20030902Peabody Direct -- Nextel.pdf

McDEVITT & MILLER, LLP
Dean J. Miller (ISB No. 1968)
420 West Bannock Street
O. Box 2564-83701
Boise, Idaho 83702
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BRIGGS AND MORGAN, P.
Philip R. Schenkenberg (MN #260551)
2200 First National Bank Building
332 Minnesota Street
Saint Paul, Minnesota 55101
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Attorneys For NPCR, Inc. d/b/a Nextel Partners
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
Case No. GNR-O3-
Case No. GNR-O3-
DIRECT TESTIMONY OF SCOTT PEABODY
FOR NPCR, INC. d/b/aNEXTEL PARTNERS
I. INTRODUCTION
PLEASE STATE YOUR NAME, PLACE OF EMPLOYMENT, POSITION AND BUSINESS
ADDRESS.
My name is Scott Peabody. I am employed by Nextel Partners, Inc. as a Director in its
Engineering Department. My business address is 4500 Carillon Point, Kirkland, W A
98033.
WHAT ARE YOUR RESPONSIBILITIES WITHIN NEXTEL PARTNERS, INc.?
I provide engineering services for Nextel Partners, Inc. and its affiliates and indirect
wholly owned subsidiaries, including the Petitioner NPCR, Inc. (collectively, "Nextel
Partners " or the "Company ). In particular, I have responsibilities relating to spectrum
management as well as various engineering and network matters.
PLEASE DESCRIBE YOUR WORK EXPERIENCE.
I have worked in the telecommunications industry for approximately seven years. I have
performed engineering and operations functions for Nextel Partners and AT&T Wireless.
I have also performed planning, systems development, network operations and
engineering functions for a CLEC venture.
PLEASE DESCRIBE YOUR EDUCATIONAL BACKGROUND.
I obtained a BS in Electrical Engineering from the University of Maine, and an MBA
from the University of Washington.
DOES NEXTEL PARTNERS CURRENTLY PROVIDE TELECOMMUNICATIONS SERVICE IN
IDAHO?
Yes. Nextel Partners is a "telecommunications carrier" as defined in Section 153(44) of
the Communications Act of 1934 , as amended (the "Act"), 47 U.C. 9 153(44). Nextel
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Partners is authorized by the Federal Communications Commission ("FCC") and
provides commercial mobile radio services ("CMRS") in areas also served by Albion
Telephone Company, Filer Mutual Telephone, Farmers Mutual Telephone, Mud Lake
Telephone Cooperative, Project Mutual Telephone, Rural Telephone Company, and
Citizens Telecommunications Company ofIdaho. The corporate parent company, Nextel
Partners, Inc., is publicly held and traded, and serves more than 1 000 000 subscribers
nationwide under the brand name "Nextel." Nextel Partners typically serves more rural
license areas, while Nextel Communications, Inc. ("Nextel Communications ) (a separate
publicly traded entity) serves in urban license areas. Together, Nextel Partners and
Nextel Communications provide service in areas of the United States where
approximately 240 million people live or work.
WHAT IS THE RELATIONSHIP BETWEEN NEXTEL PARTNERS AND NEXTEL
COMMUNICATIONS?
Nextel Communications and Nextel Partners are separately owned and operated public
corporations, both publicly traded on the Nasdaq market, with different boards of
directors and executive officers. Nextel Communications, through a subsidiary, is Nextel
Partners' largest shareholder , owning approximately 31 % of Nextel Partners' common
stock.
How LONG HAS NEXTEL PARTNERS BEEN OPERATING?
Nextel Partners was formed in 1998 to provide service under the "Nextel" brand name in
small and rural markets. We built out our network rapidly, beginning operations in 1999
and launching service in Idaho in 2000.
TURNING TO THE MATTER OF UNIVERSAL SERVICE, DOES NEXTEL PARTNERS
CURRENTLY CONTRIBUTE TO THE FUNDING FOR UNIVERSAL SERVICE?
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Yes. Federal regulations require CMRS carriers such as Nextel Partners to contribute a
portion of their revenues to the funding of federal universal service, and some states
require Nextel Partners to contribute to the funding of state universal service programs as
well.
Is THE COMPANY PRESENTLY ABLE TO DRAW FROM FEDERAL UNIVERSAL SERVICE
FUNDS FOR THE PROVISION OF THE SUPPORTED SERVICES IN IDAHO?
No. Until it is designated as an eligible telecommunications carrier ("ETC") for those
areas it serves in Idaho, Nextel Partners is not able to receive any federal universal
service funds to support its provision of universal services to Idaho consumers. Unlike
urban areas where carriers are able to compete based upon the cost of providing service
rural high-cost areas will not be able to experience the full benefits of customer choice
unless competitive carriers are designated as ETCs and have access to the support
mechanisms designed to benefit rural consumers.
Is THE COMPANY SEEKING FUNDING FROM ST ATE UNIVERSAL SERVICE MECHANISMS?
No. Although Idaho has a state universal service fund see Idaho Code 962-610 et seq"
Nextel Partners' Petition in this proceeding seeks designation only for purposes of
receiving federal universal service funding in the rural telephone company areas set forth
in Exhibit 106.
WILL NEXTEL PARTNERS SEEK ST ATE UNIVERSAL SERVICE FUNDING IN THE FUTURE?
We have not decided. If at some point in the future Nextel Partners decides to apply for
state universal service funding, Nextel Partners will file a new petition to address the
issues specific to state ETC designation.
WHAT ARE THE PURPOSES OF YOUR TESTIMONY?
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The purposes of my testimony are two-fold: first, I will describe how Nextel Partners
provides the FCC's supported services in Idaho , and state the Company s commitment to
include those services in its universal service offerings.Second, I will explain the
public interest" standard that applies to designating an additional ETC such as Nextel
Partners in areas served by rural telephone companies and demonstrate why designating
Nextel Partners in these areas significantly benefits the public interest. Because Nextel
Partners meets the applicable criteria, and because the public interest of Idaho and its
consumers favor designating N extel Partners an ETC in the specified rural telephone
company study areas, its ETC Petition ("Petition ) should be granted.
II. REQUIREMENTS FOR ETC DESIGNATION
WHEN DID NEXTEL PARTNERS FILE ITS ETC PETITION IN THE STATE OF IDAHO?
Nextel Partners' ETC Petition was filed with the Idaho Public Utilities Commission (the
Commission ) on April 28, 2003.
WHY IS NEXTEL PARTNERS SEEKING DESIGNATION AS AN ETC?
Section 214( e) of the Act provides that a common carrier must obtain designation as an
ETC from the Commission to be eligible to receive federal universal service support.
Is A WIRELESS PROVIDER LIKE NEXTEL PARTNERS ELIGIBLE FOR FEDERAL UNIVERSAL
SERVICE SUPPORT?
Yes. Both the Act and the FCC's decisions establish the directives for the Commission to
follow in making an ETC designation. Section 214( e) specifically provides that any
common carrier, including a wireless provider such as Nextel Partners, may be
designated as an ETC for federal universal service support purposes, provided that carrier
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meets the specific criteria set forth in Section 214( e)(1) of the Act. The FCC stated this
very clearly in a 1997 Order:
We agree with the Joint Board's analysis and recommendation that any
telecommunications carrier using any technology, including wireless
technology, is eligible to receive universal service support if it meets the
criteria under Section 214( e)( 1).
In the Matter of Federal-State Joint Board on Universal Service CC Docket 96-
Report and Order, FCC 97-157
, ~
145 (reI. May 7, 1997) Universal Service Order
Although this Commission has not yet designated a wireless carrier as an ETC, state
commissions and the FCC have designated wireless ETCs in over 20 states, and wireless
carriers are now assisting in the provision of universal services in high cost areas
throughout the nation. See, e.g., 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 , ~ 13
(reI. Nov. 27, 2002) RCC Order ); Western Wireless Corporation CC Docket No. 96-
, Memorandum Opinion and Order, DA 00-2896 (reI. Dec. 26, 2000) Wyoming
Order ), affd FCC 01-311 (reI. Oct. 19 2001).
HAS NEXTEL PARTNERS BEEN DESIGNATED AN ETC IN ANY OTHER JURISDICTION?
Yes. Nextel Partners was recently (May 15, 2003) designated an ETC in the state of
Iowa by the Iowa Utilities Board. See In Re: NPCR, Inc., d/b/a Nextel Partners Docket
No. 199 lAC 39.2(4), Order Designating Eligible Carrier (May 15 2003).
WHAT ARE THE REQUIREMENTS FOR OBTAINING ETC DESIGNATION?
The eligibility requirements are set forth in the Act, and are as follows:
common carrier designated as an eligible telecommunications carrier
under paragraph (2) or (3) shall be eligible to receive universal service
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support in accordance with section 254 and shall, throughout the service
area for which the designation is received:
(A) Offer the services that are supported by Federal universal
service support mechanisms under Section 254( c), 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
(B) Advertise the availability of such services and the charges
therefor using media of general distribution.
See 47 U.C. 9 214(e)(I) (emphasis added). In areas served by a rural LEC, the
Commission must also make a "public interest" finding. Id. 9214(e)(2).
Is IT YOUR UNDERSTANDING THAT NEXTEL PARTNERS IS ENTITLED TO BE DESIGNATED
AS AN ETC IF IT DEMONSTRATES THAT IT IS CAP ABLE OF MEETING ALL OF THE
OBLIGATIONS IMPOSED BY SECTION 214(e) OF THE ACT?
Yes. In areas served by a rural telephone company, the Act requires the Commission to
designate Nextel Partners as an ETC if it demonstrates an ability to perform all of the
obligations set forth in 47 u.S.C. 9 214(e)(1) and also finds that designating Nextel
Partners as an ETC is in the public interest.
THE FIRST CRITERION FOR ETC DESIGNATION UNDER SECTION 214(e)(I) IS COMMON
CARRIER STATUS. Is NEXTEL PARTNERS A COMMON CARRIER?
Yes. Nextel Partners is a "eommon carrier" for purposes of obtaining ETC designation
under 47 u.S.C. 9 214(e)(1). A common carrier is generally defined in 47 u.S.c. 9
153(10) as "any person engaged as a common carrier for-hire" in interstate or foreign
communications utilizing either wire or radio technology, except for radio broadcasters.
The FCC's regulations specifically provide that a specialized mobile radio service , such
as that provided by Nextel Partners, is a common carrier service regulated as commercial
mobile radio service ("CMRS"
).
See 47 c.P.R. 920.9(a)(4).
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THE SECOND REQUIREMENT IS THAT NEXTEL PARTNERS OFFER THE "SUPPORTED
SERVICES.WHAT ARE THE SUPPORTED SERVICES THAT MUST BE OFFERED?
The FCC has identified the following services and functionalities as the core services to
be offered by an ETC and supported by federal universal service support mechanisms:
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 services;
access to operator services;
access to interexchange services;
access to directory assistance;
toll limitation for qualifying low-income consumers
See 47 c.F.R. 954.101(a).
CAN NEXTEL PARTNERS CURRENTLY PROVIDE THE SUPPORTED SERVICES SET FORTH
ABOVE USING ITS NETWORK THAT IS IN PLACE TODAY?
Yes. Nextel's Partners ' present network can provide all of these services to consumers in
Idaho. In fact, Nextel Partners already provides all of these services in Idaho, with the
exception of the ninth supported service
, "
toll limitation for qualifying low-income
consumers." As I will explain below, the "toll limitation" service is a service linked to
the federal "Lifeline" program targeted at meeting the needs of low income consumers
and Nextel Partners cannot participate in the federal Lifeline program until it receives its
ETC designation.
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COULD YOU EXPLAIN EACH OF THE SUPPORTED SERVICES AND HOW NEXTEL PARTNERS
PROVIDES, OR WILL PROVIDE THESE SERVICES?
Yes. With the sole exception of "toll limitation for qualifying low income consumers " as
discussed below, Nextel Partners presently provides each of the supported services
identified by the FCC in 47 C.R. 9 54.101(a) as follows:
Voice-grade access to the public switched telephone network means the
ability to make 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 of Nextel Partners are able to make and receive calls on
the public switched network within the FCC's specified bandwidth.
Local usage . An ETC must include an amount of local usage determined
by the FCC as part of a universal service offering. 47 C.R. 954.101(a)(2). To date, the
FCC has specifically decided not to require unlimited local usage, and has not set a
minimum amount of local usage required to be included in a universal service offering.
In the Matter of Federal-State Joint Board on Universal Service CC Docket 96-
Order and Order on Reconsideration, FCC 03-170
, ~
14 (reI. July 14, 2003). Nextel
Partners will meet the local usage requirement by providing local usage in each universal
service offering.
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. 47 C.R. 954.101(a)(3). Nextel Partners currently uses
out-of-band digital signaling and in-band multi-frequency ("MF") signaling that
functionally equivalent to DTMF signaling
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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.F .R. 9 54.101 (d). In the Matter of Federal-State Joint Board on
Universal Service CC Docket 96-45, Report and Order, FCC 97-157, ~ 162 (reI. May 7
1997) (" Universal Service Order
).
Nextel Partners provides the functional equivalent of
single-party service - a dedicated message path for the length of all customer calls. 47
R. 954.101(a)(4).
Access to emergency services. The ability to reach a public emergency
service provider by dialing 911 is a required service in any universal service offering.
Enhanced 911 or "E911 " which includes the capability of providing both automatic
numbering information ("ANI") and automatic location information ("ALI"), is only
required if a public safety answering point ("PSAP") makes arrangements with the local
provider for the delivery of such information. 47 c.F.R. 954.101(a)(5). Nextel Partners
provides universal access to the 911 system for its customers, and has implemented and
will continue to implement E911 services consistent with the FCC's Rules and Orders and
local PSAP requests. To date, Nextel Partners has deployed Phase I and Phase II E911 in
Ada County. The only other E911 request received in Idaho was from Owyhee County.
That request requires no action at this time because the company has no cell sites that
would route to this county.
Access to operator services. Access to operator services is defined as any
automatic or live assistance provided to a consumer to arrange for the billing or
completion, or both, of a telephone call. 47 C.R. 954.101(a)(6). Nextel Partners meets
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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.
Access to interexchange service.A universal service provider must offer
consumers access to interexchange service to make and receive interexchange calls.
Nextel Partners presently meets this requirement by providing all of its customers with
the ability to make and receive interexchange or toll calls through direct interconnection
arrangements the Company has with one or more interexchange carriers (IXCs).
Access to directory assistance means the ability to place a call directly to
directory assistance. 47 c.F.R. 9 54.101(a)(8). Nextel Partners meets this requirement
by providing all of its customers with access to directory assistance by dialing " 411.
Toll limitation for qualifying low income consumers FCC Rule
54.101(a)(9) requires the provision of "tolllimitation" to requesting Lifeline customers
and defines toll limitation with reference to the FCC's Lifeline Rules.' Lifeline Rule
54.400(d) defines "toll limitation" as either "toll blocking" or "toll control" if a carrier is
incapable of providing both, but as both "toll blocking" and "toll control" if a carrier can
provide both. Toll blocking allows consumers to elect not to allow the completion of
outgoing toll calls. Toll control allows consumers to specify a certain amount of toll
usage that may be incurred per month or per billing cycle. 47 C.R. 954.500(b)-(c).
Nextel Partners is not, at this time, capable of providing toll control. To comply with this
rule, Nextel Partners will provide toll blocking to requesting Lifeline customers.
Is NEXTEL PARTNERS REQUIRED TO OFFER TOLL BLOCKING TO QUALIFYING LOW-
INCOME CONSUMERS PRIOR TO ITS DESIGNATION AS AN ETC?
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No. The toll blocking offering is part of a carrier s obligation to offer supported services
after designation as an ETC: it is part of the federal Lifeline program, and only ETCs can
participate in Lifeline. See 47 C.R. 99 54.400 et seq. The reference to "qualifying" low
income consumers means that the consumers being offered toll blocking have first
demonstrated their eligibility for Lifeline assistance by showing either that they qualify
under pertinent state-imposed guidelines, or where no such guidelines exist, that they
receive certain other types of federal financial assistance, such as Medicaid, food stamps
Supplemental Security Income, federal public housing assistance, or Low-Income Home
Energy Assistance Program assistance. Nextel Partners presently offers toll blocking on
international calls to all of its customers, and upon designation as an ETC, will offer toll
blocking to eligible Lifeline support recipients in Idaho.
WILL NEXTEL PARTNERS PROVIDE UNIVERSAL SERVICES ONCE DESIGNATED?
Yes.All of Nextel Partners' voice offerings contain the FCC's supported serVIces.
Attached as Exhibit 102 are Nextel Partners' service plans available today through
www.Nextel.com and 800-NEXTEL9, and our standard customer service agreement.
Nextel Partners' universal service offerings will be provided to consumers using the same
phones, antennae, cell sites, towers, trunk lines, mobile switching center, and
interconnection facilities used today. Exhibits 103 and 104 are maps showing our
current coverage overlayed on the rural telephone company study areas set forth in
Exhibit 106. Nextel Partners also regularly deploys additional cell sites and channels, as
I The local calling area for these plans is the state of Idaho. Other rate plans may be available
through other distribution channels. All rate plans that include the supported services would
qualify for universal service funding.
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necessary, to maximize signal coverage and service availability. The maps in Exhibits
103 and 104 depict a propagation analysis employing Nextel Partners' existing facilities
and assuming a three-watt wireless phone.The extent of Nextel Partners' existing
coverage in and around Idaho does show Nextel Partners' significant investment in
facilities for its Idaho customers, and its commitment to serving their mobile
communications needs.
Is NEXTEL PARTNERS REQUIRED TO DEMONSTRATE THAT IT CAN SERVE EVERY
CUSTOMER IN ITS PROPOSED SERVICE AREA PRIOR TO DESIGNATION AS AN ETC
IDAHO?
No. As established by the FCC, applicable law does not require Nextel Partners to show
that it can serve every customer throughout each study area for which it seeks designation
in advance of receiving a grant of ETC status. 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, Declaratory Ruling, CC Docket 96-
FCC 00-248, 15 FCC Rcd at 15175 (reI. August 10 2000) ("Declaratory Ruling
).
What
the law does require is that, once Nextel Partners is designated an ETC, Nextel Partners
respond to a "reasonable request for service" throughout each of the areas for which it
seeks designation. Id. 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.
THIRD REQUIREMENT FOR DESIGNATION AS AN ETC IS TO ADVERTISE THE
AVAILABILITY OF THE SUPPORTED SERVICES. HOW DOES NEXTEL PARTNERS INTEND
TO ADVERTISE THE AVAILABILITY OF THE SUPPORTED SERVICES?
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Based upon the recommendations of the Joint Board, the FCC has not adopted particular
standards regarding advertising using media of general distribution under Section
214( e)(1).See Universal Service Order ~ 148. Nextel Partners will advertise the
availability of the supported services and the corresponding charges in a manner that
fully informs the general public within the designated service areas of such services and
charges. The Nextel brand is currently advertised jointly by Nextel Partners and Nextel
Communications through several different media, including newspaper, television, radio
and billboard advertising.This collaborative advertising is designed to increase
awareness of the "Nextel" brand name, service offerings and unique services offered by
each company.Nextel Partners' nationwide advertising costs totaled approximately
$35.1 million for the year ending December 31 , 2002.In Idaho, Nextel Partners
collaboratively advertises with Nextel Communications through media of general
distribution, including newspaper, magazine, billboard and yellow page advertisements
as well as radio and television ads. In addition, Nextel Partners advertises through point-
of-sale marketing efforts at various wireless-telecommunications and general-electronic
retail stores and over the Internet at www.Nextel.com. Nextel Partners also maintains
various retail store locations throughout its authorized service areas, which provide an
additional source of advertising. Nextel Partners will use the same media of general
distribution that it currently employs to advertise its universal service offerings
throughout the service areas. Attached as Exhibit 105 contains Nextel Partners' general
plan regarding advertising for Idaho.
IN WHAT SERVICE AREAS IS NEXTEL PARTNERS SEEKING DESIGNA nON AS AN ETC?
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The FCC 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. See 47 C.R. 9 54.207(a). In those areas served by a rUl:al telephone
company, service area means the company s study area unless the state and the FCC, after
taking into account recommendations of the Federal-State Joint Board on Universal
Service, establish a different definition of service area for a rural company. See
c.F.R. 9 54.207(b).Pursuant to 47 U.C. 9 214(e)(1), Nextel Partners requests
designation as an ETC throughout the areas as set forth in Exhibit 106 ("Designated
Areas ). These Designated Areas all consist of study areas of rural telephone companies.
CAN NEXTEL PARTNERS SERVE THE ENTIRE STUDY AREA OF EACH RURAL TELEPHONE
COMPANY CURRENTLY SERVING AREAS FOR WHICH NEXTEL PARTNERS SEEKS ETC
DESIGNATION?
Except for the study area of Citizens Telecommunications Company of Idaho
Citizens ), Nextel Partners seeks designation for the entire study area for each affected
rural telephone company. For the area served by Citizens, Nextel Partners seeks ETC
designation conditioned on the Commission and FCC redefining Citizens' service area to
an exchange-by-exchange basis pursuant to 47 C.R. 954.207(b).
WHAT ARE THE REQUIREMENTS FOR REDEFINING THE CITIZENS' STUDY AREA TO
EXCHANGE BASIS?
The Act and the FCC's regulations authorize the FCC and the Commission to act in
concert to develop an alternative service area for 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
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reaching a different conclusion. 47 u.S.c. 9 214(e)(5); 47 C.R. 9 54.207(b); Universal
Service Order ~ 187.
WHAT JOINT BOARD RECOMMENDATIONS MUST THE COMMISSION CONSIDER?
The FCC identified three factors initially recommended by the Joint-Board which should
be considered by the Commission and the FCC when determining the appropriateness of
redefining a rural telephone company s service area. The first factor is the risk of cream-
skimming. 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 exchange of the rural ILEC's study area. Universal Service Order ~ 189. As the
Joint Board explained:
We note that some commenters argue that Congress presumptively
retained study areas as the service area for rural telephone
companies in order to minimize "cream skimming" by potential
competitors. Potential "cream skimming" is minimized because
competitors, as a condition of eligibility, must provide services
throughout the rural telephone company s study area. Competitors
would thus not be eligible for universal service support if they
sought to serve only the lowest cost portions of a rural telephone
company s study area.
In the Matter of Federal-State Joint Board on Universal Service CC Docket 96-, 12
FCC Rcd. 87, ~ 172 (reI. Nov. 8, 1996) Joint Board Recommendations
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
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companies which are exempt from certain of the Act's requirements. Universal Service
Order ~ 189. In making its recommendation, the Joint Board had reasoned:
For example, rural telephone companies are initially exempt from
the interconnection, unbundling, and resale requirements of 47
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.
Moreover, while a state commission must designate other eligible
carriers for non-rural areas, states may designate additional eligible
carriers for areas served by a rural telephone company only upon a
specific finding that such a designation is in the public interest.
Joint Board Recommendations ~ 173.
The third factor to be considered is whether any administrative burdens might result from
the redefinition of the service area.A rural telephone company s universal service
support payments are currently based on a rural company s embedded costs determined at
the study area level. Universal Service Order ~ 189. The Joint Board initially expressed
concern that rural telephone companies might have difficulty calculating costs on a less-
than-study area level. The Joint Board stated:
Another reason to retain existing study areas is that it is consistent
with our recommendation that the determination of the costs of
providing universal service by a rural telephone company should
be based, at least initially, on the Company s embedded costs.
Rural telephone companies currently determine such costs at the
study area level. We conclude, therefore, that it is reasonable to
adopt the current study areas as the service areas for rural
telephone companies rather than impose the administrative burden
of requiring rural telephone companies to determine embedded
costs on a basis other than study areas.
Joint Board Recommendations ~ 174.
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Despite its initial decision to adopt the study area as the rural telephone companies
service area, the FCC has now stated a policy favoring redefinition in instances where a
rural carrier s study area is large and/or non-contiguous. In response to issues raised by
competitive ETCs and wireless carriers who might not be able to provide facilities-based
service throughout a rural company s entire study area, the FCC has expressly urged State
commissions to explore redefinition for purposes of ETC designations.The FCC
cautioned that requiring a new entrant to serve a non-contiguous service area as a
prerequisite to ETC eligibility would 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.Universal Service Order ~ 190.
IN LIGHT OF THE JOINT BOARD'S RECOMMENDATIONS, SHOULD THE COMMISSION
GRANT NEXTEL PARTNERS' REQUEST FOR REDEFINITION OF CITIZENS' STUDY AREA?
Yes. The study area of Citizens contains multiple exchanges which are not located
within the scope of Nextel Partners' authorized service areas. The most logical and
appropriate method of redefining this service area is by individual exchanges.
Redefining this service area into separate service areas based on individual exchanges for
purposes of ETC designations will promote competition by eliminating a barrier to entry
into the universal services market. This approach also would enable Nextel Partners to
be designated a federal ETC in the exchanges within network coverage area consistent
with the public interest determination of the Commission.
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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, none of which weigh against redefining Citizens' study area.
The first factor relating to a risk of cream-skimming is not present. Nextel
Partners Wireless seeks redefinition of Citizens' service area on an individual exchange
basis so it can be designated as an ETC in those areas for which it can provide facilities-
based services. Redefinition on an individual exchange basis will preserve and advance
universal service by establishing designated service areas that are more reflective of the
areas actually served. Redefinition furthers competition and protects the incumbents
from selective targeting of specific exchanges with the lowest cost and highest support.
In fact, Citizens has already disaggregated its support to the exchange level. The Citizens
disaggregation map on file with the Universal Service Administrative Company is
attached as Exhibit 107. 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"). Thus, Nextel Partners
will simply receive the same level of support per each line that Citizens now receives.
See Application of United States Cellular Corporation for Designation as an Eligible
Telecommunications Carrier in Wisconsin PSC Docket No. 8225-TI-I02, Order
Granting ETC Status, p. 10-11 (Dec. 20, 2002) (" Us. Cellular Wisconsin Order
(finding that because a competitive ETC receives the same amount of federal support as
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the ILEC
, "
the concerns about 'cherry picking' and 'cream skimming' are largely moot"
(citing In the Matter of Reconsideration of Western Wireless Corporation s Designation
as an Eligible Telecommunications Carrier in the State of Wyoming, FCC 01-311 ~ 12
(reI. Oct. 16 2001)). In short, there will be no opportunity for cream-skimming.
The second factor relating to the special status of rural LECs can also
appropriately be taken into account by redefining on an exchange basis. The redefinition
of the 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 D.c. 9 251(c) even if its
service area is redefined for purposes of ETC designations.
The Act's public interest factor for the designation of an additional ETC in the service
areas of Citizens under 47 U.C. 9214(e)(2) will remain in place.The continued
existence of the public interest standard was noted by the FCC as a safeguard available to
a State commission to support a redefinition request for service areas on a less-than-study
area level. Universal Service Order ~ 190. This public interest factor will remain as an
effective check to prevent the designation of an additional competitive ETC who may
seek to target only low cost areas or otherwise pose a detriment to the rural consumers of
the incumbents. Thus, the incumbent LECs would retain their unique status and special
treatment as rural telephone companies under the Act consistent with the Joint Board'
recommendations if its study area were redefined on an individual exchange basis.
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The third and final Joint Board factor relating to the administrative ease of
calculating the costs of the rural telephone companies on a less-than-study area level is
likewise not an issue. There are no administrative costs to consider because any federal
universal service support 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 C.R. 954.307(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, this current funding mechanism
will remain in place for approximately another four years when the FCC is expected to
make changes to the funding mechanism for rural telephone companies.
WILL REDEFINITION OF CITIZENS' STUDY AREA TO AN EXCHANGE BASIS PROMOTE
UNIVERSAL SERVICE?
Yes. The redefinition of 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.
These large and non-contiguous study areas create a disincentive to competition. This
type of barrier to entry was appropriately recognized by the Washington Utilities and
Transportation Commission when it successfully applied to the FCC to redefine the study
areas of rural LECs in its State. The Washington Commission noted: "The designation
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of the service area impacts the ease with which competition will come to rural areas. . . .
The wider the service area defined by the state commission, the more daunting the task
facing a potential competitor seeking to enter the market." Petition for Agreement With
Designation of Rural Company Eligible Telecommunications Carrier Service Areas
the Exchange Level and for Approval of the Use of Disaggregation of Study Areas for the
Purpose of Distributing Portable Federal Universal Service Support Washington Util. &
Transp. Comm , Docket No. 970380, at 3 (Aug. 1998). The Washington Commission
concluded that smaller service areas for the designation of ETCs in rural areas will
promote competition and speed deregulation. Id. at 9.
The FCC has previously determined that redefinition of rural telephone company service
areas to the exchange or wire center basis facilitates local competition by enabling new
providers to serve relatively small areas. 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 Study Areas of the Purpose of Distributing
Portable Federal Universal Service Support Memorandum Opinion and Order
Docket No. 96-, DA 99-1844, ~ 8 (reI. Sept. 9, 1999). The FCC noted: "We find that
our concurrence with rural LEC petitioners' request for designation of their individual
exchanges as service areas is warranted in order to promote competition.Id. The FCC
concluded that Washington s "effort to facilitate local competition justifies (the FCC's)
concurrence with the proposed service area designation.Id.
. The redefinition of Citizens' study area to an individual exchange basis will foster
competition in Idaho.Redefining this study area for purposes of determining ETC
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service areas 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.
BEFORE DESIGNATING NEXTEL PARTNERS AS AN ETC, IS THE COMMISSION REQUIRED
TO FIND THAT THE DESIGNATION IS IN THE PUBLIC INTEREST?
Yes. In areas served by rural telephone companies the Commission must determine that
designating an additional ETC is in the public interest. See 47 U.C. 9214(e)(2).
Is THE DESIGNATION OF NEXTEL PARTNERS AS AN ADDITIONAL ETC IN THE
REQUESTED RURAL TELEPHONE COMPANY STUDY AREAS IN THE PUBLIC INTEREST?
Yes. An important purpose of the Act was to promote competition in local telephone
markets. Consistent with the Act, the "public interest" is served where designating a
competitive ETC will benefit consumers in rural areas of the state. The Commission
should make this determination from the presumption that competition benefits
consumers, and that citizens throughout the state are entitled to the benefits of
competitive universal service.
The FCC has confirmed that a public interest inquiry should look to whether consumer
benefits will be outweighed by demonstrated adverse impacts on consumers resulting
from the designation.Western Wireless Corporation CC Docket No. 96-
Memorandum Opinion and Order, DA 00-2896
, ~
16 (reI. Dec. 26, 2000) Wyoming
Order ), affd FCC 01-311 (reI. Oct. 19 2001). Based on that standard, Nextel Partners
Petition should be granted. The Act promised competitive telecommunications markets
in all areas of the nation, not just in urban areas. Yet, competitive service providers are
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hard to find in rural areas. In addition, rural telephone companies have been quite
successful in expanding their services provided and deploying advanced network
infrastructure. Many rural telephone companies now provide local service, long distance
cable, wireless, internet, and/or DSL services, and do so without any competition from
other landline providers. It is entirely possible in some rural areas that the residents get
all of their telecommunications-related services from a single incumbent provider, not
because they prefer to do so, but because it is their only choice. Wireless companies
especially a company like Nextel Partners that serves rural areas, represent the only real
chance at bringing meaningful competition to these service areas. That can only happen
ifNextel Partners is able to compete on a level playing field.
Access to universal service funding will allow Nextel Partners to continue to extend its
network throughout the state, and this network infrastructure will continue to be available
to provide universal and advanced services to rural consumers in Idaho. Nextel Partners
network uses a packet-based platform, the integrated Digital Enhanced Network
(iDENTM) technology, developed by Motorola.This all-digital technology provides
exceptional sound and 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.We also provide GPS location
assistance for customers dialing 911 where requested by a PSAP. As we continue to
expand our network in Idaho this network infrastructure will be available to provide basic
and enhanced services to its residents.
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We are confident that Nextel Partners will provide valuable universal services to
residents in Idaho. We offer a wide range of calling plans, and continually seek to adjust
our service plans based on customer preferences. Because we offer mobile services, we
provide service that is much more "universal" than our landline counterparts.It is
essential for the Commission to realize that the principle distinction between Nextel
Partners and the incumbent landline rural telephone company - mobility - is even
essential to residents in rural areas, where there may be many miles between landline
phones. Especially in emergencies, this distinction can be of the utmost importance. As
discussed above, Nextel Partners will continue to extend its network infrastructure for the
benefit of consumers in Idaho.
DOES NEXTEL PARTNERS PROVIDE GOOD CUSTOMER SERVICE?
Yes, absolutely. Nextel Partners takes great pride in the level of customer service it
provides. There is great competition within wireless markets, and as a result consumers
have the ability to demand that companies are meeting their needs - if a competitive
wireless carrier such as Nextel Partners cannot reliably meet its customers' expectations
for customer service, the customers vote with their feet. Since we are in the business of
showing each customer why Nextel Partners is the best of the available alternatives for
his or her mobile communications needs, we have made a strong corporate commitment
to ensuring high quality customer satisfaction and service. This has resulted in Nextel
Partners having one of the highest customer satisfaction and customer retention ratings in
the industry.
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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 Indiana, and more than 50 state and local
government agencies, including police, fire and similar first-responders.
Because designating Nextel Partners as an ETC in rural telephone company areas in
Idaho will bring the benefits of competition without causing adverse impacts for
consumers or for incumbent rural telephone companies, the Commission should find that
designating Nextel Partners as an ETC serves the public interest in accordance with
Section 214( e )(2).
Finally, our 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.C. 9 254(b)(3). Nextel Partners
offers service in small and rural markets at the same rates offered by Nextel
Communications in large urban markets.
CAN YOU SUMMARIZE YOUR TESTIMONY?
Yes. Nextel Partners has shown that it meets each and every one of the requirements to
be designated an ETC set forth in 47 U.C. 9 214(e) and Part 54 of the FCC's rules.
Furthermore, it is in the public interest to grant the ETC designation, because of the
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increased competition, innovative service, and enhanced consumer choices that Nextel
Partners can bring to the areas in which it seeks designation. Therefore, Nextel Partners
urges the Commission to approve its Petition for ETC designation.
DOES THIS CONCLUDE YOUR TESTIMONY?
Yes.
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EXHIBITS NOT CLEAR
ENOUGH TO SCAN
see case file