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If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of ) AAD 97-81 Petition for Waiver Filed by ) ) The Florala Telephone Company, Gulf Telephone ) Company and St. Joseph Telephone & Telegraph ) Company ) ) Concerning the Definition of "Study Area" ) Contained in the Part 36 Appendix-Glossary ) of the Commission's Rules ) MEMORANDUM OPINION AND ORDER Adopted: December 2, 1997 Released: December 2, 1997 By the Chief, Accounting and Audits Division Common Carrier Bureau: I. INTRODUCTION 1. On July 8, 1997, The Florala Telephone Company ("Florala"), Gulf Telephone Company ("Gulf"), and St. Joseph Telephone & Telegraph Company ("St. Joseph") filed a petition for waiver of the definition of "Study Area" contained in Part 36, Appendix-Glossary, of the Commission's rules. The requested waiver would allow these incumbent local exchange carriers ("ILECs") to consolidate their study areas into one, in conjunction with their proposed merger. 2. On August 29, 1997, the Common Carrier Bureau ("Bureau") released a public notice soliciting comments on the petition. Supporting comments were filed by the United States Telephone Association. In this Order, we find that approving the creation of the consolidated study area will serve the public interest. We therefore grant the petition as explained below. II. BACKGROUND 3. A study area is a geographic segment of an ILEC's telephone operations. Generally, a study area corresponds to an ILEC's entire service territory within a state. Thus, ILECs operating in more than one state typically have one study area for each state, and ILECs operating in a single state typically have a single study area. Study area boundaries are important primarily because ILECs perform jurisdictional separations at the study area level. For jurisdictional separations purposes, the Commission froze all study area boundaries effective November 15, 1984. The Commission took that action primarily to ensure that ILECs do not set up high-cost exchanges within their existing service territories as separate study areas to maximize interstate cost allocations. An ILEC must apply to the Commission for a waiver of the frozen study area rule if it wishes to sell or purchase an exchange. 4. Waiver of Commission rules is appropriate only if special circumstances warrant 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 employs a three-prong standard: first, the change in study area boundaries does not adversely affect the Universal Service Fund ("USF") support program; second, the state commissions having regulatory authority over the exchanges to be transferred do not object to the change; and third, the public interest supports the change. III. PETITION 5. As stated in the petition, prior to the merger these ILECs were wholly-owned subsidiaries of St. Joe Communications, Inc. They each held state-issued certificates of public convenience and necessity to provide local exchange service to their respective exchange areas. Florala provided local exchange service in Florida and Alabama; Gulf operated solely in Florida; and St. Joseph operated in Florida and Georgia. Florala served 4,501 access lines; Gulf served 9,346 access lines; and St. Joseph served 30,958 access lines. The petitioners state that the merged entity will be named GTC, Inc. 6. Petitioners seek waiver of the rule freezing study area boundaries to consolidate the Florala, Gulf, and St. Joseph study areas into one study area effective on November 1, 1997, to coincide with the proposed merger. The petitioners state that the consolidation will facilitate an internal corporate restructuring and achieve a variety of efficiencies such as: improvement of customer service functions, streamlined administration, and operating economies. In addition, the petitioners state that, as a combined study area, they would receive less USF support then they would receive as separate study areas. Specifically, they estimate that they would receive annual USF support totalling $4,295,034 if they were to operate as three separate study areas and $3,702,755 if they were to maintain one combined study area. IV. DISCUSSION 7. We have reviewed the data the petitioners filed with the National Exchange Carrier Association ("NECA") and the estimates filed in this proceeding and have determined that grant of the requested waiver would not have an adverse impact on the USF total or on individual ILEC draws. In addition, the Alabama Public Service Commission, the Florida Public Service Commission, and the Georgia Public Service Commission state that they do not object to the requested waiver. Furthermore, we agree with the petitioners that the combination of the three operations into one operation would likely lead to improved operating economies. Thus, the requested study area waiver is likely to serve the public interest. As a result, we find that the three- prong standard for granting a study area waiver has been met in this instance and that the waiver request should be granted. 8. The petitioners request that the study area waiver be made effective coincident with the merger, i.e., on November 1, 1997. The petitioners state that a requirement to track costs and maintain separate study areas after November 1, 1997 would be inefficient for the merged company and serve no public benefit. We typically do not grant study area waivers retroactively. In this case, however, we will allow the study area waiver request to be granted effective November 1, 1997. This retroactivity is for just one month. Further, the merger of the three study areas into one study area reduces the USF support for the merged entity. Thus, there will be no adverse effect on the USF. Finally, we are persuaded that there would be no benefit to prolonging the requested waiver beyond the requested date of November 1, 1997. V. ORDERING CLAUSE 9. 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 of The Florala Telephone Company, Gulf Telephone Company, and St. Joseph Telephone & Telegraph Company for waiver of Part 36, Appendix-Glossary, of the Commission's rules, 47 C.F.R. Part 36 Appendix-Glossary IS GRANTED. 10. IT IS FURTHER ORDERED, pursuant to Sections 1, 4(i), 5(c), 201 and 202 of the Communications Act of 1934, as amended, 47 U.S.C.  151, 154(i), 155(c), 201 and 202, and Sections 0.91, 0.291, and 1.3 of the Commission's rules, 47.C.F.R.  0.91, 0.291, and 1.3, that the provisions of this Order discussed in paragraphs 7 and 8 above, ARE EFFECTIVE IMMEDIATELY UPON RELEASE. FEDERAL COMMUNICATIONS COMMISSION Kenneth P. Moran Chief, Accounting and Audits Division Common Carrier Bureau