CinCinnatI Bell'"
201 E. Fourth St.
PO. Box 2301
Cincinnati, Ohio 45201-2301
March 30, 2005
Ms. Marlene H. Dortch, Secretary
Federal Communications Commission
The Portals
445 Twelfth Street SW
Washington, D. C. 20554
Re: In the Matter of Implementation of the Pay Telephone Reclassification and
Compensation Provisions of the Telecommunications Act of 1996
CC Docket No. 96-128
Dear Ms. Dortch:
Attached is a copy ofthe System Audit Report for Cincinnati Bell Any Distance Inc.
("CBAD") as required by Section 64.1320 of the Commission's rules. As explained by CBAD in
its Petition for Waiver filed on November 22, 2004, this System Audit Report would be filed no
later than April 1, 2005.
Pursuant to Section 64. 1320(e) of the Commission's rules, also attached is a copy of CBAD's
statement regarding contact information for the person responsible for handling CBAD's
payphone compensation and for resolving disputes with payphone service providers over
compensation. This statement was previously filed with the Commission on November 22,
2004.
A copy ofCBAD's System Audit Report and Section 64. 1320(e) Statement have been
provided to the National Payphone Clearinghouse for posting on its website (www.npc.cc) which
will serve as notice to payphone service providers as provided under Section 64. 1320(e).
Questions regarding this filing may be directed to me at the above address or by telephone at
(513) 397-6671.
Sincerely,
0";
A / ./
;!//,./'
,X:t:yti!Ch.____
Patricia L. Rupicl1 / .
Regulatory Analyst
cc: Denise Coca
Darryl Cooper
William Dever
National Payphone Clearinghouse
STUEDLE, SPEARS & COMPANY, PSC
CERTIFIED PUBLIC ACCOUNTANTS
STONY BROOK OFFICE CONDOMINIUMS
2821 S. HURSTBOURNE PARKWAY
LOUISVILLE, KENTUCKY 40220
PHONE: (502) 491·5253 ? FAX: (502) 491·5270
Audit of
Cincinnati Bell Any Distance, Inc.
Payphone Compensation
March 15, 2005
Audit of
Cincinnati Bell Any Distance
Payphone Compensation
March 15, 2005
Report on Controls Placed in Operation and Tests of Operating Effectiveness
Table ofContents
Section
l.
2.
3.
4.
Description of Section
Independent Auditor's Report
Cincinnati Bell Any Distance Call Tracking System Description ofControls
Infonnation Provided by the Auditor
Cincinnati Bell Any Distance Management Representation Letter
2
STUEDLE, SPEARS &COMPANY, PSC
CERTIFIED PUBLIC ACCOUNTANTS
STONY BROOK OFFICE CONDOMINIUMS
2821 S. HURSTBOURNE PARKWAY
LOUISVILLE, KENTUCKY 40220
PHONE: (502) 491-5253 ? FAX: (502) 491-5270
Section 1
Independent Auditor's Report
To the management ofCincinnati Bell Any Distance:
We have examined the controls and processes related to the Cincinnati Bell Any Distance
(CBAD) call tracking system for payphone calls. Our examination included procedures to obtain
reasonable assurance about whether the controls and processes included in our audit were
suitably designed to achieve the control objectives namely that (I) the CBAD call tracking
system accurately tracks payphone calls to completion, (2) that CBAD satisfactorily complied
with and applied these controls, and (3) that all compensable calls are accounted for. Such
controls and processes were in operation as ofJuly I, 2004 with initial payments based on third
quarter 2004. We relied on the experience and expertise ofAmerican Consultants Alliancc, Inc.
in planning the audit, gathering data, performing procedures, and completing the audit. Our
examination was performed in accordance with standards established by the American Institute
ofCertified Public Accountants and included those procedures we considcred neccssary in the
circumstances to obtain a reasonable basis for rendering our opinion.
In our opinion, the accompanying description ofthe application ofthese controls presents fairly,
in all material respects, the relevant aspects ofCBAD's controls and processes that were in
operation as ofJuly I, 2004 with initial payments based on third quarter 2004. In our opinion, the
controls and processes, as described, are suitably designed to provide reasonable assurance to
achieve the control objectives namely that CBAD:
I) has procedures in place to accurately track pa)'Phone calls to completion;
2) has identified persons responsible for tracking, compensating, and resolving disputes
concerning payphone completed calls;
3) has established data monitoring procedures;
4) adheres to estahlished protocols to ensure that any software, personnel or any other
network changes do not adversely affect its payphone call tracking ability;
5) has created a compensable payphone call file by matching call detail records against
payphonc identifiers;
6) has implemented procedures to incorporate payphone call data into required reports;
7) has implemented procedures and controls needed to resolve disputes;
8) has implemented critical controls and procedures to identify payphone compensation
errors; and
9) has implemented business rules for implementing and paying payphone compensation.
3
In addition to the procedures we considered necessary to render our opinion, we applied tests to
specific controls, which are presented in section 3 ofthis report, to obtain evidence about their
effectiveness in meeting the related control objectives during the period ofSeptember 2004. The
specific controls and the nature, timing, extent, and results ofthe tests are listed in Section 3.
This information has been provided to management ofCBAD to be used to satisty the
requirements ofthe FCC order in docket No. 96-128 Pay Telephone Reclassification and
Compensation that CBAD must establish its own ean tracking system and have a third party
attest that the system accurately tracks payphone cans to completion. In our opinion, the controls
and processes that were tested were operating with sufficient effectiveness to provide reasonable
assurance that the control objectives were achieved during the period from July I, 2004 to March
15,2005.
The description ofcontrols and processes is as ofMarch 15, 2005 and information about tests of
the operating effectiveness ofspecific controls covers the period from July I, 2004 to March 15,
2005. The projection ofany conclusions, based on our findings, to future periods is subject to the
risk that (1) changes made to the controls, processes or system, (2) changes in processing
requirements, or (3) changes required because ofthe passage oftime may alter the validity of
such conclusions. CBAD has informed auditor that CBAD will conduct an audit ofCBAD's can
tracking system for payphonc cans at a minimum on an annual basis.
This report is intended solely for use by the management ofCBAD.
4
Section 2
Cincinnati Bell Any Distance Description of Controls and Overview of Operations
CBAD Headquarters offices are located in Cincinnati, Ohio. CBAD primarily provides long
distance telephone services in the Cincinnati area however, also provides long distance telephone
services to all states except for Alaska and Hawaii.
The audit encompasscs usage as it relates to Payphone Service Provider direct dialed ]+,
originating 8XX and CBAD calling card traffic terminating on CBAD's network.
CBAD has personnel responsible for tracking, compensating, and resolving disputes. Operations
are under the direction ofthe Director Systems Development and Support in Information
Technology. The Senior Application Analyst reporting to the Director Systems Development and
Support is assigned to oversee the Payphone Compensation process. Staffpersonnel have been
identified as responsible for the handling ofdisputes.
CBAD adheres to established protocols to ensure any changes to software in place to accomplish
the payphone compensation process are accurate and complete. CBAD contracts with EUR
Systems, Inc. for all programming changes. Business requirements are developed by CBAD and
forwarded to the vendor. EUR Systems, Inc. analyzes the request and creates a project
requirements document that ineludes all programs to be changed in order to meet CBAD's
business requirements. CBAD then approves the document. Within the APTIS Product
provided by EUR Systems, detailed testing is required before releasing the program changes to
CBAD. CBAD then tests all changes internally and when all testing has been completed,
authorizes the new program to be implemented. This process ensures that any changes to
processing are appropriately authorized, approved and implemented.
Controls and procedures have been established and tested to verify that compensable calls are
properly captured.
In the FCC Pay Telephone order released October 3, 2003 the FCC noted that in order to track a
payphone call to completion, an entity must identifY whether a call originates from a payphone
(via information digits), where it originates and terminates (via ANI information), and whether it
is completed and therefore compensable (via answer supervision).
CBAD has contracted with the National Payphone Clearinghouse (NPC) to perform the actual
compensation ofthe payphone providers. KPMG LLP previously audited the NPC. The NPC
Audit is dated March 31, 2004. The name ofthe report is "National Payphone Clearinghouse,
Report on Policies and Procedures Placed in Operation ofthe National Payphone Clearinghouse
for the processing period January 1,2004 through March 31, 2004."
Using call detail records from its switch, CBAD assigns as payphone calls all calls in which the
Info Digits Field has a value of"27", "29" or "70". Ifthe Info Digit field is not populated,
CBAD's program uses the previous quarter's Automatic Number Identification (ANI) list of
5
payphone numbers provided by the National Payphone Clearinghouse (NPC). If the originating
number in the record matches a number on the NPC list, the program populates the payphone
indicator. All 8XX or calling card calls identified as payphone-originated calls with a call
duration ofgreater than 0 are considered compensable calls.
NPC Superfile Analysis Reports: Quarterly the NPC provides reports to CBAD as the submitting
carrier. The reports includc an End ofQuarter IXC Dump File Submission Analysis report and
an End ofQuarter Client Dump PSP File.
CBAD Analysis Reports: A series ofquarterly reports developed by CBAD are used to verify
internally the information contained on the NPC quarterly reports. These reports allow CBAD to
balance back to each individual type ofcall identified by the NPC, such as unique ANI counts,
unique Toll-FreelAccess Code counts, Carrier Call Type counts, Rate Status counts and other
counts provided on the NPC reports.
CBAD Monthly Variance Report: CBAD creates a monthly report to track variances in the
month-to-month payphone volumes. The report is sorted by customer number and reflects the
amount ofmessages and minutes attributed to each customer for a rolling three months. The
report allows tor the tracking ofthe differences between call volumes for each month as well as
the differences in the minutes.
The list ofcontrol considerations presented above represent a comprehensive set ofcontrols but
is not all encompassing ofCBAD controls.
6
Section 3
Information Provided by the Auditor
CBAD has implemented procedures to track payphonc calls to completion, monitor data and
resolve disputes. CBAD has developed effective business rules for payphone compensation.
CBAD provided the switch recordings for September 13 and 14, 2004, the Payphone Service
Providcr (PSP) Rating Program (RPG) File ofmessages dated September 13 - 19,2004, the
AS/400 Holding Daily Accumulation File, and the NPC Output file for 3
rd
Quarter, 2004.
Auditor verified that all PSP originated messages were successfully processed and passed to the
NPC for compensation.
Switch Records: CBAD provided a file ofthe switch records. The file contained all records
recorded by the CBAD switch. Auditor identified all records that qualified as PSP records.
PSP RPG Records: CBAD provided files containing the PSP RPG records. Auditor verified that
all switch records identified as PSP were accurately included in the RPG file.
AS/400 Holding File Records: In the daily RPG program process, a copy ofthe PSP internal
billing record is refonnatted and placed on the AS/400 Holding File. These records are
formatted in accordance with the NPC Superfile specifications. Auditor verified that the
accumulative holding file contained all sevcn days PSP records.
NPC Output Records: The RPG program produces a quarterly NPC Output file. Access queries
were performed to compare the RPG file with the NPC Output file. Auditor determined that all
appropriate PSP compensable messages were contained on the NPC Output File.
Reports: Auditor verified the usage counts to the quarterly CBAD reports and to the NPC
provided 3
rd
quarter, 2004 reports. Information on internal reports matched to the usage and the
NPC reports.
CBAD controls provide reasonable assurance that CBAD's procedures accurately track
payphone calls to completion and that the process accounts for all compensable calls.
CBAD has procedures and assigned personnel to resolve pay-phone compensation disputes. There
had been no disputes.
Auditor tested all critical controls and procedures to verify that errors are insubstantial. There
were no relevant exceptions.
SI::~R:!e:::rSroI-prG
7
@ CinCinnatI Bell'"
SECTION 4
201 E. Fourth St., 102-790
Cincinnati, Ohio 45201-2301
phone 51'3.397.6496
fax 513.397.7638
Brian A. Ross
Chief Financia! Officer
March IS, 2005
Ms. Kristin Stuedle, CPA
Stuedle, Spears & Company, PSC
2821 S. Hurstbourne Parkway, Suite I
Louisville KY 40220
Dear Ms. Stuedle:
mobile 513.608.7447
brian.ross@cinbell.com
In connection with your engagement to report on Cincinnati Bell Any Distance Inc.'s (CBAD) controls
and processes for tracking payphone calls to completion and that all compensable calls are accounted
for, CBAD recognizes that obtaining representations from us is an important part ofthe audit process.
CBAD is aware that (I) its representations enable you to fonn an opinion on whether the infonnation
and descriptions provided by CBAD present fairly, in all material respects, the relevant aspects of
CBAD's controls and processes in place and effective as ofMarch IS, 2005 and (2) whether these
controls and processes are suitably designed to provide reasonable assurance that the specified control
objectives would be achieved ifthose controls were complied with satisfactorily.
Accordingly, CBAD makes the following representations, which are true to the best ofits knowledge
and belief. CBAD provides access code calls (I 01 OXXX) and carries IntraLATA, Intrastate and
Interstate traffic. The audit encompasses usage as it rclates to Payphone Service Provider (PSP) direct
dialcd 1+, originating 8XX and CBAD calling card traffic tenninating on CBAD's network. CBAD's
procedures accurately track payphone calls to completion and this process accounts for all
compensable calls. Specifically, CBAD represents that it:
I) has procedures in place to accurately track payphone calls to completion;
2) has identified persons responsible for tracking, compensating, and resolving disputes
concerning payphone completed calls;
3) has established data monitoring procedures;
4) adheres to established protocols to ensure that any software, personnel or any other
network changes do not adversely affect its payphone call tracking ability;
5) has created a compensable payphone call file by matching call detail records against
payphone identifiers;
6) has implemented procedures to incorporate payphone call data into required reports;
7) has implemented procedures and controls needed to resolve disputes;
8) has implementcd critical controls and procedures to identify payphonc compensation
errors; and
9) has implemented business rules for implementing and paying payphone compensation.
As required by 47 C.F.R. Section 64.1320(d), CBAD herein describes it criteria for:
I. IdentifYing calls originatedfrom payphones. Using call detail records from its switch,
CBAD assigns as payphone calls all calls in which the Info Digits field has a value of"27",
"29" or "70". Ifthe Info Digits field is not populated, CBAD's program uses the previous
quarter's Automatic Number Identification (ANI) list ofpayphone numbers provided by
the National Payphone Clearinghouse (NPC). Ifthe originating number in the record
matches a number on the NPC list, the program populates the payphone indicator.
2. IdentifYing compensable payphone calls. All 8XX or calling card calls identified as
payphone-originated calls with a call duration ofgreater than 0 are considered compensable
calls.
3. IdentifYing incomplete or otherwise noncompensable calls. The following calls are
considered non-compensable: (I) calls that are not identified as payphone originated calls;
(2) direct dialed 1+ payphone-originated calls; and (3) 8XX or calling card payphone
originated calls with a call duration ofO.
4. Determining the identities ofthe PSPs to which CBAD owes compensation. CBAD
contracts with the NPC to identify valid payphone ANIs based upon information provided
to the NPC by PSPs and local exchange carriers.
Furthermore, as required by 47 C.F.R. Section 64.1320(d), CBAD attests to the fact that it uses the
NPC to identify valid PSP ANls and to process and distribute all ofCBAD's quarterly payphone
compensation payments. The information that CBAD requires ofPSPs in order to compensate thcm is
specified by the NPC and is available via the NPC's website (www.npc.cc).
Our process produces accurate and compensable call data to ensure proper compensation to PSPs. We
believe that the description ofcontrols and other information gathered by Stuedle Spears and American
Consultants Alliance (ACA) presents fairly, in all material respects, those aspects ofCBAD's controls
that may be relevant to CBAD's internal controls and processes. CBAD has responded fully to all
inquiries made by you during your examination.
The information gathered by ACA includes all ofthe controls that we believe are relevant to thc
services described in your audit report and are appropriate based on the services provided. CBAD is
not aware ofany illegal acts, fraud, or uncorrected errors attributable to management or employees of
CBAD who are significantly involved in processes to identify calls originating from payphones,
identify compensable payphone calls, and provide call detail to the NPC.
CBAD understands that your examination was conducted in accordance with generally accepted
auditing standards as defined and described by the American Institute ofCertificd Public Accountants;
and was, therefore, designed primarily for the purpose ofexpressing an opinion on the suitability of
CBAD's controls and processes to accurately track payphone calls to completion and that thesc
controls and processes account for all payphone compcnsable calls. We further understand that your
procedures were limited to those that you considered necessary for this purpose.
~trulyyours,o
.t*/eu..~~
Brian A. Ross
Chief Financial Officer
.------ --,
~CinCinnatI Be"-
_ _Any Distance
SECTION 64.1320(e) STATEMEl'ii
Cincinnati Bell Any Distance ("CBAD") is a Completing Carrier for toll-free payphone
originated calls. CBAD has contracted with the National Payphone Clearinghouse ("NPC") to
pay compensation to payphone service providers ("PSPs") on behalf of CBAD.
A PSP that has a dispute regarding payphone ownership (i.e., ANI disputes) should contact the
NPC at:
National Payphone Clearinghouse
209 West Seventh Street, Room 121-500
Cincinnati, Ohio 45202
Phone: 513-397-6260
24HourFax: 513-721-2646
E-mail: npc@cinbell.com
or
Submit a claim directly with the NPC by following the instructions on the NPC's
website at www.npc.cc. Claim forms and instructions can be found on the NPC's
website by clicking on "Payphone Service Providers" and then "PSP Processing
Fonns."
Ifthe dispute cannot be resolved by the NPC (i.e., issues unrelated to payphone ownership) the
PSP should contact CBAD. If the PSP has filed a claim with the NPC it should provide CBAD a
copy of the original claim filed with the NPC and the NPC's response. The CBAD contact for
these disputes is:
Sandy Bowling
Cincinnati Bell Any Distance
221 East Fourth Street, Room 103-710
Cincinnati, Ohio 45202
Phone: 513-397-6385
Fax: 513-397-2543
E-mail: sandy.bowling@cinbell.com