20040910Reconsideration Order No 29591.pdf

Office of the Secretary
Service Date
September 10 2004
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE PETITION OF
IA T COMMUNICATIONS, INC. DBA NTCH-
IDAHO, INC. OR CLEAR TALK FOR
DESIGNATION AS AN ELIGIBLE
TELECO MMUNI CA TI 0 NS CARRIER.
CASE NO. GNR-O3-
IN THE MATTER OF THE APPLICATION
OF NPCR, INC. DBA NEXTEL PARTNERS
SEEKING DESIGNATION AS AN ELIGIBLE
TELECO MMUNI CA TI 0 NS CARRIER.
CASE NO. GNR-O3-
ORDER NO. 29591
On July 23 2004, the Commission issued final Order No. 29541 in Case No. GNR-
03-and Case No. GNR-03-16 denying Applications filed by two wireless
telecommunications companies requesting designation as eligible telecommunications carriers
(ETCs). The Commission concluded that IAT Communications, Inc. dba ClearTalk (ClearTalk)
and NPCR, Inc. dba Nextel Partners (Nextel Partners) did not present sufficient evidence to
establish their entitlement to ETC designation. On August 13 , 2004 Petitions for
Reconsideration were filed in each case by ClearTalk and Nextel Partners. The Commission
finds that neither Petition for Reconsideration states adequate grounds for granting
reconsideration, and the Commission accordingly denies reconsideration in Case No. GNR- T -03-
8 and in Case No. GNR-03-16.
Idaho Code ~ 61-626 provides for the filing of petitions for reconsideration of a final
order issued by the Commission, which is a prerequisite for filing an appeal from the order. The
purpose for reconsideration is "to afford an opportunity to the parties to bring to the attention of
the Commission in an orderly manner any question theretofore determined in the matter and
thereby afford the Commission an opportunity to rectify any mistake made by it before
presenting the same to this (Idaho Supreme) Court.Washington Water Power Co. v. Kootenai
Environmental Alliance 99 Idaho 875, 879, 591 P.2d 122 (1979). See also, Eagle Water
Company, Inc. v. Idaho Public Utilities Commission, 130 Idaho 314, 317, 940 P.2d 1133 (1997).
Consistent with the purpose of reconsideration, the Commission s procedural rules require that
petitions for reconsideration "set forth specifically the ground or grounds why the petitioner
contends that the order or any issue decided in the order is unreasonable, unlawful, erroneous or
ORDER NO. 29591
not in conformity with the law." IDAPA 31.01.01.331. The Commission is not persuaded by
the Petition for Reconsideration filed by ClearTalk, or by the Petition filed by Nextel Partners
that its decision in Order No. 29541 is unreasonable, unlawful, erroneous or not in conformity
with the law.
After setting forth the procedural and statutory background for the case, the
Commission in Order No. 29541 discussed the standards for a state commission s designation of
a competitive telecommunications carrier as an ETC. See Order No. 29541 pp. 4-6. Most
significant in this case, the Commission noted that Section 214(e)(2) of the 1996
Telecommunications Act "provides that a state commission 'may' designate more than one ETC
in areas served by a rural telephone company if it is in the public interest " and that "the Act
gives state commissions discretion in how many carriers to designate in a given area." Order No.
29541 p. 6. We noted that all of the study areas at issue are served by incumbent rural telephone
companies, as well as other wireless carriers, and that "the Applicants have the burden of proof
to demonstrate that the public interest is served by designating them as ETCs in these rural
areas.Id.
The Commission also discussed considerations that are part of evaluating the public
interest in designating multiple ETCs in a rural area, including whether customers are likely to
benefit from increased competition and whether designation of an additional ETC would provide
benefits not available from incumbent carriers. Id. We also noted the Federal Communications
Commission recently has applied "a more stringent public interest analysis for ETC designations
in rural telephone company service areas " weighing numerous factors
, "
including the benefits of
increased competitive choice, the impact of multiple designations on the universal service fund
the unique advantages and disadvantages of the competitor s service offering, any commitments
made regarding quality of telephone service provided by competing providers, and the
competitive ETC's ability to provide the supported services throughout the designated service
area within a reasonable time frame.Order No. 29541 p. 6, quoting Virginia Cellular, LLC
Petition for Designation as an ETC 19 F.R. 1563, 1565 (2004). The FCC stated at least two
reasons for the more stringent public interest analysis: a review of the rules and process for
designating ETCs, especially in rural service areas, currently is underway by the Federal-State
oint Board on Universal Service, and increased concern about the impact on the universal
service fund due to the rapid growth in the number of competitive ETCs. Regarding the ETC
ORDER NO. 29591
process review currently underway, the FCC acknowledged it could potentially impact, among
other things, the support competitive ETCs may receive in the future and the criteria used for
continued eligibility to receive support. In the Matter of the Application of Federal-State Joint
Board on Universal Service Highland Cellular, Inc. Petition for Designation as an ETC in the
Commonwealth of Virginia CC Docket No. 96-FCC 04-2004 WL 770088 (2004).
Regarding the impact of increased demand on the universal service fund, the FCC noted
although competitive ETCs only receive a small percentage of all high-cost universal service
support, the amount of high-cost support to competitive ETCs is growing at a dramatic pace.
Highland Cellular p. 12-13. To illustrate, the FCC compared the first quarter of 2001 , when
three competitive ETCs received approximately $2 million, to the fourth quarter of 2003 , when
112 competitive ETCs received approximately $32 million.
In evaluating the various factors that affect the public interest, the Commission s goal
is to determine "whether the potential benefits of ETC designation outweigh the potential
harms." Order No. 29541 p. 6. The Commission in Order No. 29541 provided a fairly detailed
discussion of the evidence on potential benefits and harms that resulted in its conclusion that
ClearTalk and Nextel Partners "failed in their burdens of proof to demonstrate that they should
be designated as an ETC in the rural telephone company study areas identified in their respective
Applications." Order No. 29541 p. 1. The evidence created concerns regarding the companies
ability or willingness to provide service throughout the entire study areas of the incumbent
providers, the impact on the universal service fund, whether ETC designation would actually
provide consumers with increased choices in these rural areas, and concerns about "cream
skimming" that could "jeopardize the incumbents' financial viability, provide an unjustified
windfall to the Applicants , and prove detrimental to universal service goals by increased
demands on federal and state USFs." Order No. 29541 p. 12. We will not repeat in this Order
our discussion of the evidence, and will only briefly address a few arguments made by ClearTalk
and Nextel Partners in their Petitions for Reconsideration.
In its Petition, ClearTalk argues the Commission s decision "is based on
inaccurate and incomplete review of the record before it, and is not supported by substantial
evidence." Regarding the Commission s concern that "ClearTalk requested ETC designation for
only the highest density, lowest cost exchanges and wire centers in its FCC licensed service
areas " ClearTalk contends its testimony establishes that it requested ETC designation for all
ORDER NO. 29591
exchanges and all wire centers within its basic trading area (BT A), as identified in its FCC
license. ClearTalk Petition pp. 3-4. ClearTalk identified exhibits and information in its
supplemental post-hearing brief establishing ClearTalk's commitment to provide universal
service throughout its FCC licensed area. In response, we only note here our concurrence with
the FCC's recognition "that, for reasons beyond a competitive carrier s control, the lowest cost
portion of a rural study area may be the only portion of the study area that a wireless carrier is
licensed to serve. Under these circumstances, granting a carrier ETC designation for only its
licensed portion of the rural study area may have the same effect on the ILEC as rural cream
skimming.In the Matter of the Application of Federal-State Joint Board on Universal Service
Highland Cellular, Inc. Petition for Designation as an ETC in the Commonwealth of Virginia
CC Docket No. 96-, FCC 04-, 2004 WL 770088 (2004).
ClearTalk also takes issue with the Commission s concern that designating ClearTalk
as an ETC would have a negative impact on the universal service fund. ClearTalk contends the
Commission improperly focused on an undefined and unquantified negative impact on the
federal USF without giving any weight to the overall economic benefit of increasing the flow of
USF support into rural Idaho. Although impact on the universal service fund by itself is not a
reason to deny ETC designation to a competitive wireless carrier, we share the FCC's concern
about the dramatically increasing demand competitive carriers are placing on the fund, and also
believe that concern justifies a more stringent review of ETC applications in rural service areas.
It is in part a concern about increasing demand for USF finds that has created the need to review
the criteria for designating ETCs in rural areas, and likely will result in changes to the process
and criteria for designating competitive ETCs.
In its Petition for Reconsideration, Nextel Partners noted the Commission concluded
Nextel Partners did not provide sufficient information to satisfy the public interest requirement
for granting ETC status. To address the Commission s concern, Nextel Partners addressed three
considerations: (1) Nextel Partners did not produce build-out plan for review by the
Commission; (2) the Commission questioned whether Nextel Partners would be using federal
funds to serve consumers in truly rural areas; and (3) Nextel Partners' regulatory status as a
commercial mobile radio service provider regulated by the FCC limits the Commission
authority to monitor service concerns.
ORDER NO. 29591
To address the Commission s uncertainty about Nextel Partners' plan to build into
remote areas, Nextel Partners identified three cell sites it plans to construct and the Company
hopes will be activated by the end of the year. An attachment to Nextel Partners ' Petition shows
the three cell sites under construction and provides additional evidence that was not known in
December when the case was presented to the Commission. Nextel Partners also identified six
cell sites, costing approximately $1.2 million to construct, the Company asserts it cannot justify
building within the next three years unless it receives ETC funding. Nextel Partners stated that if
it is designated an ETC, it will dedicate all universal service funds to constructing and operating
the cell sites. Nextel Partners stated it is prepared to promptly file testimony affirming the above
commitments, if reconsideration is granted by the Commission.
The Commission has reviewed the issues identified by N extel Partners in its Petition
for Reconsideration, as well as the relevant evidence and analysis set forth in Order No. 29541
and is not persuaded the Commission s decision regarding Nextel Partners is unreasonable
unlawful, erroneous or not in conformity with the law. As previously noted, the Commission in
its final Order provided a detailed discussion of the evidence and resulting concerns regarding
approval of Nextel Partners' application, and that discussion will not be repeated here. Both
Nextel Partners and ClearTalk proposed to present additional evidence on reconsideration to
address the concerns identified by the Commission, but we do not believe that reconsideration is
appropriate solely to present evidence to strengthen the parties' cases. Weare concerned the
limited time available for reconsideration by statute may not provide the other parties in the case
adequate time to analyze and respond to the new evidence. Of course, Nextel Partners and
ClearTalk are free to re-apply for ETC status in these rural areas and present new evidence to
address the issues identified by the Commission in Order No. 29541.
ORDER
IT IS HEREBY ORDERED that the Petition for Reconsideration filed by ClearTalk
in Case No. GNR- T -03-8 is denied.
IT IS FURTHER ORDERED that the Petition for Reconsideration filed by Nextel
Partners in Case No. GNR-03-16 is denied.
ORDER NO. 29591
THIS IS A FINAL ORDER DENYING RECONSIDERATION.Any party
aggrieved by this Order or other final or interlocutory Orders previously issued in Case No.
GNR-03-8 and Case No. GNR-03-16 may appeal to the Supreme Court of Idaho pursuant to
the Public Utilities Law and the Idaho Appellate Rules. See Idaho Code 9 61-627.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
()
fI-..
day of September 2004.
Concurring and Dissenting Opinion Attached
MARSHA H. SMITH, COMMISSIONER
ATTEST:
Je D. Jewell
C mmission Secretary
bls/O:GNRT0308 GNRT0316 ws
ORDER NO. 29591
CONCURRING AND DISSENTING OPINION
COMMISSIONER MARSHA H. SMITH
CASE NOS. GNR-O3-8 AND GNR-O3-
ORDER NO. 29591
Although I continue to concur with the result reached by the majority regarding
ClearTalk's Application, I also remain convinced that Nextel Partners has presented sufficient
evidence to merit approval of its ETC Application. Nextel Partners has adequately demonstrated
a commitment to extend its service area and also identified specific facility improvements it
would undertake with federal USF funds.For the reasons stated in my Concurring and
Dissenting Opinion, Order No. 29541 , I would grant the Petition for Reconsideration and
approve N extel Partners' Application for ETC designation in these rural areas.
MARSHA H. SMITH, COMMISSIONER