**DA 06-1768**

**Released: September 5, 2006**

**DOMESTIC SECTION 214 APPLICATION FILED FOR TRANSFER OF CONTROL**

**OF HECTOR COMMUNICATIONS CORPORATION TO BLUE EARTH VALLEY
COMMUNICATIONS, INC., ARVIG ENTERPRISES, INC., AND NEW ULM TELECOM,
INC.**

**NON-STREAMLINED Pleading Cycle Established**

**WC Docket No. 06-166**

**Comments Due: September 19, 2006**

**Reply Comments Due: September 26, 2006**

On August 22, 2006, Hector Communications Corporation ("Hector" or
"Transferor")[^1] and Blue Earth Valley Communications, Inc. ("Blue
Earth"), Arvig Enterprises, Inc. ("Arvig") and New Ulm Telecom, Inc.
("New Ulm") (collectively, the "Transferees") (together, with Hector,
the "Applicants") filed an application pursuant to sections 63.03 and
63.04 of the Commission's rules[^2] requesting approval to transfer
control of Hector to Blue Earth, Arvig and New Ulm.[^3]

The Applicants do not seek streamlined treatment for this application
under section 63.03(b) of the Commission's rules.[^4] Applicants are
incumbent independent local exchange carriers (LECs) that have, in
combination, fewer that 2% of the nation's subscriber lines installed in
the aggregate nationwide, and no overlapping service areas. There is a
combined total of 90,600 access lines for the carriers involved in this
transaction. However, subsidiaries of each of the Transferees have
service areas that are adjacent to the service areas of one or more of
Hector's affiliates.[^5] Because the Applicants have adjacent service
areas, this application is not entitled to presumptive streamlined
treatment.[^6]

Hector, a publicly-traded Minnesota corporation, is a holding company
which provides telecommunications services through its various
subsidiaries in rural portions of Minnesota, Wisconsin and North Dakota.
It owns nine incumbent LECs that provide local exchange services to 28
rural exchanges (approximately 29,400 access lines) and resold long
distance toll services to approximately 15,700 customers.[^7] Hector
and/or its subsidiaries also hold interests in the following
telecommunications and communications companies: Northern Transport
Group, LLC ("NTG"), a Minnesota limited liability corporation that
provides high-capacity special access circuits in Minnesota (20%);
VAL-ED Joint Venture, LLP, d/b/a 702 Communications ("702
Communications"), a Minnesota limited liability partnership that
provides competitive local exchange services, long distance toll
services, and Internet access and other data services in Minnesota and
North Dakota (18.09%); Desktop Media, Inc., a Minnesota corporation that
provides competitive local exchange services in southeastern Minnesota
via Ethernet architecture (17%); Broadband Visions LLC ("Broadband
Visions"), a Minnesota limited liability corporation that delivers
digital television signals to video program distributors (16.38%);
Independent Pinnacle Services, LLC, a Minnesota limited liability
corporation that provides directory services to over 150 telephone
companies in 15 states (8.49%); Onvoy, Inc. ("Onvoy"), a Minnesota
corporation that provides telecommunications, data and video services
and transport throughout Minnesota (7.08%); Consolidated Management
Group, Inc., a Wisconsin corporation that provides high-capacity special
access circuits in Wisconsin (6.45%); Northwest Minnesota Special
Access, LLC ("NMSA"), a Minnesota limited liability corporation which
provides data and video services to schools and libraries in Minnesota
(5.26%) and West Central Transport Group ("WCTG"), which provides
high-capacity special access circuits in Minnesota, North Dakota and
South Dakota (5%).[^8] The following entities own or control 10% or more
of the equity of Hector: Curtis A. Sampson, a U.S. citizen (12.74%);
Opportunity Partners, LP, an Ohio limited partnership (14.04%); and QVT
Financial LP, a Delaware limited partnership (10.98%). The general
partners of Opportunity Partners are Phillip Goldstein and Andrew Dakos,
both of whom are U.S. citizens. The general partner of QVT Financial LP
is QVT Financial GP LLC, a Delaware limited liability corporation that
is, in turn, controlled by managing members Daniel Gold and Lars Bader,
both of whom are U.S. citizens. No other person or entity directly or
indirectly owns or controls a 10% or greater interest in Hector.

Blue Earth, a Minnesota corporation, wholly-owns the following five
incumbent LECs that provide local exchange telephone services (including
interstate exchange access) and resold interstate toll services in 11
rural local exchanges (approximately 13,500 total access lines) in
southern Minnesota and north central Iowa: Blue Earth Valley Telephone
Company; Easton Telephone Company; Minnesota Lake Telephone
Company; Shell Rock Telephone Company; and Eckles Telephone Company.[^9]
Blue Earth and/or its subsidiaries also hold interests in the following
telecommunications and communications companies: Broadband Visions
(11.7%); WCTG (5%); and Onvoy (4.2%). The following entities own or
control 10% or more of the equity of Blue Earth: Neil and Sue Eckles,
both U.S. citizens (22.41%); Gail Eckles, a U.S. citizen (24.66%);
William V. Eckles, a U.S. citizen (19.84%); and the Eckles Dynasty
Trusts #1 and #2, both organized under the laws of Minnesota (16.55%
each).[^10] No other person or entity directly or indirectly owns or
controls a 10% or greater interest in Blue Earth.

Arvig, a Minnesota corporation, owns the following six rural incumbent
LECs that provide local exchange telephone services (including
interstate exchange access) and resold interstate toll services in 27
rural local exchanges (approximately 31,400 total access lines) in
central, west central, and northwest Minnesota: East Otter Tail
Telephone Company; Twin Valley-Ulen Telephone Company; Callaway
Telephone Company; The Peoples Telephone Company of Bigfork; Midwest
Telephone Co.; and Osakis Telephone Company. Arvig also owns Tekstar
Cablevision, Inc. ("Tekstar Cable"), a Minnesota corporation which, in
turn, owns 100% of Tekstar Communications, Inc. ("Tekstar"), a Minnesota
corporation that provides competitive local exchange services and resold
long distance toll services to customers in 14 north central and
northwest Minnesota exchanges in which Qwest Corporation ("Qwest") is
the incumbent LEC, and four west central Minnesota exchanges in which
Sprint Minnesota, Inc. is the incumbent LEC.[^11] In addition, Arvig
wholly-owns WETEC, LLC, a Minnesota limited liability corporation that
is authorized to provide competitive local exchange services and resold
long distance toll services in six north central Minnesota exchanges in
which Qwest is the incumbent LEC. Arvig and/or its subsidiaries also
hold interests in the following telecommunications and/or communications
companies: Central Minnesota Network Systems LLC, a Minnesota limited
liability corporation that provides interactive video, fiber
connectivity, and leased fiber to schools in central Minnesota (33.33%);
Central Transport Group LLC, a Minnesota limited liability corporation
that provides high-capacity special access circuits in Minnesota (20%);
NMSA (15.78%); Independent Emergency Services LLC, a Minnesota limited
liability corporation that provides public service answering point
("PSAP") enhanced 911 communications services in rural Minnesota
(14.28%); Central Transport Video Group LLC, a Minnesota limited
liability corporation that provides facilities in rural Minnesota for
the distribution of video signals (12.5%); NTG (10%); 702 Communications
(9.53%); WCTG (5%); and Onvoy (3.9%). The following entities own or
control 10% or more of the equity of Arvig: Allen Arvig, a U.S. citizen
(31.1%); Arvig Employee Stock Ownership Plan, a U.S. entity (20.2%); and
Donna Ward, a U.S. citizen (18.6%). No other person or entity directly
or indirectly owns or controls a 10% or greater interest in Arvig.

New Ulm, a Minnesota corporation, provides local exchange telephone
services (including interstate exchange access) and resold interstate
toll services as an incumbent LEC in the rural southern Minnesota
communities of New Ulm, Courtland, Essig, Klossner, and Searles. New Ulm
also provides competitive local exchange telephone service (including
interstate exchange access) and resold interstate toll services as a
competitive LEC in the rural Minnesota community of Redwood Falls, where
Qwest is the incumbent LEC. New Ulm also has two wholly-owned
subsidiaries: Western Telephone Company, a Minnesota corporation and
incumbent LEC that provides local exchange telephone services (including
interstate exchange access) and resold interstate toll services in the
rural southern Minnesota communities of Springfield and Sanborn; and
Peoples Telephone Company, an Iowa corporation and incumbent LEC that
provides local exchange telephone services in the rural northwestern
Iowa community of Aurelia.[^12] New Ulm and/or its subsidiaries also
hold interests in the following telecommunications and/or communications
companies: Fibercomm LC, an Iowa limited liability corporation that
provides competitive local exchange services in Sioux City, Iowa
(25.18%); Broadband Visions (8.19%); and Onvoy (0.26%). New Ulm and its
subsidiaries provide their services to the public under the trade name
of NU-Telecom, and serve approximately 16,300 access lines in the
aggregate. New Ulm has more than 1,300 shareholders, none of whom owns
or controls 10% or more of New Ulm's equity.

The proposed transaction consists of the transfer of control of Hector,
and the transformation of Hector from a publicly-traded corporation into
a private company owned equally by Blue Earth, Arvig and New Ulm (33.33%
each). The transaction will be accomplished by the merger of Hector
Acquisition Corp. ("HAC"), a newly-formed Minnesota corporation held in
equal shares by Transferees, into Hector, with Hector continuing as the
surviving corporation. The pre-merger shares and rights of Hector will
be cancelled and extinguished, subject to various provisions for the
payment of the merger consideration to consenting shareholders, option
holders, and dissenting shareholders.

The Applicants state that the proposed transaction will serve the public
interest. Applicants state that the proposed transaction entails the
transfer of control of Hector and its subsidiaries to three
well-established rural telephone company operators that have long served
similar and nearby rural communities and have proven records of
investing in their networks and communities. Applicants further assert
that the consummation of the proposed transaction will ensure that the
rural Minnesota, Wisconsin, and North Dakota customers of Hector will
continue to receive high-quality, state-of-the-art voice, data, and
video services at affordable rates for the foreseeable future.

**[GENERAL INFORMATION]{.underline}**

The transfer of assets identified herein has been found, upon initial
review, to be acceptable for filing as a non-streamlined application.
The Commission reserves the right to return any transfer of assets
application if, upon further examination, it is determined to be
defective and not in conformance with the Commission's rules and
policies. Pursuant to sections 1.415 and 1.419 of the Commission's
rules, 47 CFR §§ 1.415, 1.419, interested parties may file comments **on
or before September 19, 2006** and reply comments **on or before
September 26, 2006**.[^13] Comments may be filed using: (1) the
Commission's Electronic Comment Filing System (ECFS), (2) the Federal
Government's eRulemaking Portal, or (3) by filing paper copies. *See
Electronic Filing of Documents in Rulemaking Proceedings*, 63 FR 24121
(1998).

-   Electronic Filers: Comments may be filed electronically using the
    Internet by accessing the ECFS: <http://www.fcc.gov/cgb/ecfs/> or
    the Federal eRulemaking Portal:
    [http://www.regulations.gov](http://www.regulations.gov/). Filers
    should follow the instructions provided on the website for
    submitting comments.

-   For ECFS filers, if multiple docket or rulemaking numbers appear in
    the caption of this proceeding, filers must transmit one electronic
    copy of the comments for each docket or rulemaking number referenced
    in the caption. In completing the transmittal screen, filers should
    include their full name, U.S. Postal Service mailing address, and
    the applicable docket or rulemaking number. Parties may also submit
    an electronic comment by Internet e-mail. To get filing
    instructions, filers should send an e-mail to <ecfs@fcc.gov>, and
    include the following words in the body of the message, "get form."
    A sample form and directions will be sent in response.

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-   Paper Filers: Parties who choose to file by paper must file an
    original and four copies of each filing. If more than one docket or
    rulemaking number appears in the caption of this proceeding, filers
    must submit two additional copies for each additional docket or
    rulemaking number.

Filings can be sent by hand or messenger delivery, by commercial
overnight courier, or by first-class or overnight U.S. Postal Service
mail (although we continue to experience delays in receiving U.S. Postal
Service mail). All filings must be addressed to the Commission's
Secretary, Office of the Secretary, Federal Communications Commission.

The Commission's contractor will receive hand-delivered or
messenger-delivered paper filings for the Commission's Secretary at 236
Massachusetts Avenue, N.E., Suite 110, Washington, D.C. 20002. The
filing hours at this location are 8:00 a.m. to 7:00 p.m. All hand
deliveries must be held together with rubber bands or fasteners. Any
envelopes must be disposed of [before]{.underline} entering the
building. Commercial overnight mail (other than U.S. Postal Service
Express Mail and Priority Mail) must be sent to 9300 East Hampton Drive,
Capitol Heights, MD 20743. U.S. Postal Service first-class, Express, and
Priority mail should be addressed to 445 12th Street, S.W., Washington
D.C. 20554.

People with Disabilities: To request materials in accessible formats for
people with disabilities (braille, large print, electronic files, audio
format), send an e-mail to <fcc504@fcc.gov> or call the Consumer &
Governmental Affairs Bureau at 202-418-0530 (voice), 202-418-0432 (tty).

**You may submit comments, identified by the above noted docket number,
by any of the following methods:**

-   Federal eRulemaking Portal:
    [http://www.regulations.gov](http://www.regulations.gov/). Follow
    the instructions for submitting comments.

-   Federal Communications Commission's Web Site:
    <http://www.fcc.gov/cgb/ecfs/>. Follow the instructions for
    submitting comments.

-   People with Disabilities: Contact the FCC to request reasonable
    accommodations (accessible format documents, sign language
    interpreters, CART, etc.) by e-mail: <FCC504@fcc.gov> or phone:
    202-418-0530 or TTY: 202-418-0432.

**In addition, one copy of each pleading must be sent to each of the
following**:

1)  The Commission's duplicating contractor, Best Copy and Printing,
    Inc., 445 12th Street, S.W., Room CY-B402, Washington, D.C. 20554,
    [www.bcpiweb.com](http://www.bcpiweb.com/); phone: (202) 488-5300
    fax: (202) 488-5563;

2)  Cecilia Seppings, Competition Policy Division, Wireline Competition
    Bureau, 445 12th Street, S.W., Room 5-C230, Washington, D.C. 20554;
    email: [Cecilia.Seppings@fcc.gov](mailto:Cecilia.seppings@fcc.gov);

3)  Alex Johns, Competition Policy Division, Wireline Competition
    Bureau, 445 12th Street, S.W., Room 5-C317, Washington, D.C. 20554;
    e-mail: <alexis.johns@fcc.gov>;

4)  Susan O'Connell, Policy Division, International Bureau, 445 12th
    Street, S.W., Room 7-B544, Washington, D.C. 20554; email:
    [susan.o'connell@fcc.gov](mailto:cynthia.bryant@fcc.gov); and

5)  Jim Bird, Office of General Counsel, 445 12th Street, S.W., Room
    8-C824, Washington, D.C. 20554; e-mail: <jim.bird@fcc.gov>.

Filings and comments are also available for public inspection and
copying during regular business hours at the FCC Reference Information
Center, Portals II, 445 12th Street, S.W., Room CY-A257, Washington,
D.C. 20554. They may also be purchased from the Commission's duplicating
contractor, Best Copy and Printing, Inc., Portals II, 445 12th Street,
S.W., Room CY-B402, Washington, D.C. 20554, telephone: (202) 488-5300,
fax: (202) 488-5563, or via e-mail
[www.bcpiweb.com](http://www.bcpiweb.com/).

People with Disabilities: To request materials in accessible formats for
people with disabilities (braille, large print, electronic files, audio
format), send an e-mail to <fcc504@fcc.gov> or call the Consumer &
Governmental Affairs Bureau at 202-418-0530 (voice), 202-418-0432 (tty).

For further information, please contact Cecilia Seppings at (202)
418-1588, or Alex Johns at (202) 418-1167.

\- FCC -

[^1]: Technically, the transferors in this proceeding are the
    approximately 400 public shareholders of Hector. However, given that
    no public shareholder owns more than 14.04% of the common stock of
    Hector or exercises *de jure* control over Hector, control is
    instead exercised by Hector's Board of Directors and its officers.
    Therefore, Hector has been designated as the Transferor for purposes
    of this application.

[^2]: 47 C.F.R §§ 63.03, 63.04; *see* 47 U.S.C. § 214.

[^3]: Applicants are also filing applications for transfer of control
    associated with authorization for international services. Any action
    on this domestic 214 application is without prejudice to Commission
    action on other related, pending applications.

[^4]: *See* 47 C.F.R. § 63.03.

[^5]: A map showing the adjacencies is contained in the Application. 
    *See* Hector Communications Corporation; Blue Earth Valley
    Communications, Inc., Arvig Enterprises, Inc., New Ulm Telecom,
    Inc., Application for Consent to Transfer Control of Domestic
    Blanket Section 214 Authorizations, WC Docket No. 06-166,
    Attachment  (filed Aug. 22, 2006).

[^6]: *See* 47 C.F.R. § 63.03(b)(2)(iii); *Implementation of Further
    Streamlining Measures for Domestic Section 214 Authorizations,* 17
    FCC Rcd 5517, 5534 (2002), para. 32.

[^7]: The nine subsidiaries are: Arrowhead Communications Corp.; Eagle
    Valley Telephone Company; Felton Telephone Company ("Felton");
    Granada Telephone Company; Hager Telecom, Inc. ("Hager"); Indianhead
    Telephone Company ("Indianhead"); Loretel Systems, Inc. ("Loretel");
    Pine Island Telephone Company ("Pine Island"); and Sleepy Eye
    Telephone Company ("Sleepy Eye"). Alliance Telecommunications
    Corporation, a wholly-owned subsidiary of Hector, owns 100% of the
    stock of Felton, Loretel, Sleepy Eye, and Hager, as well as Cannon
    Communications Corp., an Internet service provider ("ISP"). Pine
    Island is owned by Hector (69%) and Indianhead (31%). Sleepy Eye
    wholly-owns OU Connection, Inc., a Minnesota corporation authorized
    to provide competitive local exchange service in Minnesota. Hector
    and its subsidiaries also provide cable television service, digital
    television service over broadband facilities, dial-up Internet
    access, and high-speed Internet access over digital subscriber lines
    (DSL).

[^8]: At the time this application was filed, Hector, Blue Earth and New
    Ulm held interests in Midwest Wireless Holdings LLC ("Midwest
    Wireless") (8%, 8.08%, and 9.88%, respectively). A transfer of
    control of Midwest Wireless to AllTel Corporation is pending.

[^9]: Blue Earth and its subsidiaries also provide dial-up and
    high-speed Internet access services, computer networking services,
    alarm and surveillance services, and business telephone systems and
    telephone answering services.

[^10]: The trustee for each of these trusts is William V. Eckles, and
    the beneficiaries of each trust are William V. Eckles and his issue,
    all of whom are U.S. citizens.

[^11]: Tekstar Cable provides cable television services and other
    non-regulated, non-telecommunications services in many of the same
    areas served by Tekstar.

[^12]: In addition, New Ulm and its subsidiaries provide dial-up and
    high-speed Internet access services, computer sales and networking
    services, and cable television services.

[^13]: *See* 47 C.F.R. § 63.03(a).