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                           Before the
                Federal Communications Commission
                     Washington, D.C. 20554


In the matter of                 )
                                )
MCLEODUSA PUBLISHING COMPANY,    )
                                )
                                               )
Complainant,                     )
                                )    File No. EB-01-MD-004
                                       )
v.                               )
                                )
WOOD COUNTY TELEPHONE COMPANY,   )
INC.,                            )

                                               
Defendant.

                  MEMORANDUM OPINION AND ORDER

            Adopted:  March 18, 2002    Released:  March 29, 2002

By the Commission:  Commissioner Martin issuing a separate 
statement.

I.   INTRODUCTION

     1.   In this Memorandum Opinion and Order, we grant the 
formal complaint that McLeodUSA Publishing Company (``McLeod'') 
filed against Wood County Telephone Company, Inc. (``Wood 
County'') pursuant to section 208 of the Communications Act of 
1934, as amended (``Communications Act'' or ``Act'').1  In 
particular, we grant McLeod's claim that, under section 222(e) of 
the Act2 and our SLI Order,3 Wood County must charge no more than 
the Commission-prescribed presumptively reasonable rate of four 
cents ($0.04) per listing for ``base file'' subscriber listing 
information (``SLI''), rather than its proposed rate of $0.6527 
per listing (over 1600% above the presumptively reasonable rate).  
We do so because Wood County has failed to meet its burden of 
providing credible and verifiable cost data supporting a rate for 
base file SLI in excess of the presumptively reasonable rate.  
For similar reasons, we also grant McLeod's claim that Wood 
County must charge no more than the presumptively reasonable rate 
of six cents ($0.06) per listing for ``update'' SLI listings.

II.  BACKGROUND

     2.   Wood County is a local exchange carrier (``LEC'') that 
provides telecommunications services in several areas in 
Wisconsin.4  McLeod is a telephone directory publisher that 
publishes white and yellow page directories in competition with 
large and small LECs, like Wood County, in numerous states across 
the country, including Wisconsin.5  

     3.   SLI refers to telephone company subscribers' names, 
addresses, and telephone numbers, as well as headings under which 
businesses are listed in the yellow pages.6  Thus, SLI forms the 
foundation of the directory publishing business.  Telephone 
companies, like Wood County, develop SLI when they initiate 
service to local telephone exchange customers.7  Independent 
directory publishers, like McLeod, generally must obtain SLI from 
LECs in order to publish current and accurate directories 
containing listings for the areas served by the LECs.8  In 
addition, LECs, including Wood County, generally use SLI that 
they develop during the ordinary course of providing exchange 
access service to publish their own directories of residential 
and business customers.9  

     4.   Section 222(e) of the Act requires that ``each 
telecommunications carrier that provides telephone exchange 
service shall provide subscriber list information gathered in its 
capacity as a provider of such service on a timely and unbundled 
basis, under nondiscriminatory and reasonable rates, terms and 
conditions, to any person upon request for the purpose of 
publishing directories in any format.''10  The SLI Order adopted 
rules implementing section 222(e).11  

     5.   In those rules, the Commission established 
presumptively reasonable rates for LECs' provision of ``base 
file'' SLI and ``update'' SLI services to directory publishers.12  
``Base file'' SLI refers to the initial load of SLI listings that 
a directory publisher obtains from a LEC.13  ``Base file'' also 
encompasses a ``refresh'' service, which consists of a complete 
set of SLI listings that a LEC provides to a publisher who has 
already previously received a complete set of listings from the 
LEC.14  ``Update'' SLI service includes only changes to the SLI 
listings that have occurred between specified dates.15  Updates 
include ``new connects'' registered after a publisher has 
obtained the base file SLI from the LEC.16  The Commission set 
the presumptively reasonable base file rate at $0.04 per listing 
and the update rate at $0.06 per listing.17

     6.   Although the Commission established presumptively 
reasonable rates in the SLI Order, the Commission acknowledged 
that those rates might not be reasonable for all LECs.  The 
Commission recognized the possibility that ``[i]n certain 
circumstances, the actual cost per listing could be higher than 
the presumptively reasonable rates. . . .''18  The Commission 
pointed out that ``for some smaller carriers a presumptively 
reasonable rate of $0.04 per listing may not be enough to cover 
the costs associated with providing base file listings, since the 
number of listings involved could be small.''19 

     7.   Because of these concerns, the Commission did not 
prohibit LECs from charging rates higher than the presumptively 
reasonable rates set forth in the SLI Order.  The Commission made 
clear, however, that any LEC that seeks to charge more than the 
presumptively reasonable rates for SLI must justify those rates 
in the event that a directory publisher challenges them in a 
section 208 complaint proceeding.20  In such a proceeding, ``the 
carrier must present a cost study providing credible and 
verifiable cost data to justify each challenged rate.''21  The 
LEC's cost study must, inter alia, ``clearly and specifically 
identify and justify'' the following costs related to the 
creation, maintenance, and provision of SLI:  incremental costs, 
common costs, and overhead.22  The Commission emphasized that, 
``[i]n any future federal subscriber list information rate 
proceeding, the burden of proof will be on the carrier to the 
extent it charges a rate above the presumptively reasonable 
rates.''23  Further, the Commission concluded that, ``[i]n the 
absence of cost data showing that the carrier's costs exceed the 
presumptively reasonable rates, the Bureau or the Commission, 
depending on the circumstances, shall find in favor of the 
plaintiff . . . .''24

     8.   The SLI Order clearly stated, therefore, that although 
LECs may attempt to justify a rate higher than the presumptively 
reasonable rate, any such attempt must be detailed and specific.  
The Commission did not prescribe any particular methodology that 
LECs must employ to develop cost studies to justify the higher 
rate, but mandated that the cost data used in any such study be 
credible and verifiable.25  Further, the Commission explained 
that the LEC, in its cost study, must ``describe how its methods 
for allocating common costs compare to those the [LEC] uses in 
other contexts.''26  

     9.   After release of the SLI Order, McLeod and Wood County 
negotiated about rates for Wood County's provision of base file 
and update SLI.  Wood County asserted that its costs associated 
with maintaining and providing SLI justified a rate exceeding 
$0.50 per listing (over 1200% above the presumptively reasonable 
rate of $0.04 per listing for base file SLI), and offered to 
provide SLI to McLeod at a negotiated rate of $0.42 per listing 
(over 1000% above the presumptively reasonable base file rate) 
for both base file SLI and SLI updates.27  Wood County added that 
it would assess a minimum charge of $100 per transmission for 
providing updated SLI to McLeod.28  McLeod disputed Wood County's 
cost estimates and sought to obtain SLI from Wood County at the 
presumptively reasonable rates.  

     10.  McLeod and Wood County failed to reach a negotiated 
agreement, whereupon McLeod filed the instant complaint.  In its 
complaint, McLeod asserts that Wood County's refusal to provide 
SLI at the presumptively reasonable rates violates section 222(e) 
of the Act.29  McLeod requests that the Commission order Wood 
County to charge the presumptively reasonable rates of $0.04 per 
listing for base file SLI and $0.06 per listing for updates.30  

III.      DISCUSSION

     III.A.    Although It is the Defendant, Wood County Bears 
          the Burden of Proving the Reasonableness of Its SLI 
          Rates.

     11.  As stated above, the SLI Order and our rules require 
that a LEC seeking to charge more for SLI than the presumptively 
reasonable rate bears the burden of proof in a complaint 
proceeding concerning the reasonableness of the asserted rate.  
Wood County challenges that requirement here.  Wood County argues 
that, as the defendant in this complaint proceeding, it should 
not have to bear the burden of proving the reasonableness of its 
SLI rates; rather, in Wood County's view, the complainant, 
McLeod, should bear the burden of proving the unreasonableness of 
such rates.31  According to Wood County, because the complainant 
ordinarily bears the burden of proof in section 208 complaint 
proceedings, the Commission erred by shifting that burden of 
proof to LEC defendants in complaint proceedings concerning SLI 
rates.32

     12.  We disagree.  To the extent that Wood County indirectly 
challenges the Commission's rules adopted in the SLI Order, we 
reject that challenge.  The Commission has broad authority to 
conduct section 208 proceedings ``in such manner and by such 
means as it shall deem proper,''33 and more generally to 
``conduct its proceedings in such manner as will best conduce to 
the proper dispatch of business and to the ends of justice.''34  
In establishing presumptively reasonable rates in the SLI Order, 
the Commission expressly sought to promote certainty and reduce 
the likelihood that parties would expend their own and the 
Commission's resources in litigating the reasonableness of SLI 
rates.35  The Commission's allocation of the burden of proof to 
the party seeking to charge more than the presumptively 
reasonable rate helps achieve this objective by motivating the 
party with easier access to critical information to refrain from 
charging rates in excess of the benchmarks unless fully prepared 
to defend such rates.36  Moreover, the Commission has engaged in 
this same burden allocation in other circumstances in which the 
Commission has prescribed presumptively reasonable rates.37  The 
SLI Order's shift in the burden of proof is well within the 
Commission's authority to establish procedures for complaint 
cases.  Accordingly, we affirm the SLI Order and rule that Wood 
County must bear the burden of proving the reasonableness of its 
proposed SLI rates in this proceeding.38

     III.B.    Wood County Has Failed to Meet Its Burden of 
          Justifying a Rate for Base File SLI That Exceeds the 
          Presumptively Reasonable Rate.

     13.  In the SLI Order, the Commission set forth three 
categories of costs that a carrier should address in any cost 
study attempting to support a rate higher than the presumptively 
reasonable rate for the provision of SLI:  incremental costs, 
common costs, and overhead costs.39  In its answer to McLeod's 
complaint, Wood County provided a cost study that addresses those 
three cost categories.  In doing so, the cost study purports to 
justify a rate for the provision of base file SLI of $0.6527 per 
listing, over 1600% above the presumptively reasonable rate of 
$0.04.40  Wood County developed its proposed rate by adding 
together per listing incremental costs of approximately $0.04, 
common costs of approximately $0.50, and overheads of 
approximately $0.11.41  McLeod challenges Wood County's data and 
the cost justification provided for each of the three relevant 
categories, which we analyze in sequence below.

          III.B.1.  Wood County Has Failed to Provide Adequate 
               Data Concerning the Incremental Costs Associated 
               with Its Provision of Base File SLI.

     14.  In the SLI Order, the Commission required that the LEC 
in an SLI complaint proceeding identify in its cost study 
``[e]ach specific function the carrier performs solely to provide 
subscriber list information to the complainant; and the 
incremental costs the carrier incurs in performing each of these 
specific functions.''42  Thus, incremental costs are restricted 
to those costs the LEC incurs to provide SLI to the complainant.  
Examples of incremental costs include the costs of taking 
specific orders for SLI, the costs of downloading the requested 
SLI, the costs of the magnetic tape or paper on which the SLI is 
recorded, and the costs of mailing.43

     15.  Wood County asserts that its incremental costs of 
providing base file SLI to McLeod amount to $0.0408 per 
listing.44  This amount consists entirely of the fee that Wood 
County's directory publisher agent, The Berry Company 
(``Berry''), charges Wood County for providing formatted base 
file SLI to third parties who request that information from Wood 
County.45  Wood County did not provide any data from which we 
could ascertain whether the $0.0408 figure is reasonable or how 
it compares to Berry's underlying costs.

     16.  McLeod argues that Wood County has failed to justify 
any incremental costs that can be included in a reasonable rate 
for SLI.  McLeod argues that the SLI Order limits allowable 
incremental costs to those costs incurred by the LEC for 
functions that the LEC itself actually performs.46  According to 
McLeod, incremental costs do not include (1) the fee that a LEC 
pays a third party to perform SLI functions on the LEC's behalf, 
or (2) costs that a third party, such as Berry, might incur to 
provide SLI on the LEC's behalf.47

     17.  We disagree that allowable incremental costs are as 
narrowly defined as McLeod argues.  We believe that it may be 
appropriate for a small carrier, like Wood County, to utilize a 
third party agent to provide formatted SLI to directory 
publishers who request SLI from Wood County.  Wood County 
justifies its reliance on Berry to provide that service as a 
reasonable and efficient way to respond to isolated requests for 
base file SLI.48  Such justification might prove persuasive in 
particular cases.

     18.  We conclude, however, that if a LEC chooses to rely on 
an agent to respond to requests for SLI, then the LEC must, 
consistent with our SLI Order, provide credible and verifiable 
information supporting the reasonableness of the amount that the 
LEC pays the agent charges for the provision of SLI to the 
requesting party.  Thus, Wood County cannot avoid the obligation 
set forth in the SLI Order to justify proposed incremental costs 
of providing SLI merely by relying on an agent to perform the 
functions from which the incremental costs are derived.  Such an 
outcome would invite abuse by LECs and their third party 
publisher agents.  For example, a LEC could agree with its 
directory publisher agent to set an exorbitant rate for the 
provision of SLI to independent publishers.  Unless we require 
the LEC to justify that rate as reasonable, the LEC could simply 
include the rate, as Wood County has done here, as the 
``incremental cost'' the LEC incurs to provide SLI to independent 
publishers.  This would undermine the statutory goal of fostering 
a competitive directory publishing market.  

     19.  The need for information justifying the $0.0408 rate 
paid to Berry is particularly important here, given that this 
purported incremental cost dramatically exceeds the incremental 
costs that the Commission envisioned in the SLI Order.  There, 
the Commission determined that the presumptively reasonable rate 
of $0.04 per listing would be adequate to compensate a LEC, in 
all but ``relatively rare'' situations,49 for both its 
incremental costs and a reasonable allocation of common costs and 
overheads.50  Moreover, Wood County has indicated that if it were 
to calculate its own incremental costs associated with providing 
SLI directly to McLeod in at least one format, such costs would 
likely be less than the $0.0408 per listing rate cited by 
Berry.51  Finally, the SLI Order notes that commercial list 
providers typically charge approximately $0.04 per listing and 
that commercial list providers' costs in acquiring and 
maintaining SLI likely exceed those of a LEC.52  If commercial 
list providers with generally higher costs than LECs can 
typically recover not only their incremental costs, but also a 
reasonable allocation of common costs and overheads and a 
reasonable profit, by selling their listings for approximately 
$0.04 per listing, then Wood County's $0.0408 incremental cost 
projection based on the Berry rate certainly requires substantial 
supporting evidence.  

     20.  We recognize that it may be difficult in some instances 
for a LEC to obtain from a publishing agent information 
concerning the costs incurred by that agent for performing 
various functions.  However, Wood County could have offered 
certain other information that might have supported the 
reasonableness of the rate it pays Berry.  For example, Wood 
County could have explained how it selected Berry to perform the 
functions for which it seeks to charge McLeod and whether that 
selection was made through a competitive bidding process.  
Further, Wood County could have described how the Berry rate 
compares to rates charged by other publishing agents for similar 
services.  Wood County proffered no such information. 

     21.  Because the incremental cost calculation Wood County 
proposes (i.e., the Berry $0.0408 rate) is facially questionable 
for the reasons described above, Wood County has a significant 
burden to provide adequate information supporting the 
reasonableness of this calculation.  Wood County failed, however, 
to provide any information supporting the Berry rate, much less 
credible and verifiable cost data.53  Further, the record 
contains insufficient information from which we could, sua 
sponte, ascertain Wood County's incremental costs of providing 
base file SLI to McLeod.  Accordingly, we cannot consider the 
alleged incremental costs of $0.0408 in determining whether Wood 
County has justified a departure from the presumptively 
reasonable rate for base file SLI.

          III.B.2.  Wood County Has Failed to Provide Adequate 
               Data Concerning a Reasonable Allocation of Common 
               Costs.

     22.  In the SLI Order, the Commission defined common costs 
as ``the cost[s] the carrier incurs in creating and maintaining 
its subscriber list information database and the methods the 
carrier uses to allocate [those] cost[s] among supported 
services.''54  Thus, common costs, within the meaning of the SLI 
Order, are those costs that the LEC incurs in connection with all 
SLI-related activities that are in addition to those activities 
performed solely to provide SLI to the complainant.  Consistent 
with that definition, the parties agree that some portion of Wood 
County's costs of entering SLI information into a database and 
maintaining the database may properly be allocated to SLI for 
purposes of calculating a reasonable cost-based rate for the 
provision of SLI to McLeod.55  The parties disagree, however, 
concerning the proper allocation of such common costs.  

     23.  Wood County maintains its SLI information in a single 
SLI/directory assistance (``DA'') database.56  According to Wood 
County, SLI information makes its way into the SLI/DA database in 
the following manner: a Wood County customer service 
representative obtains SLI information during the order-taking 
process and enters that information into a service order system 
database.57  Some of the information collected by the customer 
service representatives automatically populates the SLI/DA 
database.58  On a daily basis, a directory clerk processes all 
new service orders affecting the SLI/DA database and modifies 
automatically populated data to reflect specific requests from 
subscribers (for example, for an additional listing for a child's 
phone).59  A verification clerk then reviews the directory 
clerk's work.60

     24.  Wood County's cost study analyzes these activities and 
their attendant costs to support a purported reasonable rate for 
the provision of SLI.  The categories of common costs that Wood 
County seeks to include in its calculation of a reasonable SLI 
rate are: service order processing costs, directory clerk 
expenses, computer expenses, and computer investment expenses.61  
Wood County arrives at its common cost allocation by determining 
the service order processing costs, directory clerk expenses, 
computer expenses, and computer investment costs that are related 
to SLI/DA activity.  Wood County totals those costs and then 
allocates half of the total costs to SLI activity (Wood County 
asserts that the SLI/DA expenses are evenly allocable to SLI and 
DA activities).62  Wood County then divides the SLI-related costs 
by an annual demand figure of 81,267 SLI listings to arrive at 
the $0.5004 per listing figure for its common cost allocation.63  

     25.  The cost categories described above seem generally 
appropriate for Wood County to consider in formulating a cost 
study.  McLeod argues, however, that Wood County cannot include 
any of the service order processing costs as common costs, 
because Wood County would incur such costs wholly apart from the 
need to create and maintain an SLI database.64  According to 
McLeod, service order processing is an integral part of providing 
telephone exchange service, and information related to SLI, 
although it may initially be collected in the service order 
process, does not become part of the SLI database until it is 
entered into the database by the directory clerk.65  Thus, in 
McLeod's view, there are no service order processing costs unique 
to SLI, only directory clerk costs.

     26.  We agree with McLeod that recoverable common costs, as 
defined in the SLI Order, should include only those costs that 
Wood County incurs because of the need to create and maintain an 
SLI database.  We do not agree, however, that Wood County has 
failed to identify any such costs in its service order 
processing.  Wood County has explained that its customer service 
representatives spend a discrete amount of time in the service 
order process obtaining information that is used exclusively for 
the SLI/DA database.66  For example, Wood County explains that 
customer service representatives ask new customers how they want 
their listings to read in the directory or whether they want 
additional listings.67  Wood County persuasively argues that, but 
for the need to create and maintain an SLI database, some 
identifiable amount of time spent by the customer service 
representatives would be eliminated.68  Accordingly, we will 
consider those service order processing costs that Wood County 
incurred because of the need to create and maintain an SLI 
database as recoverable common costs, within the meaning of the 
SLI Order.

               III.B.2.a.     Service Order Processing Costs

     27.  Wood County identifies six types of service orders that 
involve SLI activity:  1) new installation, not requesting non-
published status; 2) new installation, requesting non-published 
or non-listed status; 3) disconnects; 4) requests by established 
subscribers for non-published status; 5) requests by established 
subscribers for return to published status; and 6) requests by 
established subscribers for additional listings.69  Wood County 
predicates its service order processing costs on estimates of 
time that its customer service representatives spend performing 
SLI activities for each of these six service order types listed 
above.70  For example, Wood County estimates that it takes its 
customer service representatives an average of 21 minutes per 
service order to process a new installation request that does not 
include a request for non-published status;71 Wood County further 
estimates that 3 minutes of the 21-minute total is spent on 
SLI/DA related activities.72  Wood County maintains, therefore, 
that the costs associated with this three-minute activity must be 
considered in ascertaining a reasonable SLI rate.  

     28.       For the reasons described below, we conclude that 
Wood County's time estimates for four of the six service order 
categories are unverifiable; we also conclude that Wood County 
improperly failed to account for end user revenues from the 
remaining two service order categories in developing its cost 
allocation methodology.  Consequently, we cannot consider any 
service order processing costs in determining whether Wood County 
may exceed the presumptively reasonable rates for providing base 
file SLI.

                    III.B.2.a)i.   Wood County's Time Estimates 
                         for Four of the Six Service Order 
                         Categories are Unverifiable And the 
                         Process Used to Develop the Estimates is 
                         Not Credible.

     29.  Wood County states that it obtained estimates of the 
time spent on SLI activities for four of the six service order 
types from a senior customer service representative at the 
company with expertise in service order processing.73  However, 
the customer service representative apparently did not conduct 
any research or make any attempts to develop verifiable time 
estimates or averages in providing her estimates.74  It appears 
that she arrived at her estimates extemporaneously during the 
course of a thirty-minute conversation with Wood County's chief 
financial officer.75  Moreover, although Wood County performed a 
sampling exercise to calculate the total service order processing 
time spent on various customer service activities, Wood County 
did not track, as part of that exercise, how much of that time 
was spent on SLI-related activities.76  In fact, the customer 
service representative was not even informed of the results of 
the sampling exercise so that she could compare her estimates of 
time spent on SLI-related activity to the total service order 
processing time.77  Therefore, we conclude that the process used 
to develop the SLI-related time estimates for these four service 
order categories is not credible and cannot produce reliable 
data.  Merely asking an employee to provide a subjective, 
extemporaneous estimate of time associated with specific 
activities, without conducting any research or reviewing any data 
whatsoever, does not provide an adequate foundation for figures 
used in Wood County's cost study.  Moreover, we cannot verify the 
time estimates associated with the service order processing 
activities for these four service order categories, because Wood 
County has proffered no documents to support the SLI-related 
portion of the time estimates.  Thus, we do not consider costs 
associated with these four service order categories in 
determining whether Wood County has justified a rate exceeding 
the presumptively reasonable rate for base file SLI.78

                    III.B.2.a)ii.  Wood County Improperly Fails 
                         to Account for Revenue Received From Its 
                         End User Customers In Its Cost 
                         Allocation Methodology for the Remaining 
                         Two Service Order Categories.

     30.  With respect to the remaining two service order types 
(requests by established subscribers for additional listings, and 
requests by established subscribers for return to published 
status), Wood County maintains that the time spent on SLI 
activity equals the total time spent on service order processing 
(i.e., the service order processing time allegedly consists 
wholly of SLI-related activity (a ``pure SLI function'')).79  
These time estimates appear to be derived from the same sampling 
exercise described above, and stem from samples of four and five 
service orders, respectively.80  We question whether such small 
sample sizes could adequately justify the resulting time 
estimates.  We need not decide that question here, however, 
because we conclude that the cost allocations for these two 
service order categories are deficient for another reason - Wood 
County's cost study fails to account adequately for revenues 
received from its own end user customers for these two 
activities.

     31.  Pursuant to its state tariff, Wood County receives from 
its end user customers $5.00 per request and $0.50 per month for 
each additional directory listing requested.81  Wood County did 
not account for these revenues in calculating an allocation of 
common costs upon which to base a rate to charge directory 
publishers for SLI.82  For the following reasons, this failure 
precludes us from considering Wood County's costs associated with 
processing additional listing requests in determining whether 
Wood County may exceed the presumptively reasonable rates for 
SLI. 

     32.  The Commission explained in the SLI Order that a LEC 
may recover ``fair compensation'' and a ``reasonable profit'' for 
the creation, maintenance, and provision of SLI.83  It is neither 
fair nor reasonable for a LEC to earn a complete double recovery 
for these SLI activities.  In other words, a LEC can choose to 
recover its costs associated with a pure SLI function from either 
its end user customers or its directory publisher customers, but 
it cannot recover all such costs from both.  Accordingly, where a 
LEC charges its own end user customers to perform a pure SLI 
function, and the revenues earned pursuant to those charges 
exceed the costs incurred to perform this function, the LEC 
cannot rely on the same costs in attempting to justify a 
departure from the presumptively reasonable rates chargeable to 
directory publishers.

     33.  We cannot determine from the record whether the 
revenues Wood County receives from its end user customers for 
performing the pure SLI function of processing requests for 
additional listings exceeds Wood County's costs associated with 
performing this function.  This is because, although Wood 
County's discovery responses provide the total revenues allegedly 
received from the $5.00 non-recurring charge, the responses fail 
to state the revenues received from the $0.50 monthly recurring 
charge.  This omission is material, given the costs and revenue 
figures contained in Wood County's study.84  Thus, Wood County 
has failed to meet its burden of proving compliance with the 
threshold requirement of demonstrating that its costs exceed its 
revenues with respect to the pure SLI function of processing 
requests for additional listings.  Accordingly, we cannot 
consider such costs in determining whether Wood County may charge 
more than the presumptively reasonable rate.

     34.  Similarly, with respect to the service order category 
of requests by established subscribers for return to published 
status, Wood County also did not properly account for the revenue 
received from its end user customers for such pure SLI function 
(five dollars per request) in computing its recoverable costs.  
In particular, Wood County apparently did not subtract these 
revenues from its costs in developing its common cost allocation 
to support its SLI rate.85  Although Wood County at least made a 
superficial showing that its costs exceed its revenues for this 
service order category, the amount of un-recovered costs is so 
low (approximately $700 annually) that it, standing alone, is 
insufficient to justify a rate for SLI higher than presumptively 
reasonable rate.86  

     35.  Wood County argues that we should not consider revenues 
for these pure SLI functions, because the tariffed charges were 
not set to recover the specific costs associated with those 
functions.87  Wood County's explanation, however, is not 
sufficient.  Wood County does not explain how the end-user 
charges were set by the state commission and what specific costs 
the charges were intended to cover.  Wood County does not assert 
that the charges were designed to compensate Wood County entirely 
for other costs unrelated to the SLI-activities for which the 
charges are levied.  Nor does Wood County assert that the charges 
do not defray at least some of the costs associated with the SLI 
activities.  Accordingly, we reject Wood County's contention that 
it is improper to consider revenues earned with respect to these 
service order categories in evaluating Wood County's cost study. 

     36.  In sum, given Wood County's failure to submit 
sufficient evidence supporting its estimates of the costs 
allocable to the SLI portion of four of the six service order 
processing functions, and Wood County's failure to account for 
customer revenues for the two pure SLI functions, we conclude 
that Wood County's service order processing costs are 
unverifiable and unreliable.88  Further, with respect to at least 
four of the service order categories, although we acknowledge 
that Wood County reasonably asserts that some of these service 
order costs stem from SLI activities, Wood County provides 
insufficient information from which we can independently 
determine the amount of those costs.  Accordingly, we find that 
Wood County has not met its burden of providing credible and 
verifiable cost data supporting the allocation of service order 
processing costs to SLI.  Therefore, we decline to consider these 
costs in ascertaining whether Wood County may charge McLeod a 
rate higher than the presumptively reasonable rates for the 
provision of SLI.

               III.B.2.b.     Directory Clerk Costs

     37.  A large portion of Wood County's common cost 
calculation stems from costs allegedly incurred in connection 
with Wood County's entry of information into the SLI/DA database 
and verification of the accuracy of that information.  The most 
critical component of these costs, similar to the service order 
costs discussed above, is Wood County's estimate of the time that 
its directory clerks spend on these activities.  Despite Wood 
County's heavy reliance on such time estimates, Wood County again 
fails to provide credible and verifiable data supporting such 
estimates.

     38.  Wood County estimates that it takes an average of eight 
minutes per service order for Wood County's directory clerk and 
verification clerk to modify SLI data obtained in the service 
order process and ensure that the appropriate information is 
contained in the SLI database.89  The eight-minute estimate 
consists of a five-minute estimate for initial processing time by 
the directory clerk and a three-minute estimate for verification 
by the verification clerk.90  Again, Wood County proffers no 
records or documents to support these estimates.  Although two 
Wood County employees apparently performed sampling exercises to 
develop the estimate provided, the exercises were too flawed to 
produce reliable data, and the employees failed to keep any 
records from which the data could be verified.  As McLeod points 
out, the directory clerk and verification clerk apparently 
decided, on their own, to conduct the sampling exercises in 
question.91  Wood County's chief financial officer, who appears 
to have been responsible for gathering information for the cost 
study, did not instruct the clerks on how to perform the exercise 
or what to measure, and neither did any other Wood County 
officer.92  In fact, the chief financial officer was not aware 
that the two clerks had performed any sampling exercises until 
after the exercises were concluded.93  Wood County could not 
explain what type of service orders were sampled, how the timing 
of those service orders was measured, whether the timing was 
interrupted if the employee's work was temporarily interrupted, 
or what conventions the clerks may have used in measuring the 
processing time.94  

     39.  Further, although Wood County alleges that the eight-
minute estimate is an average derived from the sampling exercises 
just described, Wood County provides no information or documents 
showing how that average was calculated or even whether it 
resulted from a mathematical calculation.  The average may have 
simply been a subjective estimate that the directory clerks 
provided after the sampling exercises but without performing any 
mathematical calculation (similar to the subjective estimate 
provided by the customer service representative described above).  
How the average was calculated in this case is critical, because 
the record indicates that there is a wide disparity in the amount 
of time it may take to process and verify different service 
orders.95  Whether Wood County properly considered that range, 
and the probable mix of service orders therein (i.e., 95% of 
service orders are ``simple'' ones requiring only a minute of 
directory clerk time to complete and 5% are more complicated, 
requiring additional time to complete) is important in 
determining the reliability and credibility of the resulting 
average.96  Wood County offers us nothing from which we can 
determine how it calculated the average and whether it considered 
these critical factors in making the calculation.  The record 
does indicate, however, that if the directory clerks did perform 
a mathematical calculation to develop the eight-minute time 
estimate, they did so without any guidance, direction, or 
instruction from either the Wood County officer responsible for 
the cost study or Wood County's expert.97  For all the foregoing 
reasons, we find Wood County's process for developing its 
directory clerk time estimate to be not credible and, therefore, 
do not consider the estimate in determining whether Wood County 
may exceed the presumptively reasonable rate.

     40.  Moreover, Wood County inexplicably failed to keep its 
notes or records of the sampling exercises.  Wood County's 
failure to provide any documents which McLeod and the Commission 
could use to verify both the process used to obtain the time 
estimates and the resulting time estimates themselves also 
renders the estimates unreliable, because they cannot be 
verified.98  

     41.  After the close of discovery, and after McLeod had 
already submitted its responsive expert report, Wood County 
proposed in its rebuttal report an entirely different methodology 
for ascertaining recoverable directory clerk expenses than was 
contained in its previous cost study.  In doing so, Wood County 
unfairly prevented McLeod from timely inquiring into the basis 
for this new analysis.99  In any event, this tardy analysis 
suffers from the same flaw that permeates much of Wood County's 
analysis - it lacks the requisite underlying support.  Wood 
County states that, ``as part of [its] preparation of [its] 
rebuttal report,'' Wood County conferred with one of its 
executives with respect to accounting for the directory clerk's 
time.100  The executive indicated that ``the directory clerk 
charged 53.66% of her time on the processing of directory listing 
orders (based on a two-month analysis of the directory clerk's 
time coding).''101  Wood County then estimated the number of 
hours worked annually by the directory clerk, applied the 
percentage referenced above to the total estimated service orders 
with SLI activity, and arrived at an estimate for time spent by 
the directory clerk on SLI activities per service order.  
Although this may be a reasonable way to develop a time estimate 
for recoverable directory clerk expenses, Wood County offers no 
underlying data that McLeod or we could review for verification 
purposes.  Wood County does not identify the months used to 
develop the 53.66% figure, does not explain why those months are 
representative, does not produce the time coding documents to 
support the calculation, and does not explain how the time coding 
documents support the resulting calculation.  We are left solely 
with Wood County's bald assertion that the calculation on which 
it relies is correct, and Wood County asks us, and McLeod, to 
accept that assertion on faith.  We decline to do so.

     42.  Wood County contends that we cannot reject Wood 
County's estimates based on alleged inadequacies in how Wood 
County developed or recorded the time estimates or conducted the 
sampling that support the estimates.102  We disagree.  Where, as 
here, there are no records or notes supporting critical time 
estimates that make up a portion of the cost data upon which a 
carrier relies to justify a certain SLI rate, we simply cannot 
conclude that such estimates are reasonable and verifiable and, 
accordingly, will not consider them.  Allowing or relying on such 
estimates without supporting data or documents from which a third 
party could verify the estimates would lead to inevitable abuse 
and is precisely what the Commission sought to avoid when the SLI 
Order required that supporting data be both credible and 
verifiable.  

     43.  For the foregoing reasons, we conclude that Wood County 
has failed to meet its burden of producing credible and 
verifiable costs associated with directory clerk activities 
related to SLI.  Because Wood County has failed to meet its 
burden, we do not consider any directory clerk expenses in 
determining whether Wood County may exceed the presumptively 
reasonable rate for base file SLI.

               III.B.2.c.     Computer Expenses and Computer 
                    Investment Costs 

     44.  Wood County allocates a portion of computer expenses 
and computer investment costs to SLI.103  However, the 
allocations of both computer expenses and computer investment 
costs depend on Wood County's estimates of time spent by 
directory clerks entering SLI information into the SLI/DA 
computer database and verifying the accuracy of that 
information.104  These are the same time estimates addressed in 
section III(B)(2)(b) above.  Because we have concluded that those 
time estimates are not verifiable, the allocations of computer 
expenses and computer investment costs that depend on those time 
estimates are equally flawed.  Accordingly, we conclude that Wood 
County has failed to meet its burden of providing credible and 
verifiable cost data supporting its allocation of computer 
expenses and computer investment costs.  Thus, we do not consider 
such costs in determining whether Wood County may exceed the 
presumptively reasonable rate for base file SLI.

          III.B.3.  Wood County Has Failed to Provide Adequate 
               Data Concerning Overhead Costs Associated with the 
               Provision of Base File SLI.

     45.  In the SLI Order, the Commission defined overheads as 
``[a]ny other costs the carrier incurs to support its provision 
of subscriber list information to the complainant; the other 
activities those costs support; and the methods the carrier uses 
to allocate those costs.''105  Wood County develops its 
allocation of overhead expenses attributable to SLI activities by 
determining an overhead allocation factor and applying that 
factor to the service order processing and directory clerk 
expenses it developed separately.106  These are the same service 
order processing and directory clerk costs we discuss and reject 
in sections III(B)(2)(a) and (b) above.  Because we find those 
calculations to be flawed and, therefore, do not consider them, 
we also conclude that the overhead calculation is flawed for the 
same reasons.  Thus, we do not consider such costs in determining 
whether Wood County may exceed the presumptively reasonable rate 
for base file SLI. 

                    *         *         *

     46.  In sum, based on the analysis above, we conclude that 
Wood County has failed to meet its burden of proving, with 
credible and verifiable cost data, that its proposed rate for the 
provision of base file SLI to McLeod is reasonable.  Accordingly, 
we grant McLeod's claim related to base file SLI and rule that 
Wood County must charge McLeod no more than the presumptively 
reasonable rate of $0.04 per listing for base file SLI.107

     47.  We emphasize that we are fully aware that ``for some 
smaller carriers a rate of $0.04 per listing may not be enough to 
cover the costs associated with providing base file listings, 
since the number of listings involved could be small.''108  Thus, 
we do not conclude in this Order that Wood County could not have 
cost-justified a rate for base file SLI higher than the 
presumptively reasonable rate.  Further, this Order should not be 
construed as limiting the ability of LECs in the future to charge 
more for SLI than the presumptively reasonable rates, assuming 
they are prepared to justify those rates in accordance with the 
SLI Order.  We simply conclude here that, for the reasons 
described above, Wood County's effort to support a rate higher 
than the presumptively reasonable rate for base file SLI is too 
deficient to be credited.  Had Wood County not engaged in the 
fundamental errors described above, which rendered unreliable 
many of the most critical components of its cost study, we might 
have concluded that Wood County was justified in exceeding the 
presumptively reasonable rate.  However, that is not the record 
before us.

     III.C.    Wood County Has Failed to Meet Its Burden of 
          Justifying a Rate for Update SLI That Exceeds the 
          Presumptively Reasonable Rate.

     48.  In its complaint, McLeod also requests that we declare 
that Wood County's proposed rate of $0.42 per listing for SLI 
updates is unlawful and order Wood County to charge no more than 
the presumptively reasonable rate of $0.06 per listing for 
updates.109  Wood County concedes that it did not attempt to 
justify a proposed rate for updated SLI in its cost study.110  
Wood County asserts that it could not attempt to justify a 
proposed update rate without knowing the frequency with which 
McLeod wanted to receive updated SLI.111  We agree with Wood 
County that the frequency of provision of updated SLI may be 
relevant in justifying a rate for the provision of SLI.  We note, 
however, that Wood County proposed to McLeod a rate of $0.42 per 
listing for updated SLI without regard to the frequency or format 
that McLeod might request.112  Thus, Wood County must have 
believed that it could roughly cost-justify this rate, even 
without knowing exactly how often it would provide update SLI to 
McLeod.  Nevertheless, Wood County subsequently failed in this 
proceeding even to attempt to justify that or any other rate for 
updated SLI services.  Accordingly, we conclude that Wood County 
has failed to meet its burden of proving its entitlement to a 
rate exceeding the presumptively reasonable rate for update SLI.  
Therefore, we grant McLeod's claim related to update SLI and 
order Wood County to charge no more than the presumptively 
reasonable rate of $0.06 per listing for updated SLI.113

IV.  ORDERING CLAUSES

     49.  Accordingly, IT IS ORDERED, pursuant to sections 4(i), 
4(j), 208, and 222(e) of the Communications Act of 1934, as 
amended, 47 U.S.C.  154(i), 154(j), 208, and 222(e), that the 
formal complaint of McLeodUSA Publishing Company is GRANTED.114 

     50.  IT IS FURTHER ORDERED, pursuant to sections 4(i), 4(j), 
208, and 222(e) of the Communications Act of 1934, as amended, 47 
U.S.C.  154(i), 154(j), 208, and 222(e), that Wood County must 
charge McLeod no more than the presumptively reasonable rate of 
$0.04 per listing for base file SLI and $0.06 per listing for 
update SLI.115 


                              FEDERAL COMMUNICATIONS COMMISSION



                              William F. Caton
                              Acting Secretary                      SEPARATE STATEMENT OF 
                  COMMISSIONER KEVIN J. MARTIN

Re:  McLeodUSA Publishing Company v. Wood County Telephone 
Company, Inc.,      Memorandum Opinion and Order, File No. EB-01-
MD-004

     While I support the result in this case, I write separately 
today to emphasize two points.  First, I encourage carriers to 
submit specific cost information when attempting to justify a 
rate higher than the presumptively reasonable rate set out in the 
Commission's rules.  I recognize that the presumptively 
reasonable rates were based on data from the largest carriers and 
may not adequately compensate smaller and rural carriers.  Thus, 
our rules allow carriers to provide data justifying a higher 
rate.  I am committed to ensuring that smaller and rural carriers 
are fairly compensated, and I strongly recommend that carriers 
develop and submit the requisite cost data in future cases.  
While the data in this case was inadequate for the reasons 
discussed in the Order, I hope that we have provided some 
guidance on the kind of showing that would be sufficient.  

     Second, I am concerned about the presumptively reasonable 
rates established by the Commission for updates to directory 
information.  Even though the Commission conceded that costs for 
providing updates to subscriber list information would vary 
widely depending on the exact nature of the request, it 
nevertheless set a single, presumptively reasonable rate.  I have 
concerns with this approach.  While this case does not present an 
appropriate opportunity to revisit the Commission's decision, I 
look forward to considering the issue in future proceedings.


_________________________

1         47 U.S.C.  208.
2         47 U.S.C.  222(e).
3         In re Implementation of the Telecommunications Act of 
1996:  Telecommunications Carriers' Use of Customer Proprietary 
Network Information and Other Customer Information, Third Report 
and Order, 14 FCC Rcd 15550 (1999) (``SLI Order'').  
4         Formal Complaint of McLeodUSA Publishing Company, File 
No. EB-01-MD-004 (filed Feb. 12, 2001) (``Complaint'') at  5; 
Joint Statement of Stipulated Facts, Disputed Facts, and Key 
Legal Issues, File No. EB-01-MD-004 (filed Mar. 29, 2001) 
(``Joint Statement'') at  3.  
5         Joint Statement at  1.
6         SLI Order, 14 FCC Rcd at 15554,  2.
7         Id. at 15554,  3.
8         Id. at 15554,  2.
9         Id. at 15554,  3.
10   47 U.S.C.  222(e).
11   The implementing rules include, inter alia, section 64.2309 
(requiring carriers to provide SLI on a nondiscriminatory basis 
and under reasonable rates, terms, and conditions); 64.2325 
(establishing presumptively reasonable rates of $0.04 per listing 
for base file SLI and $0.06 per listing for update SLI); and 
64.2333 (placing the burden of proof in a complaint proceeding 
arising under section 222(e) of the Act on the carrier to the 
extent that it seeks to charge rates for SLI higher than the 
presumptively reasonable rates).  47 C.F.R.  64.2309, 64.2325, 
and 64.2333.
12   SLI Order, 14 FCC Rcd at 15607,  105; 47 C.F.R.  64.2325.
13   SLI Order,  14  FCC Rcd  at  11562-63,   16;  47  C.F.R.   
64.2305.
14   SLI Order, 14 FCC Rcd at 11562-63,  16.
15   SLI Order,  14  FCC Rcd  at  11562-63,   16;  47  C.F.R.   
64.2305.
16   SLI Order, 14 FCC Rcd at 11562-63,  16.
17   Id. at 15599-607,  93-103; 47 C.F.R.  64.2325.
18   SLI Order, 14 FCC Rcd at 15607,  105.
19   Id.
20   Id. (citing 47 U.S.C.  208).
21   Id. at 15607,  106.
22   Id.  These categories are defined, infra, at Sections 
III(B)(1)-(3).
23   Id. at 15607,  105; 47 C.F.R.  64.2333.
24   SLI Order, 14 FCC Rcd at 15607,  106.
25   Id.
26   Id.
27   Complaint at  12 and Exhibit 13; Joint Statement at  9.
28   Id.
29   Complaint at  1-2 and Prayer for Relief.
30   Complaint at Prayer for Relief.
31   Answer of Wood County Telephone Company, File N. EB-01-MD-
004 (filed Mar. 19, 2001) (``Answer'') at  2; Initial Brief of 
Wood County Telephone Company, File No. EB-01-MD-004 (filed Sep. 
14, 2001) (``Wood County Brief'') at 6-7.
32   Id.
33   47 U.S.C.  208(a).
34   47 U.S.C.  154(j).
35   SLI Order, 14 FCC Rcd at 15607-08,  106.
36   We note that Wood County has unique access to information 
concerning its costs.  The Commission has previously concluded in 
other similar circumstances that the party with unique access to 
crucial information may have to bear the burden of proof.  See In 
re Implementation of the Telecommunications Act of 1996, 
Amendment of Rules Governing Procedures to be Followed When 
Formal Complaints Are Filed Against Common Carriers, Report and 
Order, 12 FCC Rcd 22497, 22615, n.782 (1997) (subsequent history 
omitted) (explaining that, in cases alleging discrimination under 
section 202(a), the burden shifts to the defendant to justify 
discrimination once the complainant has presented prima facie 
evidence that discrimination in the provision of like services 
exists); see also, National Communications Assoc., Inc. v. AT&T 
Corp., 238 F.3d 124, 130 (2d Cir. 2001) (explaining that it is 
generally appropriate to shift the burden to the party with 
easier access to relevant information).  Wood County cites a 
recent Commission decision in which the Commission did not shift 
the burden of proof to the party with easier access to relevant 
information.  See AT&T Corporation v. Bell Atlantic - 
Pennsylvania, Memorandum Opinion and Order on Reconsideration, 15 
FCC Rcd 7467, 7471-72  10 (2000).  However, that case did not 
involve a Commission-prescribed presumptively reasonable rate or 
a rulemaking proceeding in which the Commission established 
specific cost-study requirements for carriers seeking to exceed a 
presumptively reasonable rate.
37   See 47 C.F.R.  76.1504(d) (assigning the burden of proof to 
the defendant open video system operator in complaint proceedings 
involving claims that the operator is not charging the 
presumptively reasonable rate).
38   Wood County also contends that McLeod waived its right to 
argue the burden of proof issue by purportedly failing to address 
it in its initial brief.  Reply Brief of Wood County Telephone 
Company, File No. EB-01-MD-004 (filed Sep. 28, 2001) (``Wood 
County Reply'') at 9 (citing 47 C.F.R.  1.732(b) (providing 
that, unless otherwise directed, all claims and defenses must be 
included in the parties' briefs or will be deemed abandoned).  We 
do not agree that McLeod was obligated to address the burden of 
proof issue in its opening brief, because the burden is clearly 
specified in Commission rules.  In any event, McLeod did assert 
in its initial brief that Wood County bore the burden of proof in 
this proceeding, and, accordingly, we reject Wood County's 
contention.  Initial Brief of Complainant McLeodUSA Publishing 
Company, File No. EB-01-MD-004 (filed Sep. 14, 2001) (``McLeod 
Brief'') at 4-5,  10-11.
39   SLI Order, 14 FCC Rcd at 15608,  106.
40   Wood County's SLI Cost Study, File No. EB-01-MD-004 (filed 
Mar. 19, 2001) (``Wood County Cost Study''), attached as Exhibit 
1 to the Answer.
41   Wood County Cost Study at Schedule 1.  
42   SLI Order, 14 FCC Rcd at 15608,  106. 
43   Id. at 15591,  77.
44   Wood County Cost Study at Schedules 2 and 2a.
45   Id. at Schedule 2a.
46   Report of Stephen E. Siwek, File No. EB-01-MD-004 (filed 
Jun. 26, 2001) (``McLeod Report'') at 11-12.
47   Id.
48   Rebuttal Cost Report prepared by Douglas Meredith and Scott 
Duncan of John Staurulakis, Inc. File No. EB-01-MD-004 (filed 
Aug. 15, 2001) (``Wood County Rebuttal'') at 8-9.
49   SLI Order, 14 FCC Rcd at 15606,  102. 
50   Id. at 15592,  79.
51   Wood County Rebuttal at 14.  Wood County points out that its 
costs would be less than the Berry rate if it provided 
unformatted SLI to McLeod, and that the Berry rate is based on 
the provision of formatted SLI to publishers.  Id.  However, Wood 
County does not attempt to calculate the formatting costs 
associated with Wood County's provision of formatted SLI directly 
to McLeod; nor does Wood County state that such costs would raise 
the total incremental cost calculation above $0.0408 per listing.  
Wood County simply says that the formatting costs ``may'' lead to 
an incremental cost calculation exceeding the Berry rate.  Id.
52   SLI Order, 14 FCC Rcd at 15602-03,  96.  Commercial list 
providers differ from directory publishers in that they obtain 
SLI from sources other than a LEC (e.g., already published 
directories or information maintained by local Chambers of 
Commerce).  Id. at 15596,  87.  
53   For example, Wood County could have ascertained how long it 
took for Berry employees to provide the requested SLI to McLeod, 
the costs associated with the time to perform the required tasks, 
and the cost of the material used to prepare and send the 
information to McLeod.
54   SLI Order, 14 FCC Rcd at 15608,  106.  
55   Reply Brief of McLeodUSA Publishing Company, File No. EB-01-
MD-004 (filed Sep. 28, 2001) (``McLeod Reply'') at 2-3; Wood 
County Brief at 17-18.
56   Wood County's Answers to Interrogatories, File No. EB-01-MD-
004 (filed Apr. 23, 2001) at Response to Interrogatory 1.
57   Wood County's Answers to Interrogatories at Response to 
Interrogatory 2.
58   Id. 
59        Id. 
60   Id. 
61   Wood County Cost Study at Schedule 3.  The service order 
processing and directory clerk expenses comprise over 95% of the 
calculated common costs.  
62   Wood County Cost Study at Schedule 3.
63   Id.
64   McLeod Report at 20-21; McLeod Brief at 13-14.
65   McLeod Report at 20.
66   Wood County Rebuttal at 27-28.
67   Id.; Wood County Answer's to Interrogatories at Response to 
Interrogatory 2.
68   Wood County Rebuttal at 27-28; Wood County Brief at 18-19.
69   Id. at Schedule 3a.
70   Wood County Cost Study at Schedule 3a, Column D.
71   Id. at Schedule 3a, Column B.
72   Id. at Schedule 3a, Column D.  Wood County provides the 
following times estimates for the remaining five categories of 
service orders:  Wood County estimates that it takes an average 
of 19 minutes to process new installation requests that include 
requests for non-published or non-listed status, of which 3 
minutes consists of SLI/DA activity; 6 minutes to process 
disconnects, of which 3 minutes consists of SLI/DA activity; 14 
minutes to process requests by established subscribers for non-
published status, of which 3 minutes consists of SLI/DA activity; 
8 minutes to process requests by established subscribers for 
return to published status, which consists entirely of SLI/DA 
activity; and 6 minutes to process requests by established 
subscribers for additional listings, which consists entirely of 
SLI/DA activity.  Id.
73   Wood County Rebuttal at 22-24.  These four service order 
categories are:  1) new installation - not requesting non-
published status; 2) new installation - requesting non-published 
or unlisted status; 3) disconnection; and 4) requests by 
established subscribers for return to published status.  Wood 
County Cost Study at Schedule 3a.
74   McLeod Report at 15-16 (citing Deposition of Jerold R. 
Johnson, File No. EB-01-MD-004 (Jun. 5, 2001) (``Johnson Dep.'') 
at 123-25, 133).
75   Johnson Dep. at 123-25.
76   McLeod Report at 15.
77   Johnson Dep. at 123-25, 133.
78   We also question whether costs related to honoring requests 
for non-published or non-listed status are appropriately included 
in a cost study seeking to establish rates for the provision of 
SLI.  The definition of SLI in the Commission's rules does not 
include non-published or non-listed information.  47 C.F.R.  
64.2305(e).  In any event, we need not decide this issue here, 
because we find the cost information to be defective for other 
reasons.
79   ``Pure SLI function'' in this case refers to functions 
performed in connection with maintaining the single SLI/DA 
database that Wood County uses for SLI purposes.  Thus, a ``pure 
SLI function,'' as defined here, does not involve activities that 
are unrelated to Wood County's maintenance of the SLI/DA 
database, such as billing or maintenance and repair activities.
80   McLeod Report at 15. 
81   Wood County Answers to Interrogatories at Response to 
Interrogatory 2-3; McLeod Report at 23; Wood County Rebuttal at 
30.
82   Rather,  Wood  County  argued  that  revenues  need  not  be 
considered at all.  Wood County Brief at 15-17.
83   Id. at 15590,  73, and 15595,  84.  
84   As McLeod points out, Wood County's cost study does not 
indicate the number of additional listings that its customers 
request annually.  McLeod Report at 23.  Although Wood County 
indicates that it processes 444 service orders annually that 
contain additional listings (Wood County Cost Study at Schedule 
3a), it is quite possible that a portion of these service orders 
contain multiple requests for additional listings.  McLeod Report 
at 23.  If less than half of these service orders contain 
requests for more than one additional listing, the revenues 
received entirely offset the alleged costs.  For example, if the 
444 service orders resulted in 650 additional listings, then Wood 
County's revenues would exceed the asserted costs:  444 service 
orders times $5.00 per service order plus 650 listings times 
$0.50 per listing times 12 months totals $6120.00; Wood County's 
alleged costs for this service order category total $6083.00.  
Wood County Answers to Interrogatories at Response to 
Interrogatory 2-3.  Even if the revenues did not entirely offset 
the costs for this category, the shortfall would be too 
insignificant, standing alone, to justify a rate above the 
presumptively reasonable rate.  See analysis, infra, at n.86.
85   Again, Wood County elected not to engage in such an 
analysis, because it argued that revenues need not be considered 
at all, an argument we reject, infra.
86   Wood County Answers to Interrogatories at Response to 
Interrogatory 2-3.  If we applied Wood County's methodology to 
the $700 cost described above, we would find a per listing SLI 
rate much lower than the presumptively reasonable rate:  if we 
assume $700 in total common costs attributed to SLI/DA 
activities, allocate those costs evenly between SLI and DA, and 
divide the SLI portion ($350) by the 81,267 demand estimate used 
by Wood County, we arrive at a per listing figure of $0.004.  We 
assess the effect of these costs ``standing alone'' because, as 
described throughout this Order, Wood County has failed to meet 
its burden of proof regarding consideration of any other category 
of costs.
87   Wood County Rebuttal at 30.
88   The SLI-related costs that Wood County includes in its 
interrogatory response for the two pure SLI functions include 
both service order processing costs and directory clerk expenses.  
Thus, Wood County's failure properly to consider revenues 
associated with these two functions applies to our consideration 
of both service order processing costs and directory clerk 
expenses.  In any event, as discussed, infra, we do not consider 
Wood County's directory clerk costs as a whole because they are 
unverifiable and are derived from a flawed process.   
89   Wood County Cost Study at Schedule 3b.  
90   Wood County Answers to Interrogatories at Response to 
Interrogatory 2-4.
91   McLeod Report at 16-17.
92   Id. (citing Johnson Dep. at 214-25 and 221-22).
93   Id.
94   Id.
95   For example, Wood County indicates that the directory clerk 
has taken as long as four hours to perform the activities related 
to SLI for a single listing and as little as one-minute for a 
simple, one-line listing.  McLeod Report at 18 (citing Johnson 
Dep. at 213).
96   It is also unclear whether Wood County properly excluded 
certain activities not related to SLI in developing its eight-
minute average.  In particular, Wood County points out that the 
directory clerk references the customer's credit history when 
processing service orders.  McLeod Report at 17.  We agree with 
McLeod that this activity is unrelated to SLI and should not be 
included in any time estimate designed to capture SLI-related 
activity.  Wood County has not indicated whether it removed time 
associated with this activity in developing its eight-minute 
estimate.
97   McLeod Report at 17-18.  
98   Johnson Dep. at 214-15, 221-22.  McLeod also challenges the 
adequacy of the sampling exercises themselves:  Wood County's 
directory clerk sampled fifty different service orders to develop 
a time estimate for entry of information, and the directory 
verification clerk performed a self-timing exercise over a four-
hour period to develop an estimate of verification time.  McLeod 
Report at 16-17 (citing Johnson Dep. at 214-15, 221-22).  We do 
not decide whether the scope of the sampling exercises Wood 
County performed is sufficient, because we find that the estimate 
that purportedly resulted from the sampling exercises is 
unverifiable for the reasons described above.
99   McLeod understandably moved to strike the new information.  
Motion of Complainant McLeodUSA Publishing Company for an Order 
Striking From the Record the Portions of Wood County Telephone 
Company's Rebuttal Cost Report That Introduce New Supporting 
Information for Wood County's Costs, File No. EB-01-MD-004 (Filed 
Aug. 23, 2001) (``McLeod Motion to Strike'') at 2.  Because we 
find that the new analysis does not meet the requirements for 
submission of cost data set forth in the SLI Order, we need not 
and do not rule on McLeod's Motion to Strike.
100  Wood County Rebuttal at 24.
101  Id.
102  Wood County Brief at 18-19.
103  The computer expenses and computer investment costs 
represent only three percent of the total common costs.  Wood 
County Cost Study at Schedule 3.
104  Wood County developed its allocation of computer expenses 
and computer investment costs by calculating a computer usage 
factor related to SLI activities.  See Wood County Cost Study at 
Schedules 3c and 3d.  The computer usage factor was based, in 
part, on the estimate Wood County used for the time spent by 
directory clerks on service orders.  See Wood County Rebuttal at 
Schedule JSI(c).
105  SLI Order, 14 FCC Rcd at 15608,  106.
106  See Wood County Cost Study at Schedule 4.
107  McLeod also argues that Wood County's proposed rate for the 
provision of SLI is discriminatory.  McLeod Brief at 24-25.  Wood 
County contends that we should not consider McLeod's 
discrimination allegations because McLeod did not allege a 
discrimination claim in its complaint.  Wood County Brief at 20-
22.  We need not consider either contention here because we have 
resolved McLeod's claims on other grounds.  
108  SLI Order, 14 FCC Rcd at 15607,  105.
109  Complaint at  2, 23-24, and Prayer for Relief.
110  Answer at  5.
111  Id.
112  Complaint at  12, Exhibit 13.
113  We note that McLeod's complaint does not challenge the 
minimum transmission charge of $100 that Wood County proposed for 
the provision of SLI updates.  Accordingly, although we find that 
Wood County can charge no more than $0.06 per listing for updated 
SLI, we make no ruling on the reasonableness of Wood County's 
proposed transmission fee, because it is not at issue here.
114  After the record closed in this proceeding, Wood County 
filed a ``Suggestion to Inquire Into McLeodUSA's Ability to Go 
Forward and Whether This Case is Stayed.''  Suggestion to Inquire 
Into McLeodUSA's Ability to Go Forward and Whether This Case is 
Stayed, File No. EB-01-MD-004 (filed Feb. 6, 2002) (``Wood 
County's Suggestion'').  Wood County inquired as to whether the 
Commission would stay the formal complaint proceeding in view of 
the fact that McLeod's parent company, McLeodUSA, Inc., had filed 
for re-organization under Chapter 11 of the bankruptcy code.  
McLeod responded to Wood County's filing and argued that this 
proceeding should not be stayed.  Opposition of McLeodUSA 
Publishing, File No. EB-01-MD-004 (filed Feb. 8, 2002) 
(``McLeod's Opposition'').  We agree with McLeod that a stay is 
inappropriate here.  First, complainant McLeodUSA Publishing 
Company is not a party to the bankruptcy proceeding.  Second, 
even if McLeod were considered a "debtor" in the bankruptcy 
proceeding, the stay provision of the bankruptcy code applies to 
actions brought against the debtor, not actions brought by the 
debtor.  See 11 U.S.C.  362(a)(1); Farley v. Henson, 2 F.3d 273, 
274 (8th Cir. 1993) (``Because the automatic stay applies to 'the 
commencement or continuation . . . of a judicial proceeding 
against the debtor,' it is well established that it does not 
apply to a proceeding brought by the debtor that inures to the 
benefit of the debtor's estate.'').  Accordingly, we reject Wood 
County's suggestion that we stay this action. 

115  McLeod's expert included in his report a request that the 
Commission award damages to McLeod to cover the costs associated 
with litigating the complaint.  See McLeod Report at 38.  
However, McLeod's complaint does not contain a claim for damages.  
Accordingly, we reject McLeod's expert's request and do not award 
any damages to McLeod in this order.