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 Federal  Communications  Commission  FCC  02-  86 
 Before  the  Federal  Communications  Commission 
 Washington,  D.  C.  20554 


 In  the  matter  of 
 MCLEODUSA  PUBLISHING  COMPANY, 
 Complainant, 
 v. 
 WOOD  COUNTY  TELEPHONE  COMPANY,  INC., 


 Defendant. 


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 )  ) 
 )  ) 
 )  ) 
 )  ) 
 )  ) 


 File  No.  EB-  01-  MD-  004 


 MEMORANDUM  OPINION  AND  ORDER 
 Adopted:  March  18,  2002  Released:  March  29,  2002 
 By  the  Commission:  Commissioner  Martin  issuing  a  separate  statement. 
 I.  INTRODUCTION 
 1.  In  this  Memorandum  Opinion  and  Order,  we  grant  the  formal  complaint  that  McLeodUSA  Publishing  Company  (  McLeod)  filed  against  Wood  County  Telephone 


 Company,  Inc.  (  Wood  County)  pursuant  to  section  208  of  the  Communications  Act  of  1934,  as  amended  (  Communications  Act  or  Act).  1  In  particular,  we  grant  McLeods  claim  that,  under 
 section  222(  e)  of  the  Act  2  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  $0.6527  per  listing  (over  1600%  above  the  presumptively  reasonable  rate).  We  do  so  because  Wood  County  has 
 failed  to  meet  its  burden  of  providing  credible  and  verifiable  cost  data  supporting  a  rate  for  base  file  SLI  in  excess  of  the  presumptively  reasonable  rate.  For  similar  reasons,  we  also  grant 
 McLeods  claim  that  Wood  County  must  charge  no  more  than  the  presumptively  reasonable  rate  of  six  cents  ($  0.06)  per  listing  for  update  SLI  listings. 


 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). 
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 II.  BACKGROUND 
 2.  Wood  County  is  a  local  exchange  carrier  (  LEC)  that  provides  telecommunications  services  in  several  areas  in  Wisconsin.  4  McLeod  is  a  telephone  directory 


 publisher  that  publishes  white  and  yellow  page  directories  in  competition  with  large  and  small  LECs,  like  Wood  County,  in  numerous  states  across  the  country,  including  Wisconsin.  5 


 3.  SLI  refers  to  telephone  company  subscribers  names,  addresses,  and  telephone  numbers,  as  well  as  headings  under  which  businesses  are  listed  in  the  yellow  pages.  6  Thus,  SLI 
 forms  the  foundation  of  the  directory  publishing  business.  Telephone  companies,  like  Wood  County,  develop  SLI  when  they  initiate  service  to  local  telephone  exchange  customers.  7 
 Independent  directory  publishers,  like  McLeod,  generally  must  obtain  SLI  from  LECs  in  order  to  publish  current  and  accurate  directories  containing  listings  for  the  areas  served  by  the  LECs.  8  In 
 addition,  LECs,  including  Wood  County,  generally  use  SLI  that  they  develop  during  the  ordinary  course  of  providing  exchange  access  service  to  publish  their  own  directories  of  residential  and 
 business  customers.  9 
 4.  Section  222(  e)  of  the  Act  requires  that  each  telecommunications  carrier  that  provides  telephone  exchange  service  shall  provide  subscriber  list  information  gathered  in  its 


 capacity  as  a  provider  of  such  service  on  a  timely  and  unbundled  basis,  under  nondiscriminatory  and  reasonable  rates,  terms  and  conditions,  to  any  person  upon  request  for  the  purpose  of 
 publishing  directories  in  any  format.  10  The  SLI  Order  adopted  rules  implementing  section  222(  e).  11 


 5.  In  those  rules,  the  Commission  established  presumptively  reasonable  rates  for  LECs  provision  of  base  file  SLI  and  update  SLI  services  to  directory  publishers.  12  Base 
 file  SLI  refers  to  the  initial  load  of  SLI  listings  that  a  directory  publisher  obtains  from  a  LEC.  13  Base  file  also  encompasses  a  refresh  service,  which  consists  of  a  complete  set  of  SLI  listings 
 that  a  LEC  provides  to  a  publisher  who  has  already  previously  received  a  complete  set  of  listings 
 4  Formal  Complaint  of  McLeodUSA  Publishing  Company,  File  No.  EB-  01-  MD-  004  (filed  Feb.  12,  2001) 
 (  Complaint)  at    5;  Joint  Statement  of  Stipulated  Facts,  Disputed  Facts,  and  Key  Legal  Issues,  File  No.  EB-  01-  MD-  004  (filed  Mar.  29,  2001)  (  Joint  Statement)  at    3. 


 5  Joint  Statement  at    1. 
 6  SLI  Order,  14  FCC  Rcd  at  15554,    2. 
 7  Id.  at  15554,    3. 
 8  Id.  at  15554,    2. 
 9  Id.  at  15554,    3. 
 10  47  U.  S.  C.    222(  e). 
 11  The  implementing  rules  include,  inter  alia,  section  64.  2309  (requiring  carriers  to  provide  SLI  on  a 
 nondiscriminatory  basis  and  under  reasonable  rates,  terms,  and  conditions);  64.  2325  (establishing  presumptively  reasonable  rates  of  $0.  04  per  listing  for  base  file  SLI  and  $0.  06  per  listing  for  update  SLI);  and  64.  2333  (placing  the 


 burden  of  proof  in  a  complaint  proceeding  arising  under  section  222(  e)  of  the  Act  on  the  carrier  to  the  extent  that  it  seeks  to  charge  rates  for  SLI  higher  than  the  presumptively  reasonable  rates).  47  C.  F.  R.    64.  2309,  64.  2325,  and 
 64.  2333.  12 
 SLI  Order,  14  FCC  Rcd  at  15607,    105;  47  C.  F.  R.    64.  2325.  13 
 SLI  Order,  14  FCC  Rcd  at  11562-  63,    16;  47  C.  F.  R.    64.  2305. 
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 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  LECs  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  carriers  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 


 14  SLI  Order,  14  FCC  Rcd  at  11562-  63,    16. 
 15  SLI  Order,  14  FCC  Rcd  at  11562-  63,    16;  47  C.  F.  R.    64.  2305. 
 16  SLI  Order,  14  FCC  Rcd  at  11562-  63,    16. 
 17  Id.  at  15599-  607,    93-  103;  47  C.  F.  R.    64.  2325. 
 18  SLI  Order,  14  FCC  Rcd  at  15607,    105. 
 19  Id. 
 20  Id.  (citing  47  U.  S.  C.    208). 
 21  Id.  at  15607,    106. 
 22  Id.  These  categories  are  defined,  infra,  at  Sections  III(  B)(  1)-(  3). 
 23  Id.  at  15607,    105;  47  C.  F.  R.    64.  2333. 
 24  SLI  Order,  14  FCC  Rcd  at  15607,    106. 
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 study  be  credible  and  verifiable.  25  Further,  the  Commission  explained  that  the  LEC,  in  its  cost  study,  must  describe  how  its  methods  for  allocating  common  costs  compare  to  those  the  [LEC] 
 uses  in  other  contexts.  26 
 9.  After  release  of  the  SLI  Order,  McLeod  and  Wood  County  negotiated  about  rates  for  Wood  Countys  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  Countys  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  Countys 


 refusal  to  provide  SLI  at  the  presumptively  reasonable  rates  violates  section  222(  e)  of  the  Act.  29  McLeod  requests  that  the  Commission  order  Wood  County  to  charge  the  presumptively 
 reasonable  rates  of  $0.04  per  listing  for  base  file  SLI  and  $0.06  per  listing  for  updates.  30 
 III.  DISCUSSION 
 A.  Although  It  is  the  Defendant,  Wood  County  Bears  the  Burden  of  Proving  the  Reasonableness  of  Its  SLI  Rates. 


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


 25  Id. 
 26  Id. 
 27  Complaint  at    12  and  Exhibit  13;  Joint  Statement  at    9. 
 28  Id. 
 29  Complaint  at    1-  2  and  Prayer  for  Relief. 
 30  Complaint  at  Prayer  for  Relief. 
 31  Answer  of  Wood  County  Telephone  Company,  File  N.  EB-  01-  MD-  004  (filed  Mar.  19,  2001)  (  Answer)  at 
   2;  Initial  Brief  of  Wood  County  Telephone  Company,  File  No.  EB-  01-  MD-  004  (filed  Sep.  14,  2001)  (  Wood  County  Brief)  at  6-  7. 


 32  Id. 
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 12.  We  disagree.  To  the  extent  that  Wood  County  indirectly  challenges  the  Commissions  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  Commissions  resources  in  litigating  the  reasonableness  of  SLI  rates.  35  The  Commissions  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  Orders  shift  in  the  burden  of  proof  is  well  within  the  Commissions  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 


 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 
 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  Countys  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. 
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 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  McLeods  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  Countys  data  and  the  cost  justification 
 provided  for  each  of  the  three  relevant  categories,  which  we  analyze  in  sequence  below. 
 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 


 Countys  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  Berrys  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  LECs  behalf,  or  (2)  costs  that  a  third  party,  such  as  Berry,  might  incur  to  provide  SLI  on  the  LECs  behalf.  47 


 39  SLI  Order,  14  FCC  Rcd  at  15608,    106. 
 40  Wood  Countys  SLI  Cost  Study,  File  No.  EB-  01-  MD-  004  (filed  Mar.  19,  2001)  (  Wood  County  Cost 
 Study),  attached  as  Exhibit  1  to  the  Answer.  41 
 Wood  County  Cost  Study  at  Schedule  1.  42 
 SLI  Order,  14  FCC  Rcd  at  15608,    106.  43 
 Id.  at  15591,    77.  44 
 Wood  County  Cost  Study  at  Schedules  2  and  2a.  45 
 Id.  at  Schedule  2a.  46 
 Report  of  Stephen  E.  Siwek,  File  No.  EB-  01-  MD-  004  (filed  Jun.  26,  2001)  (  McLeod  Report)  at  11-  12.  47 
 Id. 
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 17.  We  disagree  that  allowable  incremental  costs  are  as  narrowly  defined  as  McLeod  argues.  We  believe  that  it  may  be  appropriate  for  a  small  carrier,  like  Wood  County,  to  utilize  a 
 third  party  agent  to  provide  formatted  SLI  to  directory  publishers  who  request  SLI  from  Wood  County.  Wood  County  justifies  its  reliance  on  Berry  to  provide  that  service  as  a  reasonable  and 
 efficient  way  to  respond  to  isolated  requests  for  base  file  SLI.  48  Such  justification  might  prove  persuasive  in  particular  cases. 


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


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


 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  Countys  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. 
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 certainly  requires  substantial  supporting  evidence. 
 20.  We  recognize  that  it  may  be  difficult  in  some  instances  for  a  LEC  to  obtain  from  a  publishing  agent  information  concerning  the  costs  incurred  by  that  agent  for  performing  various 


 functions.  However,  Wood  County  could  have  offered  certain  other  information  that  might  have  supported  the  reasonableness  of  the  rate  it  pays  Berry.  For  example,  Wood  County  could  have 
 explained  how  it  selected  Berry  to  perform  the  functions  for  which  it  seeks  to  charge  McLeod  and  whether  that  selection  was  made  through  a  competitive  bidding  process.  Further,  Wood 
 County  could  have  described  how  the  Berry  rate  compares  to  rates  charged  by  other  publishing  agents  for  similar  services.  Wood  County  proffered  no  such  information. 


 21.  Because  the  incremental  cost  calculation  Wood  County  proposes  (i.  e.,  the  Berry  $0.0408  rate)  is  facially  questionable  for  the  reasons  described  above,  Wood  County  has  a 
 significant  burden  to  provide  adequate  information  supporting  the  reasonableness  of  this  calculation.  Wood  County  failed,  however,  to  provide  any  information  supporting  the  Berry 
 rate,  much  less  credible  and  verifiable  cost  data.  53  Further,  the  record  contains  insufficient  information  from  which  we  could,  sua  sponte,  ascertain  Wood  Countys  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. 
 2.  Wood  County  Has  Failed  to  Provide  Adequate  Data  Concerning  a  Reasonable  Allocation  of  Common  Costs. 


 22.  In  the  SLI  Order,  the  Commission  defined  common  costs  as  the  cost[  s]  the  carrier  incurs  in  creating  and  maintaining  its  subscriber  list  information  database  and  the 
 methods  the  carrier  uses  to  allocate  [those]  cost[  s]  among  supported  services.  54  Thus,  common  costs,  within  the  meaning  of  the  SLI  Order,  are  those  costs  that  the  LEC  incurs  in  connection 
 with  all  SLI-  related  activities  that  are  in  addition  to  those  activities  performed  solely  to  provide  SLI  to  the  complainant.  Consistent  with  that  definition,  the  parties  agree  that  some  portion  of 
 Wood  Countys  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 


 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  Countys  Answers  to  Interrogatories,  File  No.  EB-  01-  MD-  004  (filed  Apr.  23,  2001)  at  Response  to  Interrogatory  1. 
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 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  childs 
 phone).  59  A  verification  clerk  then  reviews  the  directory  clerks  work.  60 
 24.  Wood  Countys  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  McLeods  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 


 57  Wood  Countys  Answers  to  Interrogatories  at  Response  to  Interrogatory  2. 
 58  Id. 
 59  Id. 
 60  Id. 
 61  Wood  County  Cost  Study  at  Schedule  3.  The  service  order  processing  and  directory  clerk  expenses 
 comprise  over  95%  of  the  calculated  common  costs.  62 
 Wood  County  Cost  Study  at  Schedule  3.  63 
 Id.  64 
 McLeod  Report  at  20-  21;  McLeod  Brief  at  13-  14.  65 
 McLeod  Report  at  20.  66 
 Wood  County  Rebuttal  at  27-  28. 
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 County  explains  that  customer  service  representatives  ask  new  customers  how  they  want  their  listings  to  read  in  the  directory  or  whether  they  want  additional  listings.  67  Wood  County 
 persuasively  argues  that,  but  for  the  need  to  create  and  maintain  an  SLI  database,  some  identifiable  amount  of  time  spent  by  the  customer  service  representatives  would  be  eliminated.  68 
 Accordingly,  we  will  consider  those  service  order  processing  costs  that  Wood  County  incurred  because  of  the  need  to  create  and  maintain  an  SLI  database  as  recoverable  common  costs,  within 
 the  meaning  of  the  SLI  Order. 
 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  Countys  time  estimates  for  four  of  the  six  service  order  categories  are  unverifiable;  we  also  conclude  that  Wood  County 


 improperly  failed  to  account  for  end  user  revenues  from  the  remaining  two  service  order  categories  in  developing  its  cost  allocation  methodology.  Consequently,  we  cannot  consider  any 
 service  order  processing  costs  in  determining  whether  Wood  County  may  exceed  the  presumptively  reasonable  rates  for  providing  base  file  SLI. 


 67  Id.;  Wood  County  Answers  to  Interrogatories  at  Response  to  Interrogatory  2. 
 68  Wood  County  Rebuttal  at  27-  28;  Wood  County  Brief  at  18-  19. 
 69  Id.  at  Schedule  3a. 
 70  Wood  County  Cost  Study  at  Schedule  3a,  Column  D. 
 71  Id.  at  Schedule  3a,  Column  B. 
 72  Id.  at  Schedule  3a,  Column  D.  Wood  County  provides  the  following  times  estimates  for  the  remaining  five 
 categories  of  service  orders:  Wood  County  estimates  that  it  takes  an  average  of  19  minutes  to  process  new  installation  requests  that  include  requests  for  non-  published  or  non-  listed  status,  of  which  3  minutes  consists  of 


 SLI/  DA  activity;  6  minutes  to  process  disconnects,  of  which  3  minutes  consists  of  SLI/  DA  activity;  14  minutes  to  process  requests  by  established  subscribers  for  non-  published  status,  of  which  3  minutes  consists  of  SLI/  DA 
 activity;  8  minutes  to  process  requests  by  established  subscribers  for  return  to  published  status,  which  consists  entirely  of  SLI/  DA  activity;  and  6  minutes  to  process  requests  by  established  subscribers  for  additional  listings, 
 which  consists  entirely  of  SLI/  DA  activity.  Id. 
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 (i)  Wood  Countys  Time  Estimates  for  Four  of  the  Six 
 Service  Order  Categories  are  Unverifiable  And  the  Process  Used  to  Develop  the  Estimates  is  Not  Credible. 


 29.  Wood  County  states  that  it  obtained  estimates  of  the  time  spent  on  SLI  activities  for  four  of  the  six  service  order  types  from  a  senior  customer  service  representative  at  the 
 company  with  expertise  in  service  order  processing.  73  However,  the  customer  service  representative  apparently  did  not  conduct  any  research  or  make  any  attempts  to  develop 
 verifiable  time  estimates  or  averages  in  providing  her  estimates.  74  It  appears  that  she  arrived  at  her  estimates  extemporaneously  during  the  course  of  a  thirty-  minute  conversation  with  Wood 
 Countys  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  Countys  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 


 (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 


 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 


 Commissions  rules  does  not  include  non-  published  or  non-  listed  information.  47  C.  F.  R.    64.  2305(  e).  In  any  event,  we  need  not  decide  this  issue  here,  because  we  find  the  cost  information  to  be  defective  for  other  reasons. 
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 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  Countys  cost  study  fails  to  account  adequately  for  revenues  received  from  its  own  end 
 user  customers  for  these  two  activities. 
 31.  Pursuant  to  its  state  tariff,  Wood  County  receives  from  its  end  user  customers  $5.00  per  request  and  $0.  50  per  month  for  each  additional  directory  listing  requested.  81  Wood 


 County  did  not  account  for  these  revenues  in  calculating  an  allocation  of  common  costs  upon  which  to  base  a  rate  to  charge  directory  publishers  for  SLI.  82  For  the  following  reasons,  this 
 failure  precludes  us  from  considering  Wood  Countys  costs  associated  with  processing  additional  listing  requests  in  determining  whether  Wood  County  may  exceed  the  presumptively  reasonable 
 rates  for  SLI. 
 32.  The  Commission  explained  in  the  SLI  Order  that  a  LEC  may  recover  fair  compensation  and  a  reasonable  profit  for  the  creation,  maintenance,  and  provision  of  SLI.  83 


 It  is  neither  fair  nor  reasonable  for  a  LEC  to  earn  a  complete  double  recovery  for  these  SLI  activities.  In  other  words,  a  LEC  can  choose  to  recover  its  costs  associated  with  a  pure  SLI 
 function  from  either  its  end  user  customers  or  its  directory  publisher  customers,  but  it  cannot  recover  all  such  costs  from  both.  Accordingly,  where  a  LEC  charges  its  own  end  user  customers 
 to  perform  a  pure  SLI  function,  and  the  revenues  earned  pursuant  to  those  charges  exceed  the  costs  incurred  to  perform  this  function,  the  LEC  cannot  rely  on  the  same  costs  in  attempting  to 
 justify  a  departure  from  the  presumptively  reasonable  rates  chargeable  to  directory  publishers. 
 33.  We  cannot  determine  from  the  record  whether  the  revenues  Wood  County  receives  from  its  end  user  customers  for  performing  the  pure  SLI  function  of  processing  requests 


 for  additional  listings  exceeds  Wood  Countys  costs  associated  with  performing  this  function.  This  is  because,  although  Wood  Countys  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  Countys  study.  84  Thus,  Wood  County  has  failed  to  meet  its 
 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  Countys  maintenance  of  the  SLI/  DA  database,  such  as  billing  or 


 maintenance  and  repair  activities.  80 
 McLeod  Report  at  15.  81 
 Wood  County  Answers  to  Interrogatories  at  Response  to  Interrogatory  2-  3;  McLeod  Report  at  23;  Wood  County  Rebuttal  at  30. 


 82  Rather,  Wood  County  argued  that  revenues  need  not  be  considered  at  all.  Wood  County  Brief  at  15-  17. 
 83  Id.  at  15590,    73,  and  15595,    84. 
 84  As  McLeod  points  out,  Wood  Countys  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 


 (continued....) 
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 burden  of  proving  compliance  with  the  threshold  requirement  of  demonstrating  that  its  costs  exceed  its  revenues  with  respect  to  the  pure  SLI  function  of  processing  requests  for  additional 
 listings.  Accordingly,  we  cannot  consider  such  costs  in  determining  whether  Wood  County  may  charge  more  than  the  presumptively  reasonable  rate. 


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


 those  functions.  87  Wood  Countys  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  Countys  contention 
 that  it  is  improper  to  consider  revenues  earned  with  respect  to  these  service  order  categories  in  evaluating  Wood  Countys  cost  study. 


 36.  In  sum,  given  Wood  Countys  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  Countys  failure  to  account  for  customer  revenues  for  the  two  pure  SLI 


 (...  continued  from  previous  page)  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 
 Countys  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  Countys  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  Countys 
 methodology  to  the  $700  cost  described  above,  we  would  find  a  per  listing  SLI  rate  much  lower  than  the  presumptively  reasonable  rate:  if  we  assume  $700  in  total  common  costs  attributed  to  SLI/  DA  activities,  allocate 


 those  costs  evenly  between  SLI  and  DA,  and  divide  the  SLI  portion  ($  350)  by  the  81,  267  demand  estimate  used  by  Wood  County,  we  arrive  at  a  per  listing  figure  of  $0.  004.  We  assess  the  effect  of  these  costs  standing  alone 
 because,  as  described  throughout  this  Order,  Wood  County  has  failed  to  meet  its  burden  of  proof  regarding  consideration  of  any  other  category  of  costs. 
 87  Wood  County  Rebuttal  at  30. 
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 functions,  we  conclude  that  Wood  Countys  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. 
 b.  Directory  Clerk  Costs 
 37.  A  large  portion  of  Wood  Countys  common  cost  calculation  stems  from  costs  allegedly  incurred  in  connection  with  Wood  Countys  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  Countys  estimate  of  the 
 time  that  its  directory  clerks  spend  on  these  activities.  Despite  Wood  Countys  heavy  reliance  on  such  time  estimates,  Wood  County  again  fails  to  provide  credible  and  verifiable  data  supporting 
 such  estimates. 
 38.  Wood  County  estimates  that  it  takes  an  average  of  eight  minutes  per  service  order  for  Wood  Countys  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  Countys  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 


 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  Countys  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  Countys  directory  clerk  costs  as  a  whole  because  they  are  unverifiable  and  are  derived  from  a  flawed  process. 
 89  Wood  County  Cost  Study  at  Schedule  3b. 
 90  Wood  County  Answers  to  Interrogatories  at  Response  to  Interrogatory  2-  4. 
 91  McLeod  Report  at  16-  17. 
 92  Id.  (citing  Johnson  Dep.  at  214-  25  and  221-  22). 
 93  Id. 
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 was  interrupted  if  the  employees  work  was  temporarily  interrupted,  or  what  conventions  the  clerks  may  have  used  in  measuring  the  processing  time.  94 
 39.  Further,  although  Wood  County  alleges  that  the  eight-  minute  estimate  is  an  average  derived  from  the  sampling  exercises  just  described,  Wood  County  provides  no 
 information  or  documents  showing  how  that  average  was  calculated  or  even  whether  it  resulted  from  a  mathematical  calculation.  The  average  may  have  simply  been  a  subjective  estimate  that 
 the  directory  clerks  provided  after  the  sampling  exercises  but  without  performing  any  mathematical  calculation  (similar  to  the  subjective  estimate  provided  by  the  customer  service 
 representative  described  above).  How  the  average  was  calculated  in  this  case  is  critical,  because  the  record  indicates  that  there  is  a  wide  disparity  in  the  amount  of  time  it  may  take  to  process  and 
 verify  different  service  orders.  95  Whether  Wood  County  properly  considered  that  range,  and  the  probable  mix  of  service  orders  therein  (i.  e.,  95%  of  service  orders  are  simple  ones  requiring 
 only  a  minute  of  directory  clerk  time  to  complete  and  5%  are  more  complicated,  requiring  additional  time  to  complete)  is  important  in  determining  the  reliability  and  credibility  of  the 
 resulting  average.  96  Wood  County  offers  us  nothing  from  which  we  can  determine  how  it  calculated  the  average  and  whether  it  considered  these  critical  factors  in  making  the  calculation. 
 The  record  does  indicate,  however,  that  if  the  directory  clerks  did  perform  a  mathematical  calculation  to  develop  the  eight-  minute  time  estimate,  they  did  so  without  any  guidance, 
 direction,  or  instruction  from  either  the  Wood  County  officer  responsible  for  the  cost  study  or  Wood  Countys  expert.  97  For  all  the  foregoing  reasons,  we  find  Wood  Countys  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  Countys  failure  to  provide  any  documents  which  McLeod  and  the 
 Commission  could  use  to  verify  both  the  process  used  to  obtain  the  time  estimates  and  the  resulting  time  estimates  themselves  also  renders  the  estimates  unreliable,  because  they  cannot  be 
 verified.  98 
 41.  After  the  close  of  discovery,  and  after  McLeod  had  already  submitted  its 
 94  Id. 
 95  For  example,  Wood  County  indicates  that  the  directory  clerk  has  taken  as  long  as  four  hours  to  perform  the 
 activities  related  to  SLI  for  a  single  listing  and  as  little  as  one-  minute  for  a  simple,  one-  line  listing.  McLeod  Report  at  18  (citing  Johnson  Dep.  at  213). 


 96  It  is  also  unclear  whether  Wood  County  properly  excluded  certain  activities  not  related  to  SLI  in 
 developing  its  eight-  minute  average.  In  particular,  Wood  County  points  out  that  the  directory  clerk  references  the  customers  credit  history  when  processing  service  orders.  McLeod  Report  at  17.  We  agree  with  McLeod  that  this 


 activity  is  unrelated  to  SLI  and  should  not  be  included  in  any  time  estimate  designed  to  capture  SLI-  related  activity.  Wood  County  has  not  indicated  whether  it  removed  time  associated  with  this  activity  in  developing  its  eight-  minute 
 estimate.  97 
 McLeod  Report  at  17-  18.  98 
 Johnson  Dep.  at  214-  15,  221-  22.  McLeod  also  challenges  the  adequacy  of  the  sampling  exercises  themselves:  Wood  Countys  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. 
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 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  Countys  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  clerks  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  clerks  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  Countys  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  Countys  estimates  based  on  alleged  inadequacies  in  how  Wood  County  developed  or  recorded  the  time  estimates  or 
 conducted  the  sampling  that  support  the  estimates.  102  We  disagree.  Where,  as  here,  there  are  no  records  or  notes  supporting  critical  time  estimates  that  make  up  a  portion  of  the  cost  data  upon 
 which  a  carrier  relies  to  justify  a  certain  SLI  rate,  we  simply  cannot  conclude  that  such  estimates  are  reasonable  and  verifiable  and,  accordingly,  will  not  consider  them.  Allowing  or  relying  on 
 such  estimates  without  supporting  data  or  documents  from  which  a  third  party  could  verify  the  estimates  would  lead  to  inevitable  abuse  and  is  precisely  what  the  Commission  sought  to  avoid 
 when  the  SLI  Order  required  that  supporting  data  be  both  credible  and  verifiable. 
 43.  For  the  foregoing  reasons,  we  conclude  that  Wood  County  has  failed  to  meet  its  burden  of  producing  credible  and  verifiable  costs  associated  with  directory  clerk  activities  related 


 to  SLI.  Because  Wood  County  has  failed  to  meet  its  burden,  we  do  not  consider  any  directory  clerk  expenses  in  determining  whether  Wood  County  may  exceed  the  presumptively  reasonable 
 rate  for  base  file  SLI. 


 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  Companys  Rebuttal  Cost  Report  That  Introduce  New  Supporting  Information  for  Wood  Countys  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  McLeods 
 Motion  to  Strike.  100 
 Wood  County  Rebuttal  at  24.  101 
 Id.  102 
 Wood  County  Brief  at  18-  19. 
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 c.  Computer  Expenses  and  Computer  Investment  Costs 
 44.  Wood  County  allocates  a  portion  of  computer  expenses  and  computer  investment  costs  to  SLI.  103  However,  the  allocations  of  both  computer  expenses  and  computer  investment 


 costs  depend  on  Wood  Countys  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. 
 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  McLeods  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 


 103  The  computer  expenses  and  computer  investment  costs  represent  only  three  percent  of  the  total  common 
 costs.  Wood  County  Cost  Study  at  Schedule  3.  104 
 Wood  County  developed  its  allocation  of  computer  expenses  and  computer  investment  costs  by  calculating  a  computer  usage  factor  related  to  SLI  activities.  See  Wood  County  Cost  Study  at  Schedules  3c  and  3d.  The 


 computer  usage  factor  was  based,  in  part,  on  the  estimate  Wood  County  used  for  the  time  spent  by  directory  clerks  on  service  orders.  See  Wood  County  Rebuttal  at  Schedule  JSI(  c). 
 105  SLI  Order,  14  FCC  Rcd  at  15608,    106. 
 106  See  Wood  County  Cost  Study  at  Schedule  4. 
 107  McLeod  also  argues  that  Wood  Countys  proposed  rate  for  the  provision  of  SLI  is  discriminatory.  McLeod 
 Brief  at  24-  25.  Wood  County  contends  that  we  should  not  consider  McLeods  discrimination  allegations  because  (continued....) 
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 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  Countys  effort  to  support  a  rate  higher  than  the 
 presumptively  reasonable  rate  for  base  file  SLI  is  too  deficient  to  be  credited.  Had  Wood  County  not  engaged  in  the  fundamental  errors  described  above,  which  rendered  unreliable  many  of  the 
 most  critical  components  of  its  cost  study,  we  might  have  concluded  that  Wood  County  was  justified  in  exceeding  the  presumptively  reasonable  rate.  However,  that  is  not  the  record  before 
 us. 
 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  Countys  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  McLeods  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 


 (...  continued  from  previous  page)  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  McLeods  claims  on  other  grounds.  108 
 SLI  Order,  14  FCC  Rcd  at  15607,    105.  109 
 Complaint  at    2,  23-  24,  and  Prayer  for  Relief.  110 
 Answer  at    5.  111 
 Id.  112 
 Complaint  at    12,  Exhibit  13.  113 
 We  note  that  McLeods  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  Countys  proposed  transmission  fee,  because  it  is  not  at  issue  here. 
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 19 
 IV.  ORDERING  CLAUSES 
 49.  Accordingly,  IT  IS  ORDERED,  pursuant  to  sections  4(  i),  4(  j),  208,  and  222(  e)  of  the  Communications  Act  of  1934,  as  amended,  47  U.  S.  C.    154(  i),  154(  j),  208,  and  222(  e),  that 


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


 Wood  County  must  charge  McLeod  no  more  than  the  presumptively  reasonable  rate  of  $0.04  per  listing  for  base  file  SLI  and  $0.06  per  listing  for  update  SLI.  115 


 FEDERAL  COMMUNICATIONS  COMMISSION 


 William  F.  Caton  Acting  Secretary 


 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  McLeods  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,  McLeods  complaint  does  not  contain  a  claim  for  damages.  Accordingly,  we  reject  McLeods  experts  request  and  do  not  award  any  damages 


 to  McLeod  in  this  order. 
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 20 
 SEPARATE  STATEMENT  OF  COMMISSIONER  KEVIN  J.  MARTIN 
 Re:  McLeodUSA  Publishing  Company  v.  Wood  County  Telephone  Company,  Inc.,  Memorandum  Opinion  and  Order,  File  No.  EB-  01-  MD-  004 
 While  I  support  the  result  in  this  case,  I  write  separately  today  to  emphasize  two  points.  First,  I  encourage  carriers  to  submit  specific  cost  information  when  attempting  to  justify  a  rate 
 higher  than  the  presumptively  reasonable  rate  set  out  in  the  Commissions  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  Commissions  decision,  I  look  forward  to  considering  the  issue  in  future  proceedings. 
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