19980810Final_Order_No_27673.pdf

Office ofthe Secretary
Service Date
August 10,1998
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF )CASE NO.GNR-T-98-4
CTC TELECOM,INC.FOR A CERTIFICATE )
OF PUBLIC CONVENIENCE AND NECESSITY .)
TO PROVIDE LOCAL EXCHANGE SERVICE )
AS A COMPETITIVE LOCAL CARRIER AND )ORDER NO.27673
FOR DESIGNATION AS AN ELIGIBLE )
TELECOMMUNICATIONS CARRIER )
On April 21,1998,the Commission received an Application from CTC Telecom,Inc.
seeking a Certificate of Public Convenience and Necessity to provide facilities-based local exchange
service and toll access telephone service as a competitive local exchange carrier.CTC also requested
it be designated as an eligible telecommunications carrier ("ETC")pursuant to Section 214(e)(2)of
the federal Telecommunications Act of 1996 and claimed it was a rural telephone company as
defined under state and federal law.It also requested that its service area,for the purposes of
universal service obligations,be limited to the geographicboundaries of the development.
Notice of Modified Procedure was issued on June 3,1998.Order No.27548.Two
extensions of time were granted to the Staff for filing its comments and recommendation.Order
Nos.27601 and 27629.
US WEST was granted interventionon July 24,1998.Order No.27655.CTC and Staff
filed comments on July 21,1998.Staff also filed a discovery motion on July 21,1998.Oral
argument was held on July 24,1998.At oral argument and in its comments,CTC agreed to defer
consideration of its ETC status pending the Commission's decision in GNR-T-98-8 in which the
Commission will consider how service areas are designated for the purposes of ETC designation.
Based on a review of the Application,CTC's comments,StafPs comments and on oral
argument,the Commission grants CTC's Application and defers its consideration of its ETC
designation.The Commission denies the Staff s discovery motion as moot.
ORDER NO.27673 -1-
BACKGROUND
CTC applied for a Certificate of Public Convenience and Necessity to serve
approximately 900 homes and small businesses in a new development called Hidden Springs
Development to be located in Ada County near Boise,Idaho,off Dry Creek Road.CTC alleges that
if it is certificated to provide local exchange service in Hidden Springs,it will meet the definitions
of "common carrier,""telecommunications carrier,"and "rural telephone company"under the
federal Telecommunications Act.US WEST Communications,Inc.is currentlycertificated to
provideservice in the area in question but does not have facilities in place there.On May 26,1998,
CTC filed a price list with the Commission for information purposes pursuant to Idaho Code §62-
606.No interconnection agreementsin Idahohave beennegotiatedby CTC.CTC will provide basic
local exchange service,as well as,additional Title 62 services.
CTC was issued a certificate of incorporation on February 17,1998,and is a wholly-
owned subsidiary of Cambridge Telephone Company.Cambridge is a fully regulated rural
telephone company providing Title 61 services and receiving Idaho Universal Service Funds
pursuant to Idaho Code §62-610.CTC stated that its parent company,Cambridge,will provide the
initial capital required by CTC.It has no assets or capital of its own.
CTC entered into its contract with Hidden Springs Development on April 7,1998.
CTC's contract requires it to provide the telecommunications,cable television,high speed data
transfer capabilities and other services to the development and its residences.According to the
contract,CTC was to have dial tone service to each residentiallot by October 1,1998,with interim
phone service by May 15,1998.
Hidden Springs Development is a new planned development of approximately 900
residences and light commercial businesses to be located north of Boise near Idaho State Highway
55.Hidden Springs is within the Boise School District.Children from Hidden Springs will attend
Cynthia Mann Elementary,Hillside Junior High and Boise High.Boise is the largest metropolitan
area in Idaho.Because this developmentis under construction,no other local exchange carrier has
provided service to the development,although US WEST does provide local exchange service to
existing customers in the Dry Creek area.Only CTC will have facilities-based service in the Hidden
Springs Development.
ORDER NO.27673 -2-
CTC stated it intends to provide basic local exchange service,extended area service
("EAS")to US WEST's Boise calling area,touch-tone service,high speed data services,access to
toll services,access to emergency services (911),and Lifeline and Link-up services for low income
residents.This development,however,does not appear to include low income housing.CTC stated
it will construct the telephone plant in accordance with standards established by the federal Rural
Utilities Services (formerlythe REA).
COMMISSION FINDINGS
The Commission finds that this Application presents unique legal and financing issues
for the Commission that the Commission has not previously considered.
CTC is the first applicant to request a Certificate of Public Convenience and Necessity
in order to provide non-price regulated Title 61 basic local exchange service as a facilities-based
carrier to a new development under construction in which no other facilities-based carrier presently
has facilities providing service to customers.Under Idaho law,CTC is not an incumbent telephone
corporation and is,therefore,not price regulated.Idaho Code §§62-603(6)and 62-622(2).
Moreover,unless the Commission conditions its Certificate of Public Convenience and Necessity
or adopts rules establishing standards for interconnection and access,CTC would not be required
to provideunbundled access,to negotiate wholesale prices or to generallyfacilitate competition for
its services.The Commission finds that this set of circumstances would not promote customer
choice in service providers as mandated by the legislature.
CTC is also a wholly-owned subsidiary of a fully regulated Title 61 Idaho USF rural local
exchange carrier --Cambridge Telephone Company.Idaho Code §62-613 prohibits Cambridge
from subsidizing nonprice-regulated telecommunication services with those telecommunication
services price-regulated by the Commission.In this case,CTC,submitted no financial data in
support of its Application.It simply stated as follows:
As a recently formed corporation,CTC does not have current financial
statements to provide to the Commission.CTC's parent company,
Cambridge Telephone Company ("Cambridge"),will provide the initial
capital required by CTC,and Cambridge's financial statements are on file
with the Commission.The Applicant respectfully requests that the
Commission take official notice of those filed documents.
ORDER NO.27673 -3-
Application at p.3.The Commission requires all applicants for Certificates to provide sufficient
informationto establish the applicant possesses adequate financial resources to provide the proposed
services.In this case,CTC has no independent resources or assets and CTC's reliance on Cambridge
raised several questions for the StafE
The Commission will address each of these issues below.
CTC's Certificate of Public Convenience and Necessity
Staffrecommended that the Commission condition this Certificate to ensure customer
choices.CTC objected,suggesting the Commission had no authority to impose conditions.
The Commission has carefully considered whether conditioning CTC's Certificate is the
best method for protecting the public interest and promoting competition.Contrary to CTC's
assertion,the Commission finds that it clearly has the authority to condition CTC's Certificate to
ensure customer choice as recommended by the Staff.Idaho Code §§61-528,62-615(3)and 62-
622(5).The Commission rejects CTC's assertion that the Commission has no authority over it
becauseit is a competitive local exchange carrier and that the Commission's authority is preempted
by federal law.Nothing in the federal Telecommunications Act of 1996 preempts the Commission's
authority to impose appropriateand competitively neutral conditions on competitive local exchange
carriers where those conditions are necessary to protect the public interest.47 U.S.C.§§151,
152(b),251(d)(3),252(e)(3),and 253(b);See Louisiana Public Service Commission v.Federal
Communications Commission,476 U.S.355,374-375,106 S.Ct.1890,1901-1902 (1986);See Iowa
Utilities Board v.Federal Communications Commission,135 F.3d.535,541 (8th Cir.1998).The
Commission finds,however,that conditioning CTC's Certificate is not the best method for
protecting the public and advancing the legislature's plan to create competition.See Idaho Code §
62-602(2).
The Commission finds that conditioning CTC's Certificate would only protect Hidden
Springs Development's basic local exchange customers and would not address future applications
or those local exchange carriers that have already received certificates for larger service areas.
Rather,the Commission finds that adopting rules setting the standards for interconnection and access
in unserved areas is the better approach and orders a Rulemaking docket be opened and temporary
rules adopted,effective immediately.Therefore,the Commission finds it is not necessary to
condition this individual Certificate because it and all similarly situated facilities-based competitors
ORDER NO.27673 -4-
providing basic local exchange service in unserved areas will have the same standards for providing
interconnection and access in those areas.
CTC's Financial Responsibility
Staff urged the Commission only grant a conditional Certificate and proposed several
conditions designed to ensure there is no cross subsidy between the fully regulated Title 61 parent
company,Cambridge,and its subsidiary,CTC,in violationofIdaho Code §62-613.CTC objected
and again suggested the Commission has no authority to impose conditions.
The Commission finds that it has continuing authority to impose financial requirements
on all applicants for Certificates of Public Convenience and Necessity.Idaho Code §§61-528,62-
615(3)and 62-622(5);Order No.26665 as clarified by Order No.26738.Moreover,where the
applicant is the whollyowned subsidiary of a Title 61 fully regulatedcompany,the Commission may
require additional verification that Idaho Code §62-613 requirements are being met.Based on
Staff's recommendation and review,the Commission is satisfied that Staff's concerns about cross
subsidization can be addressedby Staff continuing to verify that the controls and allocations for CTC
recommended by Staff have been implemented by Cambridge.The Commission orders Staffto
notify the Commission when these requirements are met.At this time,however,the Commission
is satisfied that the Certificate may be granted.
ORDER
IT IS HEREBY ORDERED that upon review of the filings in this case,the law,oral
argument and determination of the Commission,that CTC Telecom,Inc.is granted a Certificate of
Public Convenience and Necessity to provide local telecommunications service in Hidden Springs
Development.
IT IS FURTHER ORDERED that CTC Telecom,Inc.shall provide the Commission with
a draft legal description for its final Certificate.
IT IS FURTHER ORDERED that Rulemaking docket,Case No.31-4201-9801,be
opened for the purpose of adopting temporary and proposed rules governing the standards for access
and interconnection in unserved areas and that CTC Telecom,Inc.is subject to these rules.
ORDER NO.27673 -5-
IT IS FURTHER ORDERED that Staff verify that the controls and allocations for CTC
recommended by Staff are implemented by Cambridge Telephone Corporation and that Staff notify
the Cornmission when these requirements are met.
THIS IS A FINAL ORDER.Any person interested in this Order (or in issues finally
decided by this Order)or in interlocutoryOrders previously issued in this Case No.GNR-T-98-4
may petition for reconsiderationwithin twenty-one (21)days of the service date of this Order with
regard to any matter decided in this Order or in interlocutoryOrders previously issued in this Case
No.GNR-T-98-4.Within seven (7)days after any person has petitioned for reconsideration,any
other person may cross-petition for reconsiderationin response to issues raised in the petition for
reconsideration.See section 61-626,Idaho Code.
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this 70
day of August 1998.
ENNIS S.HAN EN,RESIDENT
Commissioner Nelson was out of the
office on this date.
RALPH NELSON,COMMISSIONER
MARSHA H.SMITH,COMMISSIONER
ATTEST:
Myrna J.Walters
Commission Secretary
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ORDER NO.27673 -6-