FCC OKs Hargray's Planned ComSouth Buy, With USF Condition; O'Rielly Hails Certainty

The FCC approved Hargray Communications' proposed takeover of ComSouth from Mansfield Jennings, subject to a condition on USF support. "To prevent the transaction-specific harm of potential cost shifting, we impose a limited condition to cap high-cost universal service support based on Hargray’s operating expenses," said the unanimous order in docket 18-52. "The combined operating expense ... for Hargray’s two existing rate-of-return subsidiaries, Hargray Telephone Company and Bluffton Telephone Company, shall be capped at the averaged combined operating expense of the three calendar years preceding the transaction closing date for which the operating expense data are available." Commissioner Mike O'Rielly thanked Chairman Ajit Pai and colleagues for elevating the order from the bureau level. On substance, O'Rielly said the FCC should "remove unnecessary regulatory barriers to the voluntary consolidation of exchanges or study areas in rural America." One barrier is "a lack of clarity regarding the amount and type of federal high-cost universal service support that would be available if one kind of provider buys all or part of another provider’s service area," said his statement. "I have been pushing for the Commission to find ways to remove the 'parent trap' barrier. ... While the Commission has previously adopted rules addressing the transfer of exchanges among various categories of providers and further clarified those rules earlier this year, some categories were not addressed. Moreover, the entire structure was less than clear-cut. With this order, applicants will now have additional clarity regarding the purchase of [Alternative Connect America Cost Model] study areas." ComSouth has 3,339 local lines in Georgia and provides long-distance services.