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Home My WebLink About19991210Decision Memo.docDECISION MEMORANDUM TO: COMMISSIONER HANSEN COMMISSIONER SMITH COMMISSIONER KJELLANDER MYRNA WALTERS RON LAW TONYA CLARK LYNN ANDERSON DON HOWELL STEPHANIE MILLER JOE CUSICK SYD LANSING TERRI CARLOCK DOUG COOLEY JUDY STOKES WORKING FILE FROM: CHERI C. COPSEY DATE: DECEMBER 10, 1999 RE: 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 – CASE NO. GNRT99-20 On September 10, 1999, the Idaho Telephone Association (“ITA”) filed a Joint Application 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 EARC adds the terms, conditions and rates for providing intraLATA toll dialing parity in Idaho pursuant to the Commission’s Order No. 28064. The Joint Application originally proposed an effective date of October 10, 1999. On October 19, 1999, the Commission suspended the tariff and ordered it be considered under Modified Procedure. Order No. 28182. Staff and AT&T Communications of the Mountain States, Inc. filed comments on November 9, 1999. BACKGROUND On June 8, 1999, the Commission approved intrastate, intraLATA toll dialing parity plans filed on behalf of members of the Idaho Telephone Association (ITA). 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. APPLICATION All of the listed relevant ITA companies proposed 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 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 COMMENTS 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. 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. Because dialing parity creates equal access to intraLATA toll, Staff concluded that cost recovery based on intraLATA toll usage is reasonable. However, Staff recognized 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 believed 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 found that the 24-month recovery period is appropriate but, due to some of the unusually high recovery rates, recommended a thorough Commission review period for each company at the end of the first year to determine the effectiveness and, if necessary, adjust the recovery rate or time frame. Based on its review, Staff recommended approval of the Joint Application. In addition, Staff recommended 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. AT&T COMMENTS AT&T did not comment on the reasonableness of the costs on which the companies based the proposed EARCs because the information was filed as proprietary. However, it urged the Commission to require the companies to “true up” the costs and submit them to the Commission for review after one year of implementation. AT&T expressed concern about the EARC proposed by Teton, Silver Star and Direct Communications because it pointed out that these EARCs would substantially increase their respective access rates and likely cause interexchange carriers to refrain from offering intraLATA toll service in those exchanges. COMMISSION DECISION Does the Commission want to approve the revised Idaho Rural Exchange Carriers Tariff No. 2 adding an equal access recovery charge (EARC) for 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 as proposed in the Application? ________________________ Cheri C. Copsey Deputy Attorney General Technical Staff: Doug Cooley M:gnrt9920_cc3 The Joint Application also included Custer Telephone Cooperative, Filer Mutual Telephone Co. and Project Mutual. Telephone Cooperative. However, the Commission does not regulate tariffs for mutual and cooperative telephone companies. Idaho Code §§ 61-104 and 61-121. Pursuant to Idaho Code §§ 61-104 and 61-121 the Commission does not regulate mutual’s and cooperative’s roles. Staff did not assess the proposed EARC surcharges for Custer Telephone Cooperative, Filer Mutual Telephone Co. and Project Mutual. Telephone Cooperative. See footnote 1. DECISION MEMORANDUM 2