**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

+---------------------------------------+---+--------------------------+
| In the Matters of                     | * | CC Docket No. 96-45      |
|                                       | * |                          |
| Petitions for Waiver Concerning the   | ) | AAD 96-35                |
| Definition of "Study Area" Contained  | * |                          |
| in Part 36 Appendix-Glossary of the   | * | CC Docket No. 96-45      |
| Commission's Rules                    |   |                          |
|                                       | * | AAD 95-139               |
| Accent Communications, Inc.,          | * |                          |
|                                       | ) | CC Docket No. 96-45      |
| Armour Independent Telephone Company, | * |                          |
|                                       | * | CC Docket No. 96-45      |
| Bridgewater-Canistota Independent     |   |                          |
| Telephone Company,                    | * | AAD 94-112               |
|                                       | * |                          |
| James Valley Cooperative Telephone    | ) | CC Docket No. 96-45      |
| Company,                              | * |                          |
|                                       | * | AAD 95-139               |
| RC Communications, Inc., and          |   |                          |
|                                       | * | CC Docket No. 96-45      |
| Roberts County Telephone Cooperative  | * |                          |
| Association                           | ) | AAD 95-62                |
|                                       | * |                          |
| and                                   | * | CC Docket No. 96-45      |
|                                       |   |                          |
| Accipiter Communications, Inc.        | * | AAD 95-139               |
|                                       | * |                          |
| and                                   | ) | CC Docket No. 96-45      |
|                                       | * |                          |
| Alenco Communications, Inc.           | * | CC Docket No. 96-45      |
|                                       |   |                          |
| and                                   | * | AAD 95-30                |
|                                       | * |                          |
| Alpine Communications, L.C.,          | ) | CC Docket No. 96-45      |
|                                       | * |                          |
| Arapahoe Telephone Company,           | * | AAD 95-72                |
|                                       |   |                          |
| Great Plains Communications, Inc.,    | * | CC Docket No. 96-45      |
|                                       | * |                          |
| Kennebec Telephone Company, Inc.,     | ) | AAD 95-139               |
|                                       | * |                          |
| The Nebraska Central Telephone        | * | CC Docket No. 96-45      |
| Company, and                          |   |                          |
|                                       | * | AAD 95-139               |
| Western Telephone Company             | * |                          |
|                                       | ) | CC Docket No. 96-45      |
| and                                   | * |                          |
|                                       | * | CC Docket No. 96-45      |
| Brazos Telecommunications, Inc. and   |   |                          |
|                                       | * | AAD 96-70                |
| Brazos Telephone Cooperative, Inc.    | * |                          |
|                                       | ) | CC Docket No. 96-45      |
| and                                   | * |                          |
|                                       | * | CC Docket No. 96-45      |
| Cap Rock Telephone Cooperative, Inc.  |   |                          |
|                                       | * | AAD 96-70                |
| and                                   | * |                          |
|                                       | ) | CC Docket No. 96-45      |
| Cass County Telephone Company         | * |                          |
|                                       | * | AAD 93-20                |
| and                                   |   |                          |
|                                       | * | CC Docket No. 96-45      |
| Central Texas Telephone Cooperative,  | * |                          |
| Inc.                                  | ) | AAD 95-62                |
|                                       | * |                          |
| and                                   | * | CC Docket No. 96-45      |
|                                       |   |                          |
| Champlain Valley Telecom, Inc.,       | * | AAD 95-139               |
|                                       | * |                          |
| Northland Telephone Company of        | ) | CC Docket No. 96-45      |
| Vermont and                           | * |                          |
|                                       | * | AAD 94-108               |
| Vermont Telephone Company, Inc.       |   |                          |
|                                       | * | CC Docket No. 96-45      |
| and                                   | * |                          |
|                                       | ) | AAD 95-82                |
| Columbine Telephone Company, Inc. and | * |                          |
|                                       | * | CC Docket No. 96-45      |
| Silver Star Telephone Company, Inc.   |   |                          |
|                                       | * | AAD 96-52                |
| and                                   | * |                          |
|                                       | ) | CC Docket No. 96-45      |
| Dickey Rural Telephone Cooperative,   | * |                          |
|                                       | * | AAD 94-111               |
| Dickey Rural Communications, Inc.,    |   |                          |
|                                       | * | CC Docket No. 96-45      |
| Gilby Telephone Company,              | * |                          |
|                                       | ) | CC Docket No. 96-45      |
| Griggs County Telephone Company,      | * |                          |
|                                       | * | AAD 95-124               |
| Moore & Liberty Telephone Company,    |   |                          |
|                                       | * | CC Docket No. 96-45      |
| North Dakota Telephone Company,       | * |                          |
|                                       | ) | AAD 94-95                |
| Northwest Communications Cooperative, | * |                          |
|                                       | * | CC Docket No. 96-45      |
| Red River Telecom, Inc.,              |   |                          |
|                                       | * |                          |
| Turtle Mountain Communications, Inc., | * |                          |
|                                       | ) |                          |
| United Telephone Mutual Aid           | * |                          |
| Cooperative, and                      | * |                          |
|                                       |   |                          |
| York Telephone Company                | * |                          |
|                                       | * |                          |
| and                                   | ) |                          |
|                                       | * |                          |
| Ganado Telephone Co., Inc.            | * |                          |
|                                       |   |                          |
| and                                   | * |                          |
|                                       | * |                          |
| Guadalupe Valley Telephone            | ) |                          |
| Cooperative, Inc.                     | * |                          |
|                                       | * |                          |
| and                                   |   |                          |
|                                       | * |                          |
| Interstate Telecommunications         | * |                          |
| Cooperative, Inc. and Interstate      | ) |                          |
| Telephone Company, Inc.,              | * |                          |
|                                       | * |                          |
| Hanson Communications, Inc.,          |   |                          |
|                                       | * |                          |
| Fort Randall Telephone Company, and   | * |                          |
|                                       | ) |                          |
| Mt. Rushmore Telephone Company,       | * |                          |
|                                       | * |                          |
| Midstate Telephone Company and        |   |                          |
|                                       | * |                          |
| Heartland Communications, Inc.,       | * |                          |
|                                       | ) |                          |
| Mobridge Telecommunications Company,  | * |                          |
|                                       | * |                          |
| Hanson County Telephone, Inc. and     |   |                          |
|                                       | * |                          |
| Hanson Communications, Inc. dba       | * |                          |
| McCook Telecom, Splitrock Telecom     | ) |                          |
| Cooperative, Inc. and                 | * |                          |
|                                       | * |                          |
| Splitrock Properties, Inc.            |   |                          |
|                                       | * |                          |
| and                                   | * |                          |
|                                       | ) |                          |
| Lincolnville Telephone Company and    | * |                          |
|                                       | * |                          |
| Tidewater Telecom, Inc.               |   |                          |
|                                       | * |                          |
| and                                   | * |                          |
|                                       | ) |                          |
| Maine Telephone Company,              | * |                          |
|                                       | * |                          |
| Northland Telephone Company of Maine, |   |                          |
| Inc.,                                 | * |                          |
|                                       | * |                          |
| Sidney Telephone Company, and         | ) |                          |
|                                       | * |                          |
| Standish Telephone Company            | * |                          |
|                                       |   |                          |
| and                                   | * |                          |
|                                       | * |                          |
| Mid-Maine Telecom, Inc.               | ) |                          |
|                                       | * |                          |
| and                                   | * |                          |
|                                       |   |                          |
| Oregon-Idaho Utilities, Inc.          | * |                          |
|                                       | * |                          |
| and                                   | ) |                          |
|                                       | * |                          |
| Ozark Telephone Company               | * |                          |
|                                       |   |                          |
| and                                   | * |                          |
|                                       | * |                          |
| Peoples Telephone Cooperative, Inc.   | ) |                          |
|                                       | * |                          |
| and                                   | * |                          |
|                                       |   |                          |
| Pioneer Telephone Cooperative, Inc.   | * |                          |
|                                       | * |                          |
| and                                   | ) |                          |
|                                       | * |                          |
| Roosevelt County Rural Telephone      | * |                          |
| Cooperative, Inc.                     |   |                          |
|                                       | * |                          |
| and                                   | * |                          |
|                                       | ) |                          |
| San Carlos Apache Telecommunications  | * |                          |
| Utility, Inc.                         | * |                          |
|                                       |   |                          |
| and                                   | * |                          |
|                                       | * |                          |
| Santa Rosa Telephone Cooperative,     | ) |                          |
| Inc.                                  | * |                          |
|                                       | * |                          |
| and                                   |   |                          |
|                                       | * |                          |
| Sunflower Telephone Company, Inc. and | * |                          |
|                                       | ) |                          |
| Bluestem Telephone Company,           | * |                          |
|                                       | * |                          |
| S&T Telephone Cooperative             |   |                          |
| Association, Inc. and                 | * |                          |
|                                       | * |                          |
| S&T Communications of Dighton, Inc.,  | ) |                          |
|                                       | * |                          |
| Golden Belt Telephone Association,    | * |                          |
| Inc.,                                 |   |                          |
|                                       | * |                          |
| Northeast Missouri Rural Telephone    | * |                          |
| Company and Modern Telecommunications | ) |                          |
| Company                               | * |                          |
|                                       | * |                          |
| and                                   |   |                          |
|                                       | * |                          |
| West River Cooperative Telephone      | * |                          |
| Company and                           | ) |                          |
|                                       | * |                          |
| State Line Telecommunications, Inc.   | * |                          |
|                                       |   |                          |
| and                                   | * |                          |
|                                       | * |                          |
| Winnebago Cooperative Telephone       | ) |                          |
| Association                           | * |                          |
|                                       | * |                          |
|                                       |   |                          |
|                                       | * |                          |
|                                       | * |                          |
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+---------------------------------------+---+--------------------------+

**ORDER**

**Adopted:** August 3, 2000 **Released:** August 4, 2000

By the Deputy Chief, Common Carrier Bureau:

# introduction

1.  In this Order, we grant the requests of the above-captioned
    telephone companies (collectively, petitioners) for the removal of
    all remaining individual caps on high-cost loop support imposed in
    the past as part of the grant of study area waivers.[^1] We remove
    these caps effective January 1, 2000. We deny petitioners' requests
    to remove individual caps on high-cost loop support prior to January
    1, 2000. This action is consistent with the Common Carrier Bureau's
    (Bureau's) *September 9, 1999* *Order* lifting nine individual caps
    on high-cost loop support.[^2]

# BACKGROUND

## Commission Precedent

2.  A study area is a geographic portion of an incumbent local exchange
    carrier\'s (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,[^3]
    and generally tariff their rates at the study area level.

3.  Effective November 15, 1984, the Commission froze all study area
    boundaries. [^4] An incumbent LEC must apply to the Commission for a
    waiver of the frozen study area rule if it wishes to sell or
    purchase an exchange and if that transaction would change the study
    area boundaries of either the seller or the buyer.[^5] The purpose
    of the freeze was to ensure that any Commission policies developed
    in reliance on the number and size of existing study areas were not
    significantly undercut by study area boundary changes.[^6] For
    instance, high-cost loop support is based on the level of
    study-area-wide average loop costs, in effect requiring low-cost
    regions within a study area to support high-cost regions within that
    study area. The study area freeze was implemented, in part, to help
    ensure that incumbent LECs did not undermine this decision by
    setting up high-cost exchanges as separate study areas within their
    existing service territories to increase interstate cost
    allocations, and therefore their high-cost loop support.[^7]

4.  Consistent with the reasons for the 1984 study area freeze described
    above, the Commission has been concerned about the potential adverse
    impact of study area waivers on the high-cost loop support
    mechanism.[^8] When a low average-cost carrier sells a high-cost
    exchange, the acquiring carrier could substantially increase its
    high-cost loop support by including the new exchange in its study
    area, without any reduction in the low-cost carrier\'s support.[^9]
    This concern was heightened in the early 1990\'s when large,
    low-cost, incumbent LECs began to sell substantial numbers of
    high-cost exchanges to smaller, mostly rural, incumbent LECs. In the
    absence of individual caps on high-cost loop support, the Bureau
    found that, even in a period of a few years, payments from the
    high-cost loop support mechanism for some incumbent LECs rose by
    unexpected amounts.[^10]

5.  Partially in response to these events, the Commission adopted the
    Joint Board\'s recommendation for an overall indexed cap on
    high-cost loop support.[^11] Moreover, consistent with the intent of
    the overall cap on high-cost loop support, the Bureau also began
    imposing caps on the high-cost loop support drawn by incumbent LECs
    acquiring exchanges from other incumbent LECs.[^12] Specifically,
    study area waivers were granted subject to the condition that,
    absent explicit approval from the Bureau, the high-cost loop support
    provided to an acquiring carrier\'s study area could not exceed the
    amounts specified in the carrier's waiver petition.[^13] The Bureau
    also began analyzing the impact of the proposed transaction on the
    distribution of high-cost loop support.[^14] These steps were
    implemented in order to prevent carriers from: (1) underestimating
    the effects the waiver may have on the high-cost loop support
    mechanism in order to increase the chances that the waiver would be
    granted; and (2) then revising the cost figures upward, once the
    waiver was granted, thereby substantially increasing their share of
    the high-cost loop support from the capped high-cost universal
    service fund.

6.  In 1997 and 1998, nine rural carriers submitted requests to the
    Commission for removal of the individual caps on their high-cost
    loop support.[^15] On September 9, 1999, the Bureau removed the
    individual caps for those nine companies, effective January 1, 2000,
    concluding that it was not necessary to accomplish the policies
    outlined above or in the public interest to limit, in perpetuity,
    the petitioners to the high-cost loop support estimated in their
    original study area waiver petitions.[^16] The Bureau noted that,
    during the period the individual caps on the carriers' high-cost
    loop support were in place, the caps had served their purpose by
    preventing the carriers from underestimating the effect the transfer
    of exchanges would have on the high-cost loop support mechanism
    immediately following the transfer.[^17] The Bureau also concluded
    that lifting the caps on those petitioners\' high-cost loop support
    may increase their incentive and ability to extend service to
    previously unserved areas and upgrade their networks. The Bureau,
    therefore, concluded that individual caps placed on those
    petitioners\' high-cost loop support imposed as part of the grant of
    study area waivers should be removed, effective January 1,
    2000.[^18]

## Petitions

7.  In October and November 1999, 40 additional rural carriers filed 27
    separate petitions requesting the same relief that the nine rural
    companies received in the *September 9, 1999 Order,* and asking for
    removal of their individual high-cost loop support caps effective
    January 1, 2000.[^19] Several petitioners also suggest that the
    Commission, on it own motion, should remove all remaining individual
    caps on high-cost loop support imposed as part of the Bureau's
    approval of study area waivers.[^20] On January 24, 2000, the Bureau
    released a public notice soliciting comments on the petitioners'
    requests.[^21] Several parties filed comments in support of the
    petitioners' requests.[^22]

8.  Interstate, its co-petitioners, and the Western Telephone Company
    (Western) also have requested the removal of the individual caps on
    their high-cost loop support, effective January 1, 1998.[^23] In
    addition, Vermont Telephone Company, Inc. (Vtel), has requested that
    the Commission provide it with increased high-cost loop support for
    1999.[^24] JSI supports Vtel's request. [^25]

# discussion

9.  Consistent with the *September 9, 1999 Order,* we remove the
    individual caps on petitioners' high-cost loop support imposed as
    part of the Bureau's grant of study area waivers. We agree with
    petitioners that limiting the petitioners to the high-cost loop
    support estimated in their original study area waiver petitions, in
    perpetuity, is not necessary to accomplish the policies outlined
    above.[^26] We note that the caps imposed on petitioners\' high-cost
    loop support have been in effect for over three years. In that time,
    the individual caps placed on the carriers\' high-cost loop support
    have served their purpose by preventing the carriers from
    underestimating the effect the transfer of exchanges would have on
    the high-cost loop support mechanism immediately following the
    transfer. We concur with petitioners that their cost estimates for
    upgrading the acquired exchanges, although reasonable at that time,
    may no longer reflect the costs that they are now incurring.[^27]
    We, therefore, conclude that limiting the duration of these caps is
    appropriate at this time.

10. We also grant petitioners' request that we remove the individual
    caps on high-cost loop support imposed as part of the grant of study
    area waivers effective as of January 1, 2000. Our decision to remove
    the caps effective January 1, 2000 will ensure that the petitioners
    are treated the same as the carriers that had their individual caps
    removed in the *September 9, 1999 Order*. In the *September 9, 1999
    Order,* the Bureau removed individual high-cost loop support caps
    effective January 1, 2000.

11. For the reasons discussed above, we also agree that the individual
    caps on high-cost loop support, imposed as a condition of study area
    waivers, should be removed for all carriers. There are 15 carriers
    that currently are subject to high-cost loop support caps and have
    not filed petitions for removal of their caps.[^28] Similar to the
    caps imposed on the petitioners, the individual high-cost loop
    support caps for these remaining carriers have been in place for at
    least three years. In light of the decision to remove individual
    high-cost loop support caps for the petitioners, we expect that
    these other carriers also may request the removal of the individual
    caps on their high-cost loop support. We note that the petitions
    filed thus far present substantially similar facts and requested
    relief and we would anticipate similar claims from the remaining
    affected carriers in the future. Therefore, on our own motion, we
    remove all remaining individual caps on high-cost loop support
    imposed as part of the grant of study area waivers, effective as of
    January 1, 2000.

12. Consistent with the Bureau's decision in the *September 9, 1999
    Order* to remove individual caps on high-cost loop support effective
    January 1, 2000, we deny the request of Interstate, its
    co-petitioners, and Western to remove their individual caps for
    calendar years 1998 and 1999. In the *September 9, 1999 Order*, the
    Bureau removed the petitioners' individual caps on high-cost loop
    support effective January 1, 2000 and refused to remove the
    petitioners' individual caps on high-cost loop support for prior
    periods.[^29] Likewise, in this Order, we remove, effective January
    1, 2000, all remaining individual caps on high-cost loop support
    associated with the grant of study area waivers. We recognize that
    high-cost loop support directed to average schedule companies is
    based on an average schedule formula, rather than reported costs;
    however, we do not agree with Interstate, its co-petitioners, and
    Western that we should remove their individual high-cost loop
    support caps, effective January 1, 1998, simply because certain
    other average schedule companies have been permitted to receive
    uncapped high-cost loop support.[^30] We find that the capping of
    these average schedule companies' high-cost loop support was
    appropriate notwithstanding the fact that other average schedule
    companies received uncapped high-cost loop support. For example, we
    believe that the cap on Interstate's high-cost loop support served
    its purpose by preventing high-cost loop support to increase by
    unexpected amounts immediately following the approval of
    Interstate's study area waiver. In its original petition for a study
    area waiver, Interstate stated that it would receive no high-cost
    loop support subsequent to the approval of the study area
    waiver.[^31] The Bureau relied upon Interstate's claim and granted
    the waiver, in part, because there would be no adverse impact on the
    universal service fund.[^32] We emphasize that the Bureau set
    Interstate's high-cost loop support cap at zero based on
    Interstate's own estimate. We note, however, that in 1998 and 1999
    Interstate would have received approximately \$326,651 and
    \$336,177, respectively, in high-cost loop support had individual
    caps on its high-cost loop support not been in place.[^33]
    Therefore, if the Bureau had not imposed a cap on Interstate's
    high-cost loop support, support levels would have increased to
    unexpected amounts.

13. We also note that Interstate, its co-petitioners, and Western have
    not presented any evidence that they have been significantly
    disadvantaged (financially or otherwise) by the Commission's
    imposition of caps on their high-cost loop support in 1998 and 1999.
    We do agree with Interstate, its-co-petitioners, and Western that
    the Commission typically treats similarly situated parties
    alike.[^34] Consistent with this policy, we believe that granting
    Interstate, its co-petitioners, and Western uncapped high-cost loop
    support for 1998 and 1999 would grant them an unfair advantage over
    all carriers that also were subject to caps on their high-cost loop
    support during this period. We, therefore, do not believe that
    granting Interstate, its co-petitioners, and Western the additional
    relief for 1998 and 1999 would be in the public interest.

14. We also reject Vtel's request for increased high-cost loop support
    for 1999. We do not agree with Vtel that it should receive increased
    high-cost loop support for 1999 because "initial estimates have
    proven inaccurate."[^35] It was Vtel and its co-petitioners that
    provided the Bureau with an estimate of their high-cost loop support
    when they sought a study area waiver.[^36] The Bureau traditionally
    has relied upon such estimates in granting study area waivers.[^37]
    As the Bureau stated in the order granting a study area waiver to
    Vtel and its co-petitioners, the very reason for imposing individual
    caps on high-cost loop support was because high-cost loop support
    estimates may later prove inaccurate and result in unexpected
    increases in high-cost loop support payments.[^38] Therefore, it was
    incumbent on Vtel and its co-petitioners to conduct due diligence
    and investigation in order to accurately estimate their high-cost
    loop support needs prior to acquiring the exchanges.[^39] We,
    therefore, deny Vtel's request for increased support for 1999.

15. For the reasons stated above, we grant the petitioners' requests to
    lift the individual caps placed on their high-cost loop support
    imposed as part of the grant of study area waivers, effective from
    January 1, 2000.[^40] We also grant the petitioners' request that we
    remove all remaining individual caps on high-cost loop support. We
    deny the additional relief requested by Interstate and its
    co-petitioners, Western, and Vtel.

# ordering clauses

16. Accordingly, IT IS ORDERED, pursuant to sections 4, 5, 201, 202,
    219-220, and 254 of the Communications Act of 1934, as amended, 47
    U.S.C. §§ 154, 155, 201, 202, 219-220, 254, and sections 1.3, 0.91,
    and 0.291 of the Commission\'s rules, 47 C.F.R. §§ 1.3, 0.91, and
    0.291, that the petitioners' requests for removal of individual caps
    on high-cost loop support imposed as part of the grant of study area
    waivers ARE GRANTED, as described herein.

17. IT IS FURTHER ORDERED, pursuant to sections 4, 5, 201, 202, 219-220,
    and 254 of the Communications Act of 1934, as amended, 47 U.S.C. §§
    154, 155, 201, 202, 219-220, 254, and sections 1.3, 0.91, and 0.291
    of the Commission\'s rules, 47 C.F.R. §§ 1.3, 0.91, and 0.291, that
    all remaining individual caps on high-cost loop support imposed as
    part of the grant of study area waivers ARE HEREBY REMOVED, as
    described herein.

18. IT IS FURTHER ORDERED, pursuant to sections 4, 5, 201, 202, 219-220,
    and 254 of the Communications Act of 1934, as amended, 47 U.S.C. §§
    154, 155, 201, 202, 219-220, 254, and sections 1.3, 0.91, and 0.291
    of the Commission\'s rules, 47 C.F.R. §§ 1.3, 0.91, and 0.291, that
    the requests of Interstate Telecommunications Cooperative, Inc., its
    co-petitioners, and Western Telephone Company for uncapped high-cost
    loop support for 1998 and 1999 ARE DENIED.

19. IT IS FURTHER ORDERED, pursuant to sections 4, 5, 201, 202, 219-220,
    and 254 of the Communications Act of 1934, as amended, 47 U.S.C. §§
    154, 155, 201, 202, 219-220, 254, and sections 1.3, 0.91, and 0.291
    of the Commission\'s rules, 47 C.F.R. §§ 1.3, 0.91, and 0.291, that
    the request of Vermont Telephone Company, Inc. for increased
    high-cost loop support for 1999 IS DENIED.

    FEDERAL COMMUNICATIONS COMMISSION

Carol E. Mattey, Deputy Chief

Common Carrier Bureau

**APPENDIX 1**

**[List of Petitions]{.underline}**

Accent Communications, Inc., Armour Independent Telephone Company,
Bridgewater-Canistota Independent Telephone Company, James Valley
Cooperative Telephone Company, RC Communications, Inc., Roberts County
Telephone Cooperative Association, Request to Remove Universal Service
Caps, CC Docket No. 96-45 (October 25, 1999) (Accent Petition)

Accipiter Communications, Inc., Request for Removal of Waiver Condition
Consistent with Commission Policy, AAD 96-35, CC Docket No. 96-45
(November 3, 1999) (Accipiter Petition)

Alenco Communications, Inc., Request for Removal of Waiver Condition
Consistent with Commission Policy, AAD 95-139, CC Docket No. 96-45
(October 15, 1999) (Alenco Petition)

Alpine Communications, L.C., Arapahoe Telephone Company, Great Plains
Communications, Inc., Kennebec Telephone Company, Inc., The Nebraska
Central Telephone Company, and Western Telephone Company, Request to
Remove Universal Service Caps, CC Docket No. 96-45 (October 25, 1999)
(Alpine Petition)

Brazos Telecommunications, Inc. and Brazos Telephone Cooperative, Inc.,
Request for Removal of Waiver Condition Consistent with Commission
Policy, AAD 94-112, CC Docket No. 96-45, (November 5, 1999) (Brazos
Petition)

Cap Rock Telephone Cooperative, Inc., Request for Removal of Waiver
Condition Consistent with Commission Policy, AAD 95-139, CC Docket No.
96-45 (October 22, 1999) (Cap Rock Petition)

Cass County Telephone Company, Request for Removal of Waiver Condition
Consistent with Commission Policy, AAD 95-62, CC Docket No. 96-45
(November 22, 1999) (Cass Petition)

Central Texas Telephone Cooperative, Inc., Request for Removal of Waiver
Condition Consistent with Commission Policy, AAD 95-139, CC Docket No.
96-45 (October 12, 1999) (Central Texas Petition)

Columbine Telephone Company, Inc. and Silver Star Telephone Company,
Inc., Request to Remove Universal Service Caps, CC Docket No. 96-45
(October 22, 1999) (Columbine Petition)

Dickey Rural Telephone Cooperative, Dickey Rural Communications, Inc.,
Gilby Telephone Company, Griggs County Telephone Company, Moore &
Liberty Telephone Company, North Dakota Telephone Company, Northwest
Communications Cooperative, Red River Telecom, Inc., Turtle Mountain
Communications, Inc., United Telephone Mutual Aid Cooperative, and York
Telephone Company, Request for Removal of Waiver Condition Consistent
with Commission Policy, AAD 95-72, CC Docket No. 96-45 (November 5,
1999) (Gilby Petition)

Ganado Telephone Co., Inc., Request for Removal of Waiver Condition
Consistent with Commission Policy, AAD 95-139, CC Docket No. 96-45,
(October 26, 1999) (Ganado Petition)

Guadalupe Valley Telephone Cooperative, Inc., Request for Removal of
Waiver Condition Consistent with Commission Policy, AAD 95-139, CC
Docket No. 96-45 (October 7, 1999) (Guadalupe Petition)

Interstate Telecommunications Cooperative, Inc. and Interstate Telephone
Company, Inc., Hanson Communications, Inc., Fort Randall Telephone
Company, and Mt. Rushmore Telephone Company, Midstate Telephone Company
and Heartland Communications, Inc., Mobridge Telecommunications Company,
Hanson County Telephone, Inc. and Hanson Communications, Inc. dba McCook
Telecom, Splitrock Telecom Cooperative, Inc. and Splitrock Properties,
Inc., Petition for Removal of Individual Caps on High Cost Loop Support,
CC Docket No. 96-45 (November 17, 1999) (Interstate Petition)

Lincolnville Telephone Company and Tidewater Telecom, Inc., Request for
Removal of Waiver Condition Consistent with Commission Policy, AAD
96-70, CC Docket No. 96-45 (November 2, 1999) (Lincolnville Petition)

Maine Telephone Company, Northland Telephone Company of Maine, Inc.,
Sidney Telephone Company, and Standish Telephone Company, Request to
Remove Universal Service Caps, CC Docket No. 96-45 (October 28, 1999)
(Maine Telephone Petition)

Mid-Maine Telecom, Inc., Request for Removal of Waiver Condition
Consistent with Commission Policy, AAD 96-70, CC Docket No. 96-45
(October 8, 1999) (Mid-Maine Petition)

Oregon-Idaho Utilities, Inc., Request for Removal of Waiver Condition
Consistent with Commission Policy, AAD 93-20, CC Docket No. 96-45
(October 7, 1999) (Oregon-Idaho Petition)

Ozark Telephone Company, Request for Removal of Waiver Condition
Consistent with Commission Policy, AAD 95-62, CC Docket No. 96-45
(November 1, 1999) (Ozark Petition)

Peoples Telephone Cooperative, Inc., Request for Removal of Waiver
Condition Consistent with Commission Policy, AAD 95-139, CC Docket No.
96-45 (October 26, 1999) (Peoples Petition)

Pioneer Telephone Cooperative, Inc., Request for Removal of Waiver
Condition Consistent with Commission Policy, AAD 94-108, CC Docket No.
96-45 (November 5, 1999) (Pioneer Petition)

Roosevelt County Rural Telephone Cooperative, Inc., Request for Removal
of Waiver Condition Consistent with Commission Policy, AAD 95-82, CC
Docket No. 96-45 (November 1, 1999) (Roosevelt Petition)

San Carlos Apache Telecommunications Utility, Inc., Request for Removal
of Waiver Condition Consistent with Commission Policy, AAD 96-52, CC
Docket No. 96-45 (October 20, 1999) (San Carlos Petition)

Santa Rosa Telephone Cooperative, Inc., Request for Removal of Waiver
Condition Consistent with Commission Policy, AAD 94-111, CC Docket No.
96-45 (November 5, 1999) (Santa Rosa Petition)

Sunflower Telephone Company, Inc. and Bluestem Telephone Company, S&T
Telephone Cooperative Association, Inc. and S&T Communications of
Dighton, Inc., Golden Belt Telephone Association, Inc., Northeast
Missouri Rural Telephone Company and Modern Telecommunications Company,
Petition for Removal of Individual Caps on High Cost Loop Support, CC
Docket No. 96-45 (November 4, 1999) (Sunflower Petition)

West River Cooperative Telephone Company and State Line
Telecommunications, Inc., Request for Removal of Waiver Condition
Consistent with Commission Policy, AAD 95-124, CC Docket No. 96-45
(November 12, 1999) (West River Petition)

Winnebago Cooperative Telephone Association, Request for Removal of
Waiver Condition Consistent with Commission Policy, AAD 94-95, CC Docket
No. 96-45 (October 25, 1999) (Winnebago Petition)

[^1]: A complete list of the above-captioned petitions is attached
    hereto as Appendix 1.

[^2]: *Petitions for Waiver and Reconsideration Concerning Section
    36.611, 36.612, 61.41(c)(2), 69.605(c), 69.3(e)(11) and the
    Definition of "Study Area" Contained in Part 36 Appendix-Glossary of
    the Commission's Rules Filed by Copper Valley Telephone, Inc., et
    al.*, AAD Nos. 93-93, 95-30, 95-72, 97-21, 97-23, 07-117, 98-44,
    98-53, Memorandum Opinion and Order, DA 99-1845 (Com. Car. Bur.
    Sept. 9, 1999) (*September 9, 1999 Order*).

[^3]: Rural carriers receive high-cost loop support when their reported
    average cost per loop exceeds the nationwide average loop cost.
    *See* 47 C.F.R. §§ 36.601-36.631.

[^4]: 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*, CC Docket Nos. 78-72,
    80-286, Recommended Decision and Order, 49 Fed. Reg. 48325, 48337
    (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*, CC Docket
    No. 80-286, Notice of Proposed Rulemaking, 5 FCC Rcd 5974 (1990)
    (*Study Area NPRM*).

[^5]: *See* 47 C.F.R. § 1.3; Part 36 app.

[^6]: *See 1984 Joint Board Recommended Decision* at 48337-38; *see also
    Study Area NPRM* at 5975.

[^7]: *Id.*

[^8]: *See US West Communications, Inc., and Eagle Telecommunications,
    Inc., Joint Petition for Waiver of the definition of \"Study Area\"
    Contained in Part 36, Appendix-Glossary of the Commission\'s Rules*,
    AAD 94-27, Memorandum Opinion and Order, 10 FCC Rcd 1771, 1774
    (1995) (*Eagle Telecommunications 1995 Study Area Waiver*) (citing
    *Nevada Bell and Oregon-Idaho Utilities, Inc., Joint Petition for
    Waiver of the Definition of \"Study Area\" Contained in the Part 36
    Appendix-Glossary of the Commission\'s Rules*, AAD 93-20, Memorandum
    Opinion and Order, 9 FCC Rcd 5236, 5238 (Com. Car. Bur. 1994)
    (*Oregon-Idaho Utilities Study Area Waiver*)).

[^9]: The selling carrier\'s support might not be reduced, for instance,
    because it may not have been receiving any form of high-cost
    support. Because high-cost loop support is based on costs averaged
    throughout a study area, a carrier could be low-cost for a
    particular study area where it is operating several low-cost
    exchanges and a few high-cost exchanges.

[^10]: *See Delta Telephone Co., Inc., Petition for Waiver of the
    Definition of \"Study Area\" in Part 36 Appendix-Glossary of the
    Commission Rules*, AAD 90-20, Memorandum Opinion and Order, 5 FCC
    Rcd 7100 (Com. Car. Bur. 1990) (high-cost loop support payments grew
    from \$82,500 in 1991 to \$445,700 in 1993); *U S WEST and Gila
    River Telecomm., Inc., Petition for Waiver of the Definition of
    \"Study Area\" in Part 36 Appendix-Glossary of the Commission\'s
    Rules*, AAD 91-2, Memorandum Opinion and Order, 7 FCC Rcd 2161 (Com.
    Car. Bur. 1992) (Gila River estimated 1992 high-cost loop support
    would be \$169,155, yet actual 1992 payment was \$390,993, and the
    1995 payment was approximately \$750,000).

[^11]: The Joint Board recommended, and the Commission adopted, interim
    rules that limit the rate of growth of the high-cost loop support
    mechanism to the rate of growth in the total number of working loops
    nationwide. *See generally* *Amendment of Part 36 of the
    Commission\'s Rules and Establishment of a Joint Board*, CC Docket
    No. 80-286, Recommended Decision, 9 FCC Rcd 334 (1993); *Amendment
    of Part 36 of the Commission\'s Rules and Establishment of a Joint
    Board,* CC Docket No. 80-286, Report and Order, 9 FCC Rcd 303
    (1993). The Commission extended these interim rules through July 1,
    1996. *Amendment of Part 36 of the Commission\'s Rules and
    Establishment of a Joint Board*, CC Docket No. 80-286, Report and
    Order, 11 FCC Rcd 2538 (1995), summarized in 60 Fed. Reg. 65011
    (1995). The Joint Board recommended, and the Commission adopted, an
    extension of the interim cap until final universal service rules
    become effective. *Federal-State Joint Board on Universal Service*,
    CC Docket No. 96-45, Recommended Decision, 11 FCC Rcd 7928 (1996)*;
    Federal-State Joint Board on Universal Service,* CC Docket No.
    96-45, Report and Order, 11 FCC Rcd 7920 (1996).

[^12]: *See, e.g.,* *Oregon-Idaho Utilities Study Area Waiver*, 9 FCC
    Rcd at 5238; *US West Communications, Inc. and Wiggins Telephone
    Association, Joint Petition for Waiver of \"Study Area\" Contained
    in Part 36, Appendix-Glossary of the Commission\'s Rules*, AAD
    92-70, Memorandum Opinion and Order, 8 FCC Rcd 6229, 6230 (Com. Car.
    Bur. 1993).

[^13]: Carriers that submitted petitions for study area waivers were
    required to submit an estimate of the amount of support they would
    be eligible to receive from the high-cost loop support mechanism
    following the completion of necessary and planned upgrades in the
    new study area. The carrier's own estimate was then used to
    establish a cap, limiting the carrier\'s draw from the high-cost
    loop support mechanism.

[^14]: Because of the operation of the indexed cap, any study area
    reconfiguration that increased the high-cost loop support of one
    recipient often reduced that of other recipients. In evaluating
    whether a study area change would have an adverse impact on the
    distribution or level of the high-cost loop support fund, the
    Commission determined that a \"one-percent\" guideline should be
    applied to study area waivers filed after January 5, 1995. Under
    this guideline, no study area waiver was granted if it resulted in
    an annual aggregate shift in high-cost loop support in an amount
    equal to or greater than one percent of the total high-cost loop
    support fund, unless the parties demonstrated an extraordinary
    public interest benefit. To prevent carriers from evading this
    limitation by disaggregating a single large sale of exchanges into a
    series of smaller transactions that in the aggregate have the same
    effect on the high-cost loop support fund, the Commission further
    required that the \"one-percent\" guideline be applied to all
    exchange transfers where either carrier was a party as a purchaser
    or seller and where a study area waiver request was submitted and
    granted within the previous twelve months. *See Eagle
    Telecommunications 1995 Study Area Waiver*, 10 FCC Rcd at 1774; *US
    West Communications, Inc., and Eagle Telecommunications, Inc., Joint
    Petition for Waiver of \"Study Area\" Contained in Part 36,
    Appendix-Glossary of the Commission\'s Rules and Petition for Waiver
    of Section 61.41(c) of the Commission\'s Rules*, AAD 94-27,
    Memorandum Opinion and Order on Reconsideration, 12 FCC Rcd 4644
    (1997).

[^15]: *See* Copper Valley Telephone, Inc., Midvale Telephone Exchange,
    Table Top Telephone Company, and US West Communications, Inc.,
    Petition for Reconsideration, AAD 93-93 (March 23, 1995) and Copper
    Valley Telephone, Inc., Amended Petition for Clarification and/or
    Reconsideration, AAD 93-93 (May 21, 1999); BEK Communications I,
    Inc., CTC Communications, Inc., Dakota Central Telecom I, Inc., and
    West River Communications, Inc., Petition for Reconsideration, AAD
    95-72 (May 19, 1995); Champlain Valley Telecom, Inc., and Northland
    Telephone Company of Vermont, Petitions for Reconsideration, AAD
    95-30 (July 15, 1996); Table Top Telephone Company, Petition for
    Waiver, AAD 97-21 (December 23, 1996); and Midvale Telephone
    Exchange, Petition for Waiver, AAD 97-23 (January 16, 1997); BEK
    Communications I, Inc.; CTC Communications, Inc.; Dakota Central
    Telecom I, Inc.; Dickey Rural Communications, Inc.; Dickey Rural
    Telephone Cooperative; Gilby Telephone Company; Griggs County
    Telephone Company; Inter-Community Telephone Company II, Inc.; Moore
    & Liberty Telephone Company; Northwest Communications Cooperative;
    Red River Telecom, Inc.; RTC II. Inc.; Turtle Mountain
    Communications, Inc.; US West Communications, Inc.; United Telephone
    Mutual Aid Cooperative; West River Communications, Inc.; and York
    Telephone Company, Expedited Request for Elimination or Modification
    of Waiver Conditions, AAD 97-117 (December 22, 1997); Tularosa Basin
    Telephone Company, Expedited Request for Elimination or Modification
    of Waiver Conditions, AAD 98-44 (February 27, 1998); Sanborn
    Telephone Cooperative; Sancom, Inc.; Stockholm-Strandburg Telephone
    Company; Sully Buttes Telephone Cooperative, Inc.; Valley Cable &
    Satellite Communications, Inc.; Valley Telecommunications
    Cooperative Association, Inc.; and Venture Communications, Inc.,
    Conditional Request to Raise Universal Service Caps, AAD 98-48
    (March 27, 1998); Albion Telephone Company; BPS Telephone Company,
    Inc.; Cambridge Telephone Co., Inc.; Fremont Telecom; Leaco Rural
    Telephone Cooperative, Inc.; Midvale Telephone Exchange, Inc.;
    Rockland Telephone Company, Inc.; South Central Communications,
    Inc.; Table Top Telephone Co., Inc.; Tularosa Basin Telephone
    Company, Inc.; United Utilities, Inc.; and West River Telephone
    Cooperative, Inc., Petition for Expected Elimination or Modification
    of Waiver Conditions, AAD 98-53 (April 3, 1998).

[^16]: *September 9, 1999 Order* at para. 10.

[^17]: *Id.*

[^18]: *Id*.

[^19]: *See, e.g.,* Brazos Petition at 2; Central Texas Petition at 1;
    Dickey Petition at 2; Guadalupe Valley Petition at 1; Lincolnville
    Petition at 1-2; Mid-Maine Petition at 1; Oregon-Idaho Petition at
    1; Ozark Petition at 1; Pioneer Petition at 2; Peoples Petition at
    1; San Carlos Petition at 1; Santa Rosa Petition at 1-2; West River
    Petition at 1-2; Winnebago Petition at 1-2. Petitioners also request
    that, to the extent the Commission does not grant the petitions
    before January 1, 2000, the Commission should make the order
    effective from January 1, 2000. *See, e.g.,* Accent Petition at
    10-11; Alpine Petition at 10-11; Columbine Petition at 8-9; Ex Parte
    Presentation of Accent Communications, Inc., et al., CC Docket No.
    96-45 (April 11, 2000); Interstate Petition at 12-13; Sunflower
    Petition at 7.

[^20]: *See, e.g.,* Alenco Petition at 2; Accipiter Petition at 2;
    Brazos Petition at 2; Cap Rock Petition at 2; Cass Petition at 2;
    Central Texas Petition at 2; Dickey Petition at 2; Ganado Petition
    at 2; Mid-Maine Petition at 2; Pioneer Petition at 2; Roosevelt
    Petition at 2. Oregon-Idaho requests that the Commission lift all
    remaining high-cost loop support caps that have been in effect for
    three or more years. *See* Oregon-Idaho Petition at 2.

[^21]: *Rural Telephone Companies Seek Removal of Individual Caps Placed
    on High Cost Loop Support*, Public Notice, DA 00-121 (rel. Jan. 24,
    2000).

[^22]: *See* CenturyTel, Inc. Comments at 3; GVNW Consulting, Inc.
    Comments at 1; John Staurulakis, Inc. (JSI) Comments at 2; National
    Exchange Carrier Association, Inc. (NECA) Comments at 1; National
    Rural Telecom Association (NRTA) and the Organization for the
    Promotion and Advancement of Small Telecommunications Companies
    (OPASTCO) Comments at 6; National Telephone Cooperative Association
    (NTCA) Comments at 3; TelAlaska, Inc. (TelAlaska) Comments at 1;
    Rural Telephone Companies Reply Comments at 2-3.

[^23]: *See* Interstate Petition at 10-11; Alpine Petition at 9-10.

[^24]: Champlain Valley Telephone, Inc., Northland Telephone Company of
    Vermont and Vermont Telephone Company, Amendment to Expedited
    Request for Modification of Waiver Conditions, CC Docket No. 96-45
    (filed Oct. 12, 1999).

[^25]: JSI Comments at 5.

[^26]: *See, e.g.,* Accipiter Petition at 4; Brazos Petition at 4; Cap
    Rock Petition at 4; Cass Petition at 4; Central Texas Petition at 4;
    Dickey Petition at 5; Ganado Petition at 4; Guadalupe Valley
    Petition at 4; Mid-Maine Petition at 4; Pioneer Petition at 4;
    Roosevelt Petition at 4.

[^27]: *See, e.g.,* Accipiter Petition at 5; Brazos Petition at 4-5; Cap
    Rock Petition at 5; Cass Petition at 4-5; Central Texas Petition at
    5; Dickey Petition at 5-6; Ganado Petition at 5; Guadalupe Valley
    Petition at 5; Mid-Maine Petition at 5; Oregon-Idaho Petition at 6;
    Pioneer Petition at 5; Roosevelt Petition at 4-5.

[^28]: *See* National Exchange Carrier Association Universal Service
    Fund 1999 Submission of 1998 Study Results, filed October 1, 1999.

[^29]: *See September 9, 1999 Order* at paras. 11, 14.

[^30]: *See* Alpine Petition at 10; Interstate Petition at 12. Average
    schedule companies are those incumbent LECs that receive
    compensation for use of their interstate common carrier services on
    the basis of formulas that are designed to simulate the
    disbursements that would be received by a cost company that is
    representative of average schedule companies. *See* 47 C.F.R. §
    69.606(a). Average schedule companies are able to avoid the
    administrative burden of performing interstate cost studies. Section
    69.605(c) of the Commission's rules provides, in pertinent part,
    that "a telephone company that was participating in average schedule
    settlements on December 1, 1982, shall be deemed an average schedule
    company." 47 C.F.R. § 69.605.

[^31]: *See* Accent Communications, Inc. et al., Joint Petition for
    Waiver of the Definition of "Study Area" Contained in Part 36,
    Appendix Glossary, and Sections 61.41(c) and (d), 69.3(e)(11) and
    69.605(c) of the Commission's Rules, AAD 95-124, at 33-34 (filed
    Aug. 14, 1995).

[^32]: *See Accent Communications, Inc. et al., Joint Petition for
    Waiver of the Definition of "Study Area" Contained in Part 36,
    Appendix Glossary, and Sections 61.41(c) and (d), 69.3(e)(11) and
    69.605(c) of the Commission's Rules*, AAD 95-124, Memorandum Opinion
    and Order, 11 FCC Rcd 11513, 11518-21 (1996).

[^33]: *See* Universal Service Fund 1999 Submission of 1998 Study
    Results by the National Exchange Carrier Association, Inc. (filed
    Oct. 1, 1999).

[^34]: *See* Alpine Petition at 10; Interstate Petition at 12.
    Interstate, its co-petitioners and Western argue that they are
    similarly situated to the parties recently relieved of individual
    caps on high-cost loop support associated with the grant of study
    area waivers. *See* Alpine Petition at 5; Interstate Petition at 9
    (citing*,* e.g., *McElroy Electronics Corp. v. FCC*, 990 F.2d 1351,
    1365 (D.C. Cir. 1993) ("we remind the Commission of the importance
    of treating similarly situated parties alike or providing adequate
    justification for disparate treatment")).

[^35]: Champlain Valley Telephone, Inc., Northland Telephone Company of
    Vermont and Vermont Telephone Company, Expedited Request for
    Modification of Waiver Conditions, AAD 95-30, at 1-2 (March 23,
    1999) (*Vtel Request*). In its petition, Vtel states that its "cost
    per loop has increased due to upgrades made in its
    telecommunications infrastructure and an increase in the number of
    Vtel's working loops." *Id.* at 3. Vtel also states that it supplied
    the Commission with inaccurate cost allocation estimates used in
    determining caps on the high-cost loop support of Vtel, Champlain
    Valley Telecom, Inc. (Champlain), and Northland Telephone Company
    (Northland). *Id.*

[^36]: *Champlain Valley Telecom, Inc., Northland Telephone Company of
    Vermont, and Vermont Telephone Company, Inc. Concerning the
    Definition of "Study Area" in the Part 36 Appendix-Glossary of the
    Commission's Rules*, AAD 95-30, Memorandum Opinion and Order, 11 FCC
    Rcd 7111, 7115, 7119 (Acc. & Aud. Div. 1996) (*Vermont Study Area
    Waiver*) (citing Joint Petition at Exhibit 2). Vtel, Champlain, and
    Northland estimated that their required annual high-cost loop
    support would be \$1,045,558, \$1,819,419, and \$547,800,
    respectively. *Id.* at 7115 n. 21.

[^37]: Vtel itself concedes that the Bureau relied on estimates provided
    by Vtel, Champlain and Northland in establishing their capped
    high-cost loop support amounts. *Vtel Request* at 2.

[^38]: *Vermont Study Area Waiver* at 7119.

[^39]: *See, e.g., September 9, 1999 Order* at para. 14.

[^40]: We do not address certain commenters' request that the Commission
    lift the overall cap on the high-cost support fund. *See* Montana
    Telecommunications Association (MTA) Comments at 3; NRTA/Opastco
    Comments at 6; NTCA Comments at 4. The removal of the overall cap on
    the high-cost support fund is outside the scope of the petitioners'
    request for removal of individual caps on high-cost loop support.
    *See First Report and Order* at 8889, 8917-8918.