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INTRODUCTION Đ\  X4 e 1. ` ` On September 11, 1996, Wilderness Valley Telephone Company, Inc. ("Wilderness  xValley") filed a petition ("Petition") requesting a waiver of Sections 69.605(c) and 69.3(e)(11)  xof the Commission's rules to enable it to convert from cost study settlements to average schedule  x&settlements and to participate in the National Exchange Carrier Association's ("NECA's") average  xschedule settlements as of the time it commences local exchange and exchange access service in  X04 xOctober, 1996.0K yO'ԍWilderness Valley Telephone Company, Inc., Petition for Waiver, AAD 9699 (Sept. 11, 1996). On September 30, 1996, the Common Carrier Bureau ("Bureau") released a  X4 xpublic notice soliciting comment on the petition for waiver.XK yO"' " ԍWilderness Valley Telephone Company, Inc., Petition for Waiver of Sections 69.605(c) and 69.3(e)(11) of  {O'the Commission's Rules, Public Notice, DA 961635 (Com. Car. Bur. Sept. 30, 1996). No comments were filed. In this Order, we grant in part and dismiss in part Wilderness Valley's Petition.  X'  X':FII. BACKGROUND Đ\  X4 e 2. ` ` Incumbent local exchange carriers ("Incumbent LECs") that participate in the  xNECA pool collect interexchange access charges at the rates contained in the access tariff filed  xby NECA. In the settlement process, each pool participant receives revenues from the pool to  Xa 4 xycover its cost of providing service plus a pro rata share of the pool's earnings.ca K {O&'ԍSee generally 47 C.F.R.  69.601612.c NECA pool  x3participants' costs are determined either on the basis of cost studies or average schedule formulas. "L!D,**qq"  xAlthough less exact than cost studies, the average schedule procedure provides the advantage of  X4reducing the costs imposed on incumbent LECs and borne, in part, by interstate ratepayers.](d yOb' " ԍAlthough the Commission allowed small carriers to maintain their average schedule status, it was not a  x requirement. According to the Commission, "any exchange carrier that believes the average schedules do not provide  x appropriate compensation, however, is entitled to be compensated on a cost basis." MTS and WATS Market  {O' x Structure: Average Schedule Companies, Memorandum Opinion and Order, 2 FCC Rcd 834 (1986) (MTS and WATS  {O'Order).]  X4 e 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  X_4 !deemed to be an average schedule company."J_|(d yO 'ԍ47 C.F.R.  69.605(c).J 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 costbased 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  X 4 !"rates."i (d {O'ԍ MTS and WATS Order, 2 FCC Rcd at 835.i Although average schedule companies may elect, at any time, to convert to coststudy  !_status, the average schedule definition precludes cost companies from converting to average  X 4 !Vschedule status absent a waiver of section 69.605(c).B (d yO ' x ԍIn 1987 , the Commission granted a request by NECA to allow cost companies serving fewer than 5,000 lines  !Z to make a onetime election of average schedule status. NECA's Proposed Waiver of Section 69.605(c) of the  {O' ! Commission's Rules, Memorandum Opinion and Order, 2 FCC Rcd 3960 (1987). In accepting NECA's argument  ! that changed circumstances warranted a onetime opportunity for small exchange companies to elect average schedule  ! status, the Commission allowed cost companies serving fewer than 5,000 lines to elect average schedule treatment  ! during a period lasting approximately 30 days and ending on August 1, 1987. After that date, cost companies were  !. again barred from converting to average schedule status, absent grant of a request to waive Section 69.605(c) of the rules. 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  Xy4to warrant a special exception. hh]   XK'j III. PETITION Đ X44c  X4 ( 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  X4 !having to perform cost studies.Y(d yOH&'ԍPetition at 45.  Y In its petit  ion, Wilderness Valley represents that it is a newly xNformed entity seeking to provide telephone service to an area in Minnesota that has been"8,7)7)qq:"  X4 !_unserved.@ (d {Oy'ԍId.@ The area consists of 83 buildings, of which 10 are yearround farm or residential  X4 !dwellings and the remaining 73 are seasonal recreational structures.@ Z(d {O'ԍId. at 2.@ Wilderness Valley initially will serve between 32 and 75 access lines.  X4 ( 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  Xv4 !"provider.": v(d {O 'ԍId.: 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  XH4area.t XH~(d yOw' x< ԍUS West, GTE, and the People's Telephone Company were notified of Wilderness Valley's plans to serve  ! the area. None of these companies expressed interest in serving the area and none objected to Wilderness Valley's application for authorization from the Minnesota Public Utility Commission.t  X1'dIV. DISCUSSION Ã  X '  A. Waiver of Section 69.605(c)  X 4 ( 6. ` `   Under Section 1.3 of our rules, we are required to grant waivers "if good cause  X 4 !therefor is shown."D (d yO'ԍ47 C.F.R.  1.3.D As interpreted by the courts, this requires that a petitioner demonstrate that  !p"special circumstances warrant a deviation from the general rule and such a deviation will serve  X4 !y the public interest.". (d {Op' xy ԍNortheast Cellular Tel. Co. v. FCC, 897 F.2d 1164, 1166 (D.C. Cir. 1990); WAIT Radio v. FCC, 418 F.2d  yO:'1153, 1159 (D.C. Cir. 1969); 47 C.F.R.  1.3. According to the courts, special circumstances include demonstration of  Xz4individualized hardship or inequity.:z (d {O'ԍId.:  XL4 ( O7.` ` 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.  X}' "},7)7)qq"Ԍ X'B. Waiver of Section 69.3(e)(11) hh]  X4 ( 8.` `  Wilderness Valley also seeks a waiver of Section 69.3(e)(11) of the  !lCommission's rules requiring that any changes in NECA common line tariff participation and  xLong Term Support resulting from a merger or acquisition of telephone properties become  X4 x[effective on the next annual access tariff filing date following the merger or acquisition.rx(d yO' x ԍUntil January 1, 1998, Long Term Support (LTS) provided carriers participating in the NECA Common Line  !^ Pool support to prevent their carrier common line charge from rising significantly above the national average due  ! to the exit from the pool by large, lower-cost incumbent LECs. The incumbent LECs that left the pool contributed  ! in order that the remaining pool participants' revenue requirement would equal the revenue from the pool. After  !* January 1, 1998, LTS was removed from the access charge system. Recipients of LTS receive amounts based on  !^ 1997 LTS amounts adjusted in 1998 and 1999 by the percentage change in the national average cost per loop and thereafter by an inflation factor. 47 C.F.R.  54.303.r  xWilderness Valley is a newlyformed entity authorized to serve previously unassigned and  x~unserved territory. No merger or acquisition of telephone properties is involved in this  xproceeding. Section 69.3(e)(11), therefore, is inapplicable, and thus, we dismiss Wilderness Valley's petition.  X '  X ''LV. ORDERING CLAUSE Đ\  X 49.` ` Accordingly, IT IS ORDERED, pursuant to Sections 1, 4(i), 5(c), 201, 202, 205, and 218220, of the Communications Act of 1934, as amended, 47 U.S.C.  151, 154(i), 155(c), 201, 202, 205, and 218220, 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.  X5410.` ` IT IS FURTHER ORDERED, pursuant to Sections 1, 4(i), 5(c), 201, 202, 205, and 218220, of the Communications Act of 1934, as amended, 47 U.S.C.  151, 154(i), 155(c), 201, 202, 205, and 218220, 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.   X469.3(e)(11) IS DISMISSED.hhC ` `  hhC ` `  hhCFEDERAL COMMUNICATIONS COMMISSION ` `  hhCKenneth P. Moran ` `  hhCChief, Accounting and Audits Division