WPCV 461U6doi7~Tyy*"vE89 |FTK*0g` Vd-i3)>3wL^2o)qIJْW,:ݨ^+?jWƚv:/A6%aRY GC/WcB~q #j[˕>.nk |Ҫ?Z5 =)jP7" kiVX"'Z2 J.J/j☳wUҫ?Ryc# GQ{g:qT $2З'_RlY \񤓁Hnn28`9+u~[5~e 0 0 0v 0v 0~ 0# 0 0 0w 0( 0* 0)? 0<h 0N 0a 0S" 0-# 0# 0$ 0Y% 0 & 0& 0' 0x( 0&) 0) 0* 0T+ 04, 0'- 0-. 0,F/ 0Yr0 00 0YW1 0l1 02 02 0-3 1i3 0F4 05 05 06 07 0)8 0<: 0O[; 0< 0t= 0Q> 0A?Ub>D@ %@ 0D@ 0D@ 0DA 0DTA 0LA 0LA 0L0B 0L|B 0NB 0NC 0NdC 0NC 0ND 1iND 0zD 01E E 0=E 0F8F 0P~F 1F 0aG 1H 0IbI 0-NEO 0xO 03P 0P 0sQ 0CR 0dR 0fMS 0SaT 0 Ve$W 0%W 0W 0X 0Y 0Z 0t[ 0\ 0q\ 0b] 0] 0 ^ 0_ 0j` 0Fa 0a 0Bbrc 0Je 0OYf 0Kf 0Of 0gBg 0cg 0{ hSj 04jU.lU4B^?7@`B 1|C 1%D 1qD 1?E 1E 1wF Gn 0G 0Q BR#!R 1uTNTTU>9T2DRAFT ONHeader A Text = DRAFT and DateX 8 [  \f'  2C D $#]C--5&(%55&(%%5&(  56X%5&($ $ W(#DRAFT X O(#"US ,  ] June30,1998!  He (2f$ Z!  2C D $#]C--5&(%55&(%%5&(  ^&4DRAFT OFFTurn Draft Style off    p8LETTER LANDLetter Landscape - 11 x 8.5    \R'3\    l6LEGAL LANDLegal Landscape - 14 x 8.5    \R'A\    n8LETTER PORTLetter Portrait - 8.5 x 11    \R3'\    j6LEGAL PORTLegal Portrait - 8.5 x 14    \RA'\    T,TITLETitle of a Document@..  v$8BLOCK QUOTESmall, single-spaced, indented8.. X4HEADING 33rd Heading Level 0..V8HIGHLIGHT 2Large and Bold | 8HIGHLIGHT 3Large, Italicized and Underscoredj6LETTERHEADLetterhead - date/margins X       \R3'\  @..     \R3' II\ш  X   p<8INVOICE FEEFee Amount for Math Invoice   ,  $  X6MEMORANDUMMemo Page Format    @..  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[  \'  5X6X5yX6XX5X6#?+ b, oT9 X?yX6XXyX6{X XXyX6ee) IntermediateLegalWordPerfectLearningGuide  򀀀    P(  5X6X5yX6XX5X6#?+ b, oT9 X?yX6XXyX6{X XXyX6IntermediateLegalWordPerfectLearningGuide  򀀀    o)  5X6X5yX6XX5X6#?+ b, oT9 X?yX6XXyX6{X XXyX6򀀀  CopyrightPortolaSystems,Inc.P Page  1  ڈ    *  5X6X5yX6XX5X6#?+ b, oT9 X?yX6XXyX6{X XXyX6򀀀  Page  1  11* CopyrightPortolaSystems,Inc.1987,1988  n)I.UpdateInitial Codes for Update Module5X6X5yX6XX5X6#dndd#  [B.b, oT9 !XB  \'  5X6X5yX6XX5X6#B.b, oT9 !XByX6XXyX6{X XXyX6% LegalWordPerfect5.0UpdateClassLearningGuide  򀀀    P(  5X6X5yX6XX5X6#B.b, oT9 !XByX6XXyX6{X XXyX6LegalWordPerfect5.0UpdateClassLearningGuide  򀀀    o)  5X6X5yX6XX5X6#B.b, oT9 !XByX6XXyX6{X XXyX6򀀀  CopyrightPortolaSystems,Inc.1987,1988P Page  1  ڈ    *  5X6X5yX6XX5X6#B.b, oT9 !XByX6XXyX6{X XXyX6򀀀  Page  1  11* CopyrightPortolaSystems,Inc.1987,1988  B& $3Document Style0..8` ..` B $4Document Style.. . 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(1) (a) (i) 1) a)0..0..0..0..0..0..0..  23  0..T&68Default Paragraph FontXXXW `*Times New RomanTTW                XXXW `*Times New RomanTTW `*Times New RomanTTJ&69_Equation CaptionXXXW `*Times New RomanTTW                XXXW `*Times New RomanTTWJ&70endnote referenceXXXW `*Times New RomanTTW                XXXW `*Times New RomanTTWL&71footnote referenceXXXW `*Times New RomanTTW            W `*Times New RomanTTWXXXH! 4heading 4heading 4            H! 4heading 5heading 5            H! 4heading 6heading 6            H! 4heading 7heading 7            H! 4heading 8heading 8            T! :endnote textendnote text            P5K 8toa headingtoa heading   (#        5+ ` hp x (#5  P,A, B,Uppercase Letters.0..L&72_Equation Caption1        $"        $"        (_K &73  >4X` P  hp x (#>        5+ ` hp x (#5  hW :bly remains bly remains several years \softline \softlheight276 awa&    ;1X` hp x (#;        5+ ` hp x (#5'    (_N &74  ;1X` hp x (#;        5+ ` hp x (#5  0\K (T 2T 2  ;1X` hp x (#;        5+ ` hp x (#5  (&75        T::\mw3022.tmp:\mw3022.tmp  8.` hp x (#8W32 `*Times New RomanTTW    8.` hp x (#8      W32 `*Times New RomanTTW2 `*Times New RomanTT(&76        (MK $~~  ,"  p x (#,        5+ ` hp x (#5  \MK ::\DOCS\COMPW:\DOCS\COMPWHEN\  ,"  p x (#,        5+ ` hp x (#5  (;K &77  ` !(#        5+ ` hp x (#5  (>K &78  ` !(#        5+ ` hp x (#5  T>K ::\mw3024.tmp:\mw3024.tmp   !(#        5+ ` hp x (#5  (;K $ww  ` !(#        5+ ` hp x (#5  (&79          \f'  2C D $$DC--5&(%55&(%%5&(  _ @>>$FederalCommunicationsCommissionR(#DA981304   ?[Q' }xdEx?  $57=CIOW_e801.A.1.a.(1)(a)i)a)($     > Z!  2C D $$=C--5&(%55&(%%5&(  2  Ӏ   1    5%5&( IntheMatterofBeehiveTelephoneCompany,Inc.,TransmittalNo.8,CCDocketNo.97249,  MemorandumOpinionandOrder,FCC98105(released,June1,1998)(1998BeehiveTariffInvestigationOrder).  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Z!  2C D $$=C--5&(%55&(%%5&(  2  Ӏ   6  5%5&(   See1998BeehiveTariffInvestigationOrderatparas.2225.TheCommissionusedthesamesampleof  companiesthatithadusedtoprescribelocalswitchingratesinthe1997accesstariffinvestigationofBeehive'sTransmittalNo.6.IntheMatterofBeehiveTelephoneCompany,Inc.andBeehiveTelephone,Inc.Nevada, T TransmittalNo.6,CCDocketNo.97237,MemorandumOpinionandOrder,FCC981(releasedJanuary6,1998) l (1997BeehiveTariffInvestigationOrder). l Z!  2C D $$=C--5&(%55&(%%5&(  2  Ӏ   7  5%5&(   47C.F.R.61.39.  Z!  2C D $$=C--5&(%55&(%%5&(  2  Ӏ   8     5%5&(BeehiveTelephoneCompany,Inc.,TariffF.C.C.No.1,TransmittalNo.11(filedJune16,1998)  (TransmittalNo.11).  Z!  2C D $$=C--5&(%55&(%%5&(  2  Ӏ   9    5%5&( IntheMatterofAccessChargeReform,CCDocketNo.96262,FirstReportandOrder,12FCCRcd  15982(1997)(AccessChargeReformOrder).  b I1$  2C D $$=C--5&(%55&(%%5&(2Ӏ  10      5%5&(47C.F.R.69.111(e)(2).(!21$ Z!  2C D $#]C--5&(%55&(%%5&(  2Ӏ  0   : Z!    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V Z!    Ӏ     ..S5%\  `&Times New RomanS Beehivefiled1995and1996costdatatosupportTransmittalNo.8,and1996and1997costdatatosupportTransmittalNo.11.1234 5u{81Right-Aligned Paragraph NumbersI.A.1.a.(1)(a)i)a))*+,-./0 5u{82Right-Aligned Paragraph NumbersI.A.1.a.(1)(a)i)a)$%&' ;=CIOU]ekOrderI.A.1.a.(1)(a)i)a)"!# =W]ciowAgendaAgenda ItemsI.A.1.a.(1)(a)i)a) CyParagraph1. a. i. (1) (a) (i) 1) a)I.A.1.a.(1)(a)i)a)  5u{83Right-Aligned Paragraph NumbersI.A.1.a.(1)(a)i)a)3|a%\  `&Times New RomanX\  P6G;P%\  `&Times New RomanXXj\  P6G;XP%\  `&Times New Roman&&a\  P6G;&P*o> A`ArialTTomanCo> PfQP" [  `*Times New RomanTTX)a [ PfQXP! `>  `6Times New RomanItalicTTX)^ `> XifQXX#~>  *Times New RomanTTcTTT~> pfQp)o> A`ArialTTomanTTcTTX)ao> PfQXP$ [  `*Times New RomanTTcTTw [ PfQP<6X9`("Courier NewTTtalicTTd6X@`7@*X   `*Times New RomanTTcTTXFxX  Pg9CXP) `*Times New RomanTTcTTXXv P7XP<6X9`("Courier NewTTTTcTTXXx6X@DQX@22AArialBoldTTTcTT 2p}wC  `*Times New RomanTTcTTXPP2 `*Times New RomanTTcTT P7P($  2C D $#]C--5&(%55&(%%5&( dHP LaserJet IIISi,,,,,,0##37=CIQYag1.a.i.(1)(a)(i)1)a)  \f'  2C D $$DC--`&(%5`&(%%5&(  @>>$FederalCommunicationsCommissionR(#DA981304   ?[Q' }xdEx?  %\  `&Times New Roman3~$mU Z!  2C D $ C--5&(%55&(%%5&(  85(5&%dd8  <_  _@^^/ Beforethe p      2 @>>$FederalCommunicationsCommission@<<)Washington,D.C.20554   IntheMatterof@4) r @ @4)  CCDocketNo.98108 B  BeehiveTelephoneCompany,Inc.@4)   BeehiveTelephone,Inc.Nevada@4)   @4)  TransmittalNo.11   TariffF.C.C.No.1@4) P  @4   ORDER  "      Adopted:June30,1998; h      p Released:June30,1998   BytheDeputyChief,CommonCarrierBureau:  I.  INTRODUCTION    C = $$DC  2  1  .3   ` OnJune16,1998,BeehiveTelephoneCompany,Inc.andBeehiveTelephone,Inc.of p Nevada(collectively"Beehive")filedTransmittalNo.11,whichproposestomodifyratesforlocalswitching,establishtandemswitchedtransportfacility,tandemswitchedtransporttermination,transportinterconnectioncharges,anddiscontinuethelocaltransportfacilityandterminationcharges.WerejectTransmittalNo.11totheextentthatitproposestoincreasethepremiumandnonpremiumlocalswitchingratesinviolationoftheCommission'sprescriptioninthe1998BeehiveTariffInvestigationOrder.We  suspendandinitiateaninvestigationintotandemswitchedtransportfacility,tandemswitchedtransporttermination,andtransportinterconnectionchargesbecausewefindthattheseratesraisesubstantialquestionsoflawfulness. II.  BACKGROUND     2  2  .3   ` OnJune1,1998,theCommissionissuedaMemorandumOpinionandOrderprescribing b 0 ratesforBeehive'spremiumandnonpremiumlocalswitching,localtransportfacility,andlocaltransportterminationcharges.? >  1      ׀InthatOrder,theCommissiondeterminedthatthecostandinvestmentinformation "! BeehivesubmittedinTransmittalNo.8insupportofitsproposedratescontainedmanyinconsistent,questionable,andunexplainedentriesthatrenderedthedatauselessforthepurposeofapprovingtheratesproposedbyBeehiveorforprescribingaltogetherdifferentrates.@4 >  2      ׀Thesedataincludedcostdatafor1994, r$@$ 1995,and1996intheformatspecifiedforTable1ofFCCARMISReport4301,andBeehive'sgeneralledgersforcalendaryears1994,1995,and1996.A >  3      ׀Beehive'sproposedpremiumandnonpremiumlocal && switchingrateswere$0.028252perminuteofuseand$0.01815perminuteofuse,respectively. &'T Ї  2  3  .3   ` BeehivehadstatedinitsdirectcaseforTransmittalNo.8thatitscostaccountsand 2 recordshadnotbeenmaintainedinaccordancewithPart32oftheCommission'srules.B >  4      ׀Afterexamining  Beehive'ssubmissions,theCommissionfoundthatBeehivehadfailedtoprovideanyexplanationofitsaccountingproceduresthatwouldassurethatitscostswerepresentedandidentifiedinawaythatwouldpermittheCommissiontorelyonthemeithertojustifyBeehive'sproposedratesortoprescribelawfulinterstateaccesscharges.Thus,theCommissionconcludeditwasnecessarytoprescriberatesbasedonanothermethodology.C >  5           2  4  .3   ` TheCommissionprescribedBeehive'sratesbyusingamethodologythatcomputedthe   totalinterstaterevenuerequirementbasedontheaveragetotalplantinserviceandnetinvestmentofsimilarcompaniesusingasampleofcomparabletelephonecompaniesintheNationalExchangeCarrierAssociation(NECA)pool.Dh >  6      ׀TheCommissionprescribedapremiumlocalswitchingrateof$0.009607per "  minuteofuse,anonpremiumlocalswitchingrateof$0.004323perminuteofuse,apremiumlocaltransportfacilityrateof$0.000181permileperminuteofuse,andanonpremiumlocaltransportfacilityrateof$0.000082permileperminuteofuse.OnJune8,1998,BeehivefiledTransmittalNo.10,implementingtheCommission'srateprescription.  2  5  .3   ` OnJune16,1998,BeehivefiledTransmittalNo.11pursuanttoSection61.39ofthe   Commission'srulesE,  >  7      ׀proposingtoincreaseitspremiumandnonpremiumlocalswitchingratesto  $0.024780and$0.0111151perminuteofuse,respectively.F  >  8      ׀Beehivealsoproposestoestablishratesfor p tandemswitchedtransportfacility,tandemswitchedtransportterminationandtransportinterconnectionchargepursuanttotheAccessChargeReformOrder,G< >  9      ׀assetoutinSection69.111(e)(2)ofthe B Commission'srules.H >  10      ׀Beehiveincludedcostandinvestmentdataforcalendaryears1996and1997in  supportofitsfiling. III...DISCUSSION ..26.3  ` ..` WerejectaspatentlyunlawfulBeehive'sproposaltoreviseitspremiumandnonpremiumlocalswitchingratesbecausetheseproposedraterevisionscontainedinTransmittalNo.11violatetheCommission'srateprescriptioninthe1998BeehiveTariffInvestigationOrder.Itiswellestablishedthatagenciesareempoweredtorejecttarifffilingsthatdonotadheretoprescriptionsofratesorpracticesaffectingrates. J   ׀InUnitedAirLinesv.CAB,theU.S.CourtofAppealsfortheSeventhCircuitupheldadecisionoftheCivilAeronauticsBoard(CAB)torejectatariffthatproposedhigherratesthanhadbeenpreviouslyprescribedbytheCAB. K   ׀Inthiscase,followingatariffinvestigation,theCABprescribedcertainfarelevelsforairlineroutesbetweenHawaiiandthemainland. L   ׀Fivedaysafterfilingconformingtariffs,UnitedAirlinesfilednewtariffsreflectinghigherfaresthanthoseprescribedbytheCAB. M   ׀TheCABrejectedthetarifffiling,concludingthatithasthepowertoissueanorderfixingratesforthefutureandtorejecttariffswhichareinconsistentwithanyrateprescriptions. N   ׀TheSeventhCircuitaffirmedtheCABandstated,"[w]ebelievethatCongressnomoreintendedintheFederalAviationActthanintheotherthreesimilaracts[theInterstateCommerceAct,thePackersandStockyardsAct,andtheNaturalGasAct]toauthorizetheBoardtoestablishalawfulrateonlytobefollowedimmediatelybythenecessityofpassinguponotheranddifferentratesfiledbythecarriers." O   ..27.3  ` ..` Similarly,werejectBeehive'sproposaltoreviseitspremiumandnonpremiumlocalswitchingratesbecausetheyaresubstantiallyhigherthanthelocalswitchingratestheCommissionprescribed15daysbeforeBeehivefiledTransmittalNo.11.IfwewerenotpermittedtorejecttariffsthatareinconsistentwithratesprescribedbytheCommission,we"wouldbeunabletopreventacontinualmerrygoroundofinvestigationsalldealingwiththesamesubject." P   ..28.3  ` ..` IntheCommission'sinvestigationofTransmittalNo.8,theCommissionprescribedBeehive'spremiumandnonpremiumlocalswitchingratesby:(1)computingatotalinterstaterevenuerequirementbasedontheaveragetotalplantinserviceandnetinvestmentamongtelephonecompanieswithacomparablenumberofaccesslines;(2)calculatingan11.25percentrateofreturnonthatinvestment;and(3)computingBeehive'soperatingexpensesbyusinga25percentratiooftotaloperatingexpensestototalplantinservice.TheCommissionadoptedthisapproachbecauseitfoundthatBeehivehadfailedtojustifyitshistoriccosts.TheCommissionconcludedthatBeehivehadfailedtomaintainitscostaccountsandrecordsinaccordancewithPart32oftheCommission'srulesandhadnotexplainedtheaccountingproceduresthatwereusedtomaintainitsbookstoallowrelianceonthem.Moreover,theCommissionfoundthatBeehive'scostdatasupportingitsoperatingexpensesrevealedmanyinconsistent,questionable,andunexplainedentries...29.3  ` ..` FifteendaysaftertheCommissionmadethisprescription,Beehivefiledthetransmittalatissuehereproposingtoincreasepremiumlocalswitchingratesbyapproximately300%andnonpremiumlocalswitchingratesbyapproximately250%.NotwithstandingthegrossdeficienciestheCommissionfoundinBeehive'saccountingproceduresandhistoriccostsupportinthe1998BeehiveTariffInvestigationOrder,BeehivedoesnotevenattempttoexplainhowithascorrectedthesedeficienciesinTransmittalNo.11,whichsimilarlyisbasedonhistoriccostsupport.Forexample,Beehive'scostsupportforTransmittalNos.8and11arebothbasedinparton1996data. Q   ׀WefoundBeehive's1996costdatatobeseriouslydeficientinthe1998BeehiveTariffInvestigationOrder.Wehavenoreasontobelievethatthe1996costdatathatBeehivefiledwithTransmittalNo.11aremorereliablethanthe1996costdatafiledwithTransmittalNo.8:forinstance,Beehive'scostsupportforTransmittalNo.11failstoidentifytheaccountingproceduresitusedtomaintainitsbooksandfailstodocumentandexplainthedata,assumptions,andthemethodologiesonwhichitbaseditspremiumandnonpremiumlocalswitchingrates.Accordingly,werejectBeehiveTransmittalNo.11totheextentthatitproposestoincreaseitspremiumandnonpremiumlocalswitchingrates...210.3  ` ..` WedonotrejecttheratesBeehivehasfiledfortandemswitchedtransportfacility,tandemswitchedtransporttermination,andtransportinterconnectionchargebecauseBeehivewasrequiredtofilenewratesfortheseelementspursuanttotheAccessChargeReformOrder.Wedo,however,findthattheseratesarebased,inpart,on1996costandinvestmentdatathattheCommissionhaspreviouslyrejected.WethereforefindthatBeehive'standemswitchedtransportfacility,tandemswitchedtransporttermination,andtransportinterconnectionchargeratesraisesubstantialquestionsoflawfulnesswarrantingsuspensionandaninvestigation. IV.ORDERINGCLAUSES ..211.3  ` ..` Accordingly,ITISORDERED,pursuanttoSections201(b)and205(a)oftheCommunicationsActof1934,47U.S.C.201(b),205(a),andauthoritydelegatedpursuanttoSections0.91and0.291oftheCommission'srules,47C.F.R.0.91,0.291,thattherevisionspertainingtopremiumandnonpremiumlocalswitchingservicesfiledbyBeehiveTelephoneCompany,Inc.andBeehiveTelephone,Inc.ofNevada inTransmittalNo.11AREREJECTED...212.3  ` ..` ITISFURTHERORDEREDthatBeehiveTelephoneCompany,Inc.andBeehiveTelephone,Inc.ofNevada SHALLFILEtariffrevisionsremovingtherejectedmaterialnolaterthanfivebusinessdaysfromthereleasedateofthisOrder.Forthispurpose,Sections61.58and61.59oftheCommission'srules,47C.F.R.61.58,61.59,arewaived.BeehiveTelephoneCompany,Inc.andBeehiveTelephone,Inc.ofNevada shouldcitethe"DA"numberoftheinstantOrderastheauthorityforthisfiling...213.3  ` ..` ITISFURTHERORDEREDthat,pursuanttoSection204(a)oftheCommunicationsActof1934,47U.S.C.204(a),andauthoritydelegatedpursuanttoSections0.91and0.291oftheCommission'srules,47C.F.R.0.91,0.291,therevisionstoBeehiveTariffF.C.C.No.1,TransmittalNo.11regardingtransportfacility,transporttermination,andtransportinterconnectchargerates,ARESUSPENDEDforonedayandaninvestigationoftheseratesISINSTITUTED...214.3  ` ..` ITISFURTHERORDEREDthatBeehiveTelephoneCompanySHALLFILE,withinfivebusinessdaysfromthereleasedateofthisOrder,asupplementadvancingtheeffectivedateforthetransportfacility,transporttermination,andtransportinterconnectionchargefromJuly1,1998toJune30,1998,andinthesamesupplementsuspendthesechargesuntilJuly1,1998.BeehiveTelephoneCompany,Inc.andBeehiveTelephone,Inc.ofNevada shouldcitethe"DA"numberoftheinstantOrderastheauthorityforthisfiling...215.3  ` ..` ITISFURTHERORDEREDthat,pursuanttoSection204(a)oftheCommunicationsActof1934,47U.S.C.204(a),BeehiveTelephoneCompany,Inc.andBeehiveTelephone,Inc.ofNevada shallkeepaccurateaccountofallamountsreceivedbyreasonoftheratesthatarethesubjectofthisinvestigation.....` ..`  .. ..h..h..FEDERALCOMMUNICATIONSCOMMISSION..` ..`  .. ..h..h..JamesD.Schlichting..` ..`  .. ..h..h..DeputyChief..` ..`  .. ..h..h..CommonCarrierBureau .. ..