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                           Before the
               Federal Communications Commission
                     Washington, D.C. 20554


In the Matter of

Pioneer Telephone Cooperative, Inc.
Panhandle Telephone Cooperative, Inc.
EagleNet, Inc.

Joint Petition for Waiver of the
Definition of "Study Area" in
Appendix-Glossary of Part 36
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CC Docket No. 96-45


                             ORDER

   Adopted: March 16, 2001              Released: March 19, 2001

By the Chief, Accounting Policy Division:

                      I.introduction
1.     In this Order, we grant a request from Pioneer Telephone Cooperative, Inc. (Pioneer),
Panhandle Telephone Cooperative, Inc. (PTCI), and EagleNet, Inc. (EagleNet) (collectively, petitioners),
for a waiver of the definition of "study area" contained in the Part 36 Appendix-Glossary of the
Commission's rules.  This waiver will permit Pioneer, PTCI, and EagleNet to alter the boundaries of
their jointly operated Oklahoma study area by removing six exchanges that are currently owned by
Pioneer.  This waiver also will permit Pioneer to alter the boundaries of its existing Oklahoma study area
to include the six exchanges it is removing from the petitioners' jointly operated study area.
                       II.background
3.     Study Area Boundaries.  A study area is a geographic segment of an incumbent local
exchange carrier's (LEC's) telephone operations.  Generally, a study area corresponds to an incumbent
LEC's entire service territory within a state.  Thus, an incumbent LEC operating in more than one state
typically has one study area for each state.  The Commission froze all study area boundaries effective
November 15, 1984, and an incumbent LEC must apply to the Commission for a waiver of the study
area boundary freeze if it wishes to sell or purchase additional exchanges and the transaction requires the
alteration of a study area boundary.  As a result of the study area freeze, an incumbent LEC may operate
in more than one study area in a given state through the acquisition of partial or entire study areas from
other incumbent LECs.  In transactions involving multiple acquiring carriers, exchanges in a single
acquired study area may be operated by more than one incumbent LEC.  Such is the case with the study
area jointly operated by Pioneer, PTCI, and EagleNet.
4.     The Petition for Waiver.  On February 18, 1994, the Common Carrier Bureau (Bureau)
granted the petition of EagleNet for waiver of various of the Commission's rules to effectuate the
purchase by EagleNet, PTCI, and Pioneer of 14 rural Oklahoma exchanges comprising 12,562 access
lines from GTE Southwest Incorporated (GTE).  As a condition of approval of the study area waiver, the
Bureau required EagleNet, PTCI, and Pioneer to create a new combined study area consisting of the 14
acquired exchanges.  The Bureau reasoned that permitting the carriers to create separate study areas for
the acquired exchanges would have adverse jurisdictional separations implications and would increase
the burden of administering the universal service programs.  The Bureau specifically expressed concern
regarding PTCI's proposal to establish a second study area in Oklahoma for the exchanges operated by
its wholly-owned subsidiary, EagleNet.  Of the 12,562 access lines which were acquired from GTE,
EagleNet assumed operational responsibility for 4,727 access lines, Pioneer assumed operational
responsibility for 3,452 access lines, and PTCI assumed operational responsibility for 4,383 access lines.
5.     On January 24, 2000, Pioneer, PTCI, and EagleNet filed a joint petition for waiver of the
definition of "study area" contained in the Part 36 Appendix-Glossary of the Commission's rules.  The
requested waiver would permit Pioneer, PTCI, and EagleNet to remove the six exchanges operated by
Pioneer from their combined Oklahoma study area, and permit Pioneer to incorporate the six exchanges
into its existing Oklahoma study area.  The six exchanges are contiguous with Pioneer's existing
Oklahoma study area.  The petitioners state that the waiver is sought to regularize reporting and
accounting practices, and to respond to a notification from the National Exchange Carrier Association,
Inc. (NECA) that it will no longer accept the petitioners' prior practice of separately reporting their costs
for consolidation at the Part 69 reporting level.  On February 29, 2000, the Bureau released a public
notice seeking comment on the petition.  Comments in support of the petition were filed by NECA and
the National Telephone Cooperative Association (NTCA).
                       VI.Discussion
7.     We find that good cause exists to waive the definition of study area contained in Part 36
Appendix-Glossary of the Commission's rules to permit Pioneer, PTCI, and EagleNet to remove the six
exchanges operated by Pioneer from their jointly operated Oklahoma study area, and permit Pioneer to
incorporate the six exchanges into its existing Oklahoma study area.
8.     Generally, the Commission's rules may be waived for good cause shown.  As noted by the
Court of Appeals for the D.C. Circuit, however, agency rules are presumed valid.  The Commission
may exercise its discretion to waive a rule where the particular facts make strict compliance inconsistent
with the public interest.  In addition, the Commission may take into account considerations of hardship,
equity, or more effective implementation of overall policy on an individual basis.  Waiver of the
Commission's rules is therefore appropriate only if special circumstances warrant a deviation from the
general rule, and such a deviation will serve the public interest.  In evaluating petitions seeking a waiver
of the rule freezing study area boundaries, the Commission traditionally has applied a three-prong
standard: first, the change in study area boundaries must not adversely affect the universal service fund;
second, no state commission having regulatory authority over the transferred exchanges may oppose the
transfer; and third, the transfer must be in the public interest.  For the reasons discussed below, we
conclude that petitioners have satisfied these criteria and demonstrated that good cause exists for waiver
of the Commission's study area freeze rule.
9.     First, we conclude that Pioneer, PTCI, and EagleNet have demonstrated that the proposed
change in study area boundaries will not adversely affect any of the universal service mechanisms.  In
accordance with past precedent, a study area waiver will not be granted if it results in an annual
aggregate shift in high-cost loop support in an amount equal to or greater than one percent of the total
high-cost loop support fund, unless the parties demonstrate an extraordinary public interest benefit.  We
conclude that the transfer of Pioneer's six exchanges from the combined study area to its existing
Oklahoma study area will not result in such a shift.  According to the petitioners, as a result of the
proposed transfer of the six exchanges from the combined study area to Pioneer's Oklahoma study area,
the net amount of annual high-cost loop support received by the petitioners' exchanges will increase
$47,514.  Because the total size of the high-cost loop support mechanism for calendar year 2001 is
projected to be $919.587 million, we conclude that an estimated increase of $47,514 constitutes an
insignificant aggregate shift in high-cost loop support.  Therefore, we conclude that this transaction will
not adversely affect the universal service mechanisms.
10.    Second, no state commission with regulatory authority over the transferred exchanges
opposes the transfer.  The Oklahoma Corporation Commission (Oklahoma Commission) has indicated
that it does not object to the grant of the study area waiver.
11.    Finally, we conclude that the public interest is served by a waiver of the study area freeze
rule to permit Pioneer, PTCI, and EagleNet to remove the six exchanges operated by Pioneer from their
combined Oklahoma study area and permit Pioneer to incorporate the six exchanges into its existing
Oklahoma study area.  Specifically, the proposed study area waiver may result in greater operational
efficiencies, more accurate reporting of costs, and reduced administrative burdens for the petitioners
and NECA.  As detailed above, we also believe that the instant waiver will not enable the petitioners to
gain an undue advantage under universal service and jurisdictional separations rules, which was a
concern raised in the Bureau's order requiring the petitioners to create a combined study area.  We also
note that the Oklahoma Commission has concluded that approval of the petitioners' study area waiver
request is in the public interest.  Based on these representations and the findings of the Oklahoma
Commission, we conclude that the petitioners have demonstrated that grant of this waiver request will
serve the public interest.
                    XII.ORDERING CLAUSE
13.    Accordingly, IT IS ORDERED, pursuant to sections 1, 4(i), 5(c), 201, and 202 of the
Communications Act of 1934, as amended, 47 U.S.C.  151, 154(i), 155(c), 201, and 202, and sections
0.91, 0.291, and 1.3 of the Commission's rules, 47 C.F.R.  0.91, 0.291, and 1.3, that the petition for
waiver of Part 36, Appendix-Glossary, of the Commission's rules, filed by Pioneer Telephone
Cooperative, Inc., Panhandle Telephone Cooperative, Inc., and EagleNet, Inc., on January 24, 2000, IS
GRANTED, as described herein.

                         FEDERAL COMMUNICATIONS COMMISSION
  


                              Katherine L. Schroder
                         Chief, Accounting Policy Division