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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 97-27 ) Guam Telephone Authority ) ) Petition for Declaratory Ruling ) REPORT AND ORDER Adopted: March 20, 1997 Released: March 21, 1997 By the Chief, Accounting and Audits Division Common Carrier Bureau: I. INTRODUCTION 1. On January 16, 1997, Guam Telephone Authority ("GTA") requested that the Commission issue a declaratory ruling allowing the establishment of a study area encompassing the Territory of Guam ("Petition"). In the alternative, GTA requested a waiver of the definition of "Study Area" contained in Part 36 Appendix-Glossary of the Commission's rules, a definition that freezes the geographic boundaries of all study areas. 2. On February 3, 1997, the Common Carrier Bureau ("Bureau") released a Public Notice soliciting comments on GTA's Petition. Comments were filed by Guam Cable Telecommunications, Inc. ("Guam Cablecom") and the National Telephone Cooperative Association ("NTCA"). Reply comments were filed by GTA. In this Order, we find that creation of a study area for the Territory of Guam would serve the public interest. We therefore grant GTA's Petition. 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 area within a state. Thus, ILECs operating in more than one state typically have one study area for each state. 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. In evaluating petitions seeking a study area waiver, the Commission employs a three-pronged standard: first, the change in study area boundaries must not adversely affect the Universal Service Fund ("USF"); second, the state commission(s) having regulatory authority over the exchange(s) to be transferred must not object to the change; and third, the public interest must support such a change. 4. GTA is a self-governed agency of the Government of Guam providing exchange and exchange access service in the Territory of Guam. GTA was authorized in 1973 to take over the telephone facilities of the U.S. Navy, which had provided telephone service on Guam since the end of World War II. GTA did not consider itself to be subject to the Communications Act of 1934 and therefore failed to file exchange access tariffs with the Commission. In addition, because no study area included the Territory of Guam when the Commission froze the study area boundaries, Guam was not included within the "frozen" study areas. 5. In 1990, a Guam-based interexchange carrier petitioned the Commission to require GTA to file an interstate access tariff and to convert its existing equipment to offer equal access. The Commission held in 1992 that the Territory of Guam and GTA were subject to the Communications Act of 1934 and required GTA to show cause why it should not be required to file interstate and foreign exchange access service tariffs with the Commission. GTA subsequently filed an Integrated Compliance Plan under which it proposed to convert to cost- based federal interstate access tariffs over a four-year period. GTA intends to participate in the NECA tariffs that will become effective on July 1, 1997. III. THE PETITION 6. GTA states that establishment of the Territory of Guam as a study area is an administrative step that is necessary for GTA to become a fully compliant domestic local exchange carrier. In particular, GTA states that such a designation is required for GTA to perform the cost studies needed to file tariffs and urges the Commission to respond expeditiously so that GTA can file an access tariff that will be effective on July 1, 1997. 7. GTA supports its waiver request with an Order from the Public Utilities Commission Territory of Guam ("Guam PUC") stating that the Guam PUC has no objection to the establishment of Guam as a study area. GTA states that there will be no adverse impact on the USF as a result of establishing Guam as a study area. GTA represents that its annual cost per line is $266.15, as compared to the national average cost per line of $248.40. GTA therefore states that it will not be eligible for high cost assistance because its average cost per line does not exceed 115% of the national average cost per line. Finally, GTA requests that the Commission assign a "COSA" code for the Territory of Guam study area. IV. COMMENTS 8. NTCA supports GTA's petition because it would enable GTA to file access charge tariffs in accordance with the Commission's requirements. NTCA states that GTA's participation in the NECA tariffs will benefit the public and GTA consumers by allowing GTA to realize the benefits of efficiencies implicit in the NECA pools. NTCA also urges the Commission to declare that GTA's request for a study area waiver is unnecessary because the Commission does not require a waiver when a separately incorporated company creates a study area for previously unserved territory. NTCA argues that because Guam has never been included in a study area, it is tantamount to previously unserved territory. 9. Guam Cablecom asserts that Guam is not, and should not be declared, a study area because competition would be impaired. Contending that GTA's Petition stems in part from Guam Cablecom's attempts to negotiate with GTA for interconnection with and resale of GTA's telephone services, Guam Cablecom also asserts the following: (1) GTA is a financially thriving entity reaping monopoly profits from its monopoly position and the people of Guam need and deserve the benefits of local exchange competition; (2) the Congressional intent of the 1996 Act was to construe exemptions from competition narrowly to protect consumers in areas that cannot support multiple carriers, not to protect carriers per se; (3) GTA is an incumbent local exchange carrier ("ILEC"); and (4) GTA is subject to the Telecommunications Act of 1996. 10. In its Reply, GTA states that its request for a waiver does not relate to the activities of Guam Cablecom, but stems instead from the need for GTA to file access tariffs. Noting that Guam Cablecom's comments are irrelevant to the issues raised by the instant request for a study area, GTA requests that the Commission refer these issues for proper consideration to the proceeding instituted by the Guam PUC's Petition for a Declaratory Ruling. GTA urges that the Commission not condone this effort to prevent GTA from coming into compliance with the Commission's requirements. V. DISCUSSION 11. The Common Carrier Bureau clarified on July 16, 1996, that a separately incorporated company may create a study area for a previously unserved territory without requesting a waiver. We find that as a territory that has been served by GTA since 1973, Guam does not fall within this exception from our waiver requirements. 12. GTA proposes to participate in the NECA tariffs as a cost company. GTA's interstate costs provide the basis for rate development information provided to NECA and for defining settlement amounts it will receive from NECA. To participate in the NECA tariff process as a cost company, GTA must apply the Commission's jurisdictional separations rules to determine its interstate costs. These rules require a carrier to separate its costs between the state and interstate jurisdictions by study area. Therefore, we find it necessary to establish a study area for GTA's service territory in Guam so that it may participate in interstate access tariffs. 13. The study area freeze was adopted to prevent companies from disaggregating and recombining study areas, and portions thereof, to increase interstate revenue requirements, and compensation, through the manipulation of study area boundaries. We conclude, based on the record before us, that authorizing a new study area that merely encompasses GTA's existing service area will not compromise the Commission's reasons for freezing the study area boundaries. We also find that our three-pronged standard for study area waivers has been met in the following ways: first, there will be no adverse impact on the USF because, as GTA claims, it will not be eligible for high cost assistance; second, the Guam PUC does not object to creation of the study area; and third, the public interest supports creation of the study area because the geographical designation is necessary for compliance with the Commission's rules. We therefore authorize a new study area coterminous with the geographic boundaries encompassing the Territory of Guam. We also assign COSA code "GUMI" for the purpose of GTA's ARMIS, Form 492A, and Tariff Review Plan filings. 14. Guam Cablecom argues that grant of a study area waiver would be anti- competitive. It fails, however, to provide any support for this allegation. Guam Cablecom raises additional issues that are beyond the scope of this proceeding. We will address these issues in the Guam PUC Proceeding. VI. ORDERING CLAUSES 15. 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 Request for Declaratory Ruling of the Guam Telephone Authority to authorize the establishment of a study area encompassing the Territory of Guam IS GRANTED. 16. 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 and 0.291 of the Commission's rules, 47 C.F.R. 0.91 and 0.291 that GTA SHALL USE COSA Code "GUMI" in its filings with this Commission. FEDERAL COMMUNICATIONS COMMISSION Kenneth P. Moran Chief, Accounting and Audits Division Common Carrier | |
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