Windstream 2009 Annual Report Download - page 131

Inter-carrier Compensation
On October 5, 2007, Verizon filed a complaint with the Ohio PUC alleging that the Company’s intrastate access rates
are excessive and should be reduced to the same levels charged by the largest ILECs in Ohio, or in the alternative, to
the Company’s interstate access rate levels. If the Ohio PUC were to grant Verizon’s request and require the Company
to implement the large ILEC rate structure, the Company would incur a reduction in annual revenues of up to $7.6
million. This estimate assumes the Company would be allowed to implement retail rate increases simultaneously with
the access rate reductions similar to the plan adopted by the PUC for the larger Ohio ILEC access rate reductions. The
Ohio PUC has not acted upon requests by other parties for the Company and other similar sized ILECs in Ohio to
reduce their intrastate access rates.
On December 5, 2007 and February 22, 2008, Verizon filed complaints with the Kentucky PSC and the Georgia PSC
very similar to the complaint filed in Ohio. In these cases, Verizon also alleges that the Company’s intrastate access
rates are excessive and should be reduced to the level currently charged by AT&T (formerly BellSouth).
The Company requested that the Ohio PUC, the Kentucky PSC and the Georgia PSC deny Verizon’s requested relief
based in part on the fact that the Company’s intrastate access rates are just and reasonable and on the current efforts to
reform inter-carrier compensation comprehensively at the federal level, as previously explained.
On March 19, 2009, AT&T filed a complaint with the Pennsylvania PUC alleging that the Company’s intrastate access
rates are not just and reasonable and should be reduced to the Company’s interstate access rate levels.
On November 23, 2009, Sprint requested that the North Carolina Utilities Commission reduce the Company’s access
rates to a cost-basis or, in the alternative, to the Company’s interstate access rate levels.
The Company will request that the Pennsylvania PUC and the North Carolina Utilities Commission deny AT&T’s and
Sprint’s requested relief based in part on the fact that the Company’s intrastate access rates are just and reasonable and
on the current efforts to reform inter-carrier compensation comprehensively at the federal level, as previously
explained.
At this time, the Company cannot estimate the financial impact of any PSC decision due to the various options the PSC
could consider if it ruled in Complainant’s favor that would affect the financial impact of the rate reductions, if any.
Directory Publishing Segment
The following table reflects the Company’s directory publishing segment results as of December 31:
(Millions) 2009 2008 2007
Revenues and sales:
Directory publishing $ - $ - $ 123.0
Total revenues and sales - - 123.0
Costs and expenses:
Cost of products sold - - 90.2
Selling, general, administrative and other - - 27.5
Total costs and expenses - - 117.7
Segment income $ - $ - $ 5.3
In the fourth quarter of 2007, the Company completed the split off of its directory publishing business, as previously
discussed. Results in 2007 were derived from the publication of directories for affiliated and non-affiliated local
exchange carriers.
Merger and integration costs related to the directory publishing were $3.7 million for 2007 and were the result of
transaction costs associated with the split off of the directory publishing business. These costs are not included in the
determination of segment income.
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