**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

+----------------------------------+---+------------------------------+
| In the Matter of                 | * | CC Docket No. 96-45          |
|                                  | * |                              |
| All West Communications, Inc.,   | ) |                              |
| Carbon/Emery                     | * |                              |
|                                  | * |                              |
| Telecom, Inc., Central Utah      |   |                              |
| Telephone, Inc., Hanksville      | * |                              |
| Telecom, Inc., Manti Telephone   | * |                              |
| Company, Skyline Telecom, UBET   | ) |                              |
| Telecom, Inc.                    | * |                              |
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| And                              |   |                              |
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| USQwest Corporation              | * |                              |
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| Joint Petition for Waiver of the | * |                              |
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| Definition of "Study Area"       |   |                              |
| Contained                        | * |                              |
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| in the Part 36 Appendix-Glossary | ) |                              |
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| of the Commission's Rules;       | * |                              |
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| Petition for Waiver of Sections  | * |                              |
| 61.41(c), 61.41(d) and           | * |                              |
| 69.3(e)(11)                      | ) |                              |
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+----------------------------------+---+------------------------------+

**ORDER**

**Adopted: February 27, 2001 Released: February 27, 2001**

By the Chief, Accounting Policy Division:

# INTRODUCTION

1.  In this Order, we grant a request from All West Communications (All
    West), Carbon/Emery Telecom, Inc. (Carbon/Emery), Central Utah
    Telephone (Central Utah), Hanksville Telecom, Inc. (Hanksville),
    Manti Telephone Company (Manti), Skyline Telecom (Skyline), and UBET
    Telecom, Inc. (UBET) (collectively, Acquiring Companies), and
    USQwest Corporation (Qwest) for a waiver of the definition of "study
    area" contained in Part 36 Appendix-Glossary of the Commission's
    rules.[^1] This waiver will permit Qwest to remove telephone
    exchanges comprising approximately 35,600 access lines from its Utah
    study area. This waiver will also permit All West, Central Utah,
    Manti, and Skyline to add 1,920 access lines, 2,077 access lines,
    1,887 access lines, and 1,407 access lines, respectively, to their
    existing Utah study areas. Additionally, this waiver will permit
    Carbon/Emery, Hanksville, and UBET to add 12,105 access lines, 170
    access lines, and 16,161 access lines, respectively, to their parent
    companies' existing study areas.

2.  We also grant the request of All West, Carbon/Emery, Central Utah,
    Hanksville, and UBET for a waiver of section 61.41(c) of the
    Commission's rules to permit these companies to operate under
    rate-of-return regulation after acquiring the exchanges from Qwest
    that are currently under price cap regulation. In addition, we grant
    Manti's and Skyline's request for a waiver of section 69.605(c) of
    the Commission's rules to allow Manti and Skyline to continue
    operating as average schedule companies after the exchange
    acquisitions from Qwest. Finally, we grant the Acquiring Companies'
    request for a waiver of the tariff pooling rules included in section
    69.3(e)(11) of the Commission's rules.

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I.  **STUDY AREA WAIVER**

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A.  **Background**

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3.  *[Study Area Boundaries]{.underline}*. A study area is a geographic
    segment of an incumbent local exchange carrier's (LEC's) telephone
    operations. Generally, a study area corresponds to an incumbent
    LEC\'s entire service territory within a state.[^2] Thus, incumbent
    LECs operating in more than one state typically have one study area
    for each state. The Commission froze all study area boundaries
    effective November 15, 1984[^3][^4] and an incumbent LEC must apply
    to the Commission for a waiver of the study area boundary freeze if
    it wishes to sell or purchase additional exchanges.

4.  *[Transfer of Universal Service Support]{.underline}*. Section
    54.305 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 universal service support for which the
    acquired exchanges were eligible prior to their transfer.[^5] For
    example, if a rural carrier purchases an exchange from a non-rural
    carrier that receives support based on the Commission's new
    universal service support mechanism for non-rural carriers,[^6] the
    loops of the acquired exchange shall receive the same per-line
    support as calculated under the new non-rural mechanism, regardless
    of the support the rural carrier purchasing the exchange may receive
    for any other exchanges.[^7] In adopting section 54.305, the
    Commission sought to ensure that a selling carrier does not
    artificially inflate the price of an exchange in anticipation of the
    buyer's receipt of increased universal service support as a result
    of the transfer.[^8] High-cost support mechanisms currently include
    non-rural carrier forward-looking high-cost support,[^9] interim
    hold-harmless support for non-rural carriers,[^10] rural carrier
    high-cost loop support,[^11] local switching support,[^12] and Long
    Term Support (LTS).[^13] To the extent that a carrier acquires
    exchanges receiving any of these forms of support, the acquiring
    carrier will receive the same per-line levels of support for which
    the acquired exchanges were eligible prior to their transfer.

5.  As described in the Commission\'s recent order adopting an
    integrated interstate access reform and universal service proposal
    put forth by the members of the Coalition for Affordable Local and
    Long Distance Service (CALLS), beginning July 1, 2000, if a price
    cap LEC acquires exchanges from another price cap LEC, the acquiring
    carrier will become eligible to receive interstate access universal
    service support for the acquired exchanges.[^14] Because the
    interstate access universal service support mechanism is capped at
    \$650 million, transactions involving the transfer of support will
    not increase the mechanism\'s overall size.[^15] If a non-price cap
    LEC acquires exchanges from a price-cap LEC, per-line interstate
    access universal service support will not transfer.[^16]

6.  *[The Petition for Waiver]{.underline}*. USOn October 6, 2000, Qwest
    and the Acquiring Companies filed a joint petition for waiver of the
    definition of "study area" as set forth in Part 36 Appendix-Glossary
    of the Commission's rules.US The requested waiver would permit Qwest
    to alter the boundaries of its existing Utah study area by removing
    12 exchanges that it is transferring to the Acquiring Companies. The
    waiver would also permit the purchased exchanges to be added to the
    study areas of All West (acquiring 1,920 access lines), Central Utah
    (acquiring 2,077 access lines), Manti (acquiring 1,887 access
    lines), Skyline (acquiring 1,407 access lines), Emery Telephone (the
    parent company of Carbon/Emery and Hanksville)(acquiring 12,185
    access lines), and Uintah Basin Telecommunications Association (the
    parent company of UBET)(acquiring 16,161 access lines).[^17] The
    Acquiring Companies are based in Utah.[^18] USOn October 18, 2000,
    the Common Carrier Bureau (Bureau) released a public notice seeking
    comment on the Petition[^19][^20] The United States Telecom
    Association (USTA) and the National Telephone Cooperative
    Association (NTCA) filed comments in support of the Petition.
    Beehive Telephone Co., Inc. (Beehive) filed comments opposing the
    Petition.[^21] Qwest and the Acquiring Companies filed reply
    comments.

7.  *[Beehive's Objections]{.underline}*. Beehive objects to the instant
    waiver requests.[^22] First, Beehive contends that Qwest failed to
    adequately consider Beehive as a buyer of certain of the Utah
    exchanges that were sold to Central Utah, Skyline, and Hanksville.
    As a result, Beehive has requested that the Commission suspend and
    remand this matter to the Utah Public Service Commission (Utah
    Commission) for further investigation and recommendation. Second,
    Beehive requests that the Commission delay action on the waiver
    requests of Central Utah and Skyline until the conclusion of a
    proceeding currently pending before the Utah Commission involving
    the approval of the transfer of all outstanding shares of stock from
    Central Utah and Skyline to Lynch Telephone Corporation X (Lynch).

**B. Discussion**

8.  We find that good cause exists to waive the definition of study area
    contained in Part 36 Appendix-Glossary of the Commission's rules to
    permit Qwest to alter the boundaries of its existing Utah study area
    to remove twelve exchanges that it is transferring to the Acquiring
    Companies. We also find that good cause exists to permit the
    Acquiring Companies to add these exchanges to their Utah study
    areas. US

9.  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][^25] The Commission
    may exercise its discretion to waive a rule where the particular
    facts make strict compliance inconsistent with the public
    interest[^26][^27] In addition, the Commission may take into account
    considerations of hardship, equity, or more effective implementation
    of overall policy on an individual basis[^28][^29] 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. 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) no state commission having regulatory
    authority over the transferred exchanges may oppose the transfer;
    and (3) the transfer must be in the public interest.[^30] For the
    reasons discussed below, we conclude that petitioners have satisfied
    these criteria and have demonstrated that good cause exists for
    waiver of the Commission's study area freeze rule.

10. First, we conclude that Qwest and the Acquiring CompaniesUS have
    demonstrated that the proposed change in the study area boundaries
    will not adversely affect any of the universal service
    fundsmechanisms. Because, under the Commission's rules, carriers
    purchasing exchanges from an unaffiliated carrier currently can only
    receive the same level of per-line support that the selling company
    was receiving for those exchanges prior to the sale, there can, by
    definition, be no adverse impact on the universal service fund
    resulting from this transaction[^31][^32] As such, the Acquiring
    Companies will receive the same per-line levels of support,
    including high-cost loop support, local switching support, and LTS,
    for which the acquired exchanges were eligible prior to their
    transfer. The Acquiring Companies' existing Utah access lines will
    continue to receive support based on the average schedule cost of
    those lines or the average schedule formulas, whichever is
    applicable. Therefore, we conclude that this transaction will not
    adversely affect the universal service mechanisms. We note that, as
    a result of this transaction, access lines in the Acquiring
    Companies' pre-acquisition study area boundaries will be eligible
    for different amounts of high-cost support than the access lines
    being transferred from Qwest's study area. We therefore direct the
    Acquiring Companies to submit, as part of their annual universal
    service data submissions,[^33] a schedule showing their methodology
    for excluding the costs associated with the acquired access lines
    from the costs associated with their pre-acquisition study areas.

11. Second, no state commission with regulatory authority over the
    transferred exchanges opposes the transfer. The Utah Commission
    indicated that it does not object to the grant of the study area
    waiver.[^34]

12. Finally, we conclude that the public interest is served by a waiver
    of the study area freeze rule. First, in its petition, Qwest and the
    Acquiring Companies indicate considerable public support for the
    exchange transfers from customers served by the exchanges of the
    telecommunications services provided by the exchanges.[^35] Also, in
    its order approving the transfer of the exchanges to the Acquiring
    Companies, the Utah Commission concluded that the transfer will
    result in "greater opportunities for service and operating
    efficiencies"[^36] for all customers in the exchanges.[^37] The
    public interest benefits also include facilities improvements and
    investment in the new exchanges by the Acquiring Companies.[^38]
    Finally, inclusion of the exchanges in the study areas of the
    Acquiring Companies will provide customers with the benefit of
    voicing their concerns to locally based companies. Based on these
    representations, we conclude that Qwest and the Acquiring Companies
    have demonstrated that grant of this waiver request serves the
    public interest.

13. We reject Beehive's request to deny the instant waiver request in
    light of its objections. Beehive claims that Qwest refused to
    consider Beehive as a potential buyer for the Utah exchanges that
    were sold to Central Utah, Skyline, and Hanksville, and requests
    that the Commission suspend this matter and remand it to the Utah
    Commission for further investigation and recommendation. The
    transfer of these exchanges has already been approved by the Utah
    Commission and as noted above, the Utah Commission has indicated
    that it does not object to the grant of the study area waiver
    requests.[^39] Absent an objection from the Utah Commission, we have
    no basis for denying the waiver requests at issue here. [^40] It is
    well settled that the Commission does not involve itself in private
    contractual matters when other forums exist for resolving those
    matters.[^41] The Utah Commission and the Utah courts are the proper
    forums for addressing Beehive's claims that it should have been
    considered by Qwest as a potential buyer. For these reasons, we also
    reject Beehive's request that the Commission withhold action on the
    waiver requests of Central Utah and Skyline until the conclusion of
    a proceeding pending before the Utah Commission regarding the sale
    of all outstanding shares of stock from Central Utah and Skyline to
    Lynch.[^42] The transaction between Central Utah, Skyline, and Lynch
    is not at issue here and, as noted above, Beehive's objections to
    such a transfer should be made to the Utah Commission or the
    appropriate state or local court.[^43]

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II. **PRICE CAP WAIVER**

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A.  **Background**

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14. Section 61.41(c)(2) of the Commission's rules provides that a
    non-price cap carrier that acquires access lines from a price cap
    carrier shall become subject to price cap regulation and must file
    price cap tariffs within a year.[^44] In addition, Section
    61.41(c)(3) of the Commission's rules provides that an average
    schedule company that acquires exchanges from a price cap company is
    permitted to retain its average schedule status.[^45] Section
    61.41(d) of the Commission's rules further provides that local
    exchange carriers (LECs) that become subject to price cap regulation
    are not permitted to withdraw from such regulation.[^46]

15. In the *LEC Price Cap Reconsideration Order*, the Commission
    explained that section 61.41(c), the "all-or-nothing" rule, is
    intended to address two concerns regarding mergers and acquisitions
    involving price cap companies.[^47] The first concern was that, in
    the absence of the rule, a LEC might attempt to shift costs from its
    price cap affiliate to its non-price cap affiliate, allowing the
    non-price cap affiliate to charge higher rates to recover its
    increased revenue requirement, while increasing the earnings of the
    price cap affiliate. The second concern was that, absent the rule, a
    LEC might attempt to game the system by switching back and forth
    between rate-of-return regulation and price cap regulation. For
    example, a price cap company may attempt to "game" the system by
    opting out of price cap regulation, building a large rate base under
    rate-of-return regulation so as to raise rates and then, after
    returning to price caps, cutting costs back to an efficient level,
    thereby enabling it to realize greater profits. It would not serve
    the public interest, the Commission stated, to allow a carrier
    alternately to "fatten up" under rate-of-return regulation and "slim
    down" under price cap regulation, because the rates would not
    decrease in the manner intended under price cap regulation.[^48]

16. The Commission nonetheless recognized in the *LEC Price Cap
    Reconsideration Order* that narrow waivers of the price cap
    "all-or-nothing" rule might be justified if efficiencies created by
    the purchase and sale of exchanges outweigh the threat that the
    system might be subject to gaming.[^49] The Commission stated that
    waivers of section 61.41(c) will be granted conditioned on the
    selling price cap company's downward adjustment to its price cap
    indices to reflect the sale of exchanges.[^50] The Commission
    explained that such an adjustment is needed to remove the effects of
    transferred exchanges from rates that have been based, in whole or
    in part, upon the inclusion of those exchanges in a carrier's price
    cap indices. [^51] In addition, waivers of the all-or-nothing rule
    have been granted subject to the condition that the acquiring
    carrier obtain prior Commission approval of any attempt to return to
    price cap regulation.[^52]

17. The Acquiring Companies operate under rate-of return regulation,
    while Qwest is subject to price cap regulation.[^53] All West,
    Carbon/Emery, Central Utah, Hanksville, and UBET seek a waiver of
    section 61.41(c)(2)[^54] to permit them to continue to operate under
    rate-of-return regulation,[^55] stating that the application of
    these rules will not serve the purpose of the price cap rules, which
    is to prevent LECs from shifting costs between price cap and
    non-price cap affiliates and from increasing rates by switching back
    and forth between rate-of-return regulation and price cap
    regulation.[^56] NTCA and USTA support this waiver request.

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B.  **Discussion**

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18. For the reasons discussed below, we find that good cause exists for
    us to waive section 61.41(c)(2) of the Commission's rules, and that
    it would be in the public interest to grant the waiver request of
    All West, Carbon/Emery, Central Utah, Hanksville, and UBET.[^57] As
    discussed previously, the courts have interpreted section 1.3 of the
    Commission's rules to require a petitioner seeking a waiver of a
    Commission rule to demonstrate that special circumstances warrant a
    deviation from the general rule, and that such a deviation will
    serve the public interest.[^58]

19. We find that special circumstances warrant a waiver of section
    61.41(c)(2). In evaluating requests for waiver of section
    61.41(c)(2), the Bureau has taken into account the company's
    preferences and, in particular, the preferences of small
    carriers.[^59] In fact, the Commission traditionally has been
    sensitive to the unique administrative burdens imposed on small
    telephone companies by the application of its rules.[^60] In the
    *LEC Price Cap Order*, the Commission decided that small telephone
    companies would not be required to operate under a regulatory regime
    that was designed largely on the basis of the historical performance
    of the largest LECs.[^61] The Commission explained that small and
    mid-size LECs may have fewer opportunities than large companies to
    achieve cost savings and efficiencies and may be less productive
    than the seven Regional Bell Operating Companies (RBOCs) and
    GTE.[^62] The Commission, therefore, limited the mandatory
    application of price cap regulation to the eight largest LECs -- the
    seven RBOCs and GTE.

20. All West, Carbon/Emery, Central Utah, Hanksville, and UBET are all
    small telephone companies and have expressed a preference for
    operating under rate-of-return regulation.[^63] After the proposed
    transaction, All West will serve approximately 5,900 access lines;
    Carbon/Emery will serve approximately 17,200 access lines; Central
    Utah will serve approximately 3,600 access lines; Hanksville will
    serve approximately 200 access lines; and UBET will serve
    approximately 18,700 access lines.[^64] These operations will be
    smaller than other carriers that have been granted waivers of the
    Commission's price cap rules.[^65] Further, these companies are the
    types of small carriers which the Commission has previously found to
    be inappropriate candidates for price cap regulation.[^66] For these
    reasons, we find that of All West, Carbon/Emery, Central Utah,
    Hanksville, and UBET present special circumstances to support their
    waiver request.

21. We also find that a waiver of section 61.41(c)(2) serves the public
    interest. First, we find that the first concern identified by the
    Commission in adopting section 61.41(c) -- cost shifting between
    affiliates -- is not at issue here. Upon completion of the
    transaction, All West, Carbon/Emery, Central Utah, Hanksville, and
    UBET will operate separate and apart from Qwest.[^67] Since there
    will be no affiliation between these entities and Qwest, there will
    be no opportunity or incentive to shift costs between price cap and
    rate-of-return companies. Second, to safeguard against possible
    gaming that could result from attempts to elect price-cap regulation
    at a later time, we will require All West, Carbon/Emery, Central
    Utah, Hanksville, and UBET to seek prior Commission approval if they
    seek 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(c).

22. In accordance with section 61.45 of the Commission's rules, we also
    require Qwest to adjust its price cap indices to reflect the removal
    of the transferred access lines from its Utah study areas. Section
    61.45 grants us discretion to require price cap carriers to make
    adjustments to their price cap indices to reflect cost changes
    resulting from rule waivers.[^68]

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III. **AVERAGE SCHEDULE WAIVER**

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A.  **Background**

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23. Incumbent LECs that participate in National Exchange Carrier
    Association (NECA) pools collect access charges from interexchange
    carriers at the rates contained in the tariffs filed by NECA. Each
    pool participant receives revenues from the pools to recover the
    cost of providing service plus a pro rata share of the pool\'s
    earnings.[^69] NECA pool participants\' interstate access charge
    settlements are determined either on the basis of cost studies or
    average schedule formulas. Average schedule companies are those
    incumbent LECs that receive compensation for use of their interstate
    common carrier services on the basis of formulas that are designed
    to simulate the disbursements that would be received by a cost study
    company that is representative of average schedule companies.[^70]
    In electing average schedule status, average schedule companies are
    able to avoid the administrative and financial burdens of performing
    interstate cost studies.

24. Section 69.605(c) of the Commission\'s rules provides, in pertinent
    part, that \"a telephone company that was participating in average
    schedule settlements on December 1, 1982, shall be deemed to be an
    average schedule company.\"[^71] The definition of average schedule
    company includes existing average schedule incumbent LECs, but does
    not allow the creation of new average schedule companies or the
    conversion of cost-based carriers to average schedule status without
    a waiver of the Commission's rules. The limitation on the creation
    of new average schedule companies reflects the Commission's finding
    that cost studies produce the most accurate financial information,
    and consequently, the most accurate interstate telephone rates.[^72]

25. The special circumstances that the Bureau has found to justify
    waivers of section 69.605(c) fall into broad categories.[^73] First,
    the Bureau has granted limited opportunities for carriers serving
    5,000 or fewer access lines to convert from cost‑based to average
    schedule settlements when faced with "industry-wide changed
    circumstances."[^74] Second, the Bureau has granted waivers to
    certain small carriers that lacked the resources to operate on a
    cost‑study basis.[^75] Third, to ensure a smooth settlement process,
    the Bureau has granted section 69.605(c) waivers to average schedule
    companies that have acquired another company, and allowed the
    combined companies to merge into one average schedule study
    area.[^76]

26. Skyline and Manti have requested a waiver of section 69.605(c) of
    the Commission's rules in order to continue operating as average
    schedule companies following the proposed transaction.[^77] Skyline
    and Manti argue that a waiver permitting them to retain their
    average schedule status is justified due to "their small size and
    the savings that will be realized by their not having to perform
    cost studies."[^78] Skyline and Manti also argue that a continuation
    of their average schedule status will not affect their tariffed
    access rates or cause any concern that the two companies may "game
    the system."[^79] NTCA and USTA support this waiver request.

## Discussion

27. We are persuaded that good cause exists for us to grant Skyline's
    and Manti's request for a waiver of section 69.605(c). The
    Commission has explained that the definition of "average schedule
    company" in section 69.605 was premised upon a policy determination
    that carriers with the financial resources and expertise to conduct
    cost studies without undue hardship should be required to measure
    the actual costs they incur in providing interstate service.[^80]
    Here, Skyline and Manti have demonstrated that because of their
    size, they would suffer undue hardship if required to operate on a
    cost study basis.[^81] The high cost of completing cost studies
    relative to the small size of Skyline and Manti establishes the
    special circumstances that warrant granting their request for a
    waiver of section 69.605(c) of the Commission's rules. We note that
    we have previously granted waivers of section 69.605(c) to
    similarly-sized carriers.[^82] We therefore find that Skyline and
    Manti's requested waiver of section 69.605(c) of the Commission
    rules should be granted.

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IV. **WAIVER OF SECTION 69.3(e)(11)**

### Background

28. Under section 69.3(e)(11) of Commission's rules, any change in NECA
    carrier common line tariff participation and LTS resulting from a
    merger or acquisition of telephone properties is effective on the
    next annual access tariff filing effective date following the merger
    or acquisition.[^83] Section 69.3(e)(11) of the Commission's rules
    was implemented to minimize the complexity of administering the LTS
    program.[^84] Because the next annual access tariff filing effective
    date is not until July 1, 2001,[^85] the Acquiring Companies would
    be required to file their own interstate tariffs for the acquired
    access lines until July 1, 2001. In order to avoid the burdens
    associated with filing their own tariffs, the Acquiring Companies
    have requested a waiver of section 69.3(e)(11) of the Commission's
    rules to enable the acquired access lines to participate in the NECA
    carrier common line tariff upon the date of the closing of the
    transaction.[^86] NTCA and USTA support this waiver request.

### Discussion

29. We find that the Acquiring Companies have demonstrated that special
    circumstances warrant a deviation from section 69.3(e)(11) of our
    rules and that it would be in the public interest to grant the
    Acquiring Companies' waiver request. First, the inclusion of the
    acquired access lines in the NECA carrier common line tariff
    represent a minimal increase in NECA common line pool
    participation.[^87] Second, we believe that it would be
    administratively burdensome for the Acquiring Companies to file
    interstate tariffs for a relatively small number of access lines
    until July 1, 2001. Consequently, we find that the Acquiring
    Companies present the special circumstances to justify a waiver of
    section 69.3(e)(11). Moreover, we believe that a waiver of section
    69.3(e)(11) will be in the public interest because the Acquiring
    Companies will be able to devote additional resources to providing
    improved telecommunications services to the affected rural areas
    that otherwise would normally be spent on tariff filings. We also
    note that, according to NECA, \"inclusion of the acquired access
    lines in NECA\'s tariff, effective on March 1, 2001 . . . , will
    create no undue administrative burden for NECA, nor will it result
    in any disadvantage to other tariff participants.\"[^88] We,
    therefore, conclude that good cause exists to grant a waiver of
    section 69.3(e)(11) to the Acquiring Companies.

**VI. ORDERING CLAUSES**

30. 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 petition for waiver of Part 36, Appendix‑Glossary, of the
    Commission\'s rules, filed by All West Communications, Inc.,
    Carbon/Emery Telecom, Inc., Central Utah Telephone, Inc., Hanksville
    Telecom, Inc., Manti Telephone Company, Skyline Telecom, UBET
    Telecom, Inc., and the Qwest Corporation on October 18, 2000, IS
    GRANTED, as described herein.

31. 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, 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 61.41(c) of the Commission\'s rules,
    47 C.F.R. § 61.41(c) filed by All West Communications, Inc.,
    Carbon/Emery Telecom, Inc., Central Utah Telephone, Inc., Hanksville
    Telecom, Inc., and UBET Telecom, Inc., IS GRANTED, as described
    herein.

32. 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, 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 69.605(c) of the Commission\'s rules,
    47 C.F.R. § 69.605(c), filed by Manti Telephone Company and Skyline
    Telecom, IS GRANTED, as described herein.

33. 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, 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 69.3(e)(11) of the Commission\'s
    rules, 47 C.F.R. § 69.3(e)(11), filed by All West Communications,
    Inc., Carbon/Emery Telecom, Inc., Central Utah Telephone, Inc.,
    Hanksville Telecom, Inc., Manti Telephone Company, Skyline Telecom,
    and UBET Telecom, Inc., IS GRANTED, as described herein.

34. 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, and 1.3 of
    the Commission\'s rules, 47 C.F.R. §§ 0.91, 0.291, and 1.3, that All
    West Communications, Inc., Emery Telephone and its subsidiaries;
    Carbon/Emery Telecom, Inc. and Hanksville, Central Utah Telephone,
    Inc., Manti Telephone Company, Skyline Telecom, Uintah Basin
    Telecommunications Association, and its subsidiary; UBET Telecom,
    Inc., SHALL SUBMIT, as part of their annual USF data submission to
    the fund administrator, a schedule showing the methodology for
    excluding costs associated with the acquired access lines from costs
    associated with their pre-acquisition study areas.

35. 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 the 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.

FEDERAL COMMUNICATIONS COMMISSION

Katherine L. Schroder

Chief, Accounting Policy Division

#  {#section .unnumbered}

[^1]: All West Communications, Inc., Carbon/Emery Telecom, Inc., Central
    Utah Telephone, Inc., Hanksville Telecom, Inc., Manti Telephone
    Company, Skyline Telecom, UBET Telecom, Inc. and USQwest Corporation
    Joint Petition for Waiver of the Definition of "Study Area"
    Contained in Part 36 Appendix-Glossary of the Commission's Rules,
    Petition for Waiver of Section 61.41(c) and (d), 69.3(e)(11) and
    69.605(c) of the Commission's Rules (filed Oct. 6, 2000) (Petition).

[^2]: 47 C.F.R. § 36 app. (defining \"study area\").

[^3]: ^,^

[^4]: *See* *MTS and WATS Market Structure, Amendment of Part 67 of the
    Commission\'s Rules and Establishment of a Joint Board*, CC Docket
    Nos. 78-72, 80-286, Recommended Decision and Order, 49 Fed. Reg.
    48325 (1984); Decision and Order, 50 Fed. Reg. 939 (1985); *see
    also* *Amendment of Part 36 of the Commission\'s Rules and
    Establishment of a Joint Board*, CC Docket No. 80-286, Notice of
    Proposed Rulemaking, 5 FCC Rcd 5974 (1990).

[^5]: 47 C.F.R. § 54.305.

[^6]: On November 2, 1999, the Commission released two orders finalizing
    implementation plans for high-cost reform for non-rural carriers.
    *Federal-State Joint Board on Universal Service*, Ninth Report and
    Order and Eighteenth Order on Reconsideration, CC Docket No. 96-45,
    FCC 99-306 (rel. Nov. 2, 1999); *Federal-State Joint Board on
    Universal Service*; *Forward-Looking Mechanism for High Cost Support
    for Non-Rural LECs*, CC Docket Nos. 96-45, 97-160, Tenth Report and
    Order (rel. Nov. 2, 1999). The new mechanism, which went into effect
    on January 1, 2000, does not apply to rural carriers. The new
    mechanism for non-rural carriers directs support to carriers based
    on the forward-looking economic cost of operating a given exchange.
    *See* 47 C.F.R. § 54.309. The Commission's forward-looking
    methodology for calculating high-cost support for non-rural carriers
    targets support to states where the statewide average
    forward-looking cost per line exceeds 135 percent of the national
    average forward-looking cost. *See* *id.* The total amount of
    support directed to non-rural carriers in a high-cost state equals
    76 percent of the amount the statewide average forward-looking cost
    per line exceeds the national cost benchmark, multiplied by the
    number of lines served by non-rural carriers in the state. Carriers
    serving wire centers with an average forward-looking cost per line
    above the national cost benchmark shall be eligible to receive
    support. The amount of support provided to a non-rural carrier
    serving a particular wire center depends on the extent to which
    per-line forward-looking economic costs in that wire center exceed
    the national cost benchmark.

[^7]: *See Federal-State Joint Board on Universal Service*, CC Docket
    No. 96-45*,* Report and Order, 12 FCC Rcd 8776, 8942-43 (1997)
    (*First Report and Order*); as corrected by *Federal-State Joint
    Board on Universal Service*, Errata, CC Docket No. 96-45, FCC 97-157
    (rel. June 4, 1997), *affirmed in part, reversed in part and
    remanded in part sub nom. Texas Office of Public Utility Counsel v.
    FCC*, 183 F.3d 393 (5^th^ Cir. 1999).

[^8]: *See, e.g.,* *id*.

[^9]: *See* 47 C.F.R. § 54.309.

[^10]: In the event that support provided to a non-rural carrier in a
    given state is less under the forward-looking methodology, the
    carrier is eligible for interim hold-harmless support, which is
    equal to the amount of support for which the non-rural carrier would
    have been eligible under the Commission's existing high-cost support
    mechanism. *See* 47 C.F.R. § 54.311. The Commission recently adopted
    the recommendations of the Federal-State Joint Board on Universal
    Service (Joint Board) for phasing down the interim hold-harmless
    support for non-rural carriers. *See Federal-State Joint Board on
    Universal Service*, CC Docket No. 96-45, Thirteenth Report and Order
    and Further Notice of Proposed Rulemaking, FCC 00-428 (rel. Dec. 8,
    2000). The Commission adopted measures to phase down interim
    hold-harmless support, excluding LTS, through \$1.00 reductions in
    average monthly, per-line support beginning January 1, 2001, and
    every year thereafter until there is no more interim hold-harmless
    support. *Id.* at para. 1. The Commission also adopted the Joint
    Board's recommendation not to phase down interim hold-harmless
    support for eligible exchanges transferred to rural carriers until
    the Commission reexamines section 54.305 or until rural high-cost
    reform is complete. *Id.* at para 21. Interim hold-harmless support
    for exchanges transferred to non-rural carrier will be phased down
    over the same time period as the seller's support would have been
    phased down. *Id.* at para. 22. The Commission also sought comment
    on whether to continue applying section 54.305 to transfers of
    telephone exchanges between non-rural carriers following phase-down.
    *Id.* at paras. 23-24.

[^11]: Rural carriers receive high-cost loop support when their reported
    average cost per loop exceeds the nationwide average loop cost.
    *See* 47 C.F.R. §§ 36.601-36.631.

[^12]: Incumbent LECs that are designated eligible telecommunications
    carriers and serve study areas with 50,000 or fewer access lines
    receive support for local switching costs. 47 C.F.R. § 54.301. Local
    switching support enables participants to assign a greater
    proportion of local switching costs to the interstate jurisdiction.

[^13]: Carriers that participate in the NECA common line pool are
    eligible to receive LTS. *See* 47 C.F.R. § 54.303. LTS supports
    interstate access rates for carriers that are members of the NECA
    pool, by reducing the amount of interstate-allocated loop costs that
    such carriers must recover through carrier common line charges. *See
    First Report and Order,* 12 FCC Rcd at 9163-9165.

[^14]: *See* *Access Charge Reform*, Sixth Report and Order in CC Docket
    No. 96-262 and 94-1, Report and Order in CC Docket No. 99-249,
    Eleventh Report and Order in CC Docket No. 96-45, FCC 00-103, at
    para. 225 (rel. May 31, 2000) (*Interstate Access Universal Service
    Order*).

[^15]: *See* 47 C.F.R. § 54.801(a); *see also* *Interstate Access
    Universal Service Order* at para. 201.

[^16]: Section 54.801 of the Commission\'s rules states that, if \"all
    or a portion of a study area served by a price cap LEC is sold to an
    entity other than a price cap LEC, and the study area or portion
    thereof was not offered for sale prior to January 1, 2000, then the
    support that would otherwise be provided under this subpart, had
    such study area or portion thereof not been sold, will not be
    distributed or collected.\" 47 C.F.R. § 54.801(b). We note that the
    agreement for purchase and sale of the portions of Qwest\'s study
    area to the Acquiring Companies was entered into in October, 1999.
    *See Before the Public Service Commission of Utah, In the Matter of
    the Joint Application of U.S. West Communications, Inc., All West
    Communications, Inc., Carbon/Emery Telecom, Inc., Central Utah
    Telephone, Inc., Hanksville Telecom, Inc., Manti Telephone Company,
    Skyline Telecom, and UBET Telecom, Inc. for Approval of Purchase and
    Sale of the Various Exchanges and Associated Matters*, Docket No.
    99-049-65, Stipulation to Approve Purchase and Sale of Various
    Exchanges, para. 1 (rel. Sept. 6, 2000). Therefore, because the
    parties entered into an agreement to sell the exchanges prior to
    January 1, 2000, section 54.801 does not apply.

[^17]: Qwest's Coalville exchange will be added to All West's study
    area; Qwest's East Carbon, Hanksville, Helper and Price exchanges
    will be added to Emery Telephone's study area; Qwest's Mt. Pleasant
    exchange will be added to Central Utah's study area; Qwest's Ephraim
    exchange will be added to Manti's study area; Qwest's Dugway and
    Wendover exchanges will be added to Skyline's study area; Qwest's
    Duchesne, Roosevelt and Vernal exchanges will be added to Uintah
    Basin Telecommunications Association's study area. *See* Petition at
    Attachment A.

[^18]: *See* Comments of the National Telephone Cooperative Association,
    CC Docket 96-45 (filed Nov. 2, 2000) at 3.

[^19]: ^.^

[^20]: *ALL WEST Communications, Inc., Carbon/Emery Telecom, Inc.
    Central Utah Telephone, Inc., Hanksville Telecom, Inc., Manti
    Telephone Company, Skyline Telecom, UBET Telecom, Inc. and Qwest
    Corporation Seek a Waiver of the Definition of "Study Area" in Part
    36 and Sections 61.41(c), 69.3(e)(11), and 69.605(c) of the
    Commission's Rules*, Public Notice, DA 00-2349 (rel. Oct. 18,
    2000)(*Qwest/Acquiring Companies* *Public Notice*).

[^21]: *See* Electronic Filing of Beehive Telephone, Inc., CC Docket No.
    96-45 (filed Nov. 2, 2000) (Beehive Comments). Beehive incorrectly
    styled its filing as a petition for reconsideration. Under the
    Commission's rules, petitions for reconsideration are entertained
    after a final decision has been issued by the Commission. *See
    generally* 47 C.F.R. §§ 1.101, 1.102, 1.103, 1.104 and 1.106. The
    Commission has not issued a decision regarding the waivers at issue
    here and, therefore, Beehive's petition for reconsideration is
    premature. We nevertheless will treat Beehive's filing as comments
    and will address below Beehive's objections to the waiver requests.

[^22]: We note that except for Beehive's petition for reconsideration,
    which we are treating as comments, all of Beehive's filings were
    submitted outside the comment cycle established in this proceeding
    and outside the pleading cycle under section 1.45 of the
    Commission's rules. *See* *Qwest/Acquiring Companies* *Public
    Notice* (establishing November 13, 2000, as the deadline for reply
    comments); 47 C.F.R. § 1.45. In the interest of establishing a
    complete and comprehensive record on this matter, we believe it is
    in the public interest to accept these further pleadings and will
    treat them as ex parte presentations. *See* 47 C.F.R. §§ 1.1200(a),
    1.1206. *See also*, *In the Matter of Mobile Relay Systems*, Order
    on Further Reconsideration, FCC File No. D100478, DA 01-113, n. 22
    (rel. Jan. 16, 2001).

[^23]: 47 C.F.R. § 1.3.

[^24]: ^.^

[^25]: *WAIT Radio v. FCC*, 418 F.2d 1153, 1159 (D.C. Cir. 1969), *cert.
    denied*, 409 U.S. 1027 (1972).

[^26]: ^.^

[^27]: *Northeast Cellular Telephone Co. v. FCC*, 897 F.2d 1164, 1166
    (D.C. Cir. 1990).

[^28]: ^.^

[^29]: *WAIT Radio*, 418 F.2d at 1159; *Northeast Cellular*, 897 F.2d at
    1166.

[^30]: ^?^ *See e.g., U S WEST Communications, Inc., and Eagle
    Telecommunications, Inc., 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 1871, 1872 (1995).

[^31]: ^.^

[^32]: *See* 47 C.F.R. § 54.305.

[^33]: *See* 47 C.F.R. § 36.611.

[^34]: *See Before the Public Service Commission of Utah,* *In the
    Matter of the Joint Application of U.S. West Communications, Inc.,
    All West Communications, Inc., Carbon/Emery Telecom, Inc., Central
    Utah Telephone, Inc., Hanksville Telecom, Inc., Manti Telephone
    Company, Skyline Telecom, and UBET Telecom, Inc. for Approval of
    Purchase and Sale of the Various Exchanges and Associated Matters*,
    Docket No. 99-049-65, Report and Order (rel. Sept. 6, 2000) (*Utah
    Order*).

[^35]: ^?^ *See* Petition at 17.

[^36]: ^?^ *See id.* (*citing* Utah Order at 8-9)*.*

[^37]: ^?^ *See id.*

[^38]: ^?^ *See* USTA Comments at 7. Over the next two years,
    Carbon/Emery plans to spend approximately \$4 million on upgrades;
    All West plans to spend approximately \$1.4 million on upgrades;
    Central Utah plans to spend approximately \$2 million on upgrades;
    Hanksville plans to spend approximately \$1.1 million on upgrades;
    Manti plans to spend approximately \$800,000 on upgrades; Skyline
    plans to spend approximately \$2 million on upgrades; and UBET plans
    to spend approximately \$4.5 million on upgrades. *See* Petition at
    Attachments B, C, D, E, F, G and H.

[^39]: *See* *generally, Utah Order*.

[^40]: To the extent Beehive claims that Qwest violated the Commission's
    competitive bidding rules, we note that the competitive bidding
    regulations and related cases cited by Beehive stem from a specific
    and limited congressional mandate directing the Commission to
    develop a system for allocating *radio spectrum licenses*, not the
    sale of wireline exchanges. *See* 47 U.S.C. § 309(j).

[^41]: *See In re Applications of Lee Optical and Associated Companies
    Retirement and Pension Fund Trust*, 2 FCC Rcd 5480, para. 7 (1987)
    ("the Commission has historically declined to involve itself in jus
    privatum disputes, leaving the resolution of such claims to local
    court (or other appropriate forums)"); *Allgreg Cellular
    Engineering*, 75 RR 2d 957, 970 (Rev. Bd. 1994); *Listeners' Guild,
    Inc. v. FCC*, 813 F.2d 465, 469 (D.C. Cir. 1987).

[^42]: *See* Letter from Arthur Brothers, President, Beehive Telephone
    Co., Inc. to the Federal Communications Commission, dated Jan. 5,
    2002\[sic\], at 1; All West Communications, Inc., Carbon/Emery
    Telecom, Inc., Central Utah Telephone, Inc., Hanksville Telecom,
    Inc., Manti Telephone Company, Skyline Telecom, UBET Telecom, Inc.
    and USQwest Corporation Joint Petition for Waiver of the Definition
    of "Study Area" Contained in Part 36 Appendix-Glossary of the
    Commission's Rules, Petition for Waiver of Section 61.41(c) and (d),
    69.3(e)(11) and 69.605(c) of the Commission's Rules, *Joint Motion
    to Strike Petition or, Alternatively, Accept Response* (filed Jan.
    22, 2001) (*Joint Motion to Strike*); *Opposition to Joint Motion to
    Strike*; All West Communications, Inc., Carbon/Emery Telecom, Inc.,
    Central Utah Telephone, Inc., Hanksville Telecom, Inc., Manti
    Telephone Company, Skyline Telecom, UBET Telecom, Inc. and USQwest
    Corporation Joint Petition for Waiver of the Definition of "Study
    Area" Contained in Part 36 Appendix-Glossary of the Commission's
    Rules, Petition for Waiver of Section 61.41(c) and (d), 69.3(e)(11)
    and 69.605(c) of the Commission's Rules, *Supplemental Reply to
    Opposition to Joint Motion to Strike and Reply Response* (filed Feb.
    16, 2001) (*Supplemental Reply*).

[^43]: Qwest and the Acquiring Companies have noted that the Utah
    Commission has already rendered moot many of the issues raised by
    Beehive concerning the Lynch proceeding. *See Supplemental Reply*
    and Attachment.

[^44]: 47 C.F.R. § 61.41(c)(2). *See Policy and Rules Concerning rates
    for Dominant Carriers*, CC Docket No. 87-313, Second Report and
    Order, 5 FCC Rcd 6786 (*Price Cap Order*), Erratum, 5 FCC Rcd 7664
    (Com. Car. Bur. 1990) (*LEC Price Cap Order*), *modified on recon*.,
    Order on Reconsideration, 6 FCC Rcd 2637 (1991) (*LEC Price Cap
    Reconsideration Order*), *aff'd sub nom.* *National Rural Telecom
    Ass'n v. FCC*, 988 F.2d 174 (D.C. Cir. 1993), *petitions for further
    recon. dismissed*, 6 FCC Rcd 7482 (1991), *further modification on
    recon.*, *Amendments of Part 69 of the Commission's Rules Relating
    to the Creation of Access Charge Supplements for Open Network
    Architecture, Policy and Rules Concerning Rates for Dominant
    Carriers*, Report and Order and Order on Further Reconsideration and
    Supplemental Notice of Proposed Rulemaking, 6 FCC Rcd 4524 (1991),
    further recon., Memorandum Opinion and Order of Second Further
    Reconsideration, 7 FCC Rcd. 5235 (1992).

[^45]: 47 C.F.R. § 61.41(c)(3).

[^46]: 47 C.F.R. § 61.41(d).

[^47]: *See LEC Price Cap Reconsideration Order*, 6 FCC Rcd at 2706.

[^48]: *Id.*

[^49]: *Id.* at 2706 n. 207.

[^50]: *See* *Price Cap Performance Review for Local Exchange Carriers*,
    CC Docket No. 94-1, First Report and Order, 10 FCC Rcd 8961, 9104-06
    (1995) (*LEC Price Cap Review Order*). 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* 47 C.F.R. § 61.45.

[^51]: *See* *LEC Price Cap Review Order*, 10 FCC Rcd at 9105-9106.

[^52]: *See, e.g.,* *Rye Telephone Company, Inc. and U S WEST
    Communications, Inc., Joint Petition for Waiver of Definition of
    "Study Area" Contained in the Part 36 Appendix-Glossary of the
    Commission's Rules and Petition for Waiver of Section 61.41(c)(2) of
    the Commission's Rules*, CC Docket No. 96-45, Order, DA 00-1585, at
    para. 17 (Acc. Pol. Div. rel. Jul. 18, 2000); *ALLTEL Corp. Petition
    for Waiver of Section 61.41 of the Commission's Rules and
    Application for Transfer of Control*, CCB/CPD No. 99-1, Memorandum
    Opinion and Order, 14 FCC Rcd. 14191, 14202 (1999) (*ALLTEL/Aliant
    Merger Order)*.

[^53]: *See* Petition at 2. *See id.*

[^54]: *See* Petition at 3-10.

[^55]: We note that the Acquiring Companies have also requested a waiver
    of Section 61.41(d) which provides that LECs that become subject to
    price cap regulation are not permitted to withdraw from such
    regulation. 47 C.F.R. §§ 61.41(d). Because the Acquiring Companies
    are not currently subject to price cap regulation, a waiver of this
    rule is unnecessary at this time.

[^56]: ^?^ *See Policy and Rules Concerning Rates for Dominant
    Carriers*, CC Docket No. 87-313, Second Report and Order, 5 FCC Rcd
    6786, 6821 (1990), Erratum, 5 FCC Rcd 7664 (Com. Car. Bur. 1990)
    (*LEC Price Cap Order*), *modified on recon*., Order on
    Reconsideration, 6 FCC Rcd 2637 (1991) (*LEC Price Cap
    Reconsideration Order*), *aff'd sub nom. National Rural Telecom
    Ass'n v. FCC*, 988 F.2d 174 (D.C. Cir. 1993), *petitions for further
    recon. dismissed*, 6 FCC Rcd 7482 (1991), *further modification on
    recon.*, *Amendments of Part 69 of the Commission's Rules Relating
    to the Creation of Access Charge Supplements for Open Network
    Architecture*, *Policy and Rules Concerning Rates for Dominant
    Carriers*, Report and Order on Further Reconsideration and
    Supplemental Notice of Proposed Rulemaking, 6 FCC Rcd 4524 (1991),
    *further recon*., Memorandum Opinion and Order on Second Further
    Reconsideration, 7 FCC Rcd 5235 (1992).

[^57]: Although Skyline and Manti seek a waiver of section 61.41(c), we
    find that it is unnecessary to grant a waiver of 61.41(c) in this
    instance. Section 61.41(c)(3) states, "\[n\]otwithstanding the
    provisions of § 61.41(c)(2) above, when a telephone company subject
    to price cap regulation acquires, is acquired by, merges with, or
    otherwise becomes affiliated with a telephone company that qualifies
    as an 'average schedule' company, the latter company may retain its
    'average schedule' status or become subject to price cap regulation
    . . ." 47 C.F.R. § 61.41(c)(2). Under this rule, we have held that a
    company that acquires exchanges from a price cap company is
    permitted to retain its average schedule status and avoid any price
    cap regulation. *See, e.g.,* *In the Matter of Petition for Waivers
    filed by East Plains Telecom, Inc., Fort Randall Telephone Company,
    U.S. West Communications, Inc., and Vivian Telephone Company*, 12
    FCC Rcd 24422, (Acc. Aud. Div. 1997); *In the Matter of Petitions
    for Waivers filed by Farmers Mutual Telephone Company Project Mutual
    Telephone Cooperative Ass'n, Inc. and U.S. West Communications,
    Inc.*, 11 FCC Rcd 9380, para. 17 (Acc. Aud. Div. 1996). Because
    Skyline and Manti are currently average schedule companies, and wish
    to retain their average schedule status, they are not required to
    become subject to price cap regulation after acquiring exchanges
    from Qwest and therefore do not need to seek a waiver of section
    61.41(c).

[^58]: *See supra* discussion at para. 9.

[^59]: ^?^ *See, e.g*., *ALLTEL/Aliant Merger Order*, 14 FCC Rcd at
    14204-05.

[^60]: ^?^ *See*, *e.g*., *id.* at 14204; *In the Matter of Minburn
    Telecommunications, Inc., Petition for Waiver of Sections 61.41(c)
    and (d) of the Commission's Rules*, CCB/CPD No. 99-16, Memorandum
    Opinion and Order, 14 FCC Rcd 14184, 14187 (Com. Car. Bur. 1999).

[^61]: ^?^ *See Price Cap Order*, 5 FCC Rcd at 6799-6801, 6818-19.

[^62]: ^?^ *Id.*

[^63]: ^?^ *See* Petition at 2.

[^64]: *See* USTA Comments at 2-5. These acquisitions will have little
    impact on the exchanges of the Acquiring Companies at the state and
    national level. For example, All West's access lines represent only
    .35% of Utah's access lines and .0022% of the nation's access lines;
    Carbon Emery's access lines represent only .45% of Utah's access
    lines and .0029% of the nation's access lines; Central Utah's access
    lines represent only .13% of Utah's access lines and .0008% of the
    nation's access lines; Manti's access lines represent only .13% of
    Utah's access lines and .0008% of the nation's access lines;
    Skyline's access lines represent only .13% of Utah's access lines
    and .00082% of the nation's access lines; and Uintah Basin
    Telecommunication Association's (UBET's parent) access lines
    represent only .0027% of Utah's access lines and .0017% of the
    nation's access lines. *See* Petition at 4-7.

[^65]: *See*, *e.g.*, *CenturyTel of Northwest Arkansas, LLC et al.,
    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 (Acc. Pol. Div. rel. June 27, 2000) (approving the
    conversion of 214,270 access lines from price cap to rate-of-return
    regulation); *ALLTEL/Aliant Merger Order* (approving the conversion
    of approximately 300,000 access lines from price cap to rate-of-
    return regulation); *In the Matter of ALLTEL Service Corporation,
    Petition for Waiver of Section 61.41 of the Commission\'s Rules*,
    Order, 8 FCC Rcd 7054 (Com. Car. Bur. 1993) (approving the
    conversion of approximately 285,000 access lines from price cap to
    rate-of-return regulation).

[^66]: *See* LEC Price Cap Order at para. 6 (limiting mandatory price
    cap participation to the eight largest LECs at that time -- the
    seven Bell Operating Companies and General Telephone and Telegraph
    Company).

[^67]: *See* Petition at 9.

[^68]: ^?^ *See* 47 C.F.R. § 61.45(d).

[^69]: *See* 47 C.F.R. §§ 69.601-69.612.

[^70]: ^?^ *See* 47 C.F.R. § 69.606(a).

[^71]: ^?^ 47 C.F.R. § 69.605(c).

[^72]: ^?^ *See MTS and WATS Market Structure: Average Schedule
    Companies*, CC Docket No. 78-72, Memorandum Opinion and Order, 3 FCC
    Rcd 6642 (1986) (MTS and WATS Order). The Bureau also has observed
    that cost company conversion to average schedule status may result
    in higher than reasonable interstate revenue requirements. *See*
    NECA\'s Proposed Waiver of Section 69.605(c) of the Commission\'s
    Rules, CC Docket No. 78-72, *Memorandum Opinion and Order*, 2 FCC
    Rcd 3960 (Com. Car. Bur. 1987) (*5,000 Line Waiver Order*).

[^73]: ^?^ *See* BPS Telephone Co. Petition for Waiver of Section
    69.605(c) of the Commission\'s Rules, AAD No. 95-67, *Memorandum
    Opinion and Order on Reconsideration*, 12 FCC Rcd 13820, 13824 (Acc.
    Aud. Div. 1997) (*BPS*).

[^74]: ^?^ *See* *5,000 Line Waiver Order* where the Commission granted
    carriers with 5,000 or fewer access lines an opportunity to elect to
    be compensated under the interstate average schedules. The
    opportunity to make such an election expired on August 1, 1987, and
    the election was effective January 1, 1988.

[^75]: ^?^ *BPS*, 12 FCC Rcd at 13824. *See, e.g.*, *Dumont Telephone
    Company, Inc. and Universal Communications, Inc., Request for
    Extraordinary Relief*, AAD 96-94, Memorandum Opinion and Order, 13
    FCC Rcd 17821 (Acc. Saf. Div. 1998) (waiver granted to Dumont
    Telephone Company, Inc. and Universal Communications, Inc., which
    had approximately 1,544 access lines); Wilderness Valley Telephone
    Company, Inc., Petition for Waiver of Sections 69.605(c) and
    69.3(e)(11) of the Commission's Rules, AAD 96-99, Order, 13 FCC Rcd
    4511 (Acc. Aud. Div. 1998) (waiver granted to Wilderness Valley
    Telephone Company, Inc., which had approximately 75 access lines);
    *Petitions for Waiver Filed by Accent Communications, et al.*, AAD
    No. 95-124, Memorandum Opinion and Order, 11 FCC Rcd 11513 (Acc.
    Aud. Div. 1996) (waiver granted to Mobridge Telecommunications
    Company, which had approximately 2,400 access lines); *National
    Utilities, Inc. and Bettles Telephone Co., Inc. Petition for Waiver
    of Section 69.605(c) of the Commission\'s Rules*, Report and Order,
    8 FCC Rcd 8723 (Comm. Car. Bur. 1993) (waiver granted for National
    Utilities, which had 2,350 access lines, and Bettles, which had 50
    access lines); *Newcastle Telephone Co. Petition for Waiver of
    Section 69.605(c)*, AAD No. 90-18, Memorandum Opinion and Order, 7
    FCC Rcd 2081 (Com. Car. Bur. 1992) (waiver granted for small company
    with 1550 access lines, two exchanges); *Papago Tribal Utility
    Authority Petition for Waiver of Section 69.605(c) of the
    Commission\'s Rules*, Memorandum Opinion and Order, 2 FCC Rcd 6631
    (Com. Car. Bur. 1987) (waiver granted to small company serving fewer
    than 400 lines in a 700 square mile area and lacking operational
    expertise).

[^76]: ^?^ *BPS*, 12 FCC Rcd at 13825. *See, e.g.,* Petition for Waivers
    Filed by Baltic Telecom Cooperative, Inc. *et al.*, AAD No. 96-95,
    *Memorandum Opinion and Order*, 12 FCC Rcd 2433 (Acc. Aud. Div.
    1997); Petitions for Waiver Filed by Accent Communications, *et
    al.*, AAD No. 95-124, *Memorandum Opinion and Order*, 11 FCC Rcd
    11513 (Acc. Aud. Div. 1996). In these situations, we have attached
    three conditions to minimize the impact of the conversion and reduce
    the incentive to manipulate Commission rules. Waiver recipients must
    (1) report to NECA on a combined basis for interstate average
    schedule and USF purposes, and receive distributions on that basis
    as a consolidated company; (2) convert to cost‑based settlement
    status if an average schedule affiliate in that study area converts
    to cost‑based settlements, or elects section 61.39 treatment; and
    (3) maintain common control over average schedule affiliates, so
    that average schedule status terminates when any of the affiliates
    are sold, transferred, or otherwise assigned. *See BPS*, 12 FCC Rcd
    at 13825. We have always intended for these conditions to ensure
    that the waivers will not result in unintended effects on the
    petitioners\' interstate revenue requirements or result in an
    administrative burden on the Commission or NECA. *Id.*

[^77]: ^?^ *See* Petition at 10.

[^78]: ^?^ *See* Petition at 11. Skyline is adding 1,407 access lines to
    its existing 1,609 access lines. Manti is adding 1,887 access lines
    to its existing 1,605 access lines. *See id.* at Attachment A*.*

[^79]: ^?^ *Id.* at 12-13.

[^80]: ^?^ *See* *MTS and WATS Order*, 3 FCC Rcd at 6642.

[^81]: *See supra* note 72.

[^82]: *See supra* note 69.

[^83]: ^?^ 47 C.F.R. § 69.3(e)(11). We note that section 69.3(e)(11) of
    the Commission's rules is also applicable to changes in Transitional
    Support resulting from a merger of acquisition. In accordance with
    section 69.612 of the Commission's rules, Transitional Support
    expired on June 30, 1994. *See* 47 C.F.R. § 69.612(b).

[^84]: ^?^ *See Amendment of Part 69 of the Commission's Rules Relating
    to the Common Line Pool Status of Local Exchange Carriers Involved
    in Mergers or Acquisitions*, CC Docket No. 89-2, Report and Order, 5
    FCC Rcd 231, 248 (1989) (Common Line Pool Order).

[^85]: ^?^ *See* 47 C.F.R. § 69.3(a).

[^86]: ^?^ *See* Petition at 13-14*.*

[^87]: ^?^ *See* Petition at 14. Petitioners note that the 35,600 access
    lines in the transaction would represent an increase of only .34% of
    the approximate 10.5 million access lines with in the NECA common
    line pools reported by NECA in its 1999 Access Charge Filing. *See*
    Petition at 14 n. 25.

[^88]: *See* Letter from R. A. Askoff, National Exchange Carrier
    Association to Jerry D. Fenn, Attorney for the Acquiring Companies,
    dated February 2, 2001.