HomeMy WebLinkAbout19970912Hall Direct Testimony.docQ. Please state your name and business address.
A. My name is Carolee Hall and my business address is 472 West Washington, Boise, Idaho 83702.
Q. By whom are you employed and in what capacity?
A. I am employed by the Idaho Public Utilities Commission as a Telecommunications Analyst.
Q. Please describe your work experience and educational background.
A. I have been with the Commission since April 1997. In August 1997, I completed a two week program in Regulatory Studies offered through NARUC.
Prior to coming to work for the Commission, I worked for two years as a Financial Manager for a competitive long distance provider. I graduated from Boise State University in 1993 with a B.B.A. in Finance.
Q. What is the purpose of your testimony in this case?
A. My purpose is to address the Application from Filer Mutual Telephone Company for Idaho Universal Service Funding (USF). Filer Mutual filed this Application as a result of opening extended area service (EAS) into U S WESTs Magic Valley calling area. I will speak to the community of interest that exists between the communities included in this case, discuss the additional revenues I believe should be added and the impact it will have on Filer Mutual and its customers.
Q. Are you familiar with the Filer Mutual Telephone Company?
A. Yes, Filer Mutual Telephone Company is a cooperative telephone company and is not regulated by the Idaho Public Utilities Commission. There are three exchanges within the Filer Mutual Telephone Company. Two are located in Idaho, in Filer and Hollister, and one in Jackpot, Nevada.
Q. What are the community of interest factors that you looked at in examining this Application?
A. Filer, Idaho is a small community that is predominately agricultural. The town of Filer has three schools, a Senior High, Middle School and Elementary School. Filer has one bank, a post office, telephone company, convenience store, cafe and an auto parts store. There is also a seed plant in Filer, which employs some of its residents. Any other industry or employment opportunities would be either west of Filer in Buhl, or to the east in Twin Falls. Filer is midway between these two communities, and it is approximately ten miles to either town. Both Buhl and Twin Falls are in U S WESTs Magic Valley EAS region (See Exhibit No. 101). This calling area is a toll call for residents of Filer working within these towns.
Another community within the Filer Telephone Company exchange is Hollister, Idaho. Hollister is approximately seventeen miles south of Filer on Highway 93 and consists of a gas station/convenience store and a few homes.
Q. What do you conclude about the community of Filer and the interest in EAS?
A. According to Case No. GNR-T-93-13, Order No. 26311, the Commission was explicit in its findings for establishing a community of interest when granting EAS petitions. According to the Order, an interest exists if the location of the community requesting EAS must make toll calls as a result of their geographic proximity to the county seat and medical facilities. The Commission also noted that a review of call records and the willingness of customers to pay was a significant part of granting EAS. Based on the geographic location of Filer and Hollister, there is no question that a community of interest exists. The calling data that Staff examined supports that interest. Twin Falls is the community center for Filer with the county seat and courts located there. For the residents of Filer, the major employment opportunities are in the Twin Falls area. With the employment area being located ten miles from Filer, and in a U S WEST exchange, it creates a two-way problem for Filer residents. If they work in Twin Falls, it is a toll call to work and to home. As set forth in Order No. 26311, another factor in determining community interest was the location of the hospital and medical facilities. These facilities are in Twin Falls at the Magic Valley Medical Center. Twin Falls also offers a Community College, grocery stores, implement dealers for farm suppliers and various other businesses for Filer residents. What is most important is the geographic proximity to the U S WEST exchange. U S WEST surrounds Filer and Hollister, which creates a toll barrier to everyday life for the people in the Filer Mutual Telephone Companys area.
Q. Would you recommend granting EAS to Filer considering these barriers that result in toll calling for Filer residents?
A. Because Filer Mutual Telephone Company is a non-regulated cooperative, the Commission does not have the authority nor jurisdiction to grant or deny such a petition. Filer did not ask the Commission to grant EAS into U S WESTs Magic Valley calling area. They merely requested USF funding to recompense the lost revenues from implementing it. The analysis of call records clearly shows a community of interest between exchanges. This data would warrant a recommendation for EAS if this were a regulated company. I believe Filer had significant reasons to offer EAS to its customers. Filer customers will experience a significant rate increase as a result of the decision to join the EAS region. The rate increase is a result of increasing basic rates to the USF threshold. The customers who have contacted the Commission have been receptive to the new rates as a trade off for EAS.
Q. Have you analyzed the Application for USF funding and the proposed basic rates for Filer?
A. Yes. In the original Application, Filer Mutual proposed to increase basic service rates from the current $6.00 and $8.00 for residential and businesses respectively, to the USF threshold rates of $15.50 for residential and $33.50 for businesses. For Filer Mutual to be eligible for USF funding, it must set local rates at 125% of the statewide average. When Filer submitted its original Application, it projected that the proposed rates would be the new USF rates. Since Filer submitted the Application, the approved USF statewide average for basic service was set at $17.51 for residential and $36.57 for businesses.
Q. Has the Commission implemented these new rates for the current USF companies?
A. Implementation of the new USF rate for some independent companies has been postponed pending action on a number of EAS petitions now before the Commission. The Commission felt that addressing one rate change would be preferable to changing them twice. Filer has already implemented EAS, therefore the rate change issue has already been addressed. Filer should implement the new USF rates at this time. (Exhibit No. 102, B). The differences between the proposed rates from Filer Mutual and the approved statewide average rates would generate an additional $54,173 annually for Filer. This would decrease Filers anticipated annual residual revenue requirement and consequently, decrease the USF funding requirement.
Q. Are there other USF funding requirements? If so, what are they and did you analyze them?
A. Yes. Idaho Code 62-610 states that to qualify for USF disbursements, telephone corporations that provide local exchange service and access service for MTS/WATS providers must set their access rates at 100% (or more) of the weighted statewide average. Filer anticipated that its per minute access rate would be decreased to $.0548, which they projected to be the statewide average. After reviewing Filers tariff it was discovered that its effective access rate of $.06085 is already at the statewide average of $.0609. This is shown in Exhibit No. 103. To calculate Filers access rates, I took a weighted average based on peak and off-peak calling to determine the effective rate. I used a 75% weight for peak calling periods and 25% for off-peak calling. This weighting was necessary to allocate the 40% discount on local switching and local transport offered for off-peak calling. With the effective rate at $.06085 per access minute, the projected revenue reduction is eliminated and no change to access rates is required. The only revenue shortfall is billing and collection (B&C). According to R. Hendershots Exhibit No. 7, the B&C rate will decrease to $.09 per message from the current $.18. Filer anticipates a decrease in B&C revenues of $29,032 with this action. If B&C rates are reduced as proposed and current access rates are maintained, the projected revenue shortfall would not be as significant. This would reduce the USF funding requirement.
Q. What other areas have you examined for revenues?
A. CLASS calling features that Filer Mutual offers were the next area of my analysis. I looked at what Filer charged for Caller I.D. (number only), call forwarding, call waiting and automatic recall. I only selected these four most popular calling features and compared Filers charges with the seven other small independent companies that receive USF funding. The results of the analysis are attached as Exhibit No. 102 (A). I believe that Filer should be charging its customers rates comparable to the other USF companies. By imputing these rates, Filer generates an additional $3,574 annually which decreases its USF funding requirement.
I realize that Filer customers are already experiencing a sizeable rate increase, however, I believe it is only fair that Filer customers should pay the same for calling features as other USF customers.
Q. Could you please recap your adjustments for clarity?
A. Yes, by increasing local rates to the USF threshold, Filer would reduce its USF funding requirement by $54,173. By leaving access rates at the current rate, Filers revenue requirement is reduced by an additional $30,793. The final adjustment was to increase the CLASS calling features to those of other USF companies thereby reducing Filers funding requirement another $3,574. The total adjustments resulted in a reduced funding requirement of $88,540. This calculation is shown on Exhibit No. 104.
Q. Does this conclude your testimony?
A. Yes.
FIL-T-97-1 HALL, C (Di) 1
09/12/97 Staff
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25