**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

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| In the Matter of                 | *  | CC Docket No. 96-45          |
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| Adak Eagle Enterprises, LLC      | ** |                              |
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| d/b/a Adak Telephone Utility     | *  |                              |
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| Petition for Waiver of Sections  | ** |                              |
| 36.611, 36.612, 54.301(b),       |    |                              |
| 54.314(d), 54.903(a)(3),         | *  |                              |
| 69.2(hh) and 69.3(e)(6) of the   | *) |                              |
| Commission's Rules               | ** |                              |
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**ORDER**

**Adopted: November 27, 2006 Released: November 27, 2006**

By the Chief, Wireline Competition Bureau:

1.  In this Order, we extend the timing of the waiver of sections 36.611
    and 36.612 of the Commission's rules granted to Adak Eagle
    Enterprises, LLC d/b/a Adak Telephone Utility (Adak Telephone) in
    the *Adak Order*.[^1] The extension of this waiver will permit Adak
    Telephone, a new local exchange carrier (LEC) in Alaska, to receive
    high-cost loop support based on projected costs in 2006 and 2007,
    until its historical costs become available in 2008.[^2] We grant
    this extension on our own motion to permit Adak Telephone to
    continue receiving high-cost loop support without interruption,
    consistent with the Wireline Competition Bureau's (Bureau) intention
    in originally granting the waiver in the *Adak Order*.[^3]

2.  On December 30, 2005, the Bureau released an order granting Adak
    Telephone waivers of rules 36.611 and 36.612, and related Commission
    rules, so that Adak Telephone would be eligible to receive immediate
    high-cost universal service support and participate in the National
    Exchange Carrier Association (NECA) pools and tariffs.[^4] The
    Bureau found that special circumstances warranted a deviation from
    sections 36.611 and 36.612 of the Commission's rules, and that it
    was in the public interest to grant Adak Telephone's waiver
    request.[^5] Carriers without historical data, such as newly
    established carriers like Adak, may wait up to two years before
    receiving any high-cost loop support payments.[^6] Without immediate
    access to high-cost loop support, Adak Telephone's customers would
    continue to have extremely high monthly basic local service rates of
    \$100 and \$130 for residential and business customers,
    respectively, and customers would have to wait two years for local
    service rate relief due to the customary lag in receiving high-cost
    loop support.[^7] Consistent with the limited instances where
    requests for waiver of sections 36.611 and 36.612 have been granted,
    the Bureau also determined that delaying the timing of Adak
    Telephone's high-cost loop support could have the unintended effect
    of discouraging new carriers from extending service in unserved
    remote areas, thereby frustrating the statutory goal of promoting
    the provision of services at reasonable rates.[^8]

3.  Adak Telephone requested waiver of sections 36.611 and 36.612,
    effective January 1, 2005,[^9] and the Bureau granted the waiver "to
    the extent necessary to permit it to receive high-cost loop support
    for the period beginning May 25, 2005, the date the Alaska
    Commission designated it an \[eligible telecommunications carrier \]
    ETC."[^10] Adak Telephone already had applied for a loan from the
    Rural Utilities Service (RUS) when it requested the waivers, and
    planned to begin replacing the existing plant with new facilities in
    2005.[^11] The Bureau assumed that Adak Telephone would receive
    high-cost loop support based on projected costs in 2005 and 2006,
    and payments for periods subsequent to December 2006 based on
    historic data.[^12] Adak Telephone's RUS loan was conditioned,
    however, on evidence that it had received all necessary approvals
    from the Commission to begin receiving universal service support and
    participating in the NECA pools and tariffs.[^13] The Bureau's order
    was not released until December 30, 2005, and Adak Telephone was not
    able to finalize its RUS loan and begin construction until June
    2006.[^14]

4.  Adak Telephone expected to begin receiving high-cost loop support in
    October 2006,[^15] and it will be able to receive high-cost loop
    support in 2006 based on annualized current costs followed by
    true-ups using actual costs.[^16] Under the terms of the Bureau's
    order, however, Adak would not receive high-cost loop support in
    2007, because the Bureau had assumed that such support would be
    based on 2005 actual costs.[^17] Adak argues that limiting the use
    of trued up annualized current costs to the period ending December
    31, 2006, "will create a whipsaw effect on \[Adak Telephone\] and
    its ratepayers, with high-cost loop support available in 2006,
    absent in a large part of 2007, and available again in 2008."[^18]
    As required by the Regulatory Commission of Alaska (Alaska
    Commission), Adak Telephone intends to reduce local service rates to
    reflect additional revenue resulting from the receipt of high-cost
    support.[^19] Absent the extension of its waiver, Adak Telephone
    claims it would be forced to limit or delay its rate reduction.[^20]

5.  For the same reasons we found in the *Adak Order* that special
    circumstances warrant a waiver of section 36.611 and 36.612 of the
    Commission's rules, we find that it is in the public interest to
    extend the timing of that waiver to permit Adak Telephone to receive
    high-cost loop support based on projected costs in 2006 and 2007,
    until its historical costs become available in 2008. We further find
    that an interruption in Adak Telephone's high-cost loop support
    would impair its ability to provide telecommunications services at
    affordable rates, and that such interruption would not further the
    goals of section 254 of the Communications Act of 1934, as
    amended.[^21] We direct Adak Telephone to submit quarterly updates
    of its actual costs in accordance with the Commission's rules, so
    that NECA may determine whether adjustments for the 2006 and 2007
    high-cost loop support amounts are necessary.[^22] Payments for
    periods subsequent to December 2007 will be based on historic data
    in accordance with the Commission's rules.[^23]

6.  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 waiver of sections 36.611 and 36.612 of the Commission\'s
    rules, 47 C.F.R. §§ 36.611 and 36.612, IS GRANTED, as described
    herein, to Adak Eagle Enterprises, LLC d/b/a Adak Telephone Utility.

7.  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 Adak Eagle Enterprises, LLC d/b/a Adak Telephone Utility
    is required to submit quarterly updates pursuant to section 36.612
    of the Commission's rules, 47 C.F.R. § 36.612, for 2006 and 2007.

8.  IT IS FURTHER ORDERED that this order SHALL BE EFFECTIVE upon
    release.

    FEDERAL COMMUNICATIONS COMMISSION

    Thomas J. Navin

    Chief

    Wireline Competition Bureau

[^1]: *Adak Eagle Enterprises, LLC d/b/a Adak Telephone Utility Petition
    for Waiver of Sections 36.611, 36.612, 54.301(b), 54.314(d),
    54.903(a)(3), 69.2(hh) and 69.3(e)(6) of the Commission's Rules*, CC
    Docket No. 96-45, Order, 20 FCC Rcd 20543 (Wireline Compet. Bur.
    2005) (*Adak Order*). *See also* Adak Eagle Enterprises, LLC d/b/a
    Adak Telephone Utility, Motion for Clarifying Order, CC Docket No.
    96-45 (filed September 18, 2006) (Motion).

[^2]: *See* 47 C.F.R. §§ 36.611-36.612.

[^3]: *See Adak Order*, 20 FCC Rcd 20543.

[^4]: *See id*.

[^5]: *See id.* at 20546-47, para. 8. Adak Telephone's service area is
    on Adak Island, Alaska, a remote island that formerly housed a
    United States Navy (Navy) complex. Adak Telephone explained that it
    will require substantial construction and installation costs to
    upgrade the outdated plant installed by the Navy. *See id*. at
    20544, para. 2.

[^6]: *See id*. at 20546, para. 7. Carriers generally do not receive
    high-cost loop support based on historical cost data until the
    beginning of the second calendar year after the costs are incurred,
    because the data are not submitted by carriers until seven months
    after the end of a calendar year (*i.e.*, July 31), and NECA
    requires time to analyze the data and make the necessary nationwide
    calculations. *See id*.

[^7]: *See id*. at 20546-47, para. 8.

[^8]: *See id*. at 20547, para. 9.

[^9]: *See* Adak Eagle Enterprises, LLC d/b/a Adak Telephone Utility,
    Petition for Waiver of the Commission's Rules to Obtain Accelerated
    USF Support and to Participate in NECA Pools and Tariffs, CC Docket
    No. 96-45 (filed February 9, 2005) (Petition) at 1.

[^10]: *Adak Order*, 20 FCC Rcd at 29547-48, para.10.

[^11]: *See id*. at 20544, para. 2; Petition at ii, 6.

[^12]: *See Adak Order*, 20 FCC Rcd at 20547, para. 10. ("Adak
    Telephone's support initially, for the period May 25, 2005 through
    December 2006, will be based on annualized current costs followed by
    true-ups using actual costs.").

[^13]: Motion at 3.

[^14]: *Id*. at 3-4.

[^15]: *Id*. at 3.

[^16]: *See Adak Order*, 20 FCC Rcd at 20547, para. 10; Motion at 4.

[^17]: *See Adak Order*, 20 FCC Rcd at 20547-48, para. 10 ("Payments for
    periods subsequent to December 2006 will be based on historic data
    in accordance with the Commission's rules."). Under the normal
    operation of the Commission's rules, support in 2007 is based on
    costs incurred in 2005. *See* 47 C.F.R. §§ 36.611, 36.612; *see
    also* Motion at 4.

[^18]: Motion at 4.

[^19]: *See Adak Order*, 20 FCC Rcd at 20547, para. 8 n.32; Motion at 6.
    Adak Telephone intends to make a rate reduction filing with the
    Alaska Commission in November 2006. *Id*.

[^20]: Motion at 6.

[^21]: Section 254(b) of the Act provides, among other things, that
    consumers in rural, insular, and high-cost areas should have access
    to telecommunications services at rates that are "reasonably
    comparable to rates charged for similar services in urban areas." 47
    U.S.C. § 254(b)(3).

[^22]: *See* 47 C.F.R. § 36.612.

[^23]: *See* 47 C.F.R. §§ 36.611, 36.612.