20100930Comments.pdf

DONALD L. HOWELL, II
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
IDAHO BAR NO. 3366
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lOlO SE? 30 PH 2= 28
Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5918
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF )
GOLD STAR COMMUNICATIONS, LLC FOR ) CASE NO. GOL-T-IO-Ol
DESIGNATION AS AN ELIGIBLE )
TELECOMMUNICATIONS CARRIER )
) COMMENTS OF THE
) COMMISSION STAFF
)
The Staff of the Idaho Public Utilties Commission, by and through its Attorney of Record,
Donald L. Howell II, Deputy Attorney General, submits the following comments.
BACKGROUND
On June 8, 2010, Gold Star Communications, LLC (Gold Star or Company) filed an
Application seeking designation as an eligible telecommunications carier (ETC) pursuant to the
federal Telecommunications Act and this Commission's Order No. 29841. 47 U.S.C. § 214(e)
(1-2); 47 C.F.R. § 54.201. Gold Star is a commercial mobile radio services (CMRS) carrer
providing mobile services as defined in 47 U.S.c. § 153(27) and conducts business as "Silver Star
Wireless." Designation as an ETC would allow Gold Star to receive monetar support from the
STAFF COMMENTS 1 SEPTEMBER 30, 2010
federal Universal Service Fund (USF) and to participate in the federal Lifeline program. l Gold
Sta is a full-service wireless carier that offers universal services throughout its licensed service
area using its own wireless network infrastructure. Application at 2.
Gold Star is curently licensed to serve two "basic trading areas" (BTAs) in Idaho: BTA
202 (Idaho Falls) and BTA 353 (Pocatello). Gold Star has also entered into a lease agreement
with Syringa Wireless, LLC for use of Syringa's wireless spectrum in the areas of Wayan and the
Smokey Canyon Mine owned by the J.R. Simplot Company. Pursuant to these BTA
authorizations, Gold Star is authorized to provide wireless service in the following Idaho counties:
Bonnevile, Teton, Madison, Bingham, Butte, Custer, Lemhi, Jefferson, and Clark. Id
The Company's proposed ETC service area is in Teton County, eastern and nortern
Caribou County, and eastern Bonnevile County served by incumbent local exchange carriers
(ILEC) Silver Star Telephone Co., Inc. (Silver Star) and Columbine Telephone Co., Inc. dba Teton
Telecom Communications (Columbine).
Gold Star is a limited liabilty company that was organized in the state of Wyoming on
December 10, 1998. The address of the Company is listed as Freedom, Wyoming and its
registered agent in Idaho is Aaron Jenkins located in Driggs, Idaho. See Secretary of State's
Application for Registration of Foreign Limited Liabilty Company.
STAFF ANALYSIS
Staffhas reviewed Gold Star's Application and has conducted an analysis of the
Company's fulfillment of the federal Telecommunications Act of 1996 ("the Act") and of
Commission Order No. 29841. In addition, Staff has analyzed the merits of awarding ETC
designation for rural wire center service areas.
In the Application, Gold Star states it wil offer the federally designated universal services
which are supported by the federal USF program. These universal services include: voice grade
access to the public switched telephone network; a certain amount of local usage; dual tone mult-
frequency signaling; single-pary service; access to emergency services, operator services, long-
distance services, and directory assistance; and long-distance limitation (i.e., toll blocking) for
qualifying low-income customers. Id at 5.
i The Federal Communications Commission's Lifeline program is intended to promote universal service by using USF
revenues to make telecommunications service more afforda1Jle. Idaho participates in the residential Lifeline program
pursuant to Idaho Code § 56.90 i and Order NO.2 i 713.
STAFF COMMENTS 2 SEPTEMBER 30, 2010
Gold Star wil comply with all applicable Idaho service quality standards and consumer
protection rules, and wil abide by the Consumer Protection Standards established by the Cellular
Telephone Industry Association (CTIA) consumer code. See Application, Exh. H.
Gold Sta states in its Application that granting it ETC designation is in the public interest.
More specifically, Gold Star insists that its unversal service offering wil provide consumers in
rural eastern Idaho "with the benefits of increased competitive choice and quality service. . .
including high-speed data transmission capabilties." Id at 14-15. Gold Star fuher declares that
it wil also provide customers with voice mail, three-way callng, call waiting, call forwarding, and
several different callng plans. Id at 16.
Gold Star indicates that its designation as an ETC will have "a nominal impact on the
federal (USF) if calculated using the FCC's curent 'identical support' rule.,,2 Id at 18. Gold Star
also asserts that it will serve all customers where it is able to provide wireless service regardless of
the population densities. Consequently, it wil not be engaged in "cream skimming" by serving
only low-cost areas and avoiding high-cost areas. Id at 17-18.
Rural Wire Centers
Gold Sta's Application, includes four rural wire centers in southeastern Idaho. These
rual wire centers are: Freedom, Irwin, and Wayan served by Silver Star Telephone Co., Inc. and
Driggs served by Columbine Telephone Co., Inc. Id, Exhibit C 1.
The Act treats rural and non-rural service areas differently for the puroses of ETC
designation. When a carier meets the statutory ETC requirements and requests designation in a
rural area served by an ILEC, the Act gives the State Commission more discretion than in the non-
rual areas. The Act states that the State commission may grant ETC designation to the additional
carrier provided that ETC designation of the additional carier is in the public interest. 47 U.S.C.
§ 214(e)(2).
Under the Act and Order No. 29841, greater emphasis is placed on scrutinizing the public
interest issues for ETC Applications in rural service areas. Rural wire centers often have widely
2 The identical support rule awards federal high-cost USFsupport to competitive eligible communications cariers
(CETC) based on the costs of the ILEC in whose territory the CETC seeks support, rather than on the CETC's own
cost or some other basis. The FCC released the Identical Support NPRM(FCC 08-4) based, in part, on the
conclusions reached in 2007 by the Federal-State Joint Board on Universal Support regarding the need to control USF
support growth immediately in order to preserve and protect the future sustain abilty of the fund.
STAFF COMMENTS 3 SEPTEMBER 30, 2010
disparate population densities, and therefore, highly disparate cost characteristics.3 As such, Staff
believes the public interest analysis plays a more-important role when reviewing an ETC
designation in rural service areas.
Public Interest Analysis
Under Section 214 of the Act, the State commission must determine that an ETC
designation is consistent with the public interest, convenience and necessity. 47 U.S.C.
§ 214( e )(2). In accordance with the Act, and the ETC requirements of the FCC rules, the
Commission has stated:
In adopting the FCC's proposed public interest analysis, this
Commission adopts an analytical framework for making a public interest
determination. This framework necessarily involves the consideration of
certain enumerated factors, such as the benefits to consumer choice, the
unique advantages and disadvantages of the applicant's service offering,
and, where applicable, consideration of creamskimming. However, the
Commission may consider other relevant public interest determinations in
its public interest determination." Order No. 29841 at 15-16.
This Commission has consistently applied the public interest analysis in previous decisions. The
Commission denied the ETC Applications of wireless carriers, IA T Communications, Inc.
dba NTCH-Idaho, Inc., and NPCR, Inc dba Nextel Parners (Case No. GNR-T-03-08). In
addition, the Commission parially denied, Inland Cellular Telephone Company (Case No.
INC-T-06-02) and CTC Telecom, Inc. (Case No. CTL-T-09-01), because the applicants failed to
car out their burden of demonstrating that their Applications for areas served by rural companies
were in the public interest. See Order Nos. 29541, 30212 and 30867. These Applications failed
the public interest test by placing too much emphasis on competition and relying on approved state
and federal applications in very different service areas rather than explaining how the paricular
applicant's ETC designation would benefit all customers in its ETC service area.4
Applicants have the burden of proof to demonstrate that the public interest is served by
designating them as an ETC in these rual areas. Order No. 29541 at 6 (citing Virginia Cellular,
3 In the Matter of the Federal-State Joint Board on Universal Services, CC Docket No. 96-45 (reI. March 17,2005)
2005 WL 646635 at 21-22 (the "FCC Order").4 The term "service area" denotes a geographic area established by a State commission for the purpose of determining
universal service obligations and support mechanisms. In the case ofa rual telephone company, service area is
defined as a company's study area unless and until the FCC and the State Commission, after taking into account
recommendations ofa Federal-State Joint Board instituted under section 410(c), establish a different definition of
service area for such company. 47 U.S.C. § 214(e)(5
STAFF COMMENTS 4 SEPTEMBER 30, 2010
LLC Petition/or Designation as an ETC, 19 F.C.C.R. 1563 (2004)). Gold Star's Application
makes four primary public interest arguments.
1. Cost-Benefit Analysis
Gold Star asserts its universal service offering not only increases competition in the rual
eastern Idaho, but also provides increased competitive choice for quality service. Application at
14-15. Gold Star states that the increased competitive choice and quality service wil benefit the
rual Idaho consumers and wil also "speed the delivery of advanced wireless services to citizens
in these remote communities." Id at 15. The Company further states that, "(w)ithout Gold Star's
wireless service, many consumers in the area would have to rely solely on traditional wireline
services." Id Gold Sta claims mobilty wil offer "increased flexibilty, public safety, and
service options... (b)y offering the benefits of mobilty, Gold Star's wireless universal offering wil
provide unique and essential services to consumers in rural southeastern Idaho." Id The
Company states that an additional benefit wil be offered to low-income consumers who are
eligible for federal Lifeline benefits. Id at 16. As a locally-based company, Gold Star is focused
on the specific needs of its rual customers, who are its one and only priority. Id at 15. Without
Gold Star, consumers in the Wayan and Henry communities would have to rely solely on
traditional wire line services. In sum, Gold Star claims it provides several advantages: Mobilty,
access to E911, voicemail, three-way callng, call waiting, call forwarding, expanded callng
scopes and several callng plans. Id Gold Star concludes its Cost-Benefit Analysis by describing
how the federal high cost support would be used to improve its infrastructure in rual southeastern
Idaho. Id
Staff does not advocate one technology over another, but instead recognizes that each has
unique advantages and disadvantages depending upon the geography, demographics, and
technological needs of the community. Gold Sta states that its infrastructure improvements wil
provide greater benefits and high-quality service to its consumers, by providing additional services
in underserved or unserved areas as well as providing data network capabilties. Id Gold Star's
list of advantages is not necessarily unique to or exclusively associated with wireless technology.
Staff, however, believes that the implicit benefits of Gold Star's two-year network improvement
plan may be more cost-effective to implement for a wireless provider than a similar plan may be
for the ILEC and, therefore, consumers will more likely see improved services. Staff
acknowledges that mobilty is unique to wireless service, but Staff also understands the unique
disadvantages and service quality challenges Idaho's diverse terrain poses for wireless service
STAFF COMMENTS 5 SEPTEMBER 30,2010
providers. Furher, the Company's presumptive disadvantage associated with consumers having
to "rely solely on traditional wire line service," is not a compellng argument to satisfy the public
interest requirement.
2. Potential for Cream Skimming.
Gold Star states that it is not targeting low cost areas or avoiding high cost areas, but
instead will serve all customers where it is able to provide wireless service to varied population
densities. Id. at 17. Gold Star is not seeking ETC designation in parial wire centers and is
proposing to serve some of the more sparsely populated and more costly study areas in Idaho.
Id at 18. This statement is supported by a wire center population density char. Id Confidential,
Exhibit C-2.
Staff notes that the list of wire centers in the Application includes the entire service area of
Silver Star and Columbine. Staff agrees that an Application for ETC designation that includes an
entire service area avoids the appearance of cream skimming.
3. Impact on the Fund.
Gold Star asserts that receipt of high cost fuds will have a nominal impact on the federal
USF fund if calculated using the FCC's curent identical support rule. Gold Star conducted a
study using customer zip codes from its biling system to identify the location of its customers
relative to the exchange area boundares of the ILEC with whom Gold Star competes for wireless
service customers. Gold Star's calculation oftotal per-line support (using USAC's Idaho
projection for second quarter 2010) that each competing ILEC curently receives, including high
cost, local switching, interstate common line, and long-term support when multiplied by the
individual ILEC per-line support amount with the number of Gold Star wireless consumers shows
Gold Star would receive an estimated $648,000 per year in USF support. Id at 18. Based upon
Gold Star's calculations, "(t)his represents lessthan 0.015 percent of the high-cost portion of the
federal USF, assuming $4.3 bilion in high cost support disbursement in a single year.
Accordingly, grant of Gold Sta's ETC request wil have minimal impact on the USF." Id at
18-19. Gold Star goes on to state, "(t)he benefits of designating Gold Star as an ETC outweigh
any potential har to the sustainabilty of the fund." Id at 19.
As stated earlier, Gold Star is doing business as "Silver Star Wireless." Id at 2. Staff
notes that the addresses and principals listed for Gold Star and Silver Star Wireless are the same as
those for Silver Star and Columbine. Both are Title 61 ILECs and are price-regulated by the
Commission. In addition to the federal high-cost funds it receives, Silver Star Telecom
STAFF COMMENTS 6 SEPTEMBER 30, 2010
(separately known as Columbine Telephone Company dba Teton Telecom and Silver Star
Communications) also receives approximately $155,700 anually from the Idaho USF fud.
Staff notes that most of Gold Star's wireless emergency operation features are identical to
the those stated in the Syringa Wireless and CTC Telecom Inc'~ ETC designation Applications
(Case Nos. SYR-T-08-01 and CTL-T-09-01). Application at 9-10.
Syringa Wireless is owned by a consortium (Member Parners) of the following ILECs:
Albion Telephone Company, Project Mutual, Direct Communications, Filer Mutual Telephone
Co., and Silver Star. See Syringa Wireless website, http://ww.syringawireless.com/. Albion
Telephone Company, Direct Communications, and Silver Star are price-regulated Title 61
companies. Project Mutual and Filer Mutual Telephone Co. are Cooperative Telecommunications
Companies that are not regulated by the Commission. All five members of the Syringa Wireless
Board of Directors are employees of the Member Parners. Id Three of the ILECs, Albion
Telephone Company, Direct Communications, and Silver Star also receive a combined Idaho USF
fuding of approximately $822,600 anually or 48% of the total Idaho USF fund disbursement. In
addition, these Title 61 companies receive federal USF support.
Gold Star's assertion of minimal impact to the federal USF fund may.be correct, but partly
because of recent action taken by the FCC. This topic is examined in greater detail in the High-
Cost Federal Funding discussion.
4. State and Federal Precedent.
The Company notes that designation of Gold Star wireless services as an ETC is consistent
with ETC decisions across the country, demonstrated by numerous ca~es at the state and federal
level, including this Commission's recent designation of Edge Wireless, LLC, Syringa Wireless,
LLC and CTC Telecom, LLC as wireless rural ETCs. Id at 19.
As noted in previous decisions, the Commission does not rely upon past decisions in
determining whether a current Application should be approved or denied. Each Application must
stand on its own merit in determining if it meets the state and federal ETC designation
requirements as outlined in Commission Order No. 29841.
Public Interest Summary
In evaluating the public interest portion of an ETC Application, the Commission weighs
whether the potential benefits of ETC designation outweigh the potential harms. One
consideration is whether the Applicant is committed to providing universal service throughout the
STAFF COMMENTS 7 SEPTEMBER 30, 2010
rual areas or, if not, whether the potential for cream skimming exists. Staff believes the
Company avoids the appearance of cream skimming where the Application includes all wire
centers in a designated service area. Staff notes that the Gold Star Application includes a 2010
and 2011 network improvement plan (Application, Confidential Exhibit D), with wire center
specific details. While Staff would have preferred to see additional improvement plans for 2012,
the information provided supports the Company's claim that it will continue to use high cost funds
to upgrade the network.
In sum, the Staff believes GOLD STAR's Application presents an acceptable argument to
support the Company's public interest position.
Network improvement Plan
The two-year network improvement plan must describe with specificity proposed
improvements or upgrades to the applicant's network on a wire center-by-wire center basis
throughout its proposed designated service area. Order No. 29841 at 18.
As mentioned earlier, Gold Star's Application provides detailed information outlining its
network improvement plan for 2010 and 2011. Application, Confidential at 16 and Confidential
Exhibit D. The plan includes details such as affected wire centers, expenditures and a narative
description of the planed improvements for each year.
Staff believes Gold Star provides a reasonable improvement plan, and if Gold Star is
granted ETC designation, the anual submission of the Two-Year Network Improvement Plan and
Progress Report wil hold the Company accouttable for making a reasonable effort to implement
the network improvement plan. See Appendix Reporting Requirement, Order No. 29841.
Abilty to Remain Functional in Emergencies
The Commission explains in Order No. 29841 that it "understands different cariers in
different industries and geographic areas wil have different technological challenges and
opportunities to meet these fuctional requirements, especially in an emergency." Order No.
29841 at 10. To demonstrate the abilty to remain functional durng emergencies, the ETC
applicant must show that it has a "reasonable amount of back-up power to ensure functionality
without an external power source, is able to re-route traffic around damaged facilties, and is
capable of managing different traffic spikes resulting from emergency situations."
STAFF COMMENTS 8 SEPTEMBER 30, 2010
In the Application, Gold Star describes the components that make up its fault-tolerant
network. Application at 9-10. These components include a Mobile Switching Center located in
Roosevelt, Utah with 12 hours of backup battery and a natual gas generator connected to the
public utilty supply; Self-Healing Alternative Route Protection Service for Fiber Facilties
interconnection with automated 7x24 remote monitoring of cell sites and switches; Cell sites with
8 hours battery backup and standby generator to accommodate extended power outages; Network
Operating Center in Roosevelt, Utah; and Gold Sta's 7x24 on-call staff who will be called or
contacted via text message when the monitoring system detects a problem. Id
Staff believes the fault-tolerant network, as described in the Application, provides
adequate support to demonstrate the Company's abilty to remain functional in an emergency.
Other ETC Designation Requirements
Additional requirements for ETC designation, not previously discussed, are detailed in the
Appendix 1 of Order No. 29841 and discussed more fully below.
1. Common Carier Status. Gold Sta Telecom is a Commercial Mobile Radio Services
(CMRS) carrier providing "mobile service" as defined in 47 U.S.C. § 153(27). Application at 2.
2. Provide the Universal Services. Gold Star offers the federally designated services
listed at 47 U.S.C. § 54.1O(a). Id at 5.
3. Advertising. Gold Star plans to advertise the availabilty of each of the supported
services as detailed in the Application, throughout its licensed service area, by media of general
distribution. Id at 13.
4. The Commitment and Abilty to Provide Supported Services. Gold Star is committed
to answering all reasonable requests for service within its proposed ETC service area. Id at 20.
5. A Commitment to Consumer Protection and Service. Gold Star wil comply with all
applicable Idaho service quality standards and consumer protection rules, and will also abide by
the Consumer Protection Standards established by the Cellular Telephone Industry Association
(CTIA) consumer code. See Application at 13 and Exh. H.
6. Description of the local Usage Plan. Gold Star submits its rate plan brochures as
Exhibit E. Id at 6.
7. Tribal Notification. Gold Sta is not seeking ETC designation for any portion of tribal
lands as none currently exists in its proposed ETC service area. Id at 13.
Staff believes Gold Star meets the aforementioned ETC designation requirements.
STAFF COMMENTS 9 SEPTEMBER 30, 2010
HIGH-COST FEDERAL FUNDING
The original goal of the federal Universal Service Fund, under the Telecommunications
Act of 1934, was to provide at least one access line for basic telephone service to every household
in the U.S., and at a reasonable, subsidized cost. Staff does not believe the USF was ever intended
to provide equal funding for both the ILEC and an ILEC affiliate operating in the same service
area as would be the case with Silver Star Telecom and Gold Star Telecom, LLC dba Silver Star
Wireless.
Staff is aware of the high-cost federal funding issues for rural areas. Staff recognizes and
is concerned about the growth of high-cost fuds, paricularly as it relates to Competitive ETCs
(CETC). The escalating high-cost fud is an ongoing concern that is being addressed at the
federal leveL. On April 29, 2008, the FCC adopted the Federal-State Joint Board on Universal
.
Service's recommendation to impose an interim emergency cap on the amount of high-cost
support that CETCs may receive. See FCC 08-122. Specifcally, effective May 1,2008, total
annual CETC support for each state wil be capped at the level of support that CETCs in that state
were eligible to receive during March 2008 on an anualized basis. All newly designated and
existing CETCs in Idaho will share the high-cost USF support in the amount that was distributed
to Idaho CETCs in March 2008. The only exception to this interim cap is if a CETC: (1) Files
cost data demonstrating that its costs meet the support threshold in the same maner as the ILEC;
or (2) Serves tribal lands or Alaska Native regions. The interim cap will remain in place until the
FCC adopts comprehensive reform measures. Id
The Commission is not in a position to alter public policy regarding the federal USF draw.
The Commission must follow the rules and regulation even if troubled by the outcome. In the
meantime, Staff does not feel it should recommend denial of an ETC Application that reasonably
meets all of the statutory requirements for an ETC designation. Denial of an ETC Application
also denies the rual consumers the benefit of Idaho Telephone Service Assistance Program
(ITSAP), federal Lifeline and Linkup support, as well as other potential technological and safety
benefits that may be offered by the CETC. Staff wishes to note, however, that to the extent the
areas are already served, these benefits are available to the consumers through the ILECs.
STAFF COMMENTS 10 SEPTEMBER 30,2010
STAFF RECOMMENDATION
Staff is satisfied that the Application meets the minimal requirements for ETC designation
in Idaho and recommends that the Commission approve the Application of Gold Star
Communications, LLC for designation as an eligible telecommunications Carier.
Respectfully submitted this 3J\'s day of September 2010.
-.
~\~~
Donald L. Howell, II
Deputy Attorney General
Technical Staff: Grace Seaman
i:umisc/commentsgoltlO. ldhgs comments
STAFF COMMENTS 11 SEPTEMBER 30, 2010
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 30TH DAY OF SEPTEMBER 2010,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. GOL-T-I0-0l, BY MAILING A COPY THEREOF, POSTAGE PREPAID,
TO THE FOLLOWING:
MOLLY O'LEARY
RICHARDSON & O'LEARY
PO BOX 7218
BOISE ID 83707
E-MAIL: mollyaYrichardsonandoleary.com
SEC~A~
CERTIFICATE OF SERVICE