In the Matter of
Federal Communications Commission
Before the
Federal Communications Commission
Washington, D.C. 20554
Petition for Waiver Filed by
Vermont Telephone Company, Inc
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Concerning the Definition of
"Study Area" in the Part 36
Appendix-Glossary of the
Commission's Rules
AAD 95-30
ORDER ON RECONSIDERATION
DA 98-2635
Adopted: December 28, 1998 Released: December 28, 1998
By the Chief, Common Carrier Bureau:
I. INTRODUCTION
1. The Common Carrier Bureau (Bureau) has before it a petition for reconsideration filed July
15, 1996, by Vermont Telephone Company, Inc. (Vermont Telephone). 1 Vermont Telephone requests
reconsideration of a portion of a June 14, 1996 Order granting Vermont's request to change study area
boundaries. 2 Specifically, Vermont Telephone requests the Bureau to make the study area changes adopted
in the Order effective on January 1, 1996, instead of June 14, 1996. For the reasons discussed below, we
grant Vermont Telephone's petition for reconsideration.
II. BACKGROUND
2. A study area is a geographic segment of an incumbent LEC's telephone operations.
Generally, a study area corresponds to an incumbent LEC's entire service territory within a state. Thus,
incumbent LECs operating in more than one state typically have one study area for each state, and
incumbent LECs operating in a single state typically have a single study area. Study area boundaries are
important because incumbent LECs perform jurisdictional separations, determine high cost loop support
1 Vermont Telephone Company, Inc., Petition for Reconsideration Q"uly 16, 1996) (Vermont
Petition).
2 Champlain Valley Telephone Company, Inc, Northland Telephone Company of Vermont, and
Vermont Telephone Company, Inc., Petitions for Waiver of the Definition of "Study Area" Contained in
Part 36, Appendix-Glossary of the Commission's Rules, Memorandum Opinion and Order, 11 FCC Red
7111 (1996).
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Federal Communications Commission DA 98-2635
amounts, and generally tariff their rates at the study area level. Effective November 15, 1984,3 the
Commission froze all study area boundaries to ensure that incumbent LECs do not set up high-cost
exchanges within their existing service territories as separate study areas in order to maximize interstate
cost allocations.4
3. In July 1994, Champlain Valley Telecom, Inc, (Champlain) Northland Telephone Company
of Vermont, (Northland) and Vermont Telephone, three small rural telephone companies formed one entity
to purchase exchanges from Contel of Vermont, Inc. In August 1994, the three companies became
independent, unaffiliated entitites and began operating separately, but they continued to share the former
Contel of Vermont study area. On June 14, 1996, the Bureau's Accounting and Audits Division granted
Vermont Telephone's petition for waiver of the definition of "Study Area" to allow the Contel of Vermont
study area to be divided among Champlain, Northland and Vermont Telephone. The waiver allowed the
three companies to establish new study areas for their newly acquired exchanges. The waiver was made
effective upon release of the Order.
4. In its current petition, Vermont Telephone makes two arguments in support of adjusting
the effective date of the study area changes. First, Vermont Telephone argues that the June 14, 1996
effective date will force the carrier to perform an additional cost study.5 Second, Vermont Telephone
argues that the mid-year effective date adversely affects the interstate revenues that Vermont Telephone
would receive.6 Specifically, Vermont Telephone states that it will have an interstate revenue requirement
that is $206,713 less than it would be if the study area changes were effective January 1, 1996.7
ill. DISCUSSION
5. We agree with Vermont Telephone's contention that performing an additional cost study
to reflect two periods of operation would be unduly burdensome and unnecessarily complex. Making the
3 47 C.F.R. Part 36 app. (defining "study area"). See MTS and WATS Market Structure,
Amendment of Part 67 of the Commission's Rules and Establishment of a Joint Board, Recommended
Decision and Order, 49 Fed. Reg. 48325 (1984) ("1984 Joint Board Recommended Decision"); Decision and
Order, 50 Fed. Reg. 939 (1985) ("1985 Order Adopting Recommendation"); see also Amendment of Part 36
of the Commission's Rules and Establishment of a Joint Board, Notice of Proposed Rulemaking, 5 FCC
Red 5974 (1990) ("Study Area Notice").
4 Id.
5 Vermont Petition at 3. One cost study would be calculated based on Vermont's 5.5 months of
operation (from January 1, 1996 to June 13, 1996) as part of the shared study area. The other cost
study would be calculated based on Vermont's 6.5 months of operation (from June 14, 1996 to
December 31, 1996) with its own study area.
6 Vermont Petition at 4-5. The reduction in interstate revenues is related to the interstate
assistance rules known as DEM weighting. The DEM rules allow small LECs to assign an increased
share of local switching equipment costs to the interstate jurisdiction. See 47 C.F.R. § 36.125(£).
7 Id.
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Federal Communications Commission DA 98-2635
study area changes effective January 1, 1996 would allow Vermont Telephone's cost study to reflect an
entire year with its own study area. We believe that separate 1996 cost studies for separate study areas
would best reflect the carriers' separate operations of these properties. In addition, we agree with Vermont
Telephone's assertion that separate cost studies for the entire year would be consistent with the
Commission's goal of reducing regulatory burdens on small telephone companies.8
6. Accordingly, for the reasons stated above, we believe that Vermont Telephone has shown
good cause for the requested retroactive effective date of January 1, 1996, and therefore grant that request.
IV. ORDERING CLAUSE
7. Accordingly, IT IS SO ORDERED, pursuant to sections 4(i) and 5(c) of the
Communications Act of 1934, as amended, 47 U.S.C. §§ 154(i) and 155(c), and Sections 0.91 and 0.291
of the Commission's rules, 47 C.F.R. §§ 0.91and0.291, thatthe petition of Vermont Telephone Company,
Inc., for retroactive adjustment of the effective date of its study area changes, IS GRANTED.
FEDERAL COMMUNICATIONS COMMISSION
Lawrence Strickling
Chief, Common Carrier Bureau
8 Vermont Petition at 3.
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