**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

+----------------------------------+----+------------------------------+
| In the Matter of                 | *  | CC Docket No. 96-45          |
|                                  | *) |                              |
| Federal-State Joint Board on     | ** |                              |
| Universal Service                |    |                              |
|                                  | *  |                              |
| MCI, Inc.                        | *) |                              |
|                                  | ** |                              |
| Petitions for Waiver of Sections |    |                              |
| 54.802(a) and 54.809(c) of the   | *  |                              |
| Commission's Rules               | *) |                              |
|                                  | ** |                              |
|                                  |    |                              |
|                                  | *  |                              |
|                                  | *) |                              |
|                                  | ** |                              |
|                                  |    |                              |
|                                  | *  |                              |
|                                  | *) |                              |
|                                  | ** |                              |
|                                  |    |                              |
|                                  | *  |                              |
|                                  | *) |                              |
|                                  | ** |                              |
|                                  |    |                              |
|                                  | *  |                              |
|                                  | *) |                              |
|                                  | ** |                              |
+----------------------------------+----+------------------------------+

**ORDER**

**Adopted: December 28, 2006 Released: December 28, 2006**

By the Chief, Wireline Competition Bureau:

# introduction

1.  In this Order, we grant a request by MCI, Inc. (MCI), on behalf of
    MCImetro Access Transmission Services, Inc. (MCImetro), an eligible
    telecommunications carrier (ETC) in New York, for waiver of the
    March 31, 2004, June 30, 2004, and September 30, 2004, filing
    deadlines for universal service interstate access support (IAS) set
    forth in section 54.802(a) of the Commissions rules.[^1] In
    addition, we grant MCI's request for waiver of the June 30, 2004,
    filing deadline for IAS annual certification set forth in section
    54.809(c) of the Commission's rules.[^2] We find that MCI has
    demonstrated that special circumstances warrant granting these
    waivers.

# background

2.  Section 254(e) of the Communications Act of 1934, as amended (the
    Act), provides that "only an eligible telecommunications carrier
    designated under section 214(e) shall be eligible to receive
    specific Federal universal service support."[^3] Once a carrier is
    designated as an ETC, other requirements also must be satisfied
    before a carrier can begin receiving high-cost universal service
    support. Section 254(e) requires that support shall be used "only
    for the provision, maintenance, and upgrading of facilities and
    services for which the support is intended."[^4] To implement this
    statutory requirement, the Commission has adopted certification and
    reporting requirements.[^5]

3.  Pursuant to section 54.802 of the Commission's rules, an ETC that
    provides service within an area served by a price cap local exchange
    carrier (LEC) must file certain data with the Universal Service
    Administrative Company (USAC) to receive IAS funding.[^6]
    Specifically, an ETC must submit line count data showing separately
    the number of residential/single-line business lines and
    multi-business lines it serves within each price cap LEC's study
    area on a quarterly basis.[^7] Mandatory line count data filings are
    due on the last business day of March, June, September, and December
    of each year.[^8] USAC uses line count data filed in December to
    calculate first quarter support for the following calendar year,
    line count data filed in March to calculate second quarter support
    for the current calendar year, line count data submitted in June to
    calculate third quarter support for the current year, and line count
    data filed in September to calculate fourth quarter support for the
    current year.[^9]

4.  Pursuant to section 54.809(c) of the Commission's rules, in order to
    receive IAS support, an ETC also must file an annual certification
    that "all interstate access universal service support will be used
    only for the provision, maintenance, and upgrading of facilities and
    services for which the support is intended."[^10] Each ETC must file
    this certification on the date that it first files line count
    information and thereafter on June 30 of each year.[^11] An ETC that
    misses the June 30 annual IAS certification deadline receives
    support pursuant to the following schedule: (1) carriers that file
    no later than September 30 shall receive support for the fourth
    quarter of that year and the first and second quarters of the
    subsequent year; (2) carriers that file no later than December 31
    shall receive support for the first and second quarters of the
    subsequent year; and (3) carriers that file no later than March 31
    of the subsequent year shall receive support for the second quarter
    of the subsequent year.[^12]

5.  *[MCI's Petitions for Waiver]{.underline}*. MCI's subsidiary,
    MCImetro, provides service within an area served by a price cap
    carrier and has been designated as an ETC in New York. Therefore,
    MCI must file line count data in accordance with section 54.802(a)
    of the Commission's rules, and an annual IAS certification in
    accordance with section 54.809(c) of the Commission's rules. MCI,
    however, missed the March 31, 2004, June 30, 2004, and September 30,
    2004, deadlines for submitting the line count reports reflecting
    lines served as of December 30, 2003, March 30, 2004, and June 30,
    2004, respectively. In addition, MCI missed the June 30, 2004 IAS
    annual certification deadline. MCI filed a request for waiver of
    section 54.802(a) of the Commission's rules to permit MCI to receive
    IAS for the second, third and fourth quarters of 2004,[^13] and a
    request for waiver of the June 30, 2004 annual IAS certification
    deadline.[^14]

6.  MCI contends that good cause exists for granting its request for
    waiver of section 54.802(a) of the Commission's rules,[^15] and that
    granting its request for waiver of section 54.809(c) of the
    Commission's rules will serve the public interest.[^16] During the
    time that MCI missed the deadlines for submitting its annual
    certification and quarterly line count data for IAS, MCI asserts
    that "it was in the midst of its transition from bankruptcy and
    experiencing considerable work force reductions with an inability to
    re-staff personnel."[^17] MCI claims that, with the exception of the
    line count filings for three quarters at issue here, it has
    consistently filed its line counts on a timely basis since
    2000.[^18] MCI contends that the impact of not receiving the waivers
    is significant, because MCI would lose approximately \$1.5 million
    in IAS.[^19] MCI also argues that it would be inequitable to hold
    MCI liable for "true-up" invoice amounts based on USAC's erroneous
    assumption that MCI was serving far fewer, or even zero lines, than
    it was actually serving.[^20] MCI claims that it continued to serve
    the relevant customers, some at a loss, with no interruption or
    increase in price.[^21] MCI contends that not permitting it to
    recoup this support "may affect its future ability to market
    prospective customers in these areas,"[^22] and "could detrimentally
    affect its provision of services to rural areas of New York."[^23]
    MCI argues that the Wireline Competition Bureau has recognized in
    granting a similar waiver request that "considerations of hardship
    and equity---as well as \[a\] longstanding history of submitting
    timely data---weigh in favor of granting the requested waiver."[^24]

# discussion

7.  We find that MCI has demonstrated that special circumstances warrant
    a waiver of the filing deadlines for March 31, 2004, June 30, 2004,
    and September 20, 2004, as set forth in section 54.802(a), of the
    Commission's rules, and the June 30, 2004, annual certification
    requirement, as set forth in section 54.809(c) of the Commission's
    rules.[^25] Because USAC processes a tremendous amount of line count
    data each year, it is administratively necessary to require carriers
    to meet the line count and certification filing deadlines absent
    special circumstances.[^26] Moreover, it is the responsibility of
    ETCs to familiarize themselves with any applicable regulations,[^27]
    and to ensure that filings are timely received.[^28] In this case,
    however, considerations of hardship and equity, as well as MCI's
    history of submitting timely data, weigh in favor of granting the
    requested waiver. Specifically, we conclude that a loss of
    approximately \$1.5 million in IAS funding is excessive under the
    circumstances given that MCI had just emerged from bankruptcy.

8.  We find that the loss of approximately \$1.5 million in IAS funding
    could impact the rural and high-cost areas served by MCImetro.[^29]
    We are concerned that the loss of such a substantial amount of IAS
    funding could undermine MCImetro's future ability to serve customers
    in the high-cost areas of New York. We have granted waivers of the
    universal service line count filing deadline to "facilitate the
    continued provision of service, as well as system construction and
    upgrades."[^30] Likewise, the requested waiver would enable MCImetro
    to continue uninterrupted its efforts to maintain and promote access
    to quality services in its rural and high-cost areas.

9.  Significantly, MCI's delay in filing the line count report was
    caused by unique circumstances that are unlikely to reoccur. MCI,
    which emerged from Chapter 11 bankruptcy protection on April 20,
    2004, was experiencing considerable work force reductions and was
    unable to re-staff positions during its reorganization. MCI has
    subsequently implemented new procedures to ensure that its future
    filings will be timely.[^31] Although the line count data was filed
    too late for USAC to incorporate projected line count data for MCI
    into its quarterly calculations, we find that, in this instance,
    these special circumstances outweigh any processing difficulties
    that USAC may face as a result of the late-filed data.[^32]

10. In light of these unique special circumstances, we conclude that it
    would be onerous to deny MCI receipt of a significant amount of IAS.
    In granting this waiver, we rely on MCI's improvements to its
    certification and data filing process and procedures, including
    executive oversight, to ensure that future filings will be submitted
    on a timely basis.[^33] We also conclude that deviation from the
    general rule under these special circumstances will serve the public
    interest. Granting the requested waiver will facilitate the
    continued provision of service in MCImetro's service areas.
    Accordingly, we find that waiving section 54.802(a) and 54.809(c) of
    the Commission's rules will serve the public interest by preserving
    and advancing universal service.[^34]

# ordering clause

11. Accordingly, IT IS ORDERED, pursuant to sections 1, 4(i), 5(c), 214,
    and 254 of the Communications Act of 1934, as amended, 47 U.S.C. §§
    151, 154(i), 155(c), 214, 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 54.802(a) of the Commission\'s
    rules, 47 C.F.R. § 54.802(a), filed by MCI, Inc., on January 7,
    2005, IS GRANTED, as described herein.

12. IT IS FURTHER ORDERED, pursuant to sections 1, 4(i), 5(c), 214, and
    254 of the Communications Act of 1934, as amended, 47 U.S.C. §§ 151,
    154(i), 155(c), 214, 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 54.809(c) of the Commission\'s rules,
    47 C.F.R. § 54.809(c), filed by MCI, Inc., on July 21, 2004, IS
    GRANTED, as described herein.

FEDERAL COMMUNICATIONS COMMISSION

Thomas J. Navin

> Chief

Wireline Competition Bureau

[^1]: MCI, Inc., Petition for Waiver of FCC Rule Section 54.802(a), CC
    Docket No. 96-45, filed Jan. 7, 2005 (54.802 Petition).

[^2]: MCI, Inc., Petition for Waiver of FCC Rule Section 54.809(c), CC
    Docket No. 96-45, filed July 21, 2004 (54.809 Petition).

[^3]: 47 U.S.C. § 254(e); *see also* 47 U.S.C. § 214(e). Section 254 of
    the Act was added by the Telecommunications Act of 1996, Pub. L. No.
    104-104, 110 Stat. 56 (1996).

[^4]: 47 U.S.C. § 254(e).

[^5]: *See, e.g.*, 47 C.F.R. §§ 54.313, 54.314, 54.802(a), 54.809.

[^6]: *See* 47 C.F.R. § 54.802.

[^7]: 47 C.F.R. § 54.802(a).

[^8]: *Id*.; *see also Access Charge Reform*, *Price Cap Performance
    Review for Local Exchange Carriers, Low-Volume Long-Distance Users,
    Federal-State Joint Board on Universal Service*, Sixth Report and
    Order in CC Docket Nos. 96-262 and 94-1, Report and Order in CC
    Docket No. 99-249, Eleventh Report and Order in CC Docket No. 96-45,
    15 FCC Rcd 12962, 13060, para. 227 (2000), *aff'd in part, rev'd in
    part, and remanded in part*, *Texas Office of Public Utility
    Counsel*, 265 F.3d 313 (5^th^ Cir. 2001); *Access Charge Reform*,
    *Price Cap Performance Review for Local Exchange Carriers,
    Low-Volume Long-Distance Users, Federal-State Joint Board on
    Universal Service*, Order on Remand, CC Docket Nos. 96-262, 94-1,
    99-249, 96-45, 18 FCC Rcd 14976 (2003).

[^9]: 47 C.F.R. § 54.802(a).

[^10]: 47 C.F.R. § 54.809(a).

[^11]: 47 C.F.R. § 54.809(c).

[^12]: *Id*.; *see also*, *Federal-State Joint Board on Universal
    Service*, CC Docket No. 96-45, Report and Order, 20 FCC Rcd 6371,
    6412, para. 94 (2005) (*ETC Designation Order*). Prior to adoption
    of the *ETC Designation Order*, an ETC that missed the annual filing
    deadline could lose as much as a year of IAS. *See id.*, at 6412,
    para. 93.

[^13]: *See generally* 54.802 Petition. The Wireline Competition Bureau
    released a public notice on Feb. 1, 2005, seeking comment on the
    petition. *See Wireline Competition Bureau Seeks Comment on
    Petitions Requesting Waiver of Various Filing Deadlines Related to
    the Universal Service Program*, CC Docket No. 96-45, Public Notice,
    20 FCC Rcd 2090 (2005). No comments were filed on MCI's petition.

[^14]: *See generally* 54.809 Petition.

[^15]: *See* 54.802 Petition at 5-6.

[^16]: *See* 54.809 Petition at 2.

[^17]: *See* Letter from Karen T. Reidy, MCI, to Marlene H. Dortch, FCC,
    dated Dec. 15, 2005, at 1 (MCI Letter).

[^18]: *See* 54.802 Petition at 2.

[^19]: *See* MCI Letter at 1-2.

[^20]: *See* 54.802 Petition at 5.

[^21]: *See* MCI Letter at 2.

[^22]: *Id.*

[^23]: 54.802 Petition at 6.

[^24]: MCI Letter at 1 (quoting *Federal-State Joint Board on Universal
    Service, Citizens Communications and Frontier Communications
    Petition for Waiver of Section 54.802(a) of the Commission's Rules*,
    CC Docket No. 96-45, Order, 20 FCC Rcd 16761, 16763, para. 7
    (Wireline Comp. Bur. 2005) (*Citizens/Frontier*).

[^25]: Generally, the Commission's rules may be waived for good cause
    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 therefore appropriate only
    if special circumstances warrant a deviation from the general rule,
    and such deviation will serve the public interest. *Northeast
    Cellular*, 897 F.2d at 1166. Moreover, in demonstrating whether a
    waiver is warranted, the burden of proof rests with the petitioner.
    *Tucson Radio, Inc. v. FCC*, 452 F.2d 1380, 1382 (D.C. Cir. 1971).

[^26]: *Federal-State Joint Board on Universal Service, FiberNet, LLC,
    Petition for Waiver of Section 54.307(c) of the Commission's Rules
    and Regulations*, Order, 19 FCC Rcd 8202, 8204, para. 5 (Wireline
    Comp. Bur. 2004).

[^27]: *See* 47 C.F.R. § 0.406; *see also Citizens/Frontier*, 20 FCC Rcd
    at 16763, para. 7.

[^28]: *See* 47 C.F.R. § 54.802(a), (c).

[^29]: *See*, *e.g*., *Federal-State Joint Board on Universal Service,
    United States Cellular Corporation, Petition for Waiver of Section
    54.307(c) of the Commission\'s Rules and Regulations*, Order, 19 FCC
    Rcd 12418 (Wireline Comp. Bur. 2004) (finding that United States
    Cellular Corporation reasonably believed that quarterly line counts
    were not mandatory prior to the effective date of the *MAG Order*).

[^30]: *See Frontier*, 20 FCC Rcd at 16764, para. 11.

[^31]: *See* MCI Letter at 2.

[^32]: *See Federal-State Joint Board on Universal Service, Smithville
    Telephone Company, Inc. Petition for Waiver of Section 54.301 Local
    Switching Support Data Submission Reporting Data for Average
    Schedule Company*, Order, 19 FCC Rcd 8891, 8893 para. 5 (Wireline
    Comp. Bur. 2004) (*Smithville*); *but cf. Citizens/Frontier*, 20 FCC
    Rcd at 16764, para. 9 (noting that Frontier's swift efforts to
    submit data, notify Commission staff, and file a waiver request
    enabled USAC to incorporate projected line count data for Frontier
    into its quarterly calculations").

[^33]: *See* MCI Letter at 2.

[^34]: *See* 47 U.S.C. § 254(b); 47 C.F.R. §§ 54.802, 54.809. We note
    that, in June 2005, the Commission released a Notice of Proposed
    Rulemaking seeking comment on ways to improve the management,
    administration, and oversight of the Universal Service Fund (USF).
    *See Comprehensive Review of Universal Service Fund Management,
    Administration, and Oversight*, WC Docket Nos. 05-195, 03-109,
    02-60, *Federal-State Joint Board on Universal Service*, CC Docket
    Nos. 96-45, 02-6, 97-21, Notice of Proposed Rulemaking and Further
    Notice of Proposed Rulemaking, 20 FCC Rcd 11308 (2005). Among other
    issues, the Commission sought comment on the various filing
    deadlines for high-cost carriers. *See id.* at 11328-30, paras.
    47-51.