1022-00001 · Northgate Networks America Inc · Expert-Related

expert-retention-letter-narasimhan.docx DOCUMENT Antitrust

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PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

CALDERWOOD & HARKNESS LLP 1200 K Street NW, Suite 900 Washington, D.C. 20005 Telephone: (202) 555-7100 Facsimile: (202) 555-7101 www.calderwoodharkness.com

October 17, 2022

Dr. Priya Narasimhan Managing Director Ellsworth Economic Consulting LLC 1455 Pennsylvania Avenue NW, Suite 850 Washington, D.C. 20004

Re: Retention of Ellsworth Economic Consulting LLC as Economic Expert — Ridgepoint Communications Inc. v. Northgate Telecommunications PLC and Northgate Networks America Inc., Case No. 1:22-cv-01487-CMW (U.S. District Court for the Eastern District of Virginia, Alexandria Division); and In the Matter of Northgate Networks America Inc. — Complaint Regarding Interconnection Obligations under Section 251, FCC Docket No. WC-23-0042

Reference No.: C&H-2022-ATR-00419

Dear Dr. Narasimhan:

This letter sets forth the terms and conditions under which Calderwood & Harkness LLP ("C&H" or the "Firm") retains Ellsworth Economic Consulting LLC ("Ellsworth" or the "Consultant") and you, personally, as economic expert on behalf of our clients, Northgate Telecommunications PLC and Northgate Networks America Inc. (collectively, "Northgate" or the "Client"), in connection with the above-captioned matters. We appreciate the work that Ellsworth has already contributed to this engagement on a preliminary advisory basis, and this letter is intended to memorialize and formalize the terms of the retention, as more fully described below.

1. INTRODUCTION AND PURPOSE OF ENGAGEMENT

Calderwood & Harkness LLP represents Northgate Telecommunications PLC ("NTP"), a public limited company organized under the laws of England and Wales (registered Company No. 07824561), and its U.S. operating subsidiary, Northgate Networks America Inc. ("NNA"), a Delaware corporation (Employer Identification Number: 54-3298176), headquartered at 8200 Dulles Corner Boulevard, Suite 1100, Tysons Corner, Virginia 22182. Northgate Telecommunications PLC's American Depositary Receipts are listed on the Nasdaq Stock Market under the ticker symbol "NTP." As of September 30, 2022, NTP's market capitalization was approximately $11.3 billion.

Northgate owns and operates approximately 42,000 route-miles of fiber-optic backbone and metro-ring infrastructure across eighteen (18) U.S. states, with particular concentration along the eastern seaboard. In addition to its fiber-optic transport services, Northgate offers enterprise cloud-connectivity solutions and SaaS-based network management platforms marketed under the brand NorthgateOS™. For the fiscal year ended March 31, 2022 ("FY 2022"), the Northgate Group reported consolidated revenue of £4.87 billion (approximately $5.96 billion at an average exchange rate of $1.2236 per pound sterling). U.S. revenue for FY 2022 was approximately $2.41 billion, representing approximately 40.4% of the Group's consolidated revenue.

The C&H engagement team for this matter consists of: Elaine Forsythe, Partner, Antitrust & Competition, Washington, D.C. (Responsible Partner); Howard Bellamy, Partner, Antitrust & Competition, New York (Billing Partner); Aaron Liu, Lead Associate; and Monica Reyes, Working Associate. Day-to-day supervision and direction of Ellsworth's work will be provided primarily by Ms. Forsythe and Mr. Liu.

The purpose of this letter is to formally retain Dr. Priya Narasimhan and Ellsworth Economic Consulting LLC as economic expert on behalf of Northgate in the defense of (a) federal antitrust litigation pending before the United States District Court for the Eastern District of Virginia, Alexandria Division, styled Ridgepoint Communications Inc. v. Northgate Telecommunications PLC and Northgate Networks America Inc., Case No. 1:22-cv-01487-CMW, and (b) a parallel regulatory proceeding before the Federal Communications Commission, In the Matter of Northgate Networks America Inc. — Complaint Regarding Interconnection Obligations under Section 251, FCC Docket No. WC-23-0042.

We have selected Ellsworth and Dr. Narasimhan for this engagement based on Dr. Narasimhan's distinguished qualifications. Dr. Narasimhan is the Managing Director and co-founder of Ellsworth Economic Consulting LLC, a boutique economic consultancy specializing in the telecommunications, media, and technology sectors. Prior to founding Ellsworth, Dr. Narasimhan served as Chief Economist of the Wireline Competition Bureau at the Federal Communications Commission, where she oversaw economic analysis of interconnection, access, and competitive entry matters under Sections 251 and 252 of the Communications Act. Dr. Narasimhan holds a Ph.D. in Economics from the Massachusetts Institute of Technology and has published extensively in the areas of telecommunications economics, market definition, and competitive effects analysis. She has been qualified as an expert witness in federal and state courts, as well as before the FCC, on more than thirty occasions over the past fifteen years.

2. BACKGROUND OF THE LITIGATION AND REGULATORY PROCEEDING

2.1 District Court Action

On September 19, 2022, Ridgepoint Communications Inc. ("Ridgepoint"), a Delaware corporation headquartered at 3500 Market Street, Suite 700, Philadelphia, Pennsylvania 19104, filed a complaint against Northgate Telecommunications PLC and Northgate Networks America Inc. in the United States District Court for the Eastern District of Virginia, Alexandria Division. The case has been assigned to the Honorable Claudia M. Wentworth and docketed as Case No. 1:22-cv-01487-CMW.

Ridgepoint is a competitive local exchange carrier ("CLEC") and enterprise broadband provider operating in the states of Pennsylvania, New Jersey, Delaware, Maryland, and Virginia. Ridgepoint owns and leases approximately 6,200 route-miles of fiber-optic infrastructure. For the fiscal year ended December 31, 2021 ("FY 2022"), Ridgepoint reported revenue of approximately $387 million and employed approximately 1,450 individuals. Ridgepoint's founder and Chief Executive Officer is Gregory Trent; its Chief Operating Officer is Samira Hashemi; and its General Counsel is Theodore Braun.

Ridgepoint is privately held. In November 2018, Caravel Capital Partners LP, a mid-market private equity fund based at 1700 JFK Boulevard, Suite 2900, Philadelphia, Pennsylvania 19103 (managing partner: Richard Cavanaugh), completed a leveraged buyout of Ridgepoint valued at approximately $510 million. Caravel currently holds a majority ownership stake of approximately 78% of Ridgepoint's equity; the Trent family retains the remaining 22% equity stake. C&H believes, based on available information, that Caravel Capital Partners LP is the primary litigation funder behind the antitrust action.

Ridgepoint is represented in this matter by Hargrove, Winslow & Burke LLP, with offices in Washington, D.C. and Philadelphia. The lead partner on the matter is Victoria Hargrove; the senior associate is Daniel Stoyanov. It is our understanding that Hargrove, Winslow & Burke has been retained on a partial contingency arrangement consisting of a reduced hourly rate together with a 20% share of any recovery obtained.

The complaint asserts a single count under Section 2 of the Sherman Act, 15 U.S.C. § 2, alleging that Northgate's refusal to provide interconnection and physical colocation access at fourteen (14) specific central-office and meet-me-room facilities in the Mid-Atlantic region constitutes unlawful monopolization of the alleged "last-mile enterprise fiber-optic transport services market" in the Philadelphia–Baltimore–Washington, D.C. corridor. The fourteen disputed facilities are identified by address in Exhibit B to this letter.

2.2 The Refusal-to-Deal Conduct

The factual core of Ridgepoint's claims centers on a series of interconnection and colocation requests submitted by Ridgepoint between approximately March 2021 and August 2022, directed at fourteen (14) Northgate-owned or Northgate-leased facilities spanning the Philadelphia–Baltimore–Washington, D.C. corridor. The full list of the fourteen facilities is set forth in Exhibit B to this letter.

Northgate declined each of Ridgepoint's requests. The stated bases for these declinations were as follows:

(a) Capacity Constraints. Northgate represented that utilization at the disputed facilities was at or above 85%, leaving insufficient capacity to accommodate new third-party colocation without degrading service to existing customers. Internal Northgate engineering data, which we will make available to you subject to the confidentiality provisions set forth in Section 5 below, supports utilization figures ranging from approximately 83% to 97% across the fourteen facilities during the relevant period.

(b) No Prior Course of Dealing at the Specific Locations. Northgate noted that Ridgepoint had no existing contractual relationship for colocation or interconnection at any of the fourteen requested facilities. While Ridgepoint and Northgate had a prior colocation relationship at other locations (as described below), that relationship did not extend to the facilities at issue.

(c) Wholesale Access Policy ("WAP"). In January 2020, Northgate adopted a revised Wholesale Access Policy establishing a minimum annual revenue commitment of $5 million for any new third-party physical colocation arrangement. Ridgepoint's aggregate annual spend with Northgate in FY 2021 was approximately $1.8 million, substantially below the $5 million WAP threshold. Northgate applied the WAP uniformly to all third-party colocation requests received after January 2020.

The parties did have a prior course of dealing. Northgate and Ridgepoint entered into a Master Interconnection Agreement ("MIA") dated June 15, 2015, which covered three (3) colocation facilities in northern Virginia. The MIA had a five-year term and expired on June 14, 2020. Prior to the expiration date, Ridgepoint sought renewal of the MIA; Northgate declined to renew the agreement, citing the newly adopted WAP and Ridgepoint's failure to meet the $5 million minimum annual revenue commitment.

Ridgepoint continues to occupy the three existing colocation spaces at the northern Virginia facilities under a month-to-month holdover arrangement. Under the holdover terms, Ridgepoint pays 120% of the prior contractual rate: $14,400 per month per facility, compared to the prior contractual rate of $12,000 per month per facility. The holdover premium amounts to $2,400 per month per facility, or $7,200 per month in the aggregate ($86,400 per year). Northgate has not sought to evict Ridgepoint from these three existing colocation spaces.

2.3 Claimed Damages

Ridgepoint claims that Northgate's refusal to provide colocation and interconnection at the fourteen disputed facilities has caused Ridgepoint to lose profits totaling approximately $127 million over a projected five-year period (2022–2027). Under Section 4 of the Clayton Act, 15 U.S.C. § 15, Ridgepoint seeks treble damages, bringing the total damages claim to approximately $381 million, plus attorneys' fees and costs. Ridgepoint also seeks a permanent injunction compelling Northgate to provide physical colocation and interconnection access at all fourteen facilities on just, reasonable, and non-discriminatory terms.

Ridgepoint's economic expert is Dr. Leonard Kuo, Professor of Economics at Cavendish University. Dr. Kuo's preliminary analysis, as disclosed in Ridgepoint's complaint and subsequently in the FCC proceeding, underpins the $127 million lost-profits estimate and proposes a narrow relevant market definition in which Northgate is alleged to hold a 68% market share. We will provide you with all available materials relating to Dr. Kuo's analysis, including his declarations, preliminary reports, and any data or models disclosed in discovery.

2.4 Procedural Status

The procedural history of the district court action and the related FCC proceeding is summarized below:

• September 19, 2022: Ridgepoint filed its complaint in the Eastern District of Virginia, Alexandria Division, initiating Case No. 1:22-cv-01487-CMW.

• November 14, 2022: Northgate filed a Motion to Dismiss under Federal Rule of Civil Procedure 12(b)(6), arguing, inter alia, that Ridgepoint's complaint fails to state a plausible claim for monopolization under Section 2 of the Sherman Act and that the alleged "last-mile enterprise fiber-optic transport services market" is impermissibly narrow.

• January 9, 2023: Ridgepoint filed its opposition to Northgate's Motion to Dismiss.

• January 30, 2023: Northgate filed its reply in support of the Motion to Dismiss.

• February 7, 2023: Ridgepoint filed a separate complaint before the Federal Communications Commission, initiating FCC Docket No. WC-23-0042, captioned In the Matter of Northgate Networks America Inc. — Complaint Regarding Interconnection Obligations under Section 251. In this proceeding, Ridgepoint alleges that Northgate has violated its obligations under Sections 251 and 252 of the Communications Act of 1934, as amended, by refusing to provide interconnection and colocation at the fourteen disputed facilities. The FCC complaint has been assigned to Administrative Law Judge Robert Fenwick.

• February 22, 2023: Oral argument on Northgate's Motion to Dismiss was held before Judge Wentworth. The matter was taken under advisement.

• March 6, 2023: Northgate filed a Motion to Stay the district court proceedings pending resolution of the FCC proceeding, arguing that the FCC's primary jurisdiction over interconnection disputes warranted a stay.

• March 14, 2023: Judge Wentworth granted Northgate's Motion to Stay. The Motion to Dismiss was denied without prejudice to renewal after the stay is lifted. The district court action has remained dormant since the entry of the stay order.

• June 12, 2023: ALJ Fenwick issued a scheduling order in the FCC proceeding, establishing deadlines for discovery, pre-hearing submissions, and the evidentiary hearing.

• September 2023 (originally scheduled): The evidentiary hearing before ALJ Fenwick was originally scheduled for September 2023 but was postponed to January 2024 due to FCC staffing constraints.

• January 22–24, 2024: The evidentiary hearing before ALJ Fenwick was held over three days. Dr. Narasimhan provided testimony on behalf of Northgate at this hearing.

• March 15, 2024: Post-hearing briefs were filed by both parties.

• April 12, 2024: Reply briefs were filed by both parties.

• Present: ALJ Fenwick's initial decision remains pending. Upon issuance of the initial decision and any subsequent FCC action, we anticipate that the stay in the district court action will be lifted and that discovery will resume, at which point Dr. Narasimhan's full expert report will be required.

3. SCOPE OF ENGAGEMENT

The scope of Ellsworth's engagement on behalf of Northgate encompasses the following categories of economic analysis, expert report preparation, and expert testimony.

3.1 Market Definition Analysis

A central issue in both the district court litigation and the FCC proceeding is the definition of the relevant product and geographic markets. Ellsworth's work in this area shall include, but not be limited to, the following:

(a) Analysis of Ridgepoint's Proposed Relevant Product Market. Ridgepoint and its economic expert, Dr. Kuo, have proposed a narrow relevant product market consisting of "last-mile enterprise fiber-optic transport services (lit and dark fiber), at speeds of 1 Gbps and above, sold to enterprise and government customers." Ellsworth shall critically evaluate this proposed market definition, including an assessment of whether the proposed market is impermissibly narrow and whether it satisfies the hypothetical monopolist test (SSNIP test) and other standard tools of antitrust market definition analysis.

(b) Analysis of Ridgepoint's Proposed Relevant Geographic Market. Ridgepoint has proposed a relevant geographic market encompassing the Philadelphia–Baltimore–Washington, D.C. metropolitan corridor, specifically including portions of the states of Pennsylvania, New Jersey, Delaware, Maryland, and Virginia, as well as the District of Columbia. Ellsworth shall evaluate whether this geographic delineation is economically sound and whether the evidence supports a narrower or broader geographic market definition.

(c) Development of Northgate's Alternative Market Definition. Ellsworth shall develop and support Northgate's affirmative position that the relevant market should be defined more broadly to include not only dedicated fiber-optic transport services, but also cable-based broadband transport services, fixed wireless broadband services, and wholesale ethernet services offered by competing providers. This broader market definition reflects the economic reality that enterprise and government customers in the corridor have access to a range of functionally substitutable high-bandwidth transport options.

(d) Critique of Dr. Kuo's Market Share Analysis. Dr. Kuo has preliminarily calculated that Northgate holds a 68% share of the narrowly defined relevant market. Ellsworth shall evaluate and critique this market share estimate, including the data sources, methodology, and assumptions underlying Dr. Kuo's calculation.

(e) Preparation of Northgate's Corrected Market Share Analysis. Under the broader, properly defined relevant market, Ellsworth shall prepare an affirmative analysis supporting Northgate's position that its corrected market share is approximately 31%, a level that falls well below the threshold typically required to support an inference of monopoly power.

3.2 Competitive Effects Analysis

Ellsworth shall analyze the competitive effects, or absence thereof, of Northgate's refusal to grant colocation and interconnection at the fourteen disputed facilities. This analysis shall include, but not be limited to, the following:

(a) An assessment of whether Northgate possesses monopoly power in a properly defined relevant market, taking into account market share, barriers to entry, the competitive landscape, and other indicia of market power.

(b) An evaluation of whether Northgate's refusal to deal constitutes exclusionary conduct under applicable legal standards, including the framework established in Harborview Holdings Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398 (2004), and Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585 (1985).

(c) An analysis of the availability of alternative infrastructure for Ridgepoint and other competitive local exchange carriers in the Philadelphia–Baltimore–Washington, D.C. corridor, including colocation and interconnection facilities operated by other incumbent carriers, data center operators, and neutral carrier hotels.

(d) A comprehensive assessment of competitive conditions in the corridor, including the roles played by cable operators (such as Northgate Enterprises and Tarrant Corporation), fixed wireless providers, wholesale ethernet service providers, and other fiber-optic carriers in constraining Northgate's pricing and service decisions.

3.3 Damages Rebuttal

Ellsworth shall prepare a comprehensive rebuttal to Ridgepoint's claimed lost profits of $127 million over the 2022–2027 projection period. This damages rebuttal shall include, but not be limited to, the following:

(a) A critique of Ridgepoint's demand projections, including the assumed customer acquisition rates, contract values, renewal rates, and revenue ramp curves underlying the $127 million lost-profits estimate.

(b) A critique of Ridgepoint's revenue assumptions, including an analysis of whether Ridgepoint's assumed pricing is consistent with prevailing market rates in the corridor and whether Ridgepoint's cost structure would support the projected profit margins.

(c) An analysis of the extent to which available alternative infrastructure mitigates Ridgepoint's alleged harm, including the availability of colocation and interconnection at non-Northgate facilities in proximity to each of the fourteen disputed locations.

(d) The development of an affirmative, properly grounded damages estimate. Ellsworth's preliminary rebuttal estimate, based on work performed to date, is in the range of $18 million to $24 million on a pre-trebling basis. This estimate is subject to refinement as additional data becomes available through discovery.

(e) Dr. Narasimhan shall be prepared to testify regarding damages at deposition and trial in the district court action, and as needed in the FCC proceeding.

3.4 FCC Proceeding Support

Ellsworth shall provide economic analysis and testimony in support of Northgate's position in FCC Docket No. WC-23-0042. The FCC proceeding raises questions regarding Northgate's interconnection obligations under Sections 251 and 252 of the Communications Act that are closely intertwined with the economic issues in the district court antitrust litigation.

In connection with the FCC proceeding, Ellsworth shall coordinate with Dr. Anton Berger, Senior Advisor at Torrence Policy Group LLC, located at 7925 Jones Branch Drive, Suite 510, McLean, Virginia 22102. Dr. Berger serves as Northgate's regulatory expert on interconnection obligations under Sections 251 and 252 of the Communications Act and related FCC precedent. Ellsworth's role in the FCC proceeding is to provide the economic analysis that complements and supports Dr. Berger's regulatory analysis.

Dr. Narasimhan has already provided economic testimony on behalf of Northgate at the FCC evidentiary hearing held before Administrative Law Judge Robert Fenwick on January 22–24, 2024. Ellsworth shall remain available to provide further testimony and analysis in any subsequent proceedings before the FCC, including any review of ALJ Fenwick's initial decision by the full Commission.

3.5 Expert Report Preparation

When the stay in the district court action is lifted and discovery resumes, Ellsworth shall prepare a full written expert report for filing in Case No. 1:22-cv-01487-CMW. The scope of the expert report shall encompass market definition, monopoly power, competitive effects, and damages rebuttal, as described in Sections 3.1 through 3.3 above.

Dr. Narasimhan shall be prepared to defend the methodology and conclusions of her expert report against Daubert challenges. See Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993). To that end, the report shall set forth in detail the methodology employed, the data and information relied upon, the qualifications and experience of Dr. Narasimhan, and the bases and reasons for each opinion offered.

In addition, Ellsworth shall prepare a responsive or rebuttal expert report addressing the final opinions of Dr. Leonard Kuo, Ridgepoint's economic expert, as and when those opinions are disclosed through the expert discovery process. The rebuttal report shall identify specific points of disagreement with Dr. Kuo's methodology, assumptions, and conclusions, and shall explain the bases for Ellsworth's alternative analysis.

4. BILLING AND FEE ARRANGEMENTS

4.1 Hourly Rates

Ellsworth's services under this engagement shall be billed on an hourly basis in accordance with the rate schedule attached hereto as Exhibit A. The rate schedule sets forth the hourly rates for Dr. Narasimhan, other senior economists at Ellsworth, junior economists and analysts, and research assistants and support staff. All professionals who perform work on this engagement shall record their time in increments of no less than one-tenth (0.10) of an hour. Ellsworth invoices will be submitted monthly to Calderwood & Harkness LLP for review and will be passed through to the client, Northgate Networks America Inc., for payment.

4.2 Fees to Date

The parties acknowledge that Ellsworth has been providing preliminary advisory services in connection with this matter since the outset of the engagement in approximately October 2022. Total fees billed by Ellsworth to date are $412,000. This retention letter is intended to formalize the terms of the engagement retroactive to the commencement of Ellsworth's work. All fees previously billed and paid are deemed to have been billed and paid under the terms set forth herein.

4.3 Expense Reimbursement

Northgate, through C&H, shall reimburse Ellsworth for all reasonable out-of-pocket expenses incurred in connection with this engagement, including but not limited to travel expenses (airfare, hotel, ground transportation, and meals), data acquisition costs, subscriptions to research databases, printing and reproduction costs, courier and delivery charges, and telecommunications charges. All expenses shall be reimbursed at actual cost, without markup.

Any single expense item exceeding $2,500 shall require prior written approval from Aaron Liu or Elaine Forsythe. Requests for approval may be submitted by email and shall be deemed approved if not denied within two (2) business days of receipt.

4.4 Invoicing and Payment

Ellsworth shall submit invoices to C&H on a monthly basis. Each invoice shall include detailed time entries identifying the professional who performed the work, the date of the work, a description of the work performed, and the time expended. Each invoice shall also include an itemization of reimbursable expenses with supporting documentation as reasonably requested.

Invoices are payable within thirty (30) days of receipt. All invoices shall be directed to:

Calderwood & Harkness LLP 1200 K Street NW, Suite 900 Washington, D.C. 20005

Attention: Howard Bellamy, Billing Partner

Email: hbellamy@calderwoodharkness.com

In the event of any dispute regarding the amount or accuracy of any invoice, C&H shall notify Ellsworth in writing within fifteen (15) days of receipt of the invoice. The undisputed portion of any invoice shall remain payable within the thirty (30) day period. The parties shall work in good faith to resolve any billing dispute promptly.

5. CONFIDENTIALITY AND PRIVILEGE

5.1 Attorney-Client Privilege and Work Product Doctrine

All communications between Ellsworth and C&H in connection with this engagement are made at the direction of counsel for the purpose of assisting counsel in providing legal advice to the Client and in preparation for litigation and regulatory proceedings. As such, these communications are protected by the attorney-client privilege and the attorney work product doctrine. Dr. Narasimhan's analyses, draft reports, memoranda, notes, and other work product are being prepared in anticipation of litigation and at the express request of counsel, and are entitled to protection under Federal Rule of Civil Procedure 26(b)(3) and its state-law equivalents.

Ellsworth shall not disclose any information received in connection with this engagement, or any work product prepared in connection with this engagement, to any third party without the prior written consent of C&H. This obligation applies to all Ellsworth personnel, including employees, contractors, and subcontractors who may have access to engagement-related information.

5.2 Confidential Information

For purposes of this letter, "Confidential Information" means all documents, data, communications, analyses, work product, and other information shared between the parties in connection with this engagement, including without limitation: (a) proprietary Northgate business information, including but not limited to network architecture data, facility capacity utilization data, customer lists, pricing information, and strategic planning materials; (b) financial data, including revenue figures, cost data, and internal projections; (c) customer data, including contract terms, service-level agreements, and customer identity information; (d) C&H attorney work product, legal theories, and litigation strategy; and (e) all draft and final work product prepared by Ellsworth.

Ellsworth shall implement appropriate administrative, technical, and physical safeguards for the storage and transmission of Confidential Information, including but not limited to encrypted electronic storage, password-protected file access, secure file transfer protocols for electronic transmission, and restricted physical access to hard-copy materials. Ellsworth shall limit access to Confidential Information to those Ellsworth personnel who have a need to know in connection with the performance of services under this engagement.

All Confidential Information and all materials containing Confidential Information remain the property of Northgate (or, with respect to C&H attorney work product, the property of C&H). Upon the conclusion of the engagement, whether by completion or termination, Ellsworth shall promptly return or destroy all Confidential Information and all materials containing Confidential Information, at C&H's direction, and shall certify in writing that it has done so.

5.3 Protective Order Compliance

When discovery commences in Case No. 1:22-cv-01487-CMW (following the lifting of the current stay) and a protective order is entered by the Court, all Ellsworth personnel who access confidential discovery materials produced by any party in the litigation shall comply with the terms of any such protective order. To the extent that the protective order requires executing individual acknowledgment forms or undertakings, Ellsworth personnel shall execute such forms prior to receiving access to protected materials.

Similarly, Ellsworth personnel shall comply with any confidentiality provisions, protective orders, or non-disclosure requirements established by the FCC or ALJ Fenwick in connection with FCC Docket No. WC-23-0042.

6. CONFLICTS OF INTEREST

Dr. Narasimhan and Ellsworth Economic Consulting LLC represent and warrant that, as of the date of this letter, they have no current engagement, business relationship, financial interest, or other circumstance that creates, or could reasonably be perceived to create, a conflict of interest with respect to this retention or the subject matter of the above-captioned matters.

Without limiting the generality of the foregoing, Dr. Narasimhan and Ellsworth specifically represent and warrant that they have no current or recent engagement on behalf of Ridgepoint Communications Inc., Caravel Capital Partners LP, Hargrove, Winslow & Burke LLP, Gregory Trent, Richard Cavanaugh, or any affiliate, subsidiary, parent, or related entity of any of the foregoing.

Ellsworth shall promptly disclose to C&H any new engagement, business relationship, or other circumstance arising during the pendency of this matter that could create, or could reasonably be perceived to create, a conflict of interest. Upon receipt of such disclosure, C&H and Ellsworth shall confer in good faith to determine whether the potential conflict can be adequately managed or whether it necessitates modification or termination of this engagement.

7. TESTIFYING EXPERT OBLIGATIONS

The parties acknowledge that Dr. Narasimhan may be designated as a testifying expert witness on behalf of Northgate under Federal Rule of Civil Procedure 26(a)(2) in the district court action. If so designated, Dr. Narasimhan's expert report must comply with the requirements of Rule 26(a)(2)(B), including:

(i) a complete statement of all opinions the witness will express and the basis and reasons for them;

(ii) the facts or data considered by the witness in forming them;

(iii) any exhibits that will be used to summarize or support them;

(iv) the witness's qualifications, including a list of all publications authored in the previous 10 years;

(v) a list of all other cases in which, during the previous 4 years, the witness testified as an expert at trial or by deposition; and

(vi) a statement of the compensation to be paid for the study and testimony in the case.

Dr. Narasimhan shall also comply with similar disclosure obligations applicable in the FCC proceeding, as required by the FCC's Rules of Practice and Procedure and any orders of ALJ Fenwick.

Dr. Narasimhan shall make herself available for deposition testimony in the district court action, for trial testimony should the district court action proceed to trial, and for hearing testimony in the FCC proceeding, including any further proceedings beyond the evidentiary hearing already conducted on January 22–24, 2024. Scheduling of deposition and trial testimony shall be coordinated between C&H and Ellsworth in advance, with reasonable accommodations for Dr. Narasimhan's professional commitments.

8. TERM AND TERMINATION

This engagement shall be deemed effective as of the approximate date of commencement of Ellsworth's advisory work on this matter, which the parties agree was on or about October 2022. The engagement shall continue until the resolution of both the district court litigation (Case No. 1:22-cv-01487-CMW) and the FCC regulatory proceeding (Docket No. WC-23-0042), including any appeals or further proceedings, unless earlier terminated as provided herein.

Either party may terminate this engagement upon thirty (30) days' prior written notice to the other party. Termination shall not relieve either party of obligations that have accrued prior to the effective date of termination, including the obligation to pay all fees and expenses incurred through the date of termination.

Upon termination, Ellsworth shall promptly deliver to C&H all work product prepared in connection with this engagement, whether in draft or final form, and shall return or destroy all Confidential Information and materials containing Confidential Information, at C&H's direction, in accordance with Section 5.2 above. Ellsworth shall provide a written certification of compliance within fifteen (15) days of the effective date of termination.

9. LIMITATION OF LIABILITY AND INDEMNIFICATION

Ellsworth's aggregate liability to C&H and to Northgate arising out of or in connection with this engagement shall not exceed the total fees actually paid to Ellsworth under this engagement, except to the extent that such liability arises from Ellsworth's gross negligence, willful misconduct, or fraud. In no event shall Ellsworth be liable for any indirect, incidental, consequential, special, or punitive damages, regardless of the form of action or the theory of liability.

Northgate, through C&H, shall indemnify, defend, and hold harmless Ellsworth, its principals, employees, and agents from and against any and all third-party claims, demands, losses, liabilities, damages, costs, and expenses (including reasonable attorneys' fees) arising out of or relating to Ellsworth's performance of services under this engagement, except to the extent that such claims, losses, or liabilities are caused by Ellsworth's gross negligence, willful misconduct, or fraud. C&H shall promptly notify Ellsworth of any claim for which indemnification is sought and shall afford Ellsworth a reasonable opportunity to participate in the defense of such claim.

10. GOVERNING LAW AND DISPUTE RESOLUTION

This letter agreement shall be governed by and construed in accordance with the laws of the District of Columbia, without regard to principles of conflicts of law.

Any dispute, controversy, or claim arising out of or relating to this engagement or this letter agreement, including any dispute regarding its formation, validity, interpretation, performance, breach, or termination, shall be resolved by binding arbitration administered by the American Arbitration Association ("AAA") in accordance with its Commercial Arbitration Rules then in effect. The arbitration shall be conducted in Washington, D.C. before a single arbitrator mutually agreed upon by the parties, or, failing agreement within thirty (30) days of a demand for arbitration, appointed by the AAA. The arbitrator's award shall be final and binding and may be entered as a judgment in any court of competent jurisdiction. Each party shall bear its own costs and attorneys' fees in connection with the arbitration, except that the arbitrator may award costs and fees to the prevailing party if the arbitrator determines that the other party's claim or defense was frivolous or brought in bad faith.

11. MISCELLANEOUS

Entire Agreement. This letter agreement, together with the exhibits attached hereto, constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior oral or written understandings, agreements, negotiations, and communications relating to the engagement of Ellsworth by C&H on behalf of Northgate in connection with the above-captioned matters.

Amendments. This letter agreement may not be amended, modified, or supplemented except by a written instrument signed by authorized representatives of both C&H and Ellsworth.

Assignment. Neither party may assign its rights or obligations under this letter agreement without the prior written consent of the other party. Any purported assignment without such consent shall be void and of no effect.

Notices. All notices, requests, demands, and other communications under this letter agreement shall be in writing and shall be deemed duly given when delivered personally, sent by overnight courier (with confirmation of receipt), or sent by certified mail, return receipt requested, postage prepaid, addressed as follows:

If to C&H:

Calderwood & Harkness LLP 1200 K Street NW, Suite 900 Washington, D.C. 20005

Attention: Elaine Forsythe, Partner

Email: eforsythe@calderwoodharkness.com

If to Ellsworth:

Ellsworth Economic Consulting LLC 1455 Pennsylvania Avenue NW, Suite 850 Washington, D.C. 20004

Attention: Dr. Priya Narasimhan, Managing Director

Email: pnarasimhan@ellswortheconomics.com

Either party may change its address for notice purposes by providing written notice to the other party in accordance with this Section.

Counterparts. This letter agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. Delivery of an executed counterpart by electronic means (including by email in PDF format or by electronic signature platforms such as Brightwater Software) shall be as effective as delivery of an originally executed counterpart.

Severability. If any provision of this letter agreement is held to be invalid, illegal, or unenforceable, the remaining provisions shall continue in full force and effect.

Waiver. The failure of either party to enforce any provision of this letter agreement shall not constitute a waiver of such party's right to enforce such provision or any other provision in the future.

We are confident that Ellsworth's involvement will prove invaluable as we continue to develop Northgate's defense in both the district court litigation and the FCC proceeding. If the foregoing terms are acceptable, please sign where indicated below and return a fully executed copy to the undersigned. We look forward to continuing to work with you and your team.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Name: Elaine Forsythe

Title: Partner, Antitrust & Competition

1200 K Street NW, Suite 900 Washington, D.C. 20005

Date: ________

ACKNOWLEDGED AND AGREED:

ELLSWORTH ECONOMIC CONSULTING LLC

By: ________

Name: Dr. Priya Narasimhan

Title: Managing Director

1455 Pennsylvania Avenue NW, Suite 850 Washington, D.C. 20004

Date: ________

EXHIBIT A

RATE SCHEDULE

The following hourly rates shall apply to services rendered by Ellsworth Economic Consulting LLC personnel in connection with this engagement:

The foregoing rates are effective as of October 1, 2022, and shall remain in effect through December 31, 2023. Ellsworth reserves the right to adjust its standard rates annually, effective January 1 of each calendar year, upon thirty (30) days' prior written notice to C&H. Any rate adjustment shall not exceed five percent (5%) of the then-current rates without the prior written agreement of C&H.

Fees Billed to Date. As noted in Section 4.2 of this letter, total fees billed by Ellsworth to C&H in connection with this engagement through the date of this letter are $412,000. These fees were billed at the rates set forth above and include time expended by Dr. Narasimhan, Dr. Tran, Mr. Herrera, Ms. Patel, and research assistants.

EXHIBIT B

LIST OF FOURTEEN (14) DISPUTED FACILITIES

The following are the fourteen (14) Northgate-owned or Northgate-leased central-office and meet-me-room facilities at which Ridgepoint Communications Inc. submitted interconnection and/or physical colocation requests between March 2021 and August 2022, and at which such requests were declined by Northgate:

The facility type designations above are based on Northgate's internal classification system. "Central Office" refers to a Northgate switching or aggregation facility. "Metro Ring Hub" refers to a node on Northgate's metropolitan fiber-ring network. "Meet-Me Room" refers to a shared interconnection space within a Northgate or third-party facility. "Data Center / Meet-Me Room" refers to a Northgate facility co-located within or adjacent to a third-party data center campus.

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT C&H Reference No. C&H-2022-ATR-00419

Professional Category	Name(s)	Hourly Rate (USD)
Managing Director	Dr. Priya Narasimhan	$950
Senior Economist / Vice President	Dr. Michael Tran; Dr. Jennifer Okafor	$725
Economist / Senior Associate	David Herrera, CFA; Sarah Dalmqvist, Ph.D.	$525
Junior Economist / Analyst	Matthew Cho; Anika Patel; James Richter	$375
Research Assistant / Support Staff	Various	$225
Facility No.	Address	City / State	Facility Type
1	401 N. Broad Street	Philadelphia, PA 19108	Central Office / Meet-Me Room
2	1500 Spring Garden Street	Philadelphia, PA 19130	Metro Ring Hub
3	100 Delancey Place	Cherry Hill, NJ 08034	Central Office
4	220 S. Warren Street	Trenton, NJ 08608	Central Office
5	700 E. Pratt Street	Baltimore, MD 21202	Central Office / Meet-Me Room
6	1 W. Fayette Street	Baltimore, MD 21201	Metro Ring Hub
7	33 S. Gay Street	Baltimore, MD 21202	Central Office
8	9221 Corporate Boulevard	Rockville, MD 20850	Metro Ring Hub
9	1200 New Hampshire Avenue NW	Washington, D.C. 20036	Central Office / Meet-Me Room
10	600 New Jersey Avenue NW	Washington, D.C. 20001	Central Office
11	44755 Prentice Drive	Ashburn, VA 20147	Data Center / Meet-Me Room
12	21571 Beaumeade Circle	Ashburn, VA 20147	Data Center / Meet-Me Room
13	1807 Michael Faraday Court	Reston, VA 20190	Metro Ring Hub
14	8100 Boone Boulevard	Tysons Corner, VA 22182	Central Office / Meet-Me Room

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP 1200 K Street NW, Suite 900 Washington, D.C. 20005 Telephone: (202) 555-7100 Facsimile: (202) 555-7101 www.calderwoodharkness.com
October 17, 2022
Dr. Priya Narasimhan Managing Director Ellsworth Economic Consulting LLC 1455 Pennsylvania Avenue NW, Suite 850 Washington, D.C. 20004
Re: Retention of Ellsworth Economic Consulting LLC as Economic Expert — Ridgepoint Communications Inc. v. Northgate Telecommunications PLC and Northgate Networks America Inc., Case No. 1:22-cv-01487-CMW (U.S. District Court for the Eastern District of Virginia, Alexandria Division); and In the Matter of Northgate Networks America Inc. — Complaint Regarding Interconnection Obligations under Section 251, FCC Docket No. WC-23-0042
Reference No.: C&H-2022-ATR-00419
Dear Dr. Narasimhan:
This letter sets forth the terms and conditions under which Calderwood & Harkness LLP ("C&H" or the "Firm") retains Ellsworth Economic Consulting LLC ("Ellsworth" or the "Consultant") and you, personally, as economic expert on behalf of our clients, Northgate Telecommunications PLC and Northgate Networks America Inc. (collectively, "Northgate" or the "Client"), in connection with the above-captioned matters. We appreciate the work that Ellsworth has already contributed to this engagement on a preliminary advisory basis, and this letter is intended to memorialize and formalize the terms of the retention, as more fully described below.
1. INTRODUCTION AND PURPOSE OF ENGAGEMENT
Calderwood & Harkness LLP represents Northgate Telecommunications PLC ("NTP"), a public limited company organized under the laws of England and Wales (registered Company No. 07824561), and its U.S. operating subsidiary, Northgate Networks America Inc. ("NNA"), a Delaware corporation (Employer Identification Number: 54-3298176), headquartered at 8200 Dulles Corner Boulevard, Suite 1100, Tysons Corner, Virginia 22182. Northgate Telecommunications PLC's American Depositary Receipts are listed on the Nasdaq Stock Market under the ticker symbol "NTP." As of September 30, 2022, NTP's market capitalization was approximately $11.3 billion.
Northgate owns and operates approximately 42,000 route-miles of fiber-optic backbone and metro-ring infrastructure across eighteen (18) U.S. states, with particular concentration along the eastern seaboard. In addition to its fiber-optic transport services, Northgate offers enterprise cloud-connectivity solutions and SaaS-based network management platforms marketed under the brand NorthgateOS™. For the fiscal year ended March 31, 2022 ("FY 2022"), the Northgate Group reported consolidated revenue of £4.87 billion (approximately $5.96 billion at an average exchange rate of $1.2236 per pound sterling). U.S. revenue for FY 2022 was approximately $2.41 billion, representing approximately 40.4% of the Group's consolidated revenue.
The C&H engagement team for this matter consists of: Elaine Forsythe, Partner, Antitrust & Competition, Washington, D.C. (Responsible Partner); Howard Bellamy, Partner, Antitrust & Competition, New York (Billing Partner); Aaron Liu, Lead Associate; and Monica Reyes, Working Associate. Day-to-day supervision and direction of Ellsworth's work will be provided primarily by Ms. Forsythe and Mr. Liu.
The purpose of this letter is to formally retain Dr. Priya Narasimhan and Ellsworth Economic Consulting LLC as economic expert on behalf of Northgate in the defense of (a) federal antitrust litigation pending before the United States District Court for the Eastern District of Virginia, Alexandria Division, styled Ridgepoint Communications Inc. v. Northgate Telecommunications PLC and Northgate Networks America Inc., Case No. 1:22-cv-01487-CMW, and (b) a parallel regulatory proceeding before the Federal Communications Commission, In the Matter of Northgate Networks America Inc. — Complaint Regarding Interconnection Obligations under Section 251, FCC Docket No. WC-23-0042.
We have selected Ellsworth and Dr. Narasimhan for this engagement based on Dr. Narasimhan's distinguished qualifications. Dr. Narasimhan is the Managing Director and co-founder of Ellsworth Economic Consulting LLC, a boutique economic consultancy specializing in the telecommunications, media, and technology sectors. Prior to founding Ellsworth, Dr. Narasimhan served as Chief Economist of the Wireline Competition Bureau at the Federal Communications Commission, where she oversaw economic analysis of interconnection, access, and competitive entry matters under Sections 251 and 252 of the Communications Act. Dr. Narasimhan holds a Ph.D. in Economics from the Massachusetts Institute of Technology and has published extensively in the areas of telecommunications economics, market definition, and competitive effects analysis. She has been qualified as an expert witness in federal and state courts, as well as before the FCC, on more than thirty occasions over the past fifteen years.
2. BACKGROUND OF THE LITIGATION AND REGULATORY PROCEEDING
2.1 District Court Action
On September 19, 2022, Ridgepoint Communications Inc. ("Ridgepoint"), a Delaware corporation headquartered at 3500 Market Street, Suite 700, Philadelphia, Pennsylvania 19104, filed a complaint against Northgate Telecommunications PLC and Northgate Networks America Inc. in the United States District Court for the Eastern District of Virginia, Alexandria Division. The case has been assigned to the Honorable Claudia M. Wentworth and docketed as Case No. 1:22-cv-01487-CMW.
Ridgepoint is a competitive local exchange carrier ("CLEC") and enterprise broadband provider operating in the states of Pennsylvania, New Jersey, Delaware, Maryland, and Virginia. Ridgepoint owns and leases approximately 6,200 route-miles of fiber-optic infrastructure. For the fiscal year ended December 31, 2021 ("FY 2022"), Ridgepoint reported revenue of approximately $387 million and employed approximately 1,450 individuals. Ridgepoint's founder and Chief Executive Officer is Gregory Trent; its Chief Operating Officer is Samira Hashemi; and its General Counsel is Theodore Braun.
Ridgepoint is privately held. In November 2018, Caravel Capital Partners LP, a mid-market private equity fund based at 1700 JFK Boulevard, Suite 2900, Philadelphia, Pennsylvania 19103 (managing partner: Richard Cavanaugh), completed a leveraged buyout of Ridgepoint valued at approximately $510 million. Caravel currently holds a majority ownership stake of approximately 78% of Ridgepoint's equity; the Trent family retains the remaining 22% equity stake. C&H believes, based on available information, that Caravel Capital Partners LP is the primary litigation funder behind the antitrust action.
Ridgepoint is represented in this matter by Hargrove, Winslow & Burke LLP, with offices in Washington, D.C. and Philadelphia. The lead partner on the matter is Victoria Hargrove; the senior associate is Daniel Stoyanov. It is our understanding that Hargrove, Winslow & Burke has been retained on a partial contingency arrangement consisting of a reduced hourly rate together with a 20% share of any recovery obtained.
The complaint asserts a single count under Section 2 of the Sherman Act, 15 U.S.C. § 2, alleging that Northgate's refusal to provide interconnection and physical colocation access at fourteen (14) specific central-office and meet-me-room facilities in the Mid-Atlantic region constitutes unlawful monopolization of the alleged "last-mile enterprise fiber-optic transport services market" in the Philadelphia–Baltimore–Washington, D.C. corridor. The fourteen disputed facilities are identified by address in Exhibit B to this letter.
2.2 The Refusal-to-Deal Conduct
The factual core of Ridgepoint's claims centers on a series of interconnection and colocation requests submitted by Ridgepoint between approximately March 2021 and August 2022, directed at fourteen (14) Northgate-owned or Northgate-leased facilities spanning the Philadelphia–Baltimore–Washington, D.C. corridor. The full list of the fourteen facilities is set forth in Exhibit B to this letter.
Northgate declined each of Ridgepoint's requests. The stated bases for these declinations were as follows:
(a) Capacity Constraints. Northgate represented that utilization at the disputed facilities was at or above 85%, leaving insufficient capacity to accommodate new third-party colocation without degrading service to existing customers. Internal Northgate engineering data, which we will make available to you subject to the confidentiality provisions set forth in Section 5 below, supports utilization figures ranging from approximately 83% to 97% across the fourteen facilities during the relevant period.
(b) No Prior Course of Dealing at the Specific Locations. Northgate noted that Ridgepoint had no existing contractual relationship for colocation or interconnection at any of the fourteen requested facilities. While Ridgepoint and Northgate had a prior colocation relationship at other locations (as described below), that relationship did not extend to the facilities at issue.
(c) Wholesale Access Policy ("WAP"). In January 2020, Northgate adopted a revised Wholesale Access Policy establishing a minimum annual revenue commitment of $5 million for any new third-party physical colocation arrangement. Ridgepoint's aggregate annual spend with Northgate in FY 2021 was approximately $1.8 million, substantially below the $5 million WAP threshold. Northgate applied the WAP uniformly to all third-party colocation requests received after January 2020.
The parties did have a prior course of dealing. Northgate and Ridgepoint entered into a Master Interconnection Agreement ("MIA") dated June 15, 2015, which covered three (3) colocation facilities in northern Virginia. The MIA had a five-year term and expired on June 14, 2020. Prior to the expiration date, Ridgepoint sought renewal of the MIA; Northgate declined to renew the agreement, citing the newly adopted WAP and Ridgepoint's failure to meet the $5 million minimum annual revenue commitment.
Ridgepoint continues to occupy the three existing colocation spaces at the northern Virginia facilities under a month-to-month holdover arrangement. Under the holdover terms, Ridgepoint pays 120% of the prior contractual rate: $14,400 per month per facility, compared to the prior contractual rate of $12,000 per month per facility. The holdover premium amounts to $2,400 per month per facility, or $7,200 per month in the aggregate ($86,400 per year). Northgate has not sought to evict Ridgepoint from these three existing colocation spaces.
2.3 Claimed Damages
Ridgepoint claims that Northgate's refusal to provide colocation and interconnection at the fourteen disputed facilities has caused Ridgepoint to lose profits totaling approximately $127 million over a projected five-year period (2022–2027). Under Section 4 of the Clayton Act, 15 U.S.C. § 15, Ridgepoint seeks treble damages, bringing the total damages claim to approximately $381 million, plus attorneys' fees and costs. Ridgepoint also seeks a permanent injunction compelling Northgate to provide physical colocation and interconnection access at all fourteen facilities on just, reasonable, and non-discriminatory terms.
Ridgepoint's economic expert is Dr. Leonard Kuo, Professor of Economics at Cavendish University. Dr. Kuo's preliminary analysis, as disclosed in Ridgepoint's complaint and subsequently in the FCC proceeding, underpins the $127 million lost-profits estimate and proposes a narrow relevant market definition in which Northgate is alleged to hold a 68% market share. We will provide you with all available materials relating to Dr. Kuo's analysis, including his declarations, preliminary reports, and any data or models disclosed in discovery.
2.4 Procedural Status
The procedural history of the district court action and the related FCC proceeding is summarized below:
•  September 19, 2022: Ridgepoint filed its complaint in the Eastern District of Virginia, Alexandria Division, initiating Case No. 1:22-cv-01487-CMW.
•  November 14, 2022: Northgate filed a Motion to Dismiss under Federal Rule of Civil Procedure 12(b)(6), arguing, inter alia, that Ridgepoint's complaint fails to state a plausible claim for monopolization under Section 2 of the Sherman Act and that the alleged "last-mile enterprise fiber-optic transport services market" is impermissibly narrow.
•  January 9, 2023: Ridgepoint filed its opposition to Northgate's Motion to Dismiss.
•  January 30, 2023: Northgate filed its reply in support of the Motion to Dismiss.
•  February 7, 2023: Ridgepoint filed a separate complaint before the Federal Communications Commission, initiating FCC Docket No. WC-23-0042, captioned In the Matter of Northgate Networks America Inc. — Complaint Regarding Interconnection Obligations under Section 251. In this proceeding, Ridgepoint alleges that Northgate has violated its obligations under Sections 251 and 252 of the Communications Act of 1934, as amended, by refusing to provide interconnection and colocation at the fourteen disputed facilities. The FCC complaint has been assigned to Administrative Law Judge Robert Fenwick.
•  February 22, 2023: Oral argument on Northgate's Motion to Dismiss was held before Judge Wentworth. The matter was taken under advisement.
•  March 6, 2023: Northgate filed a Motion to Stay the district court proceedings pending resolution of the FCC proceeding, arguing that the FCC's primary jurisdiction over interconnection disputes warranted a stay.
•  March 14, 2023: Judge Wentworth granted Northgate's Motion to Stay. The Motion to Dismiss was denied without prejudice to renewal after the stay is lifted. The district court action has remained dormant since the entry of the stay order.
•  June 12, 2023: ALJ Fenwick issued a scheduling order in the FCC proceeding, establishing deadlines for discovery, pre-hearing submissions, and the evidentiary hearing.
•  September 2023 (originally scheduled): The evidentiary hearing before ALJ Fenwick was originally scheduled for September 2023 but was postponed to January 2024 due to FCC staffing constraints.
•  January 22–24, 2024: The evidentiary hearing before ALJ Fenwick was held over three days. Dr. Narasimhan provided testimony on behalf of Northgate at this hearing.
•  March 15, 2024: Post-hearing briefs were filed by both parties.
•  April 12, 2024: Reply briefs were filed by both parties.
•  Present: ALJ Fenwick's initial decision remains pending. Upon issuance of the initial decision and any subsequent FCC action, we anticipate that the stay in the district court action will be lifted and that discovery will resume, at which point Dr. Narasimhan's full expert report will be required.
3. SCOPE OF ENGAGEMENT
The scope of Ellsworth's engagement on behalf of Northgate encompasses the following categories of economic analysis, expert report preparation, and expert testimony.
3.1 Market Definition Analysis
A central issue in both the district court litigation and the FCC proceeding is the definition of the relevant product and geographic markets. Ellsworth's work in this area shall include, but not be limited to, the following:
(a) Analysis of Ridgepoint's Proposed Relevant Product Market. Ridgepoint and its economic expert, Dr. Kuo, have proposed a narrow relevant product market consisting of "last-mile enterprise fiber-optic transport services (lit and dark fiber), at speeds of 1 Gbps and above, sold to enterprise and government customers." Ellsworth shall critically evaluate this proposed market definition, including an assessment of whether the proposed market is impermissibly narrow and whether it satisfies the hypothetical monopolist test (SSNIP test) and other standard tools of antitrust market definition analysis.
(b) Analysis of Ridgepoint's Proposed Relevant Geographic Market. Ridgepoint has proposed a relevant geographic market encompassing the Philadelphia–Baltimore–Washington, D.C. metropolitan corridor, specifically including portions of the states of Pennsylvania, New Jersey, Delaware, Maryland, and Virginia, as well as the District of Columbia. Ellsworth shall evaluate whether this geographic delineation is economically sound and whether the evidence supports a narrower or broader geographic market definition.
(c) Development of Northgate's Alternative Market Definition. Ellsworth shall develop and support Northgate's affirmative position that the relevant market should be defined more broadly to include not only dedicated fiber-optic transport services, but also cable-based broadband transport services, fixed wireless broadband services, and wholesale ethernet services offered by competing providers. This broader market definition reflects the economic reality that enterprise and government customers in the corridor have access to a range of functionally substitutable high-bandwidth transport options.
(d) Critique of Dr. Kuo's Market Share Analysis. Dr. Kuo has preliminarily calculated that Northgate holds a 68% share of the narrowly defined relevant market. Ellsworth shall evaluate and critique this market share estimate, including the data sources, methodology, and assumptions underlying Dr. Kuo's calculation.
(e) Preparation of Northgate's Corrected Market Share Analysis. Under the broader, properly defined relevant market, Ellsworth shall prepare an affirmative analysis supporting Northgate's position that its corrected market share is approximately 31%, a level that falls well below the threshold typically required to support an inference of monopoly power.
3.2 Competitive Effects Analysis
Ellsworth shall analyze the competitive effects, or absence thereof, of Northgate's refusal to grant colocation and interconnection at the fourteen disputed facilities. This analysis shall include, but not be limited to, the following:
(a) An assessment of whether Northgate possesses monopoly power in a properly defined relevant market, taking into account market share, barriers to entry, the competitive landscape, and other indicia of market power.
(b) An evaluation of whether Northgate's refusal to deal constitutes exclusionary conduct under applicable legal standards, including the framework established in Harborview Holdings Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398 (2004), and Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585 (1985).
(c) An analysis of the availability of alternative infrastructure for Ridgepoint and other competitive local exchange carriers in the Philadelphia–Baltimore–Washington, D.C. corridor, including colocation and interconnection facilities operated by other incumbent carriers, data center operators, and neutral carrier hotels.
(d) A comprehensive assessment of competitive conditions in the corridor, including the roles played by cable operators (such as Northgate Enterprises and Tarrant Corporation), fixed wireless providers, wholesale ethernet service providers, and other fiber-optic carriers in constraining Northgate's pricing and service decisions.
3.3 Damages Rebuttal
Ellsworth shall prepare a comprehensive rebuttal to Ridgepoint's claimed lost profits of $127 million over the 2022–2027 projection period. This damages rebuttal shall include, but not be limited to, the following:
(a) A critique of Ridgepoint's demand projections, including the assumed customer acquisition rates, contract values, renewal rates, and revenue ramp curves underlying the $127 million lost-profits estimate.
(b) A critique of Ridgepoint's revenue assumptions, including an analysis of whether Ridgepoint's assumed pricing is consistent with prevailing market rates in the corridor and whether Ridgepoint's cost structure would support the projected profit margins.
(c) An analysis of the extent to which available alternative infrastructure mitigates Ridgepoint's alleged harm, including the availability of colocation and interconnection at non-Northgate facilities in proximity to each of the fourteen disputed locations.
(d) The development of an affirmative, properly grounded damages estimate. Ellsworth's preliminary rebuttal estimate, based on work performed to date, is in the range of $18 million to $24 million on a pre-trebling basis. This estimate is subject to refinement as additional data becomes available through discovery.
(e) Dr. Narasimhan shall be prepared to testify regarding damages at deposition and trial in the district court action, and as needed in the FCC proceeding.
3.4 FCC Proceeding Support
Ellsworth shall provide economic analysis and testimony in support of Northgate's position in FCC Docket No. WC-23-0042. The FCC proceeding raises questions regarding Northgate's interconnection obligations under Sections 251 and 252 of the Communications Act that are closely intertwined with the economic issues in the district court antitrust litigation.
In connection with the FCC proceeding, Ellsworth shall coordinate with Dr. Anton Berger, Senior Advisor at Torrence Policy Group LLC, located at 7925 Jones Branch Drive, Suite 510, McLean, Virginia 22102. Dr. Berger serves as Northgate's regulatory expert on interconnection obligations under Sections 251 and 252 of the Communications Act and related FCC precedent. Ellsworth's role in the FCC proceeding is to provide the economic analysis that complements and supports Dr. Berger's regulatory analysis.
Dr. Narasimhan has already provided economic testimony on behalf of Northgate at the FCC evidentiary hearing held before Administrative Law Judge Robert Fenwick on January 22–24, 2024. Ellsworth shall remain available to provide further testimony and analysis in any subsequent proceedings before the FCC, including any review of ALJ Fenwick's initial decision by the full Commission.
3.5 Expert Report Preparation
When the stay in the district court action is lifted and discovery resumes, Ellsworth shall prepare a full written expert report for filing in Case No. 1:22-cv-01487-CMW. The scope of the expert report shall encompass market definition, monopoly power, competitive effects, and damages rebuttal, as described in Sections 3.1 through 3.3 above.
Dr. Narasimhan shall be prepared to defend the methodology and conclusions of her expert report against Daubert challenges. See Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993). To that end, the report shall set forth in detail the methodology employed, the data and information relied upon, the qualifications and experience of Dr. Narasimhan, and the bases and reasons for each opinion offered.
In addition, Ellsworth shall prepare a responsive or rebuttal expert report addressing the final opinions of Dr. Leonard Kuo, Ridgepoint's economic expert, as and when those opinions are disclosed through the expert discovery process. The rebuttal report shall identify specific points of disagreement with Dr. Kuo's methodology, assumptions, and conclusions, and shall explain the bases for Ellsworth's alternative analysis.
4. BILLING AND FEE ARRANGEMENTS
4.1 Hourly Rates
Ellsworth's services under this engagement shall be billed on an hourly basis in accordance with the rate schedule attached hereto as Exhibit A. The rate schedule sets forth the hourly rates for Dr. Narasimhan, other senior economists at Ellsworth, junior economists and analysts, and research assistants and support staff. All professionals who perform work on this engagement shall record their time in increments of no less than one-tenth (0.10) of an hour. Ellsworth invoices will be submitted monthly to Calderwood & Harkness LLP for review and will be passed through to the client, Northgate Networks America Inc., for payment.
4.2 Fees to Date
The parties acknowledge that Ellsworth has been providing preliminary advisory services in connection with this matter since the outset of the engagement in approximately October 2022. Total fees billed by Ellsworth to date are $412,000. This retention letter is intended to formalize the terms of the engagement retroactive to the commencement of Ellsworth's work. All fees previously billed and paid are deemed to have been billed and paid under the terms set forth herein.
4.3 Expense Reimbursement
Northgate, through C&H, shall reimburse Ellsworth for all reasonable out-of-pocket expenses incurred in connection with this engagement, including but not limited to travel expenses (airfare, hotel, ground transportation, and meals), data acquisition costs, subscriptions to research databases, printing and reproduction costs, courier and delivery charges, and telecommunications charges. All expenses shall be reimbursed at actual cost, without markup.
Any single expense item exceeding $2,500 shall require prior written approval from Aaron Liu or Elaine Forsythe. Requests for approval may be submitted by email and shall be deemed approved if not denied within two (2) business days of receipt.
4.4 Invoicing and Payment
Ellsworth shall submit invoices to C&H on a monthly basis. Each invoice shall include detailed time entries identifying the professional who performed the work, the date of the work, a description of the work performed, and the time expended. Each invoice shall also include an itemization of reimbursable expenses with supporting documentation as reasonably requested.
Invoices are payable within thirty (30) days of receipt. All invoices shall be directed to:
Calderwood & Harkness LLP 1200 K Street NW, Suite 900 Washington, D.C. 20005
Attention: Howard Bellamy, Billing Partner
Email: hbellamy@calderwoodharkness.com
In the event of any dispute regarding the amount or accuracy of any invoice, C&H shall notify Ellsworth in writing within fifteen (15) days of receipt of the invoice. The undisputed portion of any invoice shall remain payable within the thirty (30) day period. The parties shall work in good faith to resolve any billing dispute promptly.
5. CONFIDENTIALITY AND PRIVILEGE
5.1 Attorney-Client Privilege and Work Product Doctrine
All communications between Ellsworth and C&H in connection with this engagement are made at the direction of counsel for the purpose of assisting counsel in providing legal advice to the Client and in preparation for litigation and regulatory proceedings. As such, these communications are protected by the attorney-client privilege and the attorney work product doctrine. Dr. Narasimhan's analyses, draft reports, memoranda, notes, and other work product are being prepared in anticipation of litigation and at the express request of counsel, and are entitled to protection under Federal Rule of Civil Procedure 26(b)(3) and its state-law equivalents.
Ellsworth shall not disclose any information received in connection with this engagement, or any work product prepared in connection with this engagement, to any third party without the prior written consent of C&H. This obligation applies to all Ellsworth personnel, including employees, contractors, and subcontractors who may have access to engagement-related information.
5.2 Confidential Information
For purposes of this letter, "Confidential Information" means all documents, data, communications, analyses, work product, and other information shared between the parties in connection with this engagement, including without limitation: (a) proprietary Northgate business information, including but not limited to network architecture data, facility capacity utilization data, customer lists, pricing information, and strategic planning materials; (b) financial data, including revenue figures, cost data, and internal projections; (c) customer data, including contract terms, service-level agreements, and customer identity information; (d) C&H attorney work product, legal theories, and litigation strategy; and (e) all draft and final work product prepared by Ellsworth.
Ellsworth shall implement appropriate administrative, technical, and physical safeguards for the storage and transmission of Confidential Information, including but not limited to encrypted electronic storage, password-protected file access, secure file transfer protocols for electronic transmission, and restricted physical access to hard-copy materials. Ellsworth shall limit access to Confidential Information to those Ellsworth personnel who have a need to know in connection with the performance of services under this engagement.
All Confidential Information and all materials containing Confidential Information remain the property of Northgate (or, with respect to C&H attorney work product, the property of C&H). Upon the conclusion of the engagement, whether by completion or termination, Ellsworth shall promptly return or destroy all Confidential Information and all materials containing Confidential Information, at C&H's direction, and shall certify in writing that it has done so.
5.3 Protective Order Compliance
When discovery commences in Case No. 1:22-cv-01487-CMW (following the lifting of the current stay) and a protective order is entered by the Court, all Ellsworth personnel who access confidential discovery materials produced by any party in the litigation shall comply with the terms of any such protective order. To the extent that the protective order requires executing individual acknowledgment forms or undertakings, Ellsworth personnel shall execute such forms prior to receiving access to protected materials.
Similarly, Ellsworth personnel shall comply with any confidentiality provisions, protective orders, or non-disclosure requirements established by the FCC or ALJ Fenwick in connection with FCC Docket No. WC-23-0042.
6. CONFLICTS OF INTEREST
Dr. Narasimhan and Ellsworth Economic Consulting LLC represent and warrant that, as of the date of this letter, they have no current engagement, business relationship, financial interest, or other circumstance that creates, or could reasonably be perceived to create, a conflict of interest with respect to this retention or the subject matter of the above-captioned matters.
Without limiting the generality of the foregoing, Dr. Narasimhan and Ellsworth specifically represent and warrant that they have no current or recent engagement on behalf of Ridgepoint Communications Inc., Caravel Capital Partners LP, Hargrove, Winslow & Burke LLP, Gregory Trent, Richard Cavanaugh, or any affiliate, subsidiary, parent, or related entity of any of the foregoing.
Ellsworth shall promptly disclose to C&H any new engagement, business relationship, or other circumstance arising during the pendency of this matter that could create, or could reasonably be perceived to create, a conflict of interest. Upon receipt of such disclosure, C&H and Ellsworth shall confer in good faith to determine whether the potential conflict can be adequately managed or whether it necessitates modification or termination of this engagement.
7. TESTIFYING EXPERT OBLIGATIONS
The parties acknowledge that Dr. Narasimhan may be designated as a testifying expert witness on behalf of Northgate under Federal Rule of Civil Procedure 26(a)(2) in the district court action. If so designated, Dr. Narasimhan's expert report must comply with the requirements of Rule 26(a)(2)(B), including:
(i) a complete statement of all opinions the witness will express and the basis and reasons for them;
(ii) the facts or data considered by the witness in forming them;
(iii) any exhibits that will be used to summarize or support them;
(iv) the witness's qualifications, including a list of all publications authored in the previous 10 years;
(v) a list of all other cases in which, during the previous 4 years, the witness testified as an expert at trial or by deposition; and
(vi) a statement of the compensation to be paid for the study and testimony in the case.
Dr. Narasimhan shall also comply with similar disclosure obligations applicable in the FCC proceeding, as required by the FCC's Rules of Practice and Procedure and any orders of ALJ Fenwick.
Dr. Narasimhan shall make herself available for deposition testimony in the district court action, for trial testimony should the district court action proceed to trial, and for hearing testimony in the FCC proceeding, including any further proceedings beyond the evidentiary hearing already conducted on January 22–24, 2024. Scheduling of deposition and trial testimony shall be coordinated between C&H and Ellsworth in advance, with reasonable accommodations for Dr. Narasimhan's professional commitments.
8. TERM AND TERMINATION
This engagement shall be deemed effective as of the approximate date of commencement of Ellsworth's advisory work on this matter, which the parties agree was on or about October 2022. The engagement shall continue until the resolution of both the district court litigation (Case No. 1:22-cv-01487-CMW) and the FCC regulatory proceeding (Docket No. WC-23-0042), including any appeals or further proceedings, unless earlier terminated as provided herein.
Either party may terminate this engagement upon thirty (30) days' prior written notice to the other party. Termination shall not relieve either party of obligations that have accrued prior to the effective date of termination, including the obligation to pay all fees and expenses incurred through the date of termination.
Upon termination, Ellsworth shall promptly deliver to C&H all work product prepared in connection with this engagement, whether in draft or final form, and shall return or destroy all Confidential Information and materials containing Confidential Information, at C&H's direction, in accordance with Section 5.2 above. Ellsworth shall provide a written certification of compliance within fifteen (15) days of the effective date of termination.
9. LIMITATION OF LIABILITY AND INDEMNIFICATION
Ellsworth's aggregate liability to C&H and to Northgate arising out of or in connection with this engagement shall not exceed the total fees actually paid to Ellsworth under this engagement, except to the extent that such liability arises from Ellsworth's gross negligence, willful misconduct, or fraud. In no event shall Ellsworth be liable for any indirect, incidental, consequential, special, or punitive damages, regardless of the form of action or the theory of liability.
Northgate, through C&H, shall indemnify, defend, and hold harmless Ellsworth, its principals, employees, and agents from and against any and all third-party claims, demands, losses, liabilities, damages, costs, and expenses (including reasonable attorneys' fees) arising out of or relating to Ellsworth's performance of services under this engagement, except to the extent that such claims, losses, or liabilities are caused by Ellsworth's gross negligence, willful misconduct, or fraud. C&H shall promptly notify Ellsworth of any claim for which indemnification is sought and shall afford Ellsworth a reasonable opportunity to participate in the defense of such claim.
10. GOVERNING LAW AND DISPUTE RESOLUTION
This letter agreement shall be governed by and construed in accordance with the laws of the District of Columbia, without regard to principles of conflicts of law.
Any dispute, controversy, or claim arising out of or relating to this engagement or this letter agreement, including any dispute regarding its formation, validity, interpretation, performance, breach, or termination, shall be resolved by binding arbitration administered by the American Arbitration Association ("AAA") in accordance with its Commercial Arbitration Rules then in effect. The arbitration shall be conducted in Washington, D.C. before a single arbitrator mutually agreed upon by the parties, or, failing agreement within thirty (30) days of a demand for arbitration, appointed by the AAA. The arbitrator's award shall be final and binding and may be entered as a judgment in any court of competent jurisdiction. Each party shall bear its own costs and attorneys' fees in connection with the arbitration, except that the arbitrator may award costs and fees to the prevailing party if the arbitrator determines that the other party's claim or defense was frivolous or brought in bad faith.
11. MISCELLANEOUS
Entire Agreement. This letter agreement, together with the exhibits attached hereto, constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior oral or written understandings, agreements, negotiations, and communications relating to the engagement of Ellsworth by C&H on behalf of Northgate in connection with the above-captioned matters.
Amendments. This letter agreement may not be amended, modified, or supplemented except by a written instrument signed by authorized representatives of both C&H and Ellsworth.
Assignment. Neither party may assign its rights or obligations under this letter agreement without the prior written consent of the other party. Any purported assignment without such consent shall be void and of no effect.
Notices. All notices, requests, demands, and other communications under this letter agreement shall be in writing and shall be deemed duly given when delivered personally, sent by overnight courier (with confirmation of receipt), or sent by certified mail, return receipt requested, postage prepaid, addressed as follows:
If to C&H:
Calderwood & Harkness LLP 1200 K Street NW, Suite 900 Washington, D.C. 20005
Attention: Elaine Forsythe, Partner
Email: eforsythe@calderwoodharkness.com
If to Ellsworth:
Ellsworth Economic Consulting LLC 1455 Pennsylvania Avenue NW, Suite 850 Washington, D.C. 20004
Attention: Dr. Priya Narasimhan, Managing Director
Email: pnarasimhan@ellswortheconomics.com
Either party may change its address for notice purposes by providing written notice to the other party in accordance with this Section.
Counterparts. This letter agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. Delivery of an executed counterpart by electronic means (including by email in PDF format or by electronic signature platforms such as Brightwater Software) shall be as effective as delivery of an originally executed counterpart.
Severability. If any provision of this letter agreement is held to be invalid, illegal, or unenforceable, the remaining provisions shall continue in full force and effect.
Waiver. The failure of either party to enforce any provision of this letter agreement shall not constitute a waiver of such party's right to enforce such provision or any other provision in the future.
We are confident that Ellsworth's involvement will prove invaluable as we continue to develop Northgate's defense in both the district court litigation and the FCC proceeding. If the foregoing terms are acceptable, please sign where indicated below and return a fully executed copy to the undersigned. We look forward to continuing to work with you and your team.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Name: Elaine Forsythe
Title: Partner, Antitrust & Competition
1200 K Street NW, Suite 900 Washington, D.C. 20005
Date: ________
ACKNOWLEDGED AND AGREED:
ELLSWORTH ECONOMIC CONSULTING LLC
By: ________
Name: Dr. Priya Narasimhan
Title: Managing Director
1455 Pennsylvania Avenue NW, Suite 850 Washington, D.C. 20004
Date: ________
EXHIBIT A
RATE SCHEDULE
The following hourly rates shall apply to services rendered by Ellsworth Economic Consulting LLC personnel in connection with this engagement:
The foregoing rates are effective as of October 1, 2022, and shall remain in effect through December 31, 2023. Ellsworth reserves the right to adjust its standard rates annually, effective January 1 of each calendar year, upon thirty (30) days' prior written notice to C&H. Any rate adjustment shall not exceed five percent (5%) of the then-current rates without the prior written agreement of C&H.
Fees Billed to Date. As noted in Section 4.2 of this letter, total fees billed by Ellsworth to C&H in connection with this engagement through the date of this letter are $412,000. These fees were billed at the rates set forth above and include time expended by Dr. Narasimhan, Dr. Tran, Mr. Herrera, Ms. Patel, and research assistants.
EXHIBIT B
LIST OF FOURTEEN (14) DISPUTED FACILITIES
The following are the fourteen (14) Northgate-owned or Northgate-leased central-office and meet-me-room facilities at which Ridgepoint Communications Inc. submitted interconnection and/or physical colocation requests between March 2021 and August 2022, and at which such requests were declined by Northgate:
The facility type designations above are based on Northgate's internal classification system. "Central Office" refers to a Northgate switching or aggregation facility. "Metro Ring Hub" refers to a node on Northgate's metropolitan fiber-ring network. "Meet-Me Room" refers to a shared interconnection space within a Northgate or third-party facility. "Data Center / Meet-Me Room" refers to a Northgate facility co-located within or adjacent to a third-party data center campus.
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT C&H Reference No. C&H-2022-ATR-00419
Professional Category | Name(s) | Hourly Rate (USD)
Managing Director | Dr. Priya Narasimhan | $950
Senior Economist / Vice President | Dr. Michael Tran; Dr. Jennifer Okafor | $725
Economist / Senior Associate | David Herrera, CFA; Sarah Dalmqvist, Ph.D. | $525
Junior Economist / Analyst | Matthew Cho; Anika Patel; James Richter | $375
Research Assistant / Support Staff | Various | $225
Facility No. | Address | City / State | Facility Type
1 | 401 N. Broad Street | Philadelphia, PA 19108 | Central Office / Meet-Me Room
2 | 1500 Spring Garden Street | Philadelphia, PA 19130 | Metro Ring Hub
3 | 100 Delancey Place | Cherry Hill, NJ 08034 | Central Office
4 | 220 S. Warren Street | Trenton, NJ 08608 | Central Office
5 | 700 E. Pratt Street | Baltimore, MD 21202 | Central Office / Meet-Me Room
6 | 1 W. Fayette Street | Baltimore, MD 21201 | Metro Ring Hub
7 | 33 S. Gay Street | Baltimore, MD 21202 | Central Office
8 | 9221 Corporate Boulevard | Rockville, MD 20850 | Metro Ring Hub
9 | 1200 New Hampshire Avenue NW | Washington, D.C. 20036 | Central Office / Meet-Me Room
10 | 600 New Jersey Avenue NW | Washington, D.C. 20001 | Central Office
11 | 44755 Prentice Drive | Ashburn, VA 20147 | Data Center / Meet-Me Room
12 | 21571 Beaumeade Circle | Ashburn, VA 20147 | Data Center / Meet-Me Room
13 | 1807 Michael Faraday Court | Reston, VA 20190 | Metro Ring Hub
14 | 8100 Boone Boulevard | Tysons Corner, VA 22182 | Central Office / Meet-Me Room

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

CALDERWOOD & HARKNESS LLP

ACKNOWLEDGED AND AGREED:

ELLSWORTH ECONOMIC CONSULTING LLC

EXHIBIT A

RATE SCHEDULE

EXHIBIT B

LIST OF FOURTEEN (14) DISPUTED FACILITIES

Record

Parties

Dates

Amounts