20040123Post Hearing Brief Nextel.pdf

ORIGINAL
McDEVITT & MILLER, LLP
Dean 1. Miller (ISB No. 1968)
420 West Bannock Street
O. Box 2564-83701
Boise, Idaho 83702
Phone [phone]
Facsimile [phone]
j oe(fYmcdevitt -miller .com
BRIGGS AND MORGAN, P.
Philip R. Schenkenberg (MN #260551)
2200 First National Bank Building
332 Minnesota Street
Saint Paul, Minnesota 55101
Phone [phone]
Facsimile [phone]
pschenkenberg(fYbriggs. com
Attorneys for NPCR, Inc. d/b/a Nextel Partners
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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
In the Matter of the Petition of IA T
Communications, Inc. d/b/a NTCH-Idaho, Inc., or
Clear Talk, for Designation as an Eligible
Telecommunications Carrier
In the Matter of the Application of NPCR, INc.
d/b/a NEXTEL PARTNERS Seeking
Designation as an Eligible Telecommunications
Carrier that may receive Federal Universal Service
Support
Case No. GNR-03-
Case No. GNR-03-
NEXTEL PARTNERS' POST-HEARING BRIEF IN SUPPORT OF
APPLICATION FOR DESIGNATION AS AN
ELIGIBLE TELECOMMUNICATIONS CARRIER
NPCR, Inc. d/b/a Nextel Partners ("Nextel Partners" or the "Company ), submits this
post-hearing brief in support of its Application for designation as a federal eligible
telecommunications carrier ("ETC"
NEXTEL PARTNERS' POST-HEARING BRIEF IN SUPPORT OF APPLICATION
FOR DESIGNATION AS AN ELIGIBLE TELECOMMUNICATIONS CARRIER-
INTRODUCTION
The fundamental question presented by this proceeding is whether the Idaho Public
Utilities Commission ("Commission will effectuate the requirements the
Telecommunications Act of 1996, 47 u.S.C. 9 151 et seq. (the "Act") and establish competitive
local telecommunications markets in which new entrants, including a commercial mobile radio
services ("CMRS") provider, can be eligible to receive universal service funds to meet the
telecommunications needs of Idaho consumers.Consistent with federal and state law, the
Commission should designate Nextel Partners as an ETC in the state of Idaho, and reject
attempts to protect the interests of monopoly local exchange carriers ("LECs ) to the ultimate
detriment of Idaho consumers. Designating Nextel Partners as an ETC is consistent with the
statutory mandates of Section 214(e) of the Act, the directives of the Federal Communications
Commission ("FCC"), and the interests of the public.
The record evidence establishes that N extel Partners satisfies all Section 214( e )(1 )
requirements for designation, and that designation of Nextel Partners as an additional ETC is in
the public interest as required by 47 u.S.C. 9214(e)(2). For the one rural telephone company
study area that the Company cannot wholly serve Citizens Telecommunications Company
of Idaho ("Citizens ), the record evidence supports designation on an exchange basis, rather than
through the study area. Accordingly, the Commission should unconditionally designate Nextel
Partners as an ETC in the rural telephone company study areas it can wholly serve, and
conditionally designate Nextel Partners as an ETC in the requested Citizens exchanges.
II.NEXTEL PARTNERS' APPLICATION
This matter commenced on April 28, 2003 , when Nextel Partners filed an Application to
be designated as a federal ETC in certain areas of the state of Idaho. The Application describes
and demonstrates Nextel Partners' satisfaction of the ETC criteria and documents the Company
NEXTEL PARTNERS' POST-HEARING BRIEF IN SUPPORT OF APPLICATION
FOR DESIGNATION AS AN ELIGIBLE TELECOMMUNICATIONS CARRIER-
requested ETC service areas based on its licensed service areas and current coverage maps.
Nextel Partners sought designation in four rural telephone company study areas, and designation
in certain Citizens exchanges. Tr. 34.1 The Company sought designation only for the receipt of
federal universal service funds, and did not request ETC status for purposes of receiving support
from the Idaho Universal Service Fund under Idaho Code 9 62-610 et seq. The Commission
consolidated Nextel Partners' Application with the application of IAT Communications , Inc.
Clear Talk"Citizens and the Idaho Telephone Association ("ITA"(collectively,
Intervenors ) intervened and opposed the applications.
Nextel Partners offers commercial mobile radio services ("CMRS") pursuant to licenses
issued by the FCC. These licenses cover a vast portion of central and southern Idaho, and other
small and rural markets throughout the nation. Tr. 10. Its corporate parent is Nextel Partners
Inc., a publicly held corporation that in just a few years has built out its network extensively
through its subsidiaries, and now serves more than 1 000 000 subscribers nationwide under the
NEXTEL" brand name.Tr. 10.Nextel Partners should not be confused with Nextel
Communications, Inc. ("Nextel Communications ), a distinctly different corporation that
provides NEXTEL brand services in urban areas. The corporations are separately traded, and
each has its own board of directors and executive officers. Id. Collectively, Nextel Partners and
Nextel Communications provide NEXTEL brand service in areas of the United States populated
by approximately 240 million people. Id.
As a provider in small and rural markets, Nextel Partners has made a commitment to be a
universal service provider throughout its service areas. It has filed applications to be designated
1 Citations to the hearing transcript will be referred to as "Tr.
NEXTEL PARTNERS' POST-HEARING BRIEF IN SUPPORT OF APPLICATION
FOR DESIGNATION AS AN ELIGIBLE TELECOMMUNICATIONS CARRIER-3
as an ETC in more than 15 states, and has already been designated an ETC in the states of
Wisconsin, Mississippi, Iowa and Arkansas.
III.BACKGROUND OF INTERVENING ILECS
ITA is a group of rural telephone companies serving 40 000 total access lines in rural
Idaho. Tr. 485. Each IT A company has been designated as an ETC, and is in fact the only ETC
in its service area. Tr. 544. These companies support the competitive principles in the Act 3 but
opposed the Nextel Partners and Clear Talk applications.
Citizens serves approximately 21 000 access lines in Idaho. Tr. 485. Like the ITA
companies, Citizens is the only ETC in its Idaho service areas. Tr. 605. At the national level
Citizens is among the ten largest LECs in the country and serves over 2 000 000 access lines. Tr.
605. Citizens receives more than $7 million each year in federal universal support for its Idaho
lines, and receives over $130 000 000 nationwide. Citizens also supports competition and the
goals of the Act generally,4 but nonetheless claimed it is too small to compete in the universal
service market. Tr. 605. Citizens took this position even though current ILEC funding levels
will not be affected by competitive ETCs at least until 2006. Tr. 220, 606.
Application of NPCR, Inc. d/b/a Nextel Partners for Designation as an Eligible
Telecommunications Carrier in Wisconsin PSC Docket No. 8081-TI-101 , Final Decision (Sept.
, 2003) Nextel Partners Wisconsin Order (Ex. 108); Application of NPCR, Inc. d/b/a
Nextel Partners for Designation as an Eligible Telecommunications Carrier Under 47 Us.
$ 214(e)(2), Miss. Pub. Svc. Comm n Docket No. 03-UA-0256, Order (Sept. 29, 2003) (Ex. 109);
In re: NPCR, Inc. d/b/a Nextel Partners Iowa Utils. Bd., Docket No. 199 lAC 39.2(4), Order
Designating Eligible Carrier (May 15 , 2003); In the Matter of the Application of NPCR, Inc.
d/b/a Nextel Partners for Designation as an Eligible Telecommunications Carrier Pursuant to
Section 214(e)(2) of the Communications Act of 1934 as Amended Arkansas PSC Docket No.
03-141-, Order No.4 (Dec. 22, 2003) (attached hereto as Exhibit 111).
3 Mr. Trampush agreed that "Congress made a decision to bring competition to all areas because
competitive markets generally benefit consumers." Tr.547.
Mr. Tade testified that "(t)he most effective way to promote economic efficiency in
competitive markets is to allow competitive market forces to entice and discipline the behavior
of firms. Effective competition requires that all firms must compete on the merits of their
respective efficiencies." Tr. 586-87.
NEXTEL PARTNERS' POST-HEARING BRIEF IN SUPPORT OF APPLICATION
FOR DESIGNATION AS AN ELIGIBLE TELECOMMUNICATIONS CARRIER-4
IV.BACKGROUND OF FEDERAL UNIVERSAL SERVICE MECHANISMS
In the Act, Congress directed the FCC and states to act jointly to establish support
mechanisms to ensure the delivery of basic telecommunications services to all Americans.
C. 9254(a)(1). Prior to the Act, the states and the federal government attempted to facilitate
telecommunications services in rural areas through implicit subsidies designed to benefit
incumbent LECs, such as excessive access charges, provisioning of non-competitive services at
above-cost rates and state geographically averaged rates. By establishing universal service
support mechanisms under the Act, Congress moved away from implicit subsidies, with explicit
federal and state subsidies then available to the ETC.This would allow competition to drive
costs and prices down in all telephone markets.
Through the Act, Congress directed the FCC and states to establish specific, predictable
and sufficient support mechanisms for universal service. See 47 U.C. 9254(d). The FCC has
put in place funding mechanisms that provide for sufficient and predictable funding in high cost
areas, and continues to seek guidance from the Joint Board on how these funding mechanisms
can be improved to achieve the Act's goals. As part of this process, the FCC adopted a five-year
plan in 2001 that assures rural telephone companies will not lose federal universal service
support - even if they lose customers - through 2006. This transition period allows competitive
universal service to develop in rural company areas:
We conclude that the plan we adopt today will preserve and advance universal
service, consistent with the goals and principles set forth in section 254 of the Act
and encourage competition in high-cost areas, consistent with the competitive
goals of the 1996 Act.In particular, we find that adoption of the modified
embedded cost mechanism is consistent with our obligation to ensure that the
support provided to rural carriers over the next five years is specific, predictable
In the Matter of Federal-State Joint Board on Universal Service CC Docket No. 96-
Report and Order, FCC 97-157, ~~ 17-19 (reI. May 8 1997) Universal Service Order ); In the
Matter of Federal-State Joint Commission on Universal Service CC Docket No. 96-, Seventh
Report and Order, FCC 99-119, ~ 30 (reI. May 28, 1999) ("Seventh Report and Order
NEXTEL PARTNERS' POST-HEARING BRIEF IN SUPPORT OF APPLICATION
FOR DESIGNATION AS AN ELIGIBLE TELECOMMUNICATIONS CARRIER-
and sufficient. In addition, we find that the mechanism is consistent with the
goals of section 254 to ensure that consumers in rural, insular, and high-cost areas
have access to telecommunications services at rates that are affordable and
reasonably comparable to rates charged for similar services in urban areas.
find further that the flexible plan for disaggregating and targeting support adopted
in this Order will facilitate competitive entry into high-cost areas, bringing the
benefits of competition to consumers in rural areas.
Now that these mechanisms are in place, it is up to this Commission to ensure that they will be
utilized to provide benefits to consumers in high cost, rural areas ofIdaho.
Granting ETC designation does not in and of itself mean Nexte1 Partners will receive
federal subsidies.Instead, once designated
, "
a carrier s continuing status as an (ETe) is
contingent upon continued compliance with the requirements of Section 214( e) and only an
eligible carrier that succeeds in attracting and/or maintaining a customer base to whom
provides universal service will receive universal service support.7 In addition, Nextel Partners
ability to receive support from the federal fund will not completely level the playing field with
incumbent LECs because the LECs will continue to receive subsidies not available to Nextel
Partners. It will, however, prompt competition in the universal service market and is the first
step in allowing Idaho consumers the benefits envisioned by the Act.
Both the Act and the Universal Service Order establish the requirements for a carrier to
be designated an ETC. Section 214( e)(1) requires a carrier to be a common carrier; provide a
base set of supported services established by the FCC in 47 C.R. 9 54.101(a); advertise the
availability of the services and charges; provide the supported services throughout a designated
service area; and in areas served by rural telephone companies, demonstrate that designation of
an additional ETC is in the public interest. 47 U.C. 9214(e)(1)-(2).
In the Matter of Federal-State Joint Board on Universal Service CC Docket 96-, Fourteenth
Report and Order, FCC 01-157, ~ 10 (reI. May 23, 2001) Fourteenth Report and Order
(emphasis added). Mr. Wood discussed these mechanisms at length in his testimony.
Universal Service Order ~ 138.
NEXTEL PARTNERS' POST-HEARING BRIEF IN SUPPORT OF APPLICATION
FOR DESIGNATION AS AN ELIGIBLE TELECOMMUNICATIONS CARRIER-
NEXTEL PARTNERS SATISFIES THE ELIGIBILITY CRITERIA OF 47 U.
~ 214(e)(1)
The record evidence establishes that Nextel Partners meets all criteria for ETC
designation contained in Section 214(e)(1). Those criteria are discussed below with reference to
the record evidence.
Nextel Partners is a Common Carrier
The first requirement for ETC designation is status as a common carrier under federal
law. Nextel Partners is a "telecommunications carrier" as defined in 47 U.C. 9 153(49), and is
authorized by the FCC to provide CMRS in those portions of Idaho identified on Exhibit 106. Its
current network coverage is shown on Exhibits 103 and 104. A "common carrier" is generally
defined in 47 U.C. 9 153(10) as a person engaged as a common carrier on a for-hire basis in
interstate communications utilizing either wire or radio technology. The FCC's regulations
specifically provide that a specialized mobile radio service, like that provided by Nextel Partners
is a common carrier service. See 47 C.R. 920.9(a)(4). Nextel Partners is therefore a "common
carrier" for purposes of obtaining ETC designation under 47 u.S.C. 9214(e)(1). The testimony
in this regard is undisputed. Tr. 9 , 545.
Nextel Partners Provides Each of the FCC's Supported Services
The record confirms that Nextel Partners can provide each of the supported services
required of an ETC under 47 c.F.R. 9 54.101(a), and will offer those services to its universal
service customers once designated an ETC.Tr. 20-27.Nextel Partners introduced clear
evidence that it has existing wireless facilities and sufficient capacity to provide the supported
services in the areas for which it seeks designation. Tr. 20-21. Each of these federal universal
services is discussed more fully below.
Voice-grade access to the public switched telephone network.The
FCC concluded that voice-grade access means the ability to make
NEXTEL PARTNERS' POST-HEARING BRIEF IN SUPPORT OF APPLICATION
FOR DESIGNATION AS AN ELIGIBLE TELECOMMUNICATIONS CARRIER-
and receive phone calls within the 300 to 3000 Hertz frequency
range. 47 C.R. 954.101(a)(1). Through its interconnection
arrangements with local telephone companies, all Idaho customers
ofNextel Partners are able to make and receive calls on the public
switched network within the FCC's specified bandwidth. Tr. 22.
Local usage.An ETC must include an amount of free local usage
determined by the FCC as part of a universal service offering. 47
R. 954.101(a)(2). The FCC has not quantified a minimum
amount of local usage required to be included in a universal
service offering, but has declined to require that ETCs offer
unlimited local usage.8 Nextel Partners can and will include local
usage in its universal service offerings. Tr. 22.
Dual-tone, multi-frequency ("DTMF") signaling, or its functional
equivalent.DTMF is a method of signaling that facilitates the
transportation of call set-up and call detail information. Carriers
that provide signaling that is functionally equivalent to DTMF
meet this requirement. 47 C.R. 954.101(a)(3). Nextel Partners
uses out-of-band digital signaling and in-band multi-frequency
MF"signaling that is functionally equivalent to DTMF
signaling. Tr. 23.
Single-party service or its functional equivalent.Single-party
service" means that only one party will be served by a subscriber
loop or access line, in contrast to a multi-party line. 47 C.
954.101(a)(4); Universal Service Order ~ 62. Nextel Partners
meets this requirement by providing a dedicated message path for
the length of all customer calls. Tr. 24.
Access to emergency services.The ability to reach a public safety
answering point ("PSAP") by dialing 911 is a required service.
Enhanced 911 , or "E911 " is only required if a PSAP is capable of
receiving and utilizing such information, and requests the delivery
of such information from a wireless provider. Universal Service
Order ~~ 72-73. Nextel Partners currently provides its customers
with access to emergency services by dialing 911 in satisfaction of
this requirement. Tr. 24. Nextel Partners has deployed Phase I
and Phase II E911 as requested in Ada County. Nextel Partners
will continue to implement Phase I and Phase II E911 requests in
accordance with FCC rules. Id.
Access to operator services.Access to operator services is defined
as any automatic or live assistance provided to a consumer to
In The Matter of Federal-State Joint Board on Universal Service CC Docket No. 96-, Order
and Order on Reconsideration, ~ 14 (reI. July 14 2003) July 2003 Order
NEXTEL PARTNERS' POST-HEARING BRIEF IN SUPPORT OF APPLICATION
FOR DESIGNATION AS AN ELIGIBLE TELECOMMUNICATIONS CARRIER-
arrange for the billing or completion, or both, of a telephone call.
47 C.R. 9 54.101(a)(6); Universal Service Order ~ 75. Nextel
Partners demonstrated it meets this requirement by providing all of
its customers with access to operator services provided by either
the Company or other entities (e.g. LECs, IXCs, etc.). Tr. 25-26.
Access to interexchange service. A universal service provider
must offer consumers access to interexchange service to make and
receive interexchange calls. 47 c.F.R. 9 54.101(a)(7). Nextel
Partners meets this requirement by providing its customers the
ability to make and receive interexchange or toll calls through
direct interconnection arrangements the Company has with several
interexchange carriers. Tr. 26.
Access to directory assistance . The ability to place a call directly
to directory assistance is a required service offering. 47 C.
954.101(a)(8). Nextel Partners meets this requirement by
providing all of its customers with access to directory assistance by
dialing "411." Tr. 26.
Toll limitation for qualifying low income consumers . An ETC
must offer either "toll control" or "toll blocking" services to
qualifying Lifeline customers at no charge. Nextel Partners is
unable to provide toll control at this time. However, The record
evidence establishes that the Company is fully capable of
providing toll blocking and that it can and will provide the service
to its Lifeline and Link Up customers, at no charge, as part of its
universal service offerings. Tr. 26-27.
Intervenor witness Mr. Trampush agreed that Nextel Partners can provide these nine
supported services:
Tr. 546.
Do you take issue with Nextel Partners' statements that it is able to provide
the nine supported services?
In the areas they ve requested, I believe they can.
In addition, the Commission has already found that Clear Talk - a CMRS provider like
Nextel Partners - provides these supported services.9 The Commission should enter an order
In the Matter of the Petition of IAT Communications, Inc. d/b/a NTCH-Idaho, Inc. or
ClearTalk for Designation as an Eligible Telecommunications Carrier Idaho PUC Docket No.
GNR-03-, Order No. 29261 (June 11 2003).
NEXTEL PARTNERS' POST-HEARING BRIEF IN SUPPORT OF APPLICATION
FOR DESIGNATION AS AN ELIGIBLE TELECOMMUNICATIONS CARRIER-
that Nextel Partners demonstrated an intent and ability to provide the supported services upon
designation. 10
Nextel Partners Will Satisfy Advertising Requirements
The third requirement for ETC designation is that a carrier agree to advertise the
availability and charges for the supported services using media of general distribution. 47 u.S.
9214(e)(1). To date, neither the FCC nor the Commission has adopted any specific advertising
guidelines for any ETC. 11 Nextel Partners has committed to advertising in media of general
distribution, including in newspapers and magazines and on radio and television, in accordance
with the federal law, and provided the outline for an advertising plan. Tr. 32-33 & Exhibit 105.
Intervenors offered no evidence suggesting any deficiency in Nextel Partners' plan or
commitment to advertise its universal service offerings. Thus, the Commission should properly
conclude that Nextel Partners satisfies the advertising requirement under Section 214(e)(1).
Nextel Partners Will Participate in Lifeline and Link Up
Federal law requires all ETCs to participate in federal Lifeline and Link Up programs
which support the provision of universal service to low-income customers. The rules governing
Lifeline and Link Up are set forth within 47 C.R. 99 51.400 - 54.415. In its Application
Nextel Partners acknowledged and undertook these obligations. Application
, ~
10(i). Mr.
Peabody further discussed these programs in his testimony. Tr. 26-27. The Commission should
find Nextel Partners will participate in the Lifeline and Link Up programs in compliance with
FCC rules as is required of all ETCs.
10 Citizens had earlier suggested that Nextel Partners would be required to provide unlimited
local usage. Tr. 592. While Nextel Partners does have one plan that includes unlimited usage
(Tr. 64), the FCC has recently confirmed that "unlimited local usage should not be added to the
list of supported services.July 2003 Order ~ 14.
11 Universal Service Order ~ 148.
NEXTEL PARTNERS' POST-HEARING BRIEF IN SUPPORT OF APPLICATION
FOR DESIGNATION AS AN ELIGIBLE TELECOMMUNICATIONS CARRIER-
Nextel Partners Provides the Required Services Using its Own Facilities
An ETC must offer the required services using its own facilities or a combination of its
own facilities and another carrier s services. Nextel Partners currently provides the required
services using its existing, facilities-based digital network infrastructure and licensed CMRS
spectrum in Idaho. Tr. 20-21. Intervenors offered no evidence to challenge Nextel Partners
demonstrated satisfaction of this request. Accordingly, the Commission should find that N extel
Partners meets the requirement to provide service through its own facilities.
VI.NEXTEL PARTNERS HAS IDENTIFIED APPROPRIATE DESIGNATED
SERVICE AREAS
The Standard for an ETC Service Area is Set forth in Federal Law
The final requirement for ETC designation (except for the public interest factor in rural
LEC areas discussed below), is that a carrier establish appropriate service areas through which it
will offer and advertise the supported services. 47 U.C. 9214(e)(1). Section 214(e)(5) of the
Act defines the term "service area" as a geographic area established by a state commission for
the purpose of determining universal service obligations and support mechanisms. 47 u.S.
9214(e)(5). For an area served by a rural telephone company, 47 U.C. 9 214(e)(5) provides
that the term "service area" means the rural telephone company s "study area " unless and until
the FCC and a state commission establish different service areas under the procedures set forth in
47 C.R. 954.207(c)-(d).
Exhibit 106 identifies the rural LEC study areas and Citizens exchanges for which Nextel
Partners seeks designation as an ETc. Nextel Partners operates pursuant to licenses that cover
the entire study areas of Albion, Filer Mutual, Fremont and Project Mutual. Thus, Nextel
Partners seeks unconditional designation for these rural telephone companies. For the areas
12 A "study area" is generally considered to be all of the rural telephone company s existing
certificated exchange service areas in a given state. Universal Service Order ~ 172 n. 434.
NEXTEL PARTNERS' POST-HEARING BRIEF IN SUPPORT OF APPLICATION
FOR DESIGNATION AS AN ELIGIBLE TELECOMMUNICATIONS CARRIER-
served by Citizens, Nextel Partners seeks ETC designation conditioned on the Commission and
FCC redefining the service area requirement for Citizens' service area on an exchange basis
pursuant to 47 C.R. 9 54.207(b). As explained below, Nextel Partners' redefinition request is
fully consistent with federal law.
A New ETC Must Be Given a Reasonable Opportunity to Extend its Network
in its Designated Areas
The FCC has made clear that a new entrant can be designated as an ETC before building
out its network, and does not need to provide detailed business and buildout plans as part of an
application.13 Instead, a new entrant like Nextel Partners should be designated as an ETC , and
must be given a reasonable opportunity, subject to real world business limitations, to serve an
area. The Declaratory Ruling contains the following discussion:
A new entrant faces a substantial barrier to entry if the incumbent local
exchange carrier (LEC) is receiving universal service support that is not
available to the new entrant for serving customers in high-cost areas.
believe that requiring a prospective new entrant to provide service
throughout a service area before receiving ETC status has the effect of
prohibiting competitive entry in those areas where universal service
support is essential to the provision of affordable telecommunications
service and is available to the incumbent LEC. Such a requirement would
deprive consumers in high-cost areas of the benefits of competition by
insulating the incumbent LEC from competition.
No competitor would ever reasonably be expected to enter a high-cost
market and compete against an incumbent carrier that is receiving support
without first knowing whether it is also eligible to receive such support.
We believe that it is unreasonable to expect an unsupported carrier to enter
a high-cost market and provide a service that its competitor already
provides at a substantially supported price. Moreover, a new entrant
cannot reasonably be expected to be able to make the substantial financial
investment required to provide the supported services in high-cost areas
without some assurance that it will be eligible for federal universal service
13 In the Matter of Federal-State Joint Board on Universal Service Western Wireless
Corporation Petition for Preemption of an Order of the South Dakota Public Utilities
Commission CC Docket 96-, Declaratory Ruling, FCC 00-248 (reI. Aug. 10, 2000)
Declaratory Ruling
NEXTEL PARTNERS' POST-HEARING BRIEF IN SUPPORT OF APPLICATION
FOR DESIGNATION AS AN ELIGIBLE TELECOMMUNICATIONS CARRIER-
support. In fact, the carrier may be unable to secure financing or finalize
business plans due to uncertainty surrounding its designation as an ETC
The Intervenors have argued in this case that Nextel Partners' Application should be
denied because it does not have business plans that would show ubiquitous buildout within a
short period of time. Tr. 521. This is, however, exactly the kind of showing the FCC rejected in
the Declaratory Order. As Mr. Peabody explained, the company has been providing service for
only a few years, and cannot make business commitments about specific additional buildout until
it is designated as an ETC, evaluates funding levels, considers its capital budgets, and analyzes
other market dynamics. Tr. 73.
Intervenor witnesses Mr. Trampush recognized on cross-examination that a company like
Nextel Partners is obligated to make good financial decisions, and that capital markets simply do
not allow companies to commit to huge investments without consideration of the financial
impacts:
Who provides the capital resources for a publicly-traded company to make
capital investment?
Either equity shareholders or bondholders.
And do those individuals require that the company make good economic
decisions?
They look at business plans prior to making investments, yes, and the
historic use of the funds.
And if a company came in and promised to spend $25 million to provide
ubiquitous service throughout an area without considering the economic
models, customer demand, revenue streams or the ability to make the
investment back, nobody would give the company the money to spend
would they?
Well, no one would go to an investor without a business plan supporting
that kind of capital.
14
Declaratory Ruling, ~~ 12-13 (emphasis added).
NEXTEL PARTNERS' POST-HEARING BRIEF IN SUPPORT OF APPLICATION
FOR DESIGNATION AS AN ELIGIBLE TELECOMMUNICATIONS CARRIER-
Tr. 560.
It is essential for the Commission to recognize that as a competitor, Nextel Partners is not
guaranteed a single dollar from the federal universal service funds - it will obtain funds only for
customers who choose its service.Because neither the Commission nor the FCC would
guarantee cost recovery, a competitor simply cannot be required to commit the huge capital
investments proposed by the Intervenors.Tr. 73 (Peabody) ("Intervenors propose that we
guarantee that we will complete a significant buildout in a short period of time with no certainty
that we will have any chance to make a profit. No unregulated new entrant could ever meet this
standard. "). Moreover, the notion that the Intervenors today provide "ubiquitous" service - or
intend to do so - is simply wrong. As Mr. Wood testified, ILECs generally cover 2% - 3% of
their service territory. Tr. 293. No one would suggest these carriers must demonstrate plans to
cover the remaining 97% as a condition of ETC designation. The Interventors' arguments are
nothing more than artificial barriers to entry designed to protect their own financial interests, and
should be rejected.
Nextel Partners has Accepted the Service Obligation Imposed on ETCs
The Commission should find that Nextel Partners has demonstrated an intent and ability
to meet the obligations of an ETC. Nextel Partners has clearly undertaken the service obligations
of an ETC:
Upon designation, Nextel Partners with provide the supported services within
those Designated Areas consistent with the obligations of an ETC." Application
~ 11.
As is clear from the Idaho coverage map, Nextel Partners is well-equipped to
respond to "reasonable requests for service" throughout the rural telephone
company study areas for which it seeks designation in Idaho, and Nextel Partners
will meet all of its legal obligations." Tr. 30-31.
Nextel Partners is licensed in all areas where we seek ETC designation, and
commits to meet the obligations of an ETC." Tr. 71.
NEXTEL PARTNERS' POST-HEARING BRIEF IN SUPPORT OF APPLICATION
FOR DESIGNATION AS AN ELIGIBLE TELECOMMUNICATIONS CARRIER-
In addition, Nextel Partners is willing to work with Commission Staff on an ongoing basis to
show how funds are being used and to show progress in its network buildout. Nextel Partners
has made the commitment to meet the service obligations imposed on all ETCs.
Nextel Partners has the ability to meet these obligations. Nextel Partners has already
made a tremendous commitment to Idaho, operating pursuant to licenses that cover all requested
ETC service areas. Tr. 71. As Mr. Peabody explained, these licenses were expensive and
involved complex bidding procedures and extensive negotiations. Tr.73. The Intervenors agree
this demonstrates a commitment to service these areas. Tr. 557 (Trampush); 608-09 (Tade).
Second, Nextel Partners has accomplished a significant buildout of these areas in a few short
years. Tr. 11; Exs. 103 and 104. Again, the Intervenor witnesses could not dispute the fact that
this buildout represents significant action toward serving these areas. Tr. 557, 608-09. By its
clear commitment, combined with significant action towards building out licensed areas, Nextel
Partners meets the obligation to be designated as an ETC in all areas set forth in its Application.
VII.NEXTEL PARTNERS' ETC DESIGNATION IS IN THE PUBLIC INTEREST
Section 214( e )(2) gives the Commission the responsibility to make a public interest
determination for designation of an additional ETC in an area served by a rural telephone
company. In accordance with the stated purposes of the Act 15 the FCC has determined that the
public interest is served when rural consumers are provided the benefits of competitive universal
services. Thus, in the absence of empirical evidence that rural consumers will be harmed, or
evidence that a specific rural telephone company study area cannot support competitive universal
15 Pub. L. No.1 04-104, 110 Stat. 56 (1996) ("To promote competition and reduce regulation
order to secure lower prices and higher quality services for American telecommunications
consumers and encourage the rapid deployment of new telecommunications technologies
. "
(emphasis added).
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service, the FCC has concluded that a CMRS provider should be designated as a competitive
ETC in a rural telephone company area:
We conclude that it is in the public interest to designate Western Wireless as an
ETC in Wyoming in those designated service areas that are served by rural
telephone companies. Western Wireless has made a threshold demonstration that
its service offering fulfills several of the underlying federal policies favoring
competition We find that there is no empirical evidence on the record to support
the contention that the designation of Western Wireless as an ETC in those
designated service areas served by rural telephone companies in Wyoming will
harm consumers. In fact, we conclude that those consumers will benefit from the
provision of competitive service and new technologies in high-cost and rural
areas.
We note that an important goal of the Act is to open local telecommunications
markets to competition. Designation of competitive ETCs promotes competition
and benefits consumers in rural and high-cost areas by increasing customer
choice innovative services, and new technologies We agree with Western
Wireless that competition will result not only in the deployment of new facilities
and technologies, but will also provide an incentive to the incumbent rural
telephone companies to improve their existing network to remain competitive
resulting in improved service to Wyoming consumers. In addition, we find that
the provision of competitive service will facilitate universal service to the benefit
of consumers in Wyoming by creating incentives to ensure that quality services
are available at "just, reasonable, and affordable rates.
* * *
We reject the general argument that rural areas are not capable of sustaining
competition for universal service support.We do not believe that it is self-evident
that rural telephone companies cannot survive competition from wireless
providers. Specifically, we find no merit to the contention that designation of an
additional ETC in areas served by rural telephone companies will necessarily
create incentives to reduce investment in infrastructure, raise rates, or reduce
service quality to consumers in rural areas. To the contrary, we believe that
competition may provide incentives to the incumbent to implement new operating
efficiencies, lower prices, and offer better service to its customers.While we
recognize that some rural areas may in fact be incapable of sustaining more than
one ETC, no evidence to demonstrate this has been provided relating to the
requested service areas. We believe such evidence would need to be before us
before we could conclude that it is not in the public interest to designate Western
Wireless as an ETC for those areas served by rural telephone companies.
16 See In the Matter of Western Wireless Corp. Petition for Designation as an Eligible
Telecommunications Carrier in the State of Wyoming, CC Docket No. 96-, Memorandum
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Consistent with these guiding principles, the Commission should consider the record
evidence relating to the public interest in light ofthe following factors:
Will the ETC designation facilitate competition in the provision of universal
services to the benefit of Idaho s rural consumers?
Does the record demonstrate any significant adverse impact . to any rural
consumers resulting from the ETC designation so significant as to justify denying
rural consumers the benefits of competition?
The record before the Commission demonstrates the goals of the Act and the interests of
the public will be promoted by granting ETC designation to Nextel Partners. Idaho s rural
consumers will realize the benefits of competition through increased choices, and granting the
designation will also further the deployment of new telecommunications services to Idaho s rural
consumers. Further, there is no evidence that consumers may be harmed as a result of Nextel
Partners' ETC designation.The Commission should approve Nextel Partners' Application
consistent with the public interest.
Granting ETC Designation Will Facilitate Competition to the Benefit of
Rural Consumers
The Commission should first determine that Nextel Partners' ETC designation will
facilitate competition that will benefit rural consumers consistent with the public interest. The
1996 Act requires that universal service goals be accomplished through competition. The Fifth
Circuit Court of Appeals confirmed this when it recognized that a "primary purpose " of the Act
is "to herald and realize a new era of competition in the market for local telephone service while
continuing to pursue the goal of universal service." 17 The
Alenco decision requires that the Act
must be implemented in a way that accommodates the "dual mandates" of promoting both
Opinion and Order, DA 00-2896, ~ 16-, 22 (reI. Dec. 26, 2000) Western Wireless Order
(emphasis added).
17 Alenco Communications, Inc. v. FCC 201 F.3d 608, 625 (5th Cir. 2000).
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competition and universal servIce.Id. at 615.Moreover, the Act promised competitive
telecommunications markets in all areas of the nation, not just in urban areas: "Consumers in all
regions of the Nation, including low-income consumers and those in rural, insular, and high cost
areas, should have access to telecommunications and information services. . .." 47 U.
9254(b)(3).
As Commissioner Smith noted at the hearing (Tr. 625), the Idaho Legislature has also
determined that telecommunications markets should evolve to competitive markets, which will
bring benefits to consumers:
The legislature further finds that the telecommunications industry is in a state of
transition from a regulated public utility industry to a competitive industry. The
legislature encourages the development of open competition in the
telecommunications industry in accordance with provisions of Idaho law and
consistent with the federal telecommunications act of 1996.
Idaho Code 9 62-602(4). Thus both federal and state law bring a significant policy preference
for competitive markets, and this policy preference must be a driving force behind the public
interest analysis.
Nextel Partners' Designation will Advance General Benefits of
Competition
By designating Nextel Partners as an ETC the Commission will advance the development
of competitive markets in Idaho. The Intervenors are the only universal service providers in their
service areas (Tr. 544), and competitive landline markets have simply not developed in areas
served by rural telephone companies.Wireless carriers offer the only real alternative for
competitive universal service, and Nextel Partners stands ready, willing and able to take on the
obligations of an ETC.
By designating Nextel Partners as a federal ETC, the Commission will allow consumers
to choose their service provider by determining which carrier provides the most advantageous
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pricing, services, service quality, customer service and service availability. Tr. 186. As the FCC
has recognized, increased competition creates incentives for the rural LECs to improve their own
networks, operate more efficiently and improve customer service, all of which benefits
consumers and promotes universal service.The Wisconsin Public Service Commission
(among others) has similarly found that "designating Nextel (Partners) as an ETC in areas served
by rural companies will ... increase consumer choice... spur ILEC infrastructure deployment
and encourage further efficiencies and productivity gains.19 This is supported by Mr. Wood'
testimony in this case:
End users will benefit in the short term from a choice of suppliers that represent
different technologies, and can choose the technology that best meets their needs.
They can also select from a much broader array of service and pricing plans, and
again can choose the plan that best meets their individual needs. Over the longer
term, consumers will benefit as competitive market forces act to make all
providers, including the ILECs, more efficient and responsive to customer needs.
Tr. 169. Intervenor witness Mr. Trampush also agreed that competitive markets can be expected
to provide these benefits for consumers.Tr. 547 (agreeing that in a competitive market
consumers are able to determine which offerings best meet their needs).
Facilitating competition by Nextel Partners thus serves the public interest because of the
general benefits that competitive markets bring to rural consumers.
Nextel Partners' Designation Will Bring Specific Benefits to Idaho
Consumers
In addition to general benefits of competition, Nextel Partners' designation will also bring
significant specific benefits to the state of Idaho. Nextel Partners operates a highly sophisticated
network that uses integrated Digital Enhanced Network (iDENTM) technology, a packet-based
platform developed by Motorola. This all-digital technology provides exceptional sound and
18 Wyoming Order ~ 22.
19 Nextel Partners Wisconsin Order p. 8.
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transmission quality, using state-of-the-art methods capable of delivering Digital Cellular, Direct
ConnectSM Service PUSH TO TALKCID (walkie-talkie service), Mobile Messaging, and Internet
access. Tr. 52-53.
As an ETC, Nextel Partners will provide servIces not otherwise available from the
landline LECs. For example, current service offerings by incumbent LECs have restricted local
calling areas, whereas Nextel Partners' local calling area is the entire state of Idaho. Tr. 29 , 62.
These expanded calling areas will be of great benefit to rural consumers who currently have to
pay toll charges to reach some government offices, health care providers, businesses or family
outside of a restricted landline calling area. Consumers are also able to choose service plans that
include nationwide calling. Tr. 85. These options are not available from the incumbent ETCs.
Nextel Partners' service also provide the benefits of mobility, which is an important
feature for many universal service consumers in rural areas, where the distance between landline
phones is much greater than in urban areas. In addition, Nextel Partners' customers obtain the
full benefits of mobility because they are never assessed a roaming charge. Tr. 121. Part ofthis
mobility component is mobile 911 - the ability to reach a 911 operator away from home. This is
a tremendous safety feature than simply cannot be provided by the incumbent ETCs. Tr.
(Peabody), 546 (Trampush).Nextel Partners also actively implements E911 requests, and
provides its customers with GPS location technology where the PSAP has the ability to receive
that information. Tr. 53.
Nextel Partners also offers its DirectConnectTM walkie-talkie feature that allows
NEXTEL users to connect to each other instantly. Tr. 84. This is a distinctive feature that
Nextel Partners' customers find valuable , and which is not available from any other ETC. As
Citizens recognizes, this and many other unique and advanced services distinguish Nextel
Partners' service offerings from those of landline LECs. Tr. 619.
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Designating Nextel Partners as an ETC will also serve the public interest by further
facilitating the extensive role Nextel Partners plays in the provision of communications services
to Idaho public schools, libraries and local, state and federal government agencies, specifically
law enforcement.Nextel Partners presently provides wireless service for at least 9 Idaho
colleges and universities, public schools and libraries, 17 divisions of Federal Government
agencies in Idaho, and more than 50 state and local government agencies, including police, fire
and similar first-responders. This segment of the Company s business is particularly important to
Nextel Partners as it reflects the partnership Nextel has had with the public safety community.
This commitment is further evidenced by Nextel Partners' investment of millions of dollars to
address concerns arising from the power blackout in the eastern United States last summer. Tr.
143.
The Commission should thus find that designating Nextel Partners as an ETC will bring
specific benefits to Idaho consumers, thus serving the public interest.
More Complete Network Deployment Will Benefit Idaho
Consumers
Nextel Partners ETC designation will also promote the deployment of wireless
technologies throughout Idaho by allowing the Company to continue to enhance and expand its
network infrastructure?O Access to universal service funding will allow Nextel Partners to
continue to extend its network throughout the state, bringing wireless service to consumers who
currently have none, and improving service to current wireless consumers.This network
infrastructure will continue to be available to provide universal and advanced services to rural
20 The Wisconsin Public Service Commission found that "the availability of high cost support for
infrastructure deployment will allow Nextel (Partners) to expand its (service) availability.
Nextel Partners Wisconsin Order p. 8.
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consumers in Idaho. In short, customers will benefit as Nextel Partners builds out its network
facilities.
Nextel Partners provided evidence that its buildout of these areas depends on access to
universal service support (Tr. 148), and that without support, such buildout may not happen at
all. Tr. 145-46. Mr. Peabody gave two specific examples of how universal service funding may
in fact be the push that is needed to bring private capital into areas of the state:
There s been a site in the (Parma) area that has been on and off our build list for a
period of time. It's been approved and disapproved and approved and it's sort of
in this limbo land. I am convinced that designation in that area would tip the
scales and we would actually build for that community.
In eastern Idaho, there s a site that is in Hamer that is a two-sector site.
Now, as you probably are aware, that has some advantages of cost, but we could
very easily make that a three-sector site which would increase the footprint.
Those typically cost 20 to $30 000, so the folks in that community would benefit
from having the ability to have Universal Service Funding.
Tr. 145-46. The Commission should find that designating Nextel Partners as an ETC will serve
the public interest by promoting network buildout and expansion in rural areas ofIdaho.
Nextel Partners Advances the Goal of Comparability in Section
254(b)(3)
Finally, Nextel Partners' service is fully consistent with Congress ' basic universal service
principle that rural consumers must be afforded access to telecommunications services
reasonably comparable to those services provided in urban areas " and at rates comparable to
those charged for similar services in urban areas. See 47 u.S.C. 9254(b)(3).
Nextel Partners' corporate mission is to provide NEXTEL services in small and rural
markets at the same rates offered by Nextel Communications in large urban markets. Tr. 56-57;
87. This is exactly what universal service funds should be supporting. Even Citizens and ITA
had to agree that consumers in rural areas should have access to the same services at comparable
prices as offered to consumers in urban areas, and that Nextel Partners advances this central goal
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of universal service. Tr. 549. To maintain this comparability in the long run, the Commission
should designate Nextel Partners as an ETC.
Rural Consumers Will Not Be Harmed By Nextel Partners' ETC Designation
The Commission find there is no reason to believe consumers will be adversely affected
by the ETC designation. Without such adverse impacts, the Intervenors' attempts to oppose
Nextel Partners' Application must fail.
No Intervenor Service Areas Are Unable to Support Competitive
Universal Service
The FCC has recognized that it is theoretically possible that a small service area might be
unable to support multiple universal service providers, and that such a fact could be considered
when evaluating the public interest.21 However, such a claim would need to be supported by
hard evidence presented by the challenging ILECs. Here, the Intervenors made broad assertions
that competition would not be sustainable. For example, Mr. Trampush first argued that Nextel
Partners might "creamskim" the incumbent's best customers, placing the incumbent at risk. Tr.
494, 499, 501. However, he later disqualified himself on this point by stating that there is no
evidence that wireless companies are taking away landline customers:
But if the many wireless carriers in the rural telephone companies service areas
were in fact competing with the incumbent to provide universal service, we would
expect to see significant line count losses by the incumbents. This simply hasn
happened.
Tr. 533.This admission makes clear that Nextel Partners' success with wireless business
customers does not put the Intervenors at risk.
21 Western Wireless Order ~ 22.
22 Moreover, to the extent Citizens claims an inability to respond to competition, the
Commission should reject such claims out of hand. Citizens obtains $7 million of federal
universal service funding in Idaho, $130 000 000 nationwide, and is a very successful, national
carrier. Tr.605.
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In addition, it is undisputed that the Intervenors will continue to receive funding based on
embedded costs, even if they lose lines, through 2006. Tr. 220, 606. This extra protection for
the Intervenors provides creates an opportunity to transition to competition, not fortify monopoly
markets. This is exactly what the FCC said when it implemented this mechanism.23 Tr. 232-
(rural LECs have an "extended transition period in which to improve their efficiency, reduce
their costs, and better prepare themselves to operate in a competitive market"). At bottom, the
question is whether, based on the record, the Commission needs to choose between competition
and universal service, or whether the two can co-exist. Mr. Trampush at the hearing testified the
Commission can accomplish these two goals simultaneously:
Do you believe this commission needs to make a choice between universal
service and competition?
I dont believe so.
Tr. 551. The Commission should thus reject claims that Intervenor service areas are unable to
support competition.
Consumers Are Not Harmed by The FCC's Regulation of
Competitive Wireless Markets
The Intervenors have opposed designation of Nextel Partners because it provides wireless
services regulated by the FCC, and is not subject to ILEC service quality rules. Tr. 588. Denial
of the Application on those grounds would be unlawful and bad policy.
First, the FCC has made clear that a state commission cannot deny ETC designation
simply because it does not regulate the service quality of the provider:
We note that not all carriers are subject to the jurisdiction of a state commission.
Nothing in section 214(e)(1), however, requires that a carrier be subject to the
jurisdiction of a state commission in order to be designated an eligible
telecommunications carrier. Thus tribal telephone companies, CMRS providers
23 Fourteenth Report and Order ~ 10.
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and other carriers not subject to the full panoply of state regulation may still be
designated as eligible telecommunications carriers.
Here, the fact is that the FCC, not the Commission, regulates the services provided by Nextel
Partners. This regulatory reality does not change by virtue of the ETC designation. An adverse
public interest finding based on Nextel Partners' regulatory status would be contrary to federal
law.
There is also no policy reason to regulate Nextel Partners like an ILEC simply because it
is an ETC. The FCC, which is responsible for regulating the wireless industry, has been very
clear that its regulation of the national wireless market has worked. Tr. 89-91. The Intervenors
failed to offer any evidence challenging the FCC's regulation of the industry. In addition, when
questioned directly, Mr. Trampush, was unable to identify any specific harms to consumers that
would result from designating wireless ETCs. Tr. 556. The fact that ILEC markets are not yet
competitive is not a reason to regulate competitive wireless markets.
The record evidence shows that market forces are increasing the benefits to the public in
the wireless industry. Nextel Partners, without being subject to the regulations the Intervenors
propose, leads the industry in customer satisfaction and customer retention. Tr. 141. Moreover
as noted by Mr. Peabody, Nextel Partners' lowest-priced rate plan was reduced by over 15% -
from $36.00 to $30.00 - since the Application was filed. Tr. 149. At the same time, the services
within that package were expanded. Tr. 149. Market forces have driven Nextel Partners to
reduce call blocking levels to less than 1% (Tr. 144), and to address backup power issues raised
after the 2003 blackouts. Tr. 143. This is all market-driven, and fully consistent with industry
trends that show consumers continue to receive better service and more value as competitive
wireless markets are allowed to operate. The Intervenors' claims that wireless carriers must be
24 Universal Service Order ~ 147.
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subject to ILEC regulations to provide quality service should be rejected as unsupported the
record and contrary to FCC determinations.
The Impact on the Federal Universal Service Fund Does Not
Justify Denial of the Application
The Intervenors claim Nextel Partners' Application should be denied based on alleged
adverse impact on the universal service fund. Tr. 596. The Commission should reject these
purported public interest consideration.
The FCC itself has rejected these exact claims. The FCC stated in an order designating
RCC Holdings as an ETC in Alabama:
Several parties to this proceeding raise concerns about the nature of high-cost
support with regard to competitive ETCs. Such concerns include, for example
questions about the impact on the universal service fund of supporting
competitive ETCs, as well as questions about subsidizing multiple lines used by
the same subscriber. Although we find that these issues reach beyond the scope
of this Order, which designates a particular carrier as an ETC, we recognize that
these are important issues regarding universal service high-cost support. We note
that the Commission has recently requested the Federal-State Joint Board on
Universal Service (Joint Board) to provide recommendations to the Commission
on the Commission s rules relating to high-cost universal service support in study
areas in which a competitive ETC is providing service, as well as the
Commission s rules regarding support for second lines.
As the RCC Order makes clear, the operation of the federal universal service fund is simply not
an appropriate issue for consideration by the Commission in the context of this ETC designation
proceeding.
In addition, as Mr. Wood explained, recent funding increases to ILECs "dwarf any
impact on the size of the fund attributable to the designation of CETCs.Tr. 193. Yet the
Intervenors do not seem opposed to increases that benefit themselves. Mr. Wood's expert
25 RCC Holdings, Inc. Petition for Designation as an Eligible Telecommunications Carrier
Throughout its Licensed Service Area In the State of Alabama CC Docket No. 96-
Memorandum Opinion and Order, DA 02-3181 , ~ 3 (reI. Nov. 27 , 2002) RCC Order
(emphasis added) (internal footnotes omitted).
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testimony on this point was unchallenged. Ultimately, Mr. Trampush agreed the FCC's funding
mechanisms are matters that will be addressed by the FCC. Tr. 544. The Commission should
reject the Intervenors' claims that the fund must be protected by denying access to competitors.
Regulatory Differences Do Not Justify Denial ofthe Application
The Intervenors seek denial of the Application claiming the Commission must require
regulatory "parity" of all ETCs. Tr. 586. This has, however, been rejected by the FCC, and is
utterly inconsistent with policy decisions made at the federal and state levels. ILECs, CLECs
and wireless carriers are all regulated differently for different reasons. As Mr. Wood stated:
ILECs have some distinct advantages, wireless carriers have some distinct
advantages. Some of those are created by historic regulatory paradigms, some of
those are created by technology, some are created by economics. Hopefully,
some at some point will be created purely by customer demand, but the FCC has
been very clear that there are advantages and disadvantages on both sides and the
implementation of universal service support and ETC designation is not a process
to somehow try to balance out each and every one of those advantages and
disadvantages.
Tr.317.
Ultimately, the Intervenor witnesses agreed that there are policy reasons why different
types of carriers are regulated differently, and that regulatory parity is simply not achievable. Tr.
551 (Trampush), 618 (Tade). The Commission should recognize that ILEC calls for regulatory
parity are anticompetitive and harmful to universal service.
Interconnection Agreements Can Be Negotiated Outside This Docket
Citizens made its lack of an interconnection agreement with Nextel Partners a major issue
In this case Citizens contends that Nextel Partners "enjoy(s) the benefit of the ILECs
networks without paying for the use of those networks " and that if designated, Nextel Partners
will actually receive Federal monies to use for free the networks that were constructed and paid
26 In fact, Citizens counsel went so far as to accuse Mr. Peabody personally of being a thief. Tr.
115.
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for by the ILECs." Tr. 599-600. As the record was developed, however, it is clear that there is
no formal agreement today because neither party has requested one of the other. Tr. 630-
(Tade). Citizens has made a decision to this point not to make such a request. Id. At present
neither party is billing the other for termination services provided. Tr. 150. If and when such a
request is made, Nextel Partners will negotiate with Citizens in good faith. Tr. 115. Until then
however, Nextel Partners believes that the status quo is more efficient than a formal
interconnection agreement. Tr. 65-66. The Commission should find this to be a non-issue that
can and will be resolved outside of this ETC docket.
VIII. THE COMMISSION SHOULD AUTHORIZE NEXTEL PARTNERS'
DESIGNATION AS AN ETC IN THE CITIZENS EXCHANGES IN ITS
APPLICATION
The Commission should also grant Nextel Partners' request for ETC designation in the
Citizens exchanges, conditioned on redefining the service area requirement for Citizens' service
area. As established above, N extel Partners satisfies the basic requirements of Section 214( e)(
and its designation serves the public interest as required by Section 214( e )(2).The only
remaining condition to granting Nextel Partners' request for designation in the Citizens
exchanges is redefinition of the service area requirement for those areas.
The Act and the FCC's regulations authorize the FCC and the Commission to act
concert to develop an alternative service area for a rural telephone company in accordance with
47 C.R. 954.207(c)-(d). The sole requirement in establishing a service area other than the
study area is that the FCC and the state commission each give full consideration to the Joint
Board's recommendations and explain their rationale for reaching a different conclusion.
The FCC identified three factors initially recommended by the Joint Board which the
Commission and the FCC should consider when redefining the service area requirement to less
47 U.C. 9 214(e)(5); 47 C.R. 9 54.207(b); Universal Service Order ~ 187.
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than a rural telephone company s study area. The first factor is the risk of a new entrant only
seeking to serve the low cost areas of the study area, known as "cream-skimming.28 The FCC
noted that if a competitor were required to serve a rural telephone company s entire study area
the risk of "cream-skimming" would be reduced because a competitive ETC would be prevented
from selectively targeting service only to the lowest cost exchanges of the rural ILEC's study
area. Universal Service Order ~ 189.
Second, a state commission and the FCC must consider the regulatory status enjoyed by
rural telephone companies under the Act. The FCC determined that initially establishing a study
area for a rural telephone company s service area was appropriate, at least temporarily, in
recognition of the different treatment afforded to smaller rural telephone companies which are
exempt from certain of the Act's requirements?9 In making its recommendation, the Joint Board
reasoned:
For example rural telephone companies are initially exempt from the
interconnection, unbundling, and resale requirements of 47 u.S.C. 9251(c). The
1996 Act continues this exemption until the relevant state commission finds, inter
alia, that a request of a rural telephone company for interconnection, unbundling,
or resale would not be unduly economically burdensome, would be technically
feasible, and would be consistent with section 254.
The third factor is whether any administrative burdens might result from the redefinition
of the service area given that a rural telephone company s universal service support payments are
currently based on a rural company s embedded costs determined at the study area leveI.31 The
28 In the Matter of Federal-State Joint Board on Universal Service CC Docket 96-, FCC 96J-
, ~ 172 (reI. Nov. 8, 1996) Joint Board Recommendations
29 Universal Service Order ~ 189.
30 Joint Board Recommendations ~ 173.
31 Universal Service Order ~ 189.
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Joint Board initially expressed concern that rural telephone companies might have difficulty
calculating costs on a less-than-study area leve1.32
The FCC has now stated a policy favoring redefinition in instances where a rural carrier
study area is large and/or non-contiguous.Indeed, the FCC has expressly urged State
commissions to explore redefinition for purposes of ETC designations, and has cautioned that
denying redefinition requests could impose a "serious barrier to entry, particularly for wireless
carriers" and would be "particularly harmful to competition in rural areas, where wireless carriers
could potentially offer service at much lower costs than traditional wireline service. ,,
The study area of Citizens contains multiple exchanges, only some of which are located
within the scope of Nextel Partners' authorized service areas. The most logical and appropriate
method of approving designation of competitive ETCs is by individual exchanges.34 Redefining
this service area based on individual exchanges for purposes of ETC designations will promote
competition by eliminating a barrier to entry into the universal services market.
The Commission can proceed to redefine the service areas on an exchange basis while
appropriately taking into account the three factors noted by the Joint Board and adopted by the
FCC, all of which support redefining the study area requirement in Citizens' service area.
The first factor - cream-skimming - is not present. Nextel Partners seeks redefinition of
the service area requirement for Citizens' exchanges on an individual exchange based on its
ability to serve those areas, not because it sought to cream-skim universal service support. Tr.
126. Logically, a cream-skimming strategy would involve a targeting of the highest support
32 Joint Board Recommendations ~ 174.
33 Universal Service Order ~ 190.
34 Nextel Partners does not, however, object to Clear Talk's request for redefinition within an
exchange based on license boundaries.
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exchanges, but this is not what Nextel Partners did. Tr. 311. In addition, because Citizens has
already targeted its support on an exchange basis (Ex. 107), any chance of cream-skimming is
eliminated:
The potential for "cream skimming" is ultimately moot because Citizens hasalready disaggregated USF support to the wire center level. Nextel Partners is
likewise seeking redefinition" at the wire center level, meaning that it is
mathematically impossible for Nextel partners to receive per-line support for the
area it serves that is based on the average cost of a larger geographic area. If
support and the areas of market entry are at disaggregated to the same level, the
potential for "cream skimming" - to the extent it ever actually existed, is
eliminated.
Tr. 183.
The second factor - the special status of a rural LEC - does not weigh against
redefinition. Redefining the service area requirement for Citizens' service area on an individual
exchange basis will not compromise or impair the unique treatment of Citizens as a rural
telephone company under Section 251(f) of the Act. Consequently, Citizens will still retain the
statutory exemptions from interconnection, unbundling and resale requirements under 47 u.S.
9 251 (c) even if its service area is redefined for purposes of ETC designations. In addition, the
public interest standard under 47 U.C. 9214(e)(2) will remain in place.The continued
existence of this as a safeguard that supports a redefinition request for ETC service areas.
Universal Service Order ~ 190.Thus, Citizens would retain its unique status and special
treatment under the Act even if its study area were redefined on an individual exchange basis.
The third and final Joint Board factor is the administrative cost of approving redefinition.
Here, there are no administrative costs to consider because any federal universal service support
35 See In the Matter of Federal State Joint Board on Universal Service CC Docket No. 96-
Memorandum Opinion and Order DA 02-3181 , ~ 39 (reI. Nov. 27. 2002) (finding that the risk
of cream-skimming is "substantially minimized by the fact that several of the affected rural
telephone companies in this proceeding have filed disaggregation and targeting plans at the wire
center level"
NEXTEL PARTNERS' POST-HEARING BRIEF IN SUPPORT OF APPLICATION
FOR DESIGNATION AS AN ELIGIBLE TELECOMMUNICATIONS CARRIER-
available to a competitive ETC in an area served by one of the rural telephone companies would
be determined based on the per-line support available to the rural telephone company itself. 47
R. 9 54.307(a); see also Us. Cellular Wisconsin Order p. 10 ("Currently, a competitive
ETC gets the same amount of federal high cost assistance per line as the ILEC. "). Moreover
because Citizens has already target support by exchanges (Ex. 107), it has already undertaken
any conceivable administrative costs associated with Nextel Partners' request.36 This current
funding mechanism will remain in place for approximately another three years, when the FCC is
expected to make changes to the funding mechanism for rural telephone companies.
Redefining the service area requirement for Citizens' service area is necessary for the
promotion of universal service because it will foster competition that otherwise does not exist.
Unless the service area is redefined, Nextel Partners is precluded from being designated as an
ETC in Citizens' exchanges because Nextel Partners cannot serve the entire study area.
Redefinition is in the public interest because it will enable Nextel Partners, and other
competitors, to bring new services and new technologies to Idaho customers currently served by
Citizens who new have no choice of universal service providers.
Citizens argues that redefinition is anticompetitive because it "fosters asymmetric
regulation.Tr. pp. 584-85. Yet, this provision is expressly provided for in the Act and the
FCC's rules.37 Moreover
, the FCC has determined that redefinition facilitates local competition
by enabling new providers to serve based on license areas.38 The FCC noted: II We find that our
36 While there was some discussion about the additional costs that might or might not be incurred
if Citizens were to target support within a wire center, that issue is not relevant to Nextel
Partners ' request - which is for designation along exchange boundaries.
37 See, e.47 U.c. 9 214(e)(5); 47 c.F.R. 954.207(b).
38 In the Matter of Petition for Agreement With Designation of Rural Company Eligible
Telecommunications Carrier Service Areas and for Approval of the Use of Disaggregation of
NEXTEL PARTNERS' POST-HEARING BRIEF IN SUPPORT OF APPLICATION
FOR DESIGNATION AS AN ELIGIBLE TELECOMMUNICATIONS CARRIER-
concurrence with rural LEC petitioners' request for designation of their individual exchanges as
service areas is warranted in order to promote competition. ,,The FCC concluded that
Washington s "effort to facilitate local competition justifies (the FCC's) concurrence with the
proposed service area designation.Id.Citizens' complains about "asymmetric regulation
should be rejected.
Redefining the service area requirement for Citizens' study area will foster competition in
Idaho. It will enable Nextel Partners and other carriers to offer competitive universal services to
Citizens' customers. This fostering of competition comports with the goals of the Act and the
FCC's directives. Unless the Commission seeks redefinition, these customers Nextel Partners
desires to serve will be denied all the benefits of competition that Congress and the FCC have
sought to foster.
Therefore, the Commission should proceed to authorize the redefinition of the service
area requirement for Citizens' study area and conditionally grant Nextel Partners ' request for
designation as an ETC in the Citizens exchanges identified on Exhibit 106.
IX.NEXTEL PARTNERS REQUESTS AN ORDER AND CERTIFICATION PRIOR
TO MARCH 30, 2004
At the conclusion of the hearing, Nextel Partners informed the Commission that, while
there was no statutory deadline for a ruling, it had a significant interest in obtaining final action
in this case prior to the end of the first quarter of 2004. The Commission requested briefing
explaining this issue. Tr. 637.
The federal universal serVIce fund is administered by the Universal Service
Administrative Company ("USAC"
).
Prior to disbursing funds to a new ETC, USAC must
Study Areas of the Purpose of Distributing Portable Federal Universal Service Support
Memorandum Opinion and Order, CC Docket No. 96-, DA 99-1844, ~ 8 (reI. Sept. 9, 1999).
39 Id.
NEXTEL PARTNERS' POST-HEARING BRIEF IN SUPPORT OF APPLICATION
FOR DESIGNATION AS AN ELIGIBLE TELECOMMUNICATIONS CARRIER-
receive line counts, an ETC designation order, and appropriate certifications indicating that the
ETC will use federal funds for the purposes for which they are intended.
Nextel Partners has reported its lines, and has filed a self-certification regarding its use of
certain support amounts as required by FCC Rules 54.809(a) and 54.904(a). So, for Nextel
Partners to be eligible to receive disbursements of federal universal service funds that it will use
in Idaho, USAC must receive a final order designating Nextel Partners as an ETC, and a state
commission certification in accordance with FCC Rule 54.314(a). FCC Rule 54.314(a) requires
a commission to file with USAC and the FCC certifications that Nextel Partners will use support
only for the provision, maintenance and upgrading of facilities and services for which the
support is intended.
If the commission proceeds under Rule 54 .314( a), N extel Partners will file a certification
with this Commission that it will use all funds received for the balance of 2004 for the purposes
for which they are intended. Nextel Partners will further work with Staff to provide a sufficient
level of detail for Staff and the Commission to confirm that funds received will in fact be spent
appropriately.
FCC Rule 54.314(d) sets forth filing deadlines addressing this certification. If an ETC is
to receive funds for an entire calendar year, that certification must be received by USAC and the
FCC before October 1 st of the prior calendar year. The Commission took such action in 2003
for incumbent ETCs. Rule 54.314(d)(3) provides that for carriers with certifications received on
or before April 1st, those carriers shall receive certain universal service funds only in the third
and fourth quarters of that year. If the April 1 st deadline is missed, and a certification is filed
40 In the alternative, the Commission could take the position under FCC Rule 54.314 that Nextel
Partners is not subject to the jurisdiction of the state commission and direct Nextel Partners to
self-certify to the FCC in accordance with Rule 54.314(b).
NEXTEL PARTNERS' POST-HEARING BRIEF IN SUPPORT OF APPLICATION
FOR DESIGNATION AS AN ELIGIBLE TELECOMMUNICATIONS CARRIER-
after April 1 st but prior to July 1 st, the carrier is eligible for the support only in the fourth quarter
of that calendar year. As a result, a designation and certification prior to April 1st will provide
more funds in 2004 that Nextel Partners can use to provide services and buildout its network.
CONCLUSION
The Act and the FCC's implementing orders and regulations establish clear, consistent
and competitively fair mechanisms for allowing carriers, including a CMRS provider, to be
designated as an ETC for the purpose of federal universal service support. Nextel Partners has
shown that it provides the required services, satisfies all statutory and regulatory requirements
and can and will meet the obligations of an ETC. For rural consumers, the designation ofNextel
Partners as an additional ETC in rural LEC study areas will bring overwhelming benefits
including competitive choice, new technology, and improved service, and so is clearly in the
public interest. Nextel Partners respectfully requests the Commission to follow the directives
and principles of federal law or issue an Order:
Finding Nextel Partners satisfies the requirements for ETC designation in the
areas identified on Exhibit 106.
Finding the public interest is served by Nextel Partners' designation pursuant to
47 US.C. 9214(e)(2).
Finding that redefinition of Citizens' ETC service area is appropriate under 47
R. 9 54.207, and directing Nextel Partners to file a Petition for approval of this redefinition
with the FCC.
Ordering Nextel Partners to certify that it will use funds received in 2004
consistent with the requirements of 47 U.C. 9 254(e), so that the Commission can file a
certification with USAC and the FCC prior to April 1 , 2004.
NEXTEL PARTNERS' POST-HEARING BRIEF IN SUPPORT OF APPLICATION
FOR DESIGNATION AS AN ELIGIBLE TELECOMMUNICATIONS CARRIER-
Dated: January 23 , 2004 NPCR, INc. d/b/a NEXTEL PARTNERS
~~U~~E & MILLER, LLP
Dean J. Miller
420 West Bannock Street
O. Box 2564-83701
Boise, Idaho 83702
Phone [phone]
Facsimile [phone]
BRIGGS AND MORGAN, P.
Philip R. Schenkenberg (MN #260551)
Matthew Slaven (MN #288226)
2200 First National Bank Building
332 Minnesota Street
Saint Paul, Minnesota 55101
Phone [phone]
Facsimile [phone]
COUNSEL FOR APPLICANT
NPCR, INc. d/b/a NEXTEL PARTNERS
NEXTEL PARTNERS' POST-HEARING BRIEF IN SUPPORT OF APPLICATION
FOR DESIGNATION AS AN ELIGIBLE TELECOMMUNICATIONS CARRIER-
ARt': :
- " ,.:-';' "
"i,
ARKANSAS PUBLIC SERVICE COMMIS~it)~L 2 11 PH '
-. j' "
\;, r "1 ;" \ i
; ,., -" ,~.
IN THE MATTER OF THE APPLICATION OF
NPCR, INC. D/B/A NEXTEL PARTNERS FOR
DESIGNATION AS AN ELIGIBLE
TELECOMMUNICATIONS CARRIER
PURSUANT TO SECTION 214(e)(2) OF THE
COMMUNICATIONS ACT OF 1934, AS AMENDED
DOCKET NO. 03-141-
ORDER NO. ----1-
ORDER
On August 28, 2003, NPCR, Inc. d/b/a Nextel Partners ("Nextel") initiated this docket by
filing a petition for designation as an eligible telecommunications carrier ("ETC") pursuant to
section 214(e)(2) of the Federal Communications Act of 1934 as amended 1
, ("
the Federal Act"
Nextel's petition asserts that the Arkansas Public Service Commission ("APSC" or "this
Commission ) has established procedures for designation as an ETC2 and that Nextel has
complied with those procedures.
Nextel states that it is a commercial mobile radio service common carrier3 and seeks
designation as an ETC for certain specified wire centers in a Southwestern Bell Telephone
Company study area.Nextel asserts that, pursuant to ~ 214(e)(2) of the Federal Act and
consistent with this Commission s Order in Docket No. 97-326-U, the Commission must
designate more than one common carrier as an ETC in non-rural service areas as long as each
carrier requesting ETC status meets the requirements of g 214(e)(2) of the Federal Act.
In support of its petition, Nextel offers the affidavit of Donald J. Manning, Vice President
and General Counsel for Nextel. Mr. Manning s affidavit asserts that Nextel is able to offer all
47 U.C ~ 214 (e)(2).
2 See in
the Matter of Determining Eligible Telecommunications Carriers in Arkansas Order No., Docket 97-326-
u (August 15 , 1997).3 Also referred to as a wireless or cellular carrier.
4 See attachment 1 , exhibit A to Nextel's petiton.
Case Nos. GNR-T-03-8 &. GNR-T-03-16
Exhibit No. 111, page 1 of 10
NPCR, Inc. d/b/a Nextel Partners
DOCKET NO. 03-l4l-
PAGE 2 OF 10
servIces and functionality required by 47 CFR ~ 54.101 (a) to its customers using its own
facilities in the Southwestern Bell wire center areas. Specifically, Nextel states that it is able to
offer voice grade access to the public switched network, local usage, dual tone multi-frequency
signaling or its functional equivalent, single-party service or its functional equivalent, access to
emergency service, access to operator services, access to interexchange service, access to
directory assistance, and toll limitation for qualifying low-income consumers. The affidavit
states that Lifeline and Linkup programs, which can only be offered by ETCs, and toll blocking
for Lifeline subscribers, will be made available when Nextel receives an ETC designation.
Three sets of comments were filed on September 29, 2003 by three groups of incumbent
local exchange carriers ("ILECs i. The rural ILECs argue that wireless carriers are essentially
unregulated in Arkansas and do not provide their customers with the protections provided in the
APSC's Telecommunications Provider Rules because wireless carriers are not subject to those
rules. The rural ILECs argue that, because wireless carriers are not subject to the APSe s
Telecommunications Provider Rules, it may not be in the public interest to approve Nextel's
ETC request.
The rural ILECs also argue that ifNextel takes a customer from an ILEC, the rural ILECs
would lose terminating access charges which would have been paid to rural ILECs for
terminating the toll calls of the customer taken by Nexte1. The rural ILECs acknowledge that
Nextel would pay terminating access charges to rural ILECs for termination of toll calls from
The commenting parties are three groups ofILECS which will be referred to as (1) "the rural ILECS", which
consist of Arkansas Telephone Company, Inc.; Central Arkansas Telephone Cooperative, Inc.; Madison County
Telephone Company; Magazine Telephone Company; Northern Arkansas Telephone Co.; Pinnacle
Communications; Prairie Grove Telephone Company; Rice Belt Telephone Company; South Arkansas Telephone
Company, Inc.; Southwest Arkansas Telephone Cooperative, Inc.; Walnut Hill Telephone Company; and Yell
County Telephone Company (2) "the Ritter companies , which consist of Ritter Communications Holdings, Inc. on
behalf of its wholly owned subsidiaries Ritter Telephone Company and Tri-County Telephone Company, along with
Yelcot Telephone Company and Mountain View Telephone Company and (3) "the CenturyTel companies" which
consist of CenturyTel of Central Arkansas, LLC; CenturyTel of Northwest Arkansas, LLC; CenturyTel of Arkansas
Inc.; CenturyTel of Mountain Home, Inc.; CenturyTel of Redfield, Inc.; CenturyTel of South Arkansas, Inc.
Cleveland County Telephone Company, Inc.; and Decatur Telephone Company,Inc.
Case Nos. GNR-T-03-S & GNR-T-03-16
Exhibit No. 111, page 2 of 10
NPCR, Inc. d/b/a Nextel Partners
DOCKET NO. 03-l4l-
PAGE 3 OF 10
Nextel customers, however, the rural ILECs assert that the terminating access rates paid by
wireless carriers are substantially less than those paid by other ILECs, such as Southwestern
Bel1 , and the resulting reduction in access charges paid to the rural ILECs could affect their
profitability and lead to rate increases for the customers of the rural ILECS.
The Ritter companies argue that ACA ~ 23-l7-405(b) (5) provides that Nextel may not be
designated as an ETC unless "it is determined by the Commission that the designation is in the
public interest" and that Nextel is not entitled to an automatic grant of ETC status. The Ritter
companies state that Nextel has failed to demonstrate that ETC designation for Nextel is in the
public interest and that Nextel has not shown that competition will be materially increased or that
new or advanced services will be delivered sooner as a result of Nextel receiving ETC
designation. The Ritter companies assert that granting ETC status to Nextel could detrimental1y
effect the Federal Universal Service Fund
, ("
USF"), because the USF is funded by assessments
on telecommunications providers' interstate revenue and as the size of the USF grows , as a result
of commercial mobile radio service providers receiving ETC status, the customers of the Ritter
companies will be charged increasing amounts to fund the USF and will receive no demonstrable
benefit.
The Ritter companies also argue that CMRS providers are not subject to the same quality
of service standards as ILECs and are not required to act as a provider of last resort. The Ritter
companies assert that the lack of these protections for Nextel's customers leads to the conclusion
that Nextel's designation as an ETC is not in the public interest.
The Ritter companies' comments also point out the continuing activity by the Federal-
State Joint Board on Universal Service ("Joint Board") and the United States House of
Representatives Energy and Commerce Committee which are reviewing the operations of the
USF. The Ritter companies suggest that this Commission wait until the Joint Board and
Case Nos. GNR-T-O3-8 & GNR-T-O3-
Exhibit No. 111, page 3 of 10
NPCR, Inc. d/b/a Nextel Partners
DOCKET NO. 03-141-
PAGE 4 OF 10
Congress have completed their reviews of the USF and made any necessary changes before
granting ETC status to Nextel.
The CenturyTel companies also raise many of the issues that are currently under review
by the Joint Board, arguing that the availability of affordable high quality telephone services to
consumers is at risk because of the ever-increasing demands on the USF from new carriers being
granted ETC status. The CenturyTel companies request that the APSC deny the ETC request
and initiate a generic proceeding to examine the policy and factual issues presented by the
application or delay any decision until the Joint Board reports its findings regarding the USF to
the Federal Communications Commission ("FCC"). The CenturyTel companies refer to the
spiraling" demands on the USF caused by the influx of ETC applications asserting that Nextel
does not need USF support to be competitive and that granting ETC status to carriers that do not
need USF support places the USF at risk. The CenturyTel companies note that the Federal
Universal Service charge has increased from 6.8 % to 9.3 % on interstate revenue over the past
two years and note that this issue is currently under review by the Joint Board.
The CenturyTel companies also argue that, when a carrier like Nextel receives an ETC
designation, it can increase its revenues through USF support funds regardless of whether it adds
any additional customers or obtains any customers from the ILEC serving the same area.
CenturyTel suggests that this ability to artificially inflate revenues through Federal USF support
when it cannot be shown that the revenues are needed is contrary to the public interest.
The CenturyTel companies claim that Nextel has not shown that it is able to provide
service in the entire study area, i., the geographical area for which Nextel seeks ETC status
and argue that the FCC rules which require wireless ETCs to use the customer billing address for
the purpose of identifying the service location provides an opportunity for customers to misuse
the service by obtaining service using a billing address within the ETC designated area, but using
Case Nos. GNR-T-03-S &GNR-T-03-16
Exhibit No. 111, page 4 of 10
NPCR, Inc. d/b/a Nextel Partners
DOCKET NO. 03-l4l-
PAGE 5 OF 10
the service primarily within the service area of a rural ILEc. The CenturyTel companies argue
that the Commission should hold all pending ETC applications in abeyance until the FCC has an
opportunity to consider the Joint Board recommendations on the issues raised by the CenturyTel
companies in their comments.
The CenturyTel companies' comments also reiterate the arguments previously made
asserting that when a wireless ETC captures a customer from an existing ILEC, the amount of
access revenues received by ILECs terminating calls for the wireless ETC is less than the amount
of terminating access which the ILEC would have received if it had terminated the call from
another ILEC customer, thereby reducing the amount of access revenues available to the ILECs.
The CenturyTel companies also argue that Nextel is not required to serve as a carrier of last
resort and is not subject to the APSC's Telecommunications Provider Rules. The CenturyTel
companies assert that because the Telecommunications Provider Rules are not applicable to
Nextel, Nextel customers would not be able to file formal complaints and that the Commission
could not require credits or refunds for service interruptions, billing errors or failure to provide
service. The CenturyTel companies state that Nextel's rates are not subject to investigation by
this Commission and that Nextel's customers deserve the protections of the Commission
Telecommunications Provider Rules. The CenturyTel companies assert that because Nextel is
currently providing service in the area in which it seeks ETC designation, this Commission
should conclude that adequate competition exists in the area and that it is not in the public
interest to designate Nextel as an ETC since such designation would not further promote
competition.
Nextel's response to the comments filed by the ILECs asserts that it has met all of the
criteria set forth in the Federal Act and this Commission s previous orders regarding ETC
designation. Nextel emphasizes that it is not seeking ETC designation in any area served by a
Case Nos. GNR-T-03-S & GNR-T-03-16
Exhibit No. 111, page 5 of 10
NPCR, Inc. d/b/a Nextel Partners
DOCKET NO. 03-l4l-
PAGE 6 OF 10
rural telecommunications company.Nextel argues that the Federal Act requires this
Commission to provide Nextel with an ETC designation if it meets the qualifications set forth in
47 USC 9 214(e)(l) and 47 CFR 9 54.201(d). Nextel asserts that it has met those requirements
and this Commission must, therefore, provide an ETC designation to Nextel. Nextel argues that
FCC precedent holds that designation of an ETC in non-rural territory per se satisfies the public
interest requirement, citing In the Matter of Federal-State Joint Board on Universal Service;
Farmer s Cellular Telephone, Inc. Petition for a Designation as an Eligible Telecommunication
Carrier 18 FCC Rcd 3848 (released March 12 2003).
Although the comments raise significant public policy issues, those issues are properly
being addressed at the Congressional level and at the Federal Communications Commission. To
the extent comments raise public policy issues such as the potential expansion of the Federal
Universal Service Fund, these matters of public policy should be addressed at the Federal level
and should not effect this Commission s decision in this case for two reasons. First, this
Commission has no jurisdiction to make changes in the Federal USF or the laws under which the
Federal USF is established, and, second, this Commission is obliged to follow the requirements
of Arkansas law which require this Commission to act consistently with the Federal Act.
ACA 23-17-405 provides that the Commission may designate other
telecommunications providers to be eligible for high-cost support consistent with 47 USC 9
214( e) (2). This grant of authority to the Commission is conditioned on the telecommunications
provider accepting responsibility to provide service to all customers in the ILEC's local
exchange area through its own facilities or a combination of facilities, and the support will not
begin until the telecommunications provider has the facilities in place to serve the area. The
telecommunications provider may only receive funding for the portion of its facilities that it
owns and maintains,the telecommunications provider must advertise the availability and
Case Nos. GNR-T-03-S &GNR-T-03-16
Exhibit No. 111, page 6 of 10
NPCR, Inc. d/b/a Nextel Partners
DOCKET NO. 03-141-
PAGE 7 OF 10
charges for its services, and the Commission must detennine that the designation is in the public
interest.
47 USC 9 214(e)(2) states that:
A State Commission shall upon its own motion or upon request
designate a common carrier that meets the requirements of
paragraph (1) as an eligible telecommunications carrier for
service area designated by the State Commission. Upon request
and consistent with the public interest, convenience, and necessity,
the State Commission may in the case of an area served by a rural
telephone company. and shall. in the case of all other areas.
designate more than one common carrier as an eligible
telecommunications carrier for a service area designated by the
State Commission. so long as each additional requesting carrier
meets the requirements of paragraph (1). Before designating an
additional eligible telecommunications carrier for an area served
by a rural telephone company, the State Commission shall find that
the designation is in the public interest.
(Emphasis added).
Nextel seeks ETC designation in an area served by a non-rural telephone company.
Section 214(e)(2) clearly directs the Commission to designate more than one common carrier as
an ETC if the requirements of paragraph (1) are met. Sections 214 (e)(I)(A) and (B) require that
the carrier seeking ETC status must "offer the services that are supported by Federal Universal
Service support mechanisms under 9 254(c) of this title, either using its own facilities or a
combination of its Own facilities and resale of another carrier s services (including the services
offered by another eligible telecommunications carrier); and advertise the availability of such
services and the charges therefore using media of general distribution.) The affidavit submitted
by Nextel clearly indicates that Nextel has, or upon receiving ETC designation will, offer the
services required and advertise the availability of those services in compliance with ~ 214(e)(1)
and ~ 254(c) thereby meeting the requirements of 9 214(e)(2) of the Federal Act.
ACA 3 23-17-405 requires this Commission to act in a manner which is "consistent with
9 214(e)(2) of the Federal Act.
. .
" The fact that Nextel has agreed to comply with 9 214(e) in
Case Nos. GNR-T-03-8 & GNR-T-03-16
Exhibit No. 111, page 7 of 10
NPCR, Inc. d/b/a Nextel Partners
DOCKET NO. 03-141-
PAGE 8 OF 10
obtaining ETC designation in an area served by a non-rural carrier is sufficient to determine that
granting ETC status is consistent per se with the public interest. In the Matter oj Federal-State
Joint Board on Universal Service; Farmer s Cellular Telephone, Inc. PetitionJor Designation as
an Eligible Telecommunications Carrier 18 FCC Rcd 3848 (released March 12, 2003); Cellco
Partnership d/b/a Bell Atlantic Mobile Petitioned Jor Designation as an Eligible
Telecommunications Carrier 16 FCC Rcd 39, , 14 (2000); Pine Belt Cellular and Pine Belt
PCS, Inc. Petition Jor Designation as an Eligible Telecommunications Carrier 17 Rcd 9589
, ,
13 (2002).
In adopting the Telecommunications Regulatory Reform Act of 997(ACA ~ 23-17-401
et seq.
),
the General Assembly stated that its intent was to provide for a system of regulation
consistent with the Federal Act, that assists in implementing the national policy of opening the
telecommunications market to competition on fair and equal terms. Many of the objections
made to the granting of ETC status by the commenting parties suggest that the granting of ETC
status could affect the profitability of those companies and possibly result in rate increases to
their customers. They therefore argue that it is not in the public interest and is inconsistent with
Arkansas law to approve the ETC request. This argument ignores the statutory intent to
implement competition, which will obviously have an affect on the profitability of some
companies, but will also provide competitive alternatives to customers. If the ILECs receive
reduced terminating access charges from the contracts they have negotiated with wireless
carriers, they should receive the benefit of paying reduced access charges for terminating their
calls to the wireless networks. Additionally, the terminating access rates paid between ILECs and
wireless carriers are negotiated rates which the ILECs have agreed to pay. The contracts
between the ILECs and wireless carriers should not, therefore, provide a basis to deny ETC
status to a wireless carrier.
Case Nos. GNR-T-03-8 & GNR-T-03-16
Exhibit No. 111, page 8 of 10
NPCR, Inc. d/b/a Nextel Partners
DOCKET NO. 03-141-
PAGE 9 OF 10
The suggestion by the ILECs that granting ETC status could affect their profits and their
customers' rates does not suggest that granting ETC status is not in the public interest. The
granting of ETC status to Nextel will provide a competitive alternative for customers in the
Southwestern Bell area in which Nexte1 seeks to provide service. The effect on the ILECs in
Arkansas, resulting from the funding of the USF through assessments on all carriers' interstate
services, is essentially the same regardless of whether an ETC request is granted in Arkansas or
by another state commission. There will be some effect on amounts paid by Arkansas ILECs
since all carriers ' interstate revenues are assessed to support the USF; however, denying the
request would prohibit a group of Arkansas consumers from having the competitive alternatives
available to customers in other states even though those Arkansas consumers would be indirectly
paying for the benefits to customers in other states through payments for interstate services
which originate or terminate in Arkansas.
To the extent that the commenting parties have suggested that the Commission delay its
decision pending resolution of some of the issues raised in the comments and cuITently pending
or under consideration in United States Congressional committees or before the FCC's Joint
Board, the request to delay would be inconsistent with the requirements of 47 USC 9 214 (e)(2)
which states that the Commission "shall" grant the ETC request if the requirements of the statute
are met. Additionally, the issues raised by the commenting parties are best dealt with in the
appropriate forums which have the jurisdiction to effect any changes which might be deemed
necessary.
The commenting parties also argue that the ETC designation, if granted, should be
conditioned on Nextel's agreement to submit to this Commission s jurisdiction for enforcement
of the Commission s Telecommunications Provider Rules. This recommendation appears to be
inconsistent with the requirements of ACA 9 23-17-411 (g), which substantially limits the
Case Nos. GNR-T-03-S & GNR-T-03-16
Exhibit No. 111, page 9 of 10
NPCR, Inc. d/b/a Nextel Partners
DOCKET NO. 03-141-
PAGE 10 OF 10
Commission s jurisdiction over commercial mobile radio services. The recommendation also
lacks support under g 214( e) which requires the Commission to grant ETC status if the
conditions set forth in the statute are met.
In view of the foregoing, the request by NPCR, Inc.dlb/a Nextel Partners for ETC status
in the exchanges of Southwestern Bell Telephone Company-Arkansas (study area code 405211)
is hereby granted.
BY ORDER OF THE PRESIDING OFFICER PURSUANT TO DELEGATION.
This day of December, 2003.
ll JiM
' , ~
/i/L
Arthur H.Stuenkel
Presiding Officer
~~ ,
L~~iana K. Wilson
..... -
IJ.)Secretary of the Commission
I hereby certify that the following order issued by the
Arkansas Public Service Commission has been served
on all parties of record this date by the U.S. mail with
postage prepaid, using the address of each party as
indicated in the official docket file.
Secretary of the Commission
Date J ;J.-J.a.- fko ~
Case Nos. GNR-T-03-S &. GNR-T-03-16
Exhibit No. 111, page 10 of 10
NPCR, Inc. d/b/a Nextel Partners
CERTIFICATE OF SERVICE
I hereby certify that on January 2004 I caused to be served true and correct copies of the foregoing
document, Nextel Partners' Post Hearing Brief, by the methode s) indicated, upon:
Glenn Ishihara, President Hand Delivered Mary S. Hobson Hand Delivered
Federal Express STOEL RIVES LLP Federal ExpressIA T COMMUNICATIONS, INc.S. Mail 101 So. Capitol Blvd., Suite 1900 S. Mail703 Pier Avenue, Suite B; PMB 813 Telecopy Boise, Idaho 83702 TelecopyHermosa Beach, California 90254 Email mshobson(gJstoel.com Email
Attorneys for ~west Corporation
Molly O'Leary Hand Delivered Robert M. Nielsen Hand Delivered
RICHARDSON &: O'LEARY Federal Express ATTORNEY AT LAw Federal Express
99 East State Street, Suite 200 S. Mail O. Box 706 S. Mail
O. Box 1849 Telecopy Rupert, Idaho 83350 Telecopy
Eagle, Idaho 83616 Email Attorney for Project Mutua! Telephone Email
moll y(gJrichardsonandoleary. com Cooperative Association, Inc.
Attorney for IA Communications, Inc.
Conley E. Ward, Jr. Hand Delivered Charles H. Creason, Jr. Hand Delivered
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