**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

In the Matter of )

) CC Docket No. 98-108

Beehive Telephone Company, Inc. )

Beehive Telephone, Inc. Nevada )

) Transmittal No. 11

Tariff F.C.C. No. 1 )

**MEMORANDUM OPINION AND ORDER**

**Adopted: December 1, 1998 Released: December 1, 1998**

By the Commission: Commissioner Furchtgott-Roth issuing a statement.

**I. INTRODUCTION**

In this Memorandum Opinion and Order, we conclude our investigation of
Transmittal No. 11 filed on June 16, 1998 by Beehive Telephone Company,
Inc. and Beehive Telephone, Inc. of Nevada (collectively \"Beehive\").
Beehive is a small company, with under one thousand access lines. We
find that Beehive has failed to meet its burden of proof under Section
204(a)(1) of the Communications Act of 1934, as amended (Act), 47 U.S.C.
§ 204(a)(1), to justify its proposed tandem switched transport facility,
tandem switched transport termination, and transport interconnection
charge (TIC) rates. We further find for the reasons discussed below that
we are unable to rely on supporting information submitted by Beehive for
the purpose of prescribing rates. We, therefore, prescribe rates for
these services based on NECA\'s rates for these services. We direct
Beehive to refund to its customers, with interest, the difference
between NECA\'s rates and the rates filed by Beehive in June, 1998.
Based on the inconsistent and irregular accounting practices we
discovered in Beehive\'s cost support data, we further direct the Common
Carrier Bureau (Bureau) to institute an investigation pursuant to
Section 205 of the Act for purposes of determining whether Beehive is in
violation of any part of the Act based upon its Part 32 accounting
methodologies and entries, Part 64 cost allocation methodologies, and
separations methodologies.[^1]

**II. BACKGROUND**

Prior to 1994, Beehive charged interstate local switching and transport
rates filed by the National Exchange Carrier Association (NECA) on
behalf of generally smaller incumbent local exchange carriers (LECs)
that participate in NECA\'s traffic-sensitive access tariff. In 1994,
Beehive established its own interstate access rates pursuant to Section
61.39 of the Commission\'s rules,[^2] which permits a LEC that qualifies
as a small telephone company to file its own tariff or traffic sensitive
interstate access charges under simpler rules than those that apply to
larger carriers.[^3] This methodology generally permits qualifying LECs
to base their rates for the next two access tariff years on their actual
costs and demand during the previous two calendar years.

On July 22, 1997, Beehive filed Transmittal No. 6, which proposed the
rates, terms, and conditions under which Beehive would offer interstate
access service for the 1997-1999 access years.[^4] The Common Carrier
Bureau suspended Beehive\'s tariff filing on August 5, 1997, concluding
that it raised significant questions of lawfulness, including whether
the proposed rates were unreasonably discriminatory in violation of
Section 202(a) of the Act; whether the proposed rates were unjust and
unreasonable in violation of Section 201(b) of the Act; and whether
Beehive had shown that its proposed traffic sensitive switched access
rates were justified under the existing interstate access charge
rules.[^5]

On January 6, 1998, we released the *Beehive Tariff Investigation
Order,Transmittal No. 6,*[^6] concluding our investigation of the rates
filed by Beehive in its 1997 annual access tariff. We found that Beehive
had failed to provide an adequate explanation for the sharp increases in
its operating costs in 1995 and 1996 and that its premium and nonpremium
local switching rates were unjust and unreasonable.[^7] In that order,
we disallowed Beehive\'s operating expenses in excess of 25 percent of
its total plant in service (TPIS) and prescribed rates for Beehive\'s
premium and non-premium local switching services.[^8] We calculated the
average ratio of operating expenses to total plant in service among
companies with a comparable number of access lines to Beehive in 1995 or
1996 using data filed with NECA.[^9] We found that the average total
operating expense to total plant in service ratio among smaller LECs (of
which NECA is largely comprised) with a comparable number of access
lines as Beehive was 21.55 percent. To account for the possibility that
Beehive is a high cost carrier, we used an expense to total plant in
service ratio of 25 percent.[^10] We also directed Beehive to refund the
difference between the actual local switching revenues that it obtained
between August 6, 1997 and December 31, 1997 and the local switching
revenues that it would have obtained during this period based on the
rates prescribed by the Commission. Beehive filed a petition for
reconsideration of the *Beehive Tariff Investigation Order* on February
5, 1998 seeking reconsideration of the rate prescriptions and the refund
requirements. On May 6, 1998, we released the *Beehive Reconsideration
Order,*which generally denied Beehive\'s petition in part but found that
we should have used Beehive\'s total 1995/1996 interstate premium and
non-premium local switching access minutes.[^11]

On December 17, 1997, Beehive filed Transmittal No. 8, which proposed to
revise its interstate access service rates in accordance with the
Commission\'s *Access Charge Reform Order*.[^12] Beehive\'s Transmittal
No. 8 proposed per minute switching rates of \$0.028252 for premium
local switching and \$0.01815 for non-premium local switching.[^13]
Beehive also proposed to reduce its local transport facility rates by
approximately 20 percent, and to raise its local transport termination
rates by approximately 50 percent. On December 30, 1997, the Bureau
suspended Beehive\'s Transmittal No. 8 for one day and initiated an
investigation into the lawfulness of Beehive\'s tariff filing.[^14]

On March 13, 1998, the Bureau released the *Beehive Designation Order*,
which designated for investigation whether Beehive\'s premium and
non‑premium local transport facility, local transport termination, and
local switching rates filed in Transmittal No. 8 were just and
reasonable. The Bureau directed Beehive to file additional supporting
documentation for its actual demand and costs during recent years and
designated many of the same issues that were the subject of the
investigation of Beehive\'s 1997 annual access tariff.[^15] The Bureau
also directed Beehive to provide detailed cost and accounting data for
calendar years 1994, 1995, and 1996.[^16]

On June 1, 1998, the Commission released a Memorandum Opinion and Order
concluding its investigation of Beehive\'s Transmittal No. 8.[^17] In
that Order, we found that Beehive failed to meet its burden of proof
under Section 204(a)(1) of the Act, and further found that we could not
rely on Beehive\'s support documentation for the purpose of prescribing
rates.[^18] We therefore prescribed rates for the services set forth in
Beehive\'s Transmittal No. 8 based on the industry averages for
comparably sized smaller LECs. On September 28, 1998, the Commission
summarily rejected Beehive\'s petition for reconsideration of *Beehive
Tariff Investigation Order, Transmittal No. 8*.[^19]

On June 16, 1998, Beehive filed Transmittal No. 11 proposing to revise
its FCC Tariff No. 1 to establish rates for tandem switched transport
facility, tandem switched transport termination, and transport
interconnection (TIC) pursuant to the Commission\'s *Access Charge
Reform Order*. Beehive also proposed increasing premium and non-premium
local switching rates above prescribed levels. Beehive included cost and
investment data for calendar years 1996 and 1997 in support of its
filing. On June 30, 1998, the Bureau released the *Beehive Suspension
Order* rejecting Beehive\'s proposed local switching rates and
suspending that portion of the tariff that proposed tandem switched
transport rates pursuant to the *Access Charge Reform Order*.[^20] On
October 7, 1998, the Bureau released the *Beehive Designation Order,
Transmittal No. 11* designating for investigation Beehive\'s proposed
rates for tandem switched transport facility, tandem switched transport
termination, and TIC.[^21] The Order required Beehive to justify its
rates. The Order also required Beehive to comply with our regulations as
set forth in § 61.39(a) by providing explanations to apparent
inconsistencies in Transmittal No. 11.[^22] As examples of such
inconsistencies, Beehive was required to explain: (1) why it moved
substantial amounts of its expenses from Utah to Nevada and from
corporate operations and plant specific accounting categories to
customer operations expense accounts; and (2) why it reported an
increase of over 26 percent in net plant from Transmittal No. 8 to
Transmittal No. 11. Beehive filed its Direct Case (Beehive Direct Case)
on October 23, 1998. AT&T filed an opposition (AT&T Opposition) to
Beehive\'s Direct Case on October 30, 1998. On November 6, 1998, Beehive
filed a Rebuttal (Beehive Rebuttal).

**III. PLEADINGS**

**A. Calculation of Proposed Tandem Switched Transport Rates and the TIC
Rate**

Beehive states that it calculated its tandem switched transport facility
rates, tandem switched transport termination rates, and TIC rates on the
basis of historical data for the years 1996 and 1997.[^23] For each rate
element under the old transport structure (premium and non-premium local
transport facility and local transport termination), Beehive contends it
multiplied its access minutes of use by NECA\'s tariffed rate to
determine \"an extended price.\" This sum was, according to Beehive,
divided into Beehive\'s transport revenue requirement. Beehive
multiplied the ratio from this calculation by NECA\'s rates for the new
transport restructure elements. This produced Beehive\'s rates for those
elements.[^24]

AT&T contends that Beehive failed to meet its burden of proof under
Section 204(a)(1) of the Communications Act to show that its proposed
rates are just and reasonable. The Commission, argues AT&T, should
either prescribe rates as in Transmittal Nos. 6 and 8, or allow a
partial authorization of Beehive\'s proposed rates.[^25]

Beehive contends that its rates are lawful and reasonable.[^26] If,
however, we decide to prescribe Beehive\'s rates, Beehive argues that we
must make available to it the underlying data and calculations of the
methodology so that Beehive can comment.

**B. Increase of Interstate Net Plant for Beehive Nevada in 1996**

Beehive admits that it reported an increase in interstate net plant from
Transmittal No. 8 to Transmittal No. 11 of over 26 percent.[^27] Beehive
contends that this increase was the result of including the weighted
dial equipment minutes (DEM) allocator, rather than the measured or
unweighted DEM allocator in the development of the switching revenue
requirement.[^28] Beehive states that it has revised its rates using an
unweighted DEM allocator, and set forth its revised rates in its Direct
Case.[^29]

AT&T contends that Beehive\'s cost support data does not support the
position that the use of a weighted DEM allocator could account for
Beehive\'s reported 26 percent increase in interstate net plant.[^30]
AT&T compared Beehive\'s original Transmittal No. 11 cost support data
with revised cost support data filed by Beehive, and argues that the
data supports less than a 3 percent increase. Therefore, states AT&T,
Beehive has not adequately explained the 26 percent increase in
interstate net plant.

Beehive states in its Rebuttal that AT&T wrongly assumed that the entire
26 percent increase in interstate net plant was associated with the
incorrect use of the weighted DEM allocator.[^31] Beehive argues that
the majority of the increase is attributable to additional plant being
placed in service.[^32]

**C. Movement of Expenses Between States and Accounts**

In its Direct Case, Beehive argues that its Transmittal No. 11 does not
have \"the problems the Commission discovered in the Transmittal No. 8
documentation.\"[^33] It contends that the Commission erred when it
tentatively concluded that Beehive merely moved substantial expenses
from Utah to Nevada and between different expense accounts.[^34] The
only substantial movement between accounts Beehive admits to was a
reclassification of \$1,008,000 that it paid to JEI Enterprises, Inc.
(JEI) in 1996 under a switching equipment lease. This reclassification
was done by Beehive\'s auditor in concurrence with the investigation of
Beehive\'s Transmittal No. 8.[^35] Beehive states that the auditor
examined the evidence supporting Beehive\'s classification of the 1996
expense as plant specific and corporate operating expenses, and
reclassified it to Account 6610 (Marketing).[^36] Beehive argues that
the 1996 cost data for Transmittal No. 8 was based upon its pre-audit
accounting records, and that subsequent adjustments \"created the
appearance\" that it was transferring expenses between Beehive Utah and
Beehive Nevada.[^37] Beehive contends that the rates it filed with
Transmittal No. 11 are based on costs that are properly recorded in
accordance with Part 32. It contends that changes made to the 1996
accounting data to comply with Part 32 cannot be cited to as a cause for
rejecting the cost support data for Transmittal No. 11.

Beehive contends that differences in reported 1996 operating expenses
between Transmittal Nos. 8 and 11 show only that Beehive Utah\'s
reported 1996 operating expenses decreased by \$173,409, while Beehive
Nevada\'s increased \$40,969. Beehive contends that these differences
are not significant.[^38]

AT&T argues that reclassification is not relevant, because Beehive has
not justified the inclusion of these expenses in any account.[^39] AT&T
contends that Beehive ignored a Commission finding that the \"lease
agreement\" between JEI and Beehive had \"few of the normal terms and
conditions of an operating lease,\" and that Beehive had \"not provided
any explanation for its relationship with JEI that would rebut concerns
raised by its accounting treatment of JEI-related costs.\"[^40] AT&T
further argues that Beehive does not explain nor justify the decrease in
Beehive Utah\'s 1996 operating expenses in the amount of \$173,409 or
Beehive Nevada\'s 1996 increase in operating expenses of \$40,969.[^41]

In its Rebuttal, Beehive argues that it fully addressed the Bureau\'s
inquiries regarding changes in Beehive\'s reported expenses and accounts
between Transmittal No. 8 and Transmittal No. 11.[^42] However, to
\"further clarify\" its account adjustments, Beehive filed with its
Rebuttal an attachment allegedly reconciling the adjustments made
between Transmittal No. 8 and Transmittal No. 11. Further, Beehive
contends that, contrary to AT&T\'s allegation, it did not ignore our
findings with respect to the lease of switching equipment from JEI.
Beehive argues that: (1) it did address the JEI issue in its Direct Case
in detail; (2) reclassification of the JEI expenses were prompted by
Commission inquiries with respect to the JEI lease; and (3) the
Commission has never ruled that the JEI expenses were not fully
recoverable if they were recorded in the appropriate expense
account.[^43]

**IV. DISCUSSION**

Beehive has failed to meet its burden of proof under Section 204(a)(1)
of the Act and does not justify its proposed tandem switched transport
facility, tandem switched transport termination, and TIC rates. Further,
we are unable to rely on supporting information submitted by Beehive for
the purpose of prescribing rates and, therefore, prescribe rates for
Beehive based on industry averages that pertain to small LECs like
Beehive, namely NECA\'s effective rates for these services.[^44]

Beehive\'s supporting cost evidence fails to justify the proposed rates.
The filing of data without any explanation of how the rates at issue
were calculated is of limited use to the staff or the Commission and
does not permit the staff to properly evaluate whether the proposed
tandem switched rates are just and reasonable. For example, under
Beehive Transmittal No. 8, \$1.008 million was recorded as lease expense
to JEI under the plant specific operations and corporate operations
expense categories for Beehive Utah. Under Beehive Transmittal No. 11,
the approximate \$1 million has been shifted to marketing expense with
the explanation that this equipment is leased to \"stimulate traffic to
terminate on its system.\"[^45] Beehive\'s auditor apparently determined
that the equipment leased from JEI was not used by Beehive as
telecommunications plant, and therefore reclassified it as a marketing
expense. In this particular case, we find that Beehive\'s lease of
equipment that is used, not to provide service to access customers, but
to do something else that causes IXC\'s customers to make interexchange
calls, thereby \"stimulating traffic\" to terminate on Beehive\'s
system, is not an allowable marketing expense and may not be included in
the rates that IXCs must pay to Beehive in order to terminate their
customers\' calls to numbers served by Beehive.

Beehive explains its alleged increase in interstate net plant for
Beehive Nevada as an error in its jurisdictional separations
procedures,[^46] and states that it corrected its error in recalculated
rates.[^47] Part 36 specifies that tandem switching equipment costs that
cannot be directly assigned to either the state or interstate
jurisdiction are to be allocated between the jurisdictions based on
relative minutes of use.[^48] Beehive is required to use relative
minutes of use rather than DEM to allocate joint investment. Beehive
therefore improperly calculated its investment costs resulting in a
shift of investment costs from the state to the interstate jurisdiction.
This means that the investment in Beehive\'s cost data is overstated
resulting in an overstated return component in its revenue requirement.
Since related expenses normally \"track\" the investment, there is a
strong possibility that switch-related interstate expenses are also
overstated. Beehive provides revised rates but fails to show how the
costs were used in calculating its revised rates. Once again, this is
further evidence of what appears to be Beehive\'s ongoing practice of
failing to explain its justifications for use of various data in the
development of its access rates.[^49]

We find that Beehive\'s cost support data are unreliable, do not support
its proposed rates, and cannot be used as a basis to prescribe rates for
its tandem switched transport facility, tandem switched transport
termination, and TIC charges. Despite our admonitions and findings in
our two recent decisions concluding the investigations of Beehive\'s
proposed interstate access charges,[^50] Beehive has once again failed
to provide the necessary data and explanations to support a proposed set
of access charges. The data submitted by Beehive in its tariff filing
are often unexplained and confusing. For example, Beehive provides no
indication of what historical demand for tandem switch related charges
was used in calculating its proposed tandem switch related rates. Other
cost support data submitted by Beehive are similarly deficient. We
therefore require Beehive to use the premium access rates set forth by
NECA in its Tariff F.C.C. No. 5 (effective July 1, 1998) for its tandem
switched transport facility, tandem switched transport termination, and
TIC charges, until Beehive\'s next biennial access filing.[^51] Beehive
must refund the difference between its filed rates and the NECA rates.

We also direct the Bureau to institute within 90 days after the release
of this Memorandum Opinion and Order an investigation pursuant to
Section 205 and other appropriate provisions of the Act for purposes of
determining whether Beehive is in violation of any part of the Act based
upon its: (1) Part 32 accounting methodologies and entries; (2) Part 64
cost allocation methodologies; and (3) separations methodologies.[^52]
Further, on the basis of that investigation, we will determine whether
further rate adjustments may be necessary or appropriate.

**V. CONCLUSION AND ORDERING CLAUSES**

For the reasons stated herein, **WE FIND** that the rates subject to
this investigation and identified in this Order, of Beehive Telephone
Company, Inc. and Beehive Telephone, Inc. Nevada are unlawful.

**IT IS ORDERED** that Beehive Telephone Company shall file tariffs
within five business days of the release date of this Memorandum Opinion
and Order, establishing the tandem switched transport facility, tandem
switched transport termination, and transport interconnection charge
rates prescribed herein.

Accordingly, **IT IS FURTHER ORDERED** that, pursuant to Sections 4(i),
201(b), 203, 204(a), and 205(a) of the Communications Act, 47 U.S.C. §§
4(i), 201(b), 203, 204(a), 205(a), Beehive Telephone Company, Inc. and
Beehive Telephone, Inc. Nevada **SHALL REFUND** to its customers with
compounded daily interest, the difference between Beehive\'s filed rates
and the rates directed prescribed herein, from the effective date of the
Beehive\'s tariff up to but not including the effective date of
Beehive\'s tariff that is filed pursuant to this Memorandum Opinion and
Order. Interest shall be computed on the basis of interest specified by
the United States Internal Revenue Service.

**IT IS FURTHER ORDERED** that Beehive Telephone Company must submit its
plans for issuing refunds to the Common Carrier Bureau for review and
approval pursuant to our delegation of authority under Section 0.291 of
the Commission\'s rules, 47 C.F.R. § 0.291, within 30 calendar days of
the release date of this Memorandum Opinion and Order.

**IT IS FURTHER ORDERED** that pursuant to Section 204(a) of the
Communications Act, 47 U.S.C. § 204(a), the investigation instituted by
the Common Carrier Bureau in CC Docket No. 98-108 for Beehive Telephone
Company, Inc. and Beehive Telephone, Inc. Nevada, Transmittal No. 11
**IS TERMINATED.**

**IT IS FURTHER ORDERED** that pursuant to Section 205 of the
Communications Act, 47 U.S.C. § 205, the Common Carrier Bureau institute
within 90 calendar days of the release date of the Memorandum Opinion
and Order an investigation for Beehive Telephone Company, Inc. and
Beehive Telephone, Inc. Nevada for purposes of determining whether
Beehive is in violation of any part of the Act based upon its Part 32
accounting methodologies and entries, Part 64 cost allocation
methodologies, and separations methodologies.

FEDERAL COMMUNICATIONS COMMISSION

Magalie Roman Salas

Secretary

**SEPARATE STATEMENT OF**

**COMMISSIONER HAROLD FURCHTGOTT‑ROTH**

**Re: *Beehive Telephone Company, Inc., CC Docket 98-108***

While I join in today\'s Order, I write separately to express my concern
with the Commission\'s decision-making process. This item has a
five-month statutory deadline of today, but was not circulated until
last Wednesday. I am becoming increasingly concerned that the
Commission\'s internal procedures that typically limit the majority of
Commissioners\' input until after an item has been fully drafted and
presented is not only precluding full consideration of important issues
by the entire Commission in a timely manner, but ultimately delaying the
decision-making process. Indeed, in such a rushed environment, the
Commission may not be having an opportunity to fully appreciate the
broader ramifications of their actions, which may cause further delay in
subsequent Orders dealing with related issues.[^53] I look forward to
working with my colleagues to attempt to rectify this situation.

[^1]: ^?^ 47 U.S.C. § 205.

[^2]: ^?^ 47 C.F.R. § 61.39.

[^3]: ^?^ Small telephone companies are defined as those carriers with
    fewer than 50,000 access lines that also are part of NECA Subset 3,
    as defined by Section 69.602(a)(3) of the rules, 47 C.F.R. §
    69.602(a)(3). *See Regulation of Small Telephone Companies*, CC
    Docket No. 86-467, Report and Order, 2 FCC Rcd 3811 (1987).

[^4]: ^?^ Beehive Access Tariff FCC No. 1, Transmittal No. 6, (filed
    July 22, 1997).

[^5]: ^?^ *Beehive Telephone Company, Inc. and Beehive Telephone, Inc
    Nevada, Tariff F.C.C. No. 1, Transmittal No. 6*, CC Docket No.
    97-237, Suspension Order, 12 FCC Rcd 11695 (1997).

[^6]: ^?^ *Beehive Telephone Company, Inc. and Beehive Telephone, Inc.
    Nevada, Transmittal No. 6*, CC Docket 97-237, Memorandum Opinion and
    Order, 13 FCC Rcd 2736 (1998) (*Beehive Tariff Investigation Order,
    Transmittal No. 6).*

[^7]: ^?^ *Beehive Tariff Investigation Order, Transmittal No. 6* at ¶¶
    14, 16.

[^8]: ^?^ *Beehive Tariff Investigation Order, Transmittal No. 6* at ¶
    25.

[^9]: ^?^ *Beehive Tariff Investigation Order, Transmittal No. 6* at
    ¶ 18.

[^10]: ^?^ *Beehive Tariff Investigation Order, Transmittal No. 6* at
    ¶ 18.

[^11]: ^?^ *Beehive Telephone Company, Inc. and Beehive Telephone, Inc.
    Nevada*, CC Docket No. 97-237, Order on Reconsideration, 13 FCC Rcd
    11795 at ¶ 3 (1998) (*Beehive Reconsideration Order*).

[^12]: ^?^ *Access Charge Reform* *Order*, CC Docket No. 96-262, First
    Report and Order, 12 FCC Rcd 15982 (1997) (*Access Charge Reform
    Order*). On December 23, 1997, AT&T Corp. (AT&T) filed a petition to
    suspend and investigate Beehive\'s tariff. *See* Petition of AT&T
    Corp. on Rate of Return LEC Tariff Filings at 6 (filed December 23,
    1997) (AT&T Petition). On December 29, 1997, Beehive filed a
    response to AT&T\'s petition. *See* Letter from Russell D. Lukas,
    Attorney for Beehive, to Magalie Roman Salas, FCC, dated December
    29, 1997*.*

[^13]: ^?^ Beehive Access Tariff FCC No. 1, Transmittal No. 8 (filed
    December 17, 1997).

[^14]: ^?^ *Tariffs Implementing Access Charge Reform, Beehive Telephone
    Company*, CC Docket Nos. 97-250 and 97-249, Memorandum Opinion and
    Order, 13 FCC Rcd 163 (1997) (*Access Charge Reform Suspension
    Order*).

[^15]: ^?^ *Beehive Telephone Company, Inc. and Beehive Telephone, Inc.
    Nevada*, CC Docket No. 97-249, Order Designating Issues for
    Investigation, 13 FCC Rcd 5142 (1998) (*Beehive Designation Order,
    Transmittal No. 8*).

[^16]: ^?^ *Id*. at 5146-5147.

[^17]: ^?^ *Beehive Telephone Company, Inc. and Beehive Telephone, Inc.
    Nevada*, CC Docket No. 97-249, Memorandum Opinion and Order, 13 FCC
    Rcd 12275 (1998) (*Beehive Tariff Investigation Order, Transmittal
    No. 8*).

[^18]: ^?^ *Beehive Tariff Investigation Order, Transmittal No. 8* at
    ¶ 1.

[^19]: ^?^ *Beehive Telephone Company, Inc. and Beehive Telephone, Inc.
    Nevada*, CC Docket No. 97-249, Memorandum Opinion and Order, FCC No.
    98-241 (rel. September 28, 1998).

[^20]: ^?^ *Beehive Telephone Company, Inc. and Beehive Telephone, Inc.
    Nevada*, CC Docket No. 98-108, Order, 13 FCC Rcd 12647 (1998).

[^21]: ^?^ *Beehive Telephone Company, Inc. and Beehive Telephone, Inc.
    Nevada*, CC Docket No. 98-108, Order Designating Issues for
    Investigation, DA 98-2030 (rel. Com. Car. Bur., October 7, 1998).
    (*Beehive Designation Order, Transmittal No. 11*).

[^22]: ^?^ *Beehive Designation Order, Transmittal No. 11* at ¶ 10.

[^23]: ^?^ Beehive Direct Case at 25.

[^24]: ^?^ *Id.*

[^25]: ^?^ AT&T Opposition at 8.

[^26]: ^?^ Beehive Rebuttal at 5.

[^27]: ^?^ Beehive Direct Case at 24.

[^28]: ^?^ *Id.*

[^29]: ^?^ *Id*.

[^30]: ^?^ AT&T Opposition at 7.

[^31]: ^?^ Beehive Rebuttal at 4.

[^32]: ^?^ *See* Beehive Rebuttal, Attachment 2.

[^33]: ^?^ Beehive Direct Case at 20.

[^34]: ^?^ *Id*.

[^35]: ^?^ Beehive Direct Case at 21. As noted in the *Beehive
    Designation Order, Transmittal No. 11*, the auditor\'s statement
    only address the representativeness of the balance sheet and income
    statement, and does not address the validity of the cost support
    data or rate development material. *Id*. at ¶ 10.

[^36]: ^?^ *Id.* at 22.

[^37]: ^?^ *Id.* at 23.

[^38]: ^?^ Beehive Direct Case at 21.

[^39]: ^?^ AT&T Opposition at 6.

[^40]: ^?^ AT&T Opposition at 6, citing from *Beehive Tariff
    Investigation Order, Transmittal No. 8*, 13 FCC Rcd at ¶ 15.

[^41]: ^?^ AT&T Opposition at 5.

[^42]: ^?^ Beehive Rebuttal at 3.

[^43]: ^?^ *Id.*

[^44]: ^?^ *See*, *e.g.*, *Tariffs Implementing Access Charge Reform*,
    CC Docket No. 97-250, 13 FCC Rcd 14686 (1998).

[^45]: ^?^ Beehive Direct Case at 21-22.

[^46]: ^?^ Beehive explains that it applied a weighted DEM allocation
    factor rather than a measured, or unweighted, DEM allocation factor.

[^47]: ^?^ Beehive Direct Case at 24.

[^48]: ^?^ 47 C.F.R. §36.124.

[^49]: ^?^ In addition, regarding the shifting of expense between
    companies, Beehive attempts to explain that cost shifts between
    companies somehow result from allocations of joint costs, but its
    explanation is vague and unsupported by any facts. Beehive either
    failed to research the cause of the difference and is unaware of the
    specific causes, or is unwilling to reveal the exact nature of the
    differences to the Commission. This provides additional evidence of
    Beehive\'s inconsistent and irregular accounting and cost allocation
    practices.

[^50]: ^?^ *See* ¶¶ 4 and 7, *infra*.

[^51]: ^?^ *See* NECA F.C.C. Tariff No. 5, § 17.2.2. We will allow
    Beehive to charge a TIC based upon rate band 3, the highest rate
    allowed.

[^52]: ^?^ 47 U.S.C. § 205.

[^53]: ^?^ *See e.g.*, GTE Tel Operating Company Transmittal No 1148, CC
    Docket 98-79, Memorandum and Opinion and Order (rel. October 30,
    1998) (GTE DSL Order).