Federal Communications Commission DA 96-1757
Before the
FEDERAL COMMUNICATIONS COMMISSION 
Washington, D.C. 20554
In the Matter of )
)GVNW Inc./Management ) 
Petition for Declaratory Ruling, or ) AAD 95-120 
Alternatively, a Waiver of Section ) 
36.612(a) of the Commission's Rules ) 
USF Data Collection )
ORDER
Adopted: October 22, 1996 Released: October 23, 1996 
By the Chief, Common Carrier Bureau
I. INTRODUCTION
1. On June 30,1995, GVNW Inc./Management (GVNW), by its attorneys, filed a Petition 
for Declaratory Ruling (Petition), or alternatively, a waiver of Section 36.612(a) of the 
Commission's rules regarding the Universal Service Fund (USF) data collection. GVNW seeks 
a ruling or a waiver that would allow the USF administrator to adjust the USF distributions of 
incumbent local exchange carriers (ILECs) involved in mergers and acquisitions subsequent to 
the grant of a study area waiver and the transfer of exchanges from the seller to the buyer.
2. In a Public Notice dated November 24, 1995, the Accounting and Audits Division 
invited comments from interested parties regarding this request. Comments were filed by nine 
parties and reply comments by five parties.1
II. BACKGROUND
3. The USF is a support program that allows local exchange carriers with high local loop 
costs to allocate an additional portion of those costs to the interstate jurisdiction, enabling the
1 Comments were filed by Cathey, Hutton & Associates, Inc. (CHA), AT&T Corp. (AT&T), the National 
Exchange Carrier Association, Inc. (NECA), the United States Telephone Association (USTA), the National 
Telephone Cooperative Association (NTCA), Citizens Utility Company (Citizens), Humboldt Telephone 
Company (Humboldt), MCI Communications Corp. (MCI), and ICORE, Inc. (ICORE). Reply comments were 
filed by AT&T, GVNW, NECA, USTA and NTCA.
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state jurisdictions to establish lower local exchange rates in study areas receiving such assistance. 
The USF is funded through a tariffed interstate charge paid by interexchange carriers (IXCs).
4. Pursuant to Sections 36.611 of the Commissions rules and a 1992 Waiver Order,2 
ILECs are required to report data, including certain expenses, investment costs and loop counts, 
by July 31 of each year for the preceding 12 months. This information may be updated at the 
option of the carrier pursuant to Section 36.612(a). NECA, as the USF administrator, calculates 
the USF expense adjustment on the basis of data for the preceding calendar year and then 
prepares USF tariffs designed to recover that amount from contributing IXCs during the 
subsequent annual rating period.
5. The USF data collection rules incorporate the definition of study area contained in Part 
36. Appendix-Glossary of the Commission's rules, which states that boundaries of a study area 
shall be frozen as they were on November 15. 1984.3 The Commission adopted the requirement 
that study area boundaries be frozen to prevent companies from setting up separate high cost 
exchanges within their existing service territory to maximize high cost support. To form a new 
study area, companies are required to seek a waiver of that provision freezing study area 
boundaries.4
6. During the past several years, GVNW has provided consulting and management 
services to numerous independent telephone companies that have acquired local exchange(s) from 
other carriers. GVNW states that even though the Commission has approved the study area 
boundary changes associated with merger/acquisition transactions, NECA does not recalculate 
USF distributions to recognize study area changes. As a result of the time lag built into the USF 
data collection rules, the buying company must wait for up to two years to receive USF support 
payments for acquired exchanges. During this time, the USF support payments continue to be
2 National Exchange Carrier Association, Inc. Petition for Waiver of Sections 36.61 l(a) and 36.613(a) of 
the Commission's Rules, AAD 92-19, 7 FCC Red 3863 (rel. June 9, 1992).
3 47 C.F.R Part 36, Appendix-Glossary.
4 The Commission's three primary concerns when it reviews study area boundary change petitions are: (1) 
that the change does not have an adverse impact on the USF support program; (2) that the state commission(s) 
having regulatory authority do not object to the change; and (3) the public interest supports such a change. See 
U S West Communications, Inc. and Eagle Telecommunications, Inc., Joint Petition for Waiver of Definition of 
"Study Area" Contained in Part 36, Appendix-Glossary of the Commission's Rules, Memorandum Opinion and 
Order, 10 FCC Red 1771, U 5 (1995).
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paid to the selling carrier although the buying company incurs the cost of operating the 
exchanges.5
III. PETITION FOR DECLARATORY RULING 
A. GVNW Petition
7. GVNW seeks a declaratory ruling that will direct NECA to recalculate the USF 
distributions of ILECs involved in mergers and acquisitions subsequent to the grant of a study 
area waiver and the transfer of exchanges from the selling company to the buying company and 
to distribute those revenues to the current owner of the exchanges. According to GVNW, NECA 
should remove the investment, expense and loop count of the acquired exchanges from the selling 
company's study area and associate the data with the buying company's study area.6 In addition, 
GVNW proposes two reporting methodologies to be used by buyers that have operated exchanges 
for only a portion of the calendar year.7
B. Positions of the Parties
8. With the exception of AT&T, the commenters support some form of Commission 
action ;to direct NECA to recalculate USF distributions in conjunction with study area changes. 
Six out of nine commenters support a declaratory ruling.8 Of these commenters, however, only 
two argue that the Petition represents a correct interpretation of the rule.9 The remaining four 
support the Petition because the current rule undermines the Commission's goals in establishing 
the USF by directing payments to carriers who no longer bear the expense of the high cost
5 The GVNW Petition is filed on behalf of carriers that acquired exchanges that were already current USF 
recipients. The Petition does not mention immediate USF payments for carriers who have acquired exchanges 
that are not current USF recipients.
6 GVNW Petition at 4.
7 Id at 12.
8 CHA comments at 6; USTA reply comments at 2; NTCA comments at 4 and reply comments at 3; 
Citizens comments at 5; Humboldt comments at 5; and ICORE comments at 3.
9 Citizens comments at 2 and Humboldt comments at 2.
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exchanges and creates financial hardships for the new owners who do. 10 Five commenters 
recommend rule changes to accommodate study area changes."
9. MCI opposes the Petition because, it argues, the method proposed by GVNW would 
enable companies to recover costs they had not incurred. 12 AT&T recommends that the Petition 
be denied because it "alleges no ambiguity whatever in the language of any Commission rule but 
merely disputes the fairness of the results that follow" from its application. 13
C. Discussion
10. We agree with AT&T. The Commission may. in accordance with Section 5(d) of 
the Administrative Procedure Act, on motion or on its own motion issue a declaratory ruling 
terminating a controversy or removing uncertainty. 14 GVNW argues that the remedy sought in 
its Petition represents a correct interpretation of the rules and that NECA may be administering 
the rules inappropriately.' 5 GVNW, however, does not identify any language in the rules that 
support its interpretation. 16 Instead, GVNW urges us to read into the rules policies and 
procedures that were simply not contemplated when the rules were drafted. Substantive 
modifications such as those posed by GVNW require a rulemaking. In fact, the USF assistance 
mechanism is currently being re-evaluated in a separate proceeding. The rule changes proposed
10 USTA comments at 3; NTCA comments at 1\ CHA comments at 4; and ICORE comments at 1. See 
also Humboldt comments at 3 and Citizens comments at 4.
" CHA comments at 6; USTA comments at 3; NTCA comments at 4: NECA comments at 8; and MCI 
comments at 3.
12 MCI comments at 5.
13 AT&T comments at 4.
14 47 C.F.R. § 1.2.
15 GVNW reply comments at 3. See also Citizens comments at 2 and Humboldt comments at 2.
16 Humboldt cites the language contained in each of the subparts of Section 36.611 directing that the 
amount for particular items reflect the "actual expense for the calendar year preceding each June filing" to 
support the use of such cost data by the purchasing company. Humboldt comments at 2. NECA responds that 
for transactions involving sales of partial study areas, study area data would need to be adjusted to reflect the 
transfer and that the Commission has not specified any accounting procedures for allocating study-area wide 
expenses among specific access lines. NECA reply comments at n. 7.
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by the commenters in this matter restate their proposals in that pending rulemaking. 17 Therefore, 
GVNW's petition for a declaratory ruling is denied.
IV. REQUEST FOR WAIVER 
A. GVNW Petition
11. As an alternative, GVNW requests a waiver of Section 36.612(a) for its client 
companies that have acquired local exchange properties from other carriers "in order to permit 
eligibility for USF support to begin on the date that study area boundaries changed." 18
B. Positions of the Parties
12. Only Citizens explicitly supports GVNW's request for a waiver. 19 NIC A 
recommends that future study area waivers include provisions for allocating USF distributions.20 
NECA voices general support for resolving the issue through the use of waivers.21 MCI opposes 
GVNW's request because it does not demonstrate why purchasers generally should be treated 
differently than companies with unexpected high growth rates in lines nor does it allege how any 
individual company has been adversely affected by the rules.22 AT&T recommends that GVNW's 
request for a waiver be denied because GVNW "has not described any special circumstances at 
all with respect to any of the 14 client companies it claims are affected by these rules."23 
According to AT&T, granting the waiver "would effectively abrogate the waiting period 
provided" in the rules.24
17 See Federal-State Joint Board on Universal Service, Notice of Proposed Rulemaking and Order 
Establishing a Joint Board, CC Docket No. 96-45, FCC 96-93 (rel. Mar. 8, 1996).
18 GVNW Petition at 9.
19 Citizens comments at 5-6.
20 NIC A comments at 4 and reply comments at 3.
21 NECA comments at 7.
22 MCI comments at 3.
23 AT&T comments at 8.
24 Id.
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C. Discussion
13. Again, we agree with AT&T. Under Section 1.3 of our rules, we are authorized 
to grant waivers "if good cause therefor is shown."25 As interpreted by the courts, this requires 
that a petitioner demonstrate that "special circumstances warrant a deviation from the general 
rule and such a deviation will serve the public interest."26 GVNW, however, has not articulated 
any rationale as to why its clients in particular warrant special treatment. GVNW's request 
applies broadly to all exchange purchasers, in effect modifying the rule for the entire class of 
companies. Such changes may only be instituted through a rulemaking proceeding. Because 
special circumstances have not been demonstrated, we need not consider whether a waiver would 
be in the public interest. GVNW's request for a waiver is denied.
V. ORDERING CLAUSE
14. Accordingly, IT IS ORDERED that, pursuant to authority delegated under Sections 
0.91 and 0.291 of the Commission's rules, 47 C.F.R. §§ 0.91 and 0.291, GVNW's Petition for 
a Declaratory Ruling or Alternatively, a Waiver of Section 36.612(a) is denied.
FEDERAL COMMUNICATIONS COMMISSION
Regina Keeney, Chief 
Common Carrier Bureau
M 47 C.F.R § 1.3.
26 Northeast Cellular Tel. Co. v. FCC, 897 F.2d 1164, 1966 (D.C. Cir. 1990), citing WATT Radio v. 
FCC, 418 F.2d 1153, 1159 (D.C. Cir. 1969). See also Industrial Broadcasting Co. v. FCC, 437 F.2d 680 
(D.C. Cir. 1970) (indicating need for articulation of special circumstances beyond those considered during 
regular rulemaking).
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