20060530final_order_no_30056.pdf

Office of the Secretary
Service Date
May 30, 2006
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE INVESTIGATION
TO DETERMINE WHETHER IT IS
REASONABLE FOR FRONTIER
COMMUNICATIONS OF IDAHO TO
PROVIDE TELECOMMUNICATIONS
SERVICE TO CUSTOMERS LOCATED IN
THE TAMARACK RESORT
CASE NO. CTC- T -05-
ORDER NO. 30056
The Idaho Public Utilities Commission on its own motion and pursuant to Idaho
Code ~ 61-503 opened this case to investigate whether Citizens Telecommunications Company
of Idaho, Inc. dba Frontier Communications of Idaho ("Frontier ) should be required to provide
telecommunications service to requesting customers located in the Tamarack Resort in Valley
County ("Tamarack"). Order No. 29845. Tamarack lies within the area included in Frontier
Certificate of Public Convenience and Necessity.
BACKGROUND
In response to consumer complaints, in Order No. 29845 issued on August 11 , 2005
the Commission opened this case to investigate whether Frontier should be required to provide
telecommunications service to requesting customers located in the Tamarack. The Commission
directed Frontier to respond to the following questions:
1. Is Frontier willing to provide telephone service to the Tamarack Resort?
a. If yes, under what conditions?
b. If no, then why does Frontier believe it is reasonable to decline the
requests for service?
The Commission also directed the Staff to conduct an investigation to determine whether it is
reasonable for Frontier to provide service to Tamarack, specifically to determine the investment
required to enable Frontier to provide service and the effect such investment will have on the
rates paid by its customers.
On August 17, 2005, Qwest Corporation filed a Petition to Intervene. The
Commission granted Qwest's Petition on September 1 , 2005. On August 30, Mr. Matthew
Castrigno, a Tamarack customer, filed a Petition to Intervene. The Commission granted Mr.
ORDER NO. 30056
Castrigno s Petition on September 30, 2005. No comment or pleading was filed by Qwest or Mr.
Castrigno since the grants of their respective Petitions.
STAFF INVESTIGATION
On August 22, 2005 , Frontier responded to Order No. 29845 regarding its
willingness, and ability, to provide telephone service to Tamarack customers. In its response
Frontier stated that it "is willing to serve customers within it's (sic) certificated areas including
Tamarack Resort, to the extent that it can acquire access to the customers and be compensated
for all costs to serve the area." Frontier provided two possible scenarios under which it may be
able to provide telecommunications service to the Tamarack customers.
First, Frontier could provide service within the resort by overbuilding Tamarack
facilities. Frontier stated this would be cost prohibitive because of the right-of-way issues within
the privately owned resort and the extremely high construction costs necessary to install
facilities.
Second, Frontier could serve Tamarack customers by interconnecting with the
existing facilities of Tamarack. For this to occur, Tamarack would need to allow Frontier access
to its network at reasonable rates. In addition, Tamarack would need to make personnel
available to perform troubleshooting and be responsible for its part of the circuits on a timely
basis. Frontier also explained that it would need to purchase and install network equipment "
enable Tamarack's fiber-to-the-home facilities to interface with Frontier s existing network." As
with the first scenario, this would be a workable solution if Frontier were allowed to recover all
its costs incurred to serve those customers who live within Tamarack.
Finally, Frontier cautioned that its costs to provide services might be prohibitive
because of the lack of facilities right-of-way access and that the expense of bringing facilities to
customers could be excessive. Frontier also stated it has no agreement with Tamarack
interconnect with the resort's facilities and that it has not received interest from enough
customers necessary to warrant the expenditures necessary for the electronic equipment to
collocate.
On August 26, 2005, Staffs First Production Request was issued to Frontier. In its
request, Staff asked Frontier to provide a detailed cost analysis showing how much Frontier
anticipated it would cost to provide telecommunications services to customers within Tamarack.
Staff also asked Frontier to provide a detailed cost analysis for collocating and interconnecting
ORDER NO. 30056
with Tamarack's facilities. In its response, Frontier concluded that it would be very costly and
time-consuming to overbuild Tamarack's facilities, providing an analysis showing that costs
could range from approximately $465 000 to $2 000 000, depending on the facilities needed. In
addition, Frontier would also need to obtain right-of-way access within Tamarack, which could
be another substantial expense. Finally, Frontier would likely incur over $80 000 in additional
interconnection expenses.
Staff contacted Tamarack's IT Director and informally requested cost estimates to
determine what Tamarack would charge Frontier for the use of its network. Tamarack stated it
had "invested almost $500 000 in infrastructure" to provide its services to the homes within the
resort, and estimated that it would charge Frontier approximately $100 per month per home to
enable Frontier to interconnect with its equipment.
On November 4, 2005, Staff issued a second set of production requests to Frontier to
follow up on the course of discussions between Frontier and Tamarack. On December 1 2005
Frontier responded by explaining that it had held preliminary discussions with Tamarack
regarding interconnecting the two companies' facilities.From those discussions, Frontier
determined that the cost that Tamarack would charge Frontier per home, along with better-
understood interconnection expenses that Frontier would incur, resulted in expenses considerably
higher than originally estimated. These costs led Frontier to determine that it could not provide
affordably priced service to Tamarack's residents. Frontier also explained to Staff that further
discussions with Tamarack would likely not change this determination, so no further discussions
regarding interconnection were scheduled to take place. To cover interconnection costs, Frontier
would apply its line extension allowance of $2 560 and then "all non-recurring facilities charges
in excess of this allowance would be due from the connecting customers within the resort.
The Staff filed a written report of its investigation. In a decision memorandum filed
May 22, 2006, Staff recommended the Commission close this case, because after a thorough
investigation, it is clear that Frontier simply cannot provide service to Tamarack in a cost-
effective manner.
COMMISSION FINDINGS AND CONCLUSIONS OF LAW
As noted in the Commission s Order granting a Certificate of Public Convenience
and Necessity to Tamarack, this Commission has no ratemaking authority over the services
provided by Tamarack. See Order No. 29808. See also Telecommunications Act of 1996, ~ 251.
ORDER NO. 30056
In addition, we find that the costs associated with the provision of such services by Frontier
would be excessive and that it would be imprudent for Frontier to incur those costs in order to
provide service to a very small number of customers within Tamarack.
Tamarack was responsive to customers who did not wish to subscribe to Tamarack'
basic combo package by offering an alternative telephone package at a considerably reduced
rate. In addition, Staff received information from Tamarack that cellular telephone service in the
area has greatly improved, providing another form of telecommunications service available to
Tamarack residents.
The Commission is satisfied that the companies have been cooperative and have
diligently attempted to explore alternative services for Tamarack customers. However, it is
neither reasonable nor prudent for Frontier to provide service to Tamarack. The investment
required to enable Frontier to provide the service would be substantial and would result in
excessive rates to either the individual Tamarack customers or all of Frontier s customers.
We find that this Commission does not have jurisdiction over Tamarack regarding
the prices it may charge its customers or other providers. See Order No. 29808. See also
Telecommunications Act of 1996, ~ 251. Staff conducted a thorough investigation into the issue
of whether it would be reasonable for Frontier to provide telecommunications services to
requesting customers located in the Tamarack Resort in Valley County. Based upon our review
of Frontier s responses to Staff requests and the Staffs analysis, we find that due to the costs that
would be incurred, it is not reasonable or prudent for Frontier to provide services to the
Tamarack Resort. Therefore, we find that this case should be closed.
ORDER
IT IS HEREBY ORDERED that Case No. CTC- T -05-2 is closed.
THIS IS A FINAL ORDER. Any person interested in this Order (or in issues finally
decided by this Order) in this Case No. CTC- T -05-2 may petition for reconsideration within
twenty-one (21) days of the service date of this Order with regard to any matter decided in this
Order. Within seven (7) days after any person has petitioned for reconsideration, any other
person may cross-petition for reconsideration. See Idaho Code ~ 61-626.
ORDER NO. 30056
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 30~
day of May 2006.
NDER, PRESIDENT
MARSHA H. SMITH, COMMISSIONER
ENNIS S. HANSEN, COMMISSIONER
ATTEST:
~illJe D. Jewell
Commission Secretary
O:CTC-05-
ORDER NO. 30056