BEFORE THE CORPORATION COMMISSION OF OKLAHOMA

Transcription

1 BEFORE THE CORPORATION COMMISSION OF OKLAHOMA APPLICATION OF THE APPLICANTS AS SET FORTH IN THE APPLICATION FOR AN ORDER OF THE COMMISSION ABOLISHING THE OKLAHOMA HIGH COST FUND CREATED BY ORDER NO AND APPROVAL OF A STREAM-LINED REVENUE REQUIREMENTS METHODOLOGY ) ) ) ) ) ) ) CAUSE NO. PUD HEARING: APPEARANCES: January 31, 2013 at 8:30 a.m. in Courtroom B 2101 N. Lincoln Blvd, Oklahoma City, OK COUR1 CLERKS OFFICE - OKC Before Jacqueline T. Miller, Administrative Law Judge CORPORAT,ON COMMISSION OF OKLAHOMA John W. Gray, Jr., Attorney representing Southwestern Bell Telephone Company, d/b/a AT&T Oklahoma Ron Comingdeer, Mary Kathryn Kunc and Kendall W. Parrish, Attorneys representing the rural telephone companies' Kimberly K. Argenbright, Attorney representing Totah Communications, Inc., FairPoint Communications, Pine Telephone Company, Inc. and Grand Telephone Company, Inc J. Fred Gist and Jennifer H. Castillo, Attorney representing Pottawatomie Telephone Company, Cimarron Telephone Company, and Salina- Spavinaw Telephone Company, Inc Marc Edwards, Attorney representing Cox Oklahoma Telecom, LLC Nancy Thompson, Attorney representing Sprint Communications Company, L.P., Sprint Spectrum L.P., Virgin Mobile USA, L.P and Nextel West Corp., T-Mobile Central LLC, d/b/a T-Mobile, and tw telecom Inc. Jack G. Clark, Jr., Attorney representing the Verizon Companies' Dallas Ferguson, Attorney representing United States Cellular Corporation Allison Chandler and Kimberly Prigmore, Assistants General Counsel, representing Public Utility Division, Oklahoma Corporation Commission William L. Humes and Nicole A. King, Assistant Attorneys General representing the Office of the Attorney General, State of Oklahoma Cody B. Waddell, Attorney representing certain telephone carriers' Howard Siegel, Attorney representing Logix Communications, L.P. dlb/a Logix Communications REPORT AND RECOMMENDATION OF THE ADMINISTRATIVE LAW JUDGE REGARDING RLECS' OBJECTIONS TO VERIZON'S FIRST SET OF DATA REQUESTS Atlas Telephone Company; Beggs Telephone Company; Bixby Telephone Company, Inc.; Canadian Valley Telephone Company; Carnegie Telephone Company; Central Oklahoma Telephone Company; Cherokee Telephone Company; Chickasaw Telephone Company; Craw-Kan Telephone Cooperative, Inc.; Cross Telephone Company; Dobson Telephone Company; Hinton Telephone Company; KanOkIa Telephone Association; McLoud Telephone Company; Medicine Park Telephone Company; Oklahoma Telephone and Telegraph, Inc.; Oklahoma Western Telephone Company; Panhandle Telephone Cooperative, Inc.; Pinnacle Communications; Pioneer Telephone Cooperative, Inc.; Santa Rosa Telephone Cooperative, Inc.; Shidler Telephone Company; South Central Telephone Association; Southwest Oklahoma Telephone Company; Terra] Telephone Company; and Valliant Telephone Company. 2 These companies include MClmetro Access Transmission Services LLC d/b/a Verizon Access Transmission Services; MCI Communications Services, Inc. d/b/a Verizon Business Services; Verizon Long Distance, LLC; TTI National, Inc.; Teleconnect Long Distance Service & Systems, d/b/a Telecom*USA and Teleconnect; Verizon Select Services, Inc.; and Celico Partnership and its commercial mobile radio service subsidiaries operating in the State of Oklahoma (collectively "Verizon"). Valor Telecommunications of Texas, LP d/b/a Windstream Communications Southwest; Windstream Oklahoma, LLC; Oklahoma Windstream, LLC; Mid-America Telephone Company, Inc. d/b/a TDS Telecom/Mid-America Telephone; Oklahoma Communication Systems, Inc. d/b/a TDS Telecom/Oklahoma Communication Systems, Inc.; Wyandotte Telephone Company dlb/a TDS Telecom; CentwyTel of Northwest Arkansas, LLC d/b/a Centu,yLink; CenturyTel Long Distance, LLC d/b/a CenturyLink Long Distance; Embarq Communications, Inc. d/b/a CenturyLink Communications; Qwest Communications Corporation dlb/a CentwyLink QCC.

2 Cause No. PUD Report Regarding RLEC 's Objections to Verizon 's First Set of Data Requests Page 2of6 SUMMARY On January 31, 2013, the ALJ ruled that the RLECs were to provide data responses to data request The ALJ reasoned that this data request relates to the RLECs contention at page 4 of the Amended Application that since the issuance of Order No , competition among various providers of communications using different technologies, including toll providers, CMRS providers, VoIP and traditional local service providers has changed. On February 7, 2013, the ALJ ruled that Verizon's first set of data requests 1-3, 1-4, 1-5, 1-6, 1-7, 1-8, 1-9 and 1-31 seek information which if required would result in a determination of the merits of the cause. 4 PROCEDURAL HISTORY Applicants herein filed an Amended Application with a Revised Settlement Agreement attached as an exhibit on December 7, Thereafter, on December 19, 2012, Verizon served its first set of data requests to the RLECs. Pursuant to an agreement of the parties, on January 21, 2013, RLECs filed their Objections to Verizon's Data Requests and set them for hearing before the Administrative Law Judge on January 31, After hearing oral arguments from the Parties, the ALJ issued her oral ruling on objections to a certain data request on January 31, 2013 and requested proposed findings of fact and conclusions of law be submitted on February 4, 2013 regarding Verizon's first set of data requests 1-3, 1-4, 1-5, 1-6, 1-7, 1-8, 1-9 and RLEC ALLEGATIONS 5 OF FACT 1. RLECs are telecommunications carriers subject to the jurisdiction and authority of the Commission. 2. As referenced in the Amended Application filed on December 7, 2012, the current Oklahoma Access Charge Plan (the "Plan"), which contained the Oklahoma High Cost Fund ("HCF"), was adopted and approved by the Commission in Order No , issued in consolidated Cause Nos. PUD and PUD , on January 30, The Plan provides in Section E that upon implementation, the HCF "will be established to provide necessary funding required to maintain revenue requirement neutrality for those ILECs who seek HCF funding and who elect to become access providers." The Plan further provides at Section F For example, see paragraphs 1, 2, 4 of the Revised Settlement Agreement. Verizon's proposed findings of fact and conclusions of law are attached hereto as Attachment A.

3 Cause No. PUD Report Regarding RLEC 's Objections to Verizon '5 First Set of Data Requests Page 3 of 6 that "any actions taken to seek to revise, change or alter the provisions of the plan shall be with notice and hearing and shall be effective only after order of the 0CC." 3. Order No also establishes that the HCF was a competitively neutral access charge plan intended to provide a mechanism to expand telecommunications competition with participation by all telecommunications providers. Specifically, the HCF was established to be a fixed amount funded by toll service providers, including resellers, on a retail billed toll minutes of use basis ("RBMOU") remitted on a monthly basis to the HCF Administrator and subsequently distributed to each ILEC access provider in a monthly fixed amount. 4. After issuance of Order No , the Federal Telecommunications Act of 1996 (the "Federal Act"), 47 U.S.C. 251 et seq., and the Oklahoma Telecommunications Act of 1997 (the "Act"), 17 O.S et seq., were passed and implemented. The Oklahoma Universal Service Fund ("OUSF") was created as part of the Act for the stated purpose of "promoting and ensuring the availability of primary universal services, at rates that are reasonable and affordable, and special universal services, and to provide for reasonably comparable services at affordable rates in rural areas as in urban areas." 17 O.S B. 5. To ensure that eligible local exchange telecommunications service providers are able to maintain rates for primary universal services that are reasonable and affordable, Section G of the Act authorizes funding, upon request by the eligible local exchange telecommunications service provider, for six (6) statutorily defined purposes. 6. There have been many changes to the telecommunications industry since the issuance of Order No and the passage of the Act and Federal Act, resulting in the decline of RBMOUs. 7. The Revised Settlement Agreement attached as Exhibit A to the Amended Application contains a solution to address the changed environment and references a procedure by which the RLECs may request and receive funding from the OUSF to maintain rates to their respective end user customers that are reasonable and affordable. The requests for prospective OUSF funding will be supported by a calculation of costs to determine each RLECs' cost to provide primary universal services based upon the Federal Communications Commission ("FCC") parts 32, 36 and 64 costs or by such other costing or measurement methodology as may be established for such purpose by the FCC pursuant to Section 254 of the Federal Act. Additionally, the Revised Settlement Agreement provides that only the Staff of the Public Utility Division of the Oklahoma Corporation Commission, the Attorney General and an independent third party jointly selected by the Attorney General and Staff with input from all Parties will

4 Cause No. PUD Report Regarding RLEC 's Objections to Verizon 's First Set of Data Requests Page 4of6 have access to each RLEC's cost study information and that such information will be kept confidential. 8. The Revised Settlement Agreement also provides for the termination of the HCF upon the expiration of sixty (60) days following the later of (1) the issuance of a final unappealable Commission order determining each RLEC's prospective revenue requirement and prospective OUSF support payment or (2) the final outcome of any appeal(s) regarding the RLEC revenue requirement determinations. 9. The relief requested in the Amended Application is narrowly limited to Commission approval of the Revised Settlement Agreement in its entirety, without condition or modification. 10. The above referenced data requests seek information regarding entities that are not parties to this proceeding or seek information regarding the determination of each RLECs' prospective revenue requirement. 11. At the hearing, Counsel for the RLECs argued that the only relief requested in this Cause is the approval of the Applicants' Revised Settlement Agreement and the process set forth therein. Approval of the Revised Settlement Agreement will not result in changes to any parties' revenue streams, nor will there be changes to the HCF or the OUSF until after the applications that are to be filed subsequently have been fully processed. Counsel argued that no revenue requirements will be addressed in this Cause and any data requests seeking revenue or cost information is beyond the relief requested. Counsel for RLECs objected to data requests seeking information regarding affiliates of the RLECs on the grounds that affiliates are not parties to this Cause; the information requested is irrelevant to the issues raised in the Amended Application and Revised Settlement Agreement and not reasonably calculated to lead to the discovery of admissible evidence; the information requested is competitively sensitive that, if required to be disclosed to the requesting party, would cause irreparable harm to each RLEC and/or its affiliate for which there is no adequate remedy; and in many instances the requested information is not maintained by the RLECs in the form requested in the regular course of business. 12. At the January 31, 2013, hearing on the Objections, the RLECs additionally argued that a ruling requiring disclosure of confidential and competitively sensitive revenue and cost information would cause the Revised Settlement Agreement to be null and void, a de facto determination to deny the relief requested in the Amended Application, and leaving Applicants without any remedy. Counsel for Atlas, et al noted during oral arguments that in Section 6 of the Revised Settlement Agreement his clients agreed to waive their rights under law in order to reach

5 Cause No. PUD Report Regarding RLEC 's Objections to Verizon 's First Set of Data Requests Page 5of6 the compromises set forth in the Revised Settlement Agreement. Counsel for Atlas further argued if his clients were required to provide the revenue and cost information requested, the Revised Settlement Agreement could not be approved in its entirety, thus rendering the waiver contained in Section 6 and the other provisions of the Revised Settlement Agreement null and void. If such a situation were to occur, counsel for Atlas, et al. would recommend his clients withdraw from the Cause and seek dismissal. 13. On July 31, 2013, RLECs committed to provide a date for submission of responses to Verizon. FINDINGS OF FACT AND CONCLUSIONS OF LAW 1. The Commission has jurisdiction over the above entitled cause pursuant to Article IX, Section 18 of the Oklahoma Constitution, 17 U.S. 131, et seq., 17 U.S et seq.; and 180.S On January 31, 2013, the ALJ ruled that the RLECs were to provide data responses to data request The ALJ reasoned that this data request relates to the RLECs contention at page 4 of the Amended Application that since the issuance of Order No , competition among various providers of communications using different technologies, including toll providers, CMRS providers, VoIP and traditional local service providers has changed. 3. On February 7, 2013, the ALJ ruled that Verizon's first set of data requests 1-3, 1-4, 1-5, 1-6, 1-7, 1-8, 1-9 and 1-31 seek information which if required would result in a determination of the merits of the cause The ALJ recommends that the RLECs provide the data request responses as referenced herein by February 11, RECOMMENDATION OF THE ADMINISTRATIVE LAW JUDGE The Administrative Law Judge's recommendation is that the RLEC objections are overruled in part and sustained in part in accordance with the rulings herein. Respectfully submitted this II day of February, Jacqueline T. Miller, Administrative Law Judge 6 For example, see paragraphs 1, 2,4 of the Revised Settlement Agreement.

6 Attachment "A" FILED FEB BEFORE THE CORPORATION COMMISSION OF OKLAHO41 CLLK'S OFFICE - 0KG ORPCRATION COMMISSION OF OKLAHOMA APPLICATION OF THE APPLICANTS AS ) SET FORTH IN THE APPLICATION FOR ) AN ORDER OF THE COMMISSION ) ABOLISHING THE OKLAHOMA HIGH ) CAUSE NO. PUD COST FUND CREATED BY ORDER ) AND APPROVAL OF A STREAM-LINED ) REVENUE REQUIREMENTS METHODOLOGY) Submission of Proposed Findings of Fact and Conclusions of Law Regarding Objections to Verizon's First Set of Data Requests The Verizon companies' (collectively "Verizon") submit the attached proposed findings of fact and conclusions of law regarding Objections to Verizon's First Set of Data Requests, filed herein on January 22, 2013 on behalf of certain RLEC Applicants 2, and Totah Communications, Inc., FairPoint Communications, Pine Telephone Company, Inc., Grand Telephone Company, Inc., Pottawatomie Telephone Company, Cimarron Telephone Company, Salina-Spavinaw Telephone Company, Inc., Oklahoma Windstream, LLC, Windstream Oklahoma LLC, Mid- America Telephone Company, Inc. dlb/a TDS Telecom/Mid-America Telephone, Oklahoma Communication Systems, Inc. dlb/a TDS Telecom/Oklahoma Communication Systems, Inc., and Wyandotte Telephone Company d!b/a TDS Telecom. 'These companies include MClmetro Access Transmission Services LLC dibla Verizon Access Transmission Services (Verizon Access"); MCI Communications Services, Inc. d/b/a Verizon Business Services; Verizon Long Distance, LLC; TTI National, Inc.; Teleconnect Long Distance Service & Systems, dlbla TelecomUSA and Teleconnect; Verizon Select Services, Inc.; and Cellco Partnership and its commercial mobile radio service subsidiaries operating in the State of Oklahoma (collectively doing business as "Verizon Wireless") (collectively, "Verizon") 2 Atlas Telephone Company; Beggs Telephone Company; Bixby Telephone Company, Inc.; Canadian Valley Telephone Company; Carnegie Telephone Company; Central Oklahoma Telephone Company; Cherokee Telephone Company; Chickasaw Telephone Company; Craw-Kan Telephone Cooperative, Inc.; Cross Telephone Company; Dobson Telephone Company; Hinton Telephone Company; KanOkla Telephone Association; McLoud Telephone Company; Medicine Park Telephone Company; Oklahoma Telephone and Telegraph, Inc.; Oklahoma Western Telephone Company; Panhandle Telephone Cooperative, Inc.; Pinnacle Communications; Pioneer Telephone Cooperative, Inc.; Santa Rosa Telephone Cooperative, Inc.; Shidler Telephone Company; South Central Telephone Association; Southwest Oklahoma Telephone Company; Terral Telephone Company; and Valliant Telephone Company.

7 Respectfully submitted, Aal -OC \ _ Jack G. Clark, Jr. OBA No Park Avenue, Suite 400 Oklahoma City, OK Telephone: (405) Facsimile: (405) Electronic mail: cclark@cswp-law.com ATTORNEY FOR VERIZON Certificate of Service I hereby certify that a true and correct copy of the above and foregoing document was delivered via hand-delivery, electronic mail, or US mail on February 4, 2013 to Elizabeth Cates, Allison Chandler, Kimberly Prigmore, Nancy Thompson, Kim Argenbright, John Gray, Howard Siegel, Marc Edwards, Jennifer Castillo, Fred Gist, Ron Comingdeer, Kendall Parrish, Cody Waddell, Dallas Ferguson, Bill Humes and Nicole King. O'A - U a - Jack G. Clark, Jr.

8 BEFORE THE CORPORATION COMMISSION OF OKLAHOMA APPLICATION OF THE APPLICANTS AS ) SET FORTH IN THE APPLICATION FOR ) CAUSE NO. PUD AN ORDER OF THE COMMISSION ) ABOLISHING THE OKLAHOMA HIGH ) COST FUND CREATED BY ORDER ) AND APPROVAL OF A STREAM-LINED ) ORDER NO. REVENUE REQUIREMENTS METHODOLOGY) HEARING: January 31, 2013, in Courtroom B 2101 North Lincoln Boulevard, Oklahoma City, Oklahoma Before Jacqueline T. Miller, Administrative Law Judge APPEARANCES: John W. Gray, Jr., Attorney representing Southwestern Bell Telephone Company, d/b/a AT&T Oklahoma Ron Comingdeer and Kendall W. Parrish, Attorneys representing certain rural telephone companies' Kimberly K. Argenbright, Attorney representing Totah Communications, Inc., FairPoint Communications, Pine Telephone Company, Inc. and Grand Telephone Company, Inc J. Fred Gist and Jennifer H. Castillo, Attorney representing Pottawatomie Telephone Company, Cimarron Telephone Company, and Sauna- Spavinaw Telephone Company, Inc Cody B. Waddell, Attorney representing Oklahoma Windstream, LLC, Windstream Oklahoma LLC, Mid-America Telephone Company, Inc. d/b/a TDS Telecom/Mid-America Telephone, Oklahoma Communication Systems, Inc. d/b/a TDS Telecom/Oklahoma Communication Systems, Inc., and Wyandotte Telephone Company d/b/a TDS Telecom Marc Edwards, Attorney representing Cox Oklahoma Telecom, LLC Nancy Thompson, Attorney representing Sprint Communications Company, L.P., Sprint Spectrum L.P., Virgin Mobile USA, L.P and Nextel West Corp., T-Mobile Central LLC, d/b/a T-Mobile, and tw telecom Inc. Jack G. Clark, Jr., Attorney representing the Verizon Companies 4 Atlas Telephone Company; Beggs Telephone Company; Bixby Telephone Company, Inc.; Canadian Valley Telephone Company; Carnegie Telephone Company; Central Oklahoma Telephone Company; Cherokee Telephone Company; Chickasaw Telephone Company; Craw-Kan Telephone Cooperative, Inc.; Cross Telephone Company; Dobson Telephone Company; Hinton Telephone Company; KanOkla Telephone Association; McLoud Telephone Company; Medicine Park Telephone Company; Oklahoma Telephone and Telegraph, Inc.; Oklahoma Western Telephone Company; Panhandle Telephone Cooperative, Inc.; Pinnacle Communications; Pioneer Telephone Cooperative, Inc.; Santa Rosa Telephone Cooperative, Inc.; Shidler Telephone Company; South Central Telephone Association; Southwest Oklahoma Telephone Company; Terral Telephone Company; and Valliant Telephone Company. 4mese companies include MClmetro Access Transmission Services LLC dlbla Verizon Access Transmission Services ("Verizon Access"); MCI Communications Services, Inc. dlbla Verizon Business Services; Verizon Long Distance, LLC; TTI National, Inc.; Teleconnect Long Distance Service & Systems, d/b/a Telecom*USA and Teleconnect; Verizon Select Services, Inc.; and CelIco Partnership and its commercial mobile radio service subsidiaries operating in the State of Oklahoma (collectively doing business as "Verizon Wireless") (collectively, "Verizon")

9 Allison Chandler and Kimberly Prigmore, Assistants General Counsel, representing Public Utility Division, Oklahoma Corporation Commission William L. Humes and Nicole A. King, Assistant Attorneys General representing the Office of the Attorney General, State of Oklahoma ORDER OVERRULING OBJECTIONS TO VERIZON'S FIRST SET OF DATA REQUESTS BY THE COMMISSION: The Corporation Commission of the State of Oklahoma (the "Commission"), being regularly in session and the undersigned Commissioners being present and participating, there comes on for consideration and action objections to data requests issued by Verizon. Three separate sets of objections were filed, including objections filed by Oklahoma Windstream, LLC and Windstream Oklahoma, LLC (collectively "Windstream"), 5 objections filed by Mid-America Telephone Company, Inc. dlb/a TDS Telecom/Mid-American Telephone, Oklahoma Communications Systems, Inc. d/b/a TDS Telecom/Oklahoma Communication Systems, Inc. and Wyandotte Telephone Company d/b/a TDS Telecom (collectively "TDS"), 6 and objections filed by the remaining RLECs ("RLECs") in this case. 7 The data requests issued by Verizon to each of the companies are identical. Windstream objected only to Verizon DRs 1-9 and TDS and the other companies filed objections to Verizon DRs 1-3, 1-4, 1-5, 1-6, 1-7, 1-8, 1-9, 1-31 and The objections filed on behalf of the various parties as to each DR are substantially similar. The companies obje cted to each and every data request "on the basis that it seeks information that is irrelevant to the issues raised in the Amended Application filed on December 7, 2012 and is not reasonably calculated to lead to the discovery of admissible evidence." Additionally, the companies objected to Verizon's DRs on the basis that each of the data requests "is overly broad, unduly burdensome, seeks information which is not kept in the normal course of business" and "which is competitively sensitive that, if required to be disclosed to the requesting party, would cause irreparable harm to each RLEC and for which there is no adequate remedy to prevent such irreparable harm to RLECs if disclosure is required." Oral arguments on the objections were heard on January 31, Counsel for the objecting parties spoke in support of their objections to the data requests issued by Verizon. In addition to the written objections, counsel argued that the only issues that can be addressed in this case are those set forth in the Amended Application, since no party has asked for affirmative relief. Counsel for the RLECs stated that the discovery requested is prohibited by the terms of the "Revised Settlement Agreement" attached to the Amended Application and if the discovery is ordered, it will violate that prohibition and render the "Revised Settlement Agreement" void. Objections to Verizon's First Set of Data Requests, filed on January 22, Objections to Verizon's First Set of Data Requests, filed on January 22, RLECS' Objections to Verizon's First Set of Data Requests, filed on January 22,

10 In response to the AL's question, counsel for the RLECs stated that the data requests are not relevant to termination of the HCF. Counsel for TDS and Windstream concurred in the statements of the RLECs and added that the data requests are intended to harass the RLECs. In response to the objections, counsel for Verizon reminded the ALJ that the Commission ordered Staff to file an Application to determine the necessity and continuation of the High Cost Fund at its current funding levels, which Staff filed in PUD The Application in that case states: The Oklahoma High Cost Fund (HCF) has not had a review of its disbursements or contributions since its inception in Therefore the Commission is initiating this present cause to conduct such review. At a hearing on April 26, 2012, on a motion to hold in abeyance, the AU asked counsel for the Applicants if the issues in can be addressed in this case, and they answered "yes." Based on that representation, Order No was entered in PUD on September 27, 2012, adopting the findings of fact and conclusions of law, including the following finding: Further, the position taken in oral arguments that Cause No. PUD issues may be addressed in Cause No. PUD , is adopted as the recommendation of the AU. Counsel for Verizon was asked by the ALJ if financial information such as is being requested in Verizon's DRs had ever been provided before. Counsel advised the ALJ that financial information had been provided in prior cases requesting OUSF or High Cost Fund funding, although he was not sure of the specific information provided. Counsel further advised the ALJ that previously in Cause No. PUD Verizon had sought cost studies such as those requested in this matter, that the Data Requests were not objected to, and that the parties were scheduling a time for the information to be reviewed when unrelated events occurred that prevented the completion of the disclosure. Counsel for Sprint concurred with the comments made by counsel for Verizon. Counsel further argued that in spite of the fact that the requested relief seeks to continue the High Cost Fund indefinitely, Applicants have submitted no evidence to address the issue of necessity of the High Cost Fund and why it is necessary to require High Cost Fund contributors to continue to pay $37 million annually without any explanation for why the subsidy is necessary. Counsel argued that the only way to determine whether the High Cost Fund should continue at its present funding levels is to determine whether the High Cost Fund is "necessary" and if so, for what purpose. It is impossible to determine if the HCF is "necessary" for any purpose without cost information. The data requests in this case are an attempt to get 5

11 information that will determine whether the High Cost Fund is necessary, which is a critical step in determining whether the High Cost Fund should continue. Counsel for Sprint further stated that in the 26 months since Staff filed the application in , the RLECs have received an additional $80 million from the HCF and receive an additional $3 million per month in subsidies. The data requests are an attempt to begin the review process required to determine the necessity of the High Cost Fund. The only way to address the issue is to require the RLECs to provide the requested cost information. The Applicants' attempts to limit access to cost information to Staff, the AG, and a third party employed to assist them in their review cannot be used as a reason to deny relevant data requests. Nor is a threat that the RLECs will dismiss the case if their objections are overruled a basis for denying parties the right to answers to legitimate data requests. Finally, to the extent the requested information is confidential and competitively sensitive, counsel for Sprint argued that confidential information can be subject to a protective order that restricts examination of the information to individuals who sign an affidavit that they are not involved in competitive decision making on behalf of their client and/or employer. That is consistent with the position taken by Staff in responses to DRs issued on April 11, 2012, where they said: "Should a competitor wish to have the rates reviewed independently of PUD and the AG, PUD supports the use of expert witnesses who are segregated from the competitive line of business." At the conclusion of the hearing, the ALJ directed the RLECs, TDS and Windstream to answer the following Verizon Data Requests: With respect to the objections to the remaining data requests, the ALJ directed the parties to submit proposed findings of fact and conclusions of law by close of business on Monday, February 4, Findings of Fact and Conclusions of Law The Commission has jurisdiction pursuant to Article IX, Section 18 of the Oklahoma Constitution and OAC 165:5. 2. On December 1, 2010 the Public Utility Division, pursuant to an Order of the Oklahoma Corporation Commission, initiated Cause No. PUD for the purpose of determining the necessity and continuation of the High Cost Fund at its present funding levels. 3. The Application in PUD indicated that the fund had not had a review of its disbursements or contributions since its inception in 1996 and therefore PUD was initiating that Cause to conduct such review.

12 4. On March 22, 2012 Applicants filed PUD seeking the Commission approval of a non-unanimous settlement agreement attached to the Application. 5. The Commission found in Order No that, "Further, the position taken in oral arguments that Cause No. PUD issues may be addressed in Cause No. PUD , is adopted as the recommendation of the AU." 6. The issues raised in PUD may properly be raised by any of the parties in PUD The Verizon Data Requests to which objections have been filed seek financial information of Applicants which are Rural Local Exchange Companies ("RLECs"). 8. The ALJ found that the information sought was related to the issues raised in PUD which could be addressed in PUD The ALJ further found that data requests related to the RLECs' finances, costs and revenues are relevant to the issue of the necessity and continuation of the High Cost Fund at its present funding levels. Therefore, objections that the information requested is irrelevant to the issues raised in the Amended Application and is not reasonably likely to lead to the discovery of admissible evidence are overruled. 10. The AU further found that objections that certain information is deemed competitively sensitive that, if required to be disclosed to the requesting party, would cause irreparable harm to each RLEC and for which there is no adequate remedy to prevent such irreparable harm if disclosure is required, are not well taken. The Commission has issued its standard protective order in numerous cases to protect confidential information. The AU also takes judicial notice of the language contained in the Stipulation creating the High Cost Fund, at Attachment B, addressing participation by interested parties in reviews of requests for increases in funding from the High Cost Fund, stating "[w]hile the 0CC staff shall be the prime reviewer, intervenors may, with appropriate proprietary agreements, be granted full review capability." Moreover, counsel for Sprint and tw telecom offered to include additional language in a protective order in this case, restricting examination of confidential information to individuals who sign an affidavit that they are not involved in competitive decision making on behalf of their client and/or employer. This language would provide an additional layer of protection and is consistent with the position of Staff taken in response to data requests. Therefore, the objections to data requests on this basis are overruled, and information deemed confidential and competitively sensitive should be produced subject to a protective order including the language stated above. 11. The AU further found that objections that the data requests are "overly broad" are overruled. None of the parties objecting to the data requests offered any explanation 7

13 to explain this objection, nor did they offer any suggestion for how the data requests should be narrowed to avoid an objection of being "overly broad." 12. As to the specific Verizon data requests to which objections have been raised the ALJ recommended that data requests 1-3, 1-4, 1-5, 1-6, 1-7, 1-8, 1-9, and 1-31 should be answered on or before [date].. ri '1 ii II Li J tjt THE COMMISSION THEREFORE ORDERS that the findings of fact and conclusions of law herein shall become the order of the Commission. THE COMMISSION FURTHER ORDERS that the Objections to Verizon's First Set of Data Requests filed by TDS, the Objections to Verizon's First Set of Data Requests filed by Windstream, and the RLECS' Objections To Verizon's First Set of Data Requests are overruled, and the parties are directed to provide responses to the data requests on or before [date]. THIS ORDER SHALL BECOME EFFECTIVE immediately. OKLAHOMA CORPORATION COMMISSION PATRICE DOUGLAS, Chairman BOB ANTHONY, Vice Chairman DANA L. MURPHY, Commissioner CERTIFICATION DONE AND PERFORMED by the Commissioners participating in the making of this order, as shown by their signatures above, this - day of February, PEGGY MITCHELL, Commission Secretary 8

14 REPORT OF THE ADMINISTRATIVE LAW JUDGE The foregoing findings, conclusions, and order are the report and recommendation of the administrative law judge. JACQUELINE T. MILLER Administrative Law Judge Date