**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

+----------------------------------+----+------------------------------+
| In the matter of                 | *  | CCB/CPD No. 01-28            |
|                                  | *) |                              |
| ALLTEL Corporation               | ** | CCB/CPD No. 99-01            |
|                                  |    |                              |
| Petition for Waiver of Section   | *  | CCB/CPD No. 01-36            |
| 61.41                            | *) |                              |
|                                  | ** | CCB/CPD No. 01-30            |
| ALLTEL Corporation               |    |                              |
|                                  | *  | CCB/CPD No. 99-36            |
| Petition to Extend Interim       | *) |                              |
| Waiver of Section 61.41 of the   | ** |                              |
| Commission\'s Rules              |    |                              |
|                                  | *  |                              |
| CenturyTel, Inc. and CenturyTel  | *) |                              |
| of Alabama, LLC                  | ** |                              |
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| Petition for Waiver of Sections  | *  |                              |
| 61.41(b) and (c) of the          | *) |                              |
| Commission's Rules               | ** |                              |
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| CenturyTel, Inc. and CenturyTel  | *  |                              |
| of Missouri, LLC                 | *) |                              |
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| Petition for Wavier of Sections  |    |                              |
| 61.41(b) and (c) of the          | *  |                              |
| Commission's Rules               | *) |                              |
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| Puerto Rico Telephone Company    |    |                              |
| Petition for Waiver of Section   | *  |                              |
| 61.41 of the Commission's Rules  | *) |                              |
| or, in the Alternative, Request  | ** |                              |
| for Waiver of Section 54.303(a)  |    |                              |
| of the Commission's Rules        | *  |                              |
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+----------------------------------+----+------------------------------+

**Memorandum Opinion and Order**

**Adopted: April 17, 2002 Released: April 18, 2002**

By the Chief, Wireline Competition Bureau:[^1]

# Introduction

1.  In this order, we grant five petitions for waiver of the
    Commission's "all-or-nothing rule."[^2] The first three petitions,
    filed by ALLTEL Corporation (ALLTEL);[^3] CenturyTel, Inc.
    (CenturyTel) and CenturyTel of Alabama, LLC (CenturyTel of
    Alabama);[^4] and CenturyTel and CenturyTel of Missouri, LLC
    (CenturyTel of Missouri)[^5] relate to pending purchases of
    exchanges from carriers subject to price cap regulation. By granting
    these petitions, we will allow the carriers to continue to operate
    their existing exchanges under rate-of-return regulation, following
    the acquisitions, until the Commission completes its review of the
    all-or-nothing rule.[^6] These first three petitions also seek
    guidance on the operation of the Commission's interstate access
    universal service support mechanism, which we provide below. The
    last two petitions concern extensions of previously-granted waivers.
    Specifically, we grant a waiver petition filed by ALLTEL[^7] and
    extend the deadline by which exchanges acquired from Aliant are
    required to convert to rate-of-return regulation until the
    Commission completes its review of the all-or-nothing rule.[^8] We
    also grant a waiver petition filed by Puerto Rico Telephone Company,
    Inc. (Puerto Rico Telephone) and extend the deadline by which Puerto
    Rico Telephone is required to convert to price cap regulation, thus
    allowing Puerto Rico Telephone to remain under rate-of-return
    regulation until the Commission completes its review of the
    all-or-nothing rule.[^9]

# Background

2.  *The All-or-Nothing Rule*. Section 61.41 of the Commission's rules
    is designed to ensure that all of a carrier's study areas and
    affiliates are subject to a single form of pricing regulation --
    either price cap regulation or rate-of-return regulation.[^10] This
    rule is commonly referred to as the "all-or-nothing" rule.
    Specifically, section 61.41 provides that, if an individual
    rate-of-return carrier or study area converts to price cap
    regulation, all of its affiliates or study areas must also do so,
    except for those using average schedules.[^11] This section also
    provides that if a price cap carrier enters into a merger,
    acquisition, or similar transaction, it must continue to operate
    under price cap regulation after the transaction.[^12] In addition,
    when rate-of-return and price cap carriers merge or acquire one
    another, the rate-of-return carrier must convert to price cap
    regulation within one year.[^13] These requirements address two
    concerns the Commission has regarding mergers and acquisitions
    involving price cap and non-price cap companies. First, a carrier
    might attempt to shift costs from its price cap affiliates to its
    non-price cap affiliates.[^14] This would allow a non-price cap
    affiliate to charge higher rates than otherwise possible to recover
    its higher revenue requirement while simultaneously increasing
    profits of a price cap affiliate resulting from its cost
    savings.[^15] Second, a carrier might attempt to "game the system"
    by switching back and forth between rate-of-return regulation and
    price cap regulation.[^16] A rate-of-return carrier could build a
    large rate base in order to raise rates, and then return to price
    cap regulation and reduce costs to an efficient level, thereby
    maximizing its profits at the expense of ratepayers.[^17]

3.  *Commission Review of the All-or-Nothing Rule*. The continued
    utility of the all-or-nothing rule is currently under consideration
    in the *Rate-of-Return Access Charge Reform Further Notice*.[^18] In
    the *Notice*, the Commission noted that the all-or-nothing rule was
    created ten years ago, and stated that it wished to explore whether
    its regulatory policy of generally not permitting affiliated
    carriers to operate under different systems of regulation continues
    to serve any public interest.[^19] It requested comment on why, if
    at all, the rule should be retained, repealed, or modified.[^20] The
    Commission requested comment on whether the all-or-nothing
    restrictions unfairly limit affiliated companies from selecting
    regulatory options that would enable them to operate more
    efficiently, especially in light of the highly diverse service areas
    of some carriers.[^21] The Commission also requested comment on
    whether and how circumstances have changed since the rule was
    adopted; whether competition would be better served with or without
    the rule; whether the rule is working effectively, especially in
    light of the rule waivers the Commission grants; what impact an
    increasingly competitive environment has on the rules; whether the
    rule is still necessary to prevent cost-shifting and gaming; and how
    rate-of-return carriers that are required to convert to price cap
    regulation will receive universal support.[^22]

# discussion

4.  Generally, the Commission\'s rules may be waived for good cause
    shown.[^23] As noted by the Court of Appeals for the D.C. Circuit,
    however, agency rules are presumed valid.[^24] The Commission may
    exercise its discretion to waive a rule where the particular facts
    make strict compliance inconsistent with the public interest.[^25]
    In addition, the Commission may take into account considerations of
    hardship, equity, or more effective implementation of overall policy
    on an individual basis.[^26] Waiver of the Commission\'s rules is
    therefore appropriate only if special circumstances warrant a
    deviation from the general rule, and such a deviation will serve the
    public interest.[^27]

## Waiver Requests for Pending Transactions 

5.  *ALLTEL*. ALLTEL requests that the Commission waive section 61.41 of
    its rules[^28] to allow ALLTEL to continue to be regulated as a
    rate-of-return incumbent local exchange carrier following its
    upcoming acquisition of 100 local exchanges from Verizon
    Communications Inc. (Verizon) in the state of Kentucky, while the
    local exchanges acquired from Verizon remain under price cap
    regulation.[^29] A new, wholly-owned subsidiary of ALLTEL named
    Kentucky ALLTEL will hold the assets of the former Verizon
    exchanges, which is separate from the entity that holds the existing
    ALLTEL local telephone operations in Kentucky.[^30] ALLTEL asserts
    that the public interest would be served if the higher-density
    Verizon properties were to remain subject to the
    efficiency-generating mechanisms of price cap regulation.[^31]
    ALLTEL contends that this transaction does not raise cost-shifting
    concerns.[^32] Additionally, ALLTEL asserts that the current level
    of universal service support under the *CALLS* *Order*,[^33] which
    is capped, would be insufficient to cover the additional exchanges
    if all of ALLTEL's rate-of-return exchanges were converted to price
    cap regulation.[^34] AT&T opposes the waiver petition.[^35] AT&T
    asserts that ALLTEL has failed to demonstrate special circumstances
    necessary to justify a waiver, that grant of ALLTEL's waiver request
    would allow it to shift costs between its affiliates, and that
    ALLTEL has failed to prove that any public interest benefit would
    result from the grant of its request.[^36]

6.  *CenturyTel*. CenturyTel and CenturyTel of Missouri request that the
    Commission waive the all-or-nothing rule, specifically
    subsections (b) and (c)(2),[^37] to allow CenturyTel to continue to
    be regulated as a rate-of-return incumbent local exchange carrier
    following the acquisition of 96 local exchanges from Verizon in
    Missouri, while the local exchanges acquired from Verizon remain
    under price cap regulation.[^38] CenturyTel and CenturyTel of
    Alabama similarly request a waiver of the Commission's
    all-or-nothing rule regarding CenturyTel of Alabama's recent
    agreement to acquire 88 of Verizon's local exchanges in
    Alabama.[^39] CenturyTel requests that the waivers last until July
    1, 2005.[^40]

7.  CenturyTel asserts that the grant of its petitions would serve the
    public interest, raises no new issues of law, and is supported by
    Commission precedent.[^41] CenturyTel asserts that the concerns
    behind the Commission's all-or-nothing rule are not at issue for its
    transactions because CenturyTel will not be able to shift costs
    among study areas without such actions appearing in state and
    federal tariffs.[^42] CenturyTel contends that the vast majority of
    its exchanges are rural, and conversion to price cap regulation
    would be inappropriate.[^43] CenturyTel asserts that if it were
    required to convert all of its exchanges to price cap regulation,
    universal service support under the *CALLS Order* would be
    insufficient.[^44] AT&T opposes the waiver petition.[^45] AT&T
    asserts that CenturyTel has failed to demonstrate special
    circumstances necessary to justify a waiver, that grant of
    CenturyTel's waiver requests would allow it to shift costs between
    its affiliates, and that CenturyTel has failed to prove that any
    public interest benefit would result from the grant of its
    request.[^46]

8.  *Waiver for ALLTEL and CenturyTel*. We find good cause to grant the
    requests by ALLTEL and CenturyTel for waiver of the Commission's
    all-or-nothing rule[^47] and to allow them to retain their
    respective regulatory status until the Commission concludes its
    review of the all-or-nothing rule in the *Rate-of-Return Access
    Charge Reform Further Notice*. As part of the *Rate-of-Return Access
    Charge Reform Further Notice*, the Commission is currently
    considering whether to modify or eliminate the all-or-nothing
    rule.[^48] We expect that the Commission's review of the
    all-or-nothing rule will be resolved before ALLTEL and CenturyTel
    must make their annual access tariff filings for 2003. Under these
    special circumstances, we do not believe the public interest would
    be served by requiring ALLTEL and CenturyTel to undertake the
    burdens of converting their acquired exchanges to rate-of-return
    regulation based on a rule that may be modified on eliminated in the
    near future.

9.  Moreover, when it adopted the all-or-nothing rule, the Commission
    noted that it would entertain requests for waiver of the rule
    because efficiencies created by the purchase and sale of exchanges
    may outweigh the threat of "gaming the system" and cost
    shifting.[^49] In addition, the Commission has stated that, although
    it believes that incentive-based regulation is generally superior to
    rate-of-return regulation, it is sensitive to the needs of smaller
    carriers.[^50] In prior waiver orders, the Bureau has observed that
    the public interest can be served by allowing smaller carriers to
    purchase exchanges from Bell Operating Companies and serve their
    customers.[^51] Here, we believe that the efficiencies to be gained
    from the sale of exchanges to ALLTEL and CenturyTel outweigh the
    threat of "gaming the system" raised by AT&T. However, to safeguard
    against possible gaming that could result from attempts to elect
    price cap regulation while these rules are under review, we require
    ALLTEL and CenturyTel to seek prior Commission approval if either
    seeks to elect price cap regulation. At that time, we can make a
    determination if the transaction raises concerns that we seek to
    address in section 61.41. Under these conditions, and absent some
    showing of actual "gaming," we find that the public interest will be
    served by allowing ALLTEL and CenturyTel to maintain their
    respective regulatory status until the Commission completes its
    review of the all-or-nothing rule.[^52]

10. We reject CenturyTel's request for a waiver of the all-or-nothing
    rule until July 2005.[^53] As mentioned above, we expect the
    Commission to conclude its review of the rule well before the annual
    access tariff filing for 2005, and we find no basis to grant a
    three-year waiver before the Commission has finished its review.

11. Additionally, we find that the comments filed by Mr. Michael Van
    Wies regarding CenturyTel's service quality in Tennessee are
    appropriately addressed by the Tennessee Regulatory Authority and do
    not affect CenturyTel's request for waiver of the all-or-nothing
    rule in Missouri and Alabama.[^54]

12. We also observe that section 61.45 of the Commission\'s rules grants
    the Commission discretion to require price cap carriers to make
    adjustments to their price cap indices to reflect cost changes
    resulting from rule waivers.[^55] Consistent with our precedent and
    in accordance with section 61.45, we require Verizon to adjust its
    price cap indices to reflect the removal of the transferred access
    lines from its Alabama, Missouri and Kentucky study areas.[^56]

## Petitions for Clarification

13. In addition to seeking waivers of the all-or-nothing rule, ALLTEL
    and CenturyTel both request a "clarification" of section 54.801(d)
    the Commission's rules.[^57] Specifically, both carriers request a
    finding that they will receive the same level of universal service
    support for the price cap exchanges they acquire, as the sellers did
    prior to the transactions.[^58] Although we find no ambiguity in the
    Commission's rules, we take this opportunity to confirm the
    carriers' understanding of section 54.801. As described in the
    Commission's *CALLS* *Order*, if a price cap carrier acquires
    exchanges from another price cap carrier, the acquiring carrier will
    become eligible to receive interstate access universal service
    support for the acquired exchanges.[^59] Here, the acquiring
    carriers, Kentucky ALLTEL, CenturyTel of Alabama, and CenturyTel of
    Missouri, will be price cap carriers upon acquisition of the
    exchanges from Verizon. In accordance with section 54.801, the
    acquiring price cap carrier will receive interstate access universal
    service support at the same level that the selling price cap carrier
    formerly received, and both carriers will adjust their line counts
    accordingly beginning with the next quarterly report to the fund
    administrator.[^60] Carriers are also required to report their
    adjusted average common line, marketing, and transport
    interconnection charge revenue per line, per month, for the affected
    study areas in accordance with the Commission's rules.[^61] Per-line
    amounts of interstate access universal service support for the
    acquired exchanges may change as a result of the revised revenue
    filings.[^62] Because the interstate access universal service
    support mechanism is capped at \$650 million, however, individual
    transactions will not increase its overall size.[^63]

## Waiver Requests for Prior Transactions 

14. *ALLTEL/Aliant*. ALLTEL requests an extension from July 1, 2002,
    until July 1, 2003, of the initial waiver of the all-or-nothing rule
    for exchanges it received when it merged with Aliant in 1999.[^64]
    Before the merger, ALLTEL was subject to rate-of-return regulation,
    and Aliant was subject to price cap regulation.[^65] As part of its
    approval of this merger, the Commission waived section 61.41 of its
    rules to allow the ALLTEL exchanges to remain subject to
    rate-of-return regulation and to permit the Aliant exchanges to
    convert from price cap to rate-of-return regulation after the
    merger.[^66] In order to prevent ALLTEL from circumventing the
    purpose of the all-or-nothing rule, the Commission required the
    merged company to seek prior Commission approval if it ever decided
    to elect price cap regulation.[^67] On June 16, 2000, the Bureau
    granted ALLTEL's petition for an interim waiver of section 61.41 to
    allow the merged company to continue to operate the former Aliant
    exchanges under price cap regulation pending the Commission's
    decision on ALLTEL's request to elect price cap regulation on a
    permanent basis for 13 of ALLTEL's study areas.[^68] On June 21,
    2000, ALLTEL withdrew its request to convert 13 of its study areas
    to price cap regulation after concluding that the conversion was not
    feasible in light of the Commission's *CALLS Order*.[^69] On June
    12, 2001, the Bureau granted ALLTEL's petition to extend the waiver
    of section 61.41 to permit it to file a price cap annual access
    tariff that would become effective July 1, 2001 for the Aliant
    exchanges, enabling them to operate under price cap regulation until
    July 3, 2002.[^70]

15. ALLTEL now seeks another one-year extension so that it may file a
    price cap annual access tariff for the Aliant exchanges to be
    effective July 1, 2002, and continue to operate those exchanges
    under price caps until July 1, 2003.[^71] ALLTEL states that the
    ALLTEL rate-of-return study areas have a permanent waiver to
    continue to operate under rate-of-return regulation, and that the
    only issue before the Commission is whether to extend the waiver of
    the all-or-nothing rule and allow the Aliant exchanges to continue
    under price cap regulation for another year.[^72] ALLTEL asserts
    that price cap regulation has yielded benefits for Aliant's relevant
    customers.[^73] ALLTEL also contends that approval of its waiver
    request will not result in any of the harms that the all-or-nothing
    rule addresses because competition has developed in the access
    service market and cost-shifting would encourage uneconomic entry
    into ALLTEL's rate-of-return study areas.[^74] Additionally, in the
    three years since the merger, ALLTEL asserts that no evidence has
    surfaced regarding cost shifting.[^75] No oppositions were filed in
    response to ALLTEL's petition.

16. We find that good cause exists for us to grant the waiver request by
    ALLTEL due to the special circumstances presented here. The
    Commission previously found that it was in the public interest to
    allow the former Aliant exchanges to remain under price cap
    regulation and allow the ALLTEL exchanges to be regulated under
    rate-of-return regulation while the Commission considered ALLTEL's
    request to elect price cap status on a permanent basis.[^76]
    Additionally, in 2001, the Bureau found good cause to allow
    ALLTEL/Aliant to maintain the status quo, and noted that the Aliant
    exchanges had reformed their access charges and emerged with a more
    cost-causative interstate rate structure which benefited Aliant's
    customers.[^77] The Bureau also noted that similar reforms for
    companies operating under rate-of-return regulation were under
    consideration in the proceeding that resulted in the *Rate-of-Return
    Access Charge Reform Further Notice*.[^78] As noted above, issues
    raised in the *Rate-of-Return Access Charge Reform Further Notice*
    could affect this petition, and we anticipate that questions
    surrounding the all-or-nothing rule will be resolved before the
    former Aliant exchanges must file their 2003 annual access tariffs.
    We therefore extend the waiver of the Commission's rules to allow
    ALLTEL to file a price cap annual access tariff for the Aliant
    exchanges to become effective July 3, 2002, so these exchanges can
    remain under price cap regulation until the Commission completes its
    review of the all-or-nothing rule. In doing so, we extend the
    deadline by which ALLTEL is required to convert the exchanges it
    acquired from Aliant to rate-of-return regulation until the
    Commission completes its review of the all-or-nothing rule.

17. *Puerto Rico Telephone*. Puerto Rico Telephone requests that the
    Commission waive the all-or-nothing rule to allow it to continue to
    be regulated as a rate-of-return incumbent local exchange carrier
    following its transfer of control to GTE Holdings (Puerto Rico) LLC
    (GTE Puerto Rico) in 1999.[^79] In the alternative, if it is
    required to convert to price cap regulation, Puerto Rico Telephone
    requests an extension of the effective date of its initial price cap
    tariff to July 1, 2003.[^80]

18. In February 1999, the Commission approved an application to transfer
    control of Puerto Rico Telephone to GTE Puerto Rico, a wholly owned
    subsidiary of GTE International Telecommunications Incorporated
    (GTE).[^81] As a result of the transfer of control to GTE, Puerto
    Rico is required under section 61.41(c)(2) of the Commission's rules
    to convert to price cap regulation,[^82] which would result in
    Puerto Rico Telephone's loss of any Long-Term Support it receives
    pursuant to section 54.303 of the Commission's rules.[^83] In
    December 1999, Puerto Rico Telephone filed a petition for waiver of
    section 61.41 of the Commission's rules, as well as any other
    provisions that would prevent it from remaining subject to
    rate-of-return regulation and in the NECA Common Line Pool, which
    enables it to receive Long-Term Support.[^84] Puerto Rico Telephone
    alternatively requested a limited waiver of section 54.303(a) of the
    Commission's rules in order to allow it to continue to receive
    Long-Term Support for a transitional period.[^85] In response, and
    in light of the Commission's *CALLS Order*, the Commission postponed
    Puerto Rico Telephone's initial price cap filing to July 1, 2001,
    but did not rule on the merits of Puerto Rico Telephone's
    petition.[^86] Based on issues pending in the proceeding that led to
    the Commission's *Rate-of-Return Access Charge Reform Further
    Notice,* the Bureau further extended Puerto Rico Telephone's
    conversion deadline to July 1, 2002.[^87]

19. Puerto Rico Telephone maintains that its current petition for waiver
    of section 61.41(c) would serve the public interest and is
    consistent with prior Commission decisions granting waivers of
    section 61.41.[^88] Puerto Rico Telephone asserts that the
    Commission is considering both the distribution of universal service
    support upon a carrier's conversion to price cap regulation, and the
    potential elimination of the all-or-nothing rule, in the context of
    the *Rate-of-Return Access Charge Reform Further Notice*.[^89]
    Puerto Rico Telephone asserts that the final determination of these
    issues will have a great impact on it, but that it is unlikely that
    either issue will be resolved before Puerto Rico Telephone must file
    its 2002 annual access tariff.[^90] Puerto Rico Telephone argues
    that if it is required to convert to price cap regulation, granting
    an extension of time to file the annual price cap tariff, to be
    effective July 1, 2003, will provide administrative ease and
    synchronization of Puerto Rico Telephone's price cap filings.[^91]
    AT&T and WorldCom oppose Puerto Rico Telephone's waiver
    petition,[^92] and NECA supports a grant of the waiver
    petition.[^93]

20. We find that good cause exists to grant Puerto Rico Telephone's
    waiver request. The Commission has previously found that it was in
    the public interest to grant Puerto Rico's waiver request and found
    that its original waiver request raised "serious and complex issues
    regarding the changes in universal service support facing \[Puerto
    Rico Telephone\] if it is required to convert to price cap
    regulation."[^94] The Commission found that an analysis of Puerto
    Rico Telephone's waiver request must involve consideration of the
    potential impact on local competition, universal service support in
    Puerto Rico, the operation of the NECA Common Line Pool, and the
    impact of the *CALLS* proceeding.[^95] In extending the initial
    waiver, the Bureau noted that the *CALLS* *Order* did not explicitly
    address how entry of new carriers into price caps affects the
    distribution of interstate access universal service support.[^96]

21. Here, we note that issues in the *Rate-of-Return Access Charge
    Reform Further Notice* affect Puerto Rico Telephone's waiver
    request. In the *Rate-of-Return Access Charge Reform Further
    Notice*, the Commission will consider how rate-of-return carriers
    that are required to, or choose to, convert to price cap regulation
    will receive universal service support.[^97] The *Rate-of-Return
    Access Charge Reform Further Notice* specifically noted that a
    primary concern with Puerto Rico Telephone's conversion to price cap
    regulation is the loss of Long-Term Support, which has no
    counterpart under *CALLS*.[^98] Additionally, in the *Rate-of-Return
    Access Charge Reform Further Notice,* the Commission is considering
    whether to modify or eliminate the all-or-nothing rule, which would
    also affect Puerto Rico Telephone' waiver request. We anticipate
    that these issues will be resolved before Puerto Rico Telephone must
    file its annual access filing for 2003. Under these special
    circumstances, we find that the public interest will be served by
    allowing Puerto Rico Telephone to remain under rate-of-return
    regulation until the Commission completes its review of the
    all-or-nothing rule.

22. We recognize that AT&T and WorldCom object to Puerto Rico
    Telephone's waiver petition, but we believe their concerns would be
    better addressed in the pending *Rate-of-Return Access Charge Reform
    Further Notice*.[^99] We again find, as the Commission and Bureau
    have found previously, that Puerto Rico Telephone's current petition
    raises difficult issues regarding universal service support if
    Puerto Rico Telephone is required to convert to price cap
    regulation.[^100] We do not wish to make a final determination on
    the merits of Puerto Rico Telephone's permanent waiver request until
    the Commission completes the *Rate-of-Return Access Charge Reform
    Further Notice*'s inquiry into the continued utility of the
    all-or-nothing rule. In light of these various considerations, we
    again find that is appropriate to extend the deadline for Puerto
    Rico Telephone's conversion to price cap regulation until the
    Commission completes its review of the all-or-nothing rule, without
    ruling on the substantive merits of Puerto Rico Telephone's
    petition.[^101] This waiver will allow further review of the merits
    of Puerto Rico Telephone's petition in light of all the information
    filed in this proceeding, and in light of other related proceedings.

# ordering clauses

23. Accordingly, IT IS 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, and 1.3
    of the Commission's rules, 47 C.F.R. §§ 0.91, 0.291, and 1.3, that
    the petitions for waiver of the Commission's rules, 47 C.F.R. §
    61.41, filed by: ALLTEL Corporation on December 3, 2001, and
    February 22, 2002; CenturyTel, Inc., and CenturyTel of Alabama, LLC
    on November 28, 2001; CenturyTel, Inc., and CenturyTel of Missouri,
    LLC on December 13, 2001; and Puerto Rico Telephone Company, Inc.,
    on February 4, 2002, ARE GRANTED, to the extent described herein.

> FEDERAL COMMUNICATIONS COMMISSION
>
> Dorothy T. Attwood
>
> Chief, Wireline Competition Bureau

[^1]: The Common Carrier Bureau recently changed its name to the
    "Wireline Competition Bureau," and the Competitive Pricing Division
    recently changed its name to the "Pricing Policy Division."

[^2]: *See* 47 C.F.R. § 61.41.

[^3]: ALLTEL Corporation Petition for Waiver of Section 61.41 (filed
    Dec. 3, 2001) (*ALLTEL Waiver Petition*).

[^4]: CenturyTel, Inc., and CenturyTel of Alabama, LLC Petition for
    Waiver (filed Nov. 28, 2001) (*CenturyTel Alabama Waiver Petition*).

[^5]: CenturyTel, Inc., and CenturyTel of Missouri, LLC, Petition for
    Waiver (filed Dec. 13, 2001) (*CenturyTel Missouri Waiver
    Petition*).

[^6]: *Multi-Association Group (MAG) Plan for Regulation of Interstate
    Services of Non-Price Cap Incumbent Local Exchange Carriers and
    Interexchange Carriers*, CC Docket No. 00-256, Second Report and
    Order and Further Notice of Proposed Rulemaking, 16 FCC Rcd 19613
    (2001) (*Rate-of-Return Access Charge Reform Further Notice*)
    (seeking comment on the all-or-nothing rule)*.*

[^7]: ALLTEL merged with Aliant Communications, Inc. (Aliant) in 1999.
    *See* *ALLTEL Corporation Petition for Waiver of Section 61.41 of
    the Commission's Rules and Applications for Transfer of Control*,
    CCB/CPD No. 99-1, Memorandum Opinion and Order, 14 FCC Rcd 14191
    (1999) (*ALLTEL/Aliant Merger Order*).

[^8]: ALLTEL Corporation Petition to Extend Interim Waiver of Section
    61.41 of the Commission's Rules (filed Feb. 22, 2002)
    (*ALLTEL/Aliant Waiver Petition*).

[^9]: Puerto Rico Telephone Company Petition for Waiver of Section 61.41
    or Section 54.303(a) of the Commission's Rules, CCB/CPD No. 99-36
    (filed Feb. 4, 2002) (*Puerto Rico Telephone Waiver Petition*).

[^10]: 47 C.F.R. § 61.41.

[^11]: 47 C.F.R. § 61.41(b).

[^12]: 47 C.F.R. § 61.41(c)(1).

[^13]: 47 C.F.R. § 61.41(c)(2).

[^14]: *Rate-of-Return Access Charge Reform Further Notice*, 16 FCC Rcd
    at 19781, para. 261.

[^15]: *Id.*

[^16]: *Id.*

[^17]: *Id.*

[^18]: *Id*. at 19720-24, paras. 266-271.

[^19]: *Id*. at 19720, para. 266.

[^20]: *Id*.

[^21]: *Id*. at 19720, para. 267.

[^22]: *Id*. at 19720-24, paras. 267-71.

[^23]: 47 C.F.R. § 1.3.

[^24]: *WAIT Radio v. FCC*, 418 F.2d 1153, 1159 (D.C. Cir. 1969), *cert.
    denied*, 409 U.S. 1027 (1972).

[^25]: *Northeast Cellular Telephone Co. v. FCC*, 897 F.2d 1164, 1166
    (D.C. Cir. 1990).

[^26]: *WAIT Radio*, 418 F.2d at 1159; *Northeast Cellular Telephone*,
    897 F.2d at 1166.

[^27]: *WAIT Radio*, 418 F.2d at 1159; *Northeast Cellular Telephone*,
    897 F.2d at 1166.

[^28]: Specifically, ALLTEL seeks a waiver of subsections (b) and
    (c)(2). 47 C.F.R. § 64.41(b) and (c)(2).

[^29]: *ALLTEL Waiver Petition* at 1. On February 13, 2002, the Public
    Service Commission of Kentucky approved the transfer of Verizon's
    Kentucky exchanges to ALLTEL, subject to certain conditions.
    *Petition by ALLTEL Corp. to Acquire the Kentucky Assets of Verizon
    South, Inc*., Case No. 2001-00399, Order (Kentucky Public Service
    Commission 2002).

[^30]: *ALLTEL Waiver Petition* at 1-2.

[^31]: *Id.* at 7-8, 11.

[^32]: *Id.* at 9.

[^33]: *Access Charge Reform, Price Cap Performance Review for Local
    Exchange Carriers, Low-Volume Long-Distance Users, Federal-State
    Joint Board on Universal Service,* Sixth Report and Order in CC
    Docket Nos. 96-262 and 94-1, Report and Order in CC Docket No.
    99-249, Eleventh Report and Order in CC Docket No. 96-45, 15 FCC Rcd
    12962 (2000), *aff\'d in part, rev\'d in part, and remanded in part,
    Texas Office of Public Util. Counsel v*. *FCC*, 265 F.3d 313 (5th
    Cir. 2001) (*CALLS Order*)*.*

[^34]: *ALLTEL Waiver Petition* at 11. ALLTEL did not request the waiver
    for a specific period of time.

[^35]: AT&T Opposition to ALLTEL Waiver Request (filed Dec. 27, 2001)
    (*AT&T ALLTEL Opposition*).

[^36]: *Id*. at 1-8.

[^37]: 47 C.F.R. § 64.41(b) and (c)(2).

[^38]: *CenturyTel Missouri Waiver Petition* at 1-12.

[^39]: *CenturyTel Alabama Waiver Petition* at 1-12.

[^40]: *CenturyTel Alabama Waiver Petition* at 11; *CenturyTel Missouri
    Waiver Petition* at 11-12.

[^41]: *CenturyTel Alabama Waiver Petition* at 1-2; *CenturyTel Missouri
    Waiver Petition* at 1-2.

[^42]: *CenturyTel Alabama Waiver Petition* at 5-6; *CenturyTel Missouri
    Waiver Petition* at 5-6.

[^43]: *CenturyTel Alabama Waiver Petition* at 6-8; *CenturyTel Missouri
    Waiver Petition* at 6-8.

[^44]: *CenturyTel Alabama Waiver Petition* at 12-13; *CenturyTel
    Missouri Waiver Petition* at 12-13.

[^45]: AT&T Opposition to CenturyTel Waiver Requests (filed Jan. 4,
    2002) (*AT&T CenturyTel Opposition*)*.*

[^46]: *Id*. at 1-8.

[^47]: *See generally Ateac, Inc., Alaska Telephone Co., Arctic Slope
    Telephone Ass'n Cooperative, Interior Telephone Co., Inc., Mukluk
    Telephone Co., and United-KUC, Inc. Petition for Waiver of Sections
    61.41(c) and (d) of the Commission's Rules*, CCB/CPD No. 00-01,
    Memorandum Opinion and Order, 15 FCC Rcd 23511 (Common Carrier
    Bureau 2000); *All West Communications, Inc., Carbon/Emery Telecom,
    Inc., Central Utah Telephone, Inc., Hanksville Telecom, Inc., Manti
    Telephone Co., Skyline Telecom, UBET Telecom, Inc., and Qwest Corp.
    Joint Petition for Waiver of the Definition of "Study Area"
    Contained in the Party 36 Appendix-Glossary of the Commission's
    Rules, Petition for Waiver of Sections 61.41(c), 61.41(d), and
    69.3(e)(11*), CC Docket No. 96-45, Order, 16 FCC Rcd 4697 (Common
    Carrier Bureau 2001); *Saddleback Communications and Qwest
    Corporation*, CC Docket No. 96-45, Order, 16 FCC Rcd 21159 (Common
    Carrier Bureau 2001).

[^48]: *See* *Rate-of-Return Access Charge Reform Further Notice*, 16
    FCC Rcd at 19720, paras. 266-67.

[^49]: *See Policy and Rules Concerning Rates for Dominant Carriers,* CC
    Docket No. 87-313, Order on Reconsideration, 6 FCC Rcd 2637, 2706,
    n.207 (1991) (subsequent history omitted) (*LEC Price Cap*
    *Reconsideration Order*).

[^50]: *See* *ALLTEL/Aliant Merger Order*, 14 FCC Rcd at 14202, para.
    34.

[^51]: *See Citizens Telecommunications Company of Wyoming and Qwest
    Corp. Joint Petition for Waiver of the Definition of "Study Area"
    Contained in the Part 36 Appendix-Glossary of the Commission's
    Rules,* CC Docket No*.* 96-45, Order, 16 FCC Rcd 3563, 3567, para.
    11 (Common Carrier Bureau 2001) (*Citizens Waiver Order*); *Valor
    Telecommunications of Texas and GTE Southwest Inc. Joint Petition
    for Waiver of the Definition of "Study Area" Contained in the Part
    36 Appendix-Glossary of the Commission's Rules,* CC Docket No*.*
    96-45, Order, 15 FCC Rcd 15816, 15821, para. 11 (Common Carrier
    Bureau 2000) (*Valor* *Waiver Order*). *See generally Price Cap
    Performance Review for Local Exchange Carriers,* CC Docket No. 94-1,
    First Report and Order, 10 FCC Rcd 8961, 9102, para. 323 (1995);
    *Price Cap Performance Review for Local Exchange Carriers*, CC
    Docket No. 94-1, Notice of Proposed Rulemaking, 9 FCC Rcd 1687,
    1704, para. 88 (1994).

[^52]: In the event the Commission modifies the all-or-nothing rule, we
    anticipate that it will provide carriers with some period of time to
    evaluate any changes to the rule before carriers are required to
    elect a particular form of pricing regulation. In the event the
    Commission chooses not to modify the rule, we expect that it will
    specify the time period in which carriers with pending waivers must
    come into compliance with the rule.

[^53]: *CenturyTel Alabama Waiver Petition* at 11; *CenturyTel Missouri
    Waiver Petition* at 11-12.

[^54]: Comments of Mr. Michael Van Wies (filed Jan. 18, 2002).

[^55]: *See* 47 C.F.R. § 61.45(d). The Price Cap Indices, which are the
    upper bounds for rates that comply with price cap regulation, are
    calculated pursuant to a formula specified in the Commission's rules
    for price cap carriers. *See also* *Price Cap Performance Review for
    Local Exchange Carriers*, CC Docket No. 99-1, First Report and
    Order, 10 FCC Rcd 8961 (1995).

[^56]: The Bureau has required carriers to make adjustments to their
    price cap indices in past study area waivers involving the sale of
    exchanges operated by carriers subject to price cap regulation.
    *See, e.g*., *CenturyTel of* *Northwest Arkansas, LLC Joint Petition
    for Waiver of Definition of "Study Area" Contained in the Part 36
    Appendix-Glossary of the Commission's Rules Petition for Waiver of
    Sections 61.41(c) and 69.3(g)(2) of the Commission's Rules,* CC
    Docket No. 96-45, Memorandum Opinion and Order, DA 00-1434 (Common
    Carrier Bureau 2000); *GTE North, Inc., and PTI Communications of
    Michigan, Inc. Petition for Waiver of Sections 61.41(c) and the
    Definition of \"Study Area\" Contained in Part 36, Appendix-Glossary
    of the Commission\'s Rules*, AAD 97-57, Memorandum Opinion and
    Order, 12 FCC Rcd 13882, 13888 (Common Carrier Bureau 1997); *Golden
    Belt Telephone Association, Inc., and United Telephone Company of
    Kansas, Petition for Waiver of Sections 61.41(c)(2) and the
    Definition of \"Study Area\" Contained in Part 36, Appendix-Glossary
    of the Commission\'s Rules*, AAD 97-72, Memorandum Opinion and
    Order, 12 FCC Rcd 16335, 16341 (Common Carrier Bureau 1997).

[^57]: *ALLTEL Waiver Petition* at 12; *CenturyTel Alabama Waiver
    Petition* at 13-14; *CenturyTel Missouri Waiver* *Petition* at
    13-14.

[^58]: *ALLTEL Waiver Petition* at 12; *CenturyTel Alabama Waiver
    Petition* at 13-14; *CenturyTel Missouri Waiver* *Petition* at
    13-14.

[^59]: *CALLS Order,* 15 FCC Rcd at 13060, para. 225. *See also*
    *Citizens Waiver Order*, 15 FCC Rcd at 3567, para. 9; *Valor Waiver
    Order*, 15 FCC Rcd at 15820, para. 9.

[^60]: 47 C.F.R. § 54.801(d).

[^61]: *Id.*

[^62]: *Id.*

[^63]: *Id.*

[^64]: *ALLTEL Waiver Petition* at 3.

[^65]: *ALLTEL/Aliant Merger Order*, 14 FCC Rcd at 14191, para. 1,
    14201, paras. 25-26.

[^66]: *Id.* at 14201, paras. 25-26.

[^67]: *Id.* at 14202, para. 29.

[^68]: *ALLTEL Corporation Petition for Waiver of Section 61.41 of the
    Commission's Rules*, CCB/CPD No. 99-01, Order, 15 FCC Rcd 23227
    (Common Carrier Bureau 2000) (*ALLTEL/Aliant 2000 Waiver Order*).

[^69]: ALLTEL Motion for Leave to Withdraw Request for Approval to Elect
    Price Cap Regulation and Petition for Waiver (filed June 21, 2000).

[^70]: *ALLTEL Corporation Petition for Waiver of Section 61.41 of the
    Commission's Rules*, CCB/CPD No. 99-01, Order, 16 FCC Rcd 12407
    (Common Carrier Bureau 2001) (*ALLTEL/Aliant 2001 Waiver Order*).

[^71]: *ALLTEL Waiver Petition* at 1-6.

[^72]: *Id*. at 4.

[^73]: *Id.* at 5.

[^74]: *Id.* at 5-6.

[^75]: *Id.*

[^76]: *ALLTEL/Aliant 2000 Waiver Order*, 15 FCC Rcd at 23227-28, paras.
    1-7.

[^77]: *ALLTEL/Aliant 2001 Order*, 16 FCC Rcd at 12409, paras. 6-7.

[^78]: *Id.*

[^79]: *Puerto Rico Telephone Waiver Petition* at 1.

[^80]: *Id.*

[^81]: *Puerto Rico Telephone Authority, Transferor, and GTE Holdings
    LLC, Transferee, for Consent to Transfer Control of Licenses and
    Authorization Held by Puerto Rico Telephone Company and Celulares
    Telefonica, Inc.,* Memorandum Opinion and Order, 14 FCC Rcd 3122
    (1999) (*Puerto Rico Telephone Merger Order*).

[^82]: *See* 47 C.F.R. § 61.41(c)(2). *See also* *Puerto Rico Telephone
    Merger Order*, 14 FCC Rcd at 3132, para. 22 ("PRTC will be required
    within 12 months of our approval of this transfer of control to file
    interstate access tariffs for Puerto Rico using the price cap
    methodology.").

[^83]: *See* 47 C.F.R. § 54.303(a). *See also* 47 C.F.R. § 61.41(a)(3).

[^84]: *Puerto Rico Telephone Company Petition for Waiver of Section
    61.41 or Section 54.303(a) of the Commission's Rules*, CCB/CPD No.
    99-36, Order, 15 FCC Rcd 9680 (2000) (*Puerto Rico Telephone 2000
    Waiver Request Order*).

[^85]: *Id*. at 9680-3, paras. 1-3.

[^86]: *Id*. at 9682-83, paras. 5-6.

[^87]: *Puerto Rico Tel. Company Petition for Waiver of Section 61.41 or
    Section 54.303(a) of the Commission's Rules*, CCB/CPD No. 99-36,
    Order, 16 FCC Rcd 12343 (Common Carrier Bureau 2001) (*Puerto Rico
    2001 Waiver Order*).

[^88]: *Puerto Rico Telephone Waiver Petition* at 5.

[^89]: *Id*. at 1.

[^90]: *Id.* at 6-7.

[^91]: *Id*. at 5.

[^92]: AT&T Opposition to Puerto Rico Telephone Company's Request for
    Grant of Petition for Waiver or, in the Alternative, Request for
    Extension (filed March 7, 2002) (*AT&T Opposition to Puerto Rico
    Telephone Waiver Petition*); WorldCom Opposition (filed March 7,
    2002) (*WorldCom Opposition to Puerto Rico Telephone Waiver
    Petition*).

[^93]: *Puerto Rico Telephone Petition for Waiver of Section 61.41(c) or
    Section 54.303(a) of the Commission's Rules*, Comments of National
    Exchange Carrier Association, Inc. (filed March 7, 2002).

[^94]: *Puerto Rico Telephone 2000 Waiver Request Order*, 15 FCC Rcd at
    9682-83, para. 5.

[^95]: *Id.*

[^96]: *Puerto Rico 2001 Waiver Order,* 16 FCC Rcd at 12346, para.7.

[^97]: *Rate-of-Return Access Charge Reform Further Notice*, 16 FCC Rcd
    at 19724, para. 271.

[^98]: *Id.*

[^99]: *AT&T Opposition to Puerto Rico Telephone Waiver Petition;
    WorldCom Opposition to* *Puerto Rico Telephone Waiver Petition*.

[^100]: *See supra* para*.* 20.

[^101]: *Puerto Rico 2001 Waiver Order*, 16 FCC Rcd at 12343, para. 7.