Federal Communications Commission DA 10-1027
Before the
Federal Communications Commission
Washington, D.C. 20554
In the Matter of
Federal-State Joint Board on Universal 
Service
Iowa Telecommunications Services, Inc.
and
Wellman Cooperative Telephone Association, 
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 Sections 
69.605(c) and 54.305 of the Commission’s 
Rules 
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CC Docket No. 96-45
ORDER
Adopted:  June 4, 2010 Released:  June 4, 2010
By the Chief, Wireline Competition Bureau:
I. INTRODUCTION
1. In this order, we grant a joint request from Iowa Telecommunications Services, Inc. 
(Iowa Telecom) and Wellman Cooperative Telephone Association (Wellman) for a waiver of the study 
area boundary freeze codified in the Appendix-Glossary of Part 36 of the Commission’s rules.1 The study 
area waiver will permit Iowa Telecom to transfer a small area from Iowa Telecom’s existing 
Williamsburg exchange, including one access line, to Wellman’s existing Iowa study area.2 We also 
grant Wellman’s request for a waiver of section 54.305 of the Commission’s rules to allow Wellman to 
receive universal service high-cost support for the acquired line in the same manner as its existing lines.3  
Lastly, we grant Wellman’s request for a waiver of section 69.605(c) so that it may continue to operate as 
an average schedule company after the transfer.4
  
1 47 C.F.R. Part 36 App.; Iowa Telecommunications Services, Inc. and Wellman Cooperative Telephone 
Association, 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 69.605(c) of the Commission’s Rules Regarding the 
Definition of “Average Schedule Company,” and Section 54.305 of the Commission’s Rules, CC Docket No. 96-45 
(filed Oct. 16, 2009) (Petition).
2 Petitioners state that the subject area is one-quarter square mile and will result in the transfer of one access line 
from Iowa Telecom’s Williamsburg exchange to Wellman’s exchange.  See Petition at 4.
3 47 C.F.R. § 54.305.
4 47 C.F.R. § 69.605(c).
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II. STUDY AREA WAIVER
A. BACKGROUND
2. Study Area.  A study area is a geographic segment of an incumbent local exchange 
carrier’s (LEC) telephone operations.  The Commission froze all study area boundaries effective 
November 15, 1984.5 The Commission took this action to prevent incumbent LECs from establishing 
separate study areas made up only of high-cost exchanges to maximize their receipt of universal service 
high-cost support.  A carrier must therefore apply to the Commission for a waiver of the study area 
boundary freeze if it wishes to acquire or transfer exchanges.6
3. Universal Service Support. Section 54.305(b) of the Commission’s rules provides that a 
carrier acquiring exchanges from an unaffiliated carrier shall receive the same per-line levels of universal 
service high-cost support for which the acquired exchanges were eligible prior to their transfer.7 This rule 
is meant to discourage a carrier from acquiring an exchange merely to increase its share of universal 
service high-cost support.8  
4. The Petition for Waiver.  Iowa Telecom and Wellman filed a joint petition for a waiver of 
the study area boundary freeze on October 16, 2009.9 On December 22, 2009, the Wireline Competition 
Bureau (Bureau) released a public notice seeking comment on the petition.10 The petitioners state that the 
area to be transferred from Iowa Telecom’s Williamsburg exchange to Wellman’s only exchange is a 
small area, covering only one-quarter square mile.11 The petitioners state that Iowa Telecom currently 
provides service to approximately 2,300 access lines in the Williamsburg exchange, of which only one 
access line serving one customer is involved in the proposed transfer.12 Wellman has provided service to 
that customer located in Iowa Telecom’s Williamsburg exchange on an adjacent exchange basis and that 
  
5 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, Decision and Order, 50 Fed. Reg. 939 (1985) (Part 67 Order); 47 
C.F.R. Part 36 App.
6 Part 67 Order, 50 Fed. Reg. at 939, para. 1.
7 47 C.F.R. § 54.305(b).  This rule applies to high-cost loop support and local switching support.  A carrier’s 
acquired exchanges may receive additional support pursuant to the Commission’s “safety valve” mechanism.  See
47 C.F.R. § 54.305(d)-(f).  A carrier acquiring exchanges also may be eligible to receive interstate common line 
support, which is not subject to the limitations set forth in section 54.305(b).  See 47 C.F.R. § 54.902.
8 See Federal-State Joint Board on Universal Service, CC Docket No. 96-45, Report and Order, 12 FCC Rcd 8776, 
8942-43, para. 308 (1997) (subsequent history omitted).
9 Iowa Telecom operates, as an incumbent LEC, approximately 203,000 access lines in three study areas in the state 
of Iowa.  Wellman operates, as an incumbent LEC, approximately 1,300 access lines in one study area in Iowa.  See
Petition at 3-4.
10 See Comment Sought on the Joint Petition of Iowa Telecommunications Services, Inc. and Wellman Cooperative 
Telephone Association to Waive the Study Area Boundary Freeze as Codified in Part 36 of the Commission’s Rules 
and Sections 54.305 and 69.605(c) of the Commission’s Rules, CC Docket No. 96-45, Public Notice, 24 FCC Rcd 
14623 (Wireline Comp. Bur. 2009).  The National Telecommunications Cooperative Association filed comments in 
support of the petition.
11 See Petition at 4.  The physical boundary of the area to be transferred is shown at Exhibit C of the Petition.  Id. at 
Exhibit C.
12 See id. at 3-4.
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customer has requested an additional access line from Wellman.13  The Iowa Utilities Board has issued an 
order approving the transfer of the subject area.14
5. Standard for Waiver.  In evaluating petitions seeking a waiver of the rule freezing study 
area boundaries, the Commission applies a three-part standard:  (1) the change in study area boundaries 
must not adversely affect the universal service fund; (2) the state commission having regulatory authority 
over the transferred exchanges does not object to the transfer; and (3) the transfer must be in the public 
interest.15 In evaluating whether a study area boundary change will have an adverse impact on the 
universal service fund, the Commission analyzes whether a study area waiver will result in an annual 
aggregate shift in an amount equal to or greater than one percent of high-cost support in the most recent 
calendar year.16
B. Discussion
6. For the reasons discussed below, we conclude that the petitioners have satisfied the three-
part standard that the Commission applies to determine whether a waiver is warranted.  We therefore find 
that good cause exists to waive the study area boundary freeze codified in the Appendix-Glossary of Part 
36 of the Commission’s rules to permit the petitioners to exchange territories as described above.17
7. Impact on the Universal Service Fund.  We conclude that the universal service fund will 
not be adversely affected by granting this study area waiver.  Section 54.305(b) of the Commission’s rules 
limits high-cost loop support and local switching support for acquired lines to the same per-line support 
levels for which they were eligible prior to transfer.18 As discussed below, we grant Wellman a waiver of 
section 54.305 of the Commission’s rules, but we find that Wellman will receive less high-cost loop 
support for that line as a result of the waiver.19 Therefore, we find that granting the study area waiver and 
a waiver of section 54.305 will not adversely affect the universal service fund.20
  
13 See id. at 4.
14 See id. at Exhibit B (attaching Iowa Telecommunications Services, Inc., d/b/a Iowa Telecom, and Wellman 
Cooperative Telephone Association, Order Approving Changes to Exchange Boundary Maps, Docket No. SPU-
2009-0004 (TF-2009-0056, TF-2009-0057) (Iowa Util. Bd., May 19, 2009) (Iowa Order)).
15 See, e.g., US WEST Communications, Inc., and Eagle Telecommunications, Inc., Joint 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 1771, 1772, para. 5 (1995) (PTI/Eagle Order).
16 See id. at 1774, paras. 14-17; see also US WEST Communications, Inc., and Eagle Telecommunications, Inc., 
Joint Petition for Waiver of “Study Area” Contained in Part 36, Appendix-Glossary of the Commission's Rules, and 
Petition for Waiver of Section 61.41(c) of the Commission's Rules, AAD 94-27, Memorandum Opinion and Order on 
Reconsideration, 12 FCC Rcd 4644 (1997).
17 Generally, the Commission’s rules may be waived if good cause is shown.  47 C.F.R. § 1.3.  The Commission 
may exercise its discretion to waive a rule where the particular facts make strict compliance inconsistent with the 
public interest.  Northeast Cellular Telephone Co. v. FCC, 897 F.2d 1164, 1166 (D.C. Cir. 1990) (Northeast 
Cellular).  In addition, the Commission may take into account considerations of hardship, equity, or more effective 
implementation of overall policy on an individual basis.  WAIT Radio v. FCC, 418 F.2d 1153, 1159 (D.C. Cir. 
1969); Northeast Cellular, 897 F.2d at 1166.  Waiver of the Commission’s rules is appropriate only if both (i) 
special circumstances warrant a deviation from the general rule, and (ii) such deviation will serve the public interest.  
NetworkIP, LLC v. FCC, 548 F.3d 116, 125-128 (D.C. Cir. 2008); Northeast Cellular, 897 F.2d at 1166.
18 47 C.F.R. § 54.305(b).
19 See infra para. 10 & note 29.
20 See, e.g., M&L Enterprises, Inc., d/b/a Skyline Telephone Company, Petition for Waiver of Sections 36.611, 
36.612, and 69.2 (hh) of the Commission’s Rules, CC Docket No. 96-45, Order, 19 FCC Rcd 6761 (2004); Qwest 
Corporation, Pine Telephone Systems, Inc., Oregon Telephone Corporation, Qwest Corporation, Pine Telephone, 
(continued....)
Federal Communications Commission DA 10-1027
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8. Position of State Commission.  The Iowa Utilities Board has issued an order approving 
the transfer.21 Thus, we find that the state commission with regulatory authority over the transferred area 
does not oppose the transfer.
9. Public Interest Analysis.  We are persuaded that the public interest is served by grant of 
the proposed waiver of the study area freeze to permit Iowa Telecom to transfer the one-quarter square 
mile area to Wellman as described.  Wellman represents that grant of the waiver will result in the 
provision of high-quality telecommunications service to a rural consumer by the consumer’s carrier of 
choice.22 Based on the totality of these circumstances, we conclude that the transfer of the one-quarter 
square mile area will serve the public interest.23
III. SECTION 54.305 WAIVER
10. The Commission has issued only two waivers of section 54.305 of the Commission’s 
rules.  In both instances, the incumbent LECs were tribally-owned carriers operating in areas with high-
costs, low telephone penetration levels, and large populations at or below the poverty line.24 In all other 
instances, the Commission has denied requests for waivers of section 54.305 because the requesting 
parties did not show that special circumstances warranted the requested waivers.25  
11. We find in this instance, however, that there is good cause to waive section 54.305 of the 
Commission’s rules.  We agree with Wellman that a waiver of section 54.305 of the Commission’s rules 
is warranted because the proposed transaction involves the transfer of only one access line.26 In addition, 
  
(...continued from previous page)
Inc., Joint Petition for Waivers of the Definition of “Study Area” Contained in Part 36, Appendix-Glossary of the 
Commission’s Rules, CC Docket No. 96-45, Order, 24 FCC Rcd 4986 (Wireline Comp. Bur. 2009). 
21 See supra note 14.
22 Petition at 9.
23 The Bureau has granted the acquisition of certain assets of Iowa Telecom by Wellman.  See Notice of Domestic 
Section 214 Authorized Granted, WC Docket No. 09-195, Public Notice, 24 FCC Rcd 14475 (Wireline Comp. Bur. 
2009).
24 See Mescalero Apache Telecom, Inc., Request for Waiver of Section 54.305 of the Commission’s Rules, CC 
Docket No. 96-45, Order, 16 FCC Rcd 1312 (2001) (Mescalero Order); Sacred Wind Communications, 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, Sacred Wind Communications, Inc., Related Waivers of Parts 36, 54, and 69 of 
the Communication’s Rules, CC Docket No. 96-45, Order, 21 FCC Rcd 9227 (Wireline Comp. Bur. 2006) (Sacred 
Wind Order).  In the Mescalero Order, the Commission concluded that Mescalero, a newly-formed, tribally-owned 
carrier, demonstrated that a deviation from the general rule was warranted because, among other things, Mescalero 
intended to bring additional service to a reservation where 52 percent of the residents on the reservation lacked 
telephone service. Mescalero Order, 16 FCC Rcd at 1316-18, paras. 7-10.  Similarly, in the Sacred Wind Order, the 
Bureau concluded that a waiver of section 54.305 was warranted because Sacred Wind intended to serve some areas 
that have no telephone service at all and that more than 50 percent of the population in the proposed service area 
have income levels at or below the poverty level.  Sacred Wind Order, 21 FCC Rcd at 9236-37, paras. 22-23.
25 The Commission has emphasized on several occasions that carriers seeking a waiver of section 54.305 must bear a 
heavy burden and that routine waivers of the rule will not be granted.  See, e.g., Federal-State Joint Board on 
Universal Service, Valor Telecommunications of Texas, L.P. Request for Waiver of Section 54.305 of the 
Commission’s Rules, CC Docket No. 96-45, Order, 20 FCC Rcd 782, 786 para. 12 (2005) (denying Valor’s request 
for a waiver of section 54.305); Mescalero, 16 FCC Rcd at 1320, para. 13; United Telephone Company of Kansas, 
United Telephone of Eastern Kansas, and Twin Valley Telephone, Inc., Joint Petition for Waiver of the Definition of 
“Study Area” of the Appendix-Glossary of Part 36 of the Commission’s Rules, Petition for Waiver of Section 
69.3(e)(11) of the Commission’s Rules, Petition for Clarification or Waiver of Section 54.305 of the Commission’s 
Rules, CC Docket No. 96-45, Order, 21 FCC Rcd 10111, 10117, para. 15 (Wireline Comp. Bur. 2006) (denying 
Twin Valley’s request for waiver of section 54.305).
26 See Petition at 8.
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a waiver would permit Wellman to treat the acquired line in the same manner as the rest of its lines.27 As 
discussed below, Wellman will continue to operate as an interstate average schedule company and will 
receive high-cost loop support and local switching support pursuant to statistical formulas developed by 
NECA and approved by the Commission.28 As a result, Wellman cannot manipulate its costs to maximize 
universal service support for the acquired line, i.e., support will be based on the results of the Commission 
approved average schedule formulas.29 We conclude it would serve the public interest to grant Wellman a 
waiver of section 54.305 in this special circumstance where only one line is being transferred and support 
for that line will be based on the average schedule formulas.
IV. AVERAGE SCHEDULE WAIVER
A. Background
12. Incumbent LECs that participate in NECA pools collect access charges from 
interexchange carriers at the rates contained in tariffs filed by NECA.30 Each pool participant receives 
settlements from the pools to recover the cost of providing service plus a pro-rata share of the pool's 
earnings.31 NECA pool participants’ interstate access charge settlements are determined either on the 
basis of cost studies or average schedule formulas.  Cost companies are incumbent LECs that receive 
compensation for interstate telecommunications services based on their actual interstate investment and 
expenses, calculated from detailed cost studies.  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 company that is 
representative of average schedule companies.32 Average schedule companies thus are able to avoid the 
administrative and financial burdens of performing interstate cost studies.
13. 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.”33 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.34 The definition was designed to limit the use of average schedule formulas to companies that 
operated as average schedule companies prior to adoption of the rule or that are able to demonstrate 
  
27 See id.
28 See infra para. 15.
29 Bureau analysis of the effect of waiving section 54.305 with respect to the additional line indicates that Wellman 
will receive less high-cost loop support.  Without a waiver of section 54.305, Wellman would receive $27,833 
annually in high-cost loop support.  With the waiver of section 54.305, Wellman will receive $27,668, which is $165 
less.  See NECA 2010 Modification of the Average Schedule Universal Service High Cost Loop Support Formula, 
WC Docket No. 05-337, page 4 (filed Aug. 27, 2009); National Exchange Carrier Association, Inc. and Universal 
Administrative Company 2010 Modification of Average Schedule Universal Service Formulas, CC Docket No. 05-
337, Order, 24 FCC Rcd 14748 (Wireline Comp. Bur. 2009) (approving the average schedule high-cost loop 
formula for 2010).
30 See 47 C.F.R. § 69.601.
31 See 47 C.F.R. §§ 69.601-.612.
32 See 47 C.F.R. § 69.606(a).
33 47 C.F.R. § 69.605(c).
34 An incumbent LEC may convert from an average schedule company to a cost company, but a carrier must obtain 
a waiver of the definition of “average schedule company” in section 69.605(c) to change from a cost company to an 
average schedule company.  See 47 C.F.R. § 69.605(c).
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compelling circumstances sufficient to warrant a special exception.35 Accordingly, absent a waiver of 
section 69.605(c), an average schedule company acquiring lines from a cost-based company would be 
required to convert to operating as a cost-based company.36 Our actions on requests for waiver of the 
definition of “average schedule company,” therefore, are guided by the principle that incumbent LECs 
should settle on a cost basis whenever possible without undue hardship.
14. Wellman seeks a waiver of the definition of “average schedule company” in section
69.605(c) of the Commission’s rules so that it may continue to operate as an interstate average schedule 
company after acquiring the access line from Iowa Telecom, which is an interstate cost-based company, 
and adding that line to its existing average schedule study area in Iowa.37 Wellman states that a waiver is 
warranted because  it currently operates as an average schedule company with only 1,286 lines, and after 
the transaction, its line count will increase by one to only 1,287 lines.38
B. Discussion
15. We find that good cause exists to grant Wellman’s request for waiver of section 
69.605(c) of the Commission’s rules.  The Commission has explained that the definition of “average 
schedule company” in section 69.605(c) 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.39 Based on the facts presented, we 
believe that Wellman would experience undue hardship if it were required to conduct cost studies solely 
because of the addition of one access line.  We, therefore, grant Wellman’s request for waiver of section 
69.605(c) of the Commission’s rules.
V. ORDERING CLAUSES
16. Accordingly, IT IS ORDERED, pursuant to sections 1, 4(i), 5(c), 201, 202 and 254 of the 
Communications Act of 1934, as amended, 47 U.S.C. §§ 151, 154(i), 155(c), 201, 202, and 254, 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 joint 
petition for waiver of the study area boundary freeze as codified in Part 36, Appendix-Glossary, of the 
Commission's rules, filed by Iowa Telecommunications Services, Inc. and Wellman Cooperative 
Telephone Association, Incorporated on October 16, 2009, IS GRANTED.
17. IT IS FURTHER ORDERED, pursuant to sections 1, 4(i), 5(c), 201, 202 and 254 of the 
Communications Act of 1934, as amended, 47 U.S.C. §§ 151, 154(i), 155(c), 201, 202, and 254, 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 54.305 of the Commission's rules, 47 C.F.R. § 54.305, filed by Iowa 
Telecommunications Services, Inc. and Wellman Cooperative Telephone Association, Incorporated on 
October 16, 2009, IS GRANTED.
18. IT IS FURTHER ORDERED, pursuant to sections 1, 4(i), 5(c), 201, 202 and 254 of the 
Communications Act of 1934, as amended, 47 U.S.C. §§ 151, 154(i), 155(c), 201, 202, and 254, 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 Iowa 
  
35 See Petition for Waiver Filed by Heartland Telecommunications Company of Iowa and Hickory Tech 
Corporation, AAD File No. 96-94, Memorandum Opinion and Order, 14 FCC Rcd 13661, 13662, para. 3 (1999) 
(Heartland Order).
36 Id. at 13664-65, para. 7.
37 See Petition at 11.
38 Id. at 12.
39 See MTS and WATS Market Structure: Average Schedule Companies, CC Docket No. 78-72, Memorandum 
Opinion and Order, 3 FCC 6642 (1986).
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Telecommunications Services, Inc. and Wellman Cooperative Telephone Association, Incorporated on 
October 16, 2009, IS GRANTED.
19. IT IS FURTHER ORDERED, pursuant to section 1.102(b)(1) of the Commission’s rules, 
47 C.F.R. § 1.102(b)(1), that this order SHALL BE EFFECTIVE upon release.
FEDERAL COMMUNICATIONS COMMISSION
Sharon E. Gillett
Chief
Wireline Competition Bureau