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



In the Matters of

Petitions for Waiver Concerning the Definition of "Study
Area" Contained in Part 36 Appendix-Glossary of the
Commission's Rules

Accent Communications, Inc., 
Armour Independent Telephone Company, 
Bridgewater-Canistota Independent Telephone Company, 
James Valley Cooperative Telephone Company, 
RC Communications, Inc., and 
Roberts County Telephone Cooperative Association

and

Accipiter Communications, Inc.

and

Alenco Communications, Inc.

and

Alpine Communications, L.C., 
Arapahoe Telephone Company, 
Great Plains Communications, Inc., 
Kennebec Telephone Company, Inc., 
The Nebraska Central Telephone Company, and 
Western Telephone Company

and 

Brazos Telecommunications, Inc. and 
Brazos Telephone Cooperative, Inc.

and

Cap Rock Telephone Cooperative, Inc.

and

Cass County Telephone Company

and

Central Texas Telephone Cooperative, Inc.

and

Champlain Valley Telecom, Inc., 
Northland Telephone Company of Vermont and 
Vermont Telephone Company, Inc.

and

Columbine Telephone Company, Inc. and 
Silver Star Telephone Company, Inc.

and

Dickey Rural Telephone Cooperative, 
Dickey Rural Communications, Inc., 
Gilby Telephone Company, 
Griggs County Telephone Company, 
Moore & Liberty Telephone Company, 
North Dakota Telephone Company,
Northwest Communications Cooperative, 
Red River Telecom, Inc., 
Turtle Mountain Communications, Inc., 
United Telephone Mutual Aid Cooperative, and 
York Telephone Company

and

Ganado Telephone Co., Inc.

and

Guadalupe Valley Telephone Cooperative, Inc.

and

Interstate Telecommunications Cooperative, Inc. and
Interstate Telephone Company, Inc., 
Hanson Communications, Inc., 
Fort Randall Telephone Company, and 
Mt. Rushmore Telephone Company, 
Midstate Telephone Company and 
Heartland Communications, Inc., 
Mobridge Telecommunications Company, 
Hanson County Telephone, Inc. and 
Hanson Communications, Inc. dba McCook Telecom,
Splitrock Telecom Cooperative, Inc. and 
Splitrock Properties, Inc.

and

Lincolnville Telephone Company and 
Tidewater Telecom, Inc.

and

Maine Telephone Company, 
Northland Telephone Company of Maine, Inc., 
Sidney Telephone Company, and 
Standish Telephone Company

and

Mid-Maine Telecom, Inc.

and

Oregon-Idaho Utilities, Inc.

and

Ozark Telephone Company

and

Peoples Telephone Cooperative, Inc.

and

Pioneer Telephone Cooperative, Inc.

and

Roosevelt County Rural Telephone Cooperative, Inc.

and

San Carlos Apache Telecommunications Utility, Inc.

and

Santa Rosa Telephone Cooperative, Inc.

and

Sunflower Telephone Company, Inc. and 
Bluestem Telephone Company, 
S&T Telephone Cooperative Association, Inc. and 
S&T Communications of Dighton, Inc., 
Golden Belt Telephone Association, Inc., 
Northeast Missouri Rural Telephone Company and Modern
Telecommunications Company

and

West River Cooperative Telephone Company and 
State Line Telecommunications, Inc.

and

Winnebago Cooperative Telephone Association

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CC Docket No. 96-45







AAD 96-35
CC Docket No. 96-45


AAD 95-139
CC Docket No. 96-45




CC Docket No. 96-45






AAD 94-112
CC Docket No. 96-45



AAD 95-139
CC Docket No. 96-45


AAD 95-62
CC Docket No. 96-45


AAD 95-139
CC Docket No. 96-45


CC Docket No. 96-45
AAD 95-30




CC Docket No. 96-45






AAD 95-72
CC Docket No. 96-45










AAD 95-139
CC Docket No. 96-45


AAD 95-139
CC Docket No. 96-45




CC Docket No. 96-45












AAD 96-70
CC Docket No. 96-45




CC Docket No. 96-45





AAD 96-70
CC Docket No. 96-45


AAD 93-20
CC Docket No. 96-45


AAD 95-62
CC Docket No. 96-45


AAD 95-139
CC Docket No. 96-45


AAD 94-108
CC Docket No. 96-45


AAD 95-82
CC Docket No. 96-45


AAD 96-52
CC Docket No. 96-45


AAD 94-111
CC Docket No. 96-45




CC Docket No. 96-45







AAD 95-124
CC Docket No. 96-45



AAD 94-95
CC Docket No. 96-45



                             ORDER

   Adopted:  August 3, 2000             Released:  August 4, 2000

By the Deputy Chief, Common Carrier Bureau:

                      I.introduction
1.     In this Order, we grant the requests of the above-captioned telephone companies (collectively,
petitioners) for the removal of all remaining individual caps on high-cost loop support imposed in the past
as part of the grant of study area waivers.  We remove these caps effective January 1, 2000. We deny
petitioners' requests to remove individual caps on high-cost loop support prior to January 1, 2000.  This
action is consistent with the Common Carrier Bureau's (Bureau's) September 9, 1999 Order lifting nine
individual caps on high-cost loop support. 
                       II.BACKGROUND
                A.Commission Precedent
3.     A study area is a geographic portion 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, incumbent LECs operating in more than one state typically have one study area for
each state, and incumbent LECs operating in a single state typically have a single study area.  Study area
boundaries are important because incumbent LECs perform jurisdictional separations, determine high-cost
loop support, and generally tariff their rates at the study area level.  
4.     Effective November 15, 1984, the Commission froze all study area boundaries.   An
incumbent LEC must apply to the Commission for a waiver of the frozen study area rule if it wishes to sell
or purchase an exchange and if that transaction would change the study area boundaries of either the seller
or the buyer.  The purpose of the freeze was to ensure that any Commission policies developed in reliance
on the number and size of existing study areas were not significantly undercut by study area boundary
changes.  For instance, high-cost loop support is based on the level of study-area-wide average loop costs,
in effect requiring low-cost regions within a study area to support high-cost regions within that study area. 
The study area freeze was implemented, in part, to help ensure that incumbent LECs did not undermine this
decision by setting up high-cost exchanges as separate study areas within their existing service territories to
increase interstate cost allocations, and therefore their high-cost loop support.  
5.     Consistent with the reasons for the 1984 study area freeze described above, the Commission
has been concerned about the potential adverse impact of study area waivers on the high-cost loop support
mechanism.  When a low average-cost carrier sells a high-cost exchange, the acquiring carrier could
substantially increase its high-cost loop support by including the new exchange in its study area, without
any reduction in the low-cost carrier's support.  This concern was heightened in the early 1990's when
large, low-cost, incumbent LECs began to sell substantial numbers of high-cost exchanges to smaller,
mostly rural, incumbent LECs.  In the absence of individual caps on high-cost loop support, the Bureau
found that, even in a period of a few years, payments from the high-cost loop support mechanism for some
incumbent LECs rose by unexpected amounts.
6.     Partially in response to these events, the Commission adopted the Joint Board's
recommendation for an overall indexed cap on high-cost loop support.  Moreover, consistent with the
intent of the overall cap on high-cost loop support, the Bureau also began imposing caps on the high-cost
loop support drawn by incumbent LECs acquiring exchanges from other incumbent LECs.  Specifically,
study area waivers were granted subject to the condition that, absent explicit approval from the Bureau, the
high-cost loop support provided to an acquiring carrier's study area could not exceed the amounts specified
in the carrier's waiver petition.  The Bureau also began analyzing the impact of the proposed transaction
on the distribution of high-cost loop support.  These steps were implemented in order to prevent carriers
from:  (1) underestimating the effects the waiver may have on the high-cost loop support mechanism in
order to increase the chances that the waiver would be granted; and (2) then revising the cost figures
upward, once the waiver was granted, thereby substantially increasing their share of the high-cost loop
support from the capped high-cost universal service fund.  
7.     In 1997 and 1998, nine rural carriers submitted requests to the Commission for removal of the
individual caps on their high-cost loop support.  On September 9, 1999, the Bureau removed the
individual caps for those nine companies, effective January 1, 2000, concluding that it was not necessary to
accomplish the policies outlined above or in the public interest to limit, in perpetuity, the petitioners to the
high-cost loop support estimated in their original study area waiver petitions.  The Bureau noted that,
during the period the individual caps on the carriers' high-cost loop support were in place, the caps had
served their purpose by preventing the carriers from underestimating the effect the transfer of exchanges
would have on the high-cost loop support mechanism immediately following the transfer.  The Bureau
also concluded that lifting the caps on those petitioners' high-cost loop support may increase their incentive
and ability to extend service to previously unserved areas and upgrade their networks.  The Bureau,
therefore, concluded that individual caps placed on those petitioners' high-cost loop support imposed as
part of the grant of study area waivers should be removed, effective January 1, 2000.
          A.   Petitions
8.     In October and November 1999, 40 additional rural carriers filed 27 separate petitions
requesting the same relief that the nine rural companies received in the September 9, 1999 Order, and
asking for removal of their individual high-cost loop support caps effective January 1, 2000.  Several
petitioners also suggest that the Commission, on it own motion, should remove all remaining individual
caps on high-cost loop support imposed as part of the Bureau's approval of study area waivers.  On
January 24, 2000, the Bureau released a public notice soliciting comments on the petitioners' requests. 
Several parties filed comments in support of the petitioners' requests.  
9.     Interstate, its co-petitioners, and the Western Telephone Company (Western) also have
requested the removal of the individual caps on their high-cost loop support, effective January 1, 1998.  In
addition, Vermont Telephone Company, Inc. (Vtel), has requested that the Commission provide it with
increased high-cost loop support for 1999.  JSI supports Vtel's request. 
                       X.discussion
11.    Consistent with the September 9, 1999 Order, we remove the individual caps on petitioners'
high-cost loop support imposed as part of the Bureau's grant of study area waivers.  We agree with
petitioners that limiting the petitioners to the high-cost loop support estimated in their original study area
waiver petitions, in perpetuity, is not necessary to accomplish the policies outlined above.  We note that
the caps imposed on petitioners' high-cost loop support have been in effect for over three years.   In that
time, the individual caps placed on the carriers' high-cost loop support have served their purpose by
preventing the carriers from underestimating the effect the transfer of exchanges would have on the high-
cost loop support mechanism immediately following the transfer.  We concur with petitioners that their cost
estimates for upgrading the acquired exchanges, although reasonable at that time, may no longer reflect the
costs that they are now incurring.  We, therefore, conclude that limiting the duration of these caps is
appropriate at this time. 
12.    We also grant petitioners' request that we remove the individual caps on high-cost loop
support imposed as part of the grant of study area waivers effective as of January 1, 2000.  Our decision to
remove the caps effective January 1, 2000 will ensure that the petitioners are treated the same as the
carriers that had their individual caps removed in the September 9, 1999 Order.  In the September 9, 1999
Order, the Bureau removed individual high-cost loop support caps effective January 1, 2000.
13.    For the reasons discussed above, we also agree that the individual caps on high-cost loop
support, imposed as a condition of study area waivers, should be removed for all carriers.  There are 15
carriers that currently are subject to high-cost loop support caps and have not filed petitions for removal of
their caps.  Similar to the caps imposed on the petitioners, the individual high-cost loop support caps for
these remaining carriers have been in place for at least three years.  In light of the decision to remove
individual high-cost loop support caps for the petitioners, we expect that these other carriers also may
request the removal of the individual caps on their high-cost loop support.  We note that the petitions filed
thus far present substantially similar facts and requested relief and we would anticipate similar claims from
the remaining affected carriers in the future.  Therefore, on our own motion, we remove all remaining
individual caps on high-cost loop support imposed as part of the grant of study area waivers, effective as of
January 1, 2000.
14.    Consistent with the Bureau's decision in the September 9, 1999 Order to remove individual
caps on high-cost loop support effective January 1, 2000, we deny the request of Interstate, its co-
petitioners, and Western to remove their individual caps for calendar years 1998 and 1999.  In the
September 9, 1999 Order, the Bureau removed the petitioners' individual caps on high-cost loop support
effective January 1, 2000 and refused to remove the petitioners' individual caps on high-cost loop support
for prior periods.  Likewise, in this Order, we remove, effective January 1, 2000, all remaining individual
caps on high-cost loop support associated with the grant of study area waivers.  We recognize that high-
cost loop support directed to average schedule companies is based on an average schedule formula, rather
than reported costs; however, we do not agree with Interstate, its co-petitioners, and Western that we
should remove their individual high-cost loop support caps, effective January 1, 1998, simply because
certain other average schedule companies have been permitted to receive uncapped high-cost loop
support.  We find that the capping of these average schedule companies' high-cost loop support was
appropriate notwithstanding the fact that other average schedule companies received uncapped high-cost
loop support.  For example, we believe that the cap on Interstate's high-cost loop support served its
purpose by preventing high-cost loop support to increase by unexpected amounts immediately following the
approval of Interstate's study area waiver.  In its original petition for a study area waiver, Interstate stated
that it would receive no high-cost loop support subsequent to the approval of the study area waiver.  The
Bureau relied upon Interstate's claim and granted the waiver, in part, because there would be no adverse
impact on the universal service fund.  We emphasize that the Bureau set Interstate's high-cost loop
support cap at zero based on Interstate's own estimate.  We note, however, that in 1998 and 1999 Interstate
would have received approximately $326,651 and $336,177, respectively, in high-cost loop support had
individual caps on its high-cost loop support not been in place.  Therefore, if the Bureau had not imposed
a cap on Interstate's high-cost loop support, support levels would have increased to unexpected amounts.
15.    We also note that Interstate, its co-petitioners, and Western have not presented any evidence
that they have been significantly disadvantaged (financially or otherwise) by the Commission's imposition
of caps on their high-cost loop support in 1998 and 1999.  We do agree with Interstate, its-co-petitioners,
and Western that the Commission typically treats similarly situated parties alike.  Consistent with this
policy, we believe that granting Interstate, its co-petitioners, and Western uncapped high-cost loop support
for 1998 and 1999 would grant them an unfair advantage over all carriers that also were subject to caps on
their high-cost loop support during this period.  We, therefore, do not believe that granting Interstate, its
co-petitioners, and Western the additional relief for 1998 and 1999 would be in the public interest.
16.    We also reject Vtel's request for increased high-cost loop support for 1999.  We do not agree
with Vtel that it should receive increased high-cost loop support for 1999 because "initial estimates have
proven inaccurate."  It was Vtel and its co-petitioners that provided the Bureau with an estimate of their
high-cost loop support when they sought a study area waiver.  The Bureau traditionally has relied upon
such estimates in granting study area waivers.  As the Bureau stated in the order granting a study area
waiver to Vtel and its co-petitioners, the very reason for imposing individual caps on high-cost loop support
was because high-cost loop support estimates may later prove inaccurate and result in unexpected increases
in high-cost loop support payments.  Therefore, it was incumbent on Vtel and its co-petitioners to conduct
due diligence and investigation in order to accurately estimate their high-cost loop support needs prior to
acquiring the exchanges.  We, therefore, deny Vtel's request for increased support for 1999.
17.    For the reasons stated above, we grant the petitioners' requests to lift the individual caps
placed on their high-cost loop support imposed as part of the grant of study area waivers, effective from
January 1, 2000.  We also grant the petitioners' request that we remove all remaining individual caps on
high-cost loop support.  We deny the additional relief requested by Interstate and its co-petitioners,
Western, and Vtel.
                  XVIII.ordering clauses
19.    Accordingly, IT IS ORDERED, pursuant to sections 4, 5, 201, 202, 219-220, and 254 of the
Communications Act of 1934, as amended, 47 U.S.C.  154, 155, 201, 202, 219-220, 254, 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 petitioners'
requests for removal of individual caps on high-cost loop support imposed as part of the grant of study area
waivers ARE GRANTED, as described herein. 
20.    IT IS FURTHER ORDERED, pursuant to sections 4, 5, 201, 202, 219-220, and 254 of the
Communications Act of 1934, as amended, 47 U.S.C.  154, 155, 201, 202, 219-220, 254, 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 all remaining
individual caps on high-cost loop support imposed as part of the grant of study area waivers ARE
HEREBY REMOVED, as described herein.  
21.    IT IS FURTHER ORDERED, pursuant to sections 4, 5, 201, 202, 219-220, and 254 of the
Communications Act of 1934, as amended, 47 U.S.C.  154, 155, 201, 202, 219-220, 254, 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 requests of
Interstate Telecommunications Cooperative, Inc., its co-petitioners, and Western Telephone Company for
uncapped high-cost loop support for 1998 and 1999 ARE DENIED.
22.    IT IS FURTHER ORDERED, pursuant to sections 4, 5, 201, 202, 219-220, and 254 of the
Communications Act of 1934, as amended, 47 U.S.C.  154, 155, 201, 202, 219-220, 254, 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 request of
Vermont Telephone Company, Inc. for increased high-cost loop support for 1999 IS DENIED.

                              FEDERAL COMMUNICATIONS COMMISSION

                              
                              Carol E. Mattey, Deputy Chief
                              Common Carrier Bureau
                           APPENDIX 1
                                
                       List of Petitions

Accent Communications, Inc., Armour Independent Telephone Company, Bridgewater-Canistota Independent
Telephone Company, James Valley Cooperative Telephone Company, RC Communications, Inc., Roberts
County Telephone Cooperative Association, Request to Remove Universal Service Caps, CC Docket No. 96-
45 (October 25, 1999) (Accent Petition)

Accipiter Communications, Inc., Request for Removal of Waiver Condition Consistent with Commission
Policy, AAD 96-35, CC Docket No. 96-45 (November 3, 1999) (Accipiter Petition) 

Alenco Communications, Inc., Request for Removal of Waiver Condition Consistent with Commission Policy,
AAD 95-139, CC Docket No. 96-45 (October 15, 1999) (Alenco Petition)

Alpine Communications, L.C., Arapahoe Telephone Company, Great Plains Communications, Inc., Kennebec
Telephone Company, Inc., The Nebraska Central Telephone Company, and Western Telephone Company,
Request to Remove Universal Service Caps, CC Docket No. 96-45 (October 25, 1999) (Alpine Petition)

Brazos Telecommunications, Inc. and Brazos Telephone Cooperative, Inc., Request for Removal of Waiver
Condition Consistent with Commission Policy, AAD 94-112, CC Docket No. 96-45, (November 5, 1999)
(Brazos Petition)

Cap Rock Telephone Cooperative, Inc., Request for Removal of Waiver Condition Consistent with
Commission Policy, AAD 95-139, CC Docket No. 96-45 (October 22, 1999) (Cap Rock Petition)

Cass County Telephone Company, Request for Removal of Waiver Condition Consistent with Commission
Policy, AAD 95-62, CC Docket No. 96-45 (November 22, 1999) (Cass Petition)

Central Texas Telephone Cooperative, Inc., Request for Removal of Waiver Condition Consistent with
Commission Policy, AAD 95-139, CC Docket No. 96-45 (October 12, 1999) (Central Texas Petition)

Columbine Telephone Company, Inc. and Silver Star Telephone Company, Inc., Request to Remove Universal
Service Caps, CC Docket No. 96-45 (October 22, 1999) (Columbine Petition)

Dickey Rural Telephone Cooperative, Dickey Rural Communications, Inc., Gilby Telephone Company,
Griggs County Telephone Company, Moore & Liberty Telephone Company, North Dakota Telephone
Company, Northwest Communications Cooperative, Red River Telecom, Inc., Turtle Mountain
Communications, Inc., United Telephone Mutual Aid Cooperative, and York Telephone Company, Request
for Removal of Waiver Condition Consistent with Commission Policy, AAD 95-72, CC Docket No. 96-45
(November 5, 1999) (Gilby Petition)

Ganado Telephone Co., Inc., Request for Removal of Waiver Condition Consistent with Commission Policy,
AAD 95-139, CC Docket No. 96-45, (October 26, 1999) (Ganado Petition)

Guadalupe Valley Telephone Cooperative, Inc., Request for Removal of Waiver Condition Consistent with
Commission Policy, AAD 95-139, CC Docket No. 96-45 (October 7, 1999) (Guadalupe Petition)

Interstate Telecommunications Cooperative, Inc. and Interstate Telephone Company, Inc., Hanson
Communications, Inc., Fort Randall Telephone Company, and Mt. Rushmore Telephone Company, Midstate
Telephone Company and Heartland Communications, Inc., Mobridge Telecommunications Company, Hanson
County Telephone, Inc. and Hanson Communications, Inc. dba McCook Telecom, Splitrock Telecom
Cooperative, Inc. and Splitrock Properties, Inc., Petition for Removal of Individual Caps on High Cost Loop
Support, CC Docket No. 96-45 (November 17, 1999) (Interstate Petition)

Lincolnville Telephone Company and Tidewater Telecom, Inc., Request for Removal of Waiver Condition
Consistent with Commission Policy, AAD 96-70, CC Docket No. 96-45 (November 2, 1999) (Lincolnville
Petition)

Maine Telephone Company, Northland Telephone Company of Maine, Inc., Sidney Telephone Company, and
Standish Telephone Company, Request to Remove Universal Service Caps, CC Docket No. 96-45 (October
28, 1999) (Maine Telephone Petition)

Mid-Maine Telecom, Inc., Request for Removal of Waiver Condition Consistent with Commission Policy,
AAD 96-70, CC Docket No. 96-45 (October 8, 1999) (Mid-Maine Petition)

Oregon-Idaho Utilities, Inc., Request for Removal of Waiver Condition Consistent with Commission Policy,
AAD 93-20, CC Docket No. 96-45 (October 7, 1999) (Oregon-Idaho Petition)

Ozark Telephone Company, Request for Removal of Waiver Condition Consistent with Commission Policy,
AAD 95-62, CC Docket No. 96-45 (November 1, 1999) (Ozark Petition)

Peoples Telephone Cooperative, Inc., Request for Removal of Waiver Condition Consistent with Commission
Policy, AAD 95-139, CC Docket No. 96-45 (October 26, 1999) (Peoples Petition) 

Pioneer Telephone Cooperative, Inc., Request for Removal of Waiver Condition Consistent with Commission
Policy, AAD 94-108, CC Docket No. 96-45 (November 5, 1999) (Pioneer Petition) 

Roosevelt County Rural Telephone Cooperative, Inc., Request for Removal of Waiver Condition Consistent
with Commission Policy, AAD 95-82, CC Docket No. 96-45 (November 1, 1999) (Roosevelt Petition) 

San Carlos Apache Telecommunications Utility, Inc., Request for Removal of Waiver Condition Consistent
with Commission Policy, AAD 96-52, CC Docket No. 96-45 (October 20, 1999) (San Carlos Petition) 

Santa Rosa Telephone Cooperative, Inc., Request for Removal of Waiver Condition Consistent with
Commission Policy, AAD 94-111, CC Docket No. 96-45 (November 5, 1999) (Santa Rosa Petition) 

Sunflower Telephone Company, Inc. and Bluestem Telephone Company, S&T Telephone Cooperative
Association, Inc. and S&T Communications of Dighton, Inc., Golden Belt Telephone Association, Inc.,
Northeast Missouri Rural Telephone Company and Modern Telecommunications Company, Petition for
Removal of Individual Caps on High Cost Loop Support, CC Docket No. 96-45 (November 4, 1999)
(Sunflower Petition) 

West River Cooperative Telephone Company and State Line Telecommunications, Inc., Request for Removal
of Waiver Condition Consistent with Commission Policy, AAD 95-124, CC Docket No. 96-45 (November 12,
1999) (West River Petition) 

Winnebago Cooperative Telephone Association, Request for Removal of Waiver Condition Consistent with
Commission Policy, AAD 94-95, CC Docket No. 96-45 (October 25, 1999) (Winnebago Petition)