leap/  Cricket  is  the 
 party  who  commissioned  a  study  that  found  that  more  than  26%  of  its  Cricket  customers  say 
 they  do  not  have  a  traditional  phone  at  home.  See  opening  affidavit    18.  21 


 14.  The  fact  is,  it  is  difficult  to  understand  why  WorldCom  believes  Leap/  Crickets  own  public 
 statements  should  be  viewed  as  suspect.  Indeed,  Nevada  Bells  reliance  on  Leap/  Cricket 
 should  come  as  no  surprise  given  that  Leap/  Cricket  has  been  identified  by  this  Commission 
 as  its  prime  example  for  wireline  replacement  competition  in  each  of  the  Commissions  two 
 most  recent  reports  on  the  CMRS  industry.  22 


 15.  Moreover,  the  calculations  I  presented  in  my  opening  affidavit  regarding  Leap/  Cricket  were 
 extremely  conservative.  I  initially  estimated  that  Leap  Cricket  served  approximately  9,100 
 residential  customers  in  Nevada  Bells  serving  area  (based  upon  the  approximate  number  of 
 Nevada  Bell  residential  access  lines  in  Reno,  Sparks  and  Carson  City    151,800    multiplied 
 by  Leap/  Crickets  publicly-  stated  market  coverage  after  first  year  of  service    6%).  I  have 


 21  According  to  Leap/  Cricket,  the  study  by  an  independent  research  firm  has  a  margin  of  error  of  plus  or  minus  1.1 
 percent.  See  opening  affidavit,  Att.  E.  Accordingly,  it  is  apparent  that  the  study  followed  statistical  sampling  methods. 


 22  See  Sixth  Report,  Implementation  of  Section  6002(  b)  of  the  Omnibus  Budget  Reconciliation  Act  of  1993; 
 Annual  Report  and  Analysis  of  Competitive  Market  Conditions  with  Respect  to  Commercial  Mobile  Services,  16  FCC  Rcd  13350,  13382  (2001)  (citing  Leap/  Cricket  as  primary  example  of  wireless  alternative  to  traditional 


 wireline  service);  Seventh  Report,  Implementation  of  Section  6002(  b)  of  the  Omnibus  Budget  Reconciliation  Act  of  1993,  Annual  Report  and  Analysis  of  Competitive  Market  Conditions  with  Respect  to  Commercial 
 Mobile  Services,  17  FCC  Rcd  12985,  13018  (2002)  (same). 
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 since  learned,  however,  that  this  number  was  likely  understated  by  over  6,000  lines.  23  Thus, 
 applying  Leap/  Crickets  own  market  study  to  Leap/  Crickets  own  Nevada  line  counts,  my 
 estimates  of  wireline  replacement  are  shown  to  have  been  very  conservative.  Indeed,  even 
 assuming  Leap/  Crickets  wireline  replacement  in  the  Nevada  market  were  only  a  small 
 fraction  of  the  26%  indicated  by  its  study,  it  would  not  alter  the  indisputable  conclusion 
 reached  in  my  opening  affidavit    that  Leap/  Crickets  broadband  PCS  service  is  directly 
 competing  with  Nevada  Bell  in  the  residential  telephone  service  market  in  Nevada  Bells 
 service  territory  and  that  Leap/  Cricket  is  serving  more  than  a  de  minimis  number  of 
 residential  customers  as  a  complete  substitute  for  wireline  service.  24 


 16.  That  conclusion  is  supported  by  the  Affidavit  of  Keith  Frederick  filed  concurrently  with 
 my  reply  affidavit.  Mr.  Fredericks  affidavit  describes  a  survey  --  commissioned  by 
 Nevada  Bell  and  conducted  by  the  polling  firm  FrederickPolls    which  provides  further 
 evidence  of  Leap/  Crickets  competitive  presence  in  the  residential  market  in  Nevada.  The 


 23  It  is  my  understanding  that,  pursuant  to  Nevada  Revised  Statute  703.360  and  Nevada  Administrative  Code 
 707.020,  all  Nevada  telephone  companies  are  required  to  collect  from  their  customers  a  surcharge  to  fund  the 
 dual-  relay  system  (which  is  available  to  individuals  who  are  deaf  or  have  severely  impaired  speech  or  hearing)  and  to  remit  those  funds  to  the  state.  Telephone  companies  must  file  quarterly  reports  with  the  PUCN 


 identifying  the  number  of  lines  in  service  during  the  quarter.  The  PUCN  instructions  for  completing  the 
 Surcharge  for  Assistance  to  Persons  with  Impaired  Speech  or  Hearing  Report  Form  appear  on  its  Internet  site  at:  http://  puc.  state.  nv.  us/  admin/  tdd/  tdd.  htm  and  are  attached  to  this  Affidavit  as  Attachment  C.  Because  the 


 report  covers  three  months  and  the  surcharge  is  applied  as  a  monthly  fee  (of  $.  08/  line),  the  total  number  of  lines 
 reported  equals  the  number  of  lines  in  service  in  each  of  the  three  mo  nths  cumulatively.  Thus,  to  determine  the  average  number  of  lines  in  service  during  the  quarter,  you  must  divide  the  total  number  of  lines  reported  by 


 three.  The  reports  filed  by  Cricket  for  the  third  and  fourth  quarters  of  2002  are  attached  to  this  Affidavit  as 
 Attachment  D.  The  third  quarter  report  reflects  a  total  of  38,325  lines,  which  indicates  an  average  of  12,775  lines  during  the  quarter.  The  fourth  quarter  report  was  not  completed  using  the  PUCN  form  and  the  dollar 


 amounts  reflected  on  its  form  appear  to  reference  lines,  not  dollars,  because  tax  is  applied  on  per  line  basis  (i.  e., 
 $.  08  per  line  per  month),  not  on  revenue.  That  report  reflects  a  total  of  46,038  lines,  which  indicates  an  average  of  15,346  lines  during  the  quarter. 


 24  Again,  discounting  completely  Leap/  Crickets  own  independent  study  showing  that  26%  of  its  customers  do  not 
 have  a  traditional  phone  at  home    and  there  is  absolutely  no  reason  to  discount  that  evidence  as  no  party  has  presented  any  evidence  to  rebut  it    it  is  beyond  reason  to  assume  that  not  even  1%  of  Leap/  Crickets  customers 


 (which  would  be  over  150)  have  not  replaced  their  wireline  residential  service.  Leap/  Crickets  marketing 
 strategy  alone    along  with  just  a  dash  of  common  sense    compels  such  a  conclusion.  And  in  my  opinion,  even  150  such  customers  would  demonstrate  that  Leap/  Cricket  is  providing  competing  service  to  more  than  a  de 


 minimis  number  of  customers. 
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 survey  demonstrates  that,  using  an  extremely  conservative  definition  of  replacement 
   based  upon  Leap/  Cricket  customers  who  chose  to  disconnect  their  residential  wireline 
 telephone  service  based  on  their  decision  to  subscribe  to  Leap/  Cricket  service    more 
 than  2,800  subscribers  in  the  Reno,  Sparks  and  Carson  City  market  are  using 
 Leap/  Crickets  broadband  PCS  service  to  replace  Nevada  Bells  residential  wireline 
 service.  25  In  light  of  this  further  support  for  my  previous  conclusion,  there  can  simply 
 be  no  question  but  that  Leap/  Crickets  broadband  PCS  service  meets  the  very  standard 
 to  which  WorldCom  points:  The  service  is  being  used  to  replace  wireline  service   
 and  not  as  simply  a  supplement.  26 


 CONCLUSION 
 17.  WorldComs  arguments  do  absolutely  nothing  to  call  into  question  the  evidence  presented  in 
 my  opening  affidavit.  The  unrebutted  facts  are  that  CLECs  have  ordered  and  are  providing 
 more  than  a  de  minimis  number  of  facilities-  based  and  resold  residential  lines  to  their 
 customers.  Moreover,  the  evidence  is  unrebutted  that  Leap/  Cricket  is  providing  broadband 
 PCS  service  to  more  than  a  de  minimis  number  of  customers  who  have  replaced  their 
 wireline  residential  service.  In  short,  as  I  previously  concluded,  the  local  market  in  Nevada 
 Bells  local  service  territory  is  open  to  competition  and  competitors  are  competing  in  the 
 market.  Accordingly,  Nevada  Bell  has  met  its  obligations  under  Section  271(  c)(  1)(  A). 


 18.  This  concludes  my  affidavit. 


 25  Leap/  Crickets  2,800  subscribers  alone  would  represent  approximately  a  1.2%  share  of  the  residential  market  in 
 Nevada  Bells  serving  area.  When  added  to  competitors  residential  resold  and  UNE-  P  lines,  the  total  lines 
 served  by  competitors  would  be  approximately  4,100,  representing  approximately  a  1.7%  share  of  the  residential  market  in  Nevada  Bells  serving  area. 


 26  WorldCom  Comments  at  5. 
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 J.  G.  Smith  Reply  Affidavit    Attachment  A 
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 WorldCom  :  About  WorldCom  :  Press  Releases  Attachment  A 
 http://  www.  worldcom.  com/  global/  about/  news/  news2.  xml?  printer_  friendly=  true&  newsid=  3910&  mode=  long&  lang=  en&  width=  53.../&  langlinks=  of  2/  10/  03 
 http://  www.  worldcom.  com/  global/  about/  news/  news2.  xml?  newsid=  28&  mode=  long&  lang=  en&  width=  530&  root=/  global/  about/&  langlinks=  off 
 WorldCom,  Inc.  Announces  Delisting  by  Nasdaq  of  its  Securities 
 CLINTON,  Miss.,  July  29,  2002  -  WorldCom,  Inc.  (WCOEQ,  MCWEQ)  today 
 announced  that  a  Nasdaq  Listing  Qualifications  Panel  had  issued  a  written  decision 
 that,  based  on  WorldCom's  recent  bankruptcy  filing  and  the  pending  restatement  of 
 its  financial  statements  for  2001  and  the  first  quarter  of  2002,  WorldCom's 
 WorldCom  Group  Common  Stock,  MCI  Group  Common  Stock  and  8%  Cumulative 
 Quarterly  Income  Preferred  Securities,  Series  A,  would  be  delisted  from  the  Nasdaq 
 Stock  Market  effective  as  of  the  opening  of  trading  on  July  30,  2002.  WorldCom 
 expects  that  its  securities  will  trade  on  the  Pink  Sheets  under  the  symbols  WCOEQ, 
 MCWEQ  and  MCPEQ  following  the  delisting  by  Nasdaq. 


 About  WorldCom,  Inc. 
 WorldCom,  Inc.  (WCOEQ,  MCWEQ)  is  a  pre-  eminent  global  communications  provider 
 for  the  digital  generation,  operating  in  more  than  65  countries.  With  one  of  the  most 
 expansive,  wholly  owned  IP  networks  in  the  world,  WorldCom  provides  innovative 
 data  and  Internet  services  for  businesses  to  communicate  in  today's  market.  In  April 
 2002,  WorldCom  launched  The  Neighborhood  built  by  MCI  -  the  industry's  first  truly 
 any-  distance,  all-  inclusive  local  and  long-  distance  offering  to  consumers  for  one 
 fixed  monthly  price.  For  more  information,  go  to  http://  www.  worldcom.  com. 


 Click  here  for  frequently  asked  questions  concerning  the  status  of  the  WorldCom 
 securities. 


 -  29  July,  2002 
  
 PR  Contact: 
  
 Name:  Scott  Hamilton 
 Role:  WorldCom  Investors 
 Tel:  877-  624-  9266 
 Email:  investor@  wcom.  com 


  
 PR  Contact: 
  
 Name:  News  Bureau 
 Role:  Media  Relations 
 Tel:  800-  644-  NEWS 


  
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 J.  G.  Smith  Reply  Affidavit    Attachment  B 
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 Leap  Press  Release  Attachment  B 
 http://  www.  leapwireless.  com/  press/  content/  2002/  121102.  html  2/  10/  03 
 Leap  Receives  Decision  From  NASDAQ  Listing  Qualifications  Panel  To  Delist  Its  Common  Stock  ~  Common  Stock  Anticipated  to  Move  to  the  OTC  Bulletin  Board  ~ 
 SAN  DIEGO  -  Dec.  11,  2002  -  Leap  Wireless  International,  Inc.  (NASDAQ:  LWIN),  an  innovator  of  wireless  communications  services,  today  announced  that  it  has  been  informed  the  NASDAQ  Listing  Qualifications  Panel 
 has  denied  the  Company's  request  for  continue  listing  on  the  NASDAQ  National  Market  and  that  the  Leap's  common  stock  will  be  delisted  effective  upon  the  open  of  business  day,  December  11,  2002.  The  Panel 
 affirmed  the  previously  announced  NASDAQ  Staff  Determination  Notice  but  expressly  decided  not  to  cite  the  previously  announced  public  interest  concerns  as  a  basis  for  its  determination. 


 "This  decision  will  not  affect  our  day-  to-  day  operations  and  does  not  change  our  strategic  focus,"  said  Harvey  P.  White,  Leap's  Chairman  and  CEO.  "While  we  are  obviously  disappointed  with  the  Panel's  decision,  we 
 expect  to  move  forward  with  our  plans  to  restructure  the  outstanding  indebtedness  of  both  Leap  and  Cricket  in  order  to  create  a  stronger  company  better  positioned  for  the  future." 


 Leap's  common  stock  may  be  eligible  to  trade  on  the  OTC  Bulletin  Board  (OTCBB),  and  the  Company  expects  that  it  will  be  traded  on  the  OTCBB  or  other  quotation  service. 
 About  Leap  Leap,  headquartered  in  San  Diego,  Calif.,  is  a  customer-  focused  company  providing  innovative 
 communications  services  for  the  mass  market.  Leap  pioneered  a  wireless  service  that  lets  customers  make  all  their  local  calls  from  within  their  local  calling  area  and  receive  calls  from  anywhere  for  one  low,  flat  rate.  Leap 
 has  begun  offering  new  services  designed  to  further  transform  wireless  communications  for  consumers.  For  more  information,  please  visit  www.  leapwireless.  com. 


 ### 
 Leap  Wireless  International  Contacts:  Jen  Carroll,  Media  Relations 
 1-  858-  882-  9266  (ph)  1-  858-  882-  6030  (fax)  jcarroll@  leapwireless.  com 


 Jim  Seines,  Investor  Relations  1-  858-  882-  6084  (ph)  1-  619-  882-  6030  (fax) 
 jseines@  leapwireless.  com 


 Bock  Communications,  Inc.  Jessica  Levy,  Media  Relations 
 1-  714-  540-  1030  (ph)  1-  714-  540-  1060  (fax)  jlevy@  bockpr.  com 
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