20040719Final Order No 29546.pdf

Office of the Secretary
Service Date
July 19 2004
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE PETITION FROM
THE RESIDENTS OF THE THREE CREEK
AREA FOR EXTENDED AREA SERVICE INTO
THE MAGIC VALLEY REGIONAL CALLING
AREA.ORDER NO. 29546
CASE NO. GNR- T -00-
On November 2, 2000, the Commission received a Petition from approximately 28
residents of Rural Telephone Company s Three Creek exchange requesting extended area service
CEAS) into the Magic Valley Calling Area. At the time of the Petition these customers had no
local Internet service provider, thus making Internet access cost-prohibitive for school children
and the community. Local Internet access became available in late 2003 and has mitigated the
need for the EAS requested in this docket. In this Order, the Commission denies the Petition and
closes the case.
BACKGROUND
Customers in Rural Telephone s Three Creek exchange have local calling only within
the exchange, which consists of approximately 50 residential and 10 business customers. The
exchange borders Nevada and covers areas of southern Owyhee and Twin Falls counties. The
Magic Valley Calling Area consists of the Twin Falls, Jerome, Richfield, Bliss, Buhl, Castleford
Hollister, Dietrich, Eden, Gooding, Hagerman, Hazelton, Kimberly, Murtaugh, Shoshone
Wendell, and Filer exchanges.
In January 2001 , the Commission opened Case No. GNR-00-41 to investigate local
calling into the Magic Valley Calling Area. Order No. 28623. In 2001 , Rural Telephone
submitted its estimates to implement the requested EAS. With estimates that exceeded $600 000
Staff believed EAS for approximately 60 customers would be too expensive. Staff visited the
Three Creek exchange and met with Rural Telephone to explore other alternatives in October
2001. During this time, Staff made Rural Telephone aware of a grant opportunity from the U.
Department of Agriculture s Rural Utilities Service CRUS) to install dial-up Internet access
facilities in rural areas. Rural Telephone was eventually awarded the maximum amount of
$400 000 in July 2002. Construction to increase cable capacity along the 17-mile route between
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the Three Creek central office and the Signal Butte microwave facility was completed in late
2003 and Rural Telephone recently began offering local Internet access via dial-up and DSL.
STAFF INVESTIGATION
With traffic capacity increased as a result of the RUS grant, Staff asked Rural
Telephone to submit a revised cost estimate for providing EAS from Three Creek into the Magic
Valley Calling Area. On March 22, 2004, Staff received a revised cost estimate of approximately
$172 000 to implement EAS from Three Creek into the Magic Valley. This estimate includes
upgrading the 2GHz CGiga Hertz) microwave transmitter to 6GHz. This upgrade would also
require Rural Telephone to obtain a license for the 6GHz microwave from the Federal
Communications Commission and to install an added microwave repeater site to reach the
receiving facilities at Jerome Butte. Because the RUS grant was aimed at providing local
Internet access to the Three Creek school and community, Rural Telephone prefers to save the
limited remaining capacity on the 2GHz microwave for growing Internet customers. Rural
Telephone believes much of the demand for EAS has been satisfied with the provision of local
Internet access and points out that the majority of Three Creek customers make no calls into the
Magic Valley. The calling data obtained before and after the provision of local Internet access
indicates that typically 55 of the approximately 60 Three Creek customers made no calls into the
Magic Valley exchanges in the surveyed months.
Customers in Three Creek currently pay $21.63 per month for telephone service. If
the EAS were granted and rates were increased to $24.10 Cthe rate paid by other rural Idaho
customers with EAS), approximately $1,482 of the annual upgrade costs would be recovered
with the remaining costs coming from the Idaho Universal Service Fund. Staff does not believe
the Idaho Universal Service Fund should be additionally burdened for so few callers, and
suggests that toll rates are an affordable and more equitable alternative to implementing the
requested EAS. The Petitioners principally wanted EAS into the Magic Valley Calling Area
because dial-up Internet access was only available to Three Creek customers via a toll call. With
local Internet access now available, Staff has not received a single inquiry regarding this EAS
case and recommended GNR-00-41 be closed without further input or analysis.
DISCUSSION AND FINDINGS
While EAS creates toll-free calling among exchanges, the costs associated with
converting a former long-distance toll route to a toll-free EAS route must be recovered from all
ORDER NO. 29546 - 2-
customers within those exchanges by increasing rates for local servIce.The Commission
balances the community-of-interest standards against the costs and rate impacts of providing
EAS. When EAS costs are disproportionate to customer needs and benefits, the Commission has
denied requests for EAS.
The Petitioners state that "one of the many reasons" they request Three Creek'
inclusion in the Magic Valley toll free calling area is that "internet access is available only upon
dialing an in-state, long distance phone call which at times costs upwards of $0.40 - $0.50 per
minute.This "prohibit(sJ access not only for our school children but for our community as a
whole." Because local Internet access is now available due to RUS grant funds, this particular
need for EAS has been satisfied.
The Commission recognizes the calling convenience that accompanies EAS into
larger calling area, but is concerned that so few customers would benefit in proportion to the rate
increases necessitated by EAS approval. The Commission is likewise reluctant to use USF funds
contributed by Idaho ratepayers generally to finance EAS when the need is questionable.
Therefore, the Commission declines to further investigate EAS between these exchanges.
ORDER
IT IS HEREBY ORDERED that the Petition requesting extended area service CEAS)
from the Three Creek Area into the Magic Valley Calling Area is denied and this case is closed.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one C21) days of the service date of 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. 29546 - 3 -
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho, this / (,f1--
day of July 2004.
MARSHA H. SMITH, COMMISSIONER
DENNIS S. HANSEN, COMMISSIONER
ATTEST:
Commission Secretary
O:GNRTO041 In2
ORDER NO. 29546 - 4-