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

1. Q w e s t W h o l e s a l e M a r k e t s Qwest Performance Assurance Plan (QPAP) Implementation The Qwest CLEC Forum September 16-17, 2002 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.

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

3. What is a Performance Assurance Plan (PAP)? • 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 Q w e s t W h o l e s a l e M a r k e t s

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

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

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

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

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

9. PAP Calculations Step 1: Determine whether Qwest passed or failed • 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 Q w e s t W h o l e s a l e M a r k e t s

10. ROC Statistical Table Critical Values LIS Trunks, UDITs, resale, unbundled loops -- Other Parity Sample Size DS1 and DS3All Measurements 1-10 1.04 * 1.645 11-150 1.645 1.645 151-300 2.0 2.0 301-600 2.7 2.7 601-3000 3.7 3.7 3001 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. Q w e s t W h o l e s a l e M a r k e t s

11. PAP Calculations Step 2: Calculate Occurrences/Misses and Payment • 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 Q w e s t W h o l e s a l e M a r k e t s

12. Payment Calculation – Percent Benchmark Q w e s t W h o l e s a l e M a r k e t s

13. Payment Calculation – Interval Benchmark Q w e s t W h o l e s a l e M a r k e t s

14. 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 Payment • Occurrences/Misses * per occurrence/miss amount Q w e s t W h o l e s a l e M a r k e t s

15. Occurrence/Miss Calculation – Parity Interval Q w e s t W h o l e s a l e M a r k e t s

16. 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 Payment • Occurrences/Misses * per occurrence/miss amount Q w e s t W h o l e s a l e M a r k e t s

17. Occurrence/Miss Calculation – Parity Percent Q w e s t W h o l e s a l e M a r k e t s

18. Generic Tier 1 per Miss/Occurrence Table All states except Colorado and Minnesota Q w e s t W h o l e s a l e M a r k e t s

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

20. Payments Utilizing per Measure Structure Q w e s t W h o l e s a l e M a r k e t s

21. Communication Strategies • Qwest QPAP Web site initiated August 16th • New PAP CLEC Questionnaire issued August 16th • CLEC Forum – September 17th Q w e s t W h o l e s a l e M a r k e t s

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

23. 30-60 Days Steps a CLEC Takes to Elect QPAP Q w e s t W h o l e s a l e M a r k e t s

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

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

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

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

28. 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