28223.hrg.doc

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE INVESTIGATION TO DETERMINE AN APPROPRIATE COST MODEL USING FORWARD-LOOKING ECONOMIC COSTS FOR CALCULATING THE COSTS OF BASIC TELECOMMUNICATION SERVICES IN IDAHO.
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) CASE NO. GNRT9722

NOTICE OF HEARING

NOTICE OF SCHEDULING

ORDER NO.  28223

On December 19, 1997, the Commission issued a Notice of Inquiry and Notice of Prehearing Conference to initiate this docket to analyze cost models and adopt a forward-looking cost model for the purpose of evaluating the costs of providing intrastate telecommunications services within the state in response to the Idaho Legislature enactment of Idaho Code § 62-610A-F. The Commission scheduled and held a hearing on March 9-10, 1998. The attendees provided comments on various Universal Service Fund (USF) mechanisms and acknowledged that the Federal Communications Commission (FCC) was in the process of developing and implementing its own non-rural USF model. Idaho Code § 62-610F provides that the Idaho USF mechanism shall operate “in conjunction with federal universal service support mechanism” and be established after adoption of the federal USF mechanism. Idaho Code § 62-610B makes clear that all telecommunications providers, including “municipal, cooperative or mutual telephone companies and telecommunications companies providing wireless, cellular, personal communications services and mobile radio services for compensation” may be eligible for the new Non-Rural USF support.
On November 2, 1999, the FCC issued two orders outlining its forward-looking cost mechanism for federal high cost support for non-rural local exchange companies (LECs): In the Matter of Federal-State Joint Board on Universal Service, Ninth Report and Order and Eighteenth Order on Reconsideration, CC Docket No. 96-45, FCC 99-306 (adopted October 21, 1999 and released November 2, 1999) (Methodology Order) and In the Matter of Federal-State Joint Board on Universal Service, Forward-Looking Cost Mechanism For High Cost Support For Non-Rural LECs, Tenth Report and Order, CC Docket No. 96-45, FCC 99-304 (adopted October 21, 1999 and released November 2, 1999) (Inputs Order).
YOU ARE HEREBY NOTIFIED that the federal USF non-rural high cost model as adopted in the FCC Orders incorporates aspects of most of the models proposed by the parties to this proceeding. The FCC noted that after a thorough review of the model and its input values, plus extensive coordination with Joint Board staff and interested outside parties, “we are convinced that it generates reasonably accurate estimates of forward-looking costs and that the model is the best basis for determining non-rural carrier’s high-cost support in a competitive environment.” FCC 99-304, paragraph 23. The Commission seeks comments on adoption of the same model for calculating high cost support for non-rural LECs in Idaho. The present statute requires the Commission to establish a non-rural universal service fund (Non-Rural USF) no later than six (6) months after the FCC high cost universal service fund for non-rural LECs is implemented. The effective date for the FCC Non-Rural USF is January 1, 2000. Therefore, the Commission is required to establish the Idaho Non-Rural USF by July 1, 2000.
YOU ARE FURTHER NOTIFIED that to meet this ambitious deadline, all parties may file written responses to the following questions and issues no later than December 14, 1999:
1. Identify problems that may be created by the Commission adopting the FCC forward-looking cost model to use in calculating eligibility for the Idaho Non-Rural USF.
2. Is some variant of the FCC methodology (see FCC 99-306, especially paragraphs 73-75) appropriate for use in Idaho? How should the benchmark be determined? What should determine the support percentage for the difference between the benchmark and forward-looking cost? Is it appropriate to target actual support to individual high-cost wire centers that are above the benchmark?

3. What mechanism should the Commission adopt to balance a rate regulated LEC’s revenue requirement if that LEC receives Idaho Non-Rural USF? That is, to the extent that a subsidy is flowing from low-cost urban lines to high-cost rural lines, what should happen to the rates for urban lines when rural lines start to receive USF support?
4. Should the Commission restrict eligibility for Idaho Non-Rural USF to those instances where the rate regulated LEC demonstrates the existence of competition? If not, why not? If yes, what indicators should be used to demonstrate the existence of competition?
5. How many lines should the Idaho Non-Rural USF support?
6. Does the Commission need to certify that state USF funds are being used by recipients in compliance with Section 254(e) of the Telecommunications Act of 1996? How should the Commission verify that this requirement has been met? Should self-certification be an option?

NOTICE OF PREHEARING CONFERENCE
YOU ARE HEREBY NOTIFIED that the Commission will convene a prehearing conference in this case on JANUARY 5, 2000, AT 9:30 A.M. IN THE COMMISSION HEARING ROOM, 472 WEST WASHINGTON, BOISE, IDAHO to consider the written comments and responses. The prehearing conference is not limited to consideration of these questions.
YOU ARE FURTHER NOTIFIED that all hearings will be conducted pursuant to the Rules of Procedure adopted by the Idaho Public Utilities Commission. IDAPA 31.01.01.000 et seq.
YOU ARE FURTHER NOTIFIED that all hearings and prehearing conferences in this matter will be held in facilities meeting the accessibility requirements of the Americans with Disabilities Act. Persons needing the help of a sign language interpreter or other assistance of the kind that the Commission is obligated to provide under the Americans with Disabilities Act in order to participate in or to understand the testimony and argument at a public hearing may ask the Commission to provide a sign language interpreter or other assistance at the hearing. The request for assistance must be received at least five (5) working days before the hearing by contacting the Commission Secretary at:

IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone] (TELEPHONE)
[phone] (TEXT TELEPHONE)
[phone] (FAX)

O R D E R
IT IS HEREBY ORDERED that the schedule set forth in this Notice shall control the processing of this case. The parties shall cooperate to expeditiously provide information regarding the cost models to each other in order to avoid delays in the completion of this case.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
day of November 1999.

DENNIS S. HANSEN, PRESIDENT

MARSHA H. SMITH, COMMISSIONER

PAUL KJELLANDER, COMMISSIONER
ATTEST:

Myrna J. Walters
Commission Secretary

O:gnrt9922_cc
The Commission is not seeking comments on related issues like the identification of geographic service areas for the purpose of determining universal service obligations as required by Idaho Code § 62-610E. That decision will be made in Case No. GNR-T-98-8 after the cost model has been adopted.

NOTICE OF HEARING
NOTICE OF SCHEDULING
ORDER NO.  28223 -1-

Office of the Secretary
Service Date
November 24, 1999