Before the

FEDERAL COMMUNICATIONS COMMISSION

Washington, D.C. 20554

In the Matter of                        )
                                        )
Request for Waiver of the Definition    )
of "Rural Area" Contained in  47 C.F.R. )
Sections 54.5 and 55.05(b)(3).          )

PETITION OF

THE PENNSYLVANIA PUBLIC UTILITY COMMISSION

I. Introduction

On May 8, 1997, the Federal Communications Commission ("FCC" or "Commission") released its Report and Order implementing the provisions of Section 254 of the 1996 Telecommunications Act ("Federal Act"). As part of its Report and Order, the FCC comprehensively addressed the universal service provisions relating to schools, libraries and health care providers. In implementing these provisions of the Federal Act, the FCC adopted the Federal-State Joint Board's recommendations which included a graduated discount matrix for eligible services provided to K-12 schools and libraries and a $400 million program aimed at ensuring the availability of information age services to both urban and rural health care providers. These provisions of the May 8, 1997 Report and Order are of particular importance to Pennsylvania which according to the U.S. Census has the nation's largest rural population with 31.1 percent of its 11.8 million people living in rural areas in 1990.

Overall, the Pennsylvania Public Utility Commission ("PaPUC") strongly supports the Commission's and Federal-State Joint Board's policies and programs covering the provision of advanced services to K-12 schools, libraries and health care institutions. The PaPUC is concerned, however, with the definition of "rural" adopted by the FCC in its Report and Order and the adverse impact which results when actual application of the definition to Pennsylvania counties occurs. The definition results in misclassification of nine counties as urban, notwithstanding their strong "rural" character and nature under all other available standards and measurement tools.

Given the large rural base in Pennsylvania, it is not surprising that this problem would surface in the Commonwealth, and that if the FCC's definition were under-inclusive in some instances, this would be reflected first and foremost in Pennsylvania. Because of the hardship and inequity likely to result in this case to these nine counties given their clearly "rural" affiliation, the PaPUC, pursuant to Section 1.3 of the Commission's rules, seeks a waiver of 47 C.F.R. Sections 54.5 and 54.505(b)(3) to permit schools, libraries and health care providers in the nine Pennsylvania counties identified below to qualify for the benefits which they would otherwise be entitled to under the Federal Act. There is no doubt that a grant of this Waiver Petition would meet all of the relevant standards as discussed below and that it would be in the public interest.

II. Discussion

A. The FCC's Definition of "Rural" Would Result in Nine Rural Counties in Pennsylvania Being Improperly Classified As Urban.

The principal focus of the federal program, particularly with respect to rural health care providers, is to provide for pricing parity for advanced communications services for all health care providers, regardless of whether the provider is located in an urban or rural area. Section 254(h) of the Federal Act provides:

TELECOMMUNICATIONS SERVICES FOR CERTAIN PROVIDERS.--

(1) IN GENERAL.--

(A) HEALTH CARE PROVIDERS FOR RURAL AREAS.--A telecommunications carrier shall, upon receiving a bona fide request, provide telecommunications services which are necessary for the provision of health care services in a State, including instruction relating to such services, to any public or nonprofit health care provider that serves persons who reside in rural areas in that State at rates that are reasonably comparable to rates charged for similar services in urban areas in that State. A telecommunications carrier providing service under this paragraph shall be entitled to have an amount equal to the difference, if any, between the rates for services provided to health care providers for rural areas in a State and the rates for similar services provided to other customers in comparable rural areas in that State treated as a service obligation as a part of its obligation to participate in the mechanisms to preserve and advance universal service.

In its May 8, 1997 Report and Order, the FCC adopted a definition of "rural area" to mean a nonmetropolitan county or county equivalent, as defined by OMB and identifiable from the most recent Metropolitan Statistical Area (MSA) released by OMB or any census tract or block numbered area, or contiguous group of such tracts or areas, within an MSA-listed metropolitan county identified in the most recent Goldsmith Modification published by the Office of Rural Health Policy/Health and Human Services (ORHP/HHS). The FCC adopted the ORHP/HHS methodology because counties are units of identification more easily used and administered than the other method of defining rural areas, the Bureau of the Census' density-based definition of rural and urban areas.⁽¹⁾

However, as discussed in more detail in the attached Interim Report Concerning the Definition of Rural Areas Prepared by the Pennsylvania Universal Telephone Service Task Force's Subcommittees on Rural Health Care and Schools and Libraries adopted July 14, 1997, the definition contained in the FCC rules, when applied to Pennsylvania, will have an adverse impact upon the following nine rural counties in Pennsylvania: (1) Butler, (2) Carbon, (3) Columbia, (4) Fayette, (5) Lebanon, (6) Perry, (7) Pike, (8) Somerset, and (9) Wyoming. Each of these counties would be classified as "urban" the standard adopted by the FCC. Yet, under most available standards, it is clear that the nine counties are predominantly rural in nature. As noted in the attached Interim Report, according to the rural experts' consensus opinion, the nine counties share more in common with their non-metropolitan counterparts than with the other metropolitan counties, and have a rural rather than urban character. It is particularly significant, as the attached Interim Report points out, that the nine counties when compared to the other 24 metropolitan counties classified as urban under the FCC's definition have:

(1) A significantly lower primary care physician to population ratio;

(2) A significantly higher proportion of residents living within designated areas of medical underservice;

(3) Significantly fewer hospitals and hospital beds;

(4) A significantly lower health care provider to population ratio for all types of providers;

(5) A significantly lower per capita income;

(6) A significantly higher population growth rate;

(7) Lower per capita federal transfer payments.

Interim Report at p. 3.

Moreover, under the "urbanization" standard recommended for use by the Pennsylvania Task Force, these nine counties would also qualify as "rural" areas. See Interim Report at p. 4

Consequently, the PaPUC concurs with the Subcommittee's conclusion that the MSA metro/non-metro classification with the Goldsmith Modification does not sufficiently ameliorate the concern of accurate classification of rural counties for Pennsylvania. The result for the nine Pennsylvania counties identified above underscores the Federal-State Joint Board finding that application of the federal definition of "rural area" would be under-inclusive in some instances.

Accordingly, a waiver is justified in this instance, as discussed in more detail below, to ensure that hardship and inequity will not result.

B. Waiver in This Instance is Justified Given the Hardship and Inequity That is Likely to Occur to Qualified Providers Located in Nine Rural Counties in Pennsylvania, and Would Have an a Minimal Fiscal Impact Upon the Federal Health Care Program.

Under Section 1.3 of the Commission's rules, the Commission may exercise its discretion to waive a rule where there is "good cause" to do so. A waiver is appropriate if "special circumstances warrant a deviation from the general rule and such deviation will serve the public interest. Northeast Cellular Telephone Co. v. FCC, 897 F.2d 1164, 1166 (D.C. Cir. 1990). Examples of special circumstances justifying waiver include hardship imposed by the rule's enforcement, equity, or more effective implementation of overall policy on an individual basis. WAIT Radio v. FCC, 418 F.2d 1153, 1159 (D.C. Cir. 1969), cert denied, 409 U.S. 1027 (1972). The FCC has also stated that a decision to grant a waiver must be based on articulated, reasonable standards that are predictable, workable, and not susceptible to discriminatory application. NorthWest Cellular at 1166.

The PaPUC submits that good cause exists in this case to grant the instant waiver with respect to the nine counties identified above. As described in the attached Interim Report, special circumstances exist in this case which warrant a deviation from the general rule and such deviation will serve the public interest. It is clear from the attached Interim Report, that the nine counties which would fall under the urban classification under the FCC's definition actually have much more in common with their rural counterparts than urban communities in Pennsylvania.

The Federal-State Joint Board itself recognized that the OMB MSA method is, by itself, under-inclusive of many rural areas and therefore does not meet the standards set by the Commission in the NPRM. It went on to state that the Goldsmith Modification, by identifying by census tract or block more densely-populated areas in large, otherwise rural counties only somewhat ameliorated this problem. It is not surprising that this problem would surface immediately in Pennsylvania given its large rural population base.

Unless the Waiver Petition is granted, hardship and inequity will result to the nine Pennsylvania counties identified herein since they will not receive the benefits of the federal discount program like other rural areas in the United States.

Additionally, as indicated in the attached Interim Report, the fiscal impact on the Federal Health Care Program of including the nine additional counties within the definition of rural will be minimal. See Interim Petition at pps. 4-5.

Finally, the PaPUC submits that reasonable, predictable standards exist that are not susceptible to discriminatory application to grant the waiver in this instance. In addition to the Pennsylvania rural experts' consensus opinion that when examined using existing measurement criteria, all nine counties share more in common with their non-metropolitan counterparts than the other metropolitan counties, these counties clearly are rural in nature if the Subcommittee's recommendation to use "urbanization" as the primary means of defining urban areas is utilized. See Interim Report at p. 4.

III. Conclusion

The PaPUC respectfully requests that the Commission grant this Petition for Waiver of the definition of "rural area" contained in 47 C.F.R. Sections 54.5 and 54.505(b)(3) with respect to the nine counties in Pennsylvania identified herein. The PaPUC submits that grant of the instant Waiver Petition would be in the public interest and that it meets all of the other standards applicable to waiver of a Commission rule.

Respectfully submitted,

___________________________

Maureen A. Scott
Assistant Counsel

Frank B. Wilmarth
Deputy Chief Counsel

John F. Povilaitis
Chief Counsel

Counsel for the Pennsylvania Public
Utility Commission
P.O. Box 3265
Harrisburg, PA 17105-3265

Dated: July 17, 1997.