Skip Navigation

Federal Communications Commission

English Display Options

Commission Document

Dell Telephone Cooperative, Inc

Download Options

Released: November 20, 2012

REDACTED – FOR PUBLIC INSPECTION

FEDERAL COMMUNICATIONS COMMISSION

WASHINGTON, D.C. 20554




DA 12-1879

November 20, 2012

Mr. Denny Bergstrom
General Manager
Dell Telephone Cooperative, Inc.
610 South Main
P.O. Box 67
Dell City, Texas 79837

Re:


Dell Telephone Cooperative Petition for Waiver of Section 54.302 of the
Commission’s Rules and the Impact of Limiting Capital and Corporate
Operations Expenses on Receipt of High-Cost Universal Service
Support, WC Docket No. 10-90 and WT Docket No. 10-208


Dear Mr. Bergstrom:
On June 6, 2012, Dell Telephone Cooperative, Inc. (Dell) filed a petition for waiver of: 1)
Section 54.302 of the Commission’s rules, which establishes a total limit on high-cost universal
service support of $250 per line per month; 2) Section 36.621(a)(5) of the Commission’s rules,
which limits reimbursable capital and operating expenses for high cost loop support (HCLS); and,
3) Section 36.621(a)(4) of the Commission’s rules, which limits recovery of corporate operations
expenses applied to HCLS and interstate common line support.1
The Wireline Competition Bureau (Bureau) has reviewed the information provided by
Dell. Based on our review of the information already provided, the Bureau now requests


1 Dell Telephone Cooperative Petition for Waiver of Section 54.302 of the Commission’s Rules and the
Impact of Limiting Capital and Corporate Operations Expenses on Receipt of High-Cost Universal Service
Support, WC Docket No. 10-90 and WT Docket No. 10-208 (filed June 6, 2012) (Petition); 47 C.F.R. §§
54.302 and 36.621(a)(4) and (5); see also Connect America Fund; A National Broadband Plan for Our
Future; Establishing Just and Reasonable Rates for Local Exchange Carriers; High-Cost Universal
Service Support; Developing a Unified Intercarrier Compensation Regime; Federal-State Joint Board on
Universal Service; Lifeline and Link-Up; Universal Service Reform—Mobility Fund
; WC Docket Nos. 10-
90, 07-135, 05-337, 03-109, CC Docket Nos. 01-92, 96-45, GN Docket No. 09-51, WT Docket No. 10-208,
Report and Order and Further Notice of Proposed Rulemaking, 26 FCC Rcd 17663 (2011) (USF/ICC
Transformation Order
); pets. for review pending sub nom. In re: FCC 11-161, No. 11-9900 (10th Cir. filed
Dec. 8, 2011); Connect America Fund; High-Cost Universal Service Support, WC Docket Nos. 10-90 and
05-337, Order, 27 FCC Rcd 4235 (2012) (adopting methodology to limit reimbursable capital and
operating expenses for HCLS).

REDACTED – FOR PUBLIC INSPECTION

additional information.2 This additional information is necessary for the Bureau to determine
whether there is good cause to grant the requested waivers.
The questions set forth below request additional details and clarifications. For example,
we seek additional details on employee salaries, marketable securities, life insurance, and
patronage refunds. The Bureau needs to better understand Dell’s operations in order to determine
whether it needs “additional support in order for its customers to continue to receive voice service
in areas where there are no terrestrial alternatives.”3
Please provide full and complete responses to the following questions:
1. Provide the name, position, responsibilities, annual compensation, and deferred
compensation if any, of the ten highest paid employees of Dell and each of its affiliates
for 2009, 2010, and 2011. Provide employment agreements, if any, with these
individuals. In addition to salary, include as part of compensation any benefits or any
other non-salary forms of compensation. Please separately identify the various
compensation components for each employee.
2. Do the employees or directors of Dell contribute to their defined benefits retirement
plans, or their health benefit plans, or are these plans fully-funded by the cooperative? If
employees or directors contribute, please specify the amount of the employee and
cooperative contributions for the ten highest paid employees of Dell.
3. In Exhibit 5 of the Petition, Dell’s financial statements indicate that Dell has, on a
consolidated company basis, approximately [REDACTED] in marketable securities as of
December 31, 2011. What factors does Dell use to determine whether to invest excess
cash in marketable securities or to invest in its telecommunications infrastructure for the
benefit of its subscribers, or to pay down its debt?
4. Dell’s 2011 financial statements in Exhibit 5 show cash value for life insurance of
approximately [REDACTED]. Please provide additional information regarding this
insurance, including the insured person(s), payable-on-death amounts, beneficiaries of the
policies, annual premiums, and why these life insurance policies are held and premiums
paid by Dell.
5. Dell’s 2011 financial statements show its affiliate, Dellcom, Inc. received [REDACTED]
in “construction services revenue” during 2011. In Exhibit 7, Dell’s 2012 consolidated
statements of projected operations indicate Dellcom is expecting to receive
[REDACTED] in construction services revenues during 2012. After 2012,
[REDACTED].
6. Please provide a table showing total patronage capital refunds to cooperative members
for each of the last five calendar years. Please provide the average annual refund to each
cooperative member for each of the last five years. Please provide a copy of the
cooperative’s bylaws that describe how patronage capital refunds are determined.


2 See USF/ICC Transformation Order, 26 FCC Rcd at 17839-42, paras. 539-43 (petitioners seeking waivers
shall provide any additional information requested by Commission staff).
3 Id. at 17840, para. 540.
2

REDACTED – FOR PUBLIC INSPECTION

7. Dell’s financial statements from 2007 through 2011 indicate Goodwill of
[REDACTED]. Please explain the nature and reason for the recordation of this asset.
8. Page 15 of Dell’s Petition indicates that it provides [REDACTED] dedicated special
access circuits to non-residential customers. Please provide the monthly recurring rates
for special access circuits for each of the past three years. How much was the annual
revenue for each of the past three years for these special access circuits?
9. We understand that the Rural Utility Service (RUS) has requested that all of its borrowers
update their financial status in light of USF/ICC reforms. Has Dell provided the RUS
with an updated financial assessment in light of the USF/ICC Transformation Order? If
so, please provide a copy of Dell’s updated financial assessment provided to RUS.
10. Is the [REDACTED] in RUS funds approved under the “T” and “U” loan agreements
still available to Dell at this time? If so, is Dell currently drawing on those loans and
what are the outstanding balances owed on those loans? Are RUS loans allocated or
directed separately to Dell’s Texas and New Mexico study areas? If so, provide the
breakdown of the loans between the study areas.
11. In the “Five-Year Financial Projection With Full FCC Order Impact” presented in Exhibit
8 of Dell’s Petition, Note F states that plant additions, for the years 2012 through 2016,
are based upon [REDACTED]. Dell stated, however, during the September 28, 2012 ex
parte
meeting with Bureau staff, that it was [REDACTED], pending resolution of the
impact of the universal service fund reforms. What is the [REDACTED]?
12. Dell’s October 9, 2012 ex parte filing stated that Dell does not offer so-called “triple
play” or “quadruple play” bundled services to its customers because Dell “has not
observed any customer demand for a voice and data bundled service offering.” What
marketing analysis or other analysis has Dell conducted to determine ways to increase its
revenues?
13. We understand that the State of Texas has enacted a statute that requires the Public
Utility Commission of Texas (Texas PUC) to “implement a mechanism to replace the
reasonably projected change in revenue caused by a Federal Communications
Commission order, rule, or policy . . .” TEX. UTIL. CODE ANN. § 56.025 (c) (West 2005).
Please estimate the impact, if any, of that Texas statute and the implementation by the
Texas PUC on Dell’s revenues as a result of the USF/ICC Transformation Order.
If you have any questions, please call Gary Seigel at (202) 418-0879 or Joseph Sorresso
at (202) 418-7431.
Sincerely,
Julie A. Veach
Chief, Wireline Competition Bureau
3

REDACTED – FOR PUBLIC INSPECTION

cc: Bennett Ross
Counsel for Dell Telephone Cooperative, Inc.
Wiley Rein LLP
4

Note: We are currently transitioning our documents into web compatible formats for easier reading. We have done our best to supply this content to you in a presentable form, but there may be some formatting issues while we improve the technology. The original version of the document is available as a PDF, Word Document, or as plain text.

close
FCC

You are leaving the FCC website

You are about to leave the FCC website and visit a third-party, non-governmental website that the FCC does not maintain or control. The FCC does not endorse any product or service, and is not responsible for, nor can it guarantee the validity or timeliness of the content on the page you are about to visit. Additionally, the privacy policies of this third-party page may differ from those of the FCC.