19991109Comments.doc

CHERI C. COPSEY
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 5142

Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5983

Attorney for the Commission Staff

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE JOINT APPLICATION OF CERTAIN MEMBERS OF THE IDAHO TELEPHONE ASSOCIATION FOR AUTHORITY TO REVISE THE IDAHO RURAL EXCHANGE CARRIERS TARIFF NO. 2 ADDING AN EQUAL ACCESS RECOVERY CHARGE. )
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CASE NO. GNR-T-99-20

COMMENTS OF THE COMMISSION STAFF

COMES NOW the Staff of the Idaho Public Utilities Commission, by and through its attorney of record, Cheri C. Copsey, Deputy Attorney General, in response to Order No. 28182 issued on October 19, 1999 submits the following comments.

BACKGROUND
On April 22, 1999, members of the Idaho Telephone Association (ITA) filed an Application for approval of their respective intrastate, intraLATA toll dialing parity plans. These plans were approved on June 8, 1999 by Order Nos. 28064 and 28065.
Pursuant to Order Nos. 28064 and 28065, an Application dated September 10, 1999 was filed on behalf of Albion Telephone Company, Fremont Telcom, Columbine Telephone Company, Inc. dba Teton Telecom Communications, Cambridge Telephone Company, Direct Communications, Inc., Rural Telephone Company and Silver Star Company. The Application contained revisions to the Idaho Rural Exchange Carriers Tariff No. 2 by adding an equal access recovery charge (EARC) for each of the respective companies. The EARC adds the terms, conditions and rates for providing intraLATA toll dialing parity in Idaho pursuant to Order Nos. 28064 and 28065.
With implementation of toll dialing parity, customers are now able to presubscribe to a carrier for both their interLATA and intraLATA toll calls. This means that customers are able to dial toll calls without having to use any extra digits or access codes (other than the prefatory “1” or “0”). In addition, customers will continue to be able to use “dial-around” 101-XXXX to route their specific calls to a carrier other than their presubscribed carrier if they so choose.
Each of the listed ITA companies informed Commission Staff that toll dialing parity (equal access) was successfully completed as set out in each plan approved by the Commission.

Cost Recovery
All of the listed relevant ITA companies propose that the incremental expenses related to intraLATA toll dialing parity should be recovered through a surcharge on originating intraLATA access minutes. These surcharges are to be imposed on the participating interexchange companies over a 24-month period for all intraLATA toll calls.
The Commission did not address the amount of the surcharges (EARC) in Order Nos. 28064 and 28065. The proposed revisions to the Idaho Rural Exchange Carriers Tariff No. 2 include the following proposed EARC for each of the listed companies in conformance with Order Nos. 28064 and 28065.
Company Incremental Expenses Est. Originating Minutes EARC
Albion $41,270 5,770,611 / yr $0.00362/min
Cambridge/Council $18,485 2,645,482 / yr $0.00349/min
Direct Communications $16,668 436,984 / yr $0.01907/min
Fremont Telcom $66,790 1,682,012 / yr $0.01985/min
Rural Telephone $5,853 655,684 / yr $0.00446/min
Silver Star Telephone $6,288 144,761 / yr $0.02172/min
Teton Telecom $40,116 490,433 / yr $0.04090/min
Staff reviewed the respective proposed incremental costs calculated by the companies’ consultants at GVNW, including the supporting workpapers. Staff also examined the high perminute rate proposed for Fremont, Teton and Silver Star. Fremont and Teton share a switch that required software upgrades in order to implement dialing parity. The company that provides this dialing parity software charges very high Right-To-Use fees. Staff verified the fee amounts with the vendor and verified that this and other costs were allocated between Fremont and Teton. Furthermore, because dialing parity creates equal access to intraLATA toll, Staff concludes that cost recovery based on intraLATA toll usage is reasonable.
However, Staff recognizes that this limits the amount of originating minutes over which to spread the collection of the EARC. Adding to this is the fact that Fremont, Teton and Silver Star serve customers in an area where much of the intraLATA toll has been reduced by extended area service (EAS), thus further reducing the amount of minutes over which to spread the collection of the EARC. Although Silver Star does not pay the high Right-To-Use fees, low originating intraLATA toll minutes make Silver Star’s recovery rate higher than expected.
Staff analyzed the respective proposed dialing parity costs and method for recovery for the listed companies and is surprised by the per-minute recovery rate of some of the ITA companies. However, Staff believes that in accordance with FCC 96-333 and DA 98-2534, the respective methods for recovery from all intraLATA toll providers is competitively neutral and that these incremental costs would not have been incurred “but for the implementation of dialing parity.” Staff finds that the 24-month recovery period is appropriate but, due to some of the unusually high recovery rates, recommends a thorough Commission review for each company at the end of the first year to determine the effectiveness and, if necessary, adjust the recovery rate or time frame.

Recovery of Waived Charges
Order Nos. 28064 and 28065 state that in the settlement agreement, the ITA companies will recover the waived PIC change charges during the free PIC period via the issuance of a one-time bulk bill to each participating carrier. This billing will assess the $5.00 PIC change charge for the total number of lines changed to those carriers’ PIC.

STAFF RECOMMENDATION
Staff recommends approval of the Joint Application filed on behalf of Albion Telephone Company, Fremont Telcom, Columbine Telephone Company, Inc. dba Teton Telecom Communications, Cambridge Telephone Company, Direct Communications, Inc., Rural Telephone Company and Silver Star Company requesting authority to revise their respective Idaho Rural Exchange Carriers Tariff No. 2 adding an equal access recovery charge (EARC) for each of the respective companies.
The Joint Application originally proposed an effective date of October 10, 1999. The Commission suspended the tariff by Order No. 28182. Staff recommends that the order approving the Joint Application be made effective upon Commission approval.
In addition, Staff recommends that the respective cost recovery methods include a review at the end of the first year of recovery so that any necessary adjustments can be made.

Respectfully submitted this day of November 1999.

________________________
Cheri C. Copsey
Deputy Attorney General

Technical Staff: Doug Cooley

CCC:DC:gdk:i:umisc/comments/gnrt9920.ccdc

The Application also included Custer Telephone Cooperative, Filer Mutual Telephone Co., and Project Mutual Telephone Cooperative. However, the Commission does not regulate mutual and cooperative telephone companies. Idaho Code (( 61-104 and 61-121
Staff did not assess the proposed EARC surcharges for Custer Telephone Cooperative, Filer Mutual Telephone Co. and Project Mutual Telephone Cooperative. See footnote 1.

STAFF COMMENTS 1 NOVEMBER 9, 1999