Before the

Federal Communications Commission

**Washington, D.C. 20554**

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| In the Matter of                 | * | WCB/Pricing No. 07-10        |
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**ORDER**

**Adopted: June 28, 2007 Released: June 28, 2007**

By the Chief, Wireline Competition Bureau:

# Introduction

1.  Price cap local exchange carriers (LECs) and certain LECs subject to
    rate-of-return regulation are required by sections 69.3(h) and
    69.3(f)(2) of the Commission's rules to file revisions to their
    interstate tariffs to become effective June 30, 2007, or July 2,
    2007.[^1] In addition, several rate-of-return LECs that are subject
    to section 61.38 of the rules[^2] and that file their own
    traffic-sensitive tariffs filed tariffs. These LECs filed their
    original tariff transmittals on June 15, 2007, or June 22, 2007, and
    subsequent revisions as reflected in Appendix A. AT&T Corporation
    (AT&T), Qwest Communications Corporation (Qwest), Sprint Nextel
    Corporation (Sprint Nextel), and Verizon (the Petitioners) filed
    petitions to suspend and investigate the tariffs of carriers leaving
    the NECA traffic-sensitive pool and filing their own tariffs
    pursuant to section 61.39 of the Commission's rules.[^3] AT&T,
    General Communication Incorporated (GCI), and Verizon[^4] filed
    petitions to suspend and investigate NECA's Tariff No. 5.[^5] On
    June 26, 2007, NECA and a number of the LECs filing pursuant to
    section 61.39 of the Commission's rules filed replies to the
    petitions.[^6]

2.  In this Order, we suspend for one day and set for investigation the
    switched access rates contained in the 2007 annual access tariffs of
    the carriers listed in Appendices B and C.

# DISCUSSION

3.  The LECs' annual tariff filings are largely compliant with
    Commission rules. Nevertheless, certain tariff filings require
    further inquiry. We find that, in their petition to suspend and
    investigate the LECs' 2007 annual access tariffs, the Petitioners
    raise substantial questions of lawfulness that warrant
    investigation.

4.  *Section 61.39 carriers exiting the NECA traffic-sensitive pool*.
    AT&T, Qwest, [^7] Sprint Nextel, and Verizon argue that the
    Commission must suspend and investigate the tariffs filed by the
    carriers that are leaving the NECA traffic-sensitive pool this year
    and filing tariffs pursuant to section 61.39 of the Commission's
    rules. In support of their filing, the Petitioners contend that they
    have seen a pattern of access stimulation by section 61.39 carriers
    in recent years and they expect that many of the carriers leaving
    the pool will engage in such access stimulation practices.[^8] They
    also note that some of the carriers leaving the traffic-sensitive
    pool, or an affiliate, have engaged in access stimulation in the
    past.[^9] Because section 61.39 carriers establish rates based on
    historical costs (or average schedule settlements) and historical
    demand, the Petitioners contend that the carriers intending to
    engage in access stimulation know that the historical data relied on
    for these tariffs is not a good proxy for future demand.[^10]
    Without suspending and investigating these tariffs, the Petitioners
    contend that the carriers at issue will earn returns that greatly
    exceed that permitted by the Commission's rules, with no remedy
    available because of the deemed lawful provision of section
    204(a)(3) of the Communications Act of 1934, as amended.[^11] As a
    result, Petitioners argue they and their customers are being charged
    excessively high access rates that the carriers at issue share with
    the parties providing the stimulating services.[^12] Petitioners
    also contend that the access stimulation violates the intent of the
    *Small Carrier Tariff Order,* which requires that rates filed by
    small LECs based on historical data be just and reasonable.[^13]

5.  *Reasnor Telephone Company, LLC*. AT&T argues that, while Reasnor's
    local switching rate has decreased, it has more than offset the
    decrease by significant increases to other rates, for example, a
    more than 1000 percent increase in tandem switching and tandem
    switched termination. AT&T states that Reasnor achieved these
    increases by using the recently approved proposed average schedule
    formulas. AT&T argues that these formulas were designed to create
    reasonable rates for carriers whose traffic does not fluctuate, not
    to create just and reasonable rates for access stimulating carriers
    like Reasnor. AT&T asserts that Reasnor is claiming a 107, 236
    percent increase in costs even though its access minutes of use grew
    by 12,717 percent. AT&T therefore urges the Commission to suspend
    Reasnor's tariff and investigate the proper application of its
    average schedule rules.[^14]

6.  *Section 61.38 carriers exiting the NECA traffic-sensitive pool*. On
    our own motion, we conclude that the tariffs of those carriers
    exiting the NECA traffic-sensitive pool and filing their own tariffs
    pursuant to section 61.38 of the Commission's rules raise questions
    of whether rates would remain just and reasonable in the face of
    access stimulation.[^15] Section 61.38 carriers set rates based on
    projected costs and demand and may establish high rates based on low
    demand. If these carriers then enter into access stimulation
    activities, they, like section 61.39 carriers, can generate
    increased revenues that likely would result in rates that are unjust
    and unreasonable, but which would be protected by the deemed lawful
    provision of the Act.[^16] Our review of the access minutes of use
    data for section 61.38 carriers reentering the NECA pool indicates a
    likelihood that some of those carriers have participated in access
    stimulation activities.[^17] We find that this information raises
    substantial questions of the lawfulness of the switched access rates
    filed by carriers under section 61.38 of our rules.

7.  After reviewing the petitions against the tariffs, and on our own
    motion, we conclude that substantial questions of lawfulness exist
    that warrant further investigation of certain of the 2007 annual
    access tariffs. We accordingly suspend the switched access rates
    contained in the 2007 annual access tariffs of the carriers listed
    in Appendices B and C for one day. The specific issues that will be
    the subject of the investigation will be identified in an upcoming
    designation order and may include, but not be limited to, the issues
    identified in paragraphs 4-6, *supra*. We may also, by order,
    identify discrete issues that do not warrant further investigation.

# *EX PARTE* REQUIREMENTS

8.  This investigation is a permit‑but‑disclose proceeding and subject
    to the requirements of section 1.1206(b) of the rules.[^18] Persons
    making oral *ex parte* presentations are reminded that memoranda
    summarizing the presentations must contain a summary of the
    substance of the presentation and not merely a listing of the
    subjects discussed. More than a one-sentence or two-sentence
    description of the views and arguments presented is generally
    required.[^19]

# ORDERING CLAUSES 

9.  ACCORDINGLY, IT IS ORDERED that, pursuant to section 204(a) of the
    Communications Act of 1934, as amended, 47 U.S.C. § 204(a), and
    through the authority delegated pursuant to sections 0.91 and 0.291
    of the Commission's rules, 47 C.F.R. §§ 0.91 and 0.291, the switched
    access rates contained in the 2007 annual access tariffs of the
    carriers listed in Appendices B and C are SUSPENDED for one day and
    an investigation IS INSTITUTED.

10. IT IS FURTHER ORDERED that the carriers listed in Appendices B and C
    MAY FILE a supplement advancing the currently scheduled effective
    date to June 29, 2007, and then SUSPEND its tariff revision for one
    day, until June 30, 2007. For this purpose, we waive sections 61.58
    and 61.59 of the Commission's rules, 47 C.F.R. §§ 61.58, 61.59.

11. IT IS FURTHER ORDERED that, pursuant to sections 4(i) and 204(a) of
    the Communications Act of 1934, as amended, 47 U.S.C. §§ 154(i) and
    204(a), and pursuant to the authority delegated by sections 0.91 and
    0.291 of the Commission's rules, 47 C.F.R. §§ 0.91 and 0.291, the
    carriers listed in Appendices B and C SHALL KEEP ACCURATE ACCOUNT of
    all amounts received that are associated with the rates that are
    subject to this investigation.

12. IT IS FURTHER ORDERED that each local exchange carrier required to
    suspend its tariff revisions pursuant to this order SHALL FILE a
    supplement within five business days from the release date of this
    order reflecting the suspension. Carriers should cite the "DA"
    number on the instant order as the authority for the filings.

13. IT IS FURTHER ORDERED that the petitions to suspend and investigate
    the 2007 Annual Access Tariff Filings filed by AT&T Corporation,
    Qwest Communications Corporation, Sprint Nextel Corporation, GCI and
    Verizon ARE GRANTED to the extent indicated herein and otherwise ARE
    DENIED.

> FEDERAL COMMUNICATIONS COMMISSION
>
> Thomas J. Navin
>
> Chief, Wireline Competition Bureau

#   {#section .unnumbered}

# Appendix A-2007 ACCESS FILINGS MADE BY ILECs

**[Issued: June 15, 2007]{.underline}**

**[Price Cap ILECs]{.underline}**

Ameritech Operating Companies Transmittal No. 1629 Tariff FCC No. 2

BellSouth Telecommunications, Inc. Transmittal No. 1080 Tariff FCC No. 1

CenturyTel Operating Companies Transmittal No. 55 Tariff FCC Nos
2&3[^20]

Cincinnati Bell Telephone Transmittal No. 818 Tariff FCC No. 35

Citizens Telecommunications Companies Transmittal No. 174 Tariff FCC No.
1

Embarq Local Operating Companies Transmittal No. 31 Tariff FCC No. 1

Frontier Tel. Of Minnesota and Iowa TRP only

Frontier Telephone of Rochester TRP only

Hawaiian Telcom, Inc. TRP only Tariff FCC No. 1

Iowa Telecommunications Services, Inc. Transmittal No. 64 Tariff FCC No.
1

Micronesian Telecommunications Corp. Transmittal No. 7 Tariff FCC No.1

Nevada Bell Telephone Company Transmittal No. 159 Tariff FCC No. 1

Pacific Bell Telephone Company Transmittal No. 355 Tariff FCC No. 1

Qwest Corporation Transmittal No. 325 Tariff FCC No. 1

Southern New England Telephone Co. Transmittal No. 947 Tariff FCC No. 39

Southwestern Bell Telephone Company Transmittal No. 3212 Tariff FCC No.
73

Valor Telecommunications Enterprises Transmittal No. 65 Tariff FCC Nos.
1

Verizon Telephone Companies Transmittal No. 821 Tariff FCC Nos. 1,

11, 14, 16 & 20 Windstream Telephone System Transmittal No. 6 Tariff FCC
Nos.1&3

**[Issued: June 15, 2007]{.underline}**

**[Non-Price Cap ILECs]{.underline}**

Alliance Communications Cooperative Transmittal Nos. 7 Tariff FCC No.
Alliance Communications Cooperative Transmittal Nos. 8 Tariff FCC No. 1

Beehive Telephone Companies Transmittal No. 34[^21] Tariff FCC No. 1

The Blair Telephone Company Transmittal No. 9[^22] Tariff FCC No. 1

Broadband Network Group Transmittal No. 1 Tariff FCC No. 1

CenturyTel Operating Companies Transmittal No. 55 Tariff FCC No. 1[^23]

Chariton Valley Telephone Corporation Transmittal No 13 Tariff FCC No. 1

Columbus Telephone Company Transmittal No. 13 Tariff FCC No. 1

# Appendix A-2007 ACCESS FILINGS MADE BY ILECs (Cont'd) {#appendix-a-2007-access-filings-made-by-ilecs-contd .unnumbered}

**[Issued: June 15, 2007]{.underline}**

**[Non-Price Cap ILECs]{.underline}**

Consortia Consulting Transmittal No. 1 Tariff FCC No. 1

Dalton Telephone Company Transmittal No. 5[^24] Tariff FCC No. 1

Elsie Communications, Inc. Transmittal No. 1 Tariff FCC No. 1

Etex Telephone Cooperative Transmittal No. 12 Tariff FCC No. 1

Farmers Mutual Telephone Company (ID) Transmittal No. 1 Tariff FCC No. 1

Geneseo Telephone Company Transmittal No. 12 Tariff FCC No. 1

Glenwood Telephone Membership Transmittal No. 3[^25] Tariff FCC No. 1

Great Plains Communications Transmittal No. 84 Tariff FCC No. 3

Gridley Telephone Company Transmittal No. 15 Tariff FCC No. 1

GVNW Inc./ Management Transmittal No. 206 Tariff FCC No. 2

Harrisonville Telephone Company Transmittal No. 38 Tariff FCC No. 2

ICORE Transmittal No. 80 Tariff FCC No. 2

James Valley Cooperative Telephone Co. Transmittal No. 10 Tariff FCC No.
1

John Staurulakis, Inc. (JSI) Transmittal No. 129[^26] Tariff FCC No. 1

John Staurulakis, Inc. (JSI) Transmittal No. 130 Tariff FCC No. 1

Kiesling Associates Transmittal No. 6[^27] Tariff FCC No. 1

National Exchange Carrier Association Transmittal No. 1172 Tariff FCC
No. 5

Royal Telephone Company Transmittal No. 1 Tariff FCC No. 1

South Central Telephone Assn. (Kansas) Transmittal No. 16[^28] Tariff
FCC No. 2

Superior Telephone Cooperative Transmittal No. 2[^29] Tariff FCC No. 1

Tri-County Telephone Association Transmittal No. 9[^30] Tariff FCC No. 1

Union Telephone Company (WY/UT) Transmittal No. 77 Tariff FCC No. 2

United Telephone Association Transmittal No. 6[^31] Tariff FCC No. 1

Wheat State Telephone Company Transmittal No. 3[^32] Tariff FCC No. 1

**[Issued:]{.underline} [June 18, 2007]{.underline}**

GVNW Inc./ Management Transmittal No. 207 Tariff FCC No. 2

# Appendix A-2007 ACCESS FILINGS MADE BY ILECs (Cont'd) {#appendix-a-2007-access-filings-made-by-ilecs-contd-1 .unnumbered}

**[Issued:]{.underline} [June 20, 2007]{.underline}**

Alliance Communications Cooperative Transmittal No. 9 Tariff FCC Nos.
1&2

James Valley Cooperative Telephone Co. Transmittal No. 11 Tariff FCC No.
1

**[Issued:]{.underline} [June 25, 2007]{.underline}**

East Ascension Telephone Company Transmittal No. 13 Tariff FCC No. 1

Smithville Telephone Company Transmittal No. 10 Tariff FCC No. 1

**[Issued: June 28, 2007]{.underline}**

ICORE Transmittal No. 81 Tariff FCC No. 2

**[APPENDIX B-COMPANIES LEAVING NECA AND ASSOCIATED]{.underline}**

**[TRANSMITTALS AFFECTED BY SUSPENSION]{.underline}**

[Alliance Communications Cooperative]{.underline} Transmittal Nos. 7 & 9
Tariff F.C.C. No. 2

[Broadband Network Group, LLC]{.underline} Transmittal No. 1 Tariff
F.C.C. No. 1

Arthur Mutual Telephone Company

Bascom Mutual Telephone Company

Benton Ridge Telephone Company

Buckland Telephone Company

Fort Jennings Telephone Company

Glandorf Telephone Company, Inc.

Kalida Telephone Company, Inc.

Middle Point Home Telephone Company

Ottoville Mutual Telephone Company

Ridgeville Telephone Company

Sherwood Mutual Telephone Association, Inc.

Vaughnsville Telephone Company

[CenturyTel Operating Companies]{.underline} Transmittal No. 55 Tariff
F.C.C. No. 1

CenturyTel of Central Wisconsin, LLC

Spectra Communications Group, LLC

Telephone USA of Wisconsin, LLC

[Consortia Consulting]{.underline} Transmittal No. 1 Tariff F.C.C. No. 1

Beresford Municipal Telephone Company

McCook Cooperative Telephone Company

Roberts County Telephone Cooperative Assn/

RC Communications, Inc.

Western Telephone Company

[Elsie Communications, Inc]{.underline}. Transmittal No. 1 Tariff F.C.C.
No. 1

[Farmers Mutual Telephone Company (ID)]{.underline} Transmittal No. 1
Tariff F.C.C. No. 1

[ICORE]{.underline} Transmittal No. 80 Tariff F.C.C. No. 2

Jordan-Soldier Valley Telephone Company

Killduff Telephone Company

Lynnville Telephone Company

Northeast Iowa Telephone Company, Inc.

Sully Telephone Association

**[APPENDIX B-COMPANIES LEAVING NECA AND ASSOCIATED]{.underline}**

**[TRANSMITTALS AFFECTED BY SUSPENSION (CONT'D)]{.underline}**

[John Staurulakis, Inc.]{.underline} Transmittal No. 130 Tariff F.C.C.
No. 1

Camden Telephone & Telgraph Company, Inc.

Chesnee Telephone Company

Gearheart Communications Company, Inc.

d/b/a Coalfields Telephone Company

Mt. Vernon Telephone Company

Oklahoma Communication Systems, Inc.

Skyline Telephone Membership Corporation

Tennesee Telephone Company

Yadkin Valley Telephone Membership Corp

[Royal Telephone Company]{.underline} Transmittal No. 1 Tariff F.C.C.
No. 1

[Windstream Telephone System]{.underline} Transmittal No. 6 Tariff
F.C.C. No. 1

Windstream Communications Kerrville, L.P

Windstream Standard, Inc.

**[APPENDIX C-COMPANIES WITH EXISTING TARIFFS]{.underline}**

**[AFFECTED BY SUSPENSION]{.underline}**

[ICORE]{.underline} Transmittal Nos. 80 & 81 Tariff F.C.C. No. 2

Reasnor Telephone Company

[CenturyTel Operating Companies]{.underline} Transmittal No. 55 Tariff
F.C.C. No. 1

CenturyTel of Wisconsin

[^1]: 47 C.F.R. §§ 69.3(h) and 69.3(f)(2).

[^2]: 47 C.F.R. § 69.38.

[^3]: July 2007 Annual Access Charge Tariff Filings, Petition of AT&T
    Corp. to Suspend and Investigate LEC Tariffs Filed Pursuant to
    Section 61.39, WCB/Pricing 07-10 (filed June 22, 2007) (AT&T
    Petition) (AT&T also petitioned to suspend and investigate Reasnor
    Telephone Company and Union Telephone Company); July 2007 Annual
    Access Charge Tariff Filings, Qwest Conditional Petition to Suspend
    and Investigate, WCB/Pricing 07-10 (filed June 19, 2007) (Qwest
    Petition); July 2007 Annual Access Charge Tariff Filings, Petition
    to Suspend and Investigate of Sprint Nextel Corporation, WCB/Pricing
    07-10 (filed June 22, 2007) (Sprint Nextel Petition); July 2007
    Annual Access Charge Tariff Filings, Petition of Verizon to Suspend
    and Investigate Tariff Filings, WCB/Pricing 07-10 (filed June 19,
    2007) (Verizon Petition).

[^4]: The Verizon companies participating in this filing are the
    regulated, wholly-owned subsidiaries of Verizon Communications, Inc.

[^5]: July 2007 Annual Access Charge Tariff Filings, Petition of AT&T
    Corp. to Suspend for One Day and Investigate National Exchange
    Carrier Association Tariff F.C.C. No. 5, Transmittal No. 1172,
    WCB/Pricing 07-10 (filed June 22, 2007) (AT&T NECA Petition); July
    2007 Annual Access Charge Tariff Filings, Petition of GCI to Reject,
    or, in the Alternative to Suspend and Investigate Tariff Filing,
    WCB/Pricing 07-10 (filed June 22, 2007); July 2007 Annual Access
    Charge Tariff Filings, Petition of Verizon to Suspend NECA Tariff
    F.C.C. No. 5, Access Service, Transmittal No. 1172, WCB/Pricing
    07-10 (filed June 22, 2007) (Verizon NECA Petition).

[^6]: July 2007 Annual Access Charge Tariff Filings, National Exchange
    Carrier Association Reply, WCB/Pricing 07-10 (filed June 26, 2007)
    (NECA Reply); July 2007 Annual Access Charge Tariff Filings, Reply
    of Group of Companies Under Consortia Consulting Tariff F.C.C. No. 1
    to Petitions to Suspend and Investigate, WCB/Pricing 07-10 (filed
    June 26, 2007) (Consortia Reply); July 2007 Annual Access Charge
    Tariff Filings, Reply of Alliance Communications Cooperative, Inc.
    to Petitions to Suspend and Investigate, WCB/Pricing 07-10 (filed
    June 26, 2007) (Alliance Reply); July 2007 Annual Access Charge
    Tariff Filings, Reply of Elsie Communications, Inc. to Petitions to
    Suspend and Investigate, WCB/Pricing 07-10 (filed June 26, 2007)
    (Elsie Reply); July 2007 Annual Access Charge Tariff Filings,
    Consolidated Reply to the Petitions to Suspend and Investigate Filed
    by Qwest Communications Corporation, AT&T Corp., Sprint Nextel
    Corporation and Verizon, WCB/Pricing 07-10 (filed June 26, 2007)
    (Broadband Network Group/ICORE Reply).

[^7]: The Qwest petition is conditional, requesting suspension and
    investigation only if the carriers refuse to certify that they have
    no reason to believe that their rates will increase by 300 percent
    during the tariff period, and that if they do, the carrier will file
    revised tariff rates. Qwest Petition at 9.

[^8]: *See, e.g.,* AT&T Petition at 10; Verizon Petition at 10;

[^9]: *See, e.g.*, AT&T Petition at 14; Verizon Petition at 13.

[^10]: *See, e.g.*, Qwest Petition at 6-7.

[^11]: 47 U.S.C. § 204(a)(3). *See* Sprint Nextel Petition at 2-3;

[^12]: *See, e.g.*, Sprint Nextel Petition at 10.

[^13]: *Regulation of Small Telephone Companies*, 2 FCC Rcd 3811, 3812,
    para. 7 (1987) (*Small Carrier Tariff Order*).

[^14]: AT&T Petition at 23.

[^15]: 47 C.F.R. § 61.38. We note that the group of Century Tel
    companies exiting the NECA pool filed averaged rates along with
    CenturyTel of Wisconsin, which had an existing tariff. Therefore, we
    also suspend the tariff of CenturyTel of Wisconsin.

[^16]: *See* 47 U.S.C. § 204(a)(3).

[^17]: *See* NECA Reply, Appendix 1.

[^18]: 47 C.F.R. § 1.1206(b).

[^19]: 47 C.F.R. § 1.1206(b)(2).

[^20]: Century's Tariff FCC Nos. 2 & 3 are subject to price cap
    regulation.

[^21]: This filing cancels Beehive's access tariff.

[^22]: This filing cancels Blair's access tariff.

[^23]: Century's Tariff FCC No. 1 is subject to rate of return
    regulation.

[^24]: This filing cancels Dalton's access tariff.

[^25]: This filing cancels Glenwood's access tariff.

[^26]: This filing is only regulations for carriers entering JSI's
    access tariff.

[^27]: This filing cancels Kiesling's access tariff.

[^28]: This filing cancels South Central- Kansas' access tariff.

[^29]: This filing cancels Superior's access tariff.

[^30]: Tri-County's filing was made on 16 days' notice, effective
    7/1/07.

[^31]: This filing cancels United Telephone's access tariff.

[^32]: This filing cancels Wheat State's access tariff.