Talk America Services, LLC 00 Rodney Parham Road Little Rock, AR Cesar Caballero Senior Regulatory Counsel 0-- Cesar.Caballero@windstream.com October, 0 Secretary of the Commission Arkansas Public Service Commission P.O. Box 00 Little Rock, AR 0 Re: Docket No. -0-U - In the Matter of the Application of Talk America Services, LLC for a Certificate of Public Convenience and Necessity to Operates a Reseller Based Provider of Local Exchange Services and Interexchange Services Within the State of Arkansas Dear Secretary: Enclosed please find Talk America Services, LLC s revised Direct Testimony of Jeffery W. Small. Should you have any questions, please do not hesitate to contact me. Sincerely, Cesar Caballero
BEFORE THE ARKANSAS PUBLIC SERVICE COMMISSION In the Matter of the Application of ) Talk America Services, LLC for a ) Certificate of Public Convenience ) And Necessity to Operate as a ) Docket No. -0-U Reseller Based Provider of Local ) Exchange Services and Interexchange ) Services Within the State of Arkansas ) DIRECT TESTIMONY OF JEFFERY W. SMALL ON BEHALF OF TALK AMERICA SERVICES, LLC
0 0 Q. PLEASE STATE YOUR NAME, TITLE, BUSINESS ADDRESS AND TELEPHONE NUMBER. A. My name is Jeffery W. Small. I am Senior Vice President-Corporate Development and Operations of Communications Sales & Leasing, Inc. ( CSL ). CSL is the parent company of Talk America Services, LLC ( TAS ), the Applicant in this proceeding. My business address is 00 N. Rodney Parham Rd., Little Rock, AR. I can be reached by telephone at (0) -. Q. PLEASE DESCRIBE YOUR EDUCATIONAL BACKGROUND AND PROFESSIONAL EXPERIENCE. A. I have a degree in accounting from the Arkansas State University and I am a licensed certified public accountant and I have held various accounting and finance leadership roles since joining Windstream Holdings, Inc. ( Windstream ) in 00. Most recently I served as Vice President of Procurement and Carrier Service Delivery at Windstream with responsibilities for supply chain management, procurement strategy and vendor management, and oversight of the service delivery experience for a full portfolio of carrier communications products provided to carriers, wireless providers, cable providers and others. Prior to joining Windstream, I served four years as the controller for Ranger Boats, Inc. and was a senior auditor with Arthur Andersen LLP for five years. Currently, I am Senior Vice President of Corporate Development and Operations for CSL, where I have responsibility for lease administration of the real estate portfolio and am the senior leader of the consumer CLEC operations of TAS. I will be responsible for managing all aspects of TAS telecommunications operations, including planning, marketing, sales and day-to-day management. Q. WHAT IS THE PURPOSE OF YOUR TESTIMONY IN THIS PROCEEDING?
0 A. The purpose of my testimony is to describe the resold local exchange and interexchange services that TAS proposes to offer in Arkansas and to review issues related to its request for a license and authority to provide such services as well as the transfer of the Windstream Companies residential customers to TAS. My testimony specifically relates to TAS s managerial, financial, and technical competence to provide the telecommunications services for which authority is requested, and its compliance with the rules and policies of this Commission. Q. PLEASE DESCRIBE THE AUTHORITY THAT PETITIONER SEEKS FROM THE COMMISSION. A. This Application is being filed in connection with a transaction involving Windstream, whereby Windstream, and certain of its indirect subsidiaries, are planning to undertake a corporate transaction (the Transaction ) under which the business will be divided into two independent units: an operating unit that will continue to provide telecommunications and related services, and a real estate investment trust that will hold title to certain distribution plant assets (the Subject Assets ) and lease those assets exclusively to Windstream for the benefit of the Windstream Companies on a long term basis. The Subject Assets of the Windstream Companies, including copper, fiber, real estate and other network assets, will be transferred to CSL, a newly established corporation, and CSL will lease them back to Windstream on a long term basis for the exclusive use and benefit of the Windstream Companies. Separately, the Windstream Companies intend 0 to transfer all of their residential local exchange and long distance customers to TAS. Further, the transfer of residential customers to TAS will be undertaken only after TAS has obtained proper authority from the Commission in order to provide resold local exchange and interexchange telecommunications services to residential customers currently subscribed to the Windstream Windstream Companies include McLeodUSA Telecommunications Services, LLC, Windstream Communications, Inc., Windstream KDL, Inc., Windstream Norlight, Inc. and Windstream NuVox Arkansas, Inc. The Windstream Companies hold authorizations to provide competitive local exchange services and interexchange services. The Subject Assets of Windstream Arkansas, LLC also will be transferred to CSL and leased back to Windstream for the long term exclusive use of Windstream Arkansas, LLC.
0 0 Companies in Arkansas. Q. HAS PETITIONER BEEN AUTHORIZED TO PROVIDE SUCH SERVICE IN ANY OTHER JURISDICTIONS? A. TAS was recently granted certification in Alabama and Iowa to provide intrastate telecommunications. TAS is still in the process of obtaining authority to provide intrastate telecommunications services in all of the contiguous United States and the District of Columbia. Q. PLEASE DESCRIBE THE CORPORATE STRUCTURE OF PETITIONER. A. TAS is a newly formed, as of June, 0, Delaware limited liability company and a subsidiary of CSL. A copy of TAS s incorporation documents were provided to the Commission with the Application as Exhibit. Q. IS PETITIONER LEGALLY AUTHORIZED TO DO BUSINESS IN ARKANSAS? A. Yes. TAS is authorized to transact business in the State of Arkansas. Q. PLEASE ADDRESS PETITIONER S MANAGERIAL AND TECHNICAL QUALIFICATIONS. A. Applicant has the technical and financial ability to provide the proposed services. Applicant will be managed and operated by capable, experienced executives and employees who possess extensive managerial, financial, and technical experience in the telecommunications industry. Resumes of the key personnel that will be managing Applicant are included herein as Exhibit. The officers and directors of TAS are Francis X. Skip Frantz, Chairman of the Board, Anthony W. Thomas, Chief Executive Officer and myself. These individuals have both highly effective management skills and considerable telecommunications expertise. The biographies of these key executives are submitted as evidence that Applicant possesses the managerial qualifications required for the provision of telecommunications services on behalf of Applicant. Q. PLEASE DESCRIBE PETITIONER S FINANCIAL QUALIFICATIONS. A. Initially, Applicant will be funded by CSL through new debt to be issued in the public markets.
0 0 With this financing, Applicant will be well-qualified financially to operate within the State of Arkansas. As a newly formed company, Applicant does not currently have historical financial statements. Q. PLEASE DESCRIBE THE TYPES OF SERVICES THAT PETITIONER WILL OFFER IN ARKANSAS. A. Applicant requests authorization to provide resold local exchange and interexchange telecommunications services to and from all points in the State of Arkansas that are currently open, and that become open, to competition, and to provide interexchange telecommunications statewide. TAS proposes to provide wireline local telecommunications service specifically, local exchange service (including, among other things, access to emergency services, access to operator services, alternative operator services, access to interexchange service, access to directory assistance, toll limitation for qualifying low-income consumers, and any other ancillary functionalities that TAS must provide pursuant to applicable statutes and regulations) and broadband service. TAS will initially only resell the services of the Windstream Companies. TAS will focus on service packages, marketing strategies and designing customers service standards catered to the residential CLEC customer segment. Applicant will enter in to a resale agreement with the Windstream Companies to provide local exchange, interexchange and broadband services to residential customers. Applicant will enter into a Transitional Services Agreement with Windstream, whereby Windstream will provide certain back office services, including billing, to TAS. TAS will have resale agreements with the Windstream Companies before it commences providing local exchange, interexchange and broadband services to residential customers Q. WHAT FACILITIES WILL PETITIONER USE TO PROVIDE ITS PROPOSED LOCAL EXCHANGE SERVICES? A. Applicant will operate the business as currently configured by the Windstream Companies as opposed to constructing any new facilities in the state at this time. Under the requested authority,
0 0 Applicant will not engage in any construction of buildings, towers, conduits, poles, or trenches. Q. DOES PETITIONER AGREE TO ABIDE BY ALL RULES, REGULATIONS, POLICIES AND ORDERS OF THIS COMMISSION, AND THE LAWS OF THE STATE OF ARKANSAS, IN ITS PROVISION OF TELECOMMUNICATIONS SERVICE? A. Yes. TAS agrees to abide by all rules and regulations that are deemed to be applicable to TAS. Q. HOW ARE CUSTOMER INQUIRIES/DISPUTES HANDLED? A. Customers with billing questions or complaints may also reach TAS at its toll free number () -000. In the event of a billing dispute, TAS will perform a review of the disputed billing amount and promptly attempt to reach a settlement to the mutual satisfaction of all parties. Following a full investigation to determine whether or not the charges may have been fraudulent or improper, TAS may adjust the disputed bill. Q. PLEASE PROVIDE THE CONTACT TO THE CUSTOMER SERVICE DIVISION FOR COMPLAINT RESOLUTION. A. TAS s contact to the customer service division for complaint resolution is James Jim Severance, who may be reached in writing at W Laburnum Avenue, Richmond, VA, by phone at (0) - or via email at james.severance@windstream.com. Q. HOW WILL TAS BILL FOR ITS SERVICES? A. TAS will bill its customers directly. Q. HOW WILL TAS GUARD AGAINST SLAMMING? A. TAS will prevent unauthorized switching of customers by obtaining a signed letter of authorization ( LOA ) or similar authorization from all new customers. TAS will comply with Arkansas law and Federal Communications Commission ( FCC ) regulations regarding how carriers may change a customer s Primary Interexchange Carrier. Q. PLEASE DESCRIBE THE PUBLIC INTEREST BENEFITS ASSOCIATED WITH PETITIONER S PROPOSED OFFERING OF TELECOMMUNICATIONS SERVICES IN ARKANSAS.
0 A. The granting of this Application will promote the public interest by allowing the previously described Transaction to be completed, thereby permitting the residential customers of the Windstream Companies to continue to receive their telecommunications services without interruption. Further, TAS s operations will be overseen by a well-qualified management team with substantial telecommunications experience and technical expertise. The entry of Applicant into the Arkansas telecommunications market will enhance competition in the provision of telecommunications services within the State of Arkansas. By enhancing competition, Applicant will bring significant benefits to telecommunications users within the State of Arkansas by providing: (a) competitively priced and better-quality service; (b) innovative telecommunications services; (c) efficient use of existing communications resources; and (d) increased diversification and reliability in the supply of communications services. Applicant s proposed intrastate services are designed to meet the telephone needs of subscribers and permit subscribers to realize cost savings in communications services. Accordingly, Applicant anticipates that its proposed service will provide its subscribers with better quality services and will increase consumer choice through innovative, diversified, and reliable service and equipment offerings. Q. DOES THIS CONCLUDE YOUR TESTIMONY? A. Yes.