*Pages 1--16 from Microsoft Word - 7148.doc* Federal Communications Commission DA 01- 507 Before the Federal Communications Commission Washington, D. C. 20554 In the Matter of All West Communications, Inc., Carbon/ Emery Telecom, Inc., Central Utah Telephone, Inc., Hanksville Telecom, Inc., Manti Telephone Company, Skyline Telecom, UBET Telecom, Inc. And Qwest Corporation Joint Petition for Waiver of the Definition of “Study Area” Contained in the Part 36 Appendix- Glossary of the Commission’s Rules; Petition for Waiver of Sections 61.41( c), 61.41( d) and 69.3( e)( 11) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) CC Docket No. 96- 45 ORDER Adopted: February 27, 2001 Released: February 27, 2001 By the Chief, Accounting Policy Division: I. INTRODUCTION 1. In this Order, we grant a request from All West Communications (All West), Carbon/ Emery Telecom, Inc. (Carbon/ Emery), Central Utah Telephone (Central Utah), Hanksville Telecom, Inc. (Hanksville), Manti Telephone Company (Manti), Skyline Telecom (Skyline), and UBET Telecom, Inc. (UBET) (collectively, Acquiring Companies), and Qwest Corporation (Qwest) for a waiver of the definition of “study area” contained in Part 36 Appendix- Glossary of the Commission’s rules. 1 This waiver will permit Qwest to remove telephone exchanges comprising approximately 35, 600 access lines from its Utah study area. This waiver will also permit All West, Central Utah, Manti, and Skyline to add 1,920 access lines, 2,077 access lines, 1,887 access lines, and 1,407 access lines, respectively, to their existing Utah study areas. Additionally, this waiver will permit Carbon/ Emery, Hanksville, and UBET to add 12,105 access lines, 170 access lines, and 16,161 access lines, respectively, to their parent companies’ existing study areas. 1 All West Communications, Inc., Carbon/ Emery Telecom, Inc., Central Utah Telephone, Inc., Hanksville Telecom, Inc., Manti Telephone Company, Skyline Telecom, UBET Telecom, Inc. and Qwest Corporation Joint Petition for Waiver of the Definition of “Study Area” Contained in Part 36 Appendix- Glossary of the Commission’s Rules, Petition for Waiver of Section 61.41( c) and (d), 69.3( e)( 11) and 69.605( c) of the Commission’s Rules (filed Oct. 6, 2000) (Petition). 1 Federal Communications Commission 2 2. We also grant the request of All West, Carbon/ Emery, Central Utah, Hanksville, and UBET for a waiver of section 61. 41( c) of the Commission’s rules to permit these companies to operate under rate- of- return regulation after acquiring the exchanges from Qwest that are currently under price cap regulation. In addition, we grant Manti’s and Skyline’s request for a waiver of section 69.605( c) of the Commission’s rules to allow Manti and Skyline to continue operating as average schedule companies after the exchange acquisitions from Qwest. Finally, we grant the Acquiring Companies’ request for a waiver of the tariff pooling rules included in section 69. 3( e)( 11) of the Commission’s rules. II. STUDY AREA WAIVER A. Background 3. Study Area Boundaries. A study area is a geographic segment of an incumbent local exchange carrier’s (LEC’s) telephone operations. Generally, a study area corresponds to an incumbent LEC's entire service territory within a state. 2 Thus, incumbent LECs operating in more than one state typically have one study area for each state. The Commission froze all study area boundaries effective November 15, 1984, 3 and an incumbent LEC must apply to the Commission for a waiver of the study area boundary freeze if it wishes to sell or purchase additional exchanges. 4. Transfer of Universal Service Support. Section 54.305 of the Commission’s rules provides that a carrier acquiring exchanges from an unaffiliated carrier shall receive the same per- line levels of high- cost universal service support for which the acquired exchanges were eligible prior to their transfer. 4 For example, if a rural carrier purchases an exchange from a non- rural carrier that receives support based on the Commission’s new universal service support mechanism for non- rural carriers, 5 the 2 47 C. F. R. § 36 app. (defining "study area"). 3 See MTS and WATS Market Structure, Amendment of Part 67 of the Commission's Rules and Establishment of a Joint Board, CC Docket Nos. 78- 72, 80- 286, Recommended Decision and Order, 49 Fed. Reg. 48325 (1984); Decision and Order, 50 Fed. Reg. 939 (1985); see also Amendment of Part 36 of the Commission's Rules and Establishment of a Joint Board, CC Docket No. 80- 286, Notice of Proposed Rulemaking, 5 FCC Rcd 5974 (1990). 4 47 C. F. R. § 54.305. 5 On November 2, 1999, the Commission released two orders finalizing implementation plans for high- cost reform for non- rural carriers. Federal- State Joint Board on Universal Service, Ninth Report and Order and Eighteenth Order on Reconsideration, CC Docket No. 96- 45, FCC 99- 306 (rel. Nov. 2, 1999); Federal- State Joint Board on Universal Service; Forward- Looking Mechanism for High Cost Support for Non- Rural LECs, CC Docket Nos. 96- 45, 97- 160, Tenth Report and Order (rel. Nov. 2, 1999). The new mechanism, which went into effect on January 1, 2000, does not apply to rural carriers. The new mechanism for non- rural carriers directs support to carriers based on the forward- looking economic cost of operating a given exchange. See 47 C. F. R. § 54.309. The Commission’s forward- looking methodology for calculating high- cost support for non- rural carriers targets support to states where the statewide average forward- looking cost per line exceeds 135 percent of the national average forward- looking cost. See id. The total amount of support directed to non- rural carriers in a high- cost state equals 76 percent of the amount the statewide average forward- looking cost per line exceeds the national cost benchmark, multiplied by the number of lines served by non- rural carriers in the state. Carriers serving wire centers with an average forward- looking cost per line above the national cost benchmark shall be eligible to receive support. The amount of support provided to a non- rural carrier serving a particular wire center depends on the extent to which per- line forward- looking economic costs in that wire center exceed the national cost benchmark. 2 Federal Communications Commission 3 loops of the acquired exchange shall receive the same per- line support as calculated under the new non-rural mechanism, regardless of the support the rural carrier purchasing the exchange may receive for any other exchanges. 6 In adopting section 54.305, the Commission sought to ensure that a selling carrier does not artificially inflate the price of an exchange in anticipation of the buyer’s receipt of increased universal service support as a result of the transfer. 7 High- cost support mechanisms currently include non- rural carrier forward- looking high- cost support, 8 interim hold- harmless support for non- rural carriers, 9 rural carrier high- cost loop support, 10 local switching support, 11 and Long Term Support (LTS). 12 To the extent that a carrier acquires exchanges receiving any of these forms of support, the acquiring carrier will receive the same per- line levels of support for which the acquired exchanges were eligible prior to their transfer. 5. As described in the Commission's recent order adopting an integrated interstate access reform and universal service proposal put forth by the members of the Coalition for Affordable Local and Long Distance Service (CALLS), beginning July 1, 2000, if a price cap LEC acquires exchanges from 6 See Federal- State Joint Board on Universal Service, CC Docket No. 96- 45, Report and Order, 12 FCC Rcd 8776, 8942- 43 (1997) (First Report and Order); as corrected by Federal- State Joint Board on Universal Service, Errata, CC Docket No. 96- 45, FCC 97- 157 (rel. June 4, 1997), affirmed in part, reversed in part and remanded in part sub nom. Texas Office of Public Utility Counsel v. FCC, 183 F. 3d 393 (5 th Cir. 1999). 7 See, e. g., id. 8 See 47 C. F. R. § 54.309. 9 In the event that support provided to a non- rural carrier in a given state is less under the forward- looking methodology, the carrier is eligible for interim hold- harmless support, which is equal to the amount of support for which the non- rural carrier would have been eligible under the Commission’s existing high- cost support mechanism. See 47 C. F. R. § 54.311. The Commission recently adopted the recommendations of the Federal-State Joint Board on Universal Service (Joint Board) for phasing down the interim hold- harmless support for non- rural carriers. See Federal- State Joint Board on Universal Service, CC Docket No. 96- 45, Thirteenth Report and Order and Further Notice of Proposed Rulemaking, FCC 00- 428 (rel. Dec. 8, 2000). The Commission adopted measures to phase down interim hold- harmless support, excluding LTS, through $1.00 reductions in average monthly, per- line support beginning January 1, 2001, and every year thereafter until there is no more interim hold- harmless support. Id. at para. 1. The Commission also adopted the Joint Board’s recommendation not to phase down interim hold- harmless support for eligible exchanges transferred to rural carriers until the Commission reexamines section 54.305 or until rural high- cost reform is complete. Id. at para 21. Interim hold- harmless support for exchanges transferred to non- rural carrier will be phased down over the same time period as the seller’s support would have been phased down. Id. at para. 22. The Commission also sought comment on whether to continue applying section 54.305 to transfers of telephone exchanges between non- rural carriers following phase- down. Id. at paras. 23- 24. 10 Rural carriers receive high- cost loop support when their reported average cost per loop exceeds the nationwide average loop cost. See 47 C. F. R. §§ 36.601- 36.631. 11 Incumbent LECs that are designated eligible telecommunications carriers and serve study areas with 50,000 or fewer access lines receive support for local switching costs. 47 C. F. R. § 54.301. Local switching support enables participants to assign a greater proportion of local switching costs to the interstate jurisdiction. 12 Carriers that participate in the NECA common line pool are eligible to receive LTS. See 47 C. F. R. § 54.303. LTS supports interstate access rates for carriers that are members of the NECA pool, by reducing the amount of interstate- allocated loop costs that such carriers must recover through carrier common line charges. See First Report and Order, 12 FCC Rcd at 9163- 9165. 3 Federal Communications Commission 4 another price cap LEC, the acquiring carrier will become eligible to receive interstate access universal service support for the acquired exchanges. 13 Because the interstate access universal service support mechanism is capped at $650 million, transactions involving the transfer of support will not increase the mechanism's overall size. 14 If a non- price cap LEC acquires exchanges from a price- cap LEC, per- line interstate access universal service support will not transfer. 15 6. The Petition for Waiver. On October 6, 2000, Qwest and the Acquiring Companies filed a joint petition for waiver of the definition of “study area” as set forth in Part 36 Appendix- Glossary of the Commission’s rules. The requested waiver would permit Qwest to alter the boundaries of its existing Utah study area by removing 12 exchanges that it is transferring to the Acquiring Companies. The waiver would also permit the purchased exchanges to be added to the study areas of All West (acquiring 1,920 access lines), Central Utah (acquiring 2,077 access lines), Manti (acquiring 1,887 access lines), Skyline (acquiring 1,407 access lines), Emery Telephone (the parent company of Carbon/ Emery and Hanksville)( acquiring 12,185 access lines), and Uintah Basin Telecommunications Association (the parent company of UBET)( acquiring 16,161 access lines). 16 The Acquiring Companies are based in Utah. 17 On October 18, 2000, the Common Carrier Bureau (Bureau) released a public notice seeking comment on the Petition. 18 The United States Telecom Association (USTA) and the National Telephone Cooperative Association 13 See Access Charge Reform, Sixth Report and Order in CC Docket No. 96- 262 and 94- 1, Report and Order in CC Docket No. 99- 249, Eleventh Report and Order in CC Docket No. 96- 45, FCC 00- 103, at para. 225 (rel. May 31, 2000) (Interstate Access Universal Service Order). 14 See 47 C. F. R. § 54.801( a); see also Interstate Access Universal Service Order at para. 201. 15 Section 54.801 of the Commission's rules states that, if "all or a portion of a study area served by a price cap LEC is sold to an entity other than a price cap LEC, and the study area or portion thereof was not offered for sale prior to January 1, 2000, then the support that would otherwise be provided under this subpart, had such study area or portion thereof not been sold, will not be distributed or collected." 47 C. F. R. § 54.801( b). We note that the agreement for purchase and sale of the portions of Qwest's study area to the Acquiring Companies was entered into in October, 1999. See Before the Public Service Commission of Utah, In the Matter of the Joint Application of U. S. West Communications, Inc., All West Communications, Inc., Carbon/ Emery Telecom, Inc., Central Utah Telephone, Inc., Hanksville Telecom, Inc., Manti Telephone Company, Skyline Telecom, and UBET Telecom, Inc. for Approval of Purchase and Sale of the Various Exchanges and Associated Matters, Docket No. 99- 049- 65, Stipulation to Approve Purchase and Sale of Various Exchanges, para. 1 (rel. Sept. 6, 2000). Therefore, because the parties entered into an agreement to sell the exchanges prior to January 1, 2000, section 54.801 does not apply. 16 Qwest’s Coalville exchange will be added to All West’s study area; Qwest’s East Carbon, Hanksville, Helper and Price exchanges will be added to Emery Telephone’s study area; Qwest’s Mt. Pleasant exchange will be added to Central Utah’s study area; Qwest’s Ephraim exchange will be added to Manti’s study area; Qwest’s Dugway and Wendover exchanges will be added to Skyline’s study area; Qwest’s Duchesne, Roosevelt and Vernal exchanges will be added to Uintah Basin Telecommunications Association’s study area. See Petition at Attachment A. 17 See Comments of the National Telephone Cooperative Association, CC Docket 96- 45 (filed Nov. 2, 2000) at 3. 18 ALL WEST Communications, Inc., Carbon/ Emery Telecom, Inc. Central Utah Telephone, Inc., Hanksville Telecom, Inc., Manti Telephone Company, Skyline Telecom, UBET Telecom, Inc. and Qwest Corporation Seek a Waiver of the Definition of “Study Area” in Part 36 and Sections 61.41( c), 69.3( e)( 11), and 69.605( c) of the Commission’s Rules, Public Notice, DA 00- 2349 (rel. Oct. 18, 2000)( Qwest/ Acquiring Companies Public Notice). 4 Federal Communications Commission 5 (NTCA) filed comments in support of the Petition. Beehive Telephone Co., Inc. (Beehive) filed comments opposing the Petition. 19 Qwest and the Acquiring Companies filed reply comments. 7. Beehive’s Objections. Beehive objects to the instant waiver requests. 20 First, Beehive contends that Qwest failed to adequately consider Beehive as a buyer of certain of the Utah exchanges that were sold to Central Utah, Skyline, and Hanksville. As a result, Beehive has requested that the Commission suspend and remand this matter to the Utah Public Service Commission (Utah Commission) for further investigation and recommendation. Second, Beehive requests that the Commission delay action on the waiver requests of Central Utah and Skyline until the conclusion of a proceeding currently pending before the Utah Commission involving the approval of the transfer of all outstanding shares of stock from Central Utah and Skyline to Lynch Telephone Corporation X (Lynch). B. Discussion 8. We find that good cause exists to waive the definition of study area contained in Part 36 Appendix- Glossary of the Commission’s rules to permit Qwest to alter the boundaries of its existing Utah study area to remove twelve exchanges that it is transferring to the Acquiring Companies. We also find that good cause exists to permit the Acquiring Companies to add these exchanges to their Utah study areas. 9. Generally, the Commission’s rules may be waived for good cause shown. 21 As noted by the Court of Appeals for the D. C. Circuit, however, agency rules are presumed valid. 22 The Commission may exercise its discretion to waive a rule where the particular facts make strict compliance inconsistent with the public interest. 23 In addition, the Commission may take into account considerations of hardship, equity, or more effective implementation of overall policy on an individual basis. 24 Waiver of the Commission’s rules is therefore appropriate only if special circumstances warrant a deviation from the general rule, and such a deviation will serve the public interest. In evaluating petitions seeking a waiver of 19 See Electronic Filing of Beehive Telephone, Inc., CC Docket No. 96- 45 (filed Nov. 2, 2000) (Beehive Comments). Beehive incorrectly styled its filing as a petition for reconsideration. Under the Commission’s rules, petitions for reconsideration are entertained after a final decision has been issued by the Commission. See generally 47 C. F. R. §§ 1.101, 1.102, 1.103, 1.104 and 1.106. The Commission has not issued a decision regarding the waivers at issue here and, therefore, Beehive’s petition for reconsideration is premature. We nevertheless will treat Beehive’s filing as comments and will address below Beehive’s objections to the waiver requests. 20 We note that except for Beehive’s petition for reconsideration, which we are treating as comments, all of Beehive’s filings were submitted outside the comment cycle established in this proceeding and outside the pleading cycle under section 1.45 of the Commission’s rules. See Qwest/ Acquiring Companies Public Notice (establishing November 13, 2000, as the deadline for reply comments); 47 C. F. R. § 1.45. In the interest of establishing a complete and comprehensive record on this matter, we believe it is in the public interest to accept these further pleadings and will treat them as ex parte presentations. See 47 C. F. R. §§ 1.1200( a), 1.1206. See also, In the Matter of Mobile Relay Systems, Order on Further Reconsideration, FCC File No. D100478, DA 01- 113, n. 22 (rel. Jan. 16, 2001). 21 47 C. F. R. § 1.3. 22 WAIT Radio v. FCC, 418 F. 2d 1153, 1159 (D. C. Cir. 1969), cert. denied, 409 U. S. 1027 (1972). 23 Northeast Cellular Telephone Co. v. FCC, 897 F. 2d 1164, 1166 (D. C. Cir. 1990). 24 WAIT Radio, 418 F. 2d at 1159; Northeast Cellular, 897 F. 2d at 1166. 5 Federal Communications Commission 6 the rule freezing study area boundaries, the Commission traditionally has applied a three- prong standard: (1) the change in study area boundaries must not adversely affect the universal service fund; (2) no state commission having regulatory authority over the transferred exchanges may oppose the transfer; and (3) the transfer must be in the public interest. 25 For the reasons discussed below, we conclude that petitioners have satisfied these criteria and have demonstrated that good cause exists for waiver of the Commission’s study area freeze rule. 10. First, we conclude that Qwest and the Acquiring Companies have demonstrated that the proposed change in the study area boundaries will not adversely affect any of the universal service mechanisms. Because, under the Commission’s rules, carriers purchasing exchanges from an unaffiliated carrier can only receive the same level of per- line support that the selling company was receiving for those exchanges prior to the sale, there can, by definition, be no adverse impact on the universal service fund resulting from this transaction. 26 As such, the Acquiring Companies will receive the same per- line levels of support, including high- cost loop support, local switching support, and LTS, for which the acquired exchanges were eligible prior to their transfer. The Acquiring Companies’ existing Utah access lines will continue to receive support based on the average schedule cost of those lines or the average schedule formulas, whichever is applicable. Therefore, we conclude that this transaction will not adversely affect the universal service mechanisms. We note that, as a result of this transaction, access lines in the Acquiring Companies’ pre- acquisition study area boundaries will be eligible for different amounts of high- cost support than the access lines being transferred from Qwest’s study area. We therefore direct the Acquiring Companies to submit, as part of their annual universal service data submissions, 27 a schedule showing their methodology for excluding the costs associated with the acquired access lines from the costs associated with their pre- acquisition study areas. 11. Second, no state commission with regulatory authority over the transferred exchanges opposes the transfer. The Utah Commission indicated that it does not object to the grant of the study area waiver. 28 12. Finally, we conclude that the public interest is served by a waiver of the study area freeze rule. First, in its petition, Qwest and the Acquiring Companies indicate considerable public support for the exchange transfers from customers served by the exchanges of the telecommunications services provided by the exchanges. 29 Also, in its order approving the transfer of the exchanges to the Acquiring Companies, the Utah Commission concluded that the transfer will result in “greater opportunities for service and operating 25 See e. g., U S WEST Communications, Inc., and Eagle Telecommunications, Inc., Petition for Waiver of the Definition of “Study Area” Contained in Part 36, Appendix- Glossary of the Commission’s Rules, AAD 94- 27, Memorandum Opinion and Order, 10 FCC Rcd 1871, 1872 (1995). 26 See 47 C. F. R. § 54.305. 27 See 47 C. F. R. § 36.611. 28 See Before the Public Service Commission of Utah, In the Matter of the Joint Application of U. S. West Communications, Inc., All West Communications, Inc., Carbon/ Emery Telecom, Inc., Central Utah Telephone, Inc., Hanksville Telecom, Inc., Manti Telephone Company, Skyline Telecom, and UBET Telecom, Inc. for Approval of Purchase and Sale of the Various Exchanges and Associated Matters, Docket No. 99- 049- 65, Report and Order (rel. Sept. 6, 2000) (Utah Order). 29 See Petition at 17. 6 Federal Communications Commission 7 efficiencies” 30 for all customers in the exchanges. 31 The public interest benefits also include facilities improvements and investment in the new exchanges by the Acquiring Companies. 32 Finally, inclusion of the exchanges in the study areas of the Acquiring Companies will provide customers with the benefit of voicing their concerns to locally based companies. Based on these representations, we conclude that Qwest and the Acquiring Companies have demonstrated that grant of this waiver request serves the public interest. 13. We reject Beehive’s request to deny the instant waiver request in light of its objections. Beehive claims that Qwest refused to consider Beehive as a potential buyer for the Utah exchanges that were sold to Central Utah, Skyline, and Hanksville, and requests that the Commission suspend this matter and remand it to the Utah Commission for further investigation and recommendation. The transfer of these exchanges has already been approved by the Utah Commission and as noted above, the Utah Commission has indicated that it does not object to the grant of the study area waiver requests. 33 Absent an objection from the Utah Commission, we have no basis for denying the waiver requests at issue here. 34 It is well settled that the Commission does not involve itself in private contractual matters when other forums exist for resolving those matters. 35 The Utah Commission and the Utah courts are the proper forums for addressing Beehive’s claims that it should have been considered by Qwest as a potential buyer. For these reasons, we also reject Beehive’s request that the Commission withhold action on the waiver requests of Central Utah and Skyline until the conclusion of a proceeding pending before the Utah Commission regarding the sale of all outstanding shares of stock from Central Utah and Skyline to Lynch. 36 The 30 See id. (citing Utah Order at 8- 9). 31 See id. 32 See USTA Comments at 7. Over the next two years, Carbon/ Emery plans to spend approximately $4 million on upgrades; All West plans to spend approximately $1.4 million on upgrades; Central Utah plans to spend approximately $2 million on upgrades; Hanksville plans to spend approximately $1.1 million on upgrades; Manti plans to spend approximately $800,000 on upgrades; Skyline plans to spend approximately $2 million on upgrades; and UBET plans to spend approximately $4.5 million on upgrades. See Petition at Attachments B, C, D, E, F, G and H. 33 See generally, Utah Order. 34 To the extent Beehive claims that Qwest violated the Commission’s competitive bidding rules, we note that the competitive bidding regulations and related cases cited by Beehive stem from a specific and limited congressional mandate directing the Commission to develop a system for allocating radio spectrum licenses, not the sale of wireline exchanges. See 47 U. S. C. § 309( j). 35 See In re Applications of Lee Optical and Associated Companies Retirement and Pension Fund Trust, 2 FCC Rcd 5480, para. 7 (1987) (“ the Commission has historically declined to involve itself in jus privatum disputes, leaving the resolution of such claims to local court (or other appropriate forums)”); Allgreg Cellular Engineering, 75 RR 2d 957, 970 (Rev. Bd. 1994); Listeners’ Guild, Inc. v. FCC, 813 F. 2d 465, 469 (D. C. Cir. 1987). 36 See Letter from Arthur Brothers, President, Beehive Telephone Co., Inc. to the Federal Communications Commission, dated Jan. 5, 2002[ sic], at 1; All West Communications, Inc., Carbon/ Emery Telecom, Inc., Central Utah Telephone, Inc., Hanksville Telecom, Inc., Manti Telephone Company, Skyline Telecom, UBET Telecom, Inc. and Qwest Corporation Joint Petition for Waiver of the Definition of “Study Area” Contained in Part 36 Appendix- Glossary of the Commission’s Rules, Petition for Waiver of Section 61.41( c) and (d), 69.3( e)( 11) and 69.605( c) of the Commission’s Rules, Joint Motion to Strike Petition or, Alternatively, Accept Response (filed Jan. 22, 2001) (Joint Motion to Strike); Opposition to Joint Motion to Strike; All West Communications, Inc., 7 Federal Communications Commission 8 transaction between Central Utah, Skyline, and Lynch is not at issue here and, as noted above, Beehive’s objections to such a transfer should be made to the Utah Commission or the appropriate state or local court. 37 III. PRICE CAP WAIVER A. Background 14. Section 61. 41( c)( 2) of the Commission’s rules provides that a non- price cap carrier that acquires access lines from a price cap carrier shall become subject to price cap regulation and must file price cap tariffs within a year. 38 In addition, Section 61. 41( c)( 3) of the Commission’s rules provides that an average schedule company that acquires exchanges from a price cap company is permitted to retain its average schedule status. 39 Section 61. 41( d) of the Commission’s rules further provides that local exchange carriers (LECs) that become subject to price cap regulation are not permitted to withdraw from such regulation. 40 15. In the LEC Price Cap Reconsideration Order, the Commission explained that section 61. 41( c), the “all- or- nothing” rule, is intended to address two concerns regarding mergers and acquisitions involving price cap companies. 41 The first concern was that, in the absence of the rule, a LEC might attempt to shift costs from its price cap affiliate to its non- price cap affiliate, allowing the non- price cap affiliate to charge higher rates to recover its increased revenue requirement, while increasing the earnings of the price cap affiliate. The second concern was that, absent the rule, a LEC might attempt to game the system by switching back and forth between rate- of- return regulation and price cap regulation. For example, a price cap company may attempt to “game” the system by opting out of price cap regulation, building a large rate base under rate- of- return regulation so as to raise rates and then, after returning to Carbon/ Emery Telecom, Inc., Central Utah Telephone, Inc., Hanksville Telecom, Inc., Manti Telephone Company, Skyline Telecom, UBET Telecom, Inc. and Qwest Corporation Joint Petition for Waiver of the Definition of “Study Area” Contained in Part 36 Appendix- Glossary of the Commission’s Rules, Petition for Waiver of Section 61.41( c) and (d), 69.3( e)( 11) and 69.605( c) of the Commission’s Rules, Supplemental Reply to Opposition to Joint Motion to Strike and Reply Response (filed Feb. 16, 2001) (Supplemental Reply). 37 Qwest and the Acquiring Companies have noted that the Utah Commission has already rendered moot many of the issues raised by Beehive concerning the Lynch proceeding. See Supplemental Reply and Attachment. 38 47 C. F. R. § 61.41( c)( 2). See Policy and Rules Concerning rates for Dominant Carriers, CC Docket No. 87- 313, Second Report and Order, 5 FCC Rcd 6786 (Price Cap Order), Erratum, 5 FCC Rcd 7664 (Com. Car. Bur. 1990) (LEC Price Cap Order), modified on recon., Order on Reconsideration, 6 FCC Rcd 2637 (1991) (LEC Price Cap Reconsideration Order), aff’d sub nom. National Rural Telecom Ass’n v. FCC, 988 F. 2d 174 (D. C. Cir. 1993), petitions for further recon. dismissed, 6 FCC Rcd 7482 (1991), further modification on recon., Amendments of Part 69 of the Commission’s Rules Relating to the Creation of Access Charge Supplements for Open Network Architecture, Policy and Rules Concerning Rates for Dominant Carriers, Report and Order and Order on Further Reconsideration and Supplemental Notice of Proposed Rulemaking, 6 FCC Rcd 4524 (1991), further recon., Memorandum Opinion and Order of Second Further Reconsideration, 7 FCC Rcd. 5235 (1992). 39 47 C. F. R. § 61.41( c)( 3). 40 47 C. F. R. § 61.41( d). 41 See LEC Price Cap Reconsideration Order, 6 FCC Rcd at 2706. 8 Federal Communications Commission 9 price caps, cutting costs back to an efficient level, thereby enabling it to realize greater profits. It would not serve the public interest, the Commission stated, to allow a carrier alternately to “fatten up” under rate-of- return regulation and “slim down” under price cap regulation, because the rates would not decrease in the manner intended under price cap regulation. 42 16. The Commission nonetheless recognized in the LEC Price Cap Reconsideration Order that narrow waivers of the price cap “all- or- nothing” rule might be justified if efficiencies created by the purchase and sale of exchanges outweigh the threat that the system might be subject to gaming. 43 The Commission stated that waivers of section 61. 41( c) will be granted conditioned on the selling price cap company’s downward adjustment to its price cap indices to reflect the sale of exchanges. 44 The Commission explained that such an adjustment is needed to remove the effects of transferred exchanges from rates that have been based, in whole or in part, upon the inclusion of those exchanges in a carrier’s price cap indices. 45 In addition, waivers of the all- or- nothing rule have been granted subject to the condition that the acquiring carrier obtain prior Commission approval of any attempt to return to price cap regulation. 46 17. The Acquiring Companies operate under rate- of return regulation, while Qwest is subject to price cap regulation. 47 All West, Carbon/ Emery, Central Utah, Hanksville, and UBET seek a waiver of section 61.41( c)( 2) 48 to permit them to continue to operate under rate- of- return regulation, 49 stating that the application of these rules will not serve the purpose of the price cap rules, which is to prevent LECs from shifting costs between price cap and non- price cap affiliates and from increasing rates by switching back and forth between rate- of- return regulation and price cap regulation. 50 NTCA and USTA support this 42 Id. 43 Id. at 2706 n. 207. 44 See Price Cap Performance Review for Local Exchange Carriers, CC Docket No. 94- 1, First Report and Order, 10 FCC Rcd 8961, 9104- 06 (1995) (LEC Price Cap Review Order). The Price Cap Indices, which are the upper bounds for rates that comply with price cap regulation, are calculated pursuant to a formula specified in the Commission's rules for price cap carriers. See 47 C. F. R. § 61.45. 45 See LEC Price Cap Review Order, 10 FCC Rcd at 9105- 9106. 46 See, e. g., Rye Telephone Company, Inc. and U S WEST Communications, Inc., Joint Petition for Waiver of Definition of “Study Area” Contained in the Part 36 Appendix- Glossary of the Commission’s Rules and Petition for Waiver of Section 61.41( c)( 2) of the Commission’s Rules, CC Docket No. 96- 45, Order, DA 00- 1585, at para. 17 (Acc. Pol. Div. rel. Jul. 18, 2000); ALLTEL Corp. Petition for Waiver of Section 61.41 of the Commission’s Rules and Application for Transfer of Control, CCB/ CPD No. 99- 1, Memorandum Opinion and Order, 14 FCC Rcd. 14191, 14202 (1999) (ALLTEL/ Aliant Merger Order). 47 See Petition at 2. See id. 48 See Petition at 3- 10. 49 We note that the Acquiring Companies have also requested a waiver of Section 61.41( d) which provides that LECs that become subject to price cap regulation are not permitted to withdraw from such regulation. 47 C. F. R. §§ 61.41( d). Because the Acquiring Companies are not currently subject to price cap regulation, a waiver of this rule is unnecessary at this time. 9 Federal Communications Commission 10 waiver request. B. Discussion 18. For the reasons discussed below, we find that good cause exists for us to waive section 61.41( c)( 2) of the Commission’s rules, and that it would be in the public interest to grant the waiver request of All West, Carbon/ Emery, Central Utah, Hanksville, and UBET. 51 As discussed previously, the courts have interpreted section 1. 3 of the Commission’s rules to require a petitioner seeking a waiver of a Commission rule to demonstrate that special circumstances warrant a deviation from the general rule, and that such a deviation will serve the public interest. 52 19. We find that special circumstances warrant a waiver of section 61. 41( c)( 2). In evaluating requests for waiver of section 61. 41( c)( 2), the Bureau has taken into account the company’s preferences and, in particular, the preferences of small carriers. 53 In fact, the Commission traditionally has been sensitive to the unique administrative burdens imposed on small telephone companies by the application of its rules. 54 In the LEC Price Cap Order, the Commission decided that small telephone companies would not be required to operate under a regulatory regime that was designed largely on the basis of the historical 50 See Policy and Rules Concerning Rates for Dominant Carriers, CC Docket No. 87- 313, Second Report and Order, 5 FCC Rcd 6786, 6821 (1990), Erratum, 5 FCC Rcd 7664 (Com. Car. Bur. 1990) (LEC Price Cap Order), modified on recon., Order on Reconsideration, 6 FCC Rcd 2637 (1991) (LEC Price Cap Reconsideration Order), aff’d sub nom. National Rural Telecom Ass’n v. FCC, 988 F. 2d 174 (D. C. Cir. 1993), petitions for further recon. dismissed, 6 FCC Rcd 7482 (1991), further modification on recon., Amendments of Part 69 of the Commission’s Rules Relating to the Creation of Access Charge Supplements for Open Network Architecture, Policy and Rules Concerning Rates for Dominant Carriers, Report and Order on Further Reconsideration and Supplemental Notice of Proposed Rulemaking, 6 FCC Rcd 4524 (1991), further recon., Memorandum Opinion and Order on Second Further Reconsideration, 7 FCC Rcd 5235 (1992). 51 Although Skyline and Manti seek a waiver of section 61.41( c), we find that it is unnecessary to grant a waiver of 61.41( c) in this instance. Section 61.41( c)( 3) states, “[ n] otwithstanding the provisions of § 61.41( c)( 2) above, when a telephone company subject to price cap regulation acquires, is acquired by, merges with, or otherwise becomes affiliated with a telephone company that qualifies as an ‘average schedule’ company, the latter company may retain its ‘average schedule’ status or become subject to price cap regulation . . .” 47 C. F. R. § 61.41( c)( 2). Under this rule, we have held that a company that acquires exchanges from a price cap company is permitted to retain its average schedule status and avoid any price cap regulation. See, e. g., In the Matter of Petition for Waivers filed by East Plains Telecom, Inc., Fort Randall Telephone Company, U. S. West Communications, Inc., and Vivian Telephone Company, 12 FCC Rcd 24422, (Acc. Aud. Div. 1997); In the Matter of Petitions for Waivers filed by Farmers Mutual Telephone Company Project Mutual Telephone Cooperative Ass’n, Inc. and U. S. West Communications, Inc., 11 FCC Rcd 9380, para. 17 (Acc. Aud. Div. 1996). Because Skyline and Manti are currently average schedule companies, and wish to retain their average schedule status, they are not required to become subject to price cap regulation after acquiring exchanges from Qwest and therefore do not need to seek a waiver of section 61.41( c). 52 See supra discussion at para. 9. 53 See, e. g., ALLTEL/ Aliant Merger Order, 14 FCC Rcd at 14204- 05. 54 See, e. g., id. at 14204; In the Matter of Minburn Telecommunications, Inc., Petition for Waiver of Sections 61.41( c) and (d) of the Commission’s Rules, CCB/ CPD No. 99- 16, Memorandum Opinion and Order, 14 FCC Rcd 14184, 14187 (Com. Car. Bur. 1999). 10 Federal Communications Commission 11 performance of the largest LECs. 55 The Commission explained that small and mid- size LECs may have fewer opportunities than large companies to achieve cost savings and efficiencies and may be less productive than the seven Regional Bell Operating Companies (RBOCs) and GTE. 56 The Commission, therefore, limited the mandatory application of price cap regulation to the eight largest LECs – the seven RBOCs and GTE. 20. All West, Carbon/ Emery, Central Utah, Hanksville, and UBET are all small telephone companies and have expressed a preference for operating under rate- of- return regulation. 57 After the proposed transaction, All West will serve approximately 5, 900 access lines; Carbon/ Emery will serve approximately 17,200 access lines; Central Utah will serve approximately 3, 600 access lines; Hanksville will serve approximately 200 access lines; and UBET will serve approximately 18, 700 access lines. 58 These operations will be smaller than other carriers that have been granted waivers of the Commission’s price cap rules. 59 Further, these companies are the types of small carriers which the Commission has previously found to be inappropriate candidates for price cap regulation. 60 For these reasons, we find that of All West, Carbon/ Emery, Central Utah, Hanksville, and UBET present special circumstances to support their waiver request. 21. We also find that a waiver of section 61. 41( c)( 2) serves the public interest. First, we find that the first concern identified by the Commission in adopting section 61. 41( c) – cost shifting between affiliates – is not at issue here. Upon completion of the transaction, All West, Carbon/ Emery, Central 55 See Price Cap Order, 5 FCC Rcd at 6799- 6801, 6818- 19. 56 Id. 57 See Petition at 2. 58 See USTA Comments at 2- 5. These acquisitions will have little impact on the exchanges of the Acquiring Companies at the state and national level. For example, All West’s access lines represent only .35% of Utah’s access lines and .0022% of the nation’s access lines; Carbon Emery’s access lines represent only .45% of Utah’s access lines and .0029% of the nation’s access lines; Central Utah’s access lines represent only .13% of Utah’s access lines and .0008% of the nation’s access lines; Manti’s access lines represent only .13% of Utah’s access lines and .0008% of the nation’s access lines; Skyline’s access lines represent only .13% of Utah’s access lines and .00082% of the nation’s access lines; and Uintah Basin Telecommunication Association’s (UBET’s parent) access lines represent only .0027% of Utah’s access lines and .0017% of the nation’s access lines. See Petition at 4- 7. 59 See, e. g., CenturyTel of Northwest Arkansas, LLC et al., Joint Petition for Waiver of Definition of "Study Area" Contained in the Part 36 Appendix- Glossary of the Commission's Rules, Petition for Waiver of Sections 61.41( c) and 69.3( g)( 2) of the Commission's Rules, CC Docket No. 96- 45, Memorandum Opinion and Order, DA 00- 1434 (Acc. Pol. Div. rel. June 27, 2000) (approving the conversion of 214,270 access lines from price cap to rate- of- return regulation); ALLTEL/ Aliant Merger Order (approving the conversion of approximately 300,000 access lines from price cap to rate- of- return regulation); In the Matter of ALLTEL Service Corporation, Petition for Waiver of Section 61.41 of the Commission's Rules, Order, 8 FCC Rcd 7054 (Com. Car. Bur. 1993) (approving the conversion of approximately 285,000 access lines from price cap to rate- of- return regulation). 60 See LEC Price Cap Order at para. 6 (limiting mandatory price cap participation to the eight largest LECs at that time – the seven Bell Operating Companies and General Telephone and Telegraph Company). 11 Federal Communications Commission 12 Utah, Hanksville, and UBET will operate separate and apart from Qwest. 61 Since there will be no affiliation between these entities and Qwest, there will be no opportunity or incentive to shift costs between price cap and rate- of- return companies. Second, to safeguard against possible gaming that could result from attempts to elect price- cap regulation at a later time, we will require All West, Carbon/ Emery, Central Utah, Hanksville, and UBET to seek prior Commission approval if they seek to elect price cap regulation. At that time, we can make a determination if the transaction raises concerns that we seek to address in section 61.41( c). 22. In accordance with section 61.45 of the Commission’s rules, we also require Qwest to adjust its price cap indices to reflect the removal of the transferred access lines from its Utah study areas. Section 61. 45 grants us discretion to require price cap carriers to make adjustments to their price cap indices to reflect cost changes resulting from rule waivers. 62 IV. AVERAGE SCHEDULE WAIVER A. Background 23. Incumbent LECs that participate in National Exchange Carrier Association (NECA) pools collect access charges from interexchange carriers at the rates contained in the tariffs filed by NECA. Each pool participant receives revenues from the pools to recover the cost of providing service plus a pro rata share of the pool's earnings. 63 NECA pool participants' interstate access charge settlements are determined either on the basis of cost studies or average schedule formulas. Average schedule companies are those incumbent LECs that receive compensation for use of their interstate common carrier services on the basis of formulas that are designed to simulate the disbursements that would be received by a cost study company that is representative of average schedule companies. 64 In electing average schedule status, average schedule companies are able to avoid the administrative and financial burdens of performing interstate cost studies. 24. Section 69.605( c) of the Commission's rules provides, in pertinent part, that "a telephone company that was participating in average schedule settlements on December 1, 1982, shall be deemed to be an average schedule company." 65 The definition of average schedule company includes existing average schedule incumbent LECs, but does not allow the creation of new average schedule companies or the conversion of cost- based carriers to average schedule status without a waiver of the Commission’s rules. The limitation on the creation of new average schedule companies reflects the Commission’s finding that cost studies produce the most accurate financial information, and consequently, the most accurate interstate telephone rates. 66 61 See Petition at 9. 62 See 47 C. F. R. § 61.45( d). 63 See 47 C. F. R. §§ 69.601- 69.612. 64 See 47 C. F. R. § 69.606( a). 65 47 C. F. R. § 69.605( c). 66 See MTS and WATS Market Structure: Average Schedule Companies, CC Docket No. 78- 72, Memorandum Opinion and Order, 3 FCC Rcd 6642 (1986) (MTS and WATS Order). The Bureau also has observed that cost 12 Federal Communications Commission 13 25. The special circumstances that the Bureau has found to justify waivers of section 69.605( c) fall into broad categories. 67 First, the Bureau has granted limited opportunities for carriers serving 5,000 or fewer access lines to convert from cost- based to average schedule settlements when faced with “industry- wide changed circumstances.” 68 Second, the Bureau has granted waivers to certain small carriers that lacked the resources to operate on a cost- study basis. 69 Third, to ensure a smooth settlement process, the Bureau has granted section 69.605( c) waivers to average schedule companies that have acquired another company, and allowed the combined companies to merge into one average schedule study area. 70 26. Skyline and Manti have requested a waiver of section 69.605( c) of the Commission’s rules company conversion to average schedule status may result in higher than reasonable interstate revenue requirements. See NECA's Proposed Waiver of Section 69.605( c) of the Commission's Rules, CC Docket No. 78- 72, Memorandum Opinion and Order, 2 FCC Rcd 3960 (Com. Car. Bur. 1987) (5,000 Line Waiver Order). 67 See BPS Telephone Co. Petition for Waiver of Section 69.605( c) of the Commission's Rules, AAD No. 95- 67, Memorandum Opinion and Order on Reconsideration, 12 FCC Rcd 13820, 13824 (Acc. Aud. Div. 1997) (BPS). 68 See 5,000 Line Waiver Order where the Commission granted carriers with 5,000 or fewer access lines an opportunity to elect to be compensated under the interstate average schedules. The opportunity to make such an election expired on August 1, 1987, and the election was effective January 1, 1988. 69 BPS, 12 FCC Rcd at 13824. See, e. g., Dumont Telephone Company, Inc. and Universal Communications, Inc., Request for Extraordinary Relief, AAD 96- 94, Memorandum Opinion and Order, 13 FCC Rcd 17821 (Acc. Saf. Div. 1998) (waiver granted to Dumont Telephone Company, Inc. and Universal Communications, Inc., which had approximately 1,544 access lines); Wilderness Valley Telephone Company, Inc., Petition for Waiver of Sections 69.605( c) and 69.3( e)( 11) of the Commission’s Rules, AAD 96- 99, Order, 13 FCC Rcd 4511 (Acc. Aud. Div. 1998) (waiver granted to Wilderness Valley Telephone Company, Inc., which had approximately 75 access lines); Petitions for Waiver Filed by Accent Communications, et al., AAD No. 95- 124, Memorandum Opinion and Order, 11 FCC Rcd 11513 (Acc. Aud. Div. 1996) (waiver granted to Mobridge Telecommunications Company, which had approximately 2,400 access lines); National Utilities, Inc. and Bettles Telephone Co., Inc. Petition for Waiver of Section 69.605( c) of the Commission's Rules, Report and Order, 8 FCC Rcd 8723 (Comm. Car. Bur. 1993) (waiver granted for National Utilities, which had 2,350 access lines, and Bettles, which had 50 access lines); Newcastle Telephone Co. Petition for Waiver of Section 69.605( c), AAD No. 90- 18, Memorandum Opinion and Order, 7 FCC Rcd 2081 (Com. Car. Bur. 1992) (waiver granted for small company with 1550 access lines, two exchanges); Papago Tribal Utility Authority Petition for Waiver of Section 69.605( c) of the Commission's Rules, Memorandum Opinion and Order, 2 FCC Rcd 6631 (Com. Car. Bur. 1987) (waiver granted to small company serving fewer than 400 lines in a 700 square mile area and lacking operational expertise). 70 BPS, 12 FCC Rcd at 13825. See, e. g., Petition for Waivers Filed by Baltic Telecom Cooperative, Inc. et al., AAD No. 96- 95, Memorandum Opinion and Order, 12 FCC Rcd 2433 (Acc. Aud. Div. 1997); Petitions for Waiver Filed by Accent Communications, et al., AAD No. 95- 124, Memorandum Opinion and Order, 11 FCC Rcd 11513 (Acc. Aud. Div. 1996). In these situations, we have attached three conditions to minimize the impact of the conversion and reduce the incentive to manipulate Commission rules. Waiver recipients must (1) report to NECA on a combined basis for interstate average schedule and USF purposes, and receive distributions on that basis as a consolidated company; (2) convert to cost- based settlement status if an average schedule affiliate in that study area converts to cost- based settlements, or elects section 61.39 treatment; and (3) maintain common control over average schedule affiliates, so that average schedule status terminates when any of the affiliates are sold, transferred, or otherwise assigned. See BPS, 12 FCC Rcd at 13825. We have always intended for these conditions to ensure that the waivers will not result in unintended effects on the petitioners' interstate revenue requirements or result in an administrative burden on the Commission or NECA. Id. 13 Federal Communications Commission 14 in order to continue operating as average schedule companies following the proposed transaction. 71 Skyline and Manti argue that a waiver permitting them to retain their average schedule status is justified due to “their small size and the savings that will be realized by their not having to perform cost studies.” 72 Skyline and Manti also argue that a continuation of their average schedule status will not affect their tariffed access rates or cause any concern that the two companies may “game the system.” 73 NTCA and USTA support this waiver request. B. Discussion 27. We are persuaded that good cause exists for us to grant Skyline’s and Manti’s request for a waiver of section 69.605( c). The Commission has explained that the definition of “average schedule company” in section 69.605 was premised upon a policy determination that carriers with the financial resources and expertise to conduct cost studies without undue hardship should be required to measure the actual costs they incur in providing interstate service. 74 Here, Skyline and Manti have demonstrated that because of their size, they would suffer undue hardship if required to operate on a cost study basis. 75 The high cost of completing cost studies relative to the small size of Skyline and Manti establishes the special circumstances that warrant granting their request for a waiver of section 69.605( c) of the Commission’s rules. We note that we have previously granted waivers of section 69.605( c) to similarly- sized carriers. 76 We therefore find that Skyline and Manti’s requested waiver of section 69.605( c) of the Commission rules should be granted. V. WAIVER OF SECTION 69.3( e)( 11) A. Background 28. Under section 69. 3( e)( 11) of Commission’s rules, any change in NECA carrier common line tariff participation and LTS resulting from a merger or acquisition of telephone properties is effective on the next annual access tariff filing effective date following the merger or acquisition. 77 Section 69. 3( e)( 11) of the Commission’s rules was implemented to minimize the complexity of administering the LTS program. 78 Because the next annual access tariff filing effective date is not until July 1, 2001, 79 the 71 See Petition at 10. 72 See Petition at 11. Skyline is adding 1,407 access lines to its existing 1,609 access lines. Manti is adding 1,887 access lines to its existing 1,605 access lines. See id. at Attachment A. 73 Id. at 12- 13. 74 See MTS and WATS Order, 3 FCC Rcd at 6642. 75 See supra note 72. 76 See supra note 69. 77 47 C. F. R. § 69.3( e)( 11). We note that section 69.3( e)( 11) of the Commission’s rules is also applicable to changes in Transitional Support resulting from a merger of acquisition. In accordance with section 69.612 of the Commission’s rules, Transitional Support expired on June 30, 1994. See 47 C. F. R. § 69.612( b). 14 Federal Communications Commission 15 Acquiring Companies would be required to file their own interstate tariffs for the acquired access lines until July 1, 2001. In order to avoid the burdens associated with filing their own tariffs, the Acquiring Companies have requested a waiver of section 69. 3( e)( 11) of the Commission’s rules to enable the acquired access lines to participate in the NECA carrier common line tariff upon the date of the closing of the transaction. 80 NTCA and USTA support this waiver request. B. Discussion 29. We find that the Acquiring Companies have demonstrated that special circumstances warrant a deviation from section 69. 3( e)( 11) of our rules and that it would be in the public interest to grant the Acquiring Companies’ waiver request. First, the inclusion of the acquired access lines in the NECA carrier common line tariff represent a minimal increase in NECA common line pool participation. 81 Second, we believe that it would be administratively burdensome for the Acquiring Companies to file interstate tariffs for a relatively small number of access lines until July 1, 2001. Consequently, we find that the Acquiring Companies present the special circumstances to justify a waiver of section 69. 3( e)( 11). Moreover, we believe that a waiver of section 69. 3( e)( 11) will be in the public interest because the Acquiring Companies will be able to devote additional resources to providing improved telecommunications services to the affected rural areas that otherwise would normally be spent on tariff filings. We also note that, according to NECA, "inclusion of the acquired access lines in NECA's tariff, effective on March 1, 2001 . . . , will create no undue administrative burden for NECA, nor will it result in any disadvantage to other tariff participants." 82 We, therefore, conclude that good cause exists to grant a waiver of section 69.3( e)( 11) to the Acquiring Companies. VI. ORDERING CLAUSES 30. Accordingly, IT IS ORDERED, pursuant to sections 1, 4( i), 5( c), 201, and 202 of the Communications Act of 1934, as amended, 47 U. S. C. §§ 151, 154( i), 155( c), 201, and 202, and sections 0.91, 0.291, and 1.3 of the Commission's rules, 47 C. F. R. §§ 0.91, 0.291, and 1.3, that the petition for waiver of Part 36, Appendix- Glossary, of the Commission's rules, filed by All West Communications, Inc., Carbon/ Emery Telecom, Inc., Central Utah Telephone, Inc., Hanksville Telecom, Inc., Manti Telephone Company, Skyline Telecom, UBET Telecom, Inc., and the Qwest Corporation on October 18, 2000, IS GRANTED, as described herein. 31. IT IS FURTHER ORDERED, pursuant to sections 1, 4( i), 5( c), 201, and 202 of the 78 See Amendment of Part 69 of the Commission’s Rules Relating to the Common Line Pool Status of Local Exchange Carriers Involved in Mergers or Acquisitions, CC Docket No. 89- 2, Report and Order, 5 FCC Rcd 231, 248 (1989) (Common Line Pool Order). 79 See 47 C. F. R. § 69.3( a). 80 See Petition at 13- 14. 81 See Petition at 14. Petitioners note that the 35,600 access lines in the transaction would represent an increase of only .34% of the approximate 10.5 million access lines with in the NECA common line pools reported by NECA in its 1999 Access Charge Filing. See Petition at 14 n. 25. 82 See Letter from R. A. Askoff, National Exchange Carrier Association to Jerry D. Fenn, Attorney for the Acquiring Companies, dated February 2, 2001. 15 Federal Communications Commission 16 Communications Act of 1934, as amended, 47 U. S. C. §§ 151, 154( i), 155( c), 201, and 202, and sections 0.91, 0.291, and 1.3 of the Commission's rules, 47 C. F. R. §§ 0.91, 0.291, and 1.3, that the petition for waiver of section 61.41( c) of the Commission's rules, 47 C. F. R. § 61.41( c) filed by All West Communications, Inc., Carbon/ Emery Telecom, Inc., Central Utah Telephone, Inc., Hanksville Telecom, Inc., and UBET Telecom, Inc., IS GRANTED, as described herein. 32. IT IS FURTHER ORDERED, pursuant to sections 1, 4( i), 5( c), 201, and 202 of the Communications Act of 1934, as amended, 47 U. S. C. §§ 151, 154( i), 155( c), 201, and 202, and sections 0.91, 0.291, and 1.3 of the Commission's rules, 47 C. F. R. §§ 0.91, 0.291, and 1.3, that the petition for waiver of section 69.605( c) of the Commission's rules, 47 C. F. R. § 69.605( c), filed by Manti Telephone Company and Skyline Telecom, IS GRANTED, as described herein. 33. IT IS FURTHER ORDERED, pursuant to sections 1, 4( i), 5( c), 201, and 202 of the Communications Act of 1934, as amended, 47 U. S. C. §§ 151, 154( i), 155( c), 201, and 202, and sections 0.91, 0.291, and 1.3 of the Commission's rules, 47 C. F. R. §§ 0.91, 0.291, and 1.3, that the petition for waiver of section 69.3( e)( 11) of the Commission's rules, 47 C. F. R. § 69.3( e)( 11), filed by All West Communications, Inc., Carbon/ Emery Telecom, Inc., Central Utah Telephone, Inc., Hanksville Telecom, Inc., Manti Telephone Company, Skyline Telecom, and UBET Telecom, Inc., IS GRANTED, as described herein. 34. IT IS FURTHER ORDERED, pursuant to sections 1, 4( i), 5( c), 201, and 202 of the Communications Act of 1934, as amended, 47 U. S. C. §§ 151, 154( i), 155( c), 201, and 202, and sections 0.91, 0.291, and 1.3 of the Commission's rules, 47 C. F. R. §§ 0.91, 0.291, and 1.3, that All West Communications, Inc., Emery Telephone and its subsidiaries; Carbon/ Emery Telecom, Inc. and Hanksville, Central Utah Telephone, Inc., Manti Telephone Company, Skyline Telecom, Uintah Basin Telecommunications Association, and its subsidiary; UBET Telecom, Inc., SHALL SUBMIT, as part of their annual USF data submission to the fund administrator, a schedule showing the methodology for excluding costs associated with the acquired access lines from costs associated with their pre- acquisition study areas. 35. IT IS FURTHER ORDERED, pursuant to sections 1, 4( i), 5( c), 201, and 202 of the Communications Act of 1934, as amended, 47 U. S. C. §§ 151, 154( i), 155( c), 201, and 202, and sections 0.91, 0.291, 1.3, and 61.43 of the Commission's rules, 47 C. F. R. §§ 0.91, 0.291, 1.3, and 61.43, that the Qwest Corporation SHALL ADJUST its price cap indices in its annual price cap filing to reflect cost changes resulting from this transaction, consistent with this Order. FEDERAL COMMUNICATIONS COMMISSION Katherine L. Schroder Chief, Accounting Policy Division 16