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 Federal  Communications  Commission  DA  06-  1645 
 1 
 Before  the  Federal  Communications  Commission 
 Washington,  D.  C.  20554 


 In  the  Matter  of 
 Sacred  Wind  Communications,  Inc.  and 
 Qwest  Corporation 
 Joint  Petition  for  Waiver  of  the  Definition  of  Study  Area  Contained  in  Part  36,  Appendix-Glossary 
 of  the  Commissions  Rules 
 Sacred  Wind  Communications,  Inc. 
 Related  Waivers  of  Parts  36,  54,  and  69  of  the  Communications  Rules 


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 CC  Docket  No.  96-  45 


 ORDER 
 Adopted:  August  15,  2006  Released:  August  15,  2006 
 By  the  Chief,  Wireline  Competition  Bureau: 


 I.  INTRODUCTION 
 1.  In  this  Order,  we  grant  a  joint  request  from  Sacred  Wind  Communications,  Inc.  (Sacred  Wind)  and  Qwest  Corporation  (Qwest)  (collectively,  Petitioners)  for  a  waiver  of  the  study  area  boundary 


 freeze  codified  in  the  Appendix-  Glossary  of  Part  36  of  the  Commissions  rules.  1  We  also  grant  Sacred  Wind  waivers  of  certain  Commission  rules  to  enable  Sacred  Wind  to  immediately  receive  high-  cost 
 universal  service  support  as  provided  in  this  Order.  In  addition,  we  grant  Sacred  Winds  request  for  waiver  of  the  Commissions  rules  so  that  it  may  participate  immediately  in  the  National  Exchange  Carrier 
 Association  (NECA)  pools  and  tariffs.  Finally,  we  waive  section  54.400(  e)  of  the  Commissions  rules,  to  the  extent  necessary,  to  permit  Sacred  Wind  and  other  eligible  telecommunications  carriers  (ETCs) 
 serving  Sacred  Winds  service  area  to  offer  enhanced  Lifeline  and  Link-  Up  benefits  to  qualified  residents. 
 II.  BACKGROUND 
 2.  Petition.  On  March  30,  2006,  Sacred  Wind  and  Qwest  filed  a  joint  petition  for  waiver  of  the  definition  of  study  area  contained  in  the  Part  36  Appendix-  Glossary  of  the  Commissions  rules  so 


 that  Sacred  Wind  may  establish  a  new  study  area  in  the  state  of  New  Mexico.  2  Sacred  Wind  was 
 1  See  47  C.  F.  R.  Part  36  App.  See  also  Sacred  Wind  Communications,  Inc.  and  Qwest  Corporation  Joint  Petition  for 
 Waiver  of  the  Definition  of  Study  Area  Contained  in  Part  36,  Appendix-  Glossary  of  the  Commissions  Rules,  Related  Waivers  of  Parts  36,  54  and  69  of  the  Commissions  Rules,  CC  Docket  No.  96-  45  (filed  March  30,  2006) 


 (Petition).  2 
 See  generally  Petition. 
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 established  in  2004  to  provide  advanced  and  basic  telecommunications  services  to  the  Navajo  people  on  both  reservation  lands  and  nearby  lands  in  the  state  of  New  Mexico.  3  Qwest  is  an  interstate  access  price 
 cap  incumbent  local  exchange  carrier  (LEC)  that  owns  and  operates  approximately  800,000  access  lines  in  New  Mexico.  4  Sacred  Wind  is  acquiring  approximately  2,300  access  lines  from  Qwest  that  are  on  or 
 near  the  Navajo  reservation  in  New  Mexico.  5  A  study  area  waiver  will  permit  Qwest  to  remove  the  approximately  2,300  access  lines  from  its  New  Mexico  study  area  and  permit  Sacred  Wind  to  establish  a 
 new  study  area  in  New  Mexico. 
 3.  Sacred  Wind  also  seeks  waiver  of  certain  Commission  rules  so  that  it  may  receive  immediate  federal  high-  cost  universal  service  support  and  enhanced  Lifeline  and  Link-  Up  support  for 


 serving  eligible  residents  of  near-  Tribal  lands.  6  Specifically,  Sacred  Wind  requests  waivers  of  sections  36.611,  36.612,  69.  2(  hh),  69.  3(  e)(  6),  and  69.3(  e)(  11)  of  the  Commissions  rules.  7  Waiver  of  sections 
 36.611  and  36.612  of  the  Commissions  rules  would  enable  Sacred  Wind  to  receive  immediate  high-  cost  loop  support  payments  based  on  projected  costs  until  historical  costs  become  available.  8  Waiver  of 
 sections  69.2(  hh),  69.  3(  e)(  6),  and  69.  3(  e)(  11)  would  permit  Sacred  Wind  to  become  a  member  of  NECA  and  to  participate  immediately  in  the  NECA  pools  and  tariffs.  9  In  addition,  Sacred  Wind  requests  waivers 
 of  sections  54.301(  b),  54.314(  d),  and  54.903(  a)(  3)  to  allow  it  to  receive  immediate  local  switching  support  (LSS)  and  interstate  common  line  support  (ICLS).  10  In  addition,  Sacred  Wind  posits  that  section 
 54.305  of  the  Commissions  rules  does  not  apply  to  the  instant  transaction  or,  in  the  alternative,  that  the  Commission  should  waive  section  54.305  in  order  that  Sacred  Wind  may  receive  high-  cost  support  based 
 on  the  average  cost  of  all  its  lines.  11  Sacred  Wind  also  requests  that  the  Commission  waive  its  stay  of  the  eligibility  requirements  for  Tier  4  Lifeline  and  Link-  Up  support  in  section  54.400(  e)  of  the  Commissions 
 rules  as  applied  to  qualifying  low-  income  consumers  living  within  its  service  area  on  land  that  qualifies  as  near  reservations.  12  Sacred  Wind  further  asks  that  we  grant,  on  our  own  motion,  any  other  waivers 
 needed  to  expedite  its  receipt  of  universal  service  support  and  participation  in  NECA  pools  and  tariffs.  13  The  Wireline  Competition  Bureau  (Bureau)  released  a  public  notice  on  April  26,  2006,  seeking  comment 


 3  See  id.  at  1-  2. 
 4  See  Letter  from  Jeffrey  Dupree,  NECA,  to  Marlene  Dortch,  Federal  Communications  Commission,  CC  Docket  No. 
 96-  45,  at  Appendix  E  (filed  September  30,  2005)  (NECA  annual  filing  showing  2004  loop  cost  data).  5 
 See  Petition  at  3.  The  sale  territory  includes  the  following  Qwest  exchanges:  Farmington  West,  Farmington  Main,  Aztec/  Bloomfield,  Albuquerque  West,  Grants  Main,  Fort  Wingate,  Thoreau  (Gallup  East)  and  Gallup  Main.  See 


 Petition,  Exh.  1  (attaching  Application  of  Sacred  Wind  Communications,  Inc.  for  Certificates  of  Financial  and  Technical  Competency,  Operating  Authority,  Public  Convenience  and  Necessity  and  for  Designation  as  an  Eligible 
 Telecommunications  Carrier  and  Approval  of  Initial  Tariffs,  Case  No.  05-  00272-  UT,  Amended  Recommended  Decision  of  the  Hearing  Examiner  at  7  (New  Mexico  Commission  March  9,  2006)). 
 6  See  generally  Petition.  Sacred  Wind  generally  uses  the  terms  Tribal  lands  and  near  reservation  to  refer  to 
 Navajo  lands  on  and  adjacent  to  reservations.  The  Commission  specifically  defines  the  term  Tribal  lands  for  purposes  of  its  enhanced  Lifeline  and  Link-  Up  rules.  See  infra  note  104. 


 7  47  C.  F.  R.    36.  611,  36.  612,  69.  2(  hh),  69.  3(  e)(  6)  and  69.  3(  e)(  11). 
 8  See  Petition  at  20-  23. 
 9  Id.  at  25-  27. 
 10  Id.  at  23-  24;  47  C.  F.  R.    54.  301(  b),  54.  314(  d),  and  54.  903(  a)(  3). 
 11  Petition  at  13-  15. 
 12  See  47  C.  F.  R.    54.  400(  e)  note;  Petition  at  27-  32. 
 13  See  Petition  at  32. 
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 on  the  petition  for  waivers.  14 
 4.  Standard  for  Waiver.  Generally,  the  Commission  may  waive  its  rules  for  good  cause  shown.  15  The  Commission  may  exercise  its  discretion  to  waive  a  rule  where  the  particular  facts  make 


 strict  compliance  inconsistent  with  the  public  interest.  16  In  addition,  the  Commission  may  take  into  account  considerations  of  hardship,  equity,  or  more  effective  implementation  of  overall  policy  on  an 
 individual  basis.  17  Waiver  of  the  Commissions  rules  is  therefore  appropriate  only  if  special  circumstances  warrant  a  deviation  from  the  general  rule,  and  such  deviation  will  serve  the  public  interest. 


 III.  DISCUSSION 
 A.  Study  Area  Waiver 
 5.  A  study  area  is  a  geographic  segment  of  an  incumbent  LECs  telephone  operations.  The  Commission  froze  all  study  area  boundaries  effective  November  15,  1984,  to  prevent  the  establishment  of 


 high-  cost  exchanges  within  existing  service  territories  as  separate  study  areas  merely  to  maximize  high-cost  support.  18  A  carrier  must  therefore  apply  to  the  Commission  for  a  waiver  of  the  study  area  boundary 
 freeze  if  it  wishes  to  sell  or  purchase  additional  exchanges.  19 
 6.  Section  54.305(  b)  of  the  Commissions  rules  provides  that  a  carrier  acquiring  exchanges  from  an  unaffiliated  carrier  shall  receive  the  same  per-  line  levels  of  high-  cost  loop  support  and  local 


 switching  support  for  which  the  acquired  exchanges  were  eligible  prior  to  their  transfer.  20  Section 
 14  See  Domestic  214  Application  Filed  for  the  Acquisition  of  Selected  Assets  of  Qwest  Corporation  by  Sacred  Wind 
 Communications,  Inc.,  Sacred  Wind  Communications,  Inc.  and  Qwest  Corporation  Seek  Waiver  of  the  Study  Area  Boundary  Freeze  as  Codified  in  Part  36,  and  Sacred  Wind  Communications,  Inc.  Seeks  Waiver  of  Sections  36.611, 


 36.  612,  54.  301(  b),  54.305,  54.  314(  d),  54.903(  a),  69.  2(  hh),  69.  3(  e)(  6)  and  69.  3(  e)(  11)  of  the  Commissions  Rules,  Sacred  Wind  Communications,  Inc.  Seeks  Waiver  of  the  Commissions  Stay  of  the  Provision  of  Enhanced  Lifeline 
 and  Link-  Up  Support  to  Customers  on  Near-  Tribal  Lands,  WC  Docket  No.  06-  82,  CC  Docket  No.  96-  45,  WC  Docket  No.  03-  109,  Public  Notice,  21  FCC  Rcd  4368  (2006).  Joe  Shirley,  Jr.,  President,  Navajo  Nation;  Charles 
 Damon,  Council  Delegate,  Navajo  Nation  Council;  David  Rico,  Council  Delegate,  Navajo  Nation  Council;  Bill  Richardson,  Governor,  State  of  New  Mexico;  Tulley  Haswood,  Chapter  President,  Rock  Springs  Chapter;  and, 
 Karen  Buller,  President,  National  Indian  Telecommunications  Institute  filed  comments  in  support  of  the  Petition.  We  note  that  the  Bureau  has  granted  transfer  of  control  of  the  exchanges.  See  Notice  of  Streamlined  214 
 Applications  Granted,  WC  Docket  Nos.  06-  82,  06-  86  &  06-  91,  Public  Notice,  DA  06-  1150  (rel.  May  30,  2006).  15 
 47  C.  F.  R.    1.3.  16 
 Northeast  Cellular  Telephone  Co.  v.  FCC,  897  F.  2d,  1164,  1166  (D.  C.  Cir.  1990)  (Northeast  Cellular).  17 
 WAIT  Radio  v.  FCC,  418  F.  2d  1153,  1159  (D.  C.  Cir.  1969),  cert.  denied,  409  U.  S.  1027  (1972);  Northeast  Cellular,  897  F.  2d  at  1166. 


 18  See  MTS  and  WATS  Market  Structure,  Amendment  of  Part  67  of  the  Commissions  Rules  and  Establishment  of  a 
 Joint  Board,  CC  Docket  Nos.  78-  72,  80-  286,  Decision  and  Order,  50  Fed.  Reg.  939  (1985)  (Part  67  Order).  See  also  47  C.  F.  R.  Part  36  App. 


 19  Part  67  Order  at  para.  1. 
 20  47  C.  F.  R.    54.305(  b).  Carriers  acquired  exchanges  may  receive  additional  support  pursuant  to  the 
 Commissions  safety  valve  mechanism,  which  allows  an  acquiring  carrier  to  receive  support  for  new  investments  in  acquired  lines.  47  C.  F.  R.    54.305(  d).  Moreover,  carriers  acquiring  exchanges  may  be  eligible  to  receive 


 Interstate  Common  Line  Support  (ICLS),  which  is  not  subject  the  limitations  set  forth  in  section  54.  305(  b).  See  Multi-  Association  Group  (MAG)  Plan  for  Regulation  of  Interstate  Services  of  Non-  Price  Cap  Incumbent  Local 
 Exchange  Carriers  and  Interexchange  Carriers  in  CC  Docket  No.  00-  256,  Federal-  State  Joint  Board  on  Universal  Service  in  CC  Docket  No.  96-  45,  Access  Charge  Reform  for  Incumbent  Local  Exchange  Carriers  Subject  to  Rate-  of-( 
 continued....) 
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 54.305(  b)  is  meant  to  discourage  carriers  from  transferring  exchanges  merely  to  increase  their  share  of  high-  cost  universal  service  support.  21  Qwest  currently  receives  interstate  access  support  (IAS),  but  does 
 not  receive  any  other  federal  high-  cost  support  in  New  Mexico.  22 
 7.  In  evaluating  petitions  seeking  a  waiver  of  the  rule  freezing  study  area  boundaries,  the  Commission  traditionally  has  applied  a  three-  prong  standard:  (1)  the  change  in  study  area  boundaries 


 must  not  adversely  affect  the  universal  service  fund;  (2)  the  state  commission  having  regulatory  authority  over  the  transferred  exchanges  does  not  object  to  the  transfer;  and  (3)  the  transfer  must  be  in  the  public 
 interest.  23  In  evaluating  whether  a  study  area  boundary  change  will  have  an  adverse  impact  on  the  universal  service  fund,  we  analyze  whether  a  study  area  waiver  will  result  in  an  annual  aggregate  shift  in 
 an  amount  equal  to  or  greater  than  one  percent  of  high-  cost  support  in  the  most  recent  calendar  year.  24  The  Commission  began  applying  the  one-  percent  guideline  in  1995  to  limit  the  potential  adverse  impact 
 of  exchange  sales  on  the  overall  fund,  also  recognizing  that,  because  high-  cost  loop  support  is  capped,  an  increase  in  the  draw  of  any  fund  recipient  necessarily  reduces  the  amounts  that  other  LECs  receive  from 
 the  fund.  25  After  the  Commission  adopted  section  54.305,  it  continued  to  apply  the  one-  percent  guideline  to  determine  the  impact  on  the  universal  service  fund  in  light  of  the  adoption  of  safety  valve  support  and 
 ICLS.  26 
 8.  We  find  that  good  cause  exists  to  waive  the  study  area  boundary  freeze  codified  in  the  Appendix-  Glossary  of  Part  36  of  the  Commissions  rules  to  permit  Qwest  to  alter  the  boundaries  of  its 


 existing  New  Mexico  study  area  by  removing  the  approximately  2,300  access  lines  that  it  is  transferring  to  Sacred  Wind.  We  also  find  that  good  cause  exists  to  permit  Sacred  Wind  to  establish  a  new  study  area 
 in  New  Mexico.  For  the  reasons  discussed  below,  we  conclude  that  the  Petitioners  have  satisfied  the 


 (...  continued  from  previous  page)  Return  Regulation  in  CC  Docket  No.  98-  77,  Prescribing  the  Authorized  Rate  of  Return  From  Interstate  Services  of 
 Local  Exchange  Carriers  in  CC  Docket  No.  98-  166,  Second  Report  and  Order  and  Further  Notice  of  Proposed  Rulemaking,  Fifteenth  Report  and  Order,  and  Report  and  Order,  16  FCC  Rcd  19613,  19667-  69,  paras.  155-  57 
 (2001),  recon.  pending.  21 
 See  Federal-  State  Joint  Board  on  Universal  Service,  CC  Docket  No.  96-  45,  Report  and  Order,  12  FCC  Rcd  8776,  8942-  43,  para.  308  (1997)  (subsequent  history  omitted).  For  example,  if  a  rural  carrier  purchases  an  exchange  from 


 a  non-  rural  carrier  that  receives  support  based  on  the  Commissions  high-  cost  support  mechanism  for  non-  rural  carriers,  the  loops  of  the  acquired  exchange  shall  receive  the  same  per-  line  support  as  calculated  under  the  non-  rural 
 mechanism,  regardless  of  the  support  the  rural  carrier  purchasing  the  exchange  may  receive  for  any  of  its  other  exchanges.  Rural  carriers  receive  high-  cost  loop  support  based  on  the  extent  to  which  their  reported  average  cost 
 per  loop  exceeds  115  percent  of  the  nationwide  average  cost  per  loop.  See  47  C.  F.  R.    36.  601-.  631.  The  mechanism  for  non-  rural  carriers  calculates  support  to  carriers  based  on  the  forward-  looking  economic  cost  of 
 operating  a  given  exchange.  See  47  C.  F.  R.    54.  309.  22 
 See  Universal  Service  Administrative  Company  (USAC)  Quarterly  Administrative  Filing  2006,  Third  Quarter  (3Q)  Appendix,  HC01,  filed  May  2,  2006,  at  http://  www.  universalservice.  org/  overview/  filings. 


 23  See,  e.  g.,  US  WEST  Communications,  Inc.,  and  Eagle  Telecommunications,  Inc.,  Joint  Petition  for  Waiver  of  the 
 Definition  of  Study  Area  Contained  in  Part  36,  Appendix-  Glossary  of  the  Commissions  Rules,  AAD  94-  27,  Memorandum  Opinion  and  Order,  10  FCC  Rcd  1771,  1772,  para.  5  (1995)  (PTI/  Eagle  Order). 


 24  See  id.  at  1774,  paras.  14-  17.  See  also  US  WEST  Communications,  Inc.,  and  Eagle  Telecommunications,  Inc., 
 Joint  Petition  for  Waiver  of  "Study  Area"  Contained  in  Part  36,  Appendix-  Glossary  of  the  Commission's  Rules,  and  Petition  for  Waiver  of  Section  61.  41(  c)  of  the  Commission's  Rules,  AAD  94-  27,  Memorandum  Opinion  and  Order  on 


 Reconsideration,  12  FCC  Rcd  4644  (1997).  25 
 See  PTI/  Eagle  Order,  10  FCC  Rcd  at  1773,  para.  13.  26 
 See  supra  note  20. 
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 three-  prong  standard  that  the  Commission  applies  to  determine  whether  a  study  area  waiver  is  warranted. 
 9.  Public  Interest  Analysis.  We  are  persuaded  that  the  public  interest  is  served  by  a  waiver  of  the  study  area  freeze  rule  to  permit  Qwest  to  remove  from  its  New  Mexico  study  area  the  2,300  lines 


 and  to  permit  Sacred  Wind  to  establish  a  new  study  area  in  New  Mexico.  The  area  in  which  Sacred  Wind  is  authorized  to  provide  telecommunications  service  is  located  on  approximately  2,000,000  acres  that  is 
 almost  exclusively  within  Navajo  Nation  Lands.  27  The  Commission  has  recognized  that  Native  American  communities  have  the  lowest  reported  level  of  telephone  subscribership  in  America.  28  Such  low 
 penetration  is  particularly  severe  in  Sacred  Winds  service  territory,  which  has  only  a  28  percent  penetration  rate.  This  rate  is  not  only  substantially  below  the  current  nationwide  penetration  rate  but  also 
 lags  the  38  percent  penetration  rate  for  the  Navajo  Nation  as  a  whole.  29  In  addition,  the  Commission  has  reported  Native  American  households  within  the  state  of  New  Mexico  have  the  second  lowest  telephone 
 penetration  rate  in  the  Nation.  30 
 10.  Sacred  Wind  states  that  it  is  committed  to  increasing  significantly  the  quality  of  basic  and  advanced  services  provided  to  the  Navajo  Nation  and  the  penetration  rate  in  its  service  area,  and  to 


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


 11.  Impact  on  the  Universal  Service  Fund.  We  conclude  that  the  universal  service  fund  will  not  be  adversely  affected  by  granting  this  study  area  waiver.  Sacred  Wind  estimates  that  it  will  initially 
 be  eligible  for  approximately  $2.1  million  in  high-  cost  support  in  2006,  which  will  grow  to  approximately  $6.6  million  in  2010.  36  Sacred  Wind  also  estimates  that  as  a  result  of  this  transaction  its  ICLS  will  be 


 27  See  Petition  at  2.  Most  of  these  lands  are  historical  tribal  lands  of  the  Navajo  people.  Id. 
 28  See  Federal-  State  Joint  Board  on  Universal  Service,  Twelfth  Report  and  Order,  Memorandum  Opinion  and 
 Order,  and  Further  Notice  of  Proposed  Rulemaking,  15  FCC  Rcd  12208,  para.  5  (2000)  (Twelfth  Report  and  Order).  29 
 See  Petition  at  2.  Sacred  Wind  further  notes  that  the  Navajo  Nations  subscribership  was  the  lowest  amount  25  tribal  lands  with  the  most  Native  American  households.  See  id.  at  2-  3. 


 30  See  Trends  in  Telephone  Service,  Industry  Analysis  and  Technology  Division,  Wireline  Competition  Bureau  , 
 FCC  at  Table  16.  3  (rel.  June  21,  2005).  31 
 See  Petition  at  i,  9.  32 
 See  id.  at  3.  33 
 Id.  at  19.  34 
 Id.  35 
 See  New  Mexico  Order  (attaching  Amended  Recommended  Decision  of  the  Hearing  Examiner  at  51).  36 
 See  Petition  at  11. 
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 approximately  $3,300,  000  for  2007,  its  first  full  calendar  year  of  operation.  37  On  the  other  hand,  Qwest  estimates  that  its  IAS  will  be  reduced  by  $25,308  annually  as  a  result  of  this  transaction.  38  Although  there 
 is  a  net  increase  of  approximately  $5.4  million  initially  in  universal  service  support  as  a  result  of  this  transaction,  we  find  that  the  unique  circumstances  concerning  the  extremely  low  telephone  penetration 
 rate  in  this  area  justify  the  level  of  increase  in  universal  service  support.  39  We  also  note  that  this  increase  is  substantially  less  than  one  percent  of  the  fund,  and  thus  will  not  have  an  adverse  effect  on  the  universal 
 service  fund.  40 
 12.  Position  of  State  Commission.  On  March  21,  2006,  the  New  Mexico  Public  Regulation  Commission  (New  Mexico  Commission)  issued  an  order  approving  Sacred  Winds  Application  for 


 Certificate  of  Operating  Authority,  Public  Convenience  and  Necessity  and  Designation  as  an  Eligible  Telecommunications  Carrier.  41  Moreover,  the  New  Mexico  Commission  supports  the  proposed  study 
 area  waiver.  42  Thus,  we  find  that  the  state  commission  with  regulatory  authority  over  the  transferred  facilities  does  not  object  to  the  transfer. 


 B.  Waiver  of  Sections  36.611  and  36.  612 
 13.  Sacred  Wind  also  requests  a  waiver  of  sections  of  36.  611  and  36.612  of  the  Commissions  rules  in  order  to  receive  immediate  high-  cost  loop  support  payments  based  on  its  projected 


 costs.  43  High-  cost  loop  support  is  calculated  using  data  provided  by  incumbent  LECs  pursuant  to  the  Commissions  cost  accounting  and  data  collection  requirements.  44  In  accordance  with  section  36.611  of 
 the  Commissions  rules,  on  July  31  of  each  year,  incumbent  LECs  file  the  preceding  years  loop  cost  data  with  NECA.  45  Each  rural  carriers  high-  cost  loop  support  for  the  following  year  is  based  on  the 
 relationship  between  the  carriers  study  area  average  cost  per  loop  and  the  nationwide  average  cost  per  loop,  as  limited  by  the  indexed  cap.  46  Because  the  cost  data  are  not  submitted  by  carriers  until  seven 


 37  See  Letter  from  Martin  L.  Stern,  Preston,  Gates,  Ellis  &  Rouvelas,  Meeds  LLP,  to  Marlene  Dortch,  FCC,  CC 
 Docket  No.  96-  45  (filed  May  23,  2006).  38 
 Id.  As  an  interstate  price  cap  LEC,  Qwest  is  eligible  for  IAS.  See  47  C.  F.  R.    54.  800,  et  seq.  39 
 We  also  note  that  the  costs  of  deployment  should  be  minimized  by  Sacred  Winds  use  of  a  fixed  wireless  local  loop  solution. 


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


 41  See  Petition  at  Exhibit  1  (attaching  Application  of  Sacred  Wind  Communications,  Inc.  for  Certificates  of  Financial 
 and  Technical  Competency,  Operating  Authority,  Public  Convenience  and  Necessity  and  for  Designation  as  an  Eligible  Telecommunications  Carrier  and  Approval  of  Initial  Tariffs,  Case  No.  05-  00272-  UT,  Final  Order  (New 


 Mexico  Commission  rel.  March  23,  2006)  (New  Mexico  Order)).  42 
 See  Petition  at  Exhibit  3  (attaching  Letter  from  Ben  R.  Lujan,  Chairman,  New  Mexico  Public  Regulation  Commission  to  Thomas  Navin,  Chief,  Wireline  Competition  Bureau,  Federal  Communications  Commission,  CC 


 Docket  No.  96-  45  (dated  March  21,  2006)).  43 
 See  Petition  at  20-  23  (citing  Border  to  Border  Communications,  Inc.,  Petition  for  Waiver  of  Sections  36.  611  and  36.  612  of  the  Commissions  Rules,  Memorandum  Opinion  and  Order,  AAD  94-  61,  10  FCC  Rcd  5055,  5057,  paras. 


 5-  14  (Com.  Car.  Bur.  1995)).  44 
 See  47  C.  F.  R.  Parts  36,  54,  and  69.  45 
 See  47  C.  F.  R.    36.  611.  46 
 See  47  C.  F.  R.    36.  622. 
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 months  after  the  end  of  a  calendar  year  (i.  e.,  July  31),  and  NECA  requires  time  to  analyze  the  data  and  make  the  necessary  nationwide  calculations,  carriers  generally  do  not  receive  high-  cost  loop  support 
 based  on  these  data  until  the  beginning  of  the  second  calendar  year  after  the  costs  are  incurred.  47  As  a  result,  carriers  without  historical  data,  such  as  newly  established  incumbent  LECs,  may  wait  up  to  two 
 years  before  receiving  any  high-  cost  loop  support  payments.  Under  section  36.612  of  the  rules,  however,  carriers  can  update  their  data  on  a  quarterly  basis  and  receive  support  earlier  than  under  section  36.611.  48 


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


 rules  have  been  granted  only  in  limited  circumstances,  primarily  to  accelerate  the  provision  of  support  to  cover  costs  incurred  by  new  carriers  initiating  or  extending  service  in  predominantly  unserved  areas.  54  In 
 these  limited  instances,  newly  established  carriers  lacking  historical  cost  data  have  been  allowed  to 
 47  See  47  C.  F.  R.    36.  611. 
 48  See  47  C.  F.  R.    36.  612. 
 49  See  e.  g.,  Mescalero  Apache  Telecom,  Inc.,  GTE  Southwest  Incorporated,  and  Valor  Telecommunications  of  New 
 Mexico,  LLC,  Joint  Petition  for  Waiver  of  the  Definition  of  Study  Area  Contained  in  Part  36,  Appendix-  Glossary  of  the  Commissions  Rules;  Mescalero  Apache  Telecom,  Inc.,  Waiver  of  Sections  61.  41(  c)(  2),  69.3(  e)(  11),  36.  611, 


 and  36.  612  of  the  Commissions  Rules,  Order,  CC  Docket  No.  96-  45,  16  FCC  Rcd  3813  (Acc.  Pol.  Div.  2001)  (Mescalero  I)  (granting  waiver  of  sections  36.611  and  36.  612  of  the  Commissions  rules  to  newly-  formed,  tribally-owned 
 carrier  expanding  service  to  unserved  residences  on  American  Indian  reservation);  Adak  Eagle  Enterprises,  LLC  d/  b/  a  Adak  Telephone  Utility,  Petition  for  Waiver  of  Sections  36.  611,  36.  612,  54.  301(  b),  54.  314(  d), 
 54.  903(  a)(  3),  69.2(  hh),  and  69.  3(  e)(  6)  of  the  Commission  Rules,  Order,  CC  Docket  No.  96-  45,  20  FCC  Rcd  20543  (Wir.  Comp.  Bur.  2005)  (Adak). 
 50  Petition  at  ii,  3. 
 51  Id.  at  ii,  4. 
 52  See  id.  More  than  50  percent  of  the  households  in  Sacred  Winds  service  area  are  at  or  below  the  poverty  level. 
 Id.  at  3.  53 
 See  id.  at  21.  54 
 See  Border  to  Border  Communications,  Inc.,  Petition  for  Waiver  of  Sections  36.  611  and  36.  612  of  the  Commissions  Rules,  Memorandum  Opinion  and  Order,  AAD  94-  61,  10  FCC  5055,  5057,  paras.  514  (Com.  Car. 


 Bur.  1995)  (Border  to  Border  Communications);  supra  note  51. 
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 receive  support  based  on  estimated  costs  that  are  subject  to  true-  up.  55  Where  requests  for  waiver  of  sections  36.611  and  36.612  have  been  granted,  the  Bureau  determined  that  delaying  the  timing  of  high-cost 
 loop  support  under  the  circumstances  presented  could  have  the  unintended  effect  of  discouraging  new  carriers  from  extending  service  in  unserved  remote  areas,  thereby  frustrating  the  statutory  goal  of 
 promoting  the  provision  of  services  at  reasonable  rates.  56  We  agree  with  Sacred  Wind  that  denial  of  immediate  high-  cost  loop  support  could  have  a  similar  effect  here. 


 16.  We  further  find  that  delaying  Sacred  Winds  high-  cost  support  would  impair  its  ability  to  provide  telecommunications  services  at  affordable  rates  and,  thus,  in  these  unique  circumstances,  strict 
 application  of  our  rules  may  not  further  the  goals  of  section  254  of  the  Communications  Act  of  1934,  as  amended  (the  Act).  57  Accordingly,  we  grant  Sacred  Wind  a  waiver  of  sections  36.  611  and  36.  612  of  the 
 Commissions  rules  to  the  extent  necessary  to  permit  it  to  receive  high-  cost  loop  support  effective  upon  release  of  this  Order.  Sacred  Winds  support  initially,  i.  e.,  for  the  remainder  of  2006  through  December 
 2007,  will  be  based  on  projected  costs  followed  by  quarterly  true-  ups  using  actual  costs.  58  This  methodology  is  consistent  with  that  used  in  previous  waivers  of  sections  36.611  and  36.612.  59  We  direct 
 Sacred  Wind  to  submit  quarterly  updates  of  its  actual  costs  in  accordance  with  the  Commissions  rules,  so  that  it  may  be  determined  whether  adjustments  for  the  2006  and  2007  high-  cost  loop  support  amounts  are 
 necessary.  60  Payments  for  periods  subsequent  to  December  2007  will  be  based  on  historic  data  in  accordance  with  the  Commissions  rules.  61 


 C.  Waiver  of  Sections  54.301(  b),  54.314(  d),  54.903(  a)(  1)  and  54.  903(  a)(  3) 
 17.  Sacred  Wind  seeks  waiver  of  Commission  rules  54.301(  b),  54.314(  d),  and  54.903(  a)(  3)  so  that  it  may  receive  universal  service  support  payments  immediately.  Pursuant  to  section  54.314  of  the 


 Commissions  rules,  a  state  that  desires  rural  incumbent  LECs  within  its  jurisdiction  to  receive  universal  service  support  must  file  an  annual  certification  with  USAC.  62  The  certification  must  be  filed  by  October 
 1  of  the  preceding  calendar  year  for  the  carrier  to  receive  support  beginning  in  the  first  quarter  of  the  subsequent  calendar  year.  63  In  addition,  once  a  carrier  is  granted  ETC  status,  it  must  file  certain  data  with 


 55  See  Mescalero  I,  16  FCC  Rcd  at  3825-  26,  paras.  28-  30. 
 56  Id.,  16  FCC  Rcd  at  3824,  para.  26.  See  also  47  U.  S.  C.    254(  b). 
 57  47  U.  S.  C.    254(  b).  The  Act  was  amended  by  the  Telecommunications  Act  of  1996.  Telecommunications  Act  of 
 1996,  Pub.  L.  No.  104-  104,  110  Stat.  56  (1996)  (1996  Act).  Section  254(  b)  of  the  Act  provides,  among  other  things,  that  consumers  in  rural,  insular,  and  high-  cost  areas  should  have  access  to  telecommunications  services  at  rates  that 


 are  reasonably  comparable  to  rates  charged  for  similar  services  in  urban  areas.  47  U.  S.  C.    254(  b)(  3).  58 
 Final  high-  cost  loop  payments  for  the  interim  period  will  be  based  on  actual  costs  for  that  period.  We  note  that,  in  its  Petition,  Sacred  Wind  states  it  intends  to  true-  up  on  an  annual  basis  to  reconcile  any  difference  between  estimated 


 and  actual  costs  incurred.  In  accordance  with  the  Bureaus  previously  approved  methodology,  however,  we  require  Sacred  Wind  to  true-  up  with  actual  cost  data  on  a  quarterly  basis.  See  Border  to  Border  Communications,  10  FCC 
 at  5057;  Mescalero  I,  16  FCC  Rcd  at  3824-  26,  paras.  26-  30;  Adak,  20  FCC  Rcd  at  20547,  para.  10.  59 
 See,  e.  g.,  Mescalero  I,  16  FCC  Rcd  at  3824-  26,  paras.  26-  30.  60 
 See  47  C.  F.  R.    36.  612.  61 
 See  47  C.  F.  R.    36.  611-.  612.  62 
 47  C.  F.  R.    54.314.  63 
 If  a  state  misses  the  October  1  deadline,  it  must  file  the  certification  by  January  1  for  support  to  begin  in  the  second  quarter  of  the  year,  by  April  1  for  support  to  begin  in  the  third  quarter,  and  by  July  1  for  support  to  begin  in 


 the  fourth  quarter.  See  47  C.  F.  R.    54.  314(  d)(  1)-(  4). 
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 USAC  before  universal  support  payments  can  begin  to  flow.  Section  54.301(  b)  of  the  Commissions  rules  provides  that  incumbent  LECs  file  certain  data  with  USAC  by  October  1  of  each  year  to  receive  LSS 
 for  the  following  calendar  year.  64  Section  54.903(  a)(  3)  of  the  Commissions  rules  provides  that  rate-  of-return  LECs  must  file  certain  cost  and  revenue  data  on  March  31  of  each  year  to  receive  ICLS  support 
 from  July  1  of  the  same  year  through  June  30  of  the  next  year.  65  In  addition,  section  54.903(  a)(  1)  of  the  Commissions  rules  provides  that  rate-  of-  return  LECs  must  file  line  count  data  by  customer  class  and 
 disaggregation  zone,  if  any,  annually  by  July  31. 
 18.  We  find  that  good  cause  exists  to  waive  the  applicable  filing  deadlines  in  sections  54.301(  b),  54.  314(  d),  54.  903(  a)(  1),  and  54.903(  a)(  3)  in  order  that  Sacred  Wind  may  be  eligible  to  receive 


 immediate  universal  service  support.  66  Having  concluded  earlier  that  Sacred  Wind  should  be  eligible  for  immediate  high-  cost  loop  support  in  order  to  provide  affordable  telecommunications  services,  the 
 granting  of  these  waivers  is  necessary  in  order  for  Sacred  Wind  to  be  eligible  to  receive  all  available  universal  service  support  as  of  the  effective  date  of  this  Order.  67 


 19.  Specifically,  we  grant  Sacred  Wind  a  waiver  of  the  April  1,  2006  state  certification  filing  deadline,  pursuant  to  section  54.314(  d)(  3),  so  that  it  may  be  eligible  to  receive  immediate  LSS  and  high-cost 
 loop  support,  pursuant  to  sections  54.301  and  Part  36,  Subpart  F.  68  In  addition,  we  grant  Sacred  Wind  a  waiver  of  the  October  1,  2005  data  filing  deadline,  pursuant  to  section  54.301(  b),  so  that  it  may  be 
 eligible  to  receive  immediate  LSS.  We  also  grant  Sacred  Wind  a  waiver  of  the  March  31,  2006  filing  deadline  in  54.903(  a)(  3)  of  the  Commissions  rules  in  order  that  Sacred  Wind  may  be  eligible  for 
 immediate  ICLS  support.  69  We  also,  on  our  own  motion,  grant  Sacred  Wind  a  waiver  of  the  July  31,  2006  filing  deadline  in  section  54.903(  a)(  1)  to  enable  Sacred  Wind  to  be  eligible  to  receive  immediate  ICLS 
 support. 
 D.  Applicability  or  Waiver  of  Section  54.305 
 20.  As  stated  above,  section  54.305(  b)  provides  that  a  carrier  acquiring  exchanges  from  an  unaffiliated  carrier  shall  receive  the  same  per-  line  levels  of  high-  cost  loop  support  and  local  switching 


 support  for  which  the  acquired  exchanges  were  eligible  prior  to  their  transfer.  70  Sacred  Wind  posits  that  because  it  is  not  acquiring  exchanges  from  Qwest,  but  merely  acquiring  2,300  copper  lines  from  Qwest, 
 it  is  not  acquiring  an  exchange  per  se  .  .  .  hence  the  limitations  on  USF  support  are  not  applicable  to 


 64  47  C.  F.  R.    54.301(  b).  Incumbent  LECs  that  have  been  designated  as  ETCs  and  serve  50,000  or  fewer  access 
 lines  within  a  study  area  are  eligible  to  receive  LSS.  See  47  C.  F.  R.    54.  301.  65 
 47  C.  F.  R.    54.903(  a)(  3).  66 
 Sacred  Wind  did  not  request  a  waiver  of  the  filing  deadline  in  section  54.  903(  a)(  1),  however,  we  grant  such  a  waiver  on  our  own  motion  in  order  that  Sacred  Wind  may  be  eligible  for  immediate  ICLS  support. 


 67  See  supra  paras.  14-  16. 
 68  A  waiver  of  the  April  1,  2006  filing  deadline,  pursuant  to  section  54.314(  d)(  3),  allows  Sacred  Wind  to  receive 
 LSS  and  high-  cost  loop  support  for  the  third  and  fourth  quarters  of  2006.  See  47  C.  F.  R.    54.  314(  d)(  3).  69 
 In  order  to  receive  ICLS,  Sacred  Wind  is  required  to  file  with  the  fund  Administrator  and  the  Commission,  on  the  date  it  first  files  its  line  count  information  pursuant  to  section  54.  903,  a  certification  that  all  ICLS  support  provided 


 to  Sacred  Wind  will  be  used  only  for  the  provision  and  maintenance,  and  upgrading  of  facilities  and  services  for  which  the  support  is  intended.  47  C.  F.  R.    54.  903,  54.  904. 
 70  See  supra  para.  6. 
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 Sacred  Wind.  71  We  disagree  with  Sacred  Winds  analysis.  We  find  that,  for  purposes  of  this  transaction,  Sacred  Wind  is  acquiring  exchange  facilities  and  customers  from  Qwest.  The  New  Mexico  Commission, 
 in  its  order  approving  the  transfer  of  lines,  states  that  the  proposed  acquisition  of  Qwests  assets,  network  facilities  .  .  .  [and]  customers  .  .  .  includes  the  following  Qwest  exchanges:  Farmington  West,  Farmington 
 Main,  Aztec/  Bloomfield,  Albuquerque  West,  Grants  Main,  Fort  Wingate,  Thoreau  (Gallup  East)  and  Gallup  Main.  72  Sacred  Wind,  thus,  has  acquired  exchange  assets,  facilities,  and  customers  from  Qwest.  73 


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


 in  which  the  Commission  granted  a  waiver  of  section  54.305  for  Mescalero  Apache  Telecom,  Inc.  (Mescalero).  77  Like  Mescalero,  Sacred  Wind  has  demonstrated  that  special  circumstances  warrant  a 
 deviation  from  section  54.305.  According  to  Sacred  Wind,  the  percentage  of  residences  on  the 


 71  See  Petition  at  14-  15.  Sacred  Wind  explains  that  the  term  exchange  is  not  defined  in  the  applicable  regulations, 
 but  references  a  definition  in  an  industry  reference.  See  id.  at  14.  72 
 See  Petition  at  Exh.  1,  New  Mexico  Order  (attaching  Amended  Recommended  Decision  of  the  Hearing  Examiner  at  7). 


 73  In  this  Order,  we  do  not  define  the  term  exchange  as  it  is  used  in  the  telecommunications  industry. 
 74  See  M&  L  Enterprises,  Inc.,  d/  b/  a  Skyline  Telephone  Company,  Petition  for  Waiver  of  Sections  36.  611,  36.  612, 
 and  69.  2  (hh)  of  the  Commissions  Rules,  Order,  19  FCC  Rcd  6761,  6767,  at  para.  16  (2004)  (Skyline).  75 
 See  Direct  Communications  Cedar  Valley,  LLC  and  Qwest  Corporation,  Joint  Petition  for  Waiver  of  the  Definition  of  Study  Area  of  the  Appendix-  Glossary  of  Part  36  of  the  Commissions  Rules,  Petition  for  Waiver  of 


 Sections  69.  2(  hh)  and  69.  605(  c)  of  the  Commissions  Rules,  Order,  20  FCC  Rcd  19180,  19183,  at  para.  9  (Wir.  Comp.  Bur.  2005)  (Direct  Communications). 
 76  See,  e.  g.,  Madison  River  Telephone  Company,  LLC,  MebTel,  Inc.  d/  b/  a  MebTel  Communications,  and  BellSouth 
 Telecommunications,  Inc.,  Joint  Petition  for  Waiver  of  the  Definition  of  Study  Area  Contained  in  Part  36  of  the  Commissions  Rules,  Petition  for  Waiver  of  Section  69.  3(  e)(  11)  of  the  Commissions  Rules,  20  FCC  Rcd  19173 


 (Wir.  Comp.  Bur.  2005);  Blue  Valley  Telecommunications,  Inc.  and  United  Telephone  Company  of  Kansas,  Joint  Petition  for  Waiver  of  the  Definition  of  Study  Area  in  Part  36  of  the  Commissions  Rules;  Petition  for  Waiver  of 
 Section  69.  3(  e)(  11)  of  the  Commissions  Rules,  20  FCC  Rcd  19166  (Wir.  Comp.  Bur.  2005).  Qwest  has  agreed  to  sell  to  Sacred  Wind  the  copper  and  any  fiber  distribution,  extensions,  drops  and  network  interface  devices  for 
 approximately  2,300  lines.  See  Petition  at  3  &  n.  13.  77 
 Mescalero  Apache  Telecom,  Inc.,  Waiver  of  Section  54.  305  of  the  Commissions  Rules,  CC  Docket  No.  96-  45,  Order,  16  FCC  Rcd  1312  (2001)  (Mescalero  II). 
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 reservation  with  telephone  service  is  among  the  lowest  in  the  country  at  28  percent,  below  the  38  percent  penetration  for  the  Navajo  Nation  as  a  whole  and  significantly  below  the  current  nationwide  penetration 
 rate.  78  Sacred  Wind  further  argues  that  some  areas  it  intends  to  serve  have  no  telephone  service  at  all  and  that  more  than  50  percent  of  the  population  in  the  proposed  service  area  has  income  levels  at  or  below  the 
 poverty  level.  79  We  therefore  conclude  that  limiting  Sacred  Winds  support  by  applying  section  54.305  in  this  instance  could  have  the  unintended  effect  of  inhibiting  the  expansion  of  service  in  unserved  and 
 remote  areas  on  or  adjacent  to  reservation  lands. 
 23.  Allowing  a  waiver  of  section  54.305  will  also  serve  the  public  interest.  In  Mescalero  II,  the  Commission  found  that  a  waiver  of  section  54.305  served  the  public  interest  because  it  would  enable 


 Mescalero  to  address  the  severe  shortage  of  telecommunications  services  on  the  Mescalero  Apache  Reservation  in  New  Mexico;  improve  existing  services  on  the  reservation  without  a  significant  increase  in 
 basic  service  rates;  and  fulfill  Mescaleros  commitment  to  provide  service  to  all  unserved  customers  in  its  first  two  years  of  operation.  80  The  Commission  therefore  found  that  a  waiver  of  section  54.  305  was 
 consistent  with  the  Commissions  goal  of  preserving  and  advancing  universal  service  and  the  Commissions  mandate  to  ensure  that  consumers  in  all  regions  of  the  Nation,  including  low-  income 
 consumers  and  those  in  rural,  insular,  and  high-  cost  areas,  have  access  to  telecommunications  and  information  services.  81  Like  Mescalero,  Sacred  Wind  plans  to  remedy  the  low  penetration  rates  and  poor 
 telecommunications  services  on  reservation  and  in  adjacent  lands.  82  Specifically,  Sacred  Wind  plans  to  upgrade  the  existing  wireline  infrastructure  through  deployment  of  a  fixed-  wireless  local  loop  network 
 suited  to  bring  service  to  among  the  most  remote  regions  of  the  Navajo  Nation  and  to  overcome  the  right-of-  way  obstacles  that  have  previously  hindered  deployment  of  network  facilities  in  the  area.  83  Sacred 
 Wind  further  states  that,  like  Mescalero,  the  projected  costs  of  providing  such  services  and  upgrading  the  facilities  in  Sacred  Winds  service  territory  are  higher  than  the  cost  of  providing  service  in  other  parts  of 
 New  Mexico  and  higher  than  the  cost  of  serving  most  subscribers  in  any  other  state.  84  Without  a  waiver  of  section  54.305,  therefore,  Sacred  Winds  plan  to  buildout  to  underserved  and  unserved  areas  would  be 
 hindered.  In  addition,  absent  a  waiver,  Sacred  Winds  customer  penetration  rates  would  also  be  affected.  85  Accordingly,  based  on  Sacred  Winds  representations  and  commitments,  we  conclude  that 
 Sacred  Wind  has  demonstrated  that  the  grant  of  this  waiver  request  serves  the  public  interest.  86 


 78  See  Petition  at  2.  We  note  that  a  recent  Commission  report  states  that  the  nationwide  telephone  penetration  rate  is 
 92.  9  percent.  See  Telephone  Subscribership  in  the  United  States,  Industry  Analysis  and  Technology  Division,  Wireline  Competition  Bureau,  FCC  at  2  (rel.  May  12,  2006). 


 79  See  Petition  at  3. 
 80  See  Mescalero  II,  16  FCC  Rcd  at  1316-  19. 
 81  Id.  at  1318. 
 81  See  id.  at  1316-  19. 
 82  See  Petition  at  17. 
 83  Id.  See  also,  Mescalero  II,  16  FCC  Rcd  at  1316-  19;  Mescalero  Apache  Telecom  Inc.,  GTE  Southwest  Inc.  and 
 Valor  Telecommunications  of  New  Mexico,  LLC,  Joint  Petition  for  Waiver  of  the  Definition  of  Study  Area  Contained  in  Part  36,  Appendix-  Glossary  of  the  Commissions  Rules,  Related  Waivers  of  Parts  36,  54,  61,  and  69  of 


 the  Commissions  Rules,  at  6  (filed  June  30,  2000).  84 
 See  Petition  at  17.  85 
 See  id.  at  19.  86 
 The  Commission  has  emphasized  on  two  occasions  that  carriers  seeking  a  waiver  of  section  54.305  must  bear  a  heavy  burden  and  that  routine  waivers  of  the  rule  will  not  be  granted.  See  Federal-  State  Joint  Board  on  Universal 


 (continued....) 
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 E.  Waiver  of  Sections  69.2(  hh),  69.3(  e)(  6),  and  69.  3(  e)(  11) 
 24.  Sacred  Wind  states  that,  should  the  Commission  find  that  Sacred  Wind  has  not  acquired  an  exchange  from  Qwest,  it  may  conclude  that  Sacred  Wind  is  not  a  successor  or  assign  of  Qwest  for 


 purposes  of  section  251(  h)(  1)  of  the  Act.  87  Sacred  Wind,  therefore,  requests  a  waiver  of  section  69.2(  hh)  in  order  that  it  may  become  a  member  of  NECA,  participate  in  NECA  pools  and  receive  federal  universal 
 service  support.  88  Section  69.  2(  hh)  of  the  Commissions  rules  defines  a  telephone  company  as  an  incumbent  LEC  as  defined  in  section  251(  h)(  1)  of  the  Act.  89  Section  251(  h)(  1)  of  the  Act  defines  an 
 incumbent  local  exchange  carrier  as  a  provider  of  telephone  exchange  service  and  a  member  of  NECA  on  the  date  of  enactment  of  the  1996  Act,  or  a  successor  or  assign  of  an  incumbent  LEC.  90  Section 
 69.3(  e)(  6)  specifies  that  a  new  carrier  filing  a  tariff  under  section  69.3(  e)  must  notify  NECA  not  later  than  March  1  of  the  year  the  tariff  becomes  effective  that  it  intends  to  file  such  a  tariff.  91  Section  69.3(  e)(  11) 
 requires  that  any  changes  in  NECA  common  line  tariff  participation  resulting  from  a  merger  or  acquisition  of  telephone  properties  are  to  be  made  effective  on  the  next  annual  access  tariff  filing  effective 
 date  following  the  merger  or  acquisition.  92  Sacred  Wind  requests  a  waiver  of  sections  69.3(  e)(  6)  and  69.3(  e)(  11)  of  the  Commissions  rules  to  allow  it  to  expeditiously  participate  in  NECAs  tariff.  93 


 25.  Because  we  find  that  Sacred  Wind  is  acquiring  facilities  from  Qwest,  a  waiver  of  section  69.2(  hh)  is  not  required.  94  Sacred  Wind,  as  a  successor  to  Qwest,  meets  the  definition  of  an  incumbent 
 LEC  pursuant  to  section  251(  h)(  1)  of  the  Act.  We  do  grant,  however,  Sacred  Winds  request  for  waiver 


 (...  continued  from  previous  page)  Service,  Valor  Telecommunications  of  Texas,  L.  P.  Request  for  Waiver  of  Section  54.  305  of  the  Commissions  Rules, 
 Order,  CC  Docket  No.  96-  45,  20  FCC  Rcd  782,  786  para.  12  (2005)  (denying  Valors  request  for  a  waiver  of  section  54.  305).  See  also  Mescalero  II,  16  FCC  Rcd  at  1320,  para.  13.  The  action  we  take  in  this  instance  recognizes  a 
 unique  opportunity  to  promote  subscribership  and  infrastructure  development  in  the  unserved  and  underserved  areas  of  Indian  tribal  land. 
 87  See  Petition  at  25. 
 88  See  id.  The  Commissions  rules  regarding  participation  in  NECA  tariffs  and  pools,  and  its  rules  regarding 
 universal  service  support  for  incumbent  LECs,  do  not  specifically  address  companies,  such  as  Sacred  Wind,  that  come  into  existence  after  the  enactment  of  the  Telecommunications  Act  of  1996.  In  order  to  be  a  member  of  NECA 


 and  to  participate  in  the  NECA  tariffs  and  pools,  a  carrier  must  be  a  telephone  company,  as  defined  in  Part  69  of  the  Commissions  rules.  See  47  C.  F.  R.    69.  601. 
 89  47  C.  F.  R.    69.2(  hh). 
 90  See  47  U.  S.  C.    251(  h)(  1).  For  purposes  of  calculating  universal  service  support,  Part  36  of  the  Commissions 
 rules  applies  to  incumbent  LECs,  and  Part  54  of  the  Commissions  rules  distinguishes  between  incumbent  LECs  and  competitive  ETCs.  For  example,  section  36.  611  of  the  Commissions  rules  governs  the  submission  of  data  to  NECA 


 for  purposes  of  calculating  high-  cost  support  and  only  applies  to  incumbent  LECs.  Competitive  ETCs  file  line  count  data  and  their  support  is  calculated  pursuant  to  section  54.  307  of  the  Commissions  rules.  See  47  C.  F.  R.    36.  611, 
 54.  307.  Incumbent  LEC  for  purposes  of  Part  54  of  the  Commissions  rules  has  the  same  meaning  as  that  term  is  defined  in  section  251(  h)(  1)  of  the  Act.  See  47  C.  F.  R.    51.  5,  54.  5.  Unlike  Parts  54  and  69  of  the  Commissions 
 rules,  Part  36  does  not  include  an  explicit  definition  of  incumbent  LEC.  The  term  incumbent  local  exchange  carrier  is  used  throughout  Part  36,  however,  and  in  some  cases  references  the  Commissions  definition  of  rural 
 incumbent  LEC  in  section  54.  5  of  the  Commissions  rules.  See,  e.  g.,  47  C.  F.  R.    36.  622(  a).  91 
 See  47  C.  F.  R.    69.  3(  e)(  6).  92 
 See  47  C.  F.  R.    69.3(  e)(  11).  93 
 See  Petition  at  26.  94 
 See  supra  para.  20. 
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 of  sections  69.  3(  e)(  6)  and  69.  3(  e)(  11)  of  the  Commissions  rules  in  order  to  allow  the  carrier  to  participate  immediately  in  NECA  tariffs  and  pools. 
 26.  We  conclude  that  Sacred  Wind  has  demonstrated  that  special  circumstances  warrant  a  waiver  of  sections  69.3(  e)(  6)  and  69.  3(  e)(  11)  of  the  Commissions  rules.  Immediate  participation  in 
 NECA  will  allow  Sacred  Wind  to  avoid  the  costs  of  filing  and  maintaining  its  own  company-  specific  interstate  tariffs  for  only  2,300  subscribers.  95  Because  Sacred  Wind  has  relatively  few  customers,  the 
 costs  of  preparing  company-  specific  tariffs  could  be  disproportionately  excessive.  Further,  without  such  participation  in  NECAs  pools  it  is  likely  that  Sacred  Winds  company-  specific  interstate  access  rates 
 would  be  prohibitively  high.  96  Therefore,  we  find  that  it  is  in  the  public  interest  to  permit  Sacred  Wind  and  its  customers  to  benefit  from  the  cost  savings  and  lower  rates  available  through  immediate  NECA 
 participation. 
 F.  Waiver  of  Section  54.400(  e)  as  Applied  to  Qualifying  Low-  Income  Consumers  on  Near-  Reservation  Lands 


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


 95  See  Petition  at  25. 
 96  We  note  that  NECA  does  not  object  to  Sacred  Wind  participating  in  its  pools.  See  Letter  from  Tracey  E.  J. 
 Saltenberger,  NECA,  to  Marlene  H.  Dortch,  Federal  Communications  Commission,  CC  Docket  No.  96-  45  (filed  June  12,  2006  ). 


 97  Petition  at  27.  See  infra  note  119. 
 98  See  47  U.  S.  C.    254(  b)(  1)  (  Quality  services  should  be  available  at  just,  reasonable,  and  affordable  rates.). 
 Under  the  Commissions  rules,  there  are  four  tiers  of  federal  Lifeline  support.  All  eligible  telephone  subscribers  receive  Tier  1  support,  which  provides  a  discount  of  up  to  $6.50  off  of  the  monthly  cost  of  telephone  service  for  a 


 single  telephone  line  in  their  principal  residence.  See  47  C.  F.  R.    54.  401(  a)(  2).  Tier  2  support  provides  an  additional  $1.  75  per  month  in  federal  support  as  long  as  all  relevant  state  regulatory  authorities  approve  such  a 
 reduction.  47  C.  F.  R.    54.  403(  a)(  2).  Tier  3  support  provides  an  amount  equal  to  one-  half  of  the  subscribers  state  or  carrier-  provided  Lifeline  support,  up  to  a  maximum  of  $1.  75.  47  C.  F.  R.    54.  403(  a)(  3).  Finally,  Tier  4  support 
 provides  eligible  residents  of  Tribal  lands,  as  defined  in  section  54.  400(  e)  of  the  Commissions  rules,  enhanced  Lifeline  support.  47  C.  F.  R.    54.  403(  a)(  4).  The  Link-  Up  program  assists  qualifying  low-  income  consumers  in 
 initiating  telephone  service  by  paying  a  portion  of  the  service  connection  charge.  See  47  C.  F.  R.    54.  411.  99 
 See  Twelfth  Report  and  Order,  15  FCC  Rcd  at  12220,  para.  20.  In  the  Twelfth  Report  and  Order,  the  Commission  noted  that  only  76.  7  percent  of  rural  households  earning  less  than  $5,  000  have  a  telephone,  and  only  47  percent  of 


 Indian  tribal  households  on  reservations  and  other  tribal  lands  have  a  telephone,  in  comparison  to  94  percent  of  all  households  in  the  United  States.  Id.  at  12224,  paras.  26-  27.  On  the  basis  of  these  observations,  the  Commission 
 concluded  that  the  extent  to  which  telephone  penetration  levels  fall  below  the  national  average  underscored  the  need  for  immediate  action  to  promote  the  deployment  of  telecommunications  facilities  in  tribal  areas  and  to  provide  the 
 support  necessary  to  increase  subscribership  in  these  areas.  Toward  that  end,  the  Commission  adopted  measures  to  promote  telecommunications  deployment  and  subscribership  for  the  benefit  of  those  living  on  federally-  recognized 
 American  Indian  and  Alaska  native  tribal  lands.  The  Commission  found  the  enhancement  of  tribal  communities  (continued....) 
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 Commission  adopted  the  enhanced  Lifeline  and  Link-  Up  programs  that  are  specifically  targeted  to  increase  subscribership  and  infrastructure  development  on  Tribal  lands,  where  unaffordable  service  and 
 low  subscribership  are  most  prevalent.  100 
 28.  Specifically,  enhanced  Lifeline  and  Link-  Up  support  provides  qualifying  low-  income  consumers  living  on  Tribal  lands  additional  discounts  off  the  monthly  cost  of  telephone  service  and 


 telephone  installation.  101  Under  Tier  4  Lifeline  support,  eligible  residents  of  Tribal  lands  receive  up  to  $25.00  in  additional  discounts  off  the  monthly  cost  of  telephone  service,  provided  that  this  amount  does 
 not  bring  the  basic  local  residential  rate  below  $1  per  month  per  qualifying  low-  income  subscriber.  102  Under  enhanced  Link-  Up  support,  eligible  residents  of  Tribal  lands  receive  up  to  an  additional  $70.00  off 
 the  initial  costs  of  installing  telephone  service.  103 
 29.  Section  54.400(  e)  defines  an  eligible  resident  of  Tribal  lands  as  a  qualifying  low-  income  consumer  living  on  or  near  a  reservation.  104  The  term  reservation  means  any  federally  recognized 


 Indian  tribes  reservation,  pueblo,  or  colony,  including  former  reservations  in  Oklahoma,  Alaska  Native  regions  established  pursuant  to  the  Alaska  Native  Claims  Settlement  Act,  and  Indian  allotments.  105  The 
 term  near  reservation  is  described  as  lands  adjacent  or  contiguous  to  reservations  and  that  generally  have  been  considered  Tribal  lands  for  purposes  of  other  federal  programs  targeted  to  federally-  recognized 
 Indian  tribes.  106  On  August  31,  2000,  the  Commission  stayed  implementation  of  enhanced  Lifeline  and  Link-  Up  benefits  to  the  extent  that  they  apply  to  qualifying  low-  income  consumers  living  near  a 
 reservation.  107 


 (...  continued  from  previous  page)  access  to  telecommunications  services  consistent  with  its  obligations  under  the  Act  to  preserve  and  advance 
 universal  service,  and  its  obligations  under  the  historic  federal  trust  relationship  between  the  federal  government  and  federally-  recognized  Indian  tribes  to  encourage  tribal  sovereignty  and  self-  governance.  Id.  at  12222,  para.  23, 
 12222-  24,  para.  26.  100 
 Id.  at  12228-  12251.  101 
 See  47  C.  F.  R.    54.  405(  a)(  4),  54.  411(  a)(  3).  102 
 47  C.  F.  R.    54.405(  a)(  4).  103 
 47  C.  F.  R.    54.411(  a)(  3).  The  Link-  Up  program  provides  other  eligible  telephone  subscribers  a  discount  of  up  to  $30.  00  off  the  initial  cost  of  installing  telephone  service.  47  C.  F.  R.    54.  411(  a)(  1). 


 104  47  C.  F.  R.    54.400(  e).  For  purposes  of  identifying  the  geographic  areas  within  which  enhanced  Lifeline  and 
 Link-  Up  should  apply,  the  Commission  determined  that  the  term  "Tribal  lands"  should  include  the  United  States  Department  of  Interior  Bureau  of  Indian  Affairs  (BIA)  definitions  of  "reservation"  and  "near  reservation"  contained 


 in  sections  20.  1(  v)  and  20.  1(  r)  of  the  BIA  regulations,  respectively.  See  Twelfth  Report  and  Order,  15  FCC  Rcd  at  12218,  para.  17,  citing  25  C.  F.  R.    20.  1(  r)  and  20.  1(  v).  See  also,  Federal-  State  Joint  Board  on  Universal  Service, 
 Twenty-  Fifth  Order  on  Reconsideration,  Report  and  Order,  and  Further  Notice  of  Proposed  Rulemaking,  18  FCC  Rcd  10958,  10965-  67,  paras.  15-  17  (2003)  (Twenty-  Fifth  Reconsideration  Order)  (confirming  that  the  Commission 
 would  continue  to  use  the  BIA  definition  adopted  in  the  Twelfth  Report  and  Order).  105 
 25  C.  F.  R.    20.1(  v).  106 
 25  C.  F.  R.    20.1(  r).  See  also,  Twelfth  Report  and  Order,  15  FCC  Rcd  at  12218-  19,  para.  18.  107 
 Order  and  Further  Notice  of  Proposed  Rulemaking,  15  FCC  Rcd  17112  (2000)  (Tribal  Stay  Order).  The  Commission  concluded  that  the  term  "near  reservation"  as  defined  by  BIA  may  include  wide  geographic  areas  that 


 do  not  possess  the  characteristics  that  warrant  the  targeting  of  enhanced  Lifeline  and  Link-  Up  support  to  reservations,  such  as  geographic  isolation,  high  rates  of  poverty,  and  low  telephone  subscribership.  Id.  at  17113-  14, 
 para.  3.  The  Commission  determined  that  giving  low  income  support  to  such  broad  areas  may  not  further  the  goal  of  increasing  telecommunications  deployment  and  subscribership  in  the  most  historically  isolated  and  underserved 
 (continued....) 
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 30.  On  March  30,  2005,  the  Commission  granted  the  petition  of  Smith  Bagley,  Inc.  (SBI)  seeking  a  waiver  of  section  54.400(  e)  of  the  Commissions  Lifeline  and  Link-  Up  eligibility  rules  to 
 enable  eligible  residents  of  the  Eastern  Navajo  Agency  in  the  state  of  New  Mexico  to  receive  enhanced  Lifeline  and  Link-  Up  support.  108  The  Commission  found  that  SBI  demonstrated  good  cause  to  justify  the 
 waiver  by  demonstrating  that  special  circumstances  exist  in  the  Eastern  Navajo  Agency.  109  For  example,  depressed  economic  conditions,  which  the  Commission  had  previously  determined  is  one  of  the  primary 
 causes  of  low  subscribership  levels,  exist  in  the  Eastern  Navajo  Agency.  110  Sparse  population  and  distances  between  requesting  customers  in  this  area  make  extending  wireline  telephone  facilities 
 challenging,  if  not  infeasible,  and  there  are  many  areas  within  the  Eastern  Navajo  Agency  where  no  telephone  service  is  available.  111  The  Commission  found  that  the  Eastern  Navajo  Agency  has  the  same 
 impediments  to  subscribership  and  infrastructure  development  as  those  existing  on  Tribal  lands,  112  and  concluded  that  it  is  appropriate  to  waive  section  54.400(  e)  of  the  Commissions  rules  and  permit  ETCs 
 serving  the  Eastern  Navajo  Agency  to  offer  Tier  4  Lifeline  and  Link-  Up  benefits  to  qualified  residents.  113 
 31.  In  its  Petition,  Sacred  Wind  states  that  the  waiver  granted  in  the  Smith  Bagley  Order  covers  substantially  the  same  lands  as  those  to  be  served  by  Sacred  Wind  and  requests  a  similar  waiver.  114 


 Sacred  Wind  subsequently  clarified  that  its  service  area  will  include  portions  of  the  Fort  Defiance,  Shiprock  and  Eastern  Navajo  Agencies  that  are  on  the  Navajo  reservation,  for  which  no  waiver  is 
 required,  115  and  lands  within  the  Eastern  Navajo  Agency  and  immediately  adjacent  non-  Agency  lands.  116  Sacred  Wind  further  clarified  that  its  service  territory  also  will  include  a  portion  of  the  Jicarilla  Apache 
 reservation.  117  Sacred  Wind  asks  that  the  Commission  confirm  that  the  waiver  granted  in  the  Smith  Bagley  Order  also  applies  to  Sacred  Winds  customers  in  the  Eastern  Agency.  118  In  addition,  Sacred 
 Wind  asks  that  the  Commission  waive  section  54.400(  e)  with  respect  to  Sacred  Wind  customers  on  those  areas  of  Sacred  Winds  service  territory  that  are  immediately  adjacent  to  the  Eastern  Agency  so  that  these 


 (...  continued  from  previous  page)  regions  of  the  Nation.  Id.  The  Commission  currently  has  a  pending  rulemaking  on  how  to  identify  geographic  areas 
 that  are  adjacent  to  reservations,  consistent  with  the  goal  of  targeting  enhanced  Lifeline  and  Link-  Up  to  the  most  underserved  areas  of  the  nation.  See  Twenty-  Fifth  Reconsideration  Order,  18  FCC  Rcd  at  10974-  77,  paras.  32-  38. 
 108  Federal-  State  Joint  Board  on  Universal  Service,  Smith  Bagley,  Inc.,  Petition  for  Waiver  of  Section  54.  400(  e)  of 
 the  Commissions  Rules,  Memorandum  Opinion  and  Order,  WC  Docket  No.  03-  109,  20  FCC  Rcd  7701  (2005)  (Smith  Bagley  Order). 


 109  See  id.  at  7704,  para.  10. 
 110  See  id.  at  7705-  06,  para.  11. 
 111  See  id.  at  7706,  para.  12. 
 112  See  id.  at  7704,  para.  10. 
 113  See  id.  at  7706,  para.  13. 
 114  See  Petition  at  30.  See  infra  note  119. 
 115  Letter  from  Martin  L.  Stern,  Preston,  Gates,  Ellis  &  Rouvelas,  Meeds  LLP,  to  Marlene  Dortch,  FCC,  WC  Docket 
 No.  06-  82,  CC  Docket  No.  96-  45,  WC  Docket  No.  03-  109  at  1  (filed  June  20,  2006)  (June  20  Letter).  116 
 See  id.  117 
 See  Letter  from  Martin  L.  Stern,  Preston,  Gates,  Ellis  &  Rouvelas,  Meeds  LLP,  to  Marlene  Dortch,  FCC,  WC  Docket  No.  06-  82,  CC  Docket  No.  96-  45,  WC  Docket  No.  03-  109  (filed  July  24,  2006)  (attaching  Letter  from  Larry 


 J.  Bonney  and  Wilson  Ray,  Huerfano  Chapter  #  91  )  at  1  (dated  July  17,  2006)  (Huerfano  Letter).  No  waiver  would  be  required  to  provide  enhanced  Lifeline  and  Link-  Up  to  eligible  residents  of  the  Jicarilla  Apache  reservation. 
 118  See  id. 
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 customers  will  be  eligible  for  enhanced  Lifeline  and  Link-  Up  support.  119 
 32.  We  clarify  that  the  waiver  of  section  54.400(  e)  of  the  Commissions  Lifeline  and  Link-Up  eligibility  rules  to  enable  eligible  residents  of  the  Eastern  Navajo  Agency  to  receive  enhanced  Lifeline 


 and  Link-  Up  support  applies  to  Sacred  Wind,  as  well  as  to  SBI.  120  In  addition,  as  explained  below,  we  find  that  Sacred  Wind  has  demonstrated  good  cause  to  justify  the  waiver  of  section  54.400(  e)  of  the 
 Commissions  rules  to  enable  eligible  residents  in  the  specified  areas,  which  are  immediately  adjacent  to  the  Eastern  Agency,  to  receive  enhanced  Lifeline  and  Link-  Up  support.  Sacred  Wind  has  demonstrated 
 that  special  circumstances  exist  in  the  areas  immediately  adjacent  to  the  Eastern  Agency. 
 33.  The  majority  of  the  residents  of  the  lands  located  adjacent  to  the  Eastern  Navajo  Agency  are  members  of  the  Navajo  Nation,  except  for  those  on  the  Jicarilla  Apache  reservation.  121  Much  of  this 


 land  is  extremely  remote,  with  many  residents  living  great  distances  from  the  larger  Navajo  housing  clusters  and  communities,  and  many  miles  from  highways  and  roads.  122  The  2000  Census  data  place  41.8 
 percent  of  all  Navajo  families  residing  on  trial  lands  in  New  Mexico  below  the  poverty  level,  123  and  estimate  that  54.4  percent  of  the  residents  of  the  New  Mexico  portions  of  the  Navaho  Nation  are  not  in  the 
 labor  force.  124  An  economic  development  study  prepared  by  the  Navajo  Nations  Division  of  Economic  Development  estimates  that  the  unemployment  rate  for  the  New  Mexico  portions  of  the  Navajo  Nation  is 
 52.76  percent,  and  specifically  in  the  Eastern  Navajo  Agency  is  70.53  percent.  125  Sacred  Wind  asserts  that  the  poverty  and  unemployment  levels  in  the  non-  Agency  lands  immediately  adjacent  to  Eastern 
 Agency  are  likely  even  below  that  for  the  rest  of  Sacred  Winds  service  territory  and  for  the  Navajo  Nation  as  a  whole,  because  there  is  a  direct  correlation  between  the  poverty  level  and  unemployment  rate 
 within  a  Navajo  Chapter  and  its  proximity  to  a  highway  and/  or  urban  center.  126  Sacred  Wind  estimates  that  the  telephone  penetration  rate  overall  for  its  service  territory  is  approximately  28  percent.  127  To 


 119  Sacred  Wind  asks  that  the  Commission  waive  the  stay  and  understands  that  this  was  the  relief  granted  in  the 
 Smith  Bagley  Order.  See  id.  In  the  Smith  Bagley  Order,  however,  the  Commission  did  not  waive  the  stay  of  the  implementation  of  enhanced  Lifeline  and  Link-  Up  benefits  to  the  extent  that  they  apply  to  qualifying  low-  income 


 consumers  living  near  a  reservation.  Rather,  the  Commission  waived  section  54.  400(  e)  of  the  Commissions  rules.  See  Smith  Bagley,  20  FCC  Rcd  at  7704  &  n.  24.  We  treat  Sacred  Winds  request  for  a  waiver  of  the  stay  of  the 
 rules,  as  a  request  for  waiver  of  the  rule.  120 
 Smith  Bagley  Order,  20  FCC  Rcd  at  7706,  para.  13.  121 
 Huerfano  Letter  at  1.  Sacred  Wind  previously  stated  that  the  lands  located  adjacent  to  the  Eastern  Navajo  Agency  are  inhabited  almost  exclusively  by  Navajo  Nation  tribal  members.  June  20  Letter  at  3. 


 122  June  20  Letter  at  3;  Huerfano  Letter  at  1. 
 123  Letter  from  Martin  L.  Stern,  Preston,  Gates,  Ellis  &  Rouvelas,  Meeds  LLP,  to  Marlene  Dortch,  FCC,  WC  Docket 
 No.  06-  82,  CC  Docket  No.  96-  45,  WC  Docket  No.  03-  109  (filed  July  18,  2006)  (July  18  Letter)  at  2,  Exhibit  1  at  3  (Table  DP-  3.  Profile  of  Selected  Economic  Characteristics:  2000).  Sacred  Wind  previously  indicated  that  the  2000 


 Census  placed  53.  8  percent  of  all  Navajo  families  residing  on  tribal  lands  in  New  Mexico  below  the  national  poverty  level.  See  June  20  Letter  at  3.  The  July  18  Letter  corrects  the  previous  figure. 
 124  July  18  Letter  at  2,  Exhibit  1  at  3  (Table  DP-  3.  Profile  of  Selected  Economic  Characteristics:  2000). 
 125  July  18  Letter  at  2,  Exhibit  2  at  2-  3  (2002-  2003  Comprehensive  Economic  Development  Strategy  of  the  Navajo 
 Nation,  Tables  15-  A,  15-  B).  Sacred  Wind  previously  estimated  that  the  unemployment  rate  for  Navajo  families  in  New  Mexico  is  between  55.  5  and  58  percent.  See  June  20  Letter  at  3.  The  July  18  Letter  updates  the  previous 


 estimate  and  provides  specific  information  about  the  Eastern  Navajo  Agency.  126 
 June  20  Letter  at  3.  127 
 Letter  from  Martin  L.  Stern,  Preston,  Gates,  Ellis  &  Rouvelas,  Meeds  LLP,  to  Marlene  Dortch,  FCC,  WC  Docket  No.  06-  82,  CC  Docket  No.  96-  45,  WC  Docket  No.  03-  109,  at  Exh.  1  (filed  July  26,  2006)  (July  26  Letter). 
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 Sacred  Winds  knowledge,  these  lands  are  largely  unserved  by  existing  providers,  including  mobile  wireless  providers.  128  The  remoteness  of  the  lands  adjacent  to  the  Eastern  Agency  makes  the  provision  of 
 basic  telephone  service  cost-  prohibitive,  and  in  many  areas,  telecommunications  facilities  are  non-existent.  129 


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


 35.  We  find  that  granting  Sacred  Winds  request  for  waiver  will  serve  the  public  interest  by  allowing  Sacred  Wind  to  provide  much-  needed  telecommunications  services  at  affordable  rates  to  many 
 Navajo  peoples  who  have  never  had  telephone  service,  or  have  been  unable  to  afford  to  maintain  it.  130  We  expect  that  the  availability  of  enhanced  Lifeline  and  Link-  Up  likely  will  increase  penetration  rates  in 
 these  depressed  regions  and,  for  the  first  time,  enable  these  low-  income  residents  to  have  access  to  necessary  emergency,  medical,  government  and  other  public  services.  131  Granting  this  waiver  serves  the 
 public  interest  because  doing  so  furthers  the  Commissions  goal  of  increasing  the  deployment  of  telecommunications  facilities  in  unserved  and  underserved  regions  of  the  Nation,  especially  among 
 Native  American  populations.  We  emphasize  that  the  action  we  take  here  does  not  affect  state  sovereignty  or  impinge  upon  a  states  ability  to  establish  universal  service  programs  aimed  at  increasing 
 telephone  subscribership  within  its  borders.  132 
 G.  Other  Matters 
 36.  Section  61.45(  d)  of  the  Commissions  rules  grants  us  discretion  to  require  price  cap  carriers  to  make  adjustments  to  their  price  cap  indices  to  reflect  cost  changes  resulting  from  rule 


 waivers.  133  Accordingly,  we  require  Qwest  to  adjust  its  price  cap  indices  to  reflect  the  removal  of  the  transferred  access  lines  from  its  New  Mexico  study  area. 


 37.  On  May  11,  2001,  the  Commission  adopted  an  order  requiring  incumbent  LECs  to  freeze,  on  an  interim  basis,  the  Part  36  jurisdictional  separations  factors  beginning  July  1,  2001.  134  In  that  order, 
 the  Commission  addressed  the  recalculation  of  frozen  allocation  factors  when  a  carrier  converts  from  average  schedule-  based  interstate  settlements  to  cost-  based  interstate  settlements.  135  In  those 


 128  June  20  Letter  at  3;  see  also  Huerfano  Letter  at  1. 
 129  June  20  Letter  at  3;  see  also  Huerfano  Letter  at  1. 
 130  June  20  Letter  at  3;  see  also  Huerfano  Letter  at  1. 
 131  See  June  20  Letter  at  3;  see  also  Huerfano  Letter  at  1. 
 132  See  Smith  Bagley  Order,  20  FCC  Rcd  at  7707,  para.  15. 
 133  See  47  C.  F.  R.    61.  45(  d). 
 134  See  Jurisdictional  Separations  and  Referral  to  the  Federal-  State  Joint  Board,  Report  and  Order,  CC  Docket  No. 
 80-  286,  16  FCC  Rcd  11382  (2001)  (Separations  Freeze  Order);  Jurisdictional  Separations  and  Referral  to  the  Federal-  State  Joint  Board,  Order  and  Further  Notice  of  Proposed  Rulemaking,  CC  Docket  No.  80-  286,  21  FCC  Rcd 


 5516  (2006).  135 
 See  Separations  Freeze  Order,  16  FCC  Rcd  at  11406  n.  123. 
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 circumstances,  the  carrier  has  not  previously  performed  cost  studies  to  separate  certain  types  of  costs.  To  address  this  issue,  the  Commission  provided  that  rate-  of-  return  carriers  that  convert  from  average 
 schedule  to  cost  company  status  during  the  freeze  shall  calculate  new  factors  based  on  the  twelve-  month  period  immediately  following  the  conversion  and  then  freeze  the  new  factors  for  the  remainder  of  the 
 freeze.  136  Because  Sacred  Wind  has  not  previously  performed  such  cost  studies,  it  is  appropriate  to  apply  the  same  requirement,  thus  eliminating  the  need  for  waiver  requests  to  calculate  new  factors  .  .  ..  137 
 Specifically,  we  require  Sacred  Wind  for  the  first  twelve  months  of  operation  to  categorize  the  telecommunications  plant  and  expenses  and  develop  separations  factors  in  accordance  with  the 
 separations  procedures  in  effect  as  of  December  31,  2000.  138 
 IV.  ORDERING  CLAUSES 
 38.  Accordingly,  IT  IS  ORDERED,  pursuant  to  sections  1,  4(  i),  5(  c),  201,  202  and  254  of  the  Communications  Act  of  1934,  as  amended,  47  U.  S.  C.    151,  154(  i),  155(  c),  201,  202,  and  254,  and 


 sections  0.91,  0.291,  and  1.3  of  the  Commission's  rules,  47  C.  F.  R.    0.91,  0.  291,  and  1.3,  that  the  joint  petition  for  waiver  of  the  study  area  boundary  freeze  as  codified  in  Part  36,  Appendix-  Glossary,  of  the 
 Commission's  rules,  filed  by  Sacred  Wind  Communications,  Inc.  and  Qwest  Corporation  on  March  30,  2006,  IS  GRANTED,  as  described  herein. 


 39.  IT  IS  FURTHER  ORDERED,  pursuant  to  sections  1,  4(  i),  5(  c),  201,  202  and  254  of  the  Communications  Act  of  1934,  as  amended,  47  U.  S.  C.    151,  154(  i),  155(  c),  201,  202,  and  254,  and 
 sections  0.91,  0.291,  and  1.3  of  the  Commission's  rules,  47  C.  F.  R.    0.91,  0.  291,  and  1.3,  that  the  petition  for  waiver  of  sections  36.611  and  36.612  of  the  Commission's  rules,  47  C.  F.  R.    36.611  and 
 36.612,  filed  by  Sacred  Wind  Communications,  Inc.,  on  March  30,  2006,  IS  GRANTED,  as  described  herein. 


 40.  IT  IS  FURTHER  ORDERED,  pursuant  to  sections  1,  4(  i),  5(  c),  201,  202  and  254  of  the  Communications  Act  of  1934,  as  amended,  47  U.  S.  C.    151,  154(  i),  155(  c),  201,  202,  and  254,  and 
 sections  0.91,  0.291,  and  1.3  of  the  Commission's  rules,  47  C.  F.  R.    0.91,  0.  291,  and  1.3,  that  the  petition  for  waiver  of  sections  54.301(  b),  54.314(  d)(  3),  54.903(  a)(  1),  and  54.903(  a)(  3)  of  the 
 Commission's  rules,  47  C.  F.  R.    54.  301(  b),  54.  314(  d)(  3),  54.  903(  a)(  1),  and  54.903(  a)(  3),  filed  by  Sacred  Wind  Communications,  Inc.,  on  March  30,  2006,  IS  GRANTED,  as  described  herein. 


 41.  IT  IS  FURTHER  ORDERED,  pursuant  to  sections  1,  4(  i),  5(  c),  201,  202  and  254  of  the  Communications  Act  of  1934,  as  amended,  47  U.  S.  C.    151,  154(  i),  155(  c),  201,  202,  and  254,  and 
 sections  0.91,  0.291,  and  1.3  of  the  Commission's  rules,  47  C.  F.  R.    0.91,  0.  291,  and  1.3,  that  the  petition  for  waiver  of  sections  69.3(  e)(  6)  and  69.3(  e)(  11)  of  the  Commission's  rules,  47  C.  F.  R.   
 69.3(  e)(  6)  and  69.3(  e)(  11),  filed  by  Sacred  Wind  Communications,  Inc.,  on  March  30,  2006,  IS  GRANTED,  as  described  herein. 


 42.  IT  IS  FURTHER  ORDERED,  pursuant  to  sections  1,  4(  i),  5(  c),  201,  202  and  254  of  the  Communications  Act  of  1934,  as  amended,  47  U.  S.  C.    151,  154(  i),  155(  c),  201,  202,  and  254,  and 
 sections  0.91,  0.291,  and  1.3  of  the  Commission's  rules,  47  C.  F.  R.    0.91,  0.  291,  and  1.3,  that  the  petition  for  waiver  of  section  54.305  of  the  Commission's  rules,  47  C.  F.  R.    54.305,  filed  by  Sacred  Wind 
 Communications,  Inc.,  on  March  30,  2006,  IS  GRANTED,  as  described  herein. 


 136  Id.,  16  FCC  Rcd  at  11407,  para.  53. 
 137  See  id. 
 138  See  47  C.  F.  R    36.  3(  e). 
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 43.  IT  IS  FURTHER  ORDERED,  pursuant  to  sections  1,  4(  i),  5(  c),  201,  202  and  254  of  the  Communications  Act  of  1934,  as  amended,  47  U.  S.  C.    151,  154(  i),  155(  c),  201,  202,  and  254,  and 
 sections  0.91,  0.291,  and  1.3  of  the  Commission's  rules,  47  C.  F.  R.    0.91,  0.  291,  and  1.3,  that  the  petition  for  waiver  of  section  54.400(  e)  of  the  Commission's  rules,  47  C.  F.  R.    54.400(  e),  filed  by  Sacred 
 Wind  Communications,  Inc.,  on  March  30,  2006,  IS  GRANTED,  as  described  herein. 
 44.  IT  IS  FURTHER  ORDERED,  pursuant  to  sections  1,  4(  i),  5(  c),  201,  and  202  of  the  Communications  Act  of  1934,  as  amended,  47  U.  S.  C.    151,  154(  i),  155(  c),  201,  and  202,  and  sections 


 0.91,  0.291,  1.  3,  and  61.43  of  the  Commission's  rules,  47  C.  F.  R.    0.91,  0.291,  1.  3,  and  61.43,  that  Qwest  Corporation  SHALL  ADJUST  its  price  cap  indices  in  its  annual  price  cap  filing  to  reflect  cost 
 changes  resulting  from  this  transaction,  consistent  with  this  Order. 
 45.  IT  IS  FURTHER  ORDERED,  pursuant  to  sections  1,  4(  i),  5(  c),  201,  202  and  254  of  the  Communications  Act  of  1934,  as  amended,  47  U.  S.  C.    151,  154(  i),  155(  c),  201,  202,  and  254,  and 


 sections  0.91,  0.291,  and  1.3  of  the  Commission's  rules,  47  C.  F.  R.    0.91,  0.  291,  and  1.3,  that  Sacred  Wind  Communications,  Inc.  IS  REQUIRED  for  the  first  twelve  months  of  operation  to  categorize  its 
 telecommunications  plant  and  expenses  and  develop  separations  factors  pursuant  to  section  36.3(  e)  of  the  Commissions  rules,  47  C.  F.  R.    36.  3(  e). 


 FEDERAL  COMMUNICATIONS  COMMISSION 
 Thomas  J.  Navin  Chief,  Wireline  Competition  Bureau 
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