20031016Comments.pdf

LISA D. NORDSTROM
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 5733
HECEIVED 0FILED
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UBLIC
UTILITIES COMl11SSION
Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5983
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF
ALTICOMM, INC. FORA CERTIFICATE OF
PUBLIC CONVIENIENCE AND NECESSITY TO)PROVIDE LOCAL EXCHANGE
TELECOMMUNICATION SERVICES.
CASE NO. GNR-O3-
COMMENTS OF THE
COMMISSION STAFF
COMES NOW the Staff of the Idaho Public Utilities Commission, by and through its
Attorney of record, Lisa D. Nordstrom, Deputy Attorney General, and in response to Order No.
29338 issued on February 20 2002, submits the following comments.
On January 22, 2003, Alticomm, Inc. ("Alticomm" or "Company ) filed an Application
for a Certificate of Public Convenience and Necessity to provide resold basic local exchange
service in Idaho within geographic areas served by Qwest and Verizon. Located in Canton
Massachusetts, Alticomm has been operating in Massachusetts and Rhode Island since 1998.
The Company maintains a Certificate of Authority with the Idaho Secretary of State and has a
price list on file with the Idaho Public Utilities Commission as an interexchange carrier.
Alticomm intends to offer resold local exchange services and will not own or control any
equipment, facilities, or property in Idaho. The Company s Application stated that it has
initiated resale agreement negotiations with Qwest and Verizon. Alticomm anticipates that it can
begin providing service to Idaho residential and business customers within 90 days of
certification.
STAFF COMMENTS OCTOBER 16, 2003
Because it does not request advance deposits from its customers, Alticomm stated that it
is not required to secure and maintain an escrow account or security bond for this purpose. The
Company does not intend to provide any prepaid local exchange telephone service in Idaho. The
Application stated that the Company has reviewed the Commission rules and agrees to comply
with all rules applicable to the provision of resold local exchange service.
STAFF DISCUSSION
Staff is very concerned about the financial health of Alticomm. Alticomm has been
incorporated under the laws of the state of Massachusetts since March 27, 1998 as a privately-
held corporation. Alticomm s unaudited income statements are a consolidation of two "asset
acquisition" companies and Alticomm s previous entity, Eastern Telephone. The statement
shows no revenues or assets for Alticomm itself. The consolidated companies' liabilities
increased more than 200% in 2001 and more than 150% in 2002. In the first nine months
2002 assets increased more than 400%, yet liabilities still exceeded assets by 66%. The Acid
Test (cash, receivables and marketable securities over current liabilities) is .147 to 1 , whereas a
ration of I: 1 or higher is desirable. Alticomm s losses and negative retained earnings are more
than 1.45 times the value of its total assets and exceed $4 million.
In a March II , 2003 response to Staff s questions regarding its finances, Alticomm
claimed an existing line of credit sufficient to provide "competitive, high quality service on an
ongoing basis without putting customers at risk." A copy of this line of credit note was
submitted under proprietary cover authorizing a revolving line of credit equal to about one-third
of the Company s profits for the nine months of2002, secured by virtually all of the Company
equipment, inventory, deposits and contracts. Additionally, Alticomm reported that it is
experiencing increased expenses associated with its move to become certificated on a nationwide
basis.
While Alticomm made a good presentation in its Application and met all of the
Commission s procedural requirements, the Company s financial picture is problematic and
Staff believes, critical. Although Alticomm will not require deposits or advance payments, the
Company will bill recurring charges in advance of the monthly cycle for which the charges
apply, as is common practice in the local service industry. If Alticomm becomes unable to meet
its financial commitments, the customers stand to be harmed by the loss amounts paid in advance
of receiving service as well as the time, cost, and inconvenience of replacing their service. The
STAFF COMMENTS OCTOBER 16, 2003
revolving line of credit would not be sufficient to repay all customers if Alticomm were to fail
and Idaho customers likely would not be the first in line to be reimbursed.
Staff believes the Commission should not issue certificates to companies that may present
substantial risks to Idaho customers. Staff is also concerned that Alticomm has not yet paid the
2003 regulatory fee due on May 15th of this year. As of this date, Alticomm now owes $50.
with interest for the first half of 2003.
STAFF RECOMMENDATION
Staff does not recommend approval of this Application at this time but encourages
Alticomm to reapply when its financial condition improves.
Respectively submitted this
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day of October 2003.
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Lisa D. Nordstrom
Deputy Attorney General
Technical Staff: Birdelle Brown
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STAFF COMMENTS OCTOBER 16, 2003
CERTIFICATE OF SERVICE
HEREBY CERTIFY THAT I HAVE THIS 16th DAY OF OCTOBER 2003
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN CASE
NO. GNR-03-, BY MAILING A COpy THEREOF, POSTAGE PREPAID, TO THE
FOLLOWING:
MONICA BORNE HAAB
NOW ALSKY BRONSTON & GOTHARD
STE 1442
3500 N CAUSEWAY BLVD
METAIRIE LA 70002
JAMES CORNBLATT, DIRECTOR
REGULATORY AFFAIRS
AL TICOMM INC
115 SHA WMUT RD
CANTON MA 02021
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SECRETARY
CERTIFICATE OF SERVICE