*Pages 1--3 from Microsoft Word - 45839.doc* Federal Communications Commission DA 05- 306 Before the Federal Communications Commission Washington, D. C. 20554 In the Matter of Federal- State Joint Board on Universal Service ) ) ) CC Docket No. 96- 45 ORDER Adopted: February 3, 2005 Released: February 3, 2005 By the Chief, Wireline Competition Bureau: I. INTRODUCTION AND BACKGROUND 1. In this Order, we grant a petition for waiver filed by New Edge Network, Inc. d/ b/ a New Edge Networks (New Edge). 1 On July 20, 2004, the Federal Communications Commission (Commission) released an order granting in part waiver requests made by AT& T Corp. (AT& T), SBC Communications Inc. (SBC), and the Verizon telephone companies (Verizon) concerning the true- up process for universal service contributions based on 2003 revenues. 2 In addition, on December 17, 2004, the Wireline Competition Bureau released an order granting the same relief to eight similarly situated petitioners. 3 New Edge requests the relief sought and received by the previous eleven petitioners in the Commission’s True- Up Order and the Bureau’s order. Specifically, New Edge states that it underestimated its first quarter 2003 projections and, as a result, would pay true- up amounts in excess of its appropriate contributions for the second through fourth quarters of 2003. 4 2. As explained in the True- Up Order, two years ago the Commission modified the universal service assessment system from contributions based on carriers’ historical gross- billed revenues to contributions based on carriers’ projected collected revenues. 5 During the implementation period, the Commission did not use carriers’ first quarter 2003 historical gross- billed or projected collected information for billing purposes. Rather, in order to true- up carriers’ 2003 revenues, which is done to reconcile contributions based on projected revenues contained in FCC Form 499- Q filings with the actual revenues contained in the FCC Form 499- A filing, the Commission subtracted revenues projected from 1 New Edge Network, Inc. d/ b/ a New Edge Networks Petition for Waiver, CC Docket No. 96- 45, filed August 23, 2004 (Petition). 2 Federal- State Joint Board on Universal Service, CC Docket No. 96- 45, Order, 19 FCC Rcd 13580 (2004) (True-Up Order). 3 Federal- State Joint Board on Universal Service, CC Docket No. 96- 45, Order, DA 04- 3903 (Wireline Comp. Bur. rel. December 17, 2004). 4 See Petition at 1- 2. 5 See True- Up Order, 19 FCC Rcd at 13580- 81, para. 2. 1 Federal Communications Commission DA 05- 306 2 the first quarter 2003 from annual revenues reported on the FCC Form 499- A to estimate a contributor’s actual revenues for the second through fourth quarters of 2003. The Administrator of the universal service support mechanisms 6 would compare this amount to the sum of revenues projected for the second through fourth quarters of 2003 to determine whether a refund or collection was appropriate. 7 Under this formula, if a carrier underestimated its first quarter 2003 projected collected revenues but forecasted its projected collected revenues for the second through fourth quarters of 2003 accurately, it would be billed additional contribution amounts. The Commission agreed with AT& T, SBC, and Verizon that such a result was inconsistent with the public interest since it was the Commission’s intention not to use a carrier’s projected collected first quarter 2003 information for billing purposes. 8 II. DISCUSSION 3. We grant New Edge’s request for waiver of the Commission’s universal service true- up procedures for 2003 and conclude that it demonstrated good cause to justify the waiver. Section 1.3 of the Commission’s rules provides that waiver of a rule may be granted upon “good cause shown.” 9 Commission rules are presumed valid, however, and an applicant for waiver bears a heavy burden. 10 The Commission may exercise its discretion to waive a rule “only if special circumstances warrant a deviation from the general rule and such deviation will serve the public interest.” 11 The Commission may take into account considerations of hardship, equity, or more effective implementation of overall policy. 12 4. As the Commission concluded in its True- Up Order, we find that New Edge has demonstrated that it experienced special circumstances that warrant the grant of a waiver of the Commission’s universal service true- up procedures for 2003. Specifically, like AT& T, SBC, and Verizon and the eight petitioners in the Bureau’s order, New Edge’s actual collected revenues for first quarter 2003 exceeded its projections of collected revenues for that quarter. As a result, even if New Edge’s projections for the second through fourth quarters of 2003 were completely accurate and New Edge made 6 See 47 C. F. R. § 54.701 (stating that the Universal Service Administrative Company is the Administrator of the universal service support mechanisms). 7 True- Up Order, 19 FCC Rcd at 13581, para. 3 (citing Federal- State Joint Board on Universal Service, 1998 Biennial Regulatory Review – Streamlined Contributor Reporting Requirements Associated with Administration of Telecommunications Relay Service, North American Numbering Plan, Local Number Portability, and Universal Service Support Mechanisms, Telecommunications Services for Individuals with Hearing and Speech Disabilities, and the Americans with Disabilities Act of 1990, Administration of the North American Numbering Plan and North American Numbering Plan Cost Recovery Contribution Factor and Fund Size, Number Resource Optimization, Telephone Number Portability, Truth- in- Billing and Billing Format, CC Docket Nos. 96- 45, 98- 171, 90- 571, 92- 237, 99- 200, 95- 116, 98- 170, Order and Second Order on Reconsideration, 18 FCC Rcd 4818, 4825, para. 17 (2003)). 8 Id. at 13582, para. 7. 9 47 C. F. R. § 1.3. 10 WAIT Radio v. FCC, 418 F. 2d 1153, 1157 (D. C. Cir. 1969), cert. denied, 409 U. S. 1027 (1972) (WAIT Radio). 11 Northeast Cellular Telephone v. FCC, 897 F. 2d 1164, 1166 (D. C. Cir. 1990). 12 WAIT Radio, 418 F. 2d at 1159. 2 Federal Communications Commission DA 05- 306 3 appropriate contributions for these quarters, it would have contributed more through the annual true- up process than its equitable share. Therefore, we grant New Edge’s waiver request and adopt the same methodology to determine an appropriate contribution as that set forth in the True- Up Order. 13 III. ORDERING CLAUSE 5. Accordingly, IT IS ORDERED, pursuant to sections 1, 4( i), 5, 254 and 405 of the Communications Act of 1934, as amended, 47 U. S. C. §§ 151, 154( i), 155, 254, and 405, and sections 1.3, 1.429 of the Commission’s rules, 47 C. F. R. §§ 1.3, 1.429, and authority delegated by sections 0.91 and 0.291 of the Commission’s rules, 47 C. F. R. §§ 0.91, 0.291, that the Petition for Waiver filed by New Edge Network, Inc. d/ b/ a New Edge Networks IS GRANTED, as set forth herein. FEDERAL COMMUNICATIONS COMMISSION Jeffrey J. Carlisle Chief, Wireline Competition Bureau 13 See True- Up Order, 19 FCC Rcd at 13583, para. 8 (directing the Administrator to subtract petitioners’ historical gross- billed revenues for first quarter 2003 reported on their FCC Form 499- Qs, adjusted to reflect their annual uncollectible rates for 2003 reported on their FCC Form 499- As, when conducting true- ups for the petitioners). 3