Skip Navigation

Federal Communications Commission

English Display Options

Commission Document

Windy City Cellular, LLC Interim USF Relief Order

Download Options

Released: June 12, 2012

Federal Communications Commission

DA 12-923

Before the

Federal Communications Commission

Washington, D.C. 20554

In the Matter of
)
)

Connect America Fund
)
WC Docket No. 10-90
)
Universal Service Reform – Mobility Fund
)
WT Docket No. 10-208
)
Petition for Waiver of Windy City Cellular, LLC
)
)
)

ORDER

Adopted: June 12, 2012

Released: June 12, 2012

By the Chief, Wireless Telecommunications Bureau:
1.
By this Order, the Wireless Telecommunications Bureau (Bureau) approves limited,
interim relief from Section 54.307(e) of the Commission’s rules to provide additional high-cost universal
service support to Windy City Cellular, LLC (WCC).1 As discussed below, the record on the petition is
not yet closed, and this petition is related to a later one filed by WCC’s parent company, incumbent local
exchange carrier Adak Eagle Enterprises (AEE).2 We grant this limited, interim relief to support the
status quo for wireless service in WCC’s service area during the pendency of our review.
I.
Background
2.
In the USF-ICC Transformation Order, the Commission adopted comprehensive reforms
to modernize the universal service system.3 Among other things, the Order eliminated the identical


1 Petition for Waiver of Windy City Cellular, LLC, WC Docket No. 10-90 et al. (filed Apr. 3, 2012) (WCC Petition
or Petition). WCC made subsequent filings on April 6, April 9, April 12, May 4, May 17, May 21, May 24, and
June 10. See Notice of Ex Parte, WC Docket No. 10-90 et al. (filed Apr. 6, 2012); Notice of Ex Parte, WC Docket
No. 10-90 et al. (filed Apr. 9, 2012); Response to Request for Additional Information and Supplement, WC Docket
No. 10-90 et al. (filed Apr. 12, 2012) (WCC April 12 Response and Supplement); Notice of Ex Parte and
Supplement, WC Docket No. 10-90 et al. (filed May 4, 2012) (WCC May 4 Supplement); Notice of Ex Parte, WC
Docket No. 10-90 et al. (filed May 17, 2012); Notice of Ex Parte in WC Docket No. 10-90 et al. (filed May 21,
2012) (WCC May 21 Ex Parte); Reply Comments of Windy City Cellular, LLC, WC Docket No. 10-90 et al. (filed
May 24, 2012); Notice of Ex Parte in WC Docket No. 10-90 et al. (filed June 10, 2012) (WCC June 10 Ex Parte).
2 WCC’s parent company, AEE, filed its own petition for waiver on May 9, 2012. That petition was rescinded and
refiled on May 22, 2012 (AEE Petition). The refiled petition was put out for Public Notice on May 31, 2012. See
Wireline Competition Bureau Seeks Comment on Adak Eagle Enterprises, LLC d/b/a Adak Telephone Utility
Petition for Waiver of Certain High Cost Universal Service Rules
, Public Notice, DA 12-865 (May 31, 2012)
(seeking comments by July 2, 2012 and reply comments by July 16, 2012). See also discussion infra at ¶ 11.
3 See Connect America Fund, WC Docket No. 10-90 et al., Report and Order and Further Notice of Proposed
Rulemaking, 26 FCC Rcd 17663 (2011) (USF-ICC Transformation Order or Order); pets. for review pending sub
nom. In re: FCC 11-161
, No. 11-9900 (10th Cir. filed Dec. 8, 2011); Connect America Fund, WC Docket No. 10-90
(continued....)

Federal Communications Commission

DA12-923

support rule, which had provided support to competitive Eligible Telecommunications Carriers (ETCs)
based on the same per-line amount as the incumbent local exchange carrier serving the same area.4 The
Commission found that “[t]he support levels generated by the identical support rule bear no relation to the
efficient cost of providing mobile voice service in a particular geography.”5 Instead, the Commission will
transition support for mobile service over time to a new, comprehensive Connect America Fund (CAF).
3.
The Commission adopted a five-year period to phase down existing competitive ETC
support and transition to the CAF. As part of the phase down, it froze existing support for competitive
ETCs at the 2011 baseline, or $3,000 per line per year, whichever was lower, and implemented a 20
percent annual reduction in support, beginning July 1, 2012, and ending July 1, 2016. The Commission
adopted a slower transition path for competitive ETCs serving remote parts of Alaska, in order to preserve
newly initiated services and facilitate additional investment in still unserved and underserved areas.6
Specifically, the Commission delayed the phase down for competitive ETCs serving remote parts of
Alaska by two years, but implemented a cap to restrict growth of the fund during that time (Remote
Alaska Cap or Cap).7 As part of the Cap, support to competitive ETCs serving remote parts of Alaska
was limited to $3,000 per line per year (equivalent to $250 per line per month) beginning January 1,
2012.8
4.
The Commission also provided guidance on how “any carrier negatively affected by the
universal service reforms … [could] file a petition for waiver that clearly demonstrates that good cause
exists for exempting the carrier from some or all of those reforms, and that waiver is necessary and in the
public interest to ensure that consumers in the area continue to receive voice service.”9 The Commission
stated that it did not “expect to grant waiver requests routinely,” and cautioned petitioners that any
requests would be subject to a “rigorous, thorough, and searching review comparable to a total company
earnings review.”10 The Commission provided guidance on the types of information that would be
relevant for such waiver requests and delegated authority to the Bureau and the Wireline Competition
Bureau (WCB) to rule on all such requests.11 The Commission directed the Bureaus to prioritize review
of any applications for waiver filed by providers serving Tribal lands and insular areas – such as WCC –
and to complete their review of petitions from providers serving Tribal lands and insular areas within 45
days of the record closing on such petitions.12


(...continued from previous page)
et al., Order on Reconsideration, 26 FCC Rcd 17633 (2011); Connect America Fund, WC Docket No. 10-90 et al.,
Second Order on Reconsideration, FCC 12-47 (rel. Apr. 25, 2012); Connect America Fund, WC Docket No. 10-90
et al., Third Order on Reconsideration, FCC 12-47 (rel. May 14, 2012).
4 USF-ICC Transformation Order at ¶ 164.
5 Id. at ¶ 504.
6 Id. at ¶ 529.
7 Id.
8 Id. See also n. 880, 47 C.F.R. § 54.307(e)(v). Where necessary, a reduction factor is applied to ensure that the
total level of support does not exceed the Remote Alaska Cap. Id. The Universal Service Administrative Company
(USAC) calculated a roughly 7.5% reduction factor for third quarter 2012. See
http://usac.org/about/tools/fcc/filings/2012/q3.aspx. The projection for fourth quarter 2012 is not yet available, but
is not likely to exceed 10%.

9 USF-ICC Transformation Order at ¶ 539.
10 Id. at ¶ 540.
11Id. at ¶¶ 542 and 544.
12 Id. at ¶ 544.
2

Federal Communications Commission

DA12-923

5.
On April 3, 2012, WCC filed a petition for waiver of Section 54.307(e) of the
Commission’s rules relating to the cap on interim USF support. WCC provides wired broadband services
and is one of two wireless providers on Adak Island, located near the western tip of the Aleutian Islands,
approximately 1,200 miles southwest of Anchorage. Roughly 330 people live on Adak Island, as well as
a number of seasonal workers and contractors. WCC reports that the area is characterized by extremely
challenging service conditions.13
6.
General Communication, Inc. (GCI), under the brand name Alaska Wireless, also
provides service to Adak Island. GCI claims that it provides wireless service to “all or nearly all of the
inhabited portions of Adak Island.”14 WCC nevertheless claims that it provides service where there is no
other provider, including parts of the Aleutian Wilderness and the Bering Sea.15 Each company has its
own cell tower in the downtown residential area of the island. WCC’s additional coverage arises
primarily because of a new cell tower that WCC erected in January 2012 at White Alice. The Bureau has
requested traffic data for this tower. In projections published by USAC for the first quarter of 2012,
WCC reported 92 lines; GCI reported 134 lines for that same period.16
7.
WCC noted that, as a result of the implementation of the Cap, its monthly USF support
decreased by approximately 84 percent, from $136,344 in December 2011 to $22,356 in January 2012.
WCC therefore sought support of $880.09 per line per month until “the details of Mobility Phase II
funding are confirmed.”17 WCC explained that this level of support was needed to allow WCC “to cover
its operating expenses less its revenues, to maintain the sites it already operates to provide wireless
service to Adak residents, workers, and visitors and to ensure critical services and public safety are not
jeopardized.”18
8.
In a supplemental filing, on May 4, 2012, WCC alternatively requested a full waiver of
the $3,000 cap for two years and, if feasible, applied from January 1, 2012, the date that the reduction in
funding became effective.19 WCC stated that a full waiver may be easier to implement, is consistent with
the Commission’s decision in other USF contexts to adopt a delayed transition plan, and would allow
WCC to continue to provide critical wireless and broadband services.20
9.
The Bureau put WCC’s Petition out for comment on April 12, 2012. Through WCC, a
number of parties filed in support of WCC’s Petition.21 GCI filed comments describing its own coverage
on Adak Island, but neither supporting nor opposing the Petition, provided that any such waiver would
correspondingly increase the Remote Alaska Cap according to section 54.307(e)(3)(v)(A) for the duration


13 WCC Petition at pp. 3-4 (reporting “frequent cyclonic storms, winter squalls producing wind gusts in excess of
100 knots, extensive fog storms in the summer, and an average accumulated snowfall of 100 inches”).
14 Comments of General Communication, Inc. (GCI), WC Docket No. 10-90 et al. (filed May 14, 2012) (GCI
Comments). See also Notice of Ex Parte, WT Docket No. 10-90 et al. (filed June 6, 2012).
15 WCC Petition at pp. 13-16 and Exhibits 2, 5 and 6; WCC May 21 Ex Parte at pp. 3-4 (noting that approximately
10 of its subscribers live in these more remote areas that are not served by GCI).
16 Universal Service Administrative Company, Federal Universal Service Support Mechanisms Fund Size
Projections for the First Quarter 2012
, App. HC19 (filed Nov. 2, 2011).
17 WCC Petition at pp. 25-26.
18 Id. at p. 25.
19 WCC May 4 Supplement.
20 Id. at pp. 2-3.
21 See WCC Petition at Tab A; WCC May 4 Supplement at Attachment A.
3

Federal Communications Commission

DA12-923

of the waiver.22 GCI has not filed for a waiver of the $3,000 per line per year cap for its coverage of
Adak.
II. Discussion
10.
As discussed below, we will provide limited, interim support (Interim Support) pending
further review of the WCC Petition, supplemental filings, and the AEE Petition. Specifically, we will
provide a fixed amount of $40,104 per month, for at least three months and up to six months or until the
Bureau resolves WCC’s Petition, whichever comes first. This amount is intended to cover WCC’s
claimed wireless operating expenses that exceed the sum of its wireless revenues and the USF support
that WCC receives under Section 54.307(e). The Interim Support is in addition to the current support
WCC receives based on the number of lines reported each quarter. Thus, the Interim Support will not
reduce the amount of support available to remote areas in Alaska under the Remote Alaska Cap.
11.
The Bureau finds that this limited relief is appropriate to ensure that WCC can maintain
its wireless operations until we have a full opportunity to evaluate its Petition based on the totality of
relevant information. As described above, WCC provides wireless mobile service to Adak Island, where
it claims to be the sole provider of mobile voice service to certain areas, including parts of the Bering Sea
and the Aleutian Wilderness, where assertedly it is used by those working for a local employer and the
U.S. Fish and Wildlife Service, as well as approximately 10 residents. Based on the costs WCC reports in
its Petition for its wireless operations, support calculated at the per-line rates now in effect will not
provide sufficient cash for WCC to continue to meet those costs. We also note that WCC is a wholly-
owned subsidiary of AEE, the incumbent local exchange carrier in Adak. AEE has also sought waiver of
reductions in USF support, but only filed its request for waiver as of May 21.23 Given the complexity
raised by the interrelationships between WCC and AEE, the Bureau has not had adequate time to review
the AEE Petition and assess the reasonableness of WCC’s claimed operating costs for preserving service
to customers. Therefore, the Bureau needs additional time to compile a full record regarding the nature
and level of WCC’s costs and complete its evaluation of WCC’s Petition.
12.
We emphasize that the Interim Support we approve today does not prejudge the ultimate
disposition of WCC’s Petition. Rather, by this action, we provide Interim Support until the Bureau can
complete its review of WCC’s Petition.24
13.
Amount of Support. The Bureau directs USAC to disburse a fixed amount of $40,104
per month to ensure that WCC can maintain its wireless operations while we complete review of WCC’s
Petition. This amount reflects the wireless portion of WCC’s projected operating expenses that is not
covered by the revenues derived from its wireless business or the subscriber-based USF support it
receives under the current rules (Capped Support). This amount will be paid on an interim basis in
addition to the Capped Support.
14.
In determining this to be the appropriate level of Interim Support, Bureau staff relied on
cost data provided by WCC regarding its operating expenses,25 excluding depreciation26 and costs related


22 GCI Comments at p. 1.
23 See n. 2, supra.
24 Id.
25 WCC April 12 Response and Supplement at Revised Tab 8.
26 Depreciation is excluded because the limited relief granted herein is intended only to offset actual monthly
operational expenses.
4

Federal Communications Commission

DA12-923

to its wireline broadband operations, to estimate annual wireless operating expenses of [REDACTED] 27
for 2012.28 The Bureau then deducted estimated Capped Support of $248,40029 and wireless revenues of
[REDACTED] to estimate a projected annual shortfall of $481,243, or $40,104 per month.
15.
The estimate does not incorporate any evaluation of the reasonableness of WCC’s current
costs, and, in particular, of whether those costs are necessary to preserve service to customers. Bureau
staff is currently in the process of evaluating and verifying the reasonableness of both the nature and level
of WCC’s costs. The Bureau is also examining the allocation of costs between WCC and its parent, AEE,
in coordination with WCB’s review of the AEE Petition. Our determination here is for the limited
purpose of establishing Interim Support and does not reflect any formula we might ultimately use to
determine whether WCC’s Petition should be granted and, if so, what amount of support would be
appropriate.
16.
Term of Support. The Interim Support will be paid on a monthly basis, beginning in June
2012, for a period of at least three months and up to six months or when the Bureau acts on WCC’s
Petition, whichever comes first. The Bureau believes that this limited period of relief will allow WCC to
maintain its wireless operations, while affording the Bureau sufficient time to fully evaluate WCC’s
Petition and related filings. We emphasize that we do not intend to extend support beyond six months
and thus expect WCC to provide all information necessary to complete the record promptly.30 This
Interim Support does not include the full scope of relief requested by WCC in its May 4 supplemental
filing. 31 WCC seeks support from January 1, 2012 to present to enable it to resume new buildout and
increase redundancy in its network, among other things.32 Our goal in providing Interim Support,
however, is to maintain the status quo pending a complete review of WCC’s Petition. We therefore
provide only the amount necessary to achieve that objective. We will consider WCC’s request for
support from January 1, 2012 in our complete review of its petition.
17.
The Bureau believes that the Interim Support will ensure that WCC can continue to
provide wireless service until the six-month period has expired or the Bureau rules on its Petition,
whichever comes first. Service must be provided over the same coverage area and consistent with the
same performance metrics that WCC offers as of the date of this Order. To the extent that WCC elects
instead to terminate service, it must so notify the Bureau and coordinate with Bureau staff on a transition
plan in order to minimize customer disruption.
18.
The Bureau also expects WCC to actively pursue any and all cost cutting and revenue
generating measures that it can take in order to reduce its dependency on USF support to the level of the


27 Certain information included in the Petition was filed pursuant to the Protective Order in this proceeding and has
been redacted. See Connect America Fund et al., WC Docket No. 10-90 et al., Protective Order, 25 FCC Rcd
13160 (Wireline Comp. Bur. 2010).
28 As noted supra, WCC provides both wireline broadband and wireless services. As a competitive ETC, it is only
eligible to receive support for the wireless portion of its business. The wireline broadband portion of WCC’s
business is thus not eligible for support.
29 The Bureau computed Capped Support based on 92 lines, the number of lines reported by WCC in projections
published by USAC for the first quarter 2012. See n. 17, supra. The Bureau then multiplied that amount by $225
per line per month, at the low end of the projected per line support, when adjusted for the reduction factor
(calculated at 10% in an abundance of caution). See n. 8, supra.
30 See USF-ICC Transformation Order at ¶ 544 (providing schedule for public comment and review of waiver
petitions). See also WCC June 10 Ex Parte.
31 WCC May 4 Supplement at p. 2.
32 Id. at pp. 2-3.
5

Federal Communications Commission

DA12-923

cap. In order to compete effectively for support, carriers will need to ensure that their business plans
minimize unnecessary costs and maximize opportunities for subscriber revenue.
III.
Conclusion
19.
For the reasons discussed above, the Bureau hereby authorizes Windy City Cellular, LLC
Interim Relief in the amount of $40,104 per month, for a period of at least three months and up to six
months or until the Bureau resolves WCC’s Petition, whichever comes first.
20.
It is ORDERED pursuant to authority contained in sections 4(i), 4(j) and 254 of the
Communications Act of 1934, as amended, 47 U.S.C. §§ 154(i), 154(j), and 254, and sections 0.131, 0.331,
and 1.3 of the Commission’s rules, 47 C.F.R. §§ 0.131, 0.331 and 1.3, and paragraph 544 of FCC 11-161,
that USAC SHALL MAKE payment to Windy City Cellular, LLC in accordance with the amount, terms
and conditions described herein.
21.
It is FURTHER ORDERED that, pursuant to section 1.103(a) of the Commission’s
rules, 47 C.F.R. § 1.103(a), this order SHALL BE effective upon release.
FEDERAL COMMUNICATIONS COMMISSION
Rick Kaplan
Chief, Wireless Telecommunications Bureau
6

Note: We are currently transitioning our documents into web compatible formats for easier reading. We have done our best to supply this content to you in a presentable form, but there may be some formatting issues while we improve the technology. The original version of the document is available as a PDF, Word Document, or as plain text.

close
FCC

You are leaving the FCC website

You are about to leave the FCC website and visit a third-party, non-governmental website that the FCC does not maintain or control. The FCC does not endorse any product or service, and is not responsible for, nor can it guarantee the validity or timeliness of the content on the page you are about to visit. Additionally, the privacy policies of this third-party page may differ from those of the FCC.