Before the

**Federal Communications Commission**

**Washington, D.C. 20554**

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| In the Matter of                 | ) | CC Docket No. 01-206          |
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| 2001 Annual Access Tariff        | ) |                               |
| Filings                          |   |                               |
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|                                  | ) |                               |
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|                                  | ) |                               |
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|                                  | ) |                               |
+----------------------------------+---+-------------------------------+

**ORDER DESIGNATING ISSUES**

**FOR INVESTIGATION**

**Adopted:** August 28, 2001 **Released:** August 29, 2001

**Direct Case Due Date:** September 12, 2001

**Oppositions to Direct Case Due Date:** September 26, 2001

**Rebuttal Due Date:** October 3, 2001

By the Chief, Common Carrier Bureau:

# INTRODUCTION

1.  On July 2, 2001, we released the *2001 Annual Access Tariff Filings
    Suspension Order*,[^1] which, *inter alia*, suspended for five
    months and set for investigation the rates for the traffic sensitive
    basket filed by Moultrie Independent Telephone Company, Inc.
    (Moultrie). In the *2001 Annual Access Tariff Filings Suspension
    Order*, we also suspended for one day several local exchange
    carriers' (LECs') 2001 annual access tariffs in certain areas,
    imposed an accounting order, and initiated an investigation into the
    lawfulness of a number of issues raised by these tariff filings. We
    subsequently reconsidered on our own motion our decision to suspend
    and investigate the proposed multi-line business subscriber line
    charges of Ameritech Operating Companies, Frontier Telephone of
    Rochester, Inc., Pacific Bell Telephone Company, Qwest
    Communications, Inc., and Sprint Local Telephone
    Companies-Nevada.[^2]

2.  In this Order, we designate for investigation issues regarding
    Moultrie's treatment of costs related to the sale/lease back of
    assets to and from an affiliated company, as reflected in the
    traffic sensitive rates submitted by Moultrie in its tariff revision
    in Transmittal Number 4 to Tariff FCC Number 1. We also designate
    for investigation issues regarding ALLTEL Telephone Systems'
    (ALLTEL's) derivation of a dial equipment minutes (DEM) allocation
    factor in setting local switching rates in Transmittal Number 90 to
    its Tariff FCC Number 1.

# issues designated for investigation

## Moultrie's Calculation of Sale/Lease Back Costs

### Background

3.  Moultrie is a rural independent LEC serving 853 access lines in
    central Illinois.[^3] In 1997, Moultrie transferred ownership of
    certain non-loop-related assets to an affiliate and leased them
    back.[^4] This transaction was designed to maximize Moultrie's USF
    support recovery.[^5] In reporting the transaction to NECA for
    determining its USF support allocation, Moultrie applied the
    Commission's part 32 accounting rules, which would allow Moultrie to
    remove the investment of the sold assets from its cost calculations
    while including the lease payments to the affiliate in its operating
    expenses. As a result of this transaction, Moultrie's loop cost and
    expense adjustment data for1997 increased significantly.[^6] The
    calculation used to derive USF loop costs compares a company's
    loop-related investment to total investment. After the sale of its
    non-loop assets, Moultrie's loop investment represented a much
    higher percentage of its total company investments. Specifically,
    the sale/lease-back transaction as reported by Moultrie for purposes
    of calculating USF support would have increased Moultrie's USF
    support by 2887 percent, from \$15 per loop per year to \$433 per
    loop per year.[^7]

4.  On March 8, 1999, NECA sought a determination from the Common
    Carrier Bureau as to the calculation of USF expense adjustments when
    affiliate sale/lease-back arrangements are involved.[^8] NECA noted
    that Moultrie's lease rates were in conformance with the
    Commission's part 32 rules, but questioned whether Moultrie should
    have applied section 36.2(c)(2) of the Commission's rules, which
    applies to property rental that is substantial in amount. Section
    36.2(c)(2) applies to affiliate sale/lease-back arrangements for
    cost separation purposes, and requires the seller/transferor to
    include the property and related expenses and exclude rent expenses
    from its own account.[^9] Moultrie filed a Petition for Declaratory
    Ruling on March 29, 1999, seeking clarification of the "patent
    ambiguity" between sections 32.27(a)-(c) and 36.2(a) and (c) of the
    Commissions rules.[^10]

5.  The Bureau provided guidance on this issue by letter on August 4,
    1999.[^11] According to the Bureau, subpart F of part 36 of the
    Commission's rules governs USF.[^12] Section 36.2 of part 36 sets
    out the basic principles that govern all of part 36, including
    subpart F.[^13] Therefore, the underlying principle of section
    36.2(c)(2) regarding treatment of property sold to and rented from
    affiliates applies to USF expense adjustment computations under part
    36.[^14] The Bureau further stated that Moultrie's sale/lease-back
    arrangement described by NECA should be accounted for under section
    36.2(c)(2), i.e., by including the property and related expenses
    with, and excluding the rent expenses from, the carrier's regulated
    telephone operations.[^15]

6.  Based upon this guidance, NECA requested Moultrie to file amended
    cost studies reflecting the sale/lease-back arrangement in
    accordance with section 36.2(c)(2). Moultrie refused to do so.[^16]
    As a result, the Universal Service Administrative Company (USAC),
    the administrative body tasked with administering USF support,
    determined that it could no longer rely on the cost data submitted
    by Moultrie and suspended all high cost loop and local switching
    support USF payments to Moultrie, effective January 1, 2001.[^17]
    When Moultrie filed its 2001 annual access tariff filing, it
    proposed to increase its local switching rate by more than 335
    percent, from \$0.05713 per minute to \$0.191586 per minute, to
    reflect the loss of USF switching support payments.[^18] The
    Competitive Pricing Division suspended and set this rate for
    investigation on July 2, 2001.[^19]

### Discussion

7.  The issue before us in this investigation is the increase in
    Moultrie's traffic sensitive rates, particularly of its local
    switching per minute rate. Moultrie attributes the major increase in
    this rate to its loss of USF local switching support. This
    non-payment of USF switching support stems from Moultrie's ongoing
    dispute with NECA regarding the treatment of affiliate
    sale/lease-back transactions for purposes of calculating USF
    support, as described above. If Moultrie correctly calculated its
    costs, then it should receive USF support from USAC and its local
    switching rates should be reduced. If Moultrie did not correctly
    calculate its costs, then Moultrie should not be able to benefit
    from this miscalculation at the expense of local switching
    ratepayers, but should recalculate its costs so it can be determined
    what the correct level of USF support would be and correspondingly
    what the correct local switching rates would be.

8.  We direct Moultrie to provide in its direct case a detailed
    explanation of why it is appropriate for it to increase its local
    switching rate to recover from ratepayers any amount of USF support
    that it is not receiving due to the dispute over its affiliate
    sale/lease-back transaction. We further direct Moultrie to provide
    evidence demonstrating that the increase in switching rates would
    recover only Moultrie's switching revenue requirement and would not
    be used to compensate for Moultrie's loss of USF support for other
    network elements. Moultrie should provide data explaining how it
    determined its interstate local switching rate, including all the
    elements used to calculate the revenue requirement and its usage
    estimates. We direct Moultrie to provide this same information for
    the three years prior to its entering into the sale/lease-back
    arrangement with its affiliate. We also direct Moultrie to submit a
    cost study recalculating its costs by including the property and
    related expenses with, and excluding the related rent expenses from,
    its regulated telephone operations. Moultrie should also calculate
    the USF local switching support to which it would be entitled under
    this revised cost study, and should recalculate its proposed local
    switching rate after taking account of this support.

## ALLTEL's DEM Allocation Factor

### Background

9.  DEM factors are used in calculating access services costs and in
    allocating local switching equipment investment costs between the
    interstate and intrastate jurisdictions. DEMs are defined in section
    36.125(a)(3) of the Commission's rules as the minutes of holding
    time of the originating and terminating local switching
    equipment.[^20] For each one-minute call, there is one minute during
    which the switching equipment originating the call is in use (an
    originating minute), and one minute during which the terminating
    switching equipment is in use (a terminating minute). The interstate
    DEM factor is the ratio of the interstate DEM to the total DEM.[^21]
    On June 25, 2001, AT&T filed a petition seeking suspension and
    investigation of several LECs' annual access tariff filings.[^22]
    Among the issues identified as problematic by AT&T was ALLTEL's
    proposed increase in its interstate DEM allocation factor.[^23]
    Specifically, AT&T argued that ALLTEL's DEM factors have been
    decreasing, and, according to a linear regression analysis, should
    continue to decrease, but ALLTEL has proposed to increase its
    interstate DEM factor.[^24]

10. ALLTEL responded by explaining that its interstate DEM factor had
    increased because it had changed the method it used for estimating
    terminating interlocal minutes of use.[^25] For shared trunks
    carrying both toll and interlocal traffic, ALLTEL is able to
    determine the number of originating minutes of traffic placed by its
    customers that are attributable to toll and interlocal calls. It is
    not able to determine how many minutes of terminating traffic, calls
    placed by other carriers' customers, are toll and how many are
    interlocal because switch measurements can not determine where an
    incoming call originated. Historically, ALLTEL had counted one
    terminating minute for each originating interlocal minute over these
    shared trunks. In 2000, however, ALLTEL conducted traffic studies
    which indicated that Internet traffic does not follow this
    one-terminating-to-one-originating-minute relationship.[^26]
    Instead, ALLTEL determined that applying a factor of 0.5 to its
    number of originating Internet minutes more accurately represented
    the number of terminating Internet minutes it received over the
    shared trunks.[^27] This is because ALLTEL's customers call ISPs,
    creating originating minutes, but ISPs do not call back, therefore
    ALLTEL was not receiving terminating minutes corresponding to these
    originated Internet calls. For purposes of calculating its DEM
    factor, ALLTEL applied a one-terminating-to-one-originating
    relationship only to non-Internet interlocal traffic, and applied a
    factor of 0.5 to Internet interlocal originating minutes to derive
    Internet interlocal terminating minutes (i.e., a
    one-terminating-to-two-originating minutes relationship). ALLTEL
    assigned all originating interlocal traffic, including Internet,
    plus the lower number of derived interlocal terminating traffic to
    the local jurisdiction. This decrease in the number of minutes
    attributed as interlocal terminating minutes reduced the total
    amount of traffic allocated as interlocal, and created a
    corresponding increase in traffic allocated to other jurisdictions,
    including interstate.[^28] Therefore, ALLTEL's decision to apply a
    0.5 factor rather than a 1.0 factor to terminating Internet
    interlocal traffic caused its interstate DEM allocation factor to
    increase. This change increased interstate costs, but left
    interstate minutes unchanged, resulting in a proposed increase to
    ALLTEL's interstate charge for a minute of use of its switches.

### Discussion

11. We question ALLTEL's method of setting its interstate DEM allocation
    factor. ALLTEL's description of the method it used to count Internet
    traffic appears to be based on switched minutes of use (SMOU).[^29]
    The difference between a SMOU factor and a DEM factor is that SMOU
    counts each minute of use only once, while DEM counts each minute of
    a local call twice, as one originating and one terminating
    minute.[^30] The Commission rejected the use of SMOU as an allocator
    for switching investment in favor of a DEM allocator in 1987.[^31]
    In an order released earlier this year, the Commission affirmed that
    under section 36.125(a)(3), each minute of use is counted as two
    DEMs for local calls.[^32]

12. Even if ALLTEL is correct in asserting that it has less terminating
    than originating interlocal minutes due to outgoing calls to ISPs
    from its customers, ALLTEL still must demonstrate that its method of
    calculating the interstate DEM factor comports with the Commission's
    rules. In the *Separations Freeze* proceeding, the Commission
    considered and rejected a proposal from the Joint Board to lower and
    freeze the local DEM at 95 percent of the current year level due to
    imbalance in Internet traffic.[^33] The Common Carrier Bureau sought
    comment on the Internet/DEM reduction issue as framed by the Joint
    Board.[^34] The Commission, however, found that the commenters had
    not supplied reliable data upon which to set the amount of any local
    DEM factor reduction that might be warranted.[^35] Instead, the
    Commission committed to seek specific comment on the status of this
    issue when it examines the effects of the separations freeze, and to
    work with the Joint Board to address the impact of the Internet and
    the growth of local minutes during the interim freeze.[^36]

13. ALLTEL's computation of its interstate DEM allocation factor appears
    inconsistent with the current practice of calculating DEMs under
    section 36.125(a)(3) of the Commission's rules. ALLTEL asserts that
    it has an imbalance of originating to terminating traffic because
    its customers call ISPs in other LECs' calling areas and ALLTEL's
    customers do not receive terminating calls from these ISPs. The DEM
    allocation factor, however, does not address traffic imbalances.
    Historically there have been many types of traffic imbalances. For
    example, generally terminating minutes exceed originating minutes
    for interstate traffic.[^37] Carriers are not allowed to choose
    which types of traffic imbalances they correct in their DEM
    allocation factor under the Commission's rules.

14. We direct ALLTEL to submit, as part of its direct case, a
    recalculated DEM factor counting one terminating minute for each
    originating minute for all traffic, including Internet traffic.
    ALLTEL must provide the data underlying this recalculated DEM
    factor. In accordance with the *Separations Freeze Order*, ALLTEL
    should use only data from calendar year 2000 in calculating its DEM
    allocation factor.[^38]

# PROCEDURAL MATTERS

## Filing Schedules

15. This investigation will be conducted as a notice and comment
    proceeding, for which we have designated CC Docket No. 01-206.
    Moultrie Independent Telephone Company, Inc. and ALLTEL Telephone
    Systems are the parties designated to this investigation.

16. These parties shall file their direct cases no later than
    **September 12, 2001.** The direct cases must present the parties'
    positions with respect to the issues described in this Order.
    Pleadings responding to the direct cases may be filed no later than
    **September 26, 2001**, and must be captioned "Oppositions to Direct
    Case" or "Comments on Direct Case." The companies may each file a
    "Rebuttal" to oppositions or comments no later than **October 3,
    2001**.

17. An original and four copies of all pleadings shall be filed with the
    Secretary of the Commission. In addition, parties shall serve with
    three copies: Competitive Pricing Division, Common Carrier Bureau,
    445 12th Street, S.W., Room 5-A452, Washington, D.C. 20554, Attn:
    Jennifer McKee. Parties shall also serve with one copy: Qualex
    International, Portals II, 445 12th Street, S.W., Room CY-B402,
    Washington, D.C. 20554, (202) 863-2893. Members of the general
    public who wish to express their views in an informal manner
    regarding the issues in this investigation may do so by submitting
    one copy of their comments to the Office of the Secretary, Federal
    Communications Commission, 445 12th Street, S.W., Room TW-A325,
    Washington, D.C. 20554. Such comments should specify the docket
    number of this investigation, CC Docket No. 01‑206. Parties are also
    encouraged to submit their pleadings via the Internet through the
    Electronic Comment Filing System at
    \<http://www.fcc.gov/e-file/ecfs.html\>. Generally, only one copy of
    an electronic submission must be filed. In completing the
    transmittal screen, commenters should include their full name,
    Postal Service mailing address, and the applicable docket number,
    which in this instance is CC Docket No. 01‑206. Parties may also
    submit an electronic comment via Internet e-mail. To get filing
    instructions for e-mail comments, commenters should send an e-mail
    to \<ecfs@fcc.gov\>, and should include the following words in the
    body of the message: "get form \<your e-mail address\>." A sample
    form and directions will be sent in reply.

18. All relevant and timely pleadings will be considered by the
    Commission. In reaching a decision, the Commission may take into
    account information and ideas not contained in pleadings, provided
    that such information, or a writing containing the nature and source
    of such information, is placed in the public file, and provided that
    the fact of reliance on such information is noted in the order.

## *Ex Parte* Requirements

Pursuant to 47 C.F.R. § 1.1200(a), which permits the Commission to adopt
modified or more stringent *ex parte* procedures in particular
proceedings if the public interest so requires, this proceeding will be
governed by "permit-but-disclose" *ex parte* procedures that are
applicable to non-restricted proceedings under 47 C.F.R. § 1.1206.
Designating this proceeding as "permit-but-disclose" will provide an
opportunity for all interested parties to receive notice of the various
technical, legal, and policy issues raised in *ex parte* presentations
made to the Commission in the course of this proceeding. This will allow
interested parties to file responses or rebuttals to proposals made on
the record in this proceeding. Accordingly, we find that it is in the
public interest to designate this proceeding as "permit-but-disclose."

19. Parties making oral *ex parte* presentations are reminded that
    memoranda summarizing the presentation must contain a summary of the
    substance of the presentation and not merely a listing of the
    subjects discussed. More than a one or two sentence description of
    the views and arguments presented generally is required. *See* 47
    C.F.R. § 1.1206(b)(2), as revised. Other rules pertaining to oral
    and written presentations are set forth in section 1.206(b) as well.
    Interested parties are to file any written *ex parte* presentations
    in this proceeding with the Commission Secretary, Magalie Roman
    Salas, 445 12th Street, S.W., TW-B204, Washington, D.C. 20554, and
    serve with three copies: Competitive Pricing Division, Common
    Carrier Bureau, 445 12th Street, S.W., Room 5-A452, Washington, D.C.
    20554, Attn: Jennifer McKee. Parties shall also serve with one copy:
    Qualex International, Portals II, 445 12th Street, S.W., Room
    CY-B402, Washington, D.C. 20554, (202) 863-2893.

## Paperwork Reduction Act

20. This Order Designating Issues for Investigation contains no new or
    modified information collections subject to the Paperwork Reduction
    Act of 1995, Pub. Law 104-13.

# ORDERING CLAUSES

21. IT IS ORDERED that, pursuant to sections 4(i), 4(j), 201(b), 203(c),
    204(a), 205, and 403 of the Communications Act, 47 U.S.C. §§ 154(i),
    154(j), 201(b), 203(c), 204(a), 205, and 403, and sections 0.91 and
    0.291 of the Commission's rules, 47 C.F.R. §§ 0.91, 0.291, the
    issues set forth in this Order ARE DESIGNATED FOR INVESTIGATION.

22. IT IS FURTHER ORDERED that Moultrie Independent Telephone Company,
    Inc. and ALLTEL Telephone Systems SHALL BE parties to this
    proceeding.

23. IT IS FURTHER ORDERED that each local exchange carrier that is a
    party to this proceeding SHALL INCLUDE, in its direct case, a
    response to each request for information that it is required to
    answer in this Order.

    FEDERAL COMMUNICATIONS COMMISSION

    Dorothy T. Attwood

    Chief, Common Carrier Bureau

[^1]: *2001 Annual Access Tariff Filings*, CCB/CPD File No. 01-08,
    Memorandum Opinion and Order, DA 01-1563 (Comp. Pric. Div. rel. July
    2, 2001) (*2001 Annual Access Tariff Filings Suspension Order*).

[^2]: *2001 Annual Access Tariff Filings*, CCB/CPD File No. 01-08, Order
    on Reconsideration, DA 01-1841 (Comp. Pric. Div. rel. July 31,
    2001).

[^3]: *See* Letter from David A. Irwin, Irwin, Campbell & Tannenwald,
    P.C., to Dorothy Attwood, Chief, Federal Communications Commission
    Common Carrier Bureau at 2 (Feb. 2, 2001) (Moultrie Feb. 2, 2001 *Ex
    Parte* Letter).

[^4]: *See* Moultrie Independent Telephone Company Petition for
    Declaratory Ruling, CC Docket No. 96-45 at 5 (filed Mar. 29, 1999)
    (Moultrie Petition). These assets include motor vehicles, other work
    equipment, land and buildings, furniture, office equipment, general
    purpose computers, circuit equipment, and non-loop-related buried
    cable. *See* Letter from Gina Harrison, Senior Counsel and Director,
    NECA Washington Office, to Magalie Roman Salas, Secretary, Federal
    Communications Commission at 2 (Mar. 10, 1999) (NECA Mar. 10, 1999
    *Ex Parte* Letter).

[^5]: In its petition, Moultrie states, "Moultrie structured the
    transfer to optimize its recovery under the USF and to maximize tax
    benefits." Moultrie Petition at 5.

[^6]: *See* NECA Mar. 10, 1999 *Ex Parte* Letter at 2.

[^7]: *See* NECA Mar. 10, 1999 *Ex Parte* Letter at 3.

[^8]: NECA Mar. 10, 1999 *Ex Parte* Letter at 3.

[^9]: 47 C.F.R. § 36.2(c)(2).

[^10]: Moultrie Petition at 1. Moultrie has also filed a Motion for Stay
    of section 69.605 of the Commission's rules to preclude NECA from
    collecting cost information from Moultrie until the Commission rules
    on the Petition for Declaratory Ruling. Moultrie Independent
    Telephone Company Motion for Stay of Section 69.605 of the
    Commission's Rules, CC Docket No. 96-45 (filed Feb. 2, 2001) (Motion
    for Stay). *See also* Moultrie Independent Telephone Company
    Amendment to Petition for Declaratory Ruling, CC Docket No. 96-45
    (filed Apr. 6, 1999) (requesting the Commission to direct NECA to
    re-open the 24-month window in which members may adjust cost
    studies); *and* Moultrie Independent Telephone Company Amendment to
    Motion for Stay of Section 69.605 of the Commission's Rules, CC
    Docket No. 96-45 (filed Feb. 6, 2001) (requesting expedited action
    on the Motion for Stay).

[^11]: Letter from Lisa Zaina, Acting Deputy, Federal Communications
    Commission Common Carrier Bureau, to John A. Ricker, Executive
    Director-Universal Service Program Support, National Exchange
    Carrier Association, Inc. (Aug. 4, 1999) (Aug. 4 Bureau Letter).

[^12]: *See* 47 C.F.R. §§ 36.601 to 36.641.

[^13]: *See* 47 C.F.R. § 36.2(a).

[^14]: *See* Aug. 4 Bureau Letter at 1.

[^15]: *See* Aug. 4 Bureau Letter at 1-2.

[^16]: *See* Letter from David A. Irwin, Irwin, Campbell & Tannenwald,
    P.C., to Jane Mago, General Counsel, Federal Communications
    Commission, Attachment (July 17, 2001).

[^17]: *See* Letter from David A. Irwin, Irwin, Campbell & Tannenwald,
    P.C., to Dorothy Attwood, Chief, Federal Communications Commission
    Common Carrier Bureau, Attachment (Dec. 29, 2000).

[^18]: *See* Letter from Steve Bowers, President, Moultrie Independent
    Telephone Company, Inc., to Secretary, FCC, Description and
    Justification (June 18, 2001) (Moultrie Transmittal No. 4).

[^19]: *2001 Annual Access Tariff Filings Suspension Order* para. 5.

[^20]: 47 C.F.R. § 36.125(a)(3). Holding time is the time in which an
    item of telephone plant is in actual use either by a customer or an
    operator. 47 C.F.R. Part 36 Appendix-Glossary.

[^21]: 47 C.F.R. § 36.125(a)(5).

[^22]: Petition of AT&T Corp., CCB/CPD File No. 01-08 (filed June 25,
    2001) (AT&T Petition).

[^23]: AT&T Petition at 33-35, Exhibit 14. AT&T also provided
    information on Western Reserve's and TXU Communications' interstate
    DEM allocation factors, but we declined to investigate these
    carriers' DEM factors.

[^24]: AT&T Petition at 33-34, Exhibit 14.

[^25]: Reply Comments of ALLTEL Corporation, CCB/CPD File No. 01-08, DA
    01-1105 (filed June 29, 2001) (ALLTEL Reply).

[^26]: ALLTEL Reply at 1.

[^27]: To determine the number of its originating Internet minutes,
    ALLTEL identified numbers with high call durations, i.e., calls that
    lasted for more than 60 minutes with at least 500 total minutes to
    the number per month. ALLTEL then called the numbers to which these
    calls were placed. Any numbers that were answered with a modem tone
    were determined to be ISP numbers and the corresponding minutes were
    determined to be Internet minutes. *See* Letter from David Bartlett,
    ALLTEL Corporation, to Magalie Roman Salas, Secretary, Federal
    Communications Commission (July 23, 2001) (ALLTEL July 23 *Ex Parte*
    Letter).

[^28]: ALLTEL Reply at 1-2.

[^29]: *See Amendment of Part 67 of the Commission's Rules and
    Establishment of a Joint Board*, CC Docket No. 80-286, Recommended
    Decision and Order, 12 FCC Rcd 2551, 2554, para. 26 (Fed.-State
    Joint Bd., 1987) (*Joint Board Recommended Decision*).

[^30]: *See id*.; *Amendment of Part 67 of the Commission's Rules and
    Establishment of a Joint Board*, CC Docket No. 80-286, Order
    Inviting Comments and Request for Data, 2 FCC Rcd 3787, 3788, para.
    7 (Fed.-State Joint Bd., 1987).

[^31]: *See MTS and WATS Market Structure, Amendment of Part 67 (New
    Part 36) of the Commission's Rules and Establishment of a
    Federal-State Joint Board*, CC Docket Nos. 78-72, 80-286, and
    86-297, Report and Order, 12 FCC Rcd 2639, 2640, 2642, paras. 5 and
    15 (1987) (adopting the Joint Board's recommendation to use study
    area measured DEM as the investment allocator for switching
    equipment). *See also Joint Board Recommended Decision*, 12 FCC Rcd
    at 2559, para. 48 (the Joint Board found that DEM better reflected
    the relative state and interstate usage of local dial switching
    equipment than the other allocators proposed, including SMOU).

[^32]: *General Communication, Inc. v. Alaska Communications Sys.
    Holdings, Inc.*, EB-00-MD-016, Memorandum Opinion and Order, FCC
    01-32, paras. 43-44 (rel. Jan. 24, 2001) (holding that a one-minute
    intraoffice call generates two DEMs; one originating and one
    terminating minute).

[^33]: *Jurisdictional Separations and Referral to the Federal-State
    Joint Board*, CC Docket No. 80-286, Report and Order, FCC 01-162,
    paras. 34-35 (rel. May 22, 2001) (*Separations Freeze Order*).

[^34]: *Separations Freeze Order* at para. 36; *Comment Sought on
    Recommended Decision Issued By Federal-State Joint Board on
    Jurisdictional Separations*, CC Docket No. 80-286, Public Notice, 15
    FCC Rcd 25580 (2000).

[^35]: *Separations Freeze Order* at para. 40 ("We have no reliable
    data, therefore, upon which to set any reasonable local DEM
    reduction on an across-the-board, nationwide basis in order to
    compensate for any effects that Internet usage may have had on
    jurisdictional allocations or consumers.").

[^36]: *Separations Freeze Order* at para. 42.

[^37]: *See, e.g., Statistics of Communications Common Carriers*,
    Federal Communications Commission, Table 2.20 (1998/1999 ed.).

[^38]: *See Separations Freeze Order* at para. 27.