20001130Comments.doc

JOHN R. HAMMOND
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 5470

Street Address for Express Mail:
472 W. WASHINGTON
BOISE, ID 83702-5983

Attorney for the Commission Staff

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE APPLICATION OF ESCHELON TELECOM, INC. FOR A CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY TO PROVIDE LOCAL EXCHANGE TELECOMMUNICATIONS SERVICES. )
)
)
)
)
)
)
CASE NO. GNR-T-00-23

COMMENTS OF THE
COMMISSION STAFF
COMES NOW the Staff of the Idaho Public Utilities Commission, by and through its Attorney of record, John R. Hammond, Deputy Attorney General, in response to Order No. 28572, the Notice of Application and Notice of Modified Procedure in Case No. GNR-T-00-23 issued on November 16, 2000, submits the following comments.
On July 31, 2000, Eschelon Telecom, Inc. filed an Application for a Certificate of Public Convenience and Necessity to provide local exchange and interexchange services within the state of Idaho. Eschelon expects to begin offering these services in the first quarter of 2001 through a combination of resale and facilities-based operations.
Eschelon (formerly known as Advanced Telecommunications, Inc.) is a privately held corporation incorporated in the state of Delaware on December 13, 1999. It currently maintains its principal business in Minneapolis, Minnesota. Two organizations, both investment companies, hold

significant interest in Eschelon’s voting securities: Stolberg Partners and Bain Capital, Inc. Eschelon Telecom, Inc. is the parent company of eight statewide telecommunications providers (Arizona, Colorado, Minnesota, Nevada, Oregon, Washington, Utah, and Nebraska, with a pending application in New Mexico.)
In the first quarter of 2001 Eschelon proposes to begin offering services to small and medium size business customers in southwestern Idaho; however, it seeks authorization to provide service throughout the Qwest Communications, Inc. and Verizon serving areas. In the beginning, the Company will provide basic local exchange service through a combination of resale and facilities-based operations, reselling primarily Centrex and 1FB lines, and will provide directory assistance and operator assistance on a resold basis. It will provide the same intraLATA and interLATA toll calling, operator services, directory assistance, directory listings and emergency services as those provided by the underlying carrier. In addition, it will provide high-capacity access lines to help high volume users with 12 or more phone numbers to save on line and feature costs.
Eventually, Eschelon will construct switching facilities in Idaho. Nationwide, it plans to deploy a technologically advanced network using high-capacity Nortel Voice and ATM switches and collocation equipment capable of integrating voice and data traffic. This technology will extend its network to 26 markets in the western United States by the end of 2001.
Eschelon has provided income and profit and loss statements reflecting the 1998 and 1999 calendar year. Although Eschelon reports an operating loss since its inception in 1996, its profit and loss statements show that the Company’s total assets exceed its total liabilities by a ratio of slightly more than two to one. Eschelon anticipates increased capital expenditures that will continue to generate negative cash flows for several years; however, capital resources and equity financing are expected to fund the business plan for a period of time.
Eschelon has promised to comply with Idaho Rules and Laws and has promised to notify the Commission if it begins to require advance deposits by its customers. (Deposits and advance deposits are not included in Eschelon’s tariff.) Staff has worked with Eschelon’s legal representative to produce a tariff which Eschelon expects to become its first official tariff after this Application is approved. As soon as Eschelon provides its toll-free customer service number, its tariff will comply with Idaho Code and the Commission rules.

STAFF RECOMMENDATION
Staff recommends that this Application for Public Convenience and Necessity be approved.

DATED at Boise, Idaho, this day of November 2000.

__________________________________
John R. Hammond
Deputy Attorney General

Technical Staff: Birdelle Brown

BB:JH:jo:umisc/comments/gnrt0023.jhbb
STAFF COMMENTS 2 NOVEMBER 30, 2000