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 JOINT  SEPARATE  STATEMENT  OF  CHAIRMAN  MICHAEL  K.  POWELL  AND 
 COMMISSIONER  JONATHAN  S.  ADELSTEIN 
 Re:  Amendment  of  Part  1  of  the  Commission’s  Rules  –  Competitive  Bidding  Procedures;  Second  Order  on  Reconsideration  of  the  Third  Report  and  Order  and 
 Order  on  Reconsideration  of  the  Fifth  Report  and  Order;  WT  Docket  No.  97-  82 
 Rural  Telephone  Cooperatives  are  a  vital  and  distinct  link  in  achieving  our  telecommunications  policy  goals  in  rural  America.  Unfortunately  our  rules  have  not  always 
 appreciated  their  unique  structures  and  roles.  While  our  auction  rules  were  designed  to  prevent  large  companies  from  manipulating  the  rules  to  qualify  as  small  entities  entitled  to  special 
 benefits,  they  did  not  carve  out  rural  cooperatives  from  these  attribution  rules.  Today,  we  cure  that  mistake. 


 The  Commission’s  previous  rules  required  that  the  gross  revenues  of  entities  controlled  by  an  applicant’s  officers  and  directors  be  attributed  to  the  applicant.  The  requirement  is  an 
 important  one.  It  strives  to  prevent  applicants  from  securing  a  level  of  bidding  credits  more  favorable  than  really  justified.  The  rule  as  crafted,  however,  had  the  unintended  consequence  of 
 attributing  to  rural  telephone  cooperatives  the  gross  revenues  of  the  outside  business  interests  of  its  officers  and  directors  even  though  these  officers  and  directors  do  not  control  the  cooperatives. 
 Moreover,  the  cooperatives  themselves  typically  are  democratic  organizations  controlled  by  their  member-  subscribers,  and  are  usually  formed  as  non-  profit  or  not-  for-  profit  corporations. 


 Today,  the  Commission  adopts  a  narrow  exemption  for  rural  telephone  cooperatives  from  the  requirement  that  the  gross  revenues  of  entities  controlled  by  an  applicant’s  officers  and 
 directors  are  attributed  to  the  applicant.  We  recognize  the  frustration  caused  by  this  overbroad  rule,  and  are  hopeful  that  the  new  exemption  will  further  promote  the  participation  of 
 cooperatives  in  the  allocation  of  licenses  through  competitive  bidding,  pursuant  to  our  Section  309(  j)  mandate.  Indeed,  we  note  that  concurrent  with  our  adoption  of  the  exemption,  we  also 
 take  the  appropriate  step  in  granting  three  pending  waiver  requests  of  the  gross  revenue  attribution  rule  filed  by  three  winning  rural  telephone  cooperative  bidders  in  a  recent  auction. 


 We  thank  the  Wireless  Telecommunications  Bureau  staff  for  helping  us  craft  an  equitable  resolution,  and  look  forward  to  continuing  to  work  together  to  bring  more  ubiquitous  and  higher 
 quality  telecommunications  services  to  rural  America. 
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