**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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| Sacred Wind Communications, Inc. | ** |                              |
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| and                              | *  |                              |
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| Qwest Corporation                | ** |                              |
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| Joint Petition for Waiver of the | *  |                              |
| Definition of "Study Area"       | *) |                              |
| Contained in Part 36,            | ** |                              |
| Appendix-Glossary of the         |    |                              |
| Commission's Rules               | *  |                              |
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| Sacred Wind Communications, Inc. | ** |                              |
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| Related Waivers of Parts 36, 54, | *  |                              |
| and 69 of the Communication's    | *) |                              |
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**ORDER**

**Adopted: August 15, 2006 Released: August 15, 2006**

By the Chief, Wireline Competition Bureau:

# INTRODUCTION

1.  In this Order, we grant a joint request from Sacred Wind
    Communications, Inc. (Sacred Wind) and Qwest Corporation (Qwest)
    (collectively, Petitioners) for a waiver of the study area boundary
    freeze codified in the Appendix-Glossary of Part 36 of the
    Commission's rules.[^1] We also grant Sacred Wind waivers of certain
    Commission rules to enable Sacred Wind to immediately receive
    high-cost universal service support as provided in this Order. In
    addition, we grant Sacred Wind's request for waiver of the
    Commission's rules so that it may participate immediately in the
    National Exchange Carrier Association (NECA) pools and tariffs.
    Finally, we waive section 54.400(e) of the Commission's rules, to
    the extent necessary, to permit Sacred Wind and other eligible
    telecommunications carriers (ETCs) serving Sacred Wind's service
    area to offer enhanced Lifeline and Link-Up benefits to qualified
    residents.

# background

2.  *Petition*. On March 30, 2006, Sacred Wind and Qwest filed a joint
    petition for waiver of the definition of "study area" contained in
    the Part 36 Appendix-Glossary of the Commission's rules so that
    Sacred Wind may establish a new study area in the state of New
    Mexico.[^2] Sacred Wind was established in 2004 to provide advanced
    and basic telecommunications services to the Navajo people on both
    reservation lands and nearby lands in the state of New Mexico.[^3]
    Qwest is an interstate access price cap incumbent local exchange
    carrier (LEC) that owns and operates approximately 800,000 access
    lines in New Mexico.[^4] Sacred Wind is acquiring approximately
    2,300 access lines from Qwest that are on or near the Navajo
    reservation in New Mexico.[^5] A study area waiver will permit Qwest
    to remove the approximately 2,300 access lines from its New Mexico
    study area and permit Sacred Wind to establish a new study area in
    New Mexico.

3.  Sacred Wind also seeks waiver of certain Commission rules so that it
    may receive immediate federal high-cost universal service support
    and enhanced Lifeline and Link-Up support for serving eligible
    residents of near-Tribal lands.[^6] Specifically, Sacred Wind
    requests waivers of sections 36.611, 36.612, 69.2(hh), 69.3(e)(6),
    and 69.3(e)(11) of the Commission's rules.[^7] Waiver of sections
    36.611 and 36.612 of the Commission's rules would enable Sacred Wind
    to receive immediate high-cost loop support payments based on
    projected costs until historical costs become available.[^8] Waiver
    of sections 69.2(hh), 69.3(e)(6), and 69.3(e)(11) would permit
    Sacred Wind to become a member of NECA and to participate
    immediately in the NECA pools and tariffs.[^9] In addition, Sacred
    Wind requests waivers of sections 54.301(b), 54.314(d), and
    54.903(a)(3) to allow it to receive immediate local switching
    support (LSS) and interstate common line support (ICLS).[^10] In
    addition, Sacred Wind posits that section 54.305 of the Commission's
    rules does not apply to the instant transaction or, in the
    alternative, that the Commission should waive section 54.305 in
    order that Sacred Wind may receive high-cost support based on the
    average cost of all its lines.[^11] Sacred Wind also requests that
    the Commission waive its stay of the eligibility requirements for
    Tier 4 Lifeline and Link-Up support in section 54.400(e) of the
    Commission's rules as applied to qualifying low-income consumers
    living within its service area on land that qualifies as "near
    reservations."[^12] Sacred Wind further asks that we grant, on our
    own motion, any other waivers needed to expedite its receipt of
    universal service support and participation in NECA pools and
    tariffs.[^13] The Wireline Competition Bureau (Bureau) released a
    public notice on April 26, 2006, seeking comment on the petition for
    waivers.[^14]

4.  *Standard for Waiver*. Generally, the Commission may waive its rules
    for good cause shown.[^15] The Commission may exercise its
    discretion to waive a rule where the particular facts make strict
    compliance inconsistent with the public interest.[^16] In addition,
    the Commission may take into account considerations of hardship,
    equity, or more effective implementation of overall policy on an
    individual basis.[^17] 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.

# discussion

## Study Area Waiver

5.  A study area is a geographic segment of an incumbent LEC's telephone
    operations. The Commission froze all study area boundaries effective
    November 15, 1984, to prevent the establishment of high-cost
    exchanges within existing service territories as separate study
    areas merely to maximize high-cost support.[^18] A carrier must
    therefore apply to the Commission for a waiver of the study area
    boundary freeze if it wishes to sell or purchase additional
    exchanges.[^19]

6.  Section 54.305(b) of the Commission's rules provides that a carrier
    acquiring exchanges from an unaffiliated carrier shall receive the
    same per-line levels of high-cost loop support and local switching
    support for which the acquired exchanges were eligible prior to
    their transfer.[^20] Section 54.305(b) is meant to discourage
    carriers from transferring exchanges merely to increase their share
    of high-cost universal service support.[^21] Qwest currently
    receives interstate access support (IAS), but does not receive any
    other federal high-cost support in New Mexico.[^22]

7.  In evaluating petitions seeking a waiver of the rule freezing study
    area boundaries, the Commission traditionally has applied a
    three-prong standard: (1) the change in study area boundaries must
    not adversely affect the universal service fund; (2) the state
    commission having regulatory authority over the transferred
    exchanges does not object to the transfer; and (3) the transfer must
    be in the public interest.[^23] In evaluating whether a study area
    boundary change will have an adverse impact on the universal service
    fund, we analyze whether a study area waiver will result in an
    annual aggregate shift in an amount equal to or greater than one
    percent of high-cost support in the most recent calendar year.[^24]
    The Commission began applying the one-percent guideline in 1995 to
    limit the potential adverse impact of exchange sales on the overall
    fund, also recognizing that, because high-cost loop support is
    capped, an increase in the draw of any fund recipient necessarily
    reduces the amounts that other LECs receive from the fund.[^25]
    After the Commission adopted section 54.305, it continued to apply
    the one-percent guideline to determine the impact on the universal
    service fund in light of the adoption of safety valve support and
    ICLS.[^26]

8.  We find that good cause exists to waive the study area boundary
    freeze codified in the Appendix-Glossary of Part 36 of the
    Commission's rules to permit Qwest to alter the boundaries of its
    existing New Mexico study area by removing the approximately 2,300
    access lines that it is transferring to Sacred Wind. We also find
    that good cause exists to permit Sacred Wind to establish a new
    study area in New Mexico. For the reasons discussed below, we
    conclude that the Petitioners have satisfied the three-prong
    standard that the Commission applies to determine whether a study
    area waiver is warranted.

9.  *[Public Interest Analysis]{.underline}*. We are persuaded that the
    public interest is served by a waiver of the study area freeze rule
    to permit Qwest to remove from its New Mexico study area the 2,300
    lines and to permit Sacred Wind to establish a new study area in New
    Mexico. The area in which Sacred Wind is authorized to provide
    telecommunications service is located on approximately 2,000,000
    acres that is almost exclusively within Navajo Nation Lands.[^27]
    The Commission has recognized that Native American communities have
    the lowest reported level of telephone subscribership in
    America.[^28] Such low penetration is particularly severe in Sacred
    Wind's service territory, which has only a 28 percent penetration
    rate. This rate is not only substantially below the current
    nationwide penetration rate but also lags the 38 percent penetration
    rate for the Navajo Nation as a whole.[^29] In addition, the
    Commission has reported Native American households within the state
    of New Mexico have the second lowest telephone penetration rate in
    the Nation.[^30]

10. Sacred Wind states that it is committed to increasing significantly
    the quality of basic and advanced services provided to the Navajo
    Nation and the penetration rate in its service area, and to ensuring
    that such services are provided at affordable rates.[^31] In
    particular, Sacred Wind plans to upgrade existing telecommunications
    services and expand service by deploying a new fixed wireless
    backbone that will provide services to remote areas on and near the
    Navajo reservation.[^32] As a result, Sacred Wind intends to
    increase the penetration rate to 90 percent, from about 2,300 lines
    to over 9,000 lines.[^33] In addition, Sacred Wind will deploy
    telecommunications infrastructure necessary to offer advanced
    services in communal locales frequented by the Navajo people.[^34]
    Further, the New Mexico Commission found that Sacred Wind has the
    financial and technical qualifications to provide services to its
    new study area.[^35] Based on the totality of these facts, we
    conclude that the transfer of the approximately 2,300 lines and
    related facilities to Sacred Wind will serve the public interest by,
    among other things, providing increased access to telecommunications
    for the residents of Sacred Wind's service territory.

11. *[Impact on the Universal Service Fund]{.underline}*. We conclude
    that the universal service fund will not be adversely affected by
    granting this study area waiver. Sacred Wind estimates that it will
    initially be eligible for approximately \$2.1 million in high-cost
    support in 2006, which will grow to approximately \$6.6 million in
    2010.[^36] Sacred Wind also estimates that as a result of this
    transaction its ICLS will be approximately \$3,300,000 for 2007, its
    first full calendar year of operation.[^37] On the other hand, Qwest
    estimates that its IAS will be reduced by \$25,308 annually as a
    result of this transaction.[^38] Although there is a net increase of
    approximately \$5.4 million initially in universal service support
    as a result of this transaction, we find that the unique
    circumstances concerning the extremely low telephone penetration
    rate in this area justify the level of increase in universal service
    support.[^39] We also note that this increase is substantially less
    than one percent of the fund, and thus will not have an adverse
    effect on the universal service fund.[^40]

12. *[Position of State Commission]{.underline}*. On March 21, 2006, the
    New Mexico Public Regulation Commission (New Mexico Commission)
    issued an order approving Sacred Wind's Application for Certificate
    of Operating Authority, Public Convenience and Necessity and
    Designation as an Eligible Telecommunications Carrier.[^41]
    Moreover, the New Mexico Commission supports the proposed study area
    waiver.[^42] Thus, we find that the state commission with regulatory
    authority over the transferred facilities does not object to the
    transfer.

## Waiver of Sections 36.611 and 36.612

13. Sacred Wind also requests a waiver of sections of 36.611 and 36.612
    of the Commission's rules in order to receive immediate high-cost
    loop support payments based on its projected costs.[^43] High-cost
    loop support is calculated using data provided by incumbent LECs
    pursuant to the Commission's cost accounting and data collection
    requirements.[^44] In accordance with section 36.611 of the
    Commission's rules, on July 31 of each year, incumbent LECs file the
    preceding year's loop cost data with NECA.[^45] Each rural carrier's
    high-cost loop support for the following year is based on the
    relationship between the carrier's study area average cost per loop
    and the nationwide average cost per loop, as limited by the indexed
    cap.[^46] Because the cost 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, carriers generally do not receive high-cost
    loop support based on these data until the beginning of the second
    calendar year after the costs are incurred.[^47] As a result,
    carriers without historical data, such as newly established
    incumbent LECs, may wait up to two years before receiving any
    high-cost loop support payments. Under section 36.612 of the rules,
    however, carriers can update their data on a quarterly basis and
    receive support earlier than under section 36.611.[^48]

14. We find that special circumstances warrant a deviation from sections
    36.611 and 36.612 of the Commission's rules, and that it is in the
    public interest to grant Sacred Wind's waiver request so that it may
    receive immediate high-cost loop support.[^49] Sacred Wind plans to
    use the existing copper wire infrastructure purchased from Qwest to
    serve and upgrade service to existing customers and plans to expand
    service to new customers by deploying a new fixed wireless local
    loop network. Sacred Wind claims that that it will efficiently bring
    basic and advanced services comparable to those found in urban areas
    to the Navajo people at affordable rates, and that it will
    significantly increase penetration throughout its service area.[^50]
    Sacred Wind argues that the waivers requested are critical to Sacred
    Wind obtaining the full level of support necessary to enable it to
    perform its network build-out in a timely manner.[^51] Absent
    immediate universal service support, Sacred Wind may have to look to
    its subscribers for cost recovery, many of whom are low-income,
    while waiting for the customary lag in universal service support to
    pass.[^52] Such a result would frustrate Sacred Wind's efforts to
    provide service to unserved and underserved areas within the study
    area. We agree with Sacred Wind that higher local rates would
    discourage subscription to local telephone service and jeopardize
    the provision of service in unserved and underserved remote
    areas.[^53]

15. We find that granting Sacred Wind's request is consistent with the
    Bureau's treatment of similar requests. In particular, requests for
    waiver of sections 36.611 and 36.612 of the Commission's rules have
    been granted only in limited circumstances, primarily to accelerate
    the provision of support to cover costs incurred by new carriers
    initiating or extending service in predominantly unserved
    areas.[^54] In these limited instances, newly established carriers
    lacking historical cost data have been allowed to receive support
    based on estimated costs that are subject to true-up.[^55] Where
    requests for waiver of sections 36.611 and 36.612 have been granted,
    the Bureau determined that delaying the timing of high-cost loop
    support under the circumstances presented 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.[^56] We
    agree with Sacred Wind that denial of immediate high-cost loop
    support could have a similar effect here.

16. We further find that delaying Sacred Wind's high-cost support would
    impair its ability to provide telecommunications services at
    affordable rates and, thus, in these unique circumstances, strict
    application of our rules may not further the goals of section 254 of
    the Communications Act of 1934, as amended (the Act).[^57]
    Accordingly, we grant Sacred Wind a waiver of sections 36.611 and
    36.612 of the Commission's rules to the extent necessary to permit
    it to receive high-cost loop support effective upon release of this
    Order. Sacred Wind's support initially, *i.e.*, for the remainder of
    2006 through December 2007, will be based on projected costs
    followed by quarterly true-ups using actual costs.[^58] This
    methodology is consistent with that used in previous waivers of
    sections 36.611 and 36.612.[^59] We direct Sacred Wind to submit
    quarterly updates of its actual costs in accordance with the
    Commission's rules, so that it may be determined whether adjustments
    for the 2006 and 2007 high-cost loop support amounts are
    necessary.[^60] Payments for periods subsequent to December 2007
    will be based on historic data in accordance with the Commission's
    rules.[^61]

## Waiver of Sections 54.301(b), 54.314(d), 54.903(a)(1) and 54.903(a)(3)

17. Sacred Wind seeks waiver of Commission rules 54.301(b), 54.314(d),
    and 54.903(a)(3) so that it may receive universal service support
    payments immediately. Pursuant to section 54.314 of the Commission's
    rules, a state that desires rural incumbent LECs within its
    jurisdiction to receive universal service support must file an
    annual certification with USAC.[^62] The certification must be filed
    by October 1 of the preceding calendar year for the carrier to
    receive support beginning in the first quarter of the subsequent
    calendar year.[^63] In addition, once a carrier is granted ETC
    status, it must file certain data with USAC before universal support
    payments can begin to flow. Section 54.301(b) of the Commission's
    rules provides that incumbent LECs file certain data with USAC by
    October 1 of each year to receive LSS for the following calendar
    year.[^64] Section 54.903(a)(3) of the Commission's rules provides
    that rate-of-return LECs must file certain cost and revenue data on
    March 31 of each year to receive ICLS support from July 1 of the
    same year through June 30 of the next year**.**[^65] In addition,
    section 54.903(a)(1) of the Commission's rules provides that
    rate-of-return LECs must file line count data by customer class and
    disaggregation zone, if any, annually by July 31.

18. We find that good cause exists to waive the applicable filing
    deadlines in sections 54.301(b), 54.314(d), 54.903(a)(1), and
    54.903(a)(3) in order that Sacred Wind may be eligible to receive
    immediate universal service support.[^66] Having concluded earlier
    that Sacred Wind should be eligible for immediate high-cost loop
    support in order to provide affordable telecommunications services,
    the granting of these waivers is necessary in order for Sacred Wind
    to be eligible to receive all available universal service support as
    of the effective date of this Order.[^67]

19. Specifically, we grant Sacred Wind a waiver of the April 1, 2006
    state certification filing deadline, pursuant to section
    54.314(d)(3), so that it may be eligible to receive immediate LSS
    and high-cost loop support, pursuant to sections 54.301 and Part 36,
    Subpart F.[^68] In addition, we grant Sacred Wind a waiver of the
    October 1, 2005 data filing deadline, pursuant to section 54.301(b),
    so that it may be eligible to receive immediate LSS. We also grant
    Sacred Wind a waiver of the March 31, 2006 filing deadline in
    54.903(a)(3) of the Commission's rules in order that Sacred Wind may
    be eligible for immediate ICLS support.[^69] We also, on our own
    motion, grant Sacred Wind a waiver of the July 31, 2006 filing
    deadline in section 54.903(a)(1) to enable Sacred Wind to be
    eligible to receive immediate ICLS support.

## Applicability or Waiver of Section 54.305

20. As stated above, section 54.305(b) provides that a carrier acquiring
    exchanges from an unaffiliated carrier shall receive the same
    per-line levels of high-cost loop support and local switching
    support for which the acquired exchanges were eligible prior to
    their transfer.[^70] Sacred Wind posits that because it is not
    acquiring exchanges from Qwest, but "merely acquiring 2,300 copper
    lines from Qwest, it is not acquiring an "exchange" per se . . .
    hence the limitations on USF support are not applicable to Sacred
    Wind."[^71] We disagree with Sacred Wind's analysis. We find that,
    for purposes of this transaction, Sacred Wind is acquiring exchange
    facilities and customers from Qwest. The New Mexico Commission, in
    its order approving the transfer of lines, states that the proposed
    acquisition of Qwest's assets, network facilities . . . \[and\]
    customers . . . includes the following Qwest exchanges: Farmington
    West, Farmington Main, Aztec/Bloomfield, Albuquerque West, Grants
    Main, Fort Wingate, Thoreau (Gallup East) and Gallup Main."[^72]
    Sacred Wind, thus, has acquired exchange assets, facilities, and
    customers from Qwest.[^73]

21. Only in rare instances has the Commission found that section 54.305
    does not apply when a study area waiver has been required. For
    example, in *Skyline*, the Commission concluded that section 54.305
    does not apply because the modifications to the Qwest and Verizon
    study areas in the state of Washington did not involve transfers of
    facilities or customers to Skyline Telephone Company.[^74] In
    *Direct Communications*, the Bureau concluded that section 54.305
    does not apply because the acquired lines were owned by a municipal
    utility deemed to be a non-carrier by the Public Service Commission
    of Utah, and that Direct Communications acquired exchanges from an
    entity that was not an eligible communications carrier and,
    therefore, had not been eligible to receive universal service
    support.[^75] Sacred Wind's circumstances are not analogous to those
    in either *Skyline* or *Direct Communications*. Rather, we find that
    Sacred Wind's situation is similar to numerous transactions
    involving study area waivers where an incumbent LEC has acquired
    exchange facilities and customers from another incumbent LEC.[^76]
    Accordingly, Sacred Wind, absent a waiver, is subject to the
    provisions of section 54.305 of the Commission's rules.

22. Although we find that section 54.305 does apply in the instant
    transaction, we find that Sacred Wind's circumstances are similar to
    those in the *Mescalero 54.305 Waiver Order* (*Mescalero II* ) in
    which the Commission granted a waiver of section 54.305 for
    Mescalero Apache Telecom, Inc. (Mescalero).[^77] Like Mescalero,
    Sacred Wind has demonstrated that special circumstances warrant a
    deviation from section 54.305. According to Sacred Wind, the
    percentage of residences on the reservation with telephone service
    is among the lowest in the country at 28 percent, below the 38
    percent penetration for the Navajo Nation as a whole and
    significantly below the current nationwide penetration rate.[^78]
    Sacred Wind further argues that some areas it intends to serve have
    no telephone service at all and that more than 50 percent of the
    population in the proposed service area has income levels at or
    below the poverty level.[^79] We therefore conclude that limiting
    Sacred Wind's support by applying section 54.305 in this instance
    could have the unintended effect of inhibiting the expansion of
    service in unserved and remote areas on or adjacent to reservation
    lands.

23. Allowing a waiver of section 54.305 will also serve the public
    interest. In *Mescalero II*, the Commission found that a waiver of
    section 54.305 served the public interest because it would enable
    Mescalero to address the severe shortage of telecommunications
    services on the Mescalero Apache Reservation in New Mexico; improve
    existing services on the reservation without a significant increase
    in basic service rates; and fulfill Mescalero's commitment to
    provide service to all unserved customers in its first two years of
    operation.[^80] The Commission therefore found that a waiver of
    section 54.305 was consistent with the Commission's goal of
    preserving and advancing universal service and the Commission's
    mandate to ensure that consumers in all regions of the Nation,
    including low-income consumers and those in rural, insular, and
    high-cost areas, have access to telecommunications and information
    services.[^81] Like Mescalero, Sacred Wind plans to remedy the low
    penetration rates and poor telecommunications services on
    reservation and in adjacent lands.[^82] Specifically, Sacred Wind
    plans to upgrade the existing wireline infrastructure through
    deployment of a fixed-wireless local loop network suited to bring
    service to among the most remote regions of the Navajo Nation and to
    overcome the right-of-way obstacles that have previously hindered
    deployment of network facilities in the area.[^83] Sacred Wind
    further states that, like Mescalero, the projected costs of
    providing such services and upgrading the facilities in Sacred
    Wind's service territory are higher than the cost of providing
    service in other parts of New Mexico and higher than the cost of
    serving most subscribers in any other state.[^84] Without a waiver
    of section 54.305, therefore, Sacred Wind's plan to buildout to
    underserved and unserved areas would be hindered. In addition,
    absent a waiver, Sacred Wind's customer penetration rates would also
    be affected.[^85] Accordingly, based on Sacred Wind's
    representations and commitments, we conclude that Sacred Wind has
    demonstrated that the grant of this waiver request serves the public
    interest.[^86]

## Waiver of Sections 69.2(hh), 69.3(e)(6), and 69.3(e)(11) 

24. Sacred Wind states that, should the Commission find that Sacred Wind
    has not acquired an exchange from Qwest, it may conclude that Sacred
    Wind is not a successor or assign of Qwest for purposes of section
    251(h)(1) of the Act.[^87] Sacred Wind, therefore, requests a waiver
    of section 69.2(hh) in order that it may become a member of NECA,
    participate in NECA pools and receive federal universal service
    support.[^88] Section 69.2(hh) of the Commission's rules defines a
    "telephone company" as an incumbent LEC as defined in section
    251(h)(1) of the Act.[^89] Section 251(h)(1) of the Act defines an
    "incumbent local exchange carrier" as a provider of telephone
    exchange service and a member of NECA on the date of enactment of
    the 1996 Act, or a successor or assign of an incumbent LEC.[^90]
    Section 69.3(e)(6) specifies that a new carrier filing a tariff
    under section 69.3(e) must notify NECA not later than March 1 of the
    year the tariff becomes effective that it intends to file such a
    tariff.[^91] Section 69.3(e)(11) requires that any changes in NECA
    common line tariff participation resulting from a merger or
    acquisition of telephone properties are to be made effective on the
    next annual access tariff filing effective date following the merger
    or acquisition.[^92] Sacred Wind requests a waiver of sections
    69.3(e)(6) and 69.3(e)(11) of the Commission's rules to allow it to
    expeditiously participate in NECA's tariff.[^93]

25. Because we find that Sacred Wind is acquiring facilities from Qwest,
    a waiver of section 69.2(hh) is not required.[^94] Sacred Wind, as a
    successor to Qwest, meets the definition of an incumbent LEC
    pursuant to section 251(h)(1) of the Act. We do grant, however,
    Sacred Wind's request for waiver of sections 69.3(e)(6) and
    69.3(e)(11) of the Commission's rules in order to allow the carrier
    to participate immediately in NECA tariffs and pools.

26. We conclude that Sacred Wind has demonstrated that special
    circumstances warrant a waiver of sections 69.3(e)(6) and
    69.3(e)(11) of the Commission's rules. Immediate participation in
    NECA will allow Sacred Wind to avoid the costs of filing and
    maintaining its own company-specific interstate tariffs for only
    2,300 subscribers.[^95] Because Sacred Wind has relatively few
    customers, the costs of preparing company-specific tariffs could be
    disproportionately excessive. Further, without such participation in
    NECA's pools it is likely that Sacred Wind's company-specific
    interstate access rates would be prohibitively high.[^96] Therefore,
    we find that it is in the public interest to permit Sacred Wind and
    its customers to benefit from the cost savings and lower rates
    available through immediate NECA participation.

## Waiver of Section 54.400(e) as Applied to Qualifying Low-Income Consumers on Near-Reservation Lands

27. Sacred Wind requests that the Commission waive its stay of the
    provision of enhanced Lifeline (Tier 4) and Link-Up support to
    eligible residents of near-Tribal Lands.[^97] The Commission's
    Lifeline and Link-Up programs are designed to ensure that telephone
    service is affordable to low-income consumers by providing universal
    service funds to reduce the price consumers pay for basic telephone
    service and initial telephone installation.[^98] In the *Twelfth
    Report and Order*, the Commission identified a number of factors
    that are primary impediments to subscribership on Tribal lands,
    including: the lack of access to, or affordability of
    telecommunications services; the cost of basic service; the cost of
    intrastate toll service; inadequate telecommunications
    infrastructure and the cost of line extensions; and the lack of
    competitive service providers offering alternative
    technologies.[^99] To address these impediments, the Commission
    adopted the enhanced Lifeline and Link-Up programs that are
    specifically targeted to increase subscribership and infrastructure
    development on Tribal lands, where unaffordable service and low
    subscribership are most prevalent.[^100]

28. Specifically, enhanced Lifeline and Link-Up support provides
    qualifying low-income consumers living on Tribal lands additional
    discounts off the monthly cost of telephone service and telephone
    installation.[^101] Under Tier 4 Lifeline support, eligible
    residents of Tribal lands receive up to \$25.00 in additional
    discounts off the monthly cost of telephone service, provided that
    this amount does not bring the basic local residential rate below
    \$1 per month per qualifying low-income subscriber.[^102] Under
    enhanced Link-Up support, eligible residents of Tribal lands receive
    up to an additional \$70.00 off the initial costs of installing
    telephone service.[^103]

29. Section 54.400(e) defines an eligible resident of Tribal lands as "a
    qualifying low-income consumer living on or near a
    reservation."[^104] The term "reservation" means "any federally
    recognized Indian tribe's reservation, pueblo, or colony, including
    former reservations in Oklahoma, Alaska Native regions established
    pursuant to the Alaska Native Claims Settlement Act, and Indian
    allotments."[^105] The term "near reservation" is described as lands
    adjacent or contiguous to reservations and that generally have been
    considered Tribal lands for purposes of other federal programs
    targeted to federally-recognized Indian tribes.[^106] On August 31,
    2000, the Commission stayed implementation of enhanced Lifeline and
    Link-Up benefits to the extent that they apply to qualifying
    low-income consumers living near a reservation.[^107]

30. On March 30, 2005, the Commission granted the petition of Smith
    Bagley, Inc. (SBI) seeking a waiver of section 54.400(e) of the
    Commission's Lifeline and Link-Up eligibility rules to enable
    eligible residents of the Eastern Navajo Agency in the state of New
    Mexico to receive enhanced Lifeline and Link-Up support.[^108] The
    Commission found that SBI demonstrated good cause to justify the
    waiver by demonstrating that special circumstances exist in the
    Eastern Navajo Agency.[^109] For example, depressed economic
    conditions, which the Commission had previously determined is one of
    the primary causes of low subscribership levels, exist in the
    Eastern Navajo Agency.[^110] Sparse population and distances between
    requesting customers in this area make extending wireline telephone
    facilities challenging, if not infeasible, and there are many areas
    within the Eastern Navajo Agency where no telephone service is
    available.[^111] The Commission found that the Eastern Navajo Agency
    has the same impediments to subscribership and infrastructure
    development as those existing on Tribal lands,[^112] and concluded
    that it is appropriate to waive section 54.400(e) of the
    Commission's rules and permit ETCs serving the Eastern Navajo Agency
    to offer Tier 4 Lifeline and Link-Up benefits to qualified
    residents.[^113]

31. In its Petition, Sacred Wind states that the waiver granted in the
    *Smith Bagley Order* covers substantially the same lands as those to
    be served by Sacred Wind and requests a similar waiver.[^114] Sacred
    Wind subsequently clarified that its service area will include
    portions of the Fort Defiance, Shiprock and Eastern Navajo Agencies
    that are on the Navajo reservation, for which no waiver is
    required,[^115] and lands within the Eastern Navajo Agency and
    immediately adjacent non-Agency lands.[^116] Sacred Wind further
    clarified that its service territory also will include a portion of
    the Jicarilla Apache reservation.[^117] Sacred Wind asks that the
    Commission confirm that the waiver granted in the *Smith Bagley
    Order* also applies to Sacred Wind's customers in the Eastern
    Agency.[^118] In addition, Sacred Wind asks that the Commission
    waive section 54.400(e) with respect to Sacred Wind customers on
    those areas of Sacred Wind's service territory that are immediately
    adjacent to the Eastern Agency so that these customers will be
    eligible for enhanced Lifeline and Link-Up support.[^119]

32. We clarify that the waiver of section 54.400(e) of the Commission's
    Lifeline and Link-Up eligibility rules to enable eligible residents
    of the Eastern Navajo Agency to receive enhanced Lifeline and
    Link-Up support applies to Sacred Wind, as well as to SBI.[^120] In
    addition, as explained below, we find that Sacred Wind has
    demonstrated good cause to justify the waiver of section 54.400(e)
    of the Commission's rules to enable eligible residents in the
    specified areas, which are immediately adjacent to the Eastern
    Agency, to receive enhanced Lifeline and Link-Up support. Sacred
    Wind has demonstrated that special circumstances exist in the areas
    immediately adjacent to the Eastern Agency.

33. The majority of the residents of the lands located adjacent to the
    Eastern Navajo Agency are members of the Navajo Nation, except for
    those on the Jicarilla Apache reservation.[^121] Much of this land
    is extremely remote, with many residents living great distances from
    the larger Navajo housing clusters and communities, and many miles
    from highways and roads.[^122] The 2000 Census data place 41.8
    percent of all Navajo families residing on trial lands in New Mexico
    below the poverty level,[^123] and estimate that 54.4 percent of the
    residents of the New Mexico portions of the Navaho Nation are not in
    the labor force.[^124] An economic development study prepared by the
    Navajo Nation's Division of Economic Development estimates that the
    unemployment rate for the New Mexico portions of the Navajo Nation
    is 52.76 percent, and specifically in the Eastern Navajo Agency is
    70.53 percent.[^125] Sacred Wind asserts that the poverty and
    unemployment levels in the non-Agency lands immediately adjacent to
    Eastern Agency are likely even below that for the rest of Sacred
    Wind's service territory and for the Navajo Nation as a whole,
    because there is a direct correlation between the poverty level and
    unemployment rate within a Navajo Chapter and its proximity to a
    highway and/or urban center.[^126] Sacred Wind estimates that the
    telephone penetration rate overall for its service territory is
    approximately 28 percent.[^127] To Sacred Wind's knowledge, these
    lands are largely unserved by existing providers, including mobile
    wireless providers.[^128] The remoteness of the lands adjacent to
    the Eastern Agency makes the provision of basic telephone service
    cost-prohibitive, and in many areas, telecommunications facilities
    are non-existent.[^129]

34. Consistent with the Commission's findings in the *Smith Bagley
    Order*, we find that the area of Sacred Wind's service territory
    immediately adjacent to the Eastern Navajo Agency has the same
    impediments to subscribership and infrastructure development as
    those existing on Tribal lands. We therefore conclude that it is
    appropriate to waive section 54.400(e) of the Commission's rules and
    permit Sacred Wind and other ETCs serving the area immediately
    adjacent to the Eastern Navajo Agency to offer Tier 4 Lifeline and
    Link-Up benefits to qualified residents.

35. We find that granting Sacred Wind's request for waiver will serve
    the public interest by allowing Sacred Wind to provide much-needed
    telecommunications services at affordable rates to many Navajo
    peoples who have never had telephone service, or have been unable to
    afford to maintain it.[^130] We expect that the availability of
    enhanced Lifeline and Link-Up likely will increase penetration rates
    in these depressed regions and, for the first time, enable these
    low-income residents to have access to necessary emergency, medical,
    government and other public services.[^131] Granting this waiver
    serves the public interest because doing so furthers the
    Commission's goal of increasing the deployment of telecommunications
    facilities in unserved and underserved regions of the Nation,
    especially among Native American populations. We emphasize that the
    action we take here does not affect state sovereignty or impinge
    upon a state's ability to establish universal service programs aimed
    at increasing telephone subscribership within its borders.[^132]

## Other Matters

36. Section 61.45(d) of the Commission's rules grants us discretion to
    require price cap carriers to make adjustments to their price cap
    indices to reflect cost changes resulting from rule waivers.[^133]
    Accordingly, we require Qwest to adjust its price cap indices to
    reflect the removal of the transferred access lines from its New
    Mexico study area.

37. On May 11, 2001, the Commission adopted an order requiring incumbent
    LECs to freeze, on an interim basis, the Part 36 jurisdictional
    separations factors beginning July 1, 2001.[^134] In that order, the
    Commission addressed the recalculation of frozen allocation factors
    when a carrier converts from average schedule-based interstate
    settlements to cost-based interstate settlements.[^135] In those
    circumstances, the carrier has not previously performed cost studies
    to separate certain types of costs. To address this issue, the
    Commission provided that rate-of-return carriers that convert from
    average schedule to cost company status during the freeze "shall
    calculate new factors based on the twelve-month period immediately
    following the conversion and then freeze the new factors for the
    remainder of the freeze."[^136] Because Sacred Wind has not
    previously performed such cost studies, it is appropriate to apply
    the same requirement, thus "eliminating the need for waiver requests
    to calculate new factors . . .."[^137] Specifically, we require
    Sacred Wind for the first twelve months of operation to categorize
    the telecommunications plant and expenses and develop separations
    factors in accordance with the separations procedures in effect as
    of December 31, 2000.[^138]

# ordering clauses

38. 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 the joint petition for waiver of the study area boundary
    freeze as codified in Part 36, Appendix‑Glossary, of the
    Commission\'s rules, filed by Sacred Wind Communications, Inc. and
    Qwest Corporation on March 30, 2006, IS GRANTED, as described
    herein.

39. 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 the petition for waiver of sections 36.611 and 36.612 of
    the Commission\'s rules, 47 C.F.R. §§ 36.611 and 36.612, filed by
    Sacred Wind Communications, Inc., on March 30, 2006, IS GRANTED, as
    described herein.

40. 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 the petition for waiver of sections 54.301(b),
    54.314(d)(3), 54.903(a)(1), and 54.903(a)(3) of the Commission\'s
    rules, 47 C.F.R. §§ 54.301(b), 54.314(d)(3), 54.903(a)(1), and
    54.903(a)(3), filed by Sacred Wind Communications, Inc., on March
    30, 2006, IS GRANTED, as described herein.

41. 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 the petition for waiver of sections 69.3(e)(6) and
    69.3(e)(11) of the Commission\'s rules, 47 C.F.R. §§ 69.3(e)(6) and
    69.3(e)(11), filed by Sacred Wind Communications, Inc., on March 30,
    2006, IS GRANTED, as described herein.

42. 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 the petition for waiver of section 54.305 of the
    Commission\'s rules, 47 C.F.R. § 54.305, filed by Sacred Wind
    Communications, Inc., on March 30, 2006, IS GRANTED, as described
    herein.

43. 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 the petition for waiver of section 54.400(e) of the
    Commission\'s rules, 47 C.F.R. § 54.400(e), filed by Sacred Wind
    Communications, Inc., on March 30, 2006, IS GRANTED, as described
    herein.

44. IT IS FURTHER ORDERED, pursuant to sections 1, 4(i), 5(c), 201, and
    202 of the Communications Act of 1934, as amended, 47 U.S.C. §§ 151,
    154(i), 155(c), 201, and 202, and sections 0.91, 0.291, 1.3, and
    61.43 of the Commission\'s rules, 47 C.F.R. §§ 0.91, 0.291, 1.3, and
    61.43, that Qwest Corporation SHALL ADJUST its price cap indices in
    its annual price cap filing to reflect cost changes resulting from
    this transaction, consistent with this Order.

45. 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 Sacred Wind Communications, Inc. IS REQUIRED for the first
    twelve months of operation to categorize its telecommunications
    plant and expenses and develop separations factors pursuant to
    section 36.3(e) of the Commission's rules, 47 C.F.R. § 36.3(e).

    FEDERAL COMMUNICATIONS COMMISSION

    Thomas J. Navin

    Chief, Wireline Competition Bureau

[^1]: *See* 47 C.F.R. Part 36 App. *See* *also* Sacred Wind
    Communications, Inc. and Qwest Corporation Joint Petition for Waiver
    of the Definition of "Study Area" Contained in Part 36,
    Appendix-Glossary of the Commission's Rules, Related Waivers of
    Parts 36, 54 and 69 of the Commission's Rules, CC Docket No. 96-45
    (filed March 30, 2006) (Petition).

[^2]: *See generally* Petition.

[^3]: *See* *id.* at 1-2.

[^4]: *See* Letter from Jeffrey Dupree, NECA, to Marlene Dortch, Federal
    Communications Commission, CC Docket No. 96-45, at Appendix E (filed
    September 30, 2005) (NECA annual filing showing 2004 loop cost
    data).

[^5]: *See* Petition at 3. The sale territory includes the following
    Qwest exchanges: Farmington West, Farmington Main, Aztec/Bloomfield,
    Albuquerque West, Grants Main, Fort Wingate, Thoreau (Gallup East)
    and Gallup Main. *See* Petition, Exh. 1 (attaching Application of
    Sacred Wind Communications, Inc. for Certificates of Financial and
    Technical Competency, Operating Authority, Public Convenience and
    Necessity and for Designation as an Eligible Telecommunications
    Carrier and Approval of Initial Tariffs, Case No. 05-00272-UT,
    Amended Recommended Decision of the Hearing Examiner at 7 (New
    Mexico Commission March 9, 2006)).

[^6]: *See generally* Petition. Sacred Wind generally uses the terms
    "Tribal lands" and "near reservation" to refer to Navajo lands on
    and adjacent to reservations. The Commission specifically defines
    the term "Tribal lands" for purposes of its enhanced Lifeline and
    Link-Up rules. *See infra* note Error: Reference source not found.

[^7]: 47 C.F.R. §§ 36.611, 36.612, 69.2(hh), 69.3(e)(6) and 69.3(e)(11).

[^8]: *See* Petition at 20-23.

[^9]: *Id*. at 25-27.

[^10]: *Id.* at 23-24; 47 C.F.R. §§ 54.301(b), 54.314(d), and
    54.903(a)(3).

[^11]: Petition at 13-15.

[^12]: *See* 47 C.F.R. § 54.400(e) note; Petition at 27-32.

[^13]: *See* Petition at 32.

[^14]: *See Domestic 214 Application Filed for the Acquisition of
    Selected Assets of Qwest Corporation by Sacred Wind Communications,
    Inc.*, *Sacred Wind Communications, Inc. and Qwest Corporation Seek
    Waiver of the Study Area Boundary Freeze as Codified in Part 36, and
    Sacred Wind Communications, Inc. Seeks Waiver of Sections 36.611,
    36.612, 54.301(b), 54.305, 54.314(d), 54.903(a), 69.2(hh),
    69.3(e)(6) and 69.3(e)(11) of the Commission's Rules, Sacred Wind
    Communications, Inc. Seeks Waiver of the Commission's Stay of the
    Provision of Enhanced Lifeline and Link-Up Support to Customers on
    Near-Tribal Lands*, WC Docket No. 06-82, CC Docket No. 96-45, WC
    Docket No. 03-109, Public Notice, 21 FCC Rcd 4368 (2006). Joe
    Shirley, Jr., President, Navajo Nation; Charles Damon, Council
    Delegate, Navajo Nation Council; David Rico, Council Delegate,
    Navajo Nation Council; Bill Richardson, Governor, State of New
    Mexico; Tulley Haswood, Chapter President, Rock Springs Chapter;
    and, Karen Buller, President, National Indian Telecommunications
    Institute filed comments in support of the Petition. We note that
    the Bureau has granted transfer of control of the exchanges. *See
    Notice of Streamlined 214 Applications Granted*, WC Docket Nos.
    06-82, 06-86 & 06-91, Public Notice, DA 06-1150 (rel. May 30, 2006).

[^15]: 47 C.F.R. § 1.3.

[^16]: *Northeast Cellular Telephone Co. v. FCC*, 897 F.2d, 1164, 1166
    (D.C. Cir. 1990) (*Northeast Cellular*).

[^17]: *WAIT Radio v. FCC*, 418 F.2d 1153, 1159 (D.C. Cir. 1969), *cert.
    denied*, 409 U.S. 1027 (1972); *Northeast Cellular*, 897 F.2d at
    1166.

[^18]: *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, Decision and Order, 50 Fed. Reg. 939 (1985)
    (*Part 67 Order*). *See also* 47 C.F.R. Part 36 App.

[^19]: *Part 67 Order* at para. 1.

[^20]: 47 C.F.R. § 54.305(b). Carriers' acquired exchanges may receive
    additional support pursuant to the Commission's "safety valve"
    mechanism, which allows an acquiring carrier to receive support for
    new investments in acquired lines. 47 C.F.R. § 54.305(d). Moreover,
    carriers acquiring exchanges may be eligible to receive Interstate
    Common Line Support (ICLS), which is not subject the limitations set
    forth in section 54.305(b). *See Multi-Association Group (MAG) Plan
    for Regulation of Interstate Services of Non-Price Cap Incumbent
    Local Exchange Carriers and Interexchange Carriers in CC Docket No.
    00-256*, *Federal-State Joint Board on Universal Service in CC
    Docket No. 96-45, Access Charge Reform for Incumbent Local Exchange
    Carriers Subject to Rate-of-Return Regulation in CC Docket No.
    98-77, Prescribing the Authorized Rate of Return From Interstate
    Services of Local Exchange Carriers in CC Docket No. 98-166*, Second
    Report and Order and Further Notice of Proposed Rulemaking,
    Fifteenth Report and Order, and Report and Order, 16 FCC Rcd 19613,
    19667-69, paras. 155-57 (2001), *recon. pending*.

[^21]: *See Federal-State Joint Board on Universal Service,* CC Docket
    No. 96-45, Report and Order, 12 FCC Rcd 8776, 8942-43, para. 308
    (1997) (subsequent history omitted). For example, if a rural carrier
    purchases an exchange from a non-rural carrier that receives support
    based on the Commission's high-cost support mechanism for non-rural
    carriers, the loops of the acquired exchange shall receive the same
    per-line support as calculated under the non-rural mechanism,
    regardless of the support the rural carrier purchasing the exchange
    may receive for any of its other exchanges. Rural carriers receive
    high-cost loop support based on the extent to which their reported
    average cost per loop exceeds 115 percent of the nationwide average
    cost per loop. *See* 47 C.F.R. §§ 36.601-.631. The mechanism for
    non-rural carriers calculates support to carriers based on the
    forward-looking economic cost of operating a given exchange. *See*
    47 C.F.R. § 54.309.

[^22]: *See* Universal Service Administrative Company (USAC) Quarterly
    Administrative Filing 2006, Third Quarter (3Q) Appendix, HC01, filed
    May 2, 2006, at http://www.universalservice.org/overview/filings.

[^23]: *See, e.g., 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, 1772, para. 5 (1995) (*PTI/Eagle Order*).

[^24]: *See* *id.* at 1774, paras. 14-17. *See also 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).

[^25]: *See PTI/Eagle Order*, 10 FCC Rcd at 1773, para. 13.

[^26]: *See* *supra* note Error: Reference source not found.

[^27]: *See* Petition at 2. Most of these lands are historical tribal
    lands of the Navajo people. *Id.*

[^28]: *See Federal-State Joint Board on Universal Service, Twelfth
    Report and Order*, Memorandum Opinion and Order, and Further Notice
    of Proposed Rulemaking, 15 FCC Rcd 12208, para. 5 (2000) (*Twelfth
    Report and Order*).

[^29]: *See* Petition at 2. Sacred Wind further notes that the Navajo
    Nation's subscribership was the lowest amount 25 tribal lands with
    the most Native American households. *See id.* at 2-3.

[^30]: *See* *Trends in Telephone Service*, Industry Analysis and
    Technology Division, Wireline Competition Bureau , FCC at Table 16.3
    (rel. June 21, 2005).

[^31]: *See* Petition at i, 9.

[^32]: *See* *id*. at 3.

[^33]: *Id*. at 19.

[^34]: *Id.*

[^35]: *See* New Mexico Order (attaching Amended Recommended Decision of
    the Hearing Examiner at 51).

[^36]: *See* Petition at 11.

[^37]: *See* Letter from Martin L. Stern, Preston, Gates, Ellis &
    Rouvelas, Meeds LLP, to Marlene Dortch, FCC, CC Docket No. 96-45
    (filed May 23, 2006).

[^38]: *Id*. As an interstate price cap LEC, Qwest is eligible for IAS.
    *See* 47 C.F.R. §§ 54.800, *et seq*.

[^39]: We also note that the costs of deployment should be minimized by
    Sacred Wind's use of a fixed wireless local loop solution.

[^40]: According to USAC's most recent estimates, total high-cost
    support for 2006 is projected to be \$4,147,059,854. *See* USAC
    Quarterly Administrative Filing 2006, Third Quarter (3Q) Appendix,
    HC02, filed May 2, 2006, at
    http://www.universalservice.org/overview/filings.

[^41]: *See* Petition at Exhibit 1 (attaching Application of Sacred Wind
    Communications, Inc. for Certificates of Financial and Technical
    Competency, Operating Authority, Public Convenience and Necessity
    and for Designation as an Eligible Telecommunications Carrier and
    Approval of Initial Tariffs, Case No. 05-00272-UT, Final Order (New
    Mexico Commission rel. March 23, 2006) (New Mexico Order)).

[^42]: *See* Petition at Exhibit 3 (attaching Letter from Ben R. Lujan,
    Chairman, New Mexico Public Regulation Commission to Thomas Navin,
    Chief, Wireline Competition Bureau, Federal Communications
    Commission, CC Docket No. 96-45 (dated March 21, 2006)).

[^43]: *See* Petition at 20-23 (citing *Border to Border Communications,
    Inc., Petition for Waiver of Sections 36.611 and 36.612 of the
    Commission's Rules*, Memorandum Opinion and Order, AAD 94-61, 10 FCC
    Rcd 5055, 5057, paras. 5-14 (Com. Car. Bur. 1995)).

[^44]: *See* 47 C.F.R. Parts 36, 54, and 69.

[^45]: *See* 47 C.F.R. § 36.611.

[^46]: *See* 47 C.F.R. § 36.622.

[^47]: *See* 47 C.F.R. § 36.611.

[^48]: *See* 47 C.F.R. § 36.612.

[^49]: *See e.g., Mescalero Apache Telecom, Inc., GTE Southwest
    Incorporated, and Valor Telecommunications of New Mexico, LLC, Joint
    Petition for Waiver of the Definition of "Study Area" Contained in
    Part 36, Appendix-Glossary of the Commission's Rules; Mescalero
    Apache Telecom, Inc., Waiver of Sections 61.41(c)(2), 69.3(e)(11),
    36.611, and 36.612 of the Commission's Rules*, Order, CC Docket No.
    96-45, 16 FCC Rcd 3813 (Acc. Pol. Div. 2001) (*Mescalero I*)
    (granting waiver of sections 36.611 and 36.612 of the Commission's
    rules to newly-formed, tribally-owned carrier expanding service to
    unserved residences on American Indian reservation); *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 Rules*, Order, CC Docket
    No. 96-45, 20 FCC Rcd 20543 (Wir. Comp. Bur. 2005) (*Adak*).

[^50]: Petition at ii, 3.

[^51]: *Id*. at ii, 4.

[^52]: *See* *id*. More than 50 percent of the households in Sacred
    Wind's service area are at or below the poverty level. *Id*. at 3.

[^53]: *See* *id*. at 21.

[^54]: *See* *Border to Border Communications, Inc., Petition for Waiver
    of Sections 36.611 and 36.612 of the Commission's Rules*, Memorandum
    Opinion and Order, AAD 94-61, 10 FCC 5055, 5057, paras. 514 (Com.
    Car. Bur. 1995) (*Border to Border Communications*); *supra* note
    51.

[^55]: *See Mescalero I*, 16 FCC Rcd at 3825-26, paras. 28-30.

[^56]: *Id.*, 16 FCC Rcd at 3824, para. 26. *See also* 47 U.S.C. §
    254(b).

[^57]: 47 U.S.C. § 254(b). The Act was amended by the Telecommunications
    Act of 1996. Telecommunications Act of 1996, Pub. L. No. 104-104,
    110 Stat. 56 (1996) (1996 Act). 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).

[^58]: Final high-cost loop payments for the interim period will be
    based on actual costs for that period. We note that, in its
    Petition, Sacred Wind states it intends to true-up on an annual
    basis to reconcile any difference between estimated and actual costs
    incurred. In accordance with the Bureau's previously approved
    methodology, however, we require Sacred Wind to true-up with actual
    cost data on a quarterly basis. *See* *Border to Border
    Communications,* 10 FCC at 5057; *Mescalero I*, 16 FCC Rcd at
    3824-26, paras. 26-30; *Adak*, 20 FCC Rcd at 20547, para. 10.

[^59]: *See, e.g., Mescalero I*, 16 FCC Rcd at 3824-26, paras. 26-30.

[^60]: *See* 47 C.F.R. § 36.612.

[^61]: *See* 47 C.F.R. §§ 36.611-.612.

[^62]: 47 C.F.R. § 54.314.

[^63]: If a state misses the October 1 deadline, it must file the
    certification by January 1 for support to begin in the second
    quarter of the year, by April 1 for support to begin in the third
    quarter, and by July 1 for support to begin in the fourth quarter.
    *See* 47 C.F.R. § 54.314(d)(1)-(4).

[^64]: 47 C.F.R. § 54.301(b). Incumbent LECs that have been designated
    as ETCs and serve 50,000 or fewer access lines within a study area
    are eligible to receive LSS. *See* 47 C.F.R. § 54.301.

[^65]: 47 C.F.R. § 54.903(a)(3).

[^66]: Sacred Wind did not request a waiver of the filing deadline in
    section 54.903(a)(1), however, we grant such a waiver on our own
    motion in order that Sacred Wind may be eligible for immediate ICLS
    support.

[^67]: *See supra* paras. 14-16.

[^68]: A waiver of the April 1, 2006 filing deadline, pursuant to
    section 54.314(d)(3), allows Sacred Wind to receive LSS and
    high-cost loop support for the third and fourth quarters of 2006.
    *See* 47 C.F.R. § 54.314(d)(3).

[^69]: In order to receive ICLS, Sacred Wind is required to file with
    the fund Administrator and the Commission, on the date it first
    files its line count information pursuant to section 54.903, a
    certification that all ICLS support provided to Sacred Wind will be
    used only for the provision and maintenance, and upgrading of
    facilities and services for which the support is intended. 47 C.F.R.
    §§ 54.903, 54.904.

[^70]: *See supra* para. 6.

[^71]: *See* Petition at 14-15. Sacred Wind explains that the term
    "exchange" is not defined in the applicable regulations, but
    references a definition in an industry reference. *See* *id*. at 14.

[^72]: *See* Petition at Exh. 1, New Mexico Order (attaching Amended
    Recommended Decision of the Hearing Examiner at 7).

[^73]: In this Order, we do not define the term "exchange" as it is used
    in the telecommunications industry.

[^74]: *See* *M&L Enterprises, Inc., d/b/a Skyline Telephone Company,
    Petition for Waiver of Sections 36.611, 36.612, and 69.2 (hh) of the
    Commission's Rules*, Order, 19 FCC Rcd 6761, 6767, at para. 16
    (2004) (*Skyline*).

[^75]: *See* *Direct Communications Cedar Valley, LLC and Qwest
    Corporation, Joint Petition for Waiver of the Definition of "Study
    Area" of the Appendix-Glossary of Part 36 of the Commission's Rules,
    Petition for Waiver of Sections 69.2(hh) and 69.605(c) of the
    Commission's Rules*, Order, 20 FCC Rcd 19180, 19183, at para. 9
    (Wir. Comp. Bur. 2005) (*Direct Communications*).

[^76]: *See, e.g., Madison River Telephone Company, LLC, MebTel, Inc.
    d/b/a MebTel Communications, and BellSouth Telecommunications, Inc.,
    Joint Petition for Waiver of the Definition of "Study Area"
    Contained in Part 36 of the Commission's Rules, Petition for Waiver
    of Section 69.3(e)(11) of the Commission's Rules*, 20 FCC Rcd 19173
    (Wir. Comp. Bur. 2005); *Blue Valley Telecommunications, Inc. and
    United Telephone Company of Kansas, Joint Petition for Waiver of the
    Definition of "Study Area" in Part 36 of the Commission's Rules;
    Petition for Waiver of Section 69.3(e)(11) of the Commission's
    Rules*, 20 FCC Rcd 19166 (Wir. Comp. Bur. 2005). Qwest has agreed to
    sell to Sacred Wind the copper and any fiber distribution,
    extensions, drops and network interface devices for approximately
    2,300 lines. *See* Petition at 3 & n.13.

[^77]: *Mescalero Apache Telecom, Inc., Waiver of Section 54.305 of the
    Commission's Rules*, CC Docket No. 96-45, Order, 16 FCC Rcd 1312
    (2001) (*Mescalero II*).

[^78]: *See* Petition at 2. We note that a recent Commission report
    states that the nationwide telephone penetration rate is 92.9
    percent. *See Telephone Subscribership in the United States*,
    Industry Analysis and Technology Division, Wireline Competition
    Bureau, FCC at 2 (rel. May 12, 2006).

[^79]: *See* Petition at 3.

[^80]: *See* *Mescalero II*, 16 FCC Rcd at 1316-19.

[^81]: *Id*. at 1318.

    ^?^ *See* *id*. at 1316-19.

[^82]: *See* Petition at 17.

[^83]: *Id. See also, Mescalero II*, 16 FCC Rcd at 1316-19*;* Mescalero
    Apache Telecom Inc., GTE Southwest Inc. and Valor Telecommunications
    of New Mexico, LLC, Joint Petition for Waiver of the Definition of
    "Study Area" Contained in Part 36, Appendix-Glossary of the
    Commission's Rules, Related Waivers of Parts 36, 54, 61, and 69 of
    the Commission's Rules, at 6 (filed June 30, 2000).

[^84]: *See* Petition at 17.

[^85]: *See* *id*. at 19.

[^86]: The Commission has emphasized on two occasions that carriers
    seeking a waiver of section 54.305 must bear a heavy burden and that
    routine waivers of the rule will not be granted. *See Federal-State
    Joint Board on Universal Service, Valor Telecommunications of Texas,
    L.P. Request for Waiver of Section 54.305 of the Commission's
    Rules*, Order, CC Docket No. 96-45, 20 FCC Rcd 782, 786 para. 12
    (2005) (denying Valor's request for a waiver of section 54.305).
    *See* *also* *Mescalero II*, 16 FCC Rcd at 1320, para. 13. The
    action we take in this instance recognizes a unique opportunity to
    promote subscribership and infrastructure development in the
    unserved and underserved areas of Indian tribal land.

[^87]: *See* Petition at 25.

[^88]: *See id*. The Commission's rules regarding participation in NECA
    tariffs and pools, and its rules regarding universal service support
    for incumbent LECs, do not specifically address companies, such as
    Sacred Wind, that come into existence after the enactment of the
    Telecommunications Act of 1996. In order to be a member of NECA and
    to participate in the NECA tariffs and pools, a carrier must be a
    "telephone company," as defined in Part 69 of the Commission's
    rules. *See* 47 C.F.R. § 69.601.

[^89]: 47 C.F.R. § 69.2(hh).

[^90]: *See* 47 U.S.C. § 251(h)(1). For purposes of calculating
    universal service support, Part 36 of the Commission's rules applies
    to incumbent LECs, and Part 54 of the Commission's rules
    distinguishes between incumbent LECs and competitive ETCs. For
    example, section 36.611 of the Commission's rules governs the
    submission of data to NECA for purposes of calculating high-cost
    support and only applies to incumbent LECs. Competitive ETCs file
    line count data and their support is calculated pursuant to section
    54.307 of the Commission's rules. *See* 47 C.F.R. §§ 36.611, 54.307.
    Incumbent LEC for purposes of Part 54 of the Commission's rules has
    the same meaning as that term is defined in section 251(h)(1) of the
    Act. *See* 47 C.F.R. §§ 51.5, 54.5. Unlike Parts 54 and 69 of the
    Commission's rules, Part 36 does not include an explicit definition
    of incumbent LEC. The term "incumbent local exchange carrier" is
    used throughout Part 36, however, and in some cases references the
    Commission's definition of rural incumbent LEC in section 54.5 of
    the Commission's rules. *See, e.g.,* 47 C.F.R. § 36.622(a).

[^91]: *See* 47 C.F.R. § 69.3(e)(6).

[^92]: *See* 47 C.F.R. § 69.3(e)(11).

[^93]: *See* Petition at 26.

[^94]: *See* *supra* para. 20.

[^95]: *See* Petition at 25.

[^96]: We note that NECA does not object to Sacred Wind participating in
    its pools. *See* Letter from Tracey E.J. Saltenberger, NECA, to
    Marlene H. Dortch, Federal Communications Commission, CC Docket No.
    96-45 (filed June 12, 2006 ).

[^97]: Petition at 27. *See infra* note Error: Reference source not
    found.

[^98]: *See* 47 U.S.C. § 254(b)(1) ("Quality services should be
    available at just, reasonable, and affordable rates."). Under the
    Commission's rules, there are four tiers of federal Lifeline
    support. All eligible telephone subscribers receive Tier 1 support,
    which provides a discount of up to \$6.50 off of the monthly cost of
    telephone service for a single telephone line in their principal
    residence. *See* 47 C.F.R. §§ 54.401(a)(2). Tier 2 support provides
    an additional \$1.75 per month in federal support as long as all
    relevant state regulatory authorities approve such a reduction. 47
    C.F.R. § 54.403(a)(2). Tier 3 support provides an amount equal to
    one-half of the subscriber's state or carrier-provided Lifeline
    support, up to a maximum of \$1.75. 47 C.F.R. § 54.403(a)(3).
    Finally, Tier 4 support provides eligible residents of Tribal lands,
    as defined in section 54.400(e) of the Commission's rules, enhanced
    Lifeline support. 47 C.F.R. § 54.403(a)(4). The Link-Up program
    assists qualifying low-income consumers in initiating telephone
    service by paying a portion of the service connection charge. *See*
    47 C.F.R. § 54.411.

[^99]: *See Twelfth Report and Order,* 15 FCC Rcd at 12220, para. 20. In
    the *Twelfth Report and Order*, the Commission noted that only 76.7
    percent of rural households earning less than \$5,000 have a
    telephone, and only 47 percent of Indian tribal households on
    reservations and other tribal lands have a telephone, in comparison
    to 94 percent of all households in the United States. *Id*. at
    12224, paras. 26-27. On the basis of these observations, the
    Commission concluded that the extent to which telephone penetration
    levels fall below the national average underscored the need for
    immediate action to promote the deployment of telecommunications
    facilities in tribal areas and to provide the support necessary to
    increase subscribership in these areas. Toward that end, the
    Commission adopted measures to promote telecommunications deployment
    and subscribership for the benefit of those living on
    federally-recognized American Indian and Alaska native tribal lands.
    The Commission found the enhancement of tribal communities' access
    to telecommunications services consistent with its obligations under
    the Act to preserve and advance universal service, and its
    obligations under the historic federal trust relationship between
    the federal government and federally-recognized Indian tribes to
    encourage tribal sovereignty and self-governance. *Id*. at 12222,
    para. 23, 12222-24, para. 26.

[^100]: *Id.* at 12228-12251.

[^101]: *See* 47 C.F.R. §§ 54.405(a)(4), 54.411(a)(3).

[^102]: 47 C.F.R. § 54.405(a)(4).

[^103]: 47 C.F.R. § 54.411(a)(3). The Link-Up program provides other
    eligible telephone subscribers a discount of up to \$30.00 off the
    initial cost of installing telephone service. 47 C.F.R. §
    54.411(a)(1).

[^104]: 47 C.F.R. § 54.400(e). For purposes of identifying the
    geographic areas within which enhanced Lifeline and Link-Up should
    apply, the Commission determined that the term \"Tribal lands\"
    should include the United States Department of Interior Bureau of
    Indian Affairs (BIA) definitions of \"reservation\" and \"near
    reservation\" contained in sections 20.1(v) and 20.1(r) of the BIA
    regulations, respectively. *See* *Twelfth Report and Order*, 15 FCC
    Rcd at 12218, para. 17, *citing* 25 C.F.R. §§ 20.1(r) and 20.1(v).
    *See also, Federal-State Joint Board on Universal Service*,
    Twenty-Fifth Order on Reconsideration, Report and Order, and Further
    Notice of Proposed Rulemaking, 18 FCC Rcd 10958, 10965-67, paras.
    15-17 (2003) (*Twenty-Fifth Reconsideration Order*) (confirming that
    the Commission would continue to use the BIA definition adopted in
    the *Twelfth Report and Order*).

[^105]: 25 C.F.R. § 20.1(v).

[^106]: 25 C.F.R. § 20.1(r). *See also,* *Twelfth Report and Order*, 15
    FCC Rcd at 12218-19, para. 18.

[^107]: *Order and Further Notice of Proposed Rulemaking*, 15 FCC Rcd
    17112 (2000) (*Tribal Stay Order*). The Commission concluded that
    the term \"near reservation\" as defined by BIA may include wide
    geographic areas that do not possess the characteristics that
    warrant the targeting of enhanced Lifeline and Link-Up support to
    reservations, such as geographic isolation, high rates of poverty,
    and low telephone subscribership. *Id.* at 17113-14, para. 3. The
    Commission determined that giving low income support to such broad
    areas may not further the goal of increasing telecommunications
    deployment and subscribership in the most historically isolated and
    underserved regions of the Nation. *Id.* The Commission currently
    has a pending rulemaking on how to identify geographic areas that
    are adjacent to reservations, consistent with the goal of targeting
    enhanced Lifeline and Link-Up to the most underserved areas of the
    nation. *See Twenty-Fifth Reconsideration Order*, 18 FCC Rcd at
    10974-77, paras. 32-38.

[^108]: *Federal-State Joint Board on Universal Service, Smith Bagley,
    Inc., Petition for Waiver of Section 54.400(e) of the Commission's
    Rules*, Memorandum Opinion and Order, WC Docket No. 03-109, 20 FCC
    Rcd 7701 (2005) (*Smith Bagley Order*).

[^109]: *See id*. at 7704, para. 10.

[^110]: *See id*. at 7705-06, para. 11.

[^111]: *See id*. at 7706, para. 12.

[^112]: *See id*. at 7704, para. 10.

[^113]: *See id*. at 7706, para. 13.

[^114]: *See* Petition at 30. *See infra* note Error: Reference source
    not found.

[^115]: Letter from Martin L. Stern, Preston, Gates, Ellis & Rouvelas,
    Meeds LLP, to Marlene Dortch, FCC, WC Docket No. 06-82, CC Docket
    No. 96-45, WC Docket No. 03-109 at 1 (filed June 20, 2006) (June 20
    Letter).

[^116]: *See id.*

[^117]: *See* Letter from Martin L. Stern, Preston, Gates, Ellis &
    Rouvelas, Meeds LLP, to Marlene Dortch, FCC, WC Docket No. 06-82, CC
    Docket No. 96-45, WC Docket No. 03-109 (filed July 24, 2006)
    (attaching Letter from Larry J. Bonney and Wilson Ray, Huerfano
    Chapter \# 91 ) at 1 (dated July 17, 2006) (Huerfano Letter). No
    waiver would be required to provide enhanced Lifeline and Link-Up to
    eligible residents of the Jicarilla Apache reservation.

[^118]: *See id.*

[^119]: Sacred Wind asks that the Commission "waive the stay" and
    understands that this was the relief granted in the *Smith Bagley
    Order*. *See id.* In the *Smith Bagley Order*, however, the
    Commission did not waive the stay of the implementation of enhanced
    Lifeline and Link-Up benefits to the extent that they apply to
    qualifying low-income consumers living near a reservation. Rather,
    the Commission waived section 54.400(e) of the Commission's rules.
    *See Smith Bagley*, 20 FCC Rcd at 7704 & n. 24. We treat Sacred
    Wind's request for a waiver of the stay of the rules, as a request
    for waiver of the rule.

[^120]: *Smith Bagley Order*, 20 FCC Rcd at 7706, para. 13.

[^121]: Huerfano Letter at 1. Sacred Wind previously stated that the
    lands located adjacent to the Eastern Navajo Agency are "inhabited
    almost exclusively by Navajo Nation tribal members." June 20 Letter
    at 3.

[^122]: June 20 Letter at 3; Huerfano Letter at 1.

[^123]: Letter from Martin L. Stern, Preston, Gates, Ellis & Rouvelas,
    Meeds LLP, to Marlene Dortch, FCC, WC Docket No. 06-82, CC Docket
    No. 96-45, WC Docket No. 03-109 (filed July 18, 2006) (July 18
    Letter) at 2, Exhibit 1 at 3 (Table DP-3. Profile of Selected
    Economic Characteristics: 2000). Sacred Wind previously indicated
    that the 2000 Census placed 53.8 percent of all Navajo families
    residing on tribal lands in New Mexico below the national poverty
    level. *See* June 20 Letter at 3. The July 18 Letter corrects the
    previous figure.

[^124]: July 18 Letter at 2, Exhibit 1 at 3 (Table DP-3. Profile of
    Selected Economic Characteristics: 2000).

[^125]: July 18 Letter at 2, Exhibit 2 at 2-3 (2002-2003 Comprehensive
    Economic Development Strategy of the Navajo Nation, Tables 15-A,
    15-B). Sacred Wind previously estimated that the unemployment rate
    for Navajo families in New Mexico is between 55.5 and 58 percent.
    *See* June 20 Letter at 3. The July 18 Letter updates the previous
    estimate and provides specific information about the Eastern Navajo
    Agency.

[^126]: June 20 Letter at 3.

[^127]: Letter from Martin L. Stern, Preston, Gates, Ellis & Rouvelas,
    Meeds LLP, to Marlene Dortch, FCC, WC Docket No. 06-82, CC Docket
    No. 96-45, WC Docket No. 03-109, at Exh. 1 (filed July 26, 2006)
    (July 26 Letter).

[^128]: June 20 Letter at 3; *see also* Huerfano Letter at 1.

[^129]: June 20 Letter at 3; *see also* Huerfano Letter at 1.

[^130]: June 20 Letter at 3; *see also* Huerfano Letter at 1.

[^131]: *See* June 20 Letter at 3; *see also* Huerfano Letter at 1.

[^132]: *See Smith Bagley Order*, 20 FCC Rcd at 7707, para. 15.

[^133]: *See* 47 C.F.R. § 61.45(d).

[^134]: *See Jurisdictional Separations and Referral to the
    Federal-State Joint Board*, Report and Order, CC Docket No. 80-286,
    16 FCC Rcd 11382 (2001) (*Separations Freeze Order*);
    *Jurisdictional Separations and Referral to the Federal-State Joint
    Board*, Order and Further Notice of Proposed Rulemaking, CC Docket
    No. 80-286, 21 FCC Rcd 5516 (2006).

[^135]: *See Separations Freeze Order*, 16 FCC Rcd at 11406 n.123.

[^136]: *Id.*, 16 FCC Rcd at 11407, para. 53.

[^137]: *See id.*

[^138]: *See* 47 C.F.R § 36.3(e).