20031117Peabody Rebuttal for Nextel.pdf

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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
Case No. GNR-O3-
Case No. GNR-O3-
REBUTTAL TESTIMONY OF SCOTT PEABODY
FOR NPCR, INC. d/b/a NEXTEL 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. I provide engineering services for Nextel Partners, Inc. and its
affiliates and indirectly wholly owned subsidiaries, including the Applicant NPCR, Inc.
(collectively, "Nextel Partners " or the "Company My business address is 4500
Carillon Point, Kirkland, W A 98033.
WHAT IS THE PURPOSE OF THIS REBUTTAL TESTIMONY?
I am responding to direct testimony filed by Lance A. Tade on behalf of Citizens
Telecommunications Company of Idaho ("Citizens ), and direct testimony by Daniel L.
Trampush on behalf of Citizens and the Idaho Telephone Association ("ITA"). Citizens
and ITA are collectively referred to as "Intervenors.
WHAT IS YOUR REACTION TO INTERVENORS' TESTIMONY?
Both Mr. Tade and Mr. Trampush oppose our designation based on policy arguments that
have little to do with the criteria for ETC designation. As I understand the "public
interest" standard as applied by the FCC, opposing ILECs should be required to identify
compelling reasons to treat rural telephone company areas different from non-rural
telephone company areas.I see no evidence that these areas are unable to support
competitive universal service, and no reason to deny high cost areas that which is
available in urban areas. I see Intervenors as having one goal - to be the only federally-
funded provider in their service areas, forever. Any other result they claim is bad policy
and will put them at an unfair disadvantage. I work for a competitive company that is
guaranteed nothing - we need to work hard every day to win and keep customers , and
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will make a profit only if we do so successfully. It astonishes me to hear ILECs claim to
be disadvantaged when:
They have built monopoly networks while being essentially guaranteed a
profit.
They currently have a captive customer base and no real competition.
They receive extraordinary amounts of money from federal universal
service funds based on embedded costs, and are guaranteed those funds for
at least 2 more years.
They have regulatory advantages such as the ability to charge interstate
and intrastate access rates.
These companies may be afraid of long-term competition from Nextel Partners. Perhaps
they should be. As we continue to deploy our network and our technology gets better we
expect more consumers will choose our services over landline services. Fundamentally,
however, consumers should be able to make these decisions, which will only happen if
wireless networks can be built and maintained in high cost areas ofIdaho.
PLEASE SUMMARIZE THE SPECIFIC POINTS THAT YOU MAKE IN THIS REBUTTAL
TESTIMONY.
Nextel Partners provides the supported services and commits to do so where it seeks
designation. Nextel Partners' requested service areas are appropriate and consistent with
law. Nextel Partners' request to be designated in only certain Citizens exchanges is not
cream skimming," but based on our license boundaries, and fully consistent with federal
law.
The record in this case clearly demonstrates that Nextel Partners' designation would serve
the public interest. Nextel Partners brings the benefits of increased competition, and the
benefits of Nextel Partners' service offerings , such as increased local calling areas and
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mobility, and its commitment to provide rural consumers with services available in urban
areas, at the same rates. This case should be about customers having the opportunity to
choose for themselves the basic service package that best meets their needs.The
Intervenors' opposition to that concept is contrary to clear federal policy, and is designed
to benefit themselves, not the public. This Commission should take advantage of federal
funding that is available to allow Nextel Partners to extend its high quality network into
more areas ofIdaho.
II.NEXTEL PARTNERS PROVIDES THE SUPPORTED SERVICES
You PREVIOUSLY TESTIFIED THAT NEXTEL PARTNERS PROVIDES THE FCC's NINE
SUPPORTED SERVICES. Is THAT DISPUTED?
I am not sure. Mr. Tade suggests that we do not satisfy local usage requirements and he
attacks our interconnection capabilities. LT Direct, pp. 10-, 14-15. As to local usage
he seems to think that unlimited local usage is a supported service. It is clearly not.
Local usage is defined as "an amount of minutes of use of exchange service... provided
free of charge." 47 C.R. ~ 54.101(a). In fact, the FCC has recently determined that
unlimited local usage should not be added to the list of supported services.In the
Matter of Federal-State Joint Board on Universal Service CC 96-, FCC 03-170, Order
and Order on Reconsideration, 'tf14 (rei. July 14 2003) July 2003 Order
I have testified that we provide customers with an amount of local usage free of charge.
We currently do include unlimited usage as part of one service offering, but have found
customers generally do not need - and do not want to pay for - 43 000 minutes of use per
month. Mr. Tade apparently believes that Nextel Partners must provide unlimited local
usage simply because the Commission has previously required Citizens, in its capacity as
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an ILEC, to do so. But under the federal rules it is clear that unlimited local usage is not
a universal service under federal law.
WHAT DOES HE SAY ABOUT NEXTEL PARTNERS' INTERCONNECTION CAP ABILITIES?
He claims "(m)any wireless carriers, including Clear Talk and Nextel (Partners), do not
properly compensate rural ILECs for wireless calls terminated on ILECs' local networks.
L T Direct, p. 14. Mr. Tade further states that "both Clear Talk and Nextel enjoy 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 for by the ILECs." L T Direct, pp. 14-l5.
I am unclear as to what ETC requirement Mr. Tade is addressing here. Whether or how
Nextel Partners and rural ILECs compensate one another is not a required or even
relevant consideration in the ETC analysis. But even if it were, Mr. Tade is simply
wrong. Nextel Partners has agreements in place that allow it to provide its customers
with access to public switched network, which is what is required of an ETc.
HAS NEXTEL PARTNERS AVOIDED ENTERING INTO INTERCONNECTION AGREEMENTS
WITH RURAL TELEPHONE COMPANIES?
No. But in most cases, it makes more sense for rural telephone companies like Citizens
and Nextel Partners to operate under a bill and keep arrangement in which each
terminates the other carrier s calls without billing each other.Nextel Partners has
received no other requests for negotiations with Citizens and so assumes it is satisfied
with this arrangement. I am aware of at least one other state in which Nextel Partners
does have a formal agreement with Citizens.
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The Commission should find Nextel Partners provides the FCC's supported services as
required by Section 214( e) of the Act.
III.NEXTEL PARTNERS SATISFIES SERVICE AREA REQUIREMENTS
WHAT IS THE SERVICE AREA REQUIREMENT FOR AN ETC?
For areas served by a rural telephone company, Section 214(e)(5) of the
Telecommunications Act provides that an ETC's designated service area must be that
rural telephone company s study area unless the ETC seeks authority to service within a
smaller area. A rural telephone company s "study area" is generally defined as all of the
Company s existing certificated exchange areas in a given state.Universal Service
Order 'tf172 n. 434.
Do THE WITNESSES QUESTION NEXTEL PARTNERS' ABILITY TO SATISFY SERVICE AREA
REQUIREMENTS?
I believe they agree that Nextel Partners has identified its requested service areas in a
manner consistent with the Act. However, both Mr. Tade and Mr. Trampush contend that
Nextel Partners' request in Citizens areas is cream skimming.Mr. Tade and Mr.
Trampush misread at best, and misrepresent at worst, federal law regarding service area
obligations.
LET S BEGIN WITH MR. TADE. How EXACTLY DOES HE ATTACK NEXTEL PARTNERS'
SATISFACTION OF SERVICE AREA REQUIREMENTS?
Mr. Tade first argues that Nextel Partners' request for designation in only certain Citizens
exchanges "fosters asymmetric regulation." L T Direct, p. 7.
Is HE CORRECT?
, absolutely not. There is a process in federal law to authorize service in only a
portion of a rural LEC service area. 47 US.C. ~ 214(e)(5); 47 C.R. ~ 54.207(b). We
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are seeking designation in most of the Citizens exchanges within our licensed areas, and
have excluded those where we do not hold licenses. We have excluded from our request
a few Citizens exchanges that are distant from our network because we simply do not
believe that it is reasonable to commit to serve there at this time. We hope at some point
to extend our designation to all areas within where we hold licenses. There is simply
nothing sinister about what we have done.
Moreover, I understand that the original reason for requiring a competitive ETC to serve
throughout the study areas was that universal service support was based on costs
averaged over the study area. Now that Citizens has targeted its support on an exchange
basis, that rationale no longer exists. If the areas we have included in our application are
lower cost, then we presumably will get less support there.Mr. Tade s notion of
asymmetric regulation is essentially the same as Mr. Trampush's cream skimming
concept. However, both witnesses seem to disagree with the FCC on this point:
Rural telephone companies, however, now have the option of
disaggregating and targeting high-cost support below the study area level
so that support will be distributed in a manner that ensures that the per-line
level of support is more closely associated with the cost of providing
service. Therefore, any concern regarding "cream-skimming" of
customers that may arise in designating a service area that does not
encompass the entire study area of the rural telephone company has been
substantially eliminated
In the Matter of Federal-State Joint Board on Universal Service Petition for
Reconsideration of Western Wireless Corporation Designation as an Eligible
Telecommunications Carrier in the State of Wyoming, CC Docket No. 96-, Order on
Reconsideration, FCC 01-311 , 'tf12 (reI. Oct. 19 2001) (emphasis added). Mr. Wood'
testimony deals with this issue in more detail.
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WHAT ABOUT SUGGESTIONS THAT NEXTEL PARTNERS SUBMIT A DETAILED
EXPLANATION FOR HOW IT WILL BUILD OUT ITS NETWORK TO SERVE ALL CUSTOMERS
WITHIN RURAL TELEPHONE COMPANY STUDY AREAS IMPLICATED IN ITS APPLICATION?
LT DIRECT, P. 9; DT DIRECT, PP. 17-18.
Nextel Partners is licensed in all areas where we seek ETC designation, and commits to
meet the obligations of an ETC. I am not a lawyer, but I understand that the FCC has
made clear that state commissions cannot require the detailed business plans as part of an
application.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
).
Instead, a new entrant like Nextel Partners must be given
a reasonable opportunity, subject to real world business limitations, to enter an area. The
Declaratory Ruling contains the following discussion:
12.
. . ..
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. We 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.
l3. 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 support. In fact, the carrier may be unable to secure
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financing or finalize business plans due to uncertainty surrounding its
designation as an ETC
Declaratory Ruling, 'tf'tf12-l3 (emphasis added).
This is exactly Nextel Partners' situation - we began providing service in parts of Idaho
only slightly more than three years ago.The ILECs have had many decades and
substantial universal service subsidies to build out their networks. As a competitor, we
cannot make business commitments about specific buildout until we are designated an
ETC , evaluate funding levels, consider our own capital budgets, and analyze other market
dynamics. 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.
ARE THESE AREAS IMPORT ANT TO NEXTEL PARTNERS' LONG TERM PLANS IN IDAHO?
Absolutely. FCC licenses are neither inexpensive nor easy to obtain. Nextel Partners
does not acquire licenses unless it intends to use those licenses. Nextel Partners won its
Idaho spectrum through the exhaustive bidding process in multiple economic area license
auctions. In addition, we took the extra step of negotiating eighteen spectrum exchanges
(swaps) and purchase agreements so that we would have more than sufficient spectrum
for our Idaho customer base. Reaching these agreements was a lengthy and complicated
process, requiring negotiations, channel clearing, provision of replacement equipment
retuning and licensing. We have made a company commitment to serve these areas.
DOES NEXTEL PARTNERS HAVE THE INTENT AND ABILITY TO PROVIDE SERVICE AS AN
ETC IN THE AREAS IDENTIFIED IN ITS APPLICATION?
Yes, absolutely.
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IV.
How DOES MR. TRAMPUSH DISPUTE NEXTEL PARTNERS' SATISFACTION OF SERVICE
AREA REQUIREMENTS?
Mr. Trampush, like Mr. Tade, relies principally on concerns of alleged cream skimming
and the effect it may have on competition. Mr. Trampush contends that the requirement
that an ETC applicant serve the entire study area of a rural telephone company exists to
ward off what he deems to be anti-competitive "cherry picking." DT Direct, pp. 10-11.
As discussed above, however, the FCC has decided there are no such cherry picking
concerns given the option ILECs have to disaggregate support. This is a red herring.
SO THEN DOES NEXTEL PARTNERS SATISFY ALL FEDERAL ETC SERVICE AREA
OBLIGATIONS?
There is no question that Nextel Partners can and will comply with all applicable FCC
service area requirements. Nextel Partners holds FCC licenses that cover all of its
requested designated areas, and commits to the obligations of an ETC.
FEDERAL FUNDING MECHANISMS ARE IN THE HANDS OF THE FCC
MR. TADE ALSO RAISES CONCERNS ABOUT THE IMPACT THAT HE BELIEVES NEXTEL
PARTNERS' ETC DESIGNATION WOULD HAVE ON THE FEDERAL UNIVERSAL SERVICE
FUND. LT DIRECT, PP. 12-13. ARE HIS COMMENTS VALID?
I do not believe so. I will defer to Mr. Wood, who is quite familiar with that topic.
NEXTEL PARTNERS' ETC DESIGNATION SERVES THE PUBLIC INTEREST
Do THE WITNESSES CONTEND THAT DESIGNATING NEXTEL PARTNERS AS AN ETC
WOULD NOT SERVE THE PUBLIC INTEREST?
Yes, both witnesses suggest in one way or another that it would not be in the public
interest to designate Nextel Partners as an ETC. But both fail to properly account for
relevant public interest factors.
LET S BEGIN WITH MR. T ADE. How DOES HE CHALLENGE THE PUBLIC INTEREST
DETERMINATION?
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Mr. Tade suggests that the public interest could only be served if the Commission
imposes upon Nextel Partners the following additional requirements: (1) publish and
adhere to a tariff, (2) file service area maps, (3) provide service quality data, and (4)
respond to customer complaints and otherwise adhere to certain customer relations rules.
LTDirect
pp.
15-16.
How DO YOU RESPOND?
Mr. Tade s proposed requirements are not in the Act, the FCC's Rules, or the
Commissioner s rules, and simply do not apply to the wireless industry generally. We are
a federally-regulated carrier under the FCC's regulatory authority subject to competitive
market pressures.
ARE REQUIREMENTS SUCH AS THOSE PROPOSED NECESSARY TO SERVE THE PUBLIC
INTEREST?
No. We do not file tariffs. Instead, our rates are publicly available and are far more
accessible than they would be if tariffed. State service rules do not apply to us, but based
on my review of the Idaho rules, we generally meet or exceed those standards as a matter
of basic business practice. In a competitive market carriers do not need to be forced to
provide high quality service. The same is true with regard to customer complaints.
Nextel Partners was recently designated as an ETC in Wisconsin, and that Commission
recognized that it is in the public interest to let a wireless carrier operate as a wireless
carrier and provide more and better services to customers. 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. 30 2003) (Ex. 108.
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I would also like to point out what I believe to be the absurdity of suggesting that
competitive entrants need to be regulated the same as dominant monopoly providers. The
FCC , this commission (as I understand it) and every other state commission I am aware
of has decided as a matter of policy that these two types of carriers should be regulated
differently. That is not unfair, it is sound, well-established public and economic policy.
BUT MR. TADE ALSO CLAIMS THAT "CONGRESS HAD QUESTIONS ABOUT WHETHER IT
WAS WISE TO HAVE COMPETING ETCs IN RURAL AREAS." LT DIRECT, P. 16. Is
CORRECT?
I don t know how he could be.Congress explicitly incorporated the benefits of
competition in rural areas into its declared principles "for the preservation and
advancement of universal service:
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, including interexchange
services and advanced telecommunications and information services , that
are reasonably comparable to those services provided in urban areas and
that are available at rates that are reasonably comparable to rates charged
for similar services in urban areas.
47 U.c. ~ 254(b)(3). I believe "all areas" means "all areas." Mr. Tade apparently
disagrees.
DOES MR. TRAMPUSH ALSO QUESTION WHETHER NEXTEL PARTNERS' DESIGNATION AS
AN ETC WOULD SERVE THE PUBLIC INTEREST?
Yes, and his testimony is similarly misguided.
WHAT SPECIFICALLY DOES MR. TRAM PUSH CLAIM?
Mr. Trampush predictably claims that Nextel Partners has presented no evidence in favor
of the public interest other than the presumed benefits of competition. DT Direct, p. 24.
Mr. Trampush then devotes nearly the remainder of this public interest discussion to
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whether Nextel Partners' designation would, in the very short term, promote competition.
DT Direct, pp. 26-29.
Is THIS POINT VALID?
No. Universal service policies are not about what happens today or tomorrow, but about
whether, in the long run, Idaho consumers will have access to telecommunications
facilities and services like those available for urban areas, and whether wireless carriers
will be given a fair chance to compete with landline companies. Nextel Partners believes
it is in the public interest to make federal universal service funding available so that
Nextel Partners can continue to fulfill its mission of providing small and rural service
areas with basic and advanced services at rates terms and conditions comparable to those
charged in urban areas. In other words, Nextel Partners believes rural customers are
entitled to the full benefits of wireless service even though they live in areas that are
costly to serve.
As an example, Albion takes in over $2 000 000 per year in federal support mechanisms
to serve 5 000 lines. Can Nextel Partners ever expect to compete effectively if Albion
has a $2 000 000 per year cash advantage over Nextel Partners simply because it is the
ILEC?
SO WHAT IS THE PROPER PUBLIC INTEREST ANALYSIS?
As I stated in my direct testimony, the public interest determination should be made from
the presumption that competition benefits consumers, and that all citizens in the state are
entitled to the benefits of competitive universal service. If competition is denied, it must
be based on some fundamental difference between rural and non-rural service areas.
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The FCC has mandated that a public interest inquiry should examine whether consumer
benefits from designation outweigh demonstrated adverse impacts on consumers. In the
Matter of Federal-State Joint Board on Universal Service Western Wireless Corporation
Petition for Designation as an Eligible Telecommunications Carrier In the State of
Wyoming, CC Docket No. 96-, Memorandum Opinion and Order, DA 00-2896, 'tf16
(reI. Dec. 26,2000), aff'd FCC 01-311 (reI. Oct. 19 2001).
DOES NEXTEL PARTNERS MEET THAT TEST?
Yes. Despite the Act's promise of competitive telecommunications markets in all areas
of the nation, rural customers do not today have the choices that urban customers have.
Wireless companies like Nextel Partners that serve rural areas can fill that need perfectly,
but only if they are able to compete on a level playing field with the rural LECs. Nextel
Partners is a national company that has a corporate mission of providing top-quality
services to rural consumers at urban rates. Our continued bui1dout is good for consumers
in Idaho.
Nextel Partners provides high-quality basic and advanced services. Our network uses a
packet-based platform known as integrated Digital Enhanced Network (iDENTM
technology, and 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 implement
E911 upon request, which means consumers can purchase phones that accomplish GPS
location assistance in an emergency.The mobility of our service is a tremendous
convenience and safety feature that consumers want and need, especially important to
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residents in rural areas where there may be many miles between landline phones. Indeed
this can be of the utmost importance in emergencies.
WHAT CONSUMER CHOICES ARE PROVIDED BY NEXTEL PARTNERS THAT ARE NOT
OFFERED BY ILECs?
As I said earlier, we provide the benefits of mobility. We offer larger local calling areas
to our customers, and in some offerings, provide nationwide calling. We offer our Direct
Connect service that cannot be provided by any ILEC. We offer mobile wireless data
services, including access to the Internet, email, and text messaging. We offer mobile
911 - perhaps the greatest personal safety feature available anywhere. We offer GPS
location for mobile subscribers where implemented by the PSAP. In addition, we operate
in an environment where carriers do not believe that customer service is something that
must be mandated by the government - we expect that competitive choice in rural LEC
areas will get rural telephone companies thinking more like competitors (fighting for
customers) and less like regulated monopolies (fighting to prevent competition).
How DOES COMPARABILITY FIT IN AS A UNIVERSAL SERVICE GOAL?
Section 254(b)(3) of the Act states:
(C)onsumers in rural, insular, and high cost areas, should have access to
telecommunications and information services, including interexchange
services and advanced telecommunications and information services, that
are reasonably comparable to those services provided in urban areas and
that are available at rates that are reasonably comparable to rates charged
for similar services in urban areas. (Emphasis added).
Fundamentally, universal service is about bringing services to rural areas in a manner that
is comparable to that provided in urban consumers. Nextel Partners bridges this gap
between urban and rural services.
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Nextel Communications, a separate publicly-traded company, serves large urban markets.
Nextel Partners provides its Idaho markets with the same rates, service offerings, terms
and conditions as offered by Nextel Communications in larger markets. This aspect of
comparability is directly in line with universal service goals.
DOES NEXTEL PARTNERS PROVIDE GOOD CUSTOMER SERVICE?
Yes, absolutely. As I stated in my direct testimony, we take great pride in our high level
of customer service. Robust competition requires that we show each customer why
Nextel Partners is the best of the available alternatives for his or her communications
needs, and thus we are firmly committed to ensuring high quality customer satisfaction
and service. It is no surprise that Nextel Partners has one of the highest customer
satisfaction and customer retention ratings in the industry.
Designating Nextel Partners as an ETC will also serve the public interest by furthering
the extensive role we play in providing communications services to public schools
libraries and local, state and federal government agencies, specifically law enforcement.
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, the Commission should find that designating Nextel Partners as an ETC
serves the public interest in accordance with Section 214( e )(2).
HAVE INTERVENORS IDENTIFIED ANY CONSUMER HARMS THAT WILL BE CAUSED BY
ALLOWING NEXTEL PARTNERS TO CONTINUE TO PROVIDE SERVICE AND EXTEND ITS
NETWORK TO RURAL CONSUMERS IN IDAHO?
Not really. Mr. Trampush talks at a high level about costs and density (DT Direct, p. 8),
but that does not tell the Commission anything about whether consumers will be harmed
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if competitive universal service is provided. Mr. Wood will address "evidence" that Mr.
Trampush includes in this testimony.
I will also point out that we will obtain funding only if customers choose our service. In
this market, if customers choose our service, that means they find more value in that
service then they can get elsewhere. If consumers do not find value in the service, they
will not choose to take that service, and we will not obtain funding. I do not see how
consumers can be harmed if they have more competitive choices from which to choose.
INTERVENORS SEEM UNCOMFORTABLE WITH THE IDEA OF WIRELESS CARRIERS
PROVIDING SERVICE AS WIRELESS CARRIERS? How DO YOU RESPOND?
The Commission should not have that same discomfort simply because we are subject to
federal regulation. The wireless industry is a wonderful example of how new competitive
markets can work to benefit consumers. The wireless industry has grown significantly,
and is extremely competitive.The FCC has generally taken an approach that
competition, market pressures and consumer demand are the best way to ensure that
consumers get the best services at the most affordable prices. In fact, the FCC recently
issued its annual report on CMRS competition, and its conclusions were described by
Chairman Powell as follows:
The annual analysis of the CMRS market demonstrates how a lighter
regulatory hand has ushered in innovation and technological advancement
and the power of facilities-based competiti9n into the marketplace. Today
95% of American consumers now have three or more choices in wireless
providers, and a stunning 71 % have six or more choices. And with this
wealth of choices has come lower per minute prices and more innovative
services. The conclusion is inescapable: the wireless industry is highly
competitive. The Report, however, notes that rural areas have fewer
competitors than urban areas. I look forward to working with my
colleagues to develop policies that will enhance the effectiveness of
competition in rural areas by removing unnecessary regulatory barriers to
facilitating the deployment and delivery "Of spectrum-based services in
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these areas. This is the most comprehensive wireless competition report
that the Commission has ever produced and I applaud the efforts of the
Wireless Bureau to update, verify, and diversify our data to better capture
the state of the marketplace.
In the matter of Implementation of Section 6002(b) of the Omnibus Budget Reconciliation
Act of 1993; Annual Report and Analysis of Competitive Market Conditions With Respect
to Commercial Mobile Services WT Docket No. 02-379 , Eighth Report, FCC 03-150
(reI. July 14, 2003) (separate statement of Chairman Powell) (emphasis added).
Intervenors challenge wireless service, and would have the Commission decide that rural
consumers are hurt by the current regulatory structure imposed by the FCC, and the
public interest is served by denying access to capital and erecting regulatory barriers to
the continuing deployment of wireless service in rural areas. The FCC - the agency
responsible for regulating the industry - clearly does not think such regulations serve the
public interest.The FCC instead thinks that additional regulations will inhibit
competition in a way that hurts rural consumers. We agree with the FCC.
How DO YOU ADDRESS THE CLAIMS THAT NEXTEL PARTNERS DOES NOT CARE ABOUT
RESIDENTIAL CUSTOMERS. DT DIRECT, PP. 19-20?
Mr. Trampush does not understand our company at all, and he is wrong. For example, he
relies on an outdated, third-party assessment of another company s stock to draw
conclusions about Nextel Partners. DT Direct, p. 19. He also reports the line count data
we provided in discovery and concludes that residential customers are included in the
same category as single-line business, and concludes this is "presumably because the
number of residential customers is not large enough (or of sufficient interest to the
company) to justify tracking them separately." DT Direct, p. 21. This is nonsense, and
he knows it. We told the IT A in the discovery response he references that we were
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producing line count data as it is filed with the Universal Service Administrative
Company ("USAC"). As I am sure Mr. Trampush knows, USAC requires that those
types of lines be reported together. We actually had to create a new internal database to
meet this USAC requirement.
Had Mr. Trampush actually looked at our service offerings or analyzed our marketing
materials, he would have seen that we do market heavily to residential consumers. Many
of the nationally-run Nextel television ads over the last year have featured residential and
family uses of our Direct Connect product. This is a service that many families find
extremely valuable. We take advantage of that by marketing shared plans where two
phones share one bucket of minutes.
Other rate plans are also clearly designed to win residential customers. We provide
offerings that are competitive with other carriers' residential-focused offerings, and
provide free nights and weekends, which is a feature that residential customers care
about.
Again, we are a young company.As we move forward our focus on residential
customers will only grow. On October 1 , our service plans changed, and our lowest-cost
plan is $6 per month less than was previously the case. If we are going to build out to
sparsely-populated areas, we are going to need to try to win every customer we can.
Nextel Partners will be there for residential customers in Idaho.
CAN YOU SUMMARIZE YOUR TESTIMONY?
Yes. Nextel Partners has shown that it meets each and everyone of the requirements to
be designated an ETC set forth in 47 D.C. ~ 214(e) and Part 54 of the FCC's rules.
Peabody, Re
NPCR, Inc.
Page 18
Furthermore, it is in the public interest to grant the ETC designation, because of the
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 Application for ETC designation.
DOES THIS CONCLUDE YOUR TESTIMONY?
Yes.
Peabody, Re
NPCR, Inc.
Page 19
BEFORE THE
PUBLIC SERVICE COMMISSION OF WISCONSIN
Application ofNPCR, Inc., d/b/a Nextel Partners for Designation
as an Eligible Telecommunications Carrier in Wisconsin
8081-TI-101
FINAL DECISION
This is the final decision in this proceeding to determine whether to designate NPCR, Inc.
(Nextel) as an Eligible Telecommunications Carrier (ETC), pursuant to 47 U.C. ~ 214(e)(2)
and Wis. Admin. Code ~ PSC 160.13. Designation as an ETC makes a provider eligible to
receive universal service fund (USF) monies.
Introduction
Nextel filed an application for ETC designation on April 24, 2003. The Commission
issued a Notice ofInvestigation on June 27, 2003. The Commission issued a Notice Requesting
Comments on September 12, 2003. A number of entities filed comments on
September 18, 2003.1 The Commission discussed this matter at its September 25 , 2003 open
meeting.
Nextel requested ETC designation for the exchanges shown in Appendix B. The
territories for which ETC designation is requested are served by a mix of rural and non-rural
telecommunications carriers.
I Citizens Utility Board ("CUB"); CenturyTel, Inc. and TDS Telecom Corporation; the Wisconsin State
Telecommunications Association Small Company Committee (WST A Small Company Committee); Wisconsin
State Telecommunications Association ILEC Division (WST A ILEC Division); Wisconsin State
Telecommunications Association Wireless Division; Nsighttel Wireless (for seven applicants); Nextel and
ALL TEL.
Case Nos. GNR~ T ~O3~8 &; GNR~ T ~O3~
Exhibit No. 108, page 1 of 24
NPCR, Inc. d/ Ib/a Nextel Partners
Witness: Scott Peabody
Docket 8081-TI-1O1
Findings of Fact
The wireless industry, its customary practices, its usual customer base, and
Nextel's desire not to obtain state USF money create an unusual situation.
It is reasonable to adopt different ETC eligibility requirements and obligations for
Nextel than specified by Wis. Admin. Code ~ PSC 160.13.
It is reasonable to require Nextel to meet only the federal requirements for ETC
status in order to be eligible for ETC designation.
It is reasonable to relieve Nextel from ETC obligations other than those imposed
under federal law.
It is reasonable to require that Nextel not apply for state USF funds and that if it
ever does, all state requirements for and obligations ofETC status shall again be applicable to it.
Nextel meets the federal requirements for ETC designation.
It is in the public interest to designate N extel as an ETC in certain areas served by
rural telephone companies.
It is reasonable to grant Nextel ETC status in the non-rural wire centers indicated
in its application, to the extent that the wire centers are located within the state.
It is reasonable to grant Nextel ETC status in the areas for which it has requested
such designation where the request includes the entire territory of a rural telephone company, to
the extent such areas are located within the state.
10.It is reasonable to grant Nextel ETC status in the areas for which it has requested
such designation where the request does not include the entire territory of a rural telephone
Case Nos. GNR~ T ~O3~8 &; GNR~ T ~O3~ 16
Exhibit No. 108, page 2 of24
NPCR, Inc. d/Ib/a Nextel Partners
Witness: Scott Peabody
Docket 8081-TI-101
company, to the extent the areas are located within the state, conditioned upon the Federal
Communications Commission (FCC) approving the use of the smaller areas.
Conclusions of Law
The Commission has jurisdiction and authority under Wis. Stats. ~~ 196., 196.218 and
196.395; Wis. Admin. Code ch. PSC 160; 47 US.C. ~~ 2l4 and 254; and other pertinent
provisions of the Telecommunications Act of 1996, to make the above Findings of Fact and to
issue this Order.
The law does not require the Commission conduct a hearing in this docket as requested
by the CUB; CenturyTel, Inc., and TDS Telecom Corporation; and the WST A Small Company
Committee and WST A ILEC Division.
If "notice and opportunity for hearing" as provided by Wis. Stat. ~ 196.50(2)(f) is
applicable in this case, or if process is due to the current ETCs in the rural areas at issue on any
other basis, the Notice Requesting Comments, dated September 12 2003 , satisfies this
requirement.
Opinion
On December 20 2002, the Commission granted the U.S. Cellular ETC status as applied
for in Docket No. 8225-TI-102. Application of United States Cellular Corporation for
Designation as an Eligible Telecommunications Carrier in Wisconsin Docket No. 8225- TI -102
2002 WL 32081608, (Wisconsin Public Service Commission, December 20 2002). The instant
application is substantively similar to the application of U.S. Cellular. The Commission
reaffirms its decision in Docket No. 8225-TI-102 and relies on the opinion issued in the Final
Decision in that docket, to approve Nextel's application.
Case Nos. GNR~03~8 &: GNR~03~
Exhibit No. 108, page 3 of 24
NPCR, Inc. d/ fb/a Nextel Partners
Witness: Scott Peabody
Docket 8081-TI-101
ETC status was created by the FCC, and codified in 47 u.S.c. ~ 214(e)(2). Under FCC
rules, the state commissions are required to designate providers as ETCs. 47 U.C. ~ 214(e)(2),
47 C.R. ~ 54.20 1 (b). Designation as an ETC is required if a provider is to receive federal
universal service funding. ETC designation is also required to receive funding from some, but
not all, state universal service programs.
The FCC established a set of minimum criteria that all ETCs must meet. These are
codified in the federal rules. 47 U.c. ~ 214(e)(1), 47 c.F.R. ~ 54.l0l(a). The 1996
Telecommunications Act states that "States may adopt regulations not inconsistent with the
Commission s rules to preserve and advance universal service." 47 U.C ~ 254(f). A court
upheld the states' right to impose additional conditions on ETCs in Texas Office of Public Utility
Counsel v. FCC l83 F.3d 393 , 418 (5th Cir. 1999). While states must designate multiple ETCs
if more than one provider meets the requirements and requests that status in a non-rural area, it
must determine that it is in the public interest before designating more than one ETC in a rural
area. 47 C.R. ~ 54.201. The Commission has already designated one ETC in each rural area.
In the year 2000, the Commission promulgated rules covering ETC designations and
requirements in Wisconsin. Wis. Admin. Code ~ PSC 160.13. Those rules govern the process
for ETC designation and set forth a minimum set of requirements for providers seeking ETC
designation from the Commission. The application filed by Nextel asks that it be designated as
an ETC for federal purposes only. It states that it is not seeking designation as an ETC for state
purposes and, therefore, is not required to meet the additional state requirements.
States must examine the federal requirements, but are allowed to create additional
requirements. Wisconsin has done so. The Commission s requirements for ETC designation
Case Nos. GNR~ T ~O3~8 &: GNR~ T ~O3~ 16
Exhibit No. 108, page 4 of 24
NPCR, Inc. d/ /b/a Nextel Partners
Witness: Scott Peabody
Docket 808l-TI-1O1
clarify and expand upon the more basic FCC rules. There is no provision in the rule for
designation as an ETC for federal purposes only. If a provider seeks to be designated as an ETC
it must follow the procedures and requirements in Wis. Admin. Code ~ PSC 160.13 and, if such
a designation is granted, that designation serves to qualify the provider for both state and federal
universal service funding. However, Wis. Admin. Code ~ PSC l60.01(2)(b) provides that:
Nothing in this chapter shall preclude special and individual consideration being
given to exceptional or unusual situations and upon due investigation of the facts
and circumstances involved, the adoption of requirements as to individual
providers or services that may be lesser, greater, other or different than those
provided in this chapter.
Nextel's request for ETC status presents an unusual situation. The wireless industry, its
customary practices, and its usual customer base are quite different than those of wireline
companies. Additionally, Nextel has stated that it has no desire to obtain state USF money. The
Commission finds that under the particular circumstances of this case, it is reasonable to adopt
different ETC requirements for Nextel to meet, and to grant ETC status to Nextel with certain
limitations.
Because Nextel only wishes to obtain federal USF support, the Commission shall adopt
the federal requirements for ETC status as the requirements that Nextel must meet to obtain ETC
status. The federal requirements are found in 47 u.S.c. ~ 214(e)(1) and 47 C.
~~ 54.1O1(a), 54.405 and 54.411. Further, the Commission relieves Nextel from ETC
obligations other than those imposed under federal law. However, since Nextel will not be
subject to the state requirements and state obligations, the Commission requires that Nextel not
apply for state USF money. IfNextel ever does apply for state USF money, then all of the state
requirements for and obligations of ETC status shall again be applicable to Nextel.
Case Nos. GNR-T-O3-8 &: GNR-T-03-16
Exhibit No. 108, page 5 of 24
NPCR, Inc. d/ Ib/a Nextel Partners
Witness: Scott Peabody
Docket 8081-TI-101
The Commission finds that Nextel has met the requirements for ETC designation; it will
offer supported service to all customers in its designation areas and will advertise these services.
In the FCC Declaratory Ruling 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 FCC 00-248 (released 8/1 0/00), par. 24 (South Dakota Decision) the FCC
has stated:
A new entrant can make a reasonable demonstration to the state
commission of its capability and commitment to provide universal service without
the actual provision of the proposed service. There are several possible methods
for doing so, including, but not limited to: (1) a description of the proposed
service technology, as supported by appropriate submissions; (2) a demonstration
of the extent to which the carrier may otherwise be providing telecommunications
services within the state; (3) a description ofthe extent to which the carrier has
entered into interconnection and resale agreements; or, (4) a sworn affidavit
signed by a representative of the carrier to ensure compliance with the obligation
to offer and advertise the supported services.
If this is sufficient for a new entrant, it would seem to be even more so for someone who has
already started to serve portions of the exchanges. Nextel submitted an affidavit ensuring
compliance and, as mentioned earlier, is not only providing service in other areas ofthe state but
also in parts of the areas for which it has requested ETC status.
The Commission finds that Nextel meets the requirement to offer service to all requesting
customers. It has stated in its application and comments that it will do so. Many filing
comments argue that the applicant will not provide service to all customers in the indicated
exchanges and thus, because of the issue of "cellular shadows " the applicant will not meet the
same standard that is applied to wire line providers. However, this is a case where "the devil is in
the details." It is true that the purpose of universal service programs is to ensure that customers
who might not otherwise be served at affordable rates by a competitive market still receive
Case Nos. GNR~ T ~03~8 &: GNR~ T ~O3~ 16
Exhibit No. 108, page 6 of 24
NPCR, Inc. d/ /b/a Nextel Partners
Witness: Scott Peabody
Docket 8081-TI-101
servIce. However, like for wire line companies, access to high cost assistance is what helps
ensure that service is provided. For Nextel, access to high cost assistance is exactly what will
make expanding service to customers requesting service in the areas for which it is designated as
an ETC "commercially reasonable" or "economically feasible." As the FCC has said:
A new entrant, once designated as an ETC, is required, as the incumbent is
required, to extend its network to serve new customers upon reasonable request.
South Dakota Decision, par. 17.
Nextel, like wireline ETCs, must fulfill this mandate, and access to high cost funding is what will
help make doing so possible. The issue of "dead spots" is not significantly different from a
wireline ETC that does not have its own lines in a portion of an exchange, perhaps a newly
developed area. After obtaining a reasonable request for service, the wireline is required to find
a way to offer service, either through extending its own facilities or other options. So too, Nextel
must be given a reasonable opportunity to provide service to requesting customers, whether
through expansion of its own facilities or some other method.
Nextel has also stated in its affidavit, application, and comments that it will advertise the
designated services as required under 47 V.C. ~ 214(e)(l)(B), including the availability oflow
Income programs.
Other objections to Nextel's designation focus on an alleged inability to meet certain
additional state requirements in Wis. Admin. Code ~ PSC l60.13. These are moot, however
since the Commission has adopted different requirements for Nextel.
Some ofthe exchanges for which Nextel seeks ETC status are served by non-rural ILECs
(SBC or Verizon). Under Wis. Admin. Code ~ PSC 160.13(3) and 47 U.C. ~ 25l(e)(2), the
Commission must designate multiple ETCs in areas served by such non-rural companies.
Case Nos. GNR- T -03-8 &; GNR- T -03-
Exhibit No. 108, page 7 of 24
NPCR, Inc. d//b/a Nextel Partners
Witness: Scott Peabody
Docket 8081-TI-101
However, the Commission may only designate multiple ETCs in an area served by a rural
company if designating more than one ETC is in the public interest. Some of the exchanges for
which Nextel seeks ETC status are served by rural telephone companies.
The Commission finds that designating Nextel as an additional ETC in these areas is in
the public interest. In its determination, the Commission is guided by the Wis. Stat. ~ 196.03(6)
factors to consider when making a public interest determination:
(a) Promotion and preservation of competition consistent with ch. 133 and
196.219.
(b) Promotion of consumer choice.
( c) Impact on the quality of life for the public, including privacy
considerations.
(d) Promotion of universal service.
(e) Promotion of economic development, including telecommunications
infrastructure deployment.
(f) Promotion of efficiency and productivity.
(g) Promotion of telecommunications services in geographical areas with
diverse income or racial populations.
The Commission finds that designating Nextel as an ETC in areas served by rural
companies will increase competition in those areas and, so, will increase consumer choice.
While it is true that Nextel is currently serving in at least some of these areas, the availability of
high cost support for infrastructure deployment will allow Nextel to expand its availability in
these areas. Further, designation of another ETC may spur ILEC infrastructure deployment and
encourage further efficiencies and productivity gains. Additional infrastructure deployment
additional consumer choices, the effects of competition, the provision of new technologies, a
mobility option and increased local calling areas will benefit consumers and improve the quality
of life for affected citizens of Wisconsin. As a result, the Commission finds that it is in the
Case Nos. GNR- T -03-8 &: GNR- T -03-
Exhibit No. 108, page 8 of 24
NPCR, Inc. d/Ib/a Nextel Partners
Witness: Scott Peabody
Docket 8081-TI-101
public interest to designate Nextel as an ETC in the areas served by rural telephone companies
for which it has requested such designation
The areas for which Nextel is granted ETC status vary. Wis. Admin. Code ~ PSC
160.13(2) states that the areas in which a provider shall be designated as an ETC depend on the
nature of the ILEC serving that area. If the ILEC is a non-rural telephone company, the
designation area is the ILEC's wire center. The FCC has urged states not to require that
competitive ETCs be required to offer service in the entire territory of large ILECs. It has found
that such a requirement could be a barrier to entry. Report and Order in the Matter of Federal-
State Joint Board on Universal Service FCC 97-157 (released 5/8/97) pars. 176-177 (First
Report and Order). Wisconsin s rule provision resolves this federal concern. As a result, Nextel
is granted ETC status in the SBC and Verizon wire centers for which it requested such status, to
the extent that such wire centers are located within the state.
Wis. Admin. Code ~ PSC 160.13(2) provides that if the ILEC is a rural telephone
company, the ETC designation area is different. For an area served by a rural telephone
company, the designation area is generally the entire territory (study area) ofthat rural company.
A smaller designation area is prohibited unless the Commission designates and the FCC
approves a smaller area. 47 C.R. ~ 54.207(b). Nextel's application contained a list of rural
telephone company areas for which it requested ETC status. Attachment B, prepared by the
Commission, show the rural areas for which it believes Nextel is seeking ETC status. Ifthis list
is not accurate, Nextel is ordered to submit to the Commission a revised list, in the same format
as the attachment to this order, by October 31 , 2003.
2 Eighteen other state commissions and the FCC have approved wireless ETC applications as second ETCs in rural
areas on similar grounds.
Case Nos. GNR~O3~8 &:GNR~O3~16
Exhibit No. 108, page 9 of 24
NPCR, Inc. d//b/a Nextel Partners
Witness: Scott Peabody
Docket 8081-TI-101
The Commission also grants ETC status to Nextel in the areas for which it is seeking
designation for the entire territory of a rural telephone company, to the extent that such
exchanges are located within the state. Finally, where Nextel is asking for ETC designation in
some, but not all, parts ofthe territory of a rural telephone company, the Commission
conditionally grants ETC status in the areas for which Nextel has requested such designation, to
the extent that such exchanges are located within the state. However, Nextel must apply to the
FCC for approval of the use of a smaller area in such a designation. 47 C.R. ~ 54.207(c)(1). If
the FCC approves use ofthe smaller area, then Nextel's ETC status for the smaller area(s)
becomes effective. If the FCC does not approve use of the smaller area(s), then Nextel's
conditional ETC status for such an area is void. In such a case, ifNextel determines that it then
wants to apply for ETC status in the entire territory of the rural company, it may submit a new
application requesting such designation.
The Commission grants this conditional status after having considered the changing
market and the reason why the limitations on ETC designation in rural areas was created.
Originally, there were concerns about "cherry picking" or "cream skimming." At that time, the
USF support was averaged across all lines served by a provider within its study area. The per
line support was the same throughout the study area. The concern was that competitive
companies might ask for ETC designation in the parts of a rural company s territory that cost less
to serve. It could thereby receive the averaged federal high-cost assistance while only serving
the low-cost areas of the territory, while the ILEC received federal high-cost assistance but had
to serve the entire territory, including the high-cost areas. First Report and Order, par. 189. As a
result, the FCC found that unless otherwise approved by both the state and the FCC, a competitor
Case Nos. GNR~ T ~O3~8 Cst GNR~ T -O3~ 16
Exhibit No. 108, page 10 of 24
NPCR, Inc. d//b/a Nextel Partners
Witness: Scott Peabody
Docket 8081-TI-101
seeking ETC status in the territory of a rural company must commit to serving the entire
territory. First Report and Order, par. 189.
However, since that time, the USF funding mechanisms have changed. Currently, a
competitive ETC gets the same amount of federal high-cost assistance per line as the ILEC.
ILEC has the option to target the federal high-cost assistance it receives so that it receives more
USF money per line in the parts of the territory where it costs more to provide service, and less
federal USF money in the parts of the territory where it costs less to provide service. In the
Matter of Multi-Association Group (MAG) Plan FCC 01-157 (released 5/23/01), par. 147.
(MAG Order) Since the competitive ETC receives the same per line amount as the ILEC, if it
chooses to only serve the lower cost parts of the territory, then it receives only the lower amount
of federal USF money. As a result, as recognized by the FCC, the concerns about "cherry
picking" and "cream skimming" are largely moot. In the Matter of Reconsideration of Western
Wireless Corporation s Designation as an Eligible Telecommunications Carrier in the State of
Wyoming, FCC 01-311 (released 10/16/01), par. l2.
In the MAG Order, rural telephone companies were given the opportunity to choose a
disaggregation and targeting method or to not disaggregate and target USF support. MAG
Order, pars. 147-154. Companies were allowed to choose one of three targeting paths. Some of
the companies in whose territory Nextel is seeking ETC designation chose Path One (no
targeting) and some chose Path Three (targeting). If a competitive ETC is named in all, or part
of the service territory of a rural company, that company may ask the Commission to allow it to
choose another Path. The FCC believed that state involvement in path changes gave competitors
some certainty as to the amount of per line support available while preventing a rural company
Case Nos. GNR~O3~8 &: GNR~03~
Exhibit No. 108, page 11 of 24
NPCR, Inc. d/Ib/a Nextel Partners
Witness: Scott Peabody
Docket 8081-TI-10l
from choosing or moving to a different path for anti-competitive reasons. MAG Order, par. 153.
Some ofthe companies in whose territory Nextel is seeking ETC designation have disaggregated
and targeted USF support, and some have not. However, the Commission may allow a company
to change paths when a competitive ETC is designated in a rural company s territory.
Requests for Hearing
In accordance with the Notice Requesting Comments, dated September 12 2003 , the
Commission received eight filings, four of which requested, on various grounds, the Commission
conduct a contested case hearing before deliberation of the application. CenturyTel, Inc. and
TDS Telecom Corporation claimed a right to a hearing under Wis. Admin. Code ~ PSC
160.13(3) and Wis. Stat. 9227.42. WSTA Small Company Committee and WSTA ILEC
Division also suggested that the Commission should hold a contested case hearing. Citizens
Utility Board (CUB) also claimed a right to a hearing under Wis. Stat. ~ 227.42. The law
however, does not require the Commission conduct a hearing in this docket as requested.
Furthermore, if "notice and opportunity for hearing" as provided by Wis. Stat. ~ 196.50(2)(f) is
applicable in this case, or if process is due to the current ETCs in the rural areas at issue on any
other basis, the Notice Requesting Comments, dated September 12 2003 , satisfies this
requirement.
CenturyTel, Inc. and TDS Telecom Corporation claimed a right to a hearing under
Wis. Admin. Code ~ PSC 160.13(3) and Wis. Stat. ~ 227.42.
Wis. Admin. Code ~ PSC 160.13 (3) states:
For an area served by an incumbent local exchange service provider that is
a rural telephone company, the commission may only designate an additional
eligible telecommunications carrier after finding that the public interest requires
multiple eligible telecommunications carriers, pursuant to federal law and
Case Nos. GNR~O3~8 &: GNR~O3~
Exhibit No. 108, page 12 of 24
NPCR, Inc. d/ /b/a Nextel Partners
Witness: Scott Peabody
Docket 8081-TI-101
s. 196.50 (2), Stats. For an area served by an incumbent local exchange service
provider that is not a rural telephone company, the commission may designate an
additional eligible telecommunications carrier without making such a finding.
Wis. Stat. ~ 196.50(2), designates the process to certify a telecommunications utility.
Wis. Stat. ~ 196.50(2), states in part
, "
. . . after notice and opportunity for hearing, that the
applicant possesses sufficient technical, financial and managerial resources to provide
telecommunications service to any person within the identified geographic area." According to
the rule and statute it would appear that notice and opportunity for hearing is a required
procedure in the instant case.
Wis. Stat. ~ 196.50(2), however, does not apply to an application for ETC status of a
wireless company to be an additional ETC in a rural area. Wis. Stat. ~ 196.202 3 expressly
restricts Commission jurisdiction over wireless providers. This statute prevents the Commission
from applying almost every provision of Wis. ch. 196, to wireless providers, except for
Wis. Stat. ~ 196.218(3).4 This section only applies if
, "
the commission promulgates rules that
3 Wis. Stat. ~ 196.202, states:
Exemption of commercial mobile radio service providers. (2) Scope of regulation.
A commercial mobile radio service provider is not subject to ch. 201 or this chapter
except as provided in sub. (5), and except that a commercial mobile radio service
provider is subject to s. 196.218 (3)if the commission promulgates rules that designate
commercial mobile radio service providers as eligible to receive universal service
funding under both the federal and state universal service fund programs. If the
commission promulgates such rules, a commercial mobile radio service provider shall
respond, subject to the protection of the commercial mobile radio service provider
competitive information, to all reasonable requests for information about its operations in
this state from the commission necessary to administer the universal service fund.
(5) Billing. A commercial mobile radio service provider may not charge a customer for
an incomplete call.
4 Wis. Stat. ~ 196.218 (3), states, in part:
Contributions to the fund. (a) 1. Except as provided in
~,
the commission shall
require all telecommunications providers to contribute to the universal service fund
beginning on January 1 , 1996. determined by the commission under par. (a) 4.
Case Nos. GNR- T -03-8 &; GNR- T -03-16
Exhibit No. 108, page 13 of 24
NPCR, Inc. d/ fb/a Nextel Partners
Witness: Scott Peabody
Docket 8081-TI-101
designate (cellular) providers as eligible to receive universal service funding under both the
federal and state universal service fund programs." Wis. Stat. ~ 196.2l8(3), mandates
telecommunications providers contribute to the Wisconsin Universal Service Fund (WUSF).
(Wireless providers currently have been exempted.) This section, however, is wholly unrelated
to the requirements for eligibility to receive money from the WUSF and, otherwise, unrelated to
this case.
The Commission cannot apply Wis. Stat. ~ 196.50(2), to wireless providers. The
Commission, therefore, cannot proceed under Wis. Stat. ~ 196.50(2)(f), when evaluating the
ETC application of a wireless provider. As a matter of law, the reference to Wis. Stat.
~ 196.50(2)(b)(f), in Wis. Admin Code ~ PSC 160., cannot apply to ETC applications of
wireless providers, including Nextel.
Wis. Stat ~ 227.42 provides a right to a hearing, treated as a contested case, to any person
filing a written request for a hearing with an agency who meets the following four part test:
(a) A substantial interest of the person is injured in fact or threatened with injury
by agency action or inaction;
(b) There is no evidence of legislative intent that the interest is not to be
protected;
(c) The injury to the person requesting a hearing is different in kind or degree
from injury to the public caused by the agency action or inaction; and
(d) There is a dispute of material fact.
CenturyTel, Inc. and TDS Telecom Corporation own local exchange telephone
companies that provide essential telecommunications service as ETCs in the rural areas
5 Like the Legislature, Congress has also limited the state role in regulating on wireless carriers. 47 D.
~ 332(c)(3); Bastien v. AT&T Wireless Services, Inc.205 F.3d 983 (7th Cir. 2000).
Case Nos. GNR~ T ~O3~8 &: GNR~ T ~O3~ 16
Exhibit No. 108, page 14 of 24
NPCR, Inc. d/ fb/a Nextel Partners
Witness: Scott Peabody
Docket 8081-TI-101
at issue. These companies are competitors ofNextel. On this basis, these companies
claim they have a substantial interest protected by law, and will suffer special injury
based on the ETC designation ofNextel. Federal law and state law, however, do not
create a substantial, or property, interest in exclusive ETC status for incumbent rural
ETCs. Alenco Communications v. FCC, 201 F.3d 608 (2000) ("The purpose of
universal service is to benefit the customer, not the carrier.
);
WITA v. WUTA 65 P.
3l9 (2003); In re Application ofGCC License Corp.647 N.2d 45 264 Neb.
167, 177 (2002).
" ("
(r)ather, customers' interest , not competitors , should control
agencies' decisions affecting universal service " and that "(t)he Telecommunications Act
does not mention protecting the private interests of incumbent rural carriers, who are
often exclusive ETCs simply by default as the sole service provider operating in a
particular area.See also, State ex reI. 1st Nat. Bank v. M&I Peoples Bank 95 Wis. 2d
303 , 311 (1980). (Economic injury as the result of lawful competition does not confer
standing.
);
MCI Telecommunications v. Pub. Servo Comm.164 Wis. 2d 489 496 476
2d 575 (Ct. App. 1991); and Wisconsin Power Light v. PSC, 45 Wis. 2d 253
(1969) (". . . the predominant purpose underlying the public utilities law is the protection
of the consuming public rather than the competing utilities.
In addition, these companies also claim that granting Nextel ETC status will
reduce the amount of USF funds available to the public. As explained above, such result
does not injure companies' protected interest. As explained below, increasing the
number of carriers eligible for federal USF money will increase the amount of federal
Case Nos. GNR~03~8 &: GNR~03~16
Exhibit No. 108, page 15 of 24
NPCR, Inc. d/ /b/a Nextel Partners
Witness: Scott Peabody
Docket 8081-TI-101
USF dollars brought into Wisconsin. Moreover, companies ' claim is entirely
speculative.
WST A Small Company Committee and WST A ILEC Division also suggested that the
Commission should hold a contested case hearing. These organizations represent local exchange
telephone companies that provide essential telecommunications service as ETCs in the rural
areas at issue who are competitors ofNextel. These comments suggest the Commission hold a
contested case hearing. These organizations, however, did not invoke Wis. Stat. ~ 227.42 or
attempt to apply the standards therein. Had these organizations claimed such a right to a hearing
under Wis. Stat. ~ 227.42 , the same analysis would apply to them as described for the
CenturyTel, Inc. and TDS Telecom Corporation claim.
CUB also claims a right to a hearing under Wis. Stat. ~ 227.42. CUB further
requests that the Commission consolidate ten pending ETC applications of wireless
providers into one contested case for investigation of common issues.
CUB asserts it has a substantial interest protected by law, and will suffer special
injury based on the ETC designation of Nextel because it claims to represent customers
in the geographic area in which the applicant seeks ETC designation. As customers of
the current ETC in that area, and as payees into the universal service fund, its members
have a substantial interest that fund money is not wasted through certification of an
inappropriate carrier. The federal USF , however, provides a benefit to customers
through the assistance of carriers who commit to providing service in high-cost areas.
The designation of more than one ETC in a particular high-cost area allows more
carriers providing service in rural Wisconsin, such as Nextel, to tap into money collected
Case Nos. GNR- T -03-8 &: GNR- T -03-16
Exhibit No. 108, page 16 of 24
NPCR, Inc. d/ /b/a Nextel Partners
Witness: Scott Peabody
Docket 8081-TI-101
on a nation-wide basis so that more services and more provider choices can be afforded
to these customers. As such, far from threatening their substantial interests, ETC
designation, like the instant one, necessarily provides a benefit to customers. On this
basis, a hearing was not required by CUB's request.
CUB asserted that it meets the standards of Wis. Stat. ~ 227.42(1)(d), because it
disputes the factual assertions made by the applicant that allowing it to receive ETC
status will further the public interest by bringing the benefits of competition to
underserved marketplaces and that the application provides the Commission with
enough information regarding what services will be offered and at what cost to support it
claims ETC designation is in the public interest. These assertions amount to a
generalized challenge regarding the sufficiency ofNextel's application. A hearing,
however, is not required on such basis. Wis. Stat. ~ 227.42(1), contemplates that a
requester provide some showing that it meets the four part test. CUB fails to present any
facts that either contradict the assertions of the applicant or demonstrate that any of
CUB's alleged deficiencies in the application are fact-based and material.
All filers requesting a hearing state or allude to the cumulative effect of granting
the ten pending wireless ETC applications as an appropriate issue in this docket. The
Commission, however, has not consolidated these applications into one case. The ETC
designation process is based on the application of an individual carrier to the standards
Wis. Admin. Code ~ PSC l60.13. Issues regarding the cumulative impact of this
decision, and decisions like it, are not before the Commission.
Case Nos. GNR~ T ~O3~8 &: GNR~ T ~O3~ 16
Exhibit No.1O8, page 17 of 24
NPCR, Inc. d/ /b/a Nextel Partners
Witness: Scott Peabody
Docket 8081-TI-101
The law does not require the Commission conduct a hearing in this docket. If "notice and
opportunity for hearing" as provided by Wis. Stat. ~ 196.50(2)(f) is applicable in this case, or if
process is due to the current ETCs in the rural areas at issue on any other basis, the Notice
Requesting Comments, dated September 12 2003, satisfies this requirement. Waste
Management of Wisconsin v. DNR 128 Wis. 2d 59, 78, 381 N.2d 318 (1985). (An
appropriate "opportunity for hearing" may be exclusively through written comments.
Order
1. Nextel is granted ETC status in the non-rural wire centers indicated in its application, to
the extent the wire centers are located within the state.
2. Nextel is granted ETC status in the areas for which it has requested such designation
where the request includes the entire territory of a rural telephone company, to the extent the
areas are located within the state.
3. Nextel is granted ETC status in the areas for which it has requested such designation
where the request does not include the entire territory of a rural telephone company, to the extent
the areas are located within the state, conditioned upon the FCC approving the use of the smaller
areas.
4. Nextel shall file a revised list of rural areas for which it is seeking ETC status by October
, 2003 , if the list attached to this order is inaccurate. The revised list shall use the same format
as the attachment.
5. Nextel must request that the FCC approve the use of an area smaller than the entire
territory of certain rural telephone companies (listed in an attachment to this order) when
granting ETC status in those areas.
Case Nos. GNR~ T ~O3~8 &; GNR~ T ~O3~ 16
Exhibit No. 108, page 18 of 24
NPCR, Inc. d/ /b/a Nextel Partners
Witness: Scott Peabody
Docket 8081-TI-1O1
6. Ifthe FCC does not approve the use of areas smaller than the entire territory of a rural
telephone company when granting ETC status in those areas, then the conditional grant of ETC
status in this order is void.
7. Nextel shall not apply for state USF support. If it ever does file for such support, the
state eligibility requirements for, and obligations ofETC status, shall immediately apply to it.
8. Based on the affidavit of Donald J. Manning, Vice President and General Councel
Nextel is an ETC within the meaning of 47 U.c. ~ 214 (c) and is eligible to receive funding
pursuant to 47 U.C. ~ 254 (2). This order constitutes the certification to this effect by the
Commission.
Case Nos. GNR-T-03-8 &; GNR-03-
Exhibit No. 108, page 19 of 24
NPCR, Inc. d/ /b/a Nextel Partners
Witness: Scott Peabody
Docket 8081-TI-1O1
9. The requests for a contested case hearing by CenturyTel, Inc., TDS Telecom Corp., CUB
WTSA Small Company Committee, and WST A ILEC Division are rejected.
10. Jurisdiction is maintained.
Dated at Madison, Wisconsin
By the Commission:
Lynda L. Dorr
Secretary to the Commission
LLD:PRJ:cdg:C:\DOCUME-l \schphi\LOCALS-l \Temp\MetaSave\8081- TI-l 0 l.doc
See attached Notice of Appeal Rights
Case Nos. GNR- T -03-8 &:: GNR- T -03-16
Exhibit No. 108, page 20 of 24
NPCR, Inc. d/ /b/a Nextel Partners
Witness: Scott Peabody
Docket 8081-TI-101
Notice of Appeal Rights
Notice is hereby given that a person aggrieved by the foregoing
decision has the right to file a petition for judicial review as
provided in Wis. Stat. ~ 227.53. The petition must be filed within
30 days after the date of mailing ofthis decision. That date is
shown on the first page. If there is no date on the first page, the
date of mailing is shown immediately above the signature line.
The Public Service Commission of Wisconsin must be named as
respondent in the petition for judicial review.
Notice is further given that, ifthe foregoing decision is an order
following a proceeding which is a contested case as defined in
Wis. Stat. ~ 227.01(3), a person aggrieved by the order has the
further right to file one petition for rehearing as provided in Wis.
Stat. ~ 227.49. The petition must be filed within 20 days of the
date of mailing of this decision.
If this decision is an order after rehearing, a person aggrieved who
wishes to appeal must seek judicial review rather than rehearing.
A second petition for rehearing is not an option.
This general notice is for the purpose of ensuring compliance with
Wis. Stat. ~ 227.48(2), and does not constitute a conclusion or
admission that any particular party or person is necessarily
aggrieved or that any particular decision or order is final or
judicially reviewable.
Revised 9/28/98
Case Nos. GNR~T~O3~8 &: GNR~O3~
Exhibit No. 108, page 21 of 24
NPCR, Inc. d/ fb/a Nextel Partners
Witness: Scott Peabody
Docket 808l-TI-101
APPENDIX A
This proceeding is not a contested
case under Wis. Stat. Ch. 227, therefore
there are no parties to be listed or certified
under Wis. Stat. ~ 227.47. However, an
investigation was conducted and the persons
listed below participated.
MR LARRY L LUECK
NSIGHT
TELSERVICESINORTHEAST TEL
PO BOX 19079
GREEN BAY WI 54307-9079
PUBLIC SERVICE COMMISSION
OF WISCONSIN
(Not a party, but must be served)
610 North Whitney Way
O. Box 7854
Madison, WI 53707-7854
MR JUDD A GENDA A TTY
AXLEY BRYNELSON LLP
2 E MIFFLIN ST STE 200
MADISON WI 53703
MS STEPHANIE L MOTT A TTY
REINHART BOERNER V AN
DEUREN
PO BOX 2018
MADISON WI 53701-2018
MS KIRA E LOEHR
CULLEN WESTON PINES AND
BACH LLP
122 WWASHINGTON AVE
SUITE 900
MADISON, WI 53703
MR PETER L GARDON
REINHART BOERNER V AN
DEUREN
PO BOX 2018
MADISON WI 53701-2018
MR JORDAN 1. HEMAIDEN
MICHAEL BEST AND
FREIDRICH LLP
POBOX 1806
MADISON, WI 53701-1806
MR NICK LESTER
WSTA
6602 NORMANDY LN
MADISON WI 53719
MR JOSEPH P WRIGHT
STAFFORD ROSENBAUM LLP
POBOX 1784
MADISON, WI 5370l-1784
MR BRUCE C REUBER
INTERSTATE TEL COM
CONSULTING INC
PO BOX 668
HECTOR MN 55342-0668
BRENT G ElLEFSON ESQ
LEONARD , STREET AND
DEINARD P
150 SOUTH FIFTH STREET
SUITE 2300
MINNEAPOLIS MN 55402
Case Nos. GNR~T~03~8 &: GNR~T~O3~
Exhibit No. 108, page 22 of 24
NPCR, Inc. d/ /b/a Nextel Partners
Witness: Scott Peabody
Docket 8081-TI-101
APPENDIX B
Rural Operating Companies for which Nextel requests ETC certification for the entire
service territory:
Amherst Tel. Co.
Badger Telecom, Inc.
Bayland Tel. Co.
Belmont Tel. Co.
Bloomer Tel. Co.
Bonduel Tel. Co.
Bruce Tel. Co., Inc.
Chibardun Tel. Co-op.
Citizens Tel Co-op. - Wis.
Cochrane Tel. Co-op.
Cuba City Exchange Tel. Co.
Dickeyville Tel. Co.
CenturyTel of the Midwest - Kendall
CenturyTel of Wisconsin - Fairwater-
Brandon-Alto
CenturyTel of Wisconsin - Forestville
CenturyTel of Wisconsin - Larsen-
Readfield
CenturyTel of Monroe County, LLC
EastCoast Telecom, Inc.
Farmers Independent Tel. Co.
Farmers Tel. Co. of Wis.
Frontier Communications - Mondovi
Fronntier Communications - Viroqua
Frontier Communications - Wisconsin, Inc.
Grantland Telecom, Inc.
Hillsboro Tel. Co.
Indianhead Tel. Co.
Lakefield Tel. Co.
Lemonweir Valley Tel. Co.
Manawa Tel. Co.
Marquette-Adams Tel. Co-op.
Mosinee Tel. Co.
Nelson Tel. Co-op.
Northeast Tel. Co.
Siren Tel. Co., Inc.
Stockbridge & Sherwood Tel. Co.
Telephone USA of Wisconsin, LLC
Tenney Tel. Co.
Tri-County Tel. Co-op.
Union Tel. Co.
Vernon Tel. Co-op.
Waunakee Tel. Co.
West Wisconsin Tel. Co-op.
Wittenberg Tel. Co.
Wood County Tel. Co.
Case Nos. GNR~ T ~03~8 &: GNR~ T ~OH6
Exhibit No. 108, page 23 of 24
NPCR, Inc. d/ /b/a Nextel Partners
Witness: Scott Peabody
Docket 8081-TI-1O1
Rural Operatin~ Companies for which Nextel requests ETC certification for individual
exchan~es, but not the whole service territory:
CenturyTel of the Midwest - Wisconsin
CenturyTel ofthe Midwest - WI Northwest
Scandinavia Tel. Co.
CenturyTel of Northwest Wisconsin, LLC
Century Tel of Northern Wisconsin, LLC
CenturyTel of Central Wis.
Casco
Coleman
Freemont
Goodman
Harmony
Boyd
Cadott
Chetek
De Forest
Poynette
Iola
Lake Nebagamon
Gilman
Holcombe
Jim Falls
Alma Center
Arcadia
Augusta
Bangor
Black Creek
Black River Falls
Centerville
Cleghorn
Denmark
Fairchild
Fall Creek
Fountain City
Galesville
Platteville
Shell Lake
Thorp
Wayside
Weyauwega
Ripon
Tomah
Warrens
Wild Rose
Holmen
Luxemburg
Merrilan
Mindoro
New Franken
Osseo
Pickett
Rosendale
Seymour
Shicoton
Trempelaeu
Wautoma
Case Nos. GNR-T-03-8 &. GNR-O3-
Exhibit No. 108, page 24 of 24
NPCR, Inc. d/ /b/a Nextel Partners
Witness: Scott Peabody
CERTIFICATE OF SERVICE
I hereby certify that on November 17, 2003 I caused to be served true and correct copies of the foregoing
document Rebuttal Testimony of Scott Peabody, by the methode s) indicated, upon:
Sean P. Farrell, General Counsel
IAT COMMUNICATIONS, INc.
703 Pier Avenue, Suite B; PMB 813
Hermosa Beach, California 90254
sfarrell cgJcleartalk. net
Attorney for LA T Communications, Inc.
Molly O'Leary
RICHARDSON &; O'LEARY
99 East State Street, Suite 200
O. Box 1849
Eagle, Idaho 83616
moll ycgJrichardsonandoleary. com
Attorney for LA T Communications, Inc.
Conley E. Ward,Jr.
GIVENS PURSLEY, LLP
227 North 6th Street, Suite 200
O. Box 2720
Boise, Idaho 83701~ 2720
cewcgJgi venspursley. com
Attorney for Idaho dephone Association
Clay Sturgis, Senior Manager
Moss ADAMS LLP
601 Riverside, Suite 1800
Spokane, W ashington 9920l~0063
clayscgJmossadams.com
Attorney for Idaho dephone Association
Morgan W. Richards
MOFFAT THOMAS BARRETT ROCK &: FIELDS
101 So. Capitol Blvd., 10th Floor
O. Box 829
Boise, Idaho 83701
m~moffatt.com
Attorneys for Citizens decommunications of Idaho
Lance A. T ade, Manager
State Government Affairs
CITIZENS TELECOMMUNICATIONS OF IDAHO
4 Triad Center, Suite 200
Salt Lake City, Utah 84180
ltadecgJczn.com
Attorney for Citizens decommunications of Idaho
$f~3 _A-'
CERTIFICATE OF SERVICE
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Mary S. Hobson
STOEL RIVES LLP
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0 Boise, Idaho 83702
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Attorneys for ~west Corporation
Robert M. Nielsen
ATTORNEY AT LAw
Q"'"' P.O. Box 706
0 Rupert, Idaho 83350
Attorney for Project Mutual dephone
Cooperative Association, Inc.
Charles H. Creason jr.
President &; General Manager
Q"'" PROJECT MUTUAL TELEPHONE COOP,
507 G Street
O. Box 366
Rupert, Idaho 83350
ccreasoncgJpmt.coop
john Hammond, Deputy AG
ID PUBLIC UTILITIES COMMISSION
ia""" 4 72 West Washington Street
0 P.O. Box 83720
Boise, Idaho 83720~0074
jhammoncgJpu c.state.id. us
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