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USTA supports NebCom's request for a waiver of Section 61.41(c)(2),  xstating that it had no opportunity to "game the system" and supports NebCom's request to operate  x.as an average schedule company, stating that because NebCom seeks to operate the acquired  x=exchanges as a portion of the existing Nebraska study area of its affiliate, an average schedule  X- x<company, the public interest would be served by allowing the waiver of 69.605(c) to be granted.R2 yO-ԍxUSTA comments at 46.R  X<    Wx<   Xa- IV. DISCUSSION Ã  X3- ` Q x10.` `  Under Section 1.3 of our rules, we are required to grant waivers "if good cause  X - xtherefor is shown."D X2 yO% -ԍx47 C.F.R.  1.3.D As interpreted by the courts, this requires that a petitioner demonstrate that  x"special circumstances warrant a deviation from the general rule and such a deviation will serve  X - xthe public interest." 2 {O-  kԍxNortheast Cellular Tel. Co. v. FCC, 897 F.2d 1164, 1166 (D.C. Cir. 1990); WAIT Radio v. FCC, 418 F.2d  yOQ-1153, 1159 (D.C. Cir. 1969); 47 C.F.R.  1.3.@ According to the courts, special circumstances include demonstration of  X -individualized hardship or inequity.: B2 {O-ԍxId.:  X -  A. Waiver of Section 61.41(c)(2)  X{< ` x11.` `   The Commission has recognized that a narrow waiver of the allornothing rule  xmight be justified if efficiencies created by the purchase and sale of a few exchanges were to  XN- xoutweigh the threat that the system may be subject to gaming.:N2 {O-ԍxId.: Such a waiver would not be  xgranted unconditionally, however. Rather, waivers of the allornothing rule are granted subject  xito the condition that the selling pricecap company makes a downward adjustment to its pricecap  X - xindices to reflect the change in its study area. f 2 {O -  {ԍxSee Price Cap Performance Review for Local Exchange Carriers, First Report and Order, 10 FCC Rcd  {O- x8962, paras. 328,330 (1995) ("LEC Price Cap Review Order"). Under that requirement, US West must reduce the  xPrice Cap Indices for its Nebraska study area if the changes in study area boundaries reduce the cost bases for those  xindices. The Price Cap Indices, which are the cost indices on which pricecapped rates are based, are calculated  {OD"-pursuant to a formula specified in the Commission's rules for pricecap LECs. See 47 C.F.R.  61.45. That adjustment is needed to remove the effects  x[of the transferred exchanges from pricecapped rates that have been based, in whole or in part,  X-upon the inclusion of those exchanges in study areas subject to pricecap regulation.:2 {O%-ԍxId.:  X- ` Ax12.` ` We agree with NebCom that the Commission's first concern underlying the allor xnothing rule is not applicable in this case. NebCom and its affiliate seek to continue as average",7)7)qq"  xschedule NECA pooling companies under rateofreturn regulation. In addition, since NebCom  xihas no affiliated pricecap companies, there is no incentive to shift costs. As to the Commission's  xsecond concern, we find it implausible that the petitioners could game the system by moving the  xjsubject exchanges back and forth between pricecap and rateofreturn regulation, because the  xpetitioners would require a second study area waiver. We therefore find good cause to grant  xNebCom a waiver of the allornothing rule to permit it to operate under rateofreturn regulation.  X_- B. Waiver of Section 69.605(c)  X1- ` x13.` `    The Commission has explained that the definition of "average schedule" in  xSection 69.605 was premised upon a policy determination "that exchange carriers which have the  xfinancial resources and expertise to conduct cost studies without undue hardship should be  X - xKrequired to measure the actual costs they incur in providing interstate service."  2 {Oe -  #X\  P6G;gP##C\  P6QgP#эxMTS and WATS Market Structure: Average Schedule Companies, Memorandum Opinion and Order, 2 FCC  yO/-Rcd 6642 (1987).  In addition, the  xdefinition contained in section 69.605(c) also serves to prevent an increase in the number of lines  xsubject to average schedule treatment. Our actions on NebCom's request shall, therefore, be  xguided by a policy preference that incumbent LECs settle on a cost basis whenever possible without undue hardship.  Xb- ` x14.` ` As a result of its acquisition from US West, NE Nebraska's study area in Nebraska  xincreased from 3,940 to 6,919. At 6,919 lines, the study area is larger than 57 percent of the  X4- x.study areas that operate on a cost basis.4"2 {O-ԍxSee NECA USF 1996 Submission of 1995 Study Results filed October 1, 1996. NebCom thus is incorrect in its assertion that only  x.large LECs settle on a cost basis. This study area is not so small that it would, on the basis of  xits size alone, experience undue difficulty in preparing annual cost studies. In addition, granting  xNebCom's requested waiver would increase the number of lines that settle on an average schedule  xbasis. In this case, more than 40 percent of the 6,919 lines in the new study area were previously  xpart of a cost study area. We believe that this effect is a significant concern in light of the Commission's policy preference for cost studies rather than average schedule settlements.  X|- ` x15.` ` We are further troubled by the absence of any itemization or explanation that could  xjestablish the credibility of NebCom's cost study expense estimates. NebCom does not explain  xwhether its estimates are based upon the time that company personnel would spend annually on  xpreparing cost studies, or whether it reflects the use of an outside consultant and, if so, whether  xzmore than one consultant was approached to prepare estimates. Further, NebCom provides  x[neither a description of the tasks that would need to be performed nor a breakdown of the time that would be spent on each task.  X - ` Qx16.` ` The absence of contrary cost information on the record does not compel us to  xaccept NebCom's estimates. In seeking a waiver, NebCom assumed the burden of presenting  x"credible evidence of special circumstances, and mere allegations, absent convincing""|,7)7)qq!"  xdocumentation and support, do not suffice. As stated above, study areas the size of NE  xNebraska's study area cannot be assumed to lack the resources to operate on a cost basis.  xMoreover, it is likely that a great deal of the requisite cost information already exists, because  xnearly 43 percent of its access lines were, prior to their acquisition, part of US West's costbased  X-study area in Nebraska..X2 yO-  ԍxAs a cost company, US West has been required under our rules to keep its property and accounting records  xin a manner that would facilitate development of the information needed by the applicants for annual cost studies. .  Xv- ` x 17. ` ` NebCom has not presented welldocumented, credible evidence that it would incur  x unduly burdensome expense in preparing cost studies for its new study area, as a result of  xMspecific problems or circumstances that differ from those of other study areas with a similar  xnumber of access lines that operate on a cost basis. We therefore do not find that NebCom has  xdemonstrated special circumstances warranting waiver of section 69.605(c) of the Commission's rules, and we are unwilling to grant a permanent waiver of that rule.  X - ` x18.` ` We are, however, inclined to grant a temporary waiver in order to allow NebCom  xto accomplish a transition to coststudy status. We base this determination, in part, upon  xNebCom's representation of a projected net loss of $83,645 in its 1997 fiscal year of operation.  xAlthough we find NebCom's assertions regarding its projected 1997 losses deficient in detail and  xdocumentation, we are nonetheless inclined to grant a temporary waiver in this instance, in light  x-of the potentially serious implications of a net loss for NebCom's subscribers. We therefore shall  xafford NebCom a temporary waiver of section 69.605(c) of our rules, commencing in 1998 and  X4- xterminating on December 31, 1999. 42 yO-ԍxWe also shall grant NebCom a temporary waiver of section 69.605(c) for 1997, which has already passed. By the beginning of 2000, NebCom must settle on a cost  xbasis. We also shall condition this temporary waiver on the provision of additional information  xby NebCom. Within 90 days from the release of this order, NebCom must file with the  xLCommission a statement of income and expenses for 1997, which indicates the actual net profit  xzor loss for that year. Assuming that NebCom complies with this requirement, the temporary  X-waiver will continue in effect until December 31, 1999.  X-5 V. ORDERING CLAUSES ă  X~-  Xg- ` x19.` ` Accordingly, IT IS ORDERED, pursuant to Sections 1, 4(i), 5(c), 201, 202, 205,  xand 218220, of the Communications Act of 1934, as amended, 47 U.S.C.  151, 154(i), 155(c),  xl201, 202, 205, and 218220, and Sections 1.3, 0.91, and 0.291 of the Commission's rules, 47  xC.F.R.  1.3, 0.91, and 0.291 that the Petition of NebCom, Inc. for Waiver of Section 61.41(c)(2) of the Commission's rules, 47 C.F.R.  61.41(c)(2) IS GRANTED.  X- ` ~x20.` ` IT IS FURTHER ORDERED, pursuant to Sections 1, 4(i), 5(c), 201, 202, 205, and  x218220, of the Communications Act of 1934, as amended, 47 U.S.C.  151, 154(i), 155(c), 201,  x202, 205, and 218220, and Sections 1.3, 0.91, and 0.291 of the Commission's rules, 47 C.F.R.  x] 1.3, 0.91, and 0.291 that the Petition of NebCom for Waiver of Section 69.605(c) of the""x ,7)7)qq!"  xCommission's rules, 47 C.F.R.  69.605(c) IS GRANTED until December 31, 1999 subject to the  X-conditions stated in paragraph 18 of this Order and is otherwise DENIED.xx 0(#(#Xx` ` x  X- x` `  hh x` `  hh@FEDERAL COMMUNICATIONS COMMISSION x` `  hh@Kenneth P. Moran x` `  hh@Chief, Accounting and Audits Division