********************************************************    
                         NOTICE
********************************************************

This document was converted from
WordPerfect to ASCII Text format.

Content from the original version of the document such as
headers, footers, footnotes, endnotes, graphics, and page numbers
will not show up in this text version.

All text attributes such as bold, italic, underlining, etc. from the
original document will not show up in this text version.

Features of the original document layout such as
columns, tables, line and letter spacing, pagination, and margins
will not be preserved in the text version.

If you need the complete document, download the
WordPerfect version or Adobe Acrobat version, if available.

*****************************************************************
      
Before the
Federa                 l Communications Commission
Wash                       ington, D.C. 20554


In the Matter of)
     )     
Wilderness Valley Telephone Company, Inc.    )    AAD 96-99
     )          
Petition For Waiver of Sections 69.605(c) and     )
69.3(e)(11) of the Commission's Rules  )


ORDER
                
Adopted:  February 26, 1998                                       Released:  February 26, 1998

By the Chief, Accounting and Audits Division:

I.   INTRODUCTION
        
     1.    On September 11, 1996, Wilderness Valley Telephone Company, Inc.
("Wilderness Valley") filed a petition ("Petition") requesting a waiver of Sections 69.605(c) and
69.3(e)(11) of the Commission's rules to enable it to convert from cost study settlements to
average schedule settlements and to participate in the National Exchange Carrier Association's
("NECA's") average schedule settlements as of the time it commences local exchange and
exchange access service in October, 1996.  On September 30, 1996, the Common Carrier
Bureau ("Bureau") released a public notice soliciting comment on the petition for waiver.  No
comments were filed.  In this Order, we grant in part and dismiss in part Wilderness Valley's
Petition.

                                            II.   BACKGROUND

     2.    Incumbent local exchange carriers ("Incumbent LECs") that participate in the
NECA pool collect interexchange access charges at the rates contained in the access tariff filed
by NECA.  In the settlement process, each pool participant receives revenues from the pool to
cover its cost of providing service plus a pro rata share of the pool's earnings.  NECA pool
participants' costs are determined either on the basis of cost studies or average schedule
formulas.  Although less exact than cost studies, the average schedule procedure provides the
advantage of reducing the costs imposed on incumbent LECs and borne, in part, by interstate
ratepayers.  

     3.    The determination of which incumbent LECs may use the average schedule
formulas is governed by the definition of "average schedule company" found in section 69.605(c)
of the Commission's rules.  Section 69.605(c) provides, in pertinent part, that "a telephone
company that was participating in average schedule settlements on December 1, 1982, shall be
deemed to be an average schedule company."  This definition of average schedule company
essentially "grandfathered" existing average schedule incumbent LECs but neither allowed the
creation of new average schedule companies nor conversion of cost-based carriers to average
schedule status.  This policy reflected the Commission's finding that "cost studies produce the
most accurate financial information, and consequently, the most accurate interstate telephone
rates."  Although average schedule companies may elect, at any time, to convert to cost-study
status, the average schedule definition precludes cost companies from converting to average
schedule status absent a waiver of section 69.605(c).  The definition thus was designed to limit
the use of average schedule formulas to companies that operated as average schedule companies
prior to adoption of the rule or that are able to demonstrate compelling circumstances sufficient
to warrant a special exception.  
     
III.   PETITION
   
     4.    Wilderness Valley seeks a waiver of 69.605(c), stating that settlement based on
average schedule formulas is justified by its size and by the savings that will be realized by not
having to perform cost studies.  In its petition, Wilderness Valley represents that it is a newly-
formed entity seeking to provide telephone service to an area in Minnesota that has been
unserved.  The area consists of 83 buildings, of which 10 are year-round farm or residential
dwellings and the remaining 73 are seasonal recreational structures.   Wilderness Valley
initially will serve between 32 and 75 access lines.  

     5.    Wilderness Valley describes its organization as part of a "joint construction
venture with North Itasca Electric Cooperative ("NIEC"), an unrelated and unaffiliated electric
power provider."  Wilderness Valley represents that none of the surrounding local exchange
carriers, US West, GTE of Minnesota, or Peoples Telephone Company, exhibited interest in
serving the area. 
                              IV.  DISCUSSION

A.  Waiver of Section 69.605(c)

     6.      Under Section 1.3 of our rules, we are required to grant waivers "if good cause
therefor is shown."  As interpreted by the courts, this requires that a petitioner demonstrate
that "special circumstances warrant a deviation from the general rule and such a deviation will
serve the public interest."  According to the courts, special circumstances include
demonstration of individualized hardship or inequity.   

     7.    Based on the facts and assumptions described in the foregoing paragraphs, we
believe that Wilderness Valley should be allowed to settle with NECA on an average schedule
basis.  The high cost of completing a cost study relative to the extremely small size of
Wilderness Valley establishes the special circumstances that warrant granting Wilderness
Valley's request for a waiver of Commission rules.  We therefore find that Wilderness Valley's
request for average schedule status should be granted.




B.  Waiver of Section 69.3(e)(11)

     8.      Wilderness Valley also seeks a waiver of Section 69.3(e)(11) of the
Commission's rules requiring that any changes in NECA common line tariff participation and
Long Term Support resulting from a merger or acquisition of telephone properties become
effective on the next annual access tariff filing date following the merger or acquisition. 
Wilderness Valley is a newly-formed entity authorized to serve previously unassigned and
unserved territory.  No merger or acquisition of telephone properties is involved in this
proceeding.  Section 69.3(e)(11), therefore, is inapplicable, and thus, we dismiss Wilderness
Valley's petition.
 
                                                 V.   ORDERING CLAUSE

     9.      Accordingly, IT IS ORDERED, pursuant to Sections 1, 4(i), 5(c), 201, 202,
205, and 218-220, of the Communications Act of 1934, as amended, 47 U.S.C.  151,
154(i), 155(c), 201, 202, 205, and 218-220, and Sections 1.3, 0.91, and 0.291 of the
Commission's rules, 47 C.F.R.  1.3, 0.91, and 0.291 that the Petition of Wilderness
Valley Telephone Company for Waiver of Section 69.605(c) of the Commission's rules, 47
C.F.R.  69.605 IS GRANTED.

     10.   IT IS FURTHER ORDERED, pursuant to Sections 1, 4(i), 5(c), 201, 202,
205, and 218-220, of the Communications Act of 1934, as amended, 47 U.S.C.  151,
154(i), 155(c), 201, 202, 205, and 218-220, and Sections 1.3, 0.91, and 0.291 of the
Commission's rules, 47 C.F.R.  1.3, 0.91, and 0.291 that the Petition of Wilderness
Valley Telephone Company for Waiver of Section 69.3(e)(11) of the Commission's rules, 47
C.F.R.  69.3(e)(11) IS DISMISSED.     
     

     FEDERAL COMMUNICATIONS COMMISSION



     Kenneth P. Moran
     Chief, Accounting and Audits Division