In the Matter of 
Federal Communications Commission 
Before the 
Federal Communications Commission 
Washington, D.C. 20554 
Open Network Architecture Tariffs 
of US West Communications, Inc. 
) 
) 
) 
) 
CC Docket No. 94-128 
MEMORANDUM OPINION AND ORDER 
FCC 96-35 
Adopted: January 30, 1996 Released: February 1, 1996 
By the Commission: 
I. INTRODUCTION 
1. In the Part 69 ONA Order, the Commission adopted rules requiring the Bell Operating 
Companies (BOCs) to implement an open network architecture (ONA).1 The Commission's ONA 
rules require BOCs providing enhanced services to make regulated basic services available to 
enhanced service providers (ESPs) at the same rates, terms, and conditions that BOCs receive 
when using those basic services in the provision of their own enhanced services. 2 The 
1 Amendments to Part 69 of the Commission's Rules Relating to the Creation of Access Charge Subelements 
for Open Network Architecture, CC Docket No. 89-79, Report and Order, Order on Reconsideration, and 
Supplemental Notice of Proposed Rulemaking, 6 FCC Red 4524 (1991) (Part 69 ONA Order), modified on recon. 
7 FCC Red 5235 (1992) (First Part 69 ONA Reconsideration Order), further modified on recon. 8 FCC Red 3114 
(1993) (Second Part 69 ONA Reconsideration Order). The Bell Operating Companies include the Ameritech 
Operating Companies, (Ameritech), Bell Atlantic Telephone· Companies (Bell Atlantic), BellSouth Telephone 
Companies (BellSouth), New York Telephone Company and New England Telephone and Telegraph Company 
(NYNEX), Pacific Bell, Nevada Bell, Southwestern Bell Telephone Company (Southwestern Bell), and US West 
Communications, Inc. (US West). Later, the Commission extended its ONA rules to GTE Corporation (GTE). 
Application of Open Network Architecture and Nondiscrimination Safeguards to GTE Corporation, CC Docket No. 
92-256, 9 FCC Red 4922 (1994) (GTE ONA Order). · 
2 Amendments of Section 64.702 of the Commission's Rules and Regulations, Report and Order, CC Docket No. 
85-229, 104 FCC 2d 958, 1063-64 (1986); ™ll·· 2 FCC Red 3035 (1987) (Phase I Reconsideration), further recon., 
3 FCC Red 1135 (1988) (Phase I Further Reconsideration), second further recon., 4 FCC Red 5927 (1989) (Phase 
I Second Further Reconsideration), Amendments of Sections 64.702 of the Commission's Rules and Regulations, 
Report and Order, CC Docket No. 85-229, 2 FCC Red 3072 (1988) (Phase II Order), ™ll·· 3 FCC Red 1150 (Phase 
II Reconsideration), vacated sub nom. California v. FCC, 905 F.2d 1217 (9th Cir. 1990) (Computer III Inquiry). 
See also GTE ONA Order, 9 FCC Red at 4923-24 (para. 2). The Commission's Rules define enhanced services as 
communications services that employ computer processing applications that act on the "format, content, code, 
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Federal Communications Commission FCC 96-35 
Commission's order required the BOCs to unbundle their interstate access services in order to 
promote the efficient and innovative use of the network by enhanced service providers. ONA 
was also designed to prevent the BOCs from cross-subsidizing enhanced services with revenues 
from regulated services and from discriminating against independent enhanced service providers 
in favor of their own enhanced service operations. The Commission eventually replaced the 
initial system of structural separation safeguards, that were designed to prevent cross-subsidization 
and undue discrimination with a system of nonstructural separation safeguards.3 In its Computer 
III Inquiry, the Commission found that structural separation produced economic inefficiencies in 
the provision of enhanced services, and that ONA in conjunction with non-structural separation 
safeguards, by contrast, provided the same measure of protection against anticompetitive behavior 
without creating such inefficiencies. 4 
2. The Part 69 ONA Order required the BOCs to file tariffs to provide ONA services. 
Specifically, the Commission ordered the BOCs to unbundle optional service offerings from their 
existing feature group access arrangements. 5 These optional service offerings are known as basic 
service elements (BSEs). Basic service elements were unbundled from essential, underlying 
switching and transmission services offered by the BOCs, known as basic serving arrangements 
(BSAs).6 In that Order, we required all BOCs, including US West, to file tariffs offering ONA 
protocol, or similar aspects of the subscriber's transmitted information." Section 64.702(a) of the Commission's 
Rules, 47 C.F.R. § 64.702(a). See also North American Telecommunications Association, 101FCC2d 349 (1985); 
recon. denied 3 FCC Red 4385 (1988). Basic services are communications services which are not enhanced. 
3 Part 69 ONA Order, 6 FCC Red at 4525 (para. 2). 
4 See Computer III Inquiry, 104 FCC 2d at 1011-12. In the US West ONA Designation Order, the Bureau noted 
that the Court had remanded the Computer III Remand Order, in which we concluded that non-structural separation 
accounting safeguards would be adequate to prevent cross-subsidization. Open Network Architecture Tariffs of US 
West Communications, Inc., CC Docket No. 94-128, 9 FCC Red 6710, 6710 n.4 (Com.Car.Bur. 1994) (US West 
ONA Designation Order), citing Computer III Remand Proceedings: Bell Operating Safeguards and Tier I Local 
Exchange Company Safeguards, CC Docket No. 90-623, 6 FCC Red 7571 (1991) (Computer III Remand Order); 
vacated in part and remanded sub nom. People of the State of California v. FCC, 39 F.3d 919 (9th Cir. 1994) 
(California III). The Bureau also found that the Court's remand of the Computer III Remand Order does not directly 
affect our investigation of US West's ONA rates. We are currently considering the issues directed to us by the 
Court's remand in a separate proceeding. See Computer III Further Remand Proceedings: Bell Operating Company 
Provision of Enhanced Services, CC Docket No. 95-20, IO FCC 8360 (1995). 
5 For a brief description of feature groups, ~ ~ Open Network Architecture Tariffs of US West 
Communications, Inc., CC Docket No. 94-128, 9 FCC Red 6710, 6710 n.5 (Com. Car. Bur. 1994) (US West ONA 
Designation Order); National Exchange Carrier Association Tariff F.C.C. No. 5, §§ 6.5.1, 6.6.l, 6.7.1, 6.8.1. 
6 See Part 69 ONA Order, 6 FCC Red at 4526 (para. 8). 
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Federal Communications Commission FCC 96-35 
services.7 The Common Carrier Bureau (Bureau) suspended those rates for one day and initiated 
an investigation.8 In December 1993, we completed our investigation of all those tariffs, except 
for US West's tariff. For the reasons discussed below, US West was required to file revised 
ONA rates.9 
3. In 1995, the U.S. Court of Appeals for the District of Columbia Circuit remanded the 
Part 69 ONA Order and the Second Part 69 ONA Reconsideration Order because it found that 
the Commission did not provide interested parties with adequate notice that it was considering 
either to require or permit BOCs to eliminate their feature group offerings.10 We will determine 
how to comply with the Court's mandate in another proceeding. We note that because the Court 
did not find it unreasonable to require BOCs to provide ONA services, we believe that the 
Court's remand does not affect the issues under investigation in this proceeding. 
4. On January 26, 1994, US West filed its revised ONA rates. The Bureau suspended 
those rates for one day, and initiated an investigation. 11 On March 8, 1995, US West filed its 
direct case. Two parties, AT&T Corp. (AT&T), and MCI Telecommunications, Inc. (MCI), filed 
comments on US West's direct case, and US West filed a reply. On August 4, 1995, MCI filed 
an ex parte statement addressing some of US West's reply comments. 12 For the reasons discussed 
below, we conclude that US West's ONA rates filed in Transmittal 446 are not unjust and 
unreasonable. 
7 Part 69 ONA Order, 6 FCC Red at 4538 (para. 81). Originally, the Commission required the BOCs to phase 
out their feature group offerings after their ONA tariffs had taken effect. Part 69 ONA Order, 6 FCC Red at 4525-
26 (para. 7). We subsequently, however, pennitted but did not require BOCs to continue to provide feature groups. 
Second Part 69 ONA Reconsideration Order, 8 FCC Red at 3114-16 (paras. 10-15). 
8 Ameritech Operating Companies, Revisions to Tariff F.C.C. No. 2, Open Network Architecture, 7 FCC Red 
257 (Com. Car. Bur. 1991) (Ameritech ONA Tariff Order), modified by Ameritech Operating Companies, 7 FCC 
Red 948 (Com. Car. Bur. 1992); Bell Atlantic Telephone Companies, et al., Open Network Architecture Tariffs, 7 
FCC Red 1512 (Com. Car. Bur. 1992) (ONA Investigation Order). 
9 Open Network Architecture Tariffs of Bell Operating Companies, CC Docket No. 92-91, 9 FCC Red 440, 463 
(para. 62) (1993) (ONA Final Order), recon. denied, 10 FCC Red 1619 (1995) (ONA Investigation Reconsideration 
Orderj. . 
10 MCI v. FCC, 57 F.3d 1136 (D.C. Cir. 1995). 
11 US West Communications, Inc., Open Network Architecture Tariffs, 9 FCC Red 2522 (Com. Car. Bur. 1994) 
(US West ONA Suspension Order). 
12 Letter from Gregory F. Intoccia, MCI, to Steven Spaeth, Tariff Division, Common Carrier Bureau, Federal 
Communications Commission, dated August 4, 1995 (August 4 Letter). 
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Federal Communications Commission FCC 96-35 
5. In addition, on December 8, 1994, MCI filed an application for review of the US West 
ONA Designation Order. US West filed an opposition to MCI's application, and MCI filed a 
reply. For the reasons discussed below, we deny MCI's application. 
II.BACKGROUND 
6. Implementing ONA requires development of reasonable basic service element rates, 
which in turn requires some rational means for apportioning joint and common switch investment 
among basic service elements. In the ONA context, the Bureau concluded that any reasonable 
apportionment of switching costs requires the BOCs to develop an investment cost allocation 
model, to enable them to allocate switch investment based on the usage of various features and 
functions of each switch to provide each basic service element. 13 Therefore, the BOCs used 
computer models to develop the necessary investment data on which to base the unbundled basic 
service element rates. 
7. Bell Communications Research, Inc. (Bell core) and US West have each developed a 
cost model that the BOCs use to determine the investment required to produce one unit of a 
service. These models analyze switching equipment to determine how much investment is 
required to produce one unit of a particular basic service element. The BOCs then multiply that 
unit investment by annual direct cost factors to determine the tota!- annual direct costs required 
to support their investment. Because direct costs, which are predominantly capital costs and other 
plant-specific costs, are closely linked to direct investment, the BOCs are able to use internal 
company records to develop direct cost factors that are applied to unit investment in order to 
determine the amount of direct costs that can be recovered from each service.14 Overhead costs 
are costs that are not linked to a specific service. BOCs calculate overhead costs to· be recovered 
from a specific service by developing an overhead loading factor and applying it to direct costs. 15 
8. The Bureau allowed BOC ONA tariffs to take effect subject to a one day suspension 
and an investigation. The cost support models used by the BOCs to develop ONA cost support 
employ proprietary information in the form of pricing information supplied by switch vendors. 
13 Commission Requirements for Cost Support Material To Be Filed with Open Network Architecture Access 
Tariffs, 7 FCC Red 521, 523-24 (para. 17) (Com. Car. Bur. 1991) (SCIS In Camera Order); review denied, 8 FCC 
Red 422 (1993) (SCIS In Camera Review Order). 
14 See ONA Final Order, 9 FCC Red at 456 (paras. 44-45). By "unit investment," we mean the investment 
required to produce one unit of the basic service element at issue. 
IS Id. 
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Bellcore and US West also hold intellectual property rights in these cost support models. 16 The 
Commission has determined that these models are exempt from disclosure under Exemption 4 of 
the Freedom of Information Act, 5 U.S.C. § 552(b)(4) (FOIA). In deciding not to disclose this 
information, the Commission determined that disclosure would not be in the public interest 
because it could cause substantial competitive harm to carriers and switch vendors and might 
cause switch manufacturers to stop providing this proprietary information, which would make it 
difficult or impossible to update the computer models to reflect changes in switch prices or 
development of new switching technologies. This, in turn, would render the computer models 
meaningless, and the Commission would be deprived of an important tool needed to evaluate 
ONA tariffs. 17 Therefore, we developed special procedures to enable intervenors to review as 
much cost support as possible without disclosing proprietary information. 18 
9. In December 1993, the Commission completed its investigation of all the BOC ONA 
tariffs except US West. 19 Unlike other BOCs, which used one computer model for all their basic 
service element rates, US West developed the costs underlying the rates in its first ONA filing 
from two separate software models that were inconsistent with each other.20 US West developed 
its own computer model, known as the "Switching Cost Model" (SCM), to determine its basic 
service element investment costs, but also relied on a 1987 version of the model used by six other 
BOCs, the "Switching Cost Information System" (SCIS).21 Because the two models did not use 
the same costing methodology, US West's reliance on both not only created the possibility of 
inconsistent cost allocations, but was also contrary to the requirements of the Part 69 ONA Order. 
16 SCIS In Camera Order, 7 FCC Red at 523 (paras. 14-16); SCIS In Camera Review Order, 8 FCC Red at 423 
(para. 5). 
17 Allnet Communications Services, Inc., FOIA Control No. 92-266, 7 FCC Red 6329, 6330-31 (paras. 14-17) 
(1992) (Allnet FOIA Review Order), affd. Allnet Communications Services, Inc. v. FCC, 800 F.Supp. 984 (D.D.C. 
1992), affd. Allnet Communications Services, Inc. v. FCC, No. 92-5351, slip op. (D.C. Cir. May 27, 1994). 
18 Commission Requirements for Cost Support Material To Be Filed with Open Network Architecture Access 
Tariffs, 7 FCC Red 1526 (Com. Car. Bur. 1992) (SCIS Disclosure Order); affd, 9 FCC Red 180 (1993) (SCIS 
Disclosure Review Order). 
19 See ONA Final Order, 9 FCC Red 440. 
20 ONA Final Order, 9 FCC Red at 461-62 (paras. 56-59). 
21 Id. at 461 (para. 56). 
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Federal Communications Commission FCC 96-35 
The Commission, therefore, required US West to file replacement rates to rectify this and other 
problems.22 
10. On January 26, 1994, US West filed replacement ONA rates under Transmittal No. 
446. Although US West relied exclusively on one computer model, a revised version of SCM,23 
it was not clear whether or how these revisions affected the unit investment figures produced by 
the model.24 The Bureau therefore suspended Transmittal No. 446 for one day, and initiated an 
investigation.25 In the US West ONA Designation Order, the Bureau designated several issues 
for investigation. 26 The Bureau also established special procedures that were intended to protect 
proprietary material without unreasonably restricting intervenors' participation in the tariff 
investigation.27 Those procedures were substantially similar to procedures established by the 
Bureau and approved by the Commission in the first ONA investigation. In the US West ONA 
Designation Order, the Bureau required US West to hire an independent reviewer to examine 
SCM, and also required it to develop a redacted model that intervenors could examine pursuant 
to a nondisclosure agreement. 28 
ID. DESIGNATED ISSUES 
Issue A. Has US West Corrected the Ratemaking Deficiencies Identified in the ONA Final 
Order With Respect to Developing Unit Investment Figures? 
1. Model Office Development 
11. Background. The SCM bases its BSE unit investment for each switch manufactured 
by each switch vendor on a "model office." Each model office is an average of all the existing 
22 Id. at 463 (paras. 61-63). For example, the Commission identified outdated factual material that US West had 
relied upon in its filing and required US West to update its filing. Id. at 461-62 (para. 58). 
23 US West Transmittal No. 446, Description and Justification (D&J), at 2-1. 
24 US West ONA Suspension Order, 9 FCC Red at 2522 (para. 3). 
2s Id. 
26 US West ONA Designation Order, 9 FCC Red 6710. 
27 Id. at 6714 (para. 18). 
28 Id. at 6714 (paras. 19-21). US West subsequently hired Arthur Andersen and Co. (Arthur Andersen). We 
refer to Arthur Andersen's report as the "1995 Arthur Andersen Report," to distinguish it from the reports Arthur 
Andersen filed in the first ONA investigation. 
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Federal Communications Commission FCC 96-35 
switches of a certain type in the BOC's network.29 We found in the ONA Final Order that the 
reasonableness of the SCM results depends in part on whether the model office is based on a 
representative sample of actual switches.30 We also noted that US West used only central offices 
from its central region to develop investment for its "Make Busy Key" and its "Message 
Delivery" basic service elements.31 In the US West ONA Designation Order, the Bureau required 
US West to show that it included all of its central offices in developing investment costs for all 
of its basic service elements, or to justify why it had excluded any central offices. 32 
12. Pleadings. US West states that it incorporated information from only 85 percent of 
all of the switches in service in its service area in its model office.33 US West states that the 
investment information included in the model office is derived from SESS, DMS 100, and DMS 
10 switches, and that those switches are represented in its model office in the same proportion 
as the lines served by each type of switch.34 US West did not include SESS remote or DMS 100 
remote switches in its model office, because most of the processing functions associated with 
these switches occur at the host switch, and because these remote switches make up only 8 
percent of its switches.35 Similarly, US West states that it did not include Ericsson AXE host or 
remote switches in its model because US West claims that these switches do not provide all the 
features that other switches do, and because these switches provide service to only 6 percent of 
its lines.36 US West also stated that it included only digital switches in its model office.37 None 
of the commenters challenged US West's assertions on this issue. 
29 ONA Final Order, 9 FCC Red at 447 (para. 15). 
30 Id. 
31 Id. at 448 (para. 18). US West's central region is the part of its service area formerly served by Mountain 
States Telephone and Telegraph Co. (Mountain BeU). Id. at 447 (para. 15). Message Delivery service transmits call 
information pertaining to all incoming calls to the customers switched access multiline hunt group. US West Tariff 
F.C.C. No. 1, Section 6.3.1.X. The Make Busy service provides a method for making lines appear busy to the 
serving wire center when they are in an idle state. This function would also allow a customer to have all incoming 
calls routed to another location upon activation of a CPE device. US West Tariff F.C.C. No. 1, Section 6.3.1.Z. 
32 US West ONA Designation Order, 9 FCC Red at 6712 (para. 8). 
33 US West Direct Case at 2. 
34 Id. 
35 Id. at 3. 
36 Id. 
37 Id. at 2. 
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Federal Communications Commission FCC 96-35 
13. Discussion. We conclude that US West's exclusion of remote switches and the 
Ericsson AXE host switches from US West's SCM model office calculations is unlikely to skew 
the results of its study in any significant manner. The Arthur Andersen Report concluded that 
the switching systems included in US West's ONA tariffs "are in large part representative of [US 
West's] mix of technologies at the time of the filing." 38 We conclude, therefore, that the 
exclusion of remote switches and Ericsson switches does not provide an adequate basis to find 
that US West's ONA rates are unreasonable. 
2. Outdated Traffic Studies, Vendor Operating Software, and Vendor Data 
14. Background. The Commission concluded in the ONA Final Order that US West's 
traffic studies might not reflect current traffic patterns accurately because they were outdated.39 
In addition, we determined that US West's rates were unreasonable because they were based on 
versions of switching software and associated switch vendor data that had been superseded by 
newer software versions and vendor data. Therefore, we concluded that US West's ONA rates 
were not based on its current costs of providing service. 40 
15. US West stated in its January 1994 ONA tariff filing that it updated its traffic studies, 
and updated SCM to reflect new switching software. US West, however, failed to describe these 
updates, or explain their effects on unit investments.41 Therefore, the Bureau required US West 
to specify the scope, date, and the procedure used to conduct its new traffic studies, and to 
describe the more recent vendor data and software incorporated within the updated SCM software, 
itemized for each switch technology. For each deficiency identified in the ONA Final Order that 
US West asserted it has corrected, US West was directed to show the effect of the correction on 
the unit investment figures developed using the updated SCM. 42 
16. Pleadings. US West contends that over half of its traffic data comes from its Demand 
and Facilities (D&F) database, which stores central office traffic data and is updated twice per 
year.43 US West also states that about a third of its traffic data came from its Trunk Forecasting 
38 1995 Arthur Andersen Report at 8. 
39 ONA Final Order, 9 FCC Red at 450 (para. 22). 
40 ONA Final Order, 9 FCC Red at 461-62 (para. 58). 
41 See US West ONA Designation Order, 9 FCC Red at 6712 (para. 9). 
42 US West ONA Designation Order, 9 FCC Red at 6712 (para. 10). 
43 US West Direct Case at 3-4. 
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Federal Communications Commission FCC 96-35 
System, which is updated weekly.44 US West also maintains that its integrated services digital 
network (ISDN) and analog 
trunk forecasts were taken from special studies completed in 1993.45 US West states that it based 
its 5ESS model office on 5E9 software, technology, and prices in effect on December 31, 1993. 
Similarly, US West asserts that it based its DMS 100 model office on BCS 35 software, 
technology, and prices in effect on December 31, 1993, and its DMS 10 model office on Series 
400 software, technology, and prices in effect on December 31, 1993. 46 
17. US West explains in detail in Appendix B to its direct case the manner in which it 
corrected the SCM and the SCM inputs, as required by the ONA Investigation Final Order, and 
the impact of these changes on its rates. The corrections US West made include: (1) making its 
model office representative of its entire service area, by including 85 percent of its switches in 
its model office calculations as discussed above; (2) using forward-looking technology; i.e., 
excluding from its calculations costs which US West will not use to provide service in the future; 
and (3) updating its traffic studies as of December 31, 1993, as discussed above.47 US West 
shows the effects of these corrections in its direct cost and overhead cost ratios in Appendix A 
to its direct case.48 US West also states that it made a computational error in its original cost 
support for the rates subject to this investigation, and the effects of correcting this error are 
displayed in Appendix C to its direct case, Workpapers 4, 5, and 6.49 Neither MCI nor AT&T 
addressed US West's assertions on this issue. 
18. Discussion. We have reviewed US West's updates to its SCM model. US West has 
shown that its model now includes current switch software, and traffic studies. We find, 
therefore, that US West's ONA rates are now based on its current costs of providing BSEs, and 
that US West has complied with this requirement of the ONA Final Order.50 
3. Inclusion of 1993 Rate Levels 
44 Id. at 4. 
4s Id. 
46 Id. 
47 Id. at 5, 9-10. 
48 Id. at 6. 
49 Id. at 12-15. 
so ONA Final Order, 9 FCC Red at 450 (para. 23). 
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Federal Communications Commission FCC 96-35 
19. In its cost support for its current ONA rates, US West stated that the SCM had been 
updated to include "1993 rate levels and traffic data," and "the most current data on switching 
technology."51 US West was directed to explain its statement in the Transmittal No. 446 
Description and Justification that 1993 rate levels have been included in SCM. The Bureau 
expressed concern that US West's cost model might have been somehow modified to result in 
rates that US West had selected arbitrarily prior to conducting any SCM analysis.52 US West 
claims that its reference to 1993 rate levels was merely a reference to 1993 vendor prices. 53 
Neither of the commenters responded to US West's claim. We find that US West has provided 
an adequate explanation, and that no refunds are warranted as a result of US West's reliance on 
1993 vendor data. 
Issue B. Does the Revised SCM Software Provide a Sound Methodology for Developing 
Reasonable Rates? 
20. Background. The Bureau determined that it was unclear whether SCM, as revised, 
could be used to produce reasonable unit investment data on which reasonable ONA rates can be 
based.54 Accordingly, the Bureau directed US West to run the same set of data through both the 
old and the revised SCM models, to incorporate the same model assumptions in each set, and 
identify any differences on unit investment outputs. 55 US West was directed to show the effect 
of any SCM software revisions, any changes in SCM assumptions, and any other sources of 
variation on unit investments. 56 The Bureau also required an independent reviewer to examine 
US West's comparison of old and new SCM.57 
si See US West ONA Designation Order, 9 FCC Red at 6712 (para. 9). 
s2 US West ONA Designation Order, 9 FCC Red at 6712 n.25. 
s3 US West Direct Case at 6. 
s4 US West ONA Designation Order, 9 FCC Red at 6712 (para 11). 
ss US West ONA Designation Order, 9 FCC Red at 6713 (para. 12). Regarding the "assumptions," the Bureau 
explained that the equations within the SCM model include variables that enable US West to adjust the model to fit 
assumptions it makes concerning its network. Many of these assumptions are similar to the assumptions one can 
make using SCIS, such as average investment or marginal investment, cost of money, or switch exhaustion. See US 
West ONA Designation Order, 9 FCC Red at 6713 n.29. For a more detailed discussion of these assumptions, see 
ONA Investigation Order, 7 FCC Red at 1514-15 (paras. 10-16). 
s6 US West ONA Designation Order, 9 FCC Red at 6712-13 (para. 12). 
s7 Id. at 6713 (para. 13). 
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Federal Communications Commission FCC 96-35 
21. Pleadings. In Appendix B to its direct case, US West compares the results produced 
by the SCM model it used in the first ONA investigation with the results produced by the revised 
SCM it used for the rates subject to this investigation, for six of the seven BSEs for which it used 
the SCM in the first ONA investigation. US West explains that it did not make this comparison 
for Called Directory Number Delivery (CDND) because it mistakenly used unit investment data 
for DID Trunk Termination in the first ONA investigation.58 US West also argues that Arthur 
Andersen found SCM to be reasonable in both its 1992 and 1995 reports, and that no further 
inquiries into SCM should be necessary.59 
22. Based on the redacted 1995 Arthur Andersen Report, AT&T argues that there are still 
unresolved problems with SCM that US West has not explained or justified.60 AT&T points out 
that changes in the consumption rate ~ time per attempt or time per call) have significant 
effects on BSE unit investment.61 AT&T and MCI also argue that a number of functional 
category unit investments, which are used to calculate BSE unit investments, are significantly 
affected by changes in variables such as 100 call seconds (CCS) per line, calls per working line, 
line concentration ratios, and number of working lines and trunks. 62 
23. MCI and AT&T also note that Arthur Andersen found that SCIS and SCM produce 
highly different BSE unit investments. 63 AT&T also observes that SCIS and SCM use similar 
processes to develop unit investments.64 AT&T argues that, up.less US West can provide 
persuasive justifications for the discrepancies in the two models' outputs, US West has failed to 
demonstrate that its tariffs are reasonable.65 MCI contends that US West's current ONA rates are 
in most cases lower than the rates in its first ONA filing were, but cannot determine the source 
of these changes or verify their accuracy.66 
58 US West Direct Case at 7-9. 
59 US West Direct Case at 15-16. 
60 AT&T Opposition at 4. 
61 AT&T Opposition at 4-5. 
62 AT&T Opposition at 5 and n.9; MCI Opposition at 23. 
63 MCI Opposition at 23-24; AT&T Opposition at 6. 
64 AT&T Opposition at 6, citing ONA Final Order, 9 FCC Red at 451-52 (paras. 26-29). 
65 AT&T Opposition at 6-7. See also MCI Opposition at 24. 
66 MCI Opposition at 24-25. 
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Federal Communications Commission FCC 96-35 
24. US West contends that SCM produces reasonable results, regardless of whether it 
produces results different than SCIS.67 US West also observes that SCIS did not produce 
identical results for six other BOCs, and contends that its ONA rates in many cases are not 
substantially different from the rates of those other carriers.68 
25. Discussion. AT&T and MCI are correct that SCIS and SCM produce different 
results. Arthur Andersen compared SCM and SCIS results for four BSEs and two switching 
technologies, for a total of eight comparisons. Arthur Andersen found that, in five cases, SCIS 
unit investments were substantially greater than those of SCM. The SCIS unit investment was 
much lower than the SCM unit investment in one case, and the unit investments were within 20 
percent of each other in the remaining tWo cases. 69 
26. We disagree with AT&T's and MCI's assertions, however, that SCM is an 
unreasonable model unless US West can explain the discrepancies between SCM and SCIS 
outputs. Although we have found that SCIS has no substantial defects that would preclude its 
use for developing ONA rates, 70 there is no evidence either in this investigation or in the first 
ONA investigation that would support a conclusion that SCIS is the only possible reasonable 
computer cost allocation model. In the ONA Final Order, we found that SCIS unit investment 
studies based on marginal investment and average investment are both reasonable, and that 
carriers should be permitted to use either method, in spite of the fact that marginal and average 
investment studies produce different results. 71 We thus fmd that SCM cannot be considered 
unreasonable simply because it produces results that differ from SCIS results. 
27. AT&T and MCI are also correct that changes in the consumption rate and changes 
in variables measuring usage, such as CCS per line, calls per working line, line concentration 
ratios, and number of working lines and trunks, have significant effects on BSE unit investment 
calculations produced by the SCM. Such variation by itself, however, does not establish the 
invalidity of the SCM model. We originally adopted a "flexible cost-based approach" for ONA 
rate development, in order to encourage carriers to develop innovative new services. 72 In the 
ONA Final Order, we sought to limit carrier discretion in rate development only to the extent 
67 US West Reply at 17-18. 
68 US West Reply at 18. 
69 1995 Arthur Andersen Report at 7. 
10 ONA Investigation Order, 7 FCC Red at 1514 (para. 9); ONA Final Order, 9 FCC Red at 471 (paras. 82-83). 
71 ONA Final Order, 9 FCC Red at 451-53 (paras. 26-34). 
72 Part 69 ONA Order, 6 FCC Red at 4531 (para. 41). 
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Federal Communications Commission FCC 96-35 
necessary to prevent unreasonable or discriminatory rates, not to eliminate the flexibility we 
established in the Part 69 ONA Order.73 As a result, the sensitivity in the SCM model, while 
generated in part by usage-related factors rather than investment costs, does not by itself show 
that the SCM model cannot be used to develop reasonable ONA rates. 
28. Furthermore, Arthur Andersen found that US West's SCM model provides a logical 
methodology for estimating the total cost or total investment of a switching system and 
apportioning this cost among the functions performed by the switching system. 74 In any case, it 
appears that the sensitivity of SCM outputs to changes in consumption rates and usage variables 
is no greater than the sensitivity of SCIS outputs to such changes.75 Accordingly, we find that 
the variability in SCM emphasized by MCI and AT&T does not lead us to conclude that SCM 
cannot be used to produce reasonable ONA rates. 
Issue C. Has US West Complied with the Instructions of the ONA Final Order? 
1. Inclusion of Analog Switch Equipment 
29. Each BSE rate is based on a weighted average of the costs of providing the service 
through use of different kinds of switches in a BOC's network.76 An important issue in the first 
ONA investigation was whether it was reasonable to include the costs of analog switches in this 
weighted average.77 In other words, carriers must base their ONA rates on the mix of switch 
types they expect to use in the future. In the ONA Final Order, the Commission prescribed use 
of prospective switch investment to set rates. We also allowed analog switch investment to be 
included as part of the carrier's switch technology mix only to the extent those switches will be 
73 ONA Final Order, 9 FCC Red at 445-46 (paras. 11-12). 
74 1995 Arthur Andersen Report at 13. 
75 July 1992 Arthur Andersen Report at 78-90 (showing the variance in unit investments resulting in different 
usage assumptions by the six BOCs using SCIS, as well as variance from other sources, for four BSEs). See also 
ONA Final Order, 9 FCC Red at 472 (para. 84) (rate variation between carriers resulting in changes in demand is 
not by itself indicative of unreasonable rates). 
76 ONA Investigation Order, 7 FCC Red at 1515 (paras. 17-18). See also US West ONA Designation Order, 
9 FCC Red at 6713 (para. 14). 
77 Open Network Architecture Tariffs of Bell Operating Companies, Order Terminating Investigation, CC Docket 
No. 92-91, 7 FCC Red 2604, 2605 (Com. Car. Bur. 1992) (ONA Designation Order). See also US West ONA 
Designation Order, 9 FCC Red at 6713 (para. 14). 
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Federal Communications Commission FCC 96-35 
in service in the future, and required carriers to explain the basis for including that equipment. 78 
US West was required to describe any analog equipment included in its mix of switches used to 
develop its model for ratemaking purposes. If analog equipment is included, then US West was 
required to explain the procedure it used to develop analog unit investment data for basic service 
elements, and justify its inclusion of analog technology in the forward-looking mix of switch 
technologies. 79 
30. US West states that it included only digital equipment in its technology mix.80 
Accordingly, we find that US West's inclusion of exclusively digital equipment in its technology 
mix complies with the ONA Final Order, and is reasona~le. 
2. Excessive Direct Costs and Overhead Costs 
31. Background. In the ONA Final Order, we found that US West, among other BOCs, 
had not adequately justified the direct and overhead costs on which it based its ONA rates. 81 The 
Commission, therefore, required US West to explain how it calculated its direct costs and 
overhead costs. We also stated that we would resort to calculating an upper limit for these costs 
based on Automated Reporting Management and Information System (ARMIS) data if US West 
failed to provide adequate explanations. 82 Rather than develop its own cost support mechanism 
for "loading" administrative costs onto direct costs associated with basic service elements, US 
West decided to use the Commission's default approach by using the direct costs and overhead 
loadings based on ARMIS data.83 In the ONA Final Order, however, the Commission did not 
conclude that the use of ARMIS-based direct cost and overhead factors was reasonable in all 
cases; it merely found that ARMIS figures could be used to establish reasonable upper limits in 
the absence of reliable carrier-provided data. Accordingly, the Bureau required US West to either 
justify in detail its reliance on this approach, or use traditional cost methods to calculate direct 
78 ONA Final Order, 9 FCC Red at 456 (para. 41-43). See also US West ONA Designation Order, 9 FCC Red 
at 6713 (para. 14). 
79 US West ONA Designation Order, 9 FCC Red at 6713 (para. 15). 
80 US West Direct Case at 9-10. 
81 ONA Final Order, 9 FCC Red at 458 (paras. 49-50). 
82 Id. at 458 (para. SO). ARMIS is a database established by the Commission that requires LECs to report 
detailed investment and expense infonnation on a regular basis. 
83 US West ONA Designation Order, 9 FCC Red at_6713 (para. 17). 
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Federal Communications Commission FCC 96-35 
costs.84 US West was also required to provide an explanation for any direct costs that exceed the 
ARMIS-based upper limit. 85 
32. Pleadings. US West states that the Commission found in the ONA Investigation Final 
Order that ARMIS-based ratios would be reasonable upper limits for direct costs and overheads. 86 
US West claims that none of its direct costs and overheads exceeds these ratios.87 US West's 
ARMIS-based direct cost factor is 0.2501, and its ARMIS-based overhead cost factor is 1.9425.88 
Neither MCI nor AT&T addressed US West's direct cost or overhead loadings. 
33. Discussion. US West's direct cost and overhead loading factors are lower than those 
used in its original ONA tariff filing. In addition, those factors are not significantly different 
from the direct cost and overhead loading factors US West uses for other switched access 
services. Neither our review nor the record before us in this investigation provides any basis for 
prescribing lower direct cost or overhead factors for US West. Accordingly, we find that US 
West has complied adequately with our directions in the ONA Investigation Final Order regarding 
direct costs and overheads, and therefore these direct cost and overhead loadings are not 
unreasonable. 
IV. REASONABLENESS OF PROTECTIONS FOR PROPRIETARY INFORMATION 
A. Background 
34. Because this investigation required examination of proprietary information similar to 
that submitted in the first ONA investigation, the Bureau established procedures to protect that 
proprietary information similar to those used in the first ONA investigation. 89 Specifically, the 
Bureau required US West to designate an independent auditing firm to review the proprietary 
materials, and to develop a redacted model could be made available to the intervenors pursuant 
to a nondisclosure agreement. 90 The Bureau stated that the redacted SCM should at minimum 
84 US West ONA Designation Order, 9 FCC Red at 6713 (para. 17). 
8s Id. 
86 US West Direct Case at 10. 
87 Id. at 10-11 and App. C. 
88 Id. at 11-12 and App. C. 
89 US West ONA Designation Order, 9 FCC Red at 6714 (para 18). 
90 US West ONA Designation Order, 9 FCC Red at 6714 (para. 18). 
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Federal Communications Commission FCC 96-35 
enable intervenors to examine the effects of changes in SCM inputs on SCM outputs, just as 
intervenors were able to do with the SCIS Redaction II, used in the first ONA investigation.91 
The Bureau also determined that the nondisclosure agreement should not be more restrictive on 
intervenors than the agreement governing intervenors' examination of SCIS Redaction 11.92 
35. In its application for review of the US West ONA Designation Order, MCI argued 
that the protections for confidential information adopted in that Order were unreasonably 
restrictive. MCI raised similar issues in its opposition to US West's direct case. We consider 
these issues below. 
B. Reliance on Undisclosed Data 
36. Pleadings. MCI maintains that the procedures in this investigation are unreasonable 
for the reasons set forth in its petitions for reconsideration of the ONA Final Order and the SCIS 
Disclosure Review Order.93 According to MCI, reliance on any cost support information that is 
not publicly available violates the Communications Act and the Administrative Procedure Act 
(APA).94 MCI observes that Sections 203 and 412 of the Communications Act define tariffs as 
public documentS, and that Section 61.49 of the Commission's Rules, 47 C.F.R. § 61.49, establish 
cost support requirements for price cap LECs. 95 
37. MCI equates reliance on any non-public information with denial of effective 
participation in the investigation by interested parties.96 MCI cites US Lines and Sea-Land for 
91 US West ONA Designation Order, 9 FCC Red at 6714 (para 20). The SCIS Disclosure Order required BOCs 
to make a redacted version of SCIS available to intervenors in the first ONA investigation. SCIS Disclosure Order, 
7 FCC Red at 1536 (para. 55). Because some intervenors claimed that the first redacted SCIS model that Bellcore 
provided was so deeply redacted as to be deficient, the Bureau informally encouraged Bellcore and switch 
manufacturers to develop a second redacted SCIS model. See Commission Requirements for Cost Support Material 
to be Filed with Open Network Architecture Tariffs, 7 FCC Red 5307 (Com. Car. Bur. 1992); ONA Final Order, 
9 FCC Red at 468 n.149. The Commission referred to this second model as "SCIS Redaction II." 
92 US West ONA Designation Order, 9 FCC Red at 6714 (para. 20). 
93 MCI Opposition at 25-26. 
94 MCI Opposition at 26-27; MCI Application at 8, citing U.S. Lines v. FMC, 584 F.2d 519 (D.C. Cir. 1978); 
August 4 Letter at 5. 
95 MCI Opposition at 27 n.42. MCI also cites Section 61.38 as establishing cost support requirements for 
"dominant carriers." .Section 61.38 does not apply to price cap carriers, however. See Section 61.38(a) of the 
Commission's Rules, 47 C.F.R. § 61.38(a). 
96 MCI Opposition at 27-28. 
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Federal Communications Commission FCC 96-35 
the proposition that reliance on undisclosed data violates due process requirements and Section 
204 of the Communications Act.97 MCI also contends that reliance on undisclosed data is 
arbitrary and capricious because it precludes adversarial discussions among interested parties.98 
According to MCI, the Commission cannot determine whether ONA rates are reasonable without 
participation from intervenors.99 Finally, MCI cites Portland Cement for the proposition that the 
Commission's refusal to respond to criticisms of its methodology is a "critical defect" in the 
decision-making process. 100 • 
38. According to US West, MCI does not argue that US West was required to submit the 
SCM to support its ONA rates, but rather that the Commission may not withhold the SCM from 
MCI if the Commission reviews the SCM. US West argues that this reasoning could result in 
depriving the Commission from obtaining confidential information during tariff proceedings in 
the future. 101 US West contends that US Lines is not applicable here, because US Lines 
concerned granting a carrier an exemption from the antitrust laws rather than a tariff 
proceeding.102 US West argues that the Commission is required to place in the record only the 
material on which it relies in making its decision. 103 US West also argues that the tariff review 
process is not the same as an audit which would require it to submit all of its books of account. 
US West contends, however, that even those books would receive confidential treatment. 104 
Finally, US West contends that acceptance of MCI's legal interpretation would place proprietary 
97 MCI Opposition at 28, citing US Lines v. FMC, 584 F.2d 519 (D.C. Cir. 1978) (US Lines); Sea-Land 
Services, Inc. v. FMC, 653 F.2d 544 (D.C. Cir. 1981) (Sea-Land). 
98 MCI Opposition at 28-29, citing US Lines, 584 F.2d at 533-35; Home Box Office v. FCC, 567 F.2d 9 (D.C. 
Cir.), cert. denied 434 U.S. 829 (1977) (HBO v. FCC). 
99 MCI Application at 7-8, MCI Opposition at 29, citing American Lithotripsy Society v. Sullivan, 785 F. Supp. 
1034 (D.D.C. 1992) (American LithotripsV). 
100 MCI Opposition at 29 n.47, citing Portland Cement Ass'n v. Ruckelshaus, 486 F.2d 375 (D.C. Cir. 1973), 
cert. denied 417 U.S. 921 (1974) (Portland Cement). 
101 US West Reply at 12-13. 
102 US West Reply at 13-14. 
103 US West Reply at 14-15, citing Amendment of Part 15 to Redefine and Clarify the Rules Governing 
Restricted Radiation Devices and Low Power Communications Devises, Docket No. 20780, 79 FCC 2d 28, 77 
(1977); Applications of General Telephone and Electronics Corporation to Acquire Control of Telenet Corporation 
and its Wholly-owned Subsidiary Telenet Communications Corporation, 84 FCC 2d 18, 21 (1979). 
104 US West Reply at 15-16, citing Section 220(e) of the Commission~s Rules, 47 U.S.C. § 220(e). 
5141 
Federal Communications Commission FCC 96-35 
information at risk any time a tariff is filed. US West denies that MCI has a right to examine 
proprietary cost support information.105 
39. MCI replies that, on the basis of the arguments advanced in its applications for 
review of the SCIS Disclosure Review Order, the SCIS Disclosure Order was wrongly decided 
and should be reversed. 106 MCI also distinguishes information submitted in support of an initial 
tariff filing from information submitted during a subsequent tariff investigation. MCI notes that 
an initial decision to allow a tariff to take effect does not constitute a final finding on whether 
the tariff is lawful. 107 MCI argues that an Order terminating a tariff investigation is a final, 
appealable Order, and therefore intervenors have a greater procedural interest in the outcome of 
investigations than they do prior to the effectiveness of the tariff. 108 MCI also contends that US 
West has not adequately distinguished the cases cited by MCI that hold that an agency should not 
base its decisions on information that was not available to opposing parties in the proceeding.109 
40. Discussion. MCI's reliance on Sections 203 and 412 of the Communications Act, 
and Section 61.49 of the Commission's Rules is misplaced. Sections 203 and 412 of the 
Communications Act require carriers to make rates for common carrier services publicly 
available. These provisions, however, do not specify, or even address, the underlying cost 
support for those rates. Section 61.49 of the Commission's Rules specifies cost support 
requirements for price cap new service filings, but does not specify under what conditions that 
cost support must be made publicly available. Disclosure of cost support information is governed 
by Sections 0.455(b)(l l), 0.457(d), and 0.459, which state that cost support information shall be 
"routinely" publicly available, unless the cost support information is considered proprietary under 
FOIA Exception 4. 110 As we noted above, SCIS and SCM have been found subject to FOIA 
Exception 4. 111 Thus, we find that MCI misinterprets the Communications Act and our Rules to 
require more extensive SCM disclosure. 
105 US West Reply at 16-17. 
106 MCI Reply at 2. 
107 MCI Reply at 2-3; citing Aeronautical Radio, Inc. v. FCC, 642 F.2d 1221, 1234-35 (D.C. Cir. 1980), cert. 
denied, 451 U.S. 920 (1981). 
108 MCI Reply at 3-4. 
109 MCI Reply at 4-5. 
110 Section 0.457(d) of the Commission's Rules, 47 C.F.R. § 0.457(d), citing FOIA Exception 4, 5 U.S.C. § 
552(b)(4); Sections 0.455 and 0.459, of the Commission's Rules, 47 C.F.R. §§ 0.455, 0.459. 
111 Allnet FOIA Review Order, 7 FCC Red 6329. 
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Federal Communications Commission FCC 96-35 
41. Furthermore, we noted in the ONA Final Order that "the Administrative Procedure 
Act does not require that every bit of background information used by an administrative agency 
be published for public comment," as long as data sufficient to support the agency's actions were 
available to petitioners for comment.112 We conclude that data sufficient to support our actions 
were made available to intervenors, and that the cases that MCI relies upon do not provide a 
sufficient basis to question that conclusion. Furthermore, we previously have considered MCI's 
claim that the Commission may not rely on undisclosed data in tariff investigations. In the ONA 
Investigation Reconsideration Order, we explained that, in each of the cases cited by MCI to 
support its claim, the agency decision under review failed to withstand judicial review because 
the agency either had failed to present any of its analysis to the public for comment, or had 
released that analysis after the pleading cycle was closed. 113 As in the ONA Investigation 
Reconsideration Order, we find that the holdings in the cases cited by MCI do not apply to this 
investigation, because the record available to the parties for comment was fully sufficient to 
support our conclusions. Moreover, MCI was afforded an opportunity to fully utilize the SCM 
model without compromising proprietary data, and was able to include this analysis in its 
comments in the investigation. 
C. Nondisclosure Agreement 
112 ONA Final Order, 9 FCC Red at 444 n.16; see also B.F. Goodrich Co. v. Dept. of Transportation, 541 F.2d 
1178, 1184 (6th Cir. 1976) (the Administrative Procedure Act does not require that every bit of background 
information used by an agency be published for comment where the basic data upon which the agency relied was 
available for comment), cert. denied, 430 U.S. 930 (1977); In re Surface Mining Regulation Litigation, 627 F.2d 
1346, 1354 n.9 (D.C. Cir. 1980) (citing B.F. Goodrich); Association of Data Processing v. Board of Governors, 745 
F.2d 677, 684 (D.C. Cir. 1984) (noting that "on the record" standard does not apply to informal rulemaking or 
adjudication). 
113 ONA Investigation Reconsideration Order, 10 FCC Red at 1625 (para. 34) and n.39 ("American Lithotripsy 
remanded an agency's decision because the agency had not presented any of its own analysis to the public for 
comment, and did not provide any opportunity for comment. Similarly, in Portland Cement, the court concluded 
that EPA' s failure to release the details of emission tests until after comments were due in the rulemaking was 
arbitrary and capricious. American Lithotripsy and Portland Cement are both distinguishable from the ONA 
investigation because MCI was given an opportunity to examine the SCIS model to the extent possible without 
compromising proprietary data, and was able to include its analysis in its comments in the investigation.") 
5143 
Federal Communications Commission FCC 96-35 
42. Pleadings. MCI maintains that the disclosure standards specified in the US West 
ONA Designation Order do not permit full participation in the investigation. 114 With regard to 
the nondisclosure agreement, MCI argues that it is unreasonable to limit access to the redacted 
SCM model to one attorney and two consultants, to restrict copying of computer data, to restrict 
communications between intervenors, and to limit intervenors to examining one switch type. 115 
MCI also objects to the application of those restrictions to the Arthur Andersen Report. 116 MCI 
argues that these restrictions are especially unreasonable in this investigation because US West 
initially expressed no opposition to modifying some of these restrictions in the first ONA 
investigation. 117 MCI denies that SCIS Redaction II permitted intervenors to conduct sensitivity 
analyses, i.e., to see the effect of changes in SCIS inputs on SCIS outputs.118 MCI also argues 
that these procedures are inconsistent with the procedures the Commission adopted to protect 
proprietary information in formal complaint proceedings. 119 MCI criticizes US West's 
nondisclosure agreement because it did not identify material that would warrant proprietary 
treatment, did not provide for electronic print capability at the review site, and prohibited 
intervenors from removing material from the review site.120 MCI denies that these protections 
are necessary to protect any legitimate interest on US West's part. 121 
43. US West maintains that the Commission considered and rejected MCI's contentions 
in the first ONA investigation. 122 US West argues that the information sought by MCI is 
114 MCI Application at 3-4. MCI states that it discussed its arguments in more detail in prior pleadings, such 
as, inter alia, its petitions for reconsideration of the SCIS Disclosure Review Order and the ONA Final Order. MCI 
attaches those pleadings as Appendices A-G of its application for review of the US West ONA Designation Order. 
'.
15 MCI Application at 4-5; MCI Opposition at 16-17; August 4 Letter at l. 
116 MCI Application at 4-5. 
111 Id. 
118 MCI Application at 6-7. 
119 MCI Opposition at 16; MCI Application at 6, citing Amendment of Rules Governing Procedures to Be 
Followed When Formal Complaints Are Filed Against Common Carriers, CC Docket No. 92-26, 8 FCC Red 2614 
(1993) (Formal Complaint Order). See Section 1.731 of the Commission's Rules, 47 C.F.R. § 1.731. 
120 MCI Opposition at 16-17. 
121 August 4 Letter at 1. 
122 US West Reply at 3. 
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Federal Communications Commission FCC 96-35 
proprietary, and alleges that MCI's information request is essentially motivated by its desire to 
gain a competitive advantage in its plans to enter the local exchange market. 123 
44. US West argues that the US West ONA Designation Order established reasonable. 
protections for highly sensitive commercial information, and that the Commission has considered 
and rejected MCI's arguments in prior proceedings. 124 US West also asserts that private parties 
do not have a constitutional right to see confidential information submitted in support of a 
tariff. 125 According to US West, "[t]he Commission must recognize that, at least as long as it 
requires cost support for tariff filings, competitively sensitive information will increasingly be 
filed with tariffs -- on a routine basis. "126 
45. Discussion. We agree with MCI that intervenor participation is an important element 
in any tariff investigation. Interested parties can contribute experience and resources to the 
analysis of rates that are not otherwise available to the Commission, thus improving the accuracy 
of the rates and benefiting the public.127 MCI is mistaken, however, in maintaining that the 
protections for proprietary information adopted for this investigation precluded adequate 
intervenor participation. 
46. We considered and rejected many of the arguments MCI raises here in the ONA 
Investigation Reconsideration Order or prior Orders. 128 Specifically, we concluded in the SCIS 
Disclosure Review Order that the "one attorney, two expert" restriction did not unreasonably limit 
intervenors' participation in the ONA investigation. 129 We also determined in the ONA 
Investigation Reconsideration Order that SCIS Redaction II did enable intervenors to observe the 
effects of changing model inputs on the model outputs.130 Accordingly, MCI has not persuaded 
123 US West Reply at 3-4. 
124 US West Opposition at 1-2. 
125 Id. at 2-4, citing American Farm Lines v. Black Ball Freight Service, 397 U.S. 532, 538 (1970); Aeronautical 
Radio, Inc. v. FCC, 642 F.2d 1221, 1235 (D.C. Cir. 1980), cert. denied, 451 U.S. 920 (1981). 
126 Id. at 3. 
127 See 800 Database Access Tariffs and the 800 Service Management System Tariff, CC Docket No. 93-129, 
9 FCC Red 715, 718 (para. 11) (Com. Car. Bur. 1994). 
128 ONA Investigation Reconsideration Order, 10 FCC Red 1619. 
129 SCIS Disclosure Review Order, 9 FCC Red at 181-82 (paras. 8-9). See also ONA Investigation 
Reconsideration Order, 10 FCC Red at 1621-22 (para 16). 
130 ONA Investigation Reconsideration Order, 10 FCC Red at 1622 (paras. 17-18). 
5145 
Federal Communications Commission FCC 96-35 
us that the US West ONA Designation Order nondisclosure restrictions precluded any intervenor 
from participating effectively in this investigation. 
47. We also disagree with MCI that the Formal Complaint Order, which among other 
things, adopted a rule governing proprietary information in complaint proceedings, 131 governs our 
treatment of SCM in this tariff investigation proceeding. Furthermore, our treatment of SCM in 
this investigation would not be precluded even if it were governed by the Formal Complaint 
Order. In that Order, we recognized that there might be "extremely limited circumstances" in 
which Section 1. 731 would not be sufficient to protect certain confidential materials. We 
concluded that in those cases, parties could decline to comply with the request for discovery, and 
we would address the issue of whether the protections in Section 1. 731 are adequate in deciding 
whether to grant or deny a motion to compel discovery. 132 This is essentially what the Bureau 
did in the SCIS In Camera Order and prior proceedings. Specifically, the Bureau directed the 
BOCs to disclose SCIS, 133 and BOCs filed petitions for waiver of that requirement. In the SCIS 
In Camera Order, the Bureau found that the BOCs had adequately shown that unrestricted SCIS 
disclosure could, inter ali~ damage competition in the switch manufacturing market, and 
accordingly, granted the BOCs' waiver requests. 134 Later, in the SCIS Disclosure Order, the 
Bureau developed procedures that enabled intervenors to examine the SCIS model without 
compromising proprietary information. We see no relevant distinction between the SCIS 
Disclosure Order and an Order considering a motion to compel discovery in a complaint 
proceeding, concluding that Section 1. 731 would not be sufficient to protect the proprietary 
information in that "extremely limited circumstance," and establishing additional protections for 
that proprietary information that would enable a party in the complaint proceeding to examine 
that material. Therefore, we find that the Bureau's actions the SCIS Disclosure Order and the 
US West ONA Designation Order are not inconsistent with our Formal Complaint Order. 
48. In reaching these conclusions, however, we place no weight on US West's assertion 
that our cost support requirements compel LECs to support their tariff filings with proprietary 
information "on a routine basis," either now or in the future. In fact, US West's contention is 
clearly inconsistent with the Commission's rules and prior orders. Section 0.455(b)(l 1) of the 
Commission's Rules, 47 C.F.R. § 0.455(b)(l 1), requires that tariffs and "all documents filed in 
connection therewith" shall be routinely publicly available. In the ONA Final Order, we 
131 See Section 1.731 of the Commission's Rules, 47 C.F.R. § 1.731. 
132 Fonnal Complaint Order, 8 FCC Red at 2622 (para. 44). 
133 Commission Requirements for Cost Support Material To Be Filed with Open Network Architecture Access 
Tariffs, 6 FCC Red 5682, 5682 n.9 (Com. Car. Bur. 1991) (ONA TRP Order); review denied, 7 FCC Red 4229 
(1992). 
134 SCIS In Camera Order, 5 FCC Red at 523 (paras. 14-15). 
5146 
Federal Communications Commission FCC 96-35 
concluded that proprietary cost support information was "necessary in the ONA context," but 
emphasized that "carriers should not routinely support proposed rates through the use of 
proprietary models or data," and that carriers relying on proprietary cost support data "bear a 
substantial, initial burden of demonstrating the circumstances that preclude reliance on publicly 
available data."135 Thus, contrary to US West's assertion, proprietary cost support information 
will not be "routinely" accepted. At minimum, carriers are required to show that it is impossible 
to support their tariffs with publicly available information before we will permit carriers to rely 
on proprietary data. 136 
D. Reasonableness of Conditions Under Which Intervenors Examined the Redacted Model 
49. Pleadings. MCI states that it has previously explained in a letter dated March 17, 
1995, the level of access to the SCM it considers appropriate. 137 In that letter, MCI argued that: 
(1) the redacted SCM Model should be a "complete, functioning, unaltered" version of the model, 
with proprietary information merely "masked," i.e., included in the model, but not displayed on 
the computer screen in any way; (2) MCI should be given access to SCM documentation, with 
only vendor-specific proprietary information redacted; (3) the input display screens and 
instructions for acceptable ranges of inputs should not be altered; and ( 4) the model inputs used 
by US West should be included, so that MCI could use US West's inputs as a "baseline" for its 
sensitivity analyses. 138 
50. MCI also complained that a US West representative observed MCI's SCM 
examination, and claims that this prevented MCI's attorney from having confidential 
communications with his clients.139 US West states that, although a US West person was present 
while MCI was examining the redacted SCM model, a private conference room adjacent to the 
computer room was made available to MCl.140 MCI responds that the room US West made 
135 ONA Final Order, 9 FCC Red at 469 n.163. See also SCIS Disclosure Review Order, 9 FCC Red at 181 
n.17; US West ONA Designation Order, 9 FCC Red at 6714 n.39. 
136 ONA Final Order, 9 FCC Red at 444 (para. 8). 
137 MCI Opposition at 6-7 and Exh. A. MCI attaches the March 17 Letter to its Opposition as Exhibit A. Letter 
from Gregory F. Intoccia, MCI, to Robert B. McKenna, US West, March 17, 1995 (March 17 Letter). 
138 MCI Opposition, Exh. A at 1-2. 
139 MCI Opposition at 17. 
140 US West Reply at 5-6. 
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Federal Communications Commission FCC 96-35 
available was a break room which did not afford sufficient privacy to conduct sensitive 
conversations.141 
51. MCI further claims that US West refused to provide the SCM documentation it 
requested. 142 MCI also asserts that, when it tried to operate the redacted model, the model 
generated a "fatal error" message and stopped working. MCI states it received "fatal error" 
messages twice on March 22, 1995, and once on March 27, 1995. MCI asserts that US West 
informed MCI that the errors were caused by the redaction process rather than being inherent in 
the model. 143 MCI speculates that in addition to the "fatal errors" it did discover, there may have 
been other "non-fatal errors" which call into question the accuracy of the redacted model 
outputs. 144 MCI also asserts that it obtained anomalous results in its SCM examination, but does 
not specify what those anomalous results were. 145 
52. MCI states that on March 28, 1995, it conducted more sensitivity analyses, by 
changing the value of a variable at each switching location, but found that process to be 
"unworkable."146 Nevertheless, on May 3, MCI examined redacted SCM again by changing one 
variable at each switching location. 147 MCI maintains that the redaction caused this to be a 
burdensome process.148 MCI alleges that, because it was required to use US West's master file, 
changing a variable at each switching location required 12 to 15 minutes for each run. At this 
rate, MCI contends that it would have taken approximately 27 to 37 weeks for MCI to conduct 
a sensitivity analysis of 25 to 30 variables at each switching location.149 MCI considers it 
141 August 4 Letter at 2. 
142 MCI Opposition at 7. 
143 MCI Opposition at 7-9. 
144 MCI Opposition at 12-13, 19-20; August 4 Letter at 3-4. 
145 August 4 Letter at 3. 
146 MCI Opposition at 9. 
147 Id. at 9-10. 
148 Id. at 10. 
149 MCI Opposition at 10-11, 18, August 4 Letter at 4. In Exhibit B of its opposition, MCI reports the amount 
oftime consumed by each run. Based on MCI's Exhibit B, it appears that most ifnot all of MCI's runs lasted three 
or four minutes rather than 12 to 15 minutes. 
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Federal Communications Commission FCC 96-35 
"untenable" to base its analysis on a single switching location, because that office may not be 
representative of all US West switching locations.150 
53. MCI alleges that US West removed the feature from SCM that would enable 
intervenors to select switching locations based on common characteristics, and that this caused 
the redacted model to run more slowly than it would have otherwise. 151 Similarly, MCI claims 
that US West's inclusion of additional master files increased SCM running time.152 MCI criticizes 
US West for making only the "cost study" output report available, rather than the more extensive 
"investment analysis" output report. 153 MCI claims that some sensitivity to input variation does 
exist, but alleges that it is unable to quantify that sensitivity using the redacted model. 154 MCI 
also alleges that the Arthur Andersen Report is too heavily redacted to enable it to comment on 
Arthur Andersen's methodology or results. 155 
54. US West denies that it has been "anything less than open and accommodating" to 
MCI. US West notes that its technician once flew from Denver to Washington for an 
appointment that MCI had made to examine the redacted model, but MCI failed to keep that 
appointment. 156 US West states that the two fatal errors consisted of a file-naming convention 
error and an error involving the size of a file. US West contends that the revisions causing these 
errors only masked proprietary data, but had no effect on the model outputs. 157 US West argues 
that, based on the redacted 1995 Arthur Andersen Report, MCI should have known that it would 
have been more reasonable and less time-consuming to test feature.input sensitivities rather than 
measuring the time necessary to make changes to core data. 158 US West maintains that AT&T 
completed this kind of analysis in less than one day. 159 US West contends that, because MCI was 
iso MCI Opposition at 18-19; August 4 Letter at 3. 
isi MCI Opposition at 13. 
1s2 Id. at 14-15. 
1s3 Id. at 13-14; August 4 Letter at 1. 
is4 MCI Opposition at 21. 
!SS MCI Opposition at 22-23. 
1s6 US West Reply at 11-12. 
157 Id. at 7 n.10. 
158 Id. at 8-9. 
159 Id. at 9. 
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Federal Communications· Commission FCC 96-35 
permitted to examine only one switch type, and because locations were masked, the feature that 
would have enabled MCI to select switching locations based on common characteristics would 
have been of no practical value to MCI.160 US West asserts that the number of offices in the 
"core run" rather than the number of offices in the master file is the main determinant of the time 
it takes to run the model. 161 US West asserts that it was necessary to mask the output reports to 
protect proprietary data. 162 
55. MCI dismisses US West's comments as an unfounded attack on its credibility. MCI 
further responds that to focus exclusively on the features module, as US West suggests, would 
ignore about two-thirds of the variables in SCM over which US West has control. 163 MCI also 
contends that limiting its analysis to one or two central offices would probably not produce 
representative results, and would probably not shorten the amount of time needed to conduct its 
analysis. 164 In addition, MCI disagrees that the feature which would have enabled MCI to select 
switching locations based on common .characteristics would have been "of no practical value," 
because it would have enabled MCI to select all host or remote switches.165 MCI also argues that, 
if the feature were truly valueless, then US West would have had no legitimate basis for 
removing it. 166 
56. Discussion. As we determined above, the procedures adopted by the Bureau did not 
preclude intervenors from participating adequately in the investigation. We find below that US 
West implemented those procedures in a reasonable fashion, and that MCI overstates the burdens 
it found in its redacted SCM review. 
57. As an initial matter, MCI's claim that US West refused to provide the SCM 
documentation it requested is inaccurate. MCI informed the Bureau that US West did provide 
that information to MCI on April 19, 1995, and on April 26, the Bureau extended the date for 
filing oppositions so that MCI and other intervenors could examine the model further in light of 
160 Id. at 7 n.10. 
161 Id. at 11. 
162 Id. at I 0. 
163 August 4 Letter at 2-3. 
164 August 4 Letter at 3. 
165 Id. at 4. 
166 Id. at 4. 
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Federal Communications Commission FCC 96-35 
this documentation.167 Second, we have found in prior Orders that disclosure of input ranges on 
display screens, and access to US West's inputs, as MCI requested in its March 17 Letter, might 
enable MCI to derive proprietary vendor information. 168 Finally, Commission staff input the same 
set of data in our redacted and unredacted versions of SCM, and obtained the same results from 
each. Therefore, we conclude that nothing has been removed from the model that would cause 
the outputs to vary from the unredacted model. 
58. During MCI's review of the redacted SCM model, it received two "fatal error" 
messages. US West explained the source of those errors, both to MCI and in its pleadings, and 
quickly revised the model so that "fatal errors" would not recur. US West also made those 
revisions to the redacted SCM model provided to the Commission. As we stated above, we found 
that the redacted and unredacted SCM models produce the same results. Thus, MCI's concerns 
that the redaction process might have caused the redacted SCM to produce results different from 
those produced by the unredacted SCM are unfounded. 
59. We agree with MCI that it would be unreasonable to expect intervenors to ignore the 
effects of changes in core data on SCM outputs. Nevertheless, we agree with US West to the 
extent it argues that MCI should have known that conducting sensitivity analyses on a switch-by­
switch basis would be unlikely to be the most efficient method of examining SCM. MCI states 
that it adopted its switch-by-switch approach because it was concerned that US West would argue 
that basing its sensitivity analyses on a single switch would not necessarily be representative of 
all the switches in US West's service area for the purposes of conducting sensitivity analyses. 169 
MCI has not explained, however, why this argument compels it to conduct sensitivity analyses 
on all of US West's switches, one at a time. Specifically, MCI could have selected a relatively 
small random sample and be confident within a low margin of error that the effects of changes 
in the random sample on SCM outputs would be representative of the effects of those changes 
in all of US West's switches. We find that such a sample of switches would be sufficient to 
determine whether changes in a given input or set of SCM inputs has a reasqnable or 
unreasonable effect on SCM outputs.170 Although it would take a few more minutes to input 
167 Open Network Architecture Tariffs of US West Communications, Inc., CC Docket No. 94-128, 10 FCC Red 
5694 (Com. Car. Bur., Tar. Div., 1995) (Extension of Time Order). 
168 See ONA Investigation Reconsideration Order, 10 FCC Red at 1622 (para. 18); SCIS Disclosure Review 
Order, 9 FCC Red at 181 n.16. 
169 MCI Opposition at 18-19; August 4 Letter at 3. 
170 We do not find, however, that this level of precision would be sufficient for LECs to use when developing 
ONA rates. As we discussed above, and in the ONA Final Order, we expect LECs establishing ONA rates to include 
all the switches in their service area for their model offices, unless they have a good reason for using fewer switches. 
See ONA Final Order, 9 FCC Red at 447-48 (paras. 16-18). 
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Federal Communications Commission FCC 96-35 
changes for this random sample of switches than it would for one switch, these few minutes 
would be sufficient to conduct one sensitivity analysis; i.e., to examine how changes in one model 
input or set of inputs affect model outputs. 171 Thus, MCI inaccurately asserts that it would take 
several hours or days to conduct one sensitivity analysis, or that it would take 27 to 37 weeks to 
conduct a reasonable review of SCM. 
60. With respect to the feature that would have permitted intervenors to select switching 
locations based on common characteristics, we find US West's removal of this feature was not 
inconsistent with the instructions set forth in the US West ONA Designation Order. In that 
Order, the Bureau stated that the redacted SCM model should "at minimum enable intervenors 
to examine the effects on SCM outputs of changes in SCM inputs to the same extent as was 
possible with SCIS Redaction II, used in the first ONA investigation."172 We find that US West's 
redacted SCM met this standard. Furthermore, on March 17, 1995, the Bureau extended the 
pleading cycle in this investigation. 173 The Bureau did this in part to account for the fact that one 
sensitivity analysis using redacted SCM requires more time than a sensitivity analysis using 
redacted SCIS. Thus, removal of this feature did not preclude MCI from participating in this 
investigation. 
61. Finally, MCI has not made a convincing showing that its review of redacted SCM 
was as difficult as it claims. First, as we noted above, MCI did n~t acknowledge that US West 
provided MCI with the documentation it requested. Second, MCI's claim that each redacted 
SCM run required 12 to 15 minutes is inconsistent with the documentation of each run it provides 
in Appendix B of its opposition. In Appendix B, MCI reports the amount of time it spent 
"setting up" and "running" each central office.174 MCI reports that it took about one or two 
minutes to "set up" each office that did not have any remote switches, and about three minutes 
to "run" each of those offices. For offices with remotes, MCI appears to have spent an average 
of about one minute per remote to "set up" those offices, and three to five minutes to "run" the 
offices, including the remotes. The total "set-up" and "run" times thus are less than MCI's claims 
for the times needed to review a changed variable at a switching location. Thus, we question the 
accuracy of MCI's claims on this issue. Our doubts are based not on US West's reply, but on 
171 We defined sensitivity analyses initially in the ONA Final Order, 9 FCC Red at 470 (para. 80). 
172 US West ONA Designation Order, 9 FCC Red at 6714 (para. 20). 
173 See Public Notice, Tariff Division Revises Pleading Cycle in US West ONA Investigation, IO FCC Red 5093 
(Com. Car. Bur., Tariff Div., 1995). 
174 MCI defines "setup" time include the selection of the office location, calculation of the revised value for the 
selected variable, and the change of the variable value. MCI defines "run" time to include only the time needed for 
the redacted model to process the change after the "calculate and save" command has been executed. MCI 
Opposition, App. B at 1 n. l. 
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Federal Communications Commission FCC 96-35 
inconsistencies in MCI's opposition. In view of these inconsistencies, we find MCI's claims of 
hardship in its redacted SCM ~eview to be overstated and unpersuasive. 
62. In summary, we find that US West did not place unreasonable conditions on 
intervenors reviewing the redacted SCM model, and consequently, did not preclude intervenors 
from participating adequately in the investigation. 
V. ORDERING CLAUSES 
63. Accordingly, IT IS ORDERED that the investigation and accounting orders imposed 
by the Common Carrier Bureau in CC Docket No. 92-91 IS TERMINATED, with respect to US 
West Communications, Inc. 
64. IT IS FURTHER ORDERED that the investigation and accounting orders imposed 
by the Common Carrier Bureau in CC Docket No. 94-128 IS TERMINATED. 
65. IT IS FURTHER ORDERED that the Applicatio~ for Review filed by MCI 
Telecommunications Corporation IS DENIED. 
FEDERAL COMMUNICATIONS COMMISSION 
William F. Caton 
Secretary 
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