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 Federal  Communications  Commission  DA  00-  1307 
 Before  the  Federal  Communications  Commission 
 Washington,  D.  C. 


 In  the  Matter  of  )  ) 
 ALLTEL  Corporation  )  )  CCB/  CPD  No.  99-  01 
 Petition  for  Waiver  of  )  Section  61.41  ) 
 of  the  Commission's  Rules  ) 


 ORDER 
 Adopted:  June  16,  2000  Released:  June  16,  2000 
 By  the  Deputy  Chief,  Common  Carrier  Bureau: 
 1.  In  this  order,  we  grant  ALLTEL/  Aliants  petition  for  a  waiver  to  the  extent  necessary  to  permit  its  former  Aliant  exchanges  to  file  a  price  cap  annual  access  tariff  that  will  be 
 effective  July  1,  2000.  On  May  17,  2000,  ALLTEL/  Aliant  filed  a  petition  requesting  that  the  Commission  grant  it  permission  to  convert  13  of  the  24  ALLTEL  study  areas  to  price  cap 
 regulation  under  section  61.4(  a)(  3)  of  the  Commissions  rules,  47  C.  F.  R.    61.41(  a)(  3)  and  waive,  on  a  temporary  basis,  section  61.41(  b)  of  the  Commissions  rules,  47  C.  F.  R.    61.41(  b)  to  permit 
 the  continued  regulation  of  its  remaining  study  areas  as  rate-  of-  return  companies.  1  In  addition,  ALLTEL/  Aliant  requests  that  the  Commission  grant,  on  an  expedited  basis,  an  interim  waiver  of 
 section  61.41(  b)  of  the  Commissions  rules  to  allow  the  merged  company  to  continue  to  operate  the  former  Aliant  exchanges  under  price  cap  regulation  pending  the  Commissions  decision  on 
 ALLTEL/  Aliants  request  to  elect  price  cap  regulation  on  a  permanent  basis  for  the  13  ALLTEL  study  areas.  2  ALLTEL  does  not  intend  to  convert  to  price  cap  the  study  areas  in  which  it  files  on 
 an  average  schedule  basis,  pursuant  to  47  C.  F.  R.  69.605(  c),  under  rate-  of-  return  regulation. 
 2.  As  part  of  the  Commissions  approval  of  the  merger  between  ALLTEL  and  Aliant,  the  Commission  waived  sections  61.41(  c)(  1),  (2)  and  (d)  of  the  Commission's  rules,  47  C.  F.  R.   
 61.41(  c)(  1),  (2)  and  (d),  and  any  other  necessary  provisions  of  its  rules,  to  permit  the  continued  regulation  of  the  ALLTEL  incumbent  local  exchange  companies  as  rate-  of-  return  companies  and  to 
 permit  Aliant  to  convert  to  rate-  of-  return  regulation  following  the  merger.  In  order  to  prevent 
 1  For  purposes  of  this  order,  when  discussing  the  company  formed  by  the  merger  of  ALLTEL  and  Aliant 
 Corporation  Communications,  Inc.,  we  use  the  term  ALLTEL/  Aliant  or  the  merged  company.  When  discussing  only  the  ALLTEL  exchanges,  we  use  the  term  ALLTEL.  Similarly,  when  discussing  the  former  Aliant 


 exchanges,  we  use  the  term  Aliant. 
 2  See  ALLTEL  Corporation,  Petition  for  Waiver  of  Section  61.41  of  the  Commissions  Rules  and  Applications  for 
 Transfer  of  Control,  14  FCC  Rcd  14,  191  (1999)  (ALLTEL/  Aliant  Order). 
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 ALLTEL  from  circumventing  the  purpose  of  the  Commission's  rules  in  sections  61.41(  c)  and  (d),  the  Commission  also  required  the  merged  company  to  seek  prior  Commission  approval  if  it  ever 
 decided  to  elect  price  cap  regulation.  Pursuant  to  the  Commissions  ALLTEL/  Aliant  Order,  in  the  absence  of  a  waiver,  the  combined  company  is  required  to  make  its  June  16,  2000  annual  access 
 filing,  under  rate-  of-  return  regulation. 
 3.  ALLTEL/  Aliant  asserts  that  good  cause  exists  to  allow  the  Aliant  exchanges  to  continue  to  operate  under  price  cap  regulation  pending  decision  on  the  combined  companys 
 waiver  request  to  elect  price  cap  regulation  on  a  permanent  basis  for  13  of  the  ALLTEL  study  areas,  including  Aliant.  3  ALLTEL/  Aliant  asserts  that  the  continued  operation  of  the  Aliant 
 properties  under  the  current  price  cap  mode  of  regulation  would  allow  ALLTEL  to  maintain  the  status  quo  while  the  Commission  considers  its  waiver  request  to  elect  price  cap  regulation  on  a 
 permanent  basis.  4  ALLTEL/  Aliant  also  asserts  that  this  approach  would  avoid  the  customer  confusion  and  rate  churn  that  would  result  from  converting  Aliant  from  price  cap  regulation  to 
 rate-  of-  return  regulation  as  of  July  1,  2000  and  then  back  to  price  cap  regulation  if  its  waiver  request  were  granted.  5 


 4.  Several  parties  responded  to  ALLTEL/  Aliants  Petition.  6  These  parties  do  not  oppose  the  Commission  granting  an  interim  waiver  to  permit  ALLTEL/  Aliant  to  continue  to  operate  the 
 former  Aliant  exchanges  under  price  cap  regulation  while  the  Commission  considers  the  request  to  elect  price  cap  regulation  on  a  permanent  basis  for  the  13  ALLTEL  study  areas.  7  AT&  T  argues 
 that  such  a  waiver  should  be  subject  to  the  following  conditions.  The  Commission  should  require  the  combined  company  to  operate  Aliant  as  a  structurally  separate  price  cap  company 
 and  to  treat  Aliant  as  a  non-  regulated  affiliate  (as  it  has  required  for  Bell  Operating  Companies  (BOCs)  long  distance  affiliates  pursuant  to  Section  272  of  the  Telecommunications  Act  of 
 1996).  8  AT&  T  asserts  that  this  requirement  would  limit  the  risk  of  Aliants  costs  being  shifted  to  ALLTELs  rate-  of-  return  local  exchange  carriers  (LECs)  so  that  Aliant  retains  higher  earnings 
 under  price  caps.  9 
 5.  Although  the  ALLTEL/  Aliant  Order  permitted  ALLTEL  to  convert  the  Aliant  exchanges  to  rate-  of-  return  regulation,  the  exchanges  are  still  operating  under  price  cap  regulation.  The  grant 
 of  the  interim  waiver  would  maintain  the  status  quo  and  avoid  rate  churn  for  customers  that  might 
 3  ALLTEL/  Aliant  Petition  for  Waiver  dated  May  17,  2000  at  2.  (ALLTEL/  Aliant  Petition). 


 4  ALLTEL/  Aliant  Petition  at  2. 
 5  ALLTEL/  Aliant  Petition  at  2. 
 6  See  AT&  T  Corporation  Comments  (AT&  T  Comments);  Nebraska  Public  Service  Commission  (Nebraska 
 PSC).  In  response,  ALLTEL/  Aliant  filed  a  reply  on  June  8,  2000.  See  ALLTEL/  Aliant  Reply. 
 7  See,  e.  g.,  AT&  T  Comments  at  2;  MCI  WorldCom  Comments  at  12.  No  parties  have  filed  comments  in 
 opposition  to  the  request  for  interim  waiver. 
 8  AT&  T  Comments  at  3  citing  Accounting  Safeguards  Under  the  Telecommunications  Act  of  1996,  CC 
 Docket  No.  96-  150,  Report  and  Order,  11  FCC  Rcd  17577  (1996). 
 9  AT&  T  Comments  at  3. 
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 occur  if  the  Aliant  exchanges  were  required  to  convert  to  rate-  of-  return  regulation  while  the  Commission  evaluates  the  combined  companys  request  to  seek  price  cap  regulation  for  13  of  its 
 study  areas,  and  then  were  subsequently  converted  back  to  price  cap  regulation,  if  the  Commission  were  to  grant  the  larger  waiver.  In  light  of  these  considerations,  we  find  that  it  is 
 appropriate  to  grant  an  interim  waiver  to  ALLTEL/  Aliant  to  the  extent  necessary  to  permit  its  former  Aliant  exchanges  to  file  a  price  cap  annual  access  tariff  that  will  be  effective  July  1,  2000. 
 The  grant  of  the  interim  waiver  will  allow  the  Commission  to  review  the  merits  of  ALLTELs  petition  in  light  of  all  of  the  information  filed  in  this  proceeding  and  in  light  of  the  Commissions 
 recent  adoption  of  new  access  charge  and  universal  service  rules  for  price  cap  carriers.  10 
 6.  We  reject  AT&  Ts  request  that  if  the  interim  waiver  is  granted,  ALLTEL  should,  at  a  minimum,  be  required  to  operate  Aliant  as  a  structurally  separate  price  cap  company  and  to 
 treat  Aliant  as  a  non-  regulated  affiliate.  11  The  Commission  rejected  a  similar  request  by  AT&  T  in  the  ALLTEL/  Aliant  Order.  In  the  ALLTEL/  Aliant  Order,  the  Commission  concluded  that  any 
 benefits  that  may  be  gained  from  AT&  Ts  request  were  outweighed  by  the  harms  of  creating  the  additional  layer  of  regulation  that  AT&  T  suggests.  12  AT&  T  has  not  presented  any  new  evidence 
 to  persuade  us  to  follow  a  different  course  on  this  matter. 


 7.  Accordingly,  IT  IS  ORDERED,  pursuant  to  sections  4(  i)  and  201  of  the  Communications  Act  of  1934,  as  amended,  47  U.  S.  C.    154(  i)  and  201,  and  sections  1.3,  0.91, 
 and  0.291  of  the  Commission's  rules,  47  C.  F.  R.    1.3,  0.91,  and  0.291,  that  section  61.41(  c)(  2)  of  the  Commission's  rules,  47  C.  F.  R.    61.41(  c)(  2),  SHALL  BE  WAIVED  to  the  extent 


 10  Access  Charge  Reform  and  Price  Cap  Performance  Review,  CC  Docket  Nos.  96-  262  and  94-  1,  Sixth 
 Report  and  Order,  Low-  Volume  Long-  Distance  Users,  CC  Docket  99-  249,  Federal-  State  Joint  Board  on  Universal  Service,  CC  Docket  No.  96-  45,  Eleventh  Report  and  Order,  FCC  00-  193  (rel.  May  31,  2000)  (CALLS  Report  and 


 Order). 
 11  AT&  T  Comments  at  3.  See  also  AT&  T  Opposition  in  ALLTEL/  Aliant  Order  at  9-  10  (requesting  Aliant  be 
 treated  as  a  non-  regulated  affiliate  and  a  structurally  separate  price  cap  company). 
 12  ALLTEL/  Aliant  Order  at    38. 
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 necessary  to  permit  ALLTEL/  Aliant  to  file  a  price  cap  annual  access  tariff  that  will  be  effective  July  1,  2000. 
 FEDERAL  COMMUNICATIONS  COMMISSION 
 Yog  R.  Varma  Deputy  Chief 
 Common  Carrier  Bureau 
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