Q w e s t W h o l e s a l e M a r k e t s

Q w e s t W h o l e s a l e M a r k e t s

The information provided on every slide in the following presentation is for training purposes only. The information provided does not create or modify any legal obligations, promises or expectations between Qwest and CLEC customer. The parties’ relationship is governed by existing legal obligations and contracts.

Qwest Performance Assurance Plan (QPAP)

Implementation

The Qwest CLEC ForumSeptember 16-17, 2002

22Q w e s t W h o l e s a l e M a r k e t s

Agenda

What is QPAP? How does it work? Positioning – What do CLECs need to do? Pre-QPAP – SGATS, Questionnaire, Web site Post-QPAP – Roles and Processes, CLEC reports Resources/Support

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The PAP is a performance remedy plan for services that Qwest provides to CLECs

The PAP encompasses a broad range of carrier-to-carrier functions

Qwest offers the plan to CLECs in conjunction with its 271 application as an anti-backsliding mechanism once 271 approval has been granted


What is a Performance Assurance Plan (PAP)?


Payments

Per occurrence payments – Qwest pays on the difference between CLEC performance and benchmark or parity performance

Measures prioritized: High, Medium and Low Tiers

Tier 1 payments to CLECs Tier 2 to state designated funds

Payments under the plan will be self-executing - calculated based on monthly performance results for each state


Generic ROC QPAP Features

PAP is essentially a per occurrence payment plan: For example, if the CLEC performance on OP-3 was 85% and the parity/benchmark performance was 90%, assuming 100 orders, Qwest would pay for 5 occurrences

Measures are classified as High ($150), Medium ($75) or Low ($25) per miss to reflect relative importance

CLECs receive Tier I payments if Qwest does not provide parity between the service it provides to the CLECs and that which it provides to its retail customers or if Qwest fails to meet applicable benchmarks


Generic ROC QPAP Features

Qwest will make additional Tier 2 payments to the state if it fails parity and benchmark standards on an aggregateCLEC basis

The amount of payment also depends on the number of consecutive months of non-compliant performance

The CAP for payments is generally set at 36% of Qwest’s FCC NOI


Generic ROC QPAP Reporting

On or before last business day of the month following the performance period, e.g., January results reported by end of February

5 day grace period in QPAP $500 per calendar day payment for late reports QPAP $500 per business day for 6-10 days, $1000 for

11-15 days, $2000 per day >15 business days


PAP Payments

Qwest will make bill credits to CLECs and will issue checks of additional amounts due to CLECs over and above amount owed to Qwest. In Colorado, Nebraska and Washington, this will be primarily EFT and checks.

- It is important to note that credits will appear on CLEC bills in March for January performance

Qwest will make payments to state funds for Tier 2 measures.


PAP Calculations

Benchmarks “Stare and compare”

Parity measurements Compare CLEC z-scores to critical z-values*

*For Colorado Tier 1A parity measurements require a comparison between the six month rolling average of Qwest retail results adjusted for sample size and variance

Step 1: Determine whether Qwest passed or failed


ROC Statistical Table

LIS Trunks, UDITs, resale, unbundled loops -- Other Parity Sample Size DS1 and DS3All Measurements 1-10 1.04 * 1.645 11-150 1.645 1.645151-300 2.0 2.0301-600 2.7 2.7601-3000 3.7 3.73001 and above 4.3 4.3

*Applies for individual month testing. For purposes of determining consecutive month misses, 1.645 shall be used. Zone 1 and Zone 2 shall be combined.

Critical Values


PAP Calculations

Calculate the difference between the actual CLEC performance and the benchmark or parity performance

multiply the difference by CLEC denominator/volume (number of items)

Tier 2 calculations done similarly, except utilizes CLEC aggregate rather than individual CLEC data

Step 2: Calculate Occurrences/Misses and Payment


Payment Calculation – Percent Benchmark

Calculate Occurrences/Misses:Difference

(Occurrences/CLEC Result Benchmark Misses Paid)

Result: 78.30% 95% 16.7%Denominator/Volume: 250

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Calculate Payment:

PerOccurrence/Miss

Occur/Misses Payment Payment

42 $150 $6,300


Payment Calculation – Interval Benchmark

Calculate Occurrences/Misses:Difference

(Occurrences/CLEC Result Benchmark Misses Paid)

Result: 7 Days 6 Days 16.7%Denominator: 250

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Calculate Payment:

PerOccurrence/Miss

Occur/Misses Payment Payment

42 $150 $6,300


Payment Calculation – Parity Interval

Modified z-score(CLEC Result – Qwest Result)

Qwest Std Dev * SQRT(1/Qwest Volume + 1/CLEC Qwest)

Calculate Occurrences/Misses (Qwest Result + Critical z-value * Qwest Std Dev * (SQRT(1/Qwest Vol + 1/CLEC Vol)) - CLEC Result)

(Qwest Result + Critical z-value * Qwest Std Dev * (SQRT(1/Qwest Volume + 1/CLEC Volume))

* CLEC Volume

Calculate PaymentOccurrences/Misses * per occurrence/miss amount

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Occurrence/Miss Calculation – Parity Interval


Example: OP-4 Installation IntervalStatistical Critical Value: 1.645

Qwest CLEC

PID numerator denominator resultStandard Deviation numerator denominator result z score

OP-4 1,700 500 3.400 1.000 400 100 4.00 5.4772 3.5802 12

N occurrences to pay

Parity Value

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Payment Calculation – Parity Percent

Modified z-score(Qwest Result - CLEC Result)

SQRT(Qwest Result * (1 - Qwest Result))*(1/Qwest Volume + 1/CLEC Volume))

Calculate Occurrences/Misses Qwest Result - Critical z-value * (SQRT((Qwest Result * (1 - Qwest Result)) * (1/Qwest Vol + 1/CLEC Vol)) -

CLEC Result) * CLEC Volume

Calculate PaymentOccurrences/Misses * per occurrence/miss amount


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Occurrence/Miss Calculation – Parity Percent


Example: MR-3 Out of Service Cleared within 24 HoursStatistical Critical Value: 1.645

Qwest CLEC

PID numerator denominator result numerator denominator result z scoreMR-3a 3,450 3,500 98.57% 80 100 80.00% 15.431 96.6% 17

N occurrences to pay

Parity Value


Generic Tier 1 per Miss/Occurrence TableAll states except Colorado and Minnesota

Measurement Group Month 1 Month 2 Month 3 Month 4 Month 5

Month 6 and succeeding

monthsHigh $150 $250 $500 $600 $700 $800Medium $75 $150 $300 $400 $500 $600Low $25 $50 $100 $200 $300 $400

Per Measure/Cap

Measurement Group Month 1 Month 2 Month 3 Month 4 Month 5

Month 6 and succeeding

monthsHigh $25,000 $50,000 $75,000 $100,000 $125,000 $150,000Medium $10,000 $20,000 $30,000 $40,000 $50,000 $60,000Low $5,000 $10,000 $15,000 $20,000 $25,000 $30,000

Per Occurrence

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Generic QPAP ROC Tier 2 Payment Table

Per Occurrence Measurement Group: High $500 Medium $300 Low $200


Per Measurement/Cap Measurement Group: High $75,000 Medium $30,000 Low $20,000

2020

Payments Utilizing per Measure Structure

Measurement Performance State Payment14 State Payment

GA-1, 2, 3, 4, 5 ,6 1% or lower $1,000 $14,000>1% to 3% $10,000 $140,000>3% to 5% $20,000 $280,000

>5% $30,000 $420,000

PO-1 2 sec or less $1,000 $14,000>2 sec to 5 sec. $5,000 $70,000>5 sec to 10 sec. $10,000 $140,000

>10 sec. $20,000 $280,000

OP-2/MR-2 1% or lower $1,000 $14,000>1% to 3% $10,000 $140,000>3% to 5% $20,000 $280,000

>5% $30,000 $420,000

PO-20 1% or lower $500 $7,000Resale POTS/ >1% to 3% $2,500 $35,000UNE-P (POTS) >3% to 5% $5,000 $70,000

>5% $7,500 $105,000

Unbundled Loops 1% or lower $500 $7,000(Analog and 2-Wire >1% to 3% $2,500 $35,000Non-Loaded >3% to 5% $5,000 $70,000

>5% $7,500 $105,000


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Communication Strategies

Qwest QPAP Web site initiated August 16th

New PAP CLEC Questionnaire issued August 16th

CLEC Forum – September 17th


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Positioning

QPAP is predicated on and a subset of Performance Indicator Definitions (PIDS). PIDs were developed during 271 workshops in all 14 states. The two “triggers” for QPAP are: (1) Qwest 271 approval and (2) An approved amendment to an interconnection agreement.


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Steps a CLEC Takes to Elect QPAP


30-60 Days

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SGAT “Opt in” Process

CLECs should review Qwest template website. The CLEC contacts Qwest to obtain a copy of the “template”. If 271 approval occurs first, the date of execution determines when the CLEC becomes eligible for the QPAP. If the agreement is executed prior to 271 approval, the 271 approval date determines when the CLEC becomes QPAP eligible.


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CLEC Questionnaire

Follows same form and procedures as other questionnaires. Asks CLECs to declare the form of payment preferred (Paper check vs Electronic Funds Transfer). Should be completed and returned prior to QPAP execution. Provides critical information to ensure QPAP payments are issued correctly. Must be updated should CLEC’s information concerning QPAP change.


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Validation of CLEC Information

Qwest Accounts Payable will validate all CLEC information and confirm usefulness and accuracy of this detail obtained via CLEC QPAP questionnaire.


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CLEC Reports

Individual CLEC PID/PAP calculations will be available on a password protected website. This site will provide two months of a CLEC’s performance reports and one month of their QPAP payment calculations.

A digital certificate is necessary to obtain access to this information.


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Key Resources

QPAP Agreements and Questionnaire site:http://www.qwest.com/wholesale/clecs/negotiations.html

Notifications: http://www.qwest.com/wholesale/notices/cnla/

Website to obtain digital certificate:http://www.qwest.com/wholesale/systems/generalinfo.html


Q w e s t W h o l e s a l e M a r k e t s

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