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Federal Communications Commission
Washington, D.C. 20554
In the matter of )
MCLEODUSA PUBLISHING COMPANY, )
) File No. EB-01-MD-004
WOOD COUNTY TELEPHONE COMPANY, )
MEMORANDUM OPINION AND ORDER
Adopted: March 18, 2002 Released: March 29, 2002
By the Commission: Commissioner Martin issuing a separate
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.
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
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.A. Although It is the Defendant, Wood County Bears
the Burden of Proving the Reasonableness of Its SLI
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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-
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,
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. §
14 SLI Order, 14 FCC Rcd at 11562-63, ¶ 16.
15 SLI Order, 14 FCC Rcd at 11562-63, ¶ 16; 47 C.F.R. §
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.
20 Id. (citing 47 U.S.C. § 208).
21 Id. at 15607, ¶ 106.
22 Id. These categories are defined, infra, at Sections
23 Id. at 15607, ¶ 105; 47 C.F.R. § 64.2333.
24 SLI Order, 14 FCC Rcd at 15607, ¶ 106.
27 Complaint at ¶ 12 and Exhibit 13; Joint Statement at ¶ 9.
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.
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.
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
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.
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
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
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
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
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
91 McLeod Report at 16-17.
92 Id. (citing Johnson Dep. at 214-25 and 221-22).
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
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.
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
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.
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.