20101015Decision Memo.pdf

DECISION MEMORANDUM 1
DECISION MEMORANDUM

TO: COMMISSIONER KEMPTON
COMMISSIONER SMITH
COMMISSIONER REDFORD
COMMISSION SECRETARY
COMMISSION STAFF

FROM: DON HOWELL
DEPUTY ATTORNEY GENERAL

DATE: OCTOBER 14, 2010

SUBJECT: GOLD STAR COMMUNICATIONS’ APPLICATION FOR ETC
DESIGNATION, CASE NO. GOL-T-10-01

On June 8, 2010, Gold Star Communications, LLC filed an Application seeking
designation as an eligible telecommunications carrier (ETC) pursuant to the federal
Telecommunications Act and this Commission‟s Order No. 29841. Gold Star is a commercial
mobile radio services (CMRS) carrier providing mobile wireless services and conducts business
as “Silver Star Wireless.” Designation as an ETC would allow Gold Star to receive monetary
support from the federal Universal Service Fund (USF) and to participate in the Link-Up and
Lifeline programs.
On September 9, 2010, the Commission issued Order No. 32066 soliciting comment
in response to Gold Star‟s ETC Application. According to the Order, comments in the Modified
Procedure docket were to be submitted no later than September 30, 2010. The only comments
submitted were filed by the Commission Staff.
APPLICATION
Gold Star is currently licensed to serve two “basic trading areas” (BTAs) in Idaho:
BTA 202 (Idaho Falls) and BTA 353 (Pocatello). Gold Star has entered into a lease arrangement
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. Gold Star is authorized to
provide wireless service under its two BTAs in the following Idaho counties: Bonneville, Teton,
Madison, Bingham, Butte, Custer, Lemhi, Jefferson, and Clark. Application at 2.
DECISION MEMORANDUM 2
The Company proposes to deliver ETC services in Teton County, eastern and
northern Caribou County, and eastern Bonneville County served by the incumbent ILECs, Silver
Star Telephone Company and Columbine Telephone (dba Teton Telecom).
Gold Star‟s Application states that it satisfies all of the statutory and regulatory
requirements for ETC designation. Gold Star asserts that it will offer the services required for
carriers to be eligible for federal USF funding, including voice grade access, local calling, access
to 911 services, and the ability to remain functional in emergency situations. Gold Star requests
that it be designated as eligible to receive all available supports from the federal USF including
support for rural, insular and high-cost areas and low-income customers in the proposed service
area. Gold Star further asserts that it will comply with all applicable Idaho service quality
standards and consumer protection rules, as well as those standards established by the Cellular
Telephone Industry Association (CTIA) consumer code.
Gold Star states in its Application that granting it ETC designation is in the public
interest because its universal service offering will provide consumers in rural eastern Idaho “with
the benefits of increased competitive choice and quality service . . . including high-speed data
transmission capabilities.” Application at 14-15. The carrier further states that its designation as
an ETC will have “a nominal impact on the federal [USF] if calculated using the FCC‟s current
„identical support‟ rule.” Id. at 18. Gold Star insists that it will not engage in “cream skimming”
and that it will serve all customers where it is able to provide wireless service regardless of
population densities. Id. at 17-18.
STAFF COMMENTS
Staff recommended that the Commission approve Gold Star‟s Application for ETC
designation. Comments at 11. Staff examined the federal and state criteria used to evaluate ETC
applications. Staff reviewed the public interest standards for: (1) cost-benefit analysis; (2)
potential for cream skimming; (3) impact on the federal USF; and (4) state and federal precedent.
1. Cost-Benefit Analysis. While Staff does not advocate one technology over
another, it recognizes that each communications technology has unique advantages and
disadvantages depending upon the geography, demographics, and technological needs of the
proposed service area. After reviewing Gold Star‟s Application, Staff concluded that Gold Star‟s
two-year network improvement plan “may be more cost-effective to implement for a wireless
DECISION MEMORANDUM 3
provider than a similar plan may be for the [landline] ILEC and, therefore, consumers will more
likely see improved services.” Comments at 5.
2. Cream Skimming. Gold Star is not seeking ETC designation in partial wire
centers and is proposing to serve some of the more sparsely populated and more costly study
areas in Idaho. Staff observed that the list of wire centers proposed to be served by Gold Star
include the entire service areas of Silver Star and Columbine. Staff determined that Gold Star‟s
proposal to serve all of the service area avoids the appearance of cream skimming.
3. Impact on the USF. Gold Star asserted that receipt of high-cost funds will have a
nominal impact on the federal USF. Gold Star calculated that it might receive an estimated
$648,000 per year in USF support, which is less than 0.015% of the high-cost portion of the
federal USF, assuming $4.3 billion in high-cost support per year. Id. at 6. Staff expressed
concern that the federal USF was not intended to provide equal funding for both the ILEC and an
affiliate ETC operating in the same service area as would be the case with Silver Star Telephone
and Gold Star Communications. Staff specifically noted that the FCC imposed an interim cap on
the amount of high-cost support that competitive ETCs (CETCs) may receive in each state. “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.” Comments at 10. Although there
are some exceptions, Staff noted that the interim cap will remain in place until the FCC adopts
comprehensive reform measures. Id.
Despite these concerns, Staff does recommend approval of this Application because
Gold Star meets all of the statutory requirements for ETC designation. Withholding approval
would also deny rural consumers the benefit of the state and federal Lifeline and Link-Up
support as well as the wireless technology.
4. State and Federal Precedent. Staff noted that designating Gold Star as an ETC is
consistent with prior cases of both the FCC and this Commission.
Staff also stated that it believes Gold Star meets the seven ETC designation
requirements set out in Appendix 1 of Order No. 29841. Id. at 9. In addition, Staff maintained
that Gold Star‟s network improvement plan is in sufficient detail and appears reasonable. If
“Gold Star is granted ETC designation, the annual submission of the Two-Year Network
Improvement Plan and Progress Report will hold the Company accountable for making a
reasonable effort to implement” the plan. Id. at 8.
DECISION MEMORANDUM 4
In conclusion, Staff recommended that the Commission approve the ETC Application
for Gold Star to serve in Teton County, eastern and northern Caribou County, and eastern
Bonneville County served by Silver Star Telephone and Columbine Telephone.
COMMISSION DECISION
Should the Application of Gold Star Communications, LLC for designation as an
ETC to serve the areas identified above be approved?

bls/M:GOL-T-10-01_dh2