20061228final_order_no_30212.pdf

Office of the Secretary
Service Date
December 28, 2006
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE PETITION OF
INLAND CELLULAR TELEPHONE COMPANY )
FOR DESIGNATION AS AN ELIGIBLE
TELECOMMUNICATIONS CARRIER UNDER
47 U.c. ~ 214(e)(2)
CASE NO. INC-06-
ORDER NO. 30212
On June 29, 2006, Inland Cellular Telephone Company filed a Petition on behalf of
Washington RSA No.8 Limited Partnership d/b/a Inland Cellular ("Inland" or "Company ) for
designation as an eligible telecommunications carrier (ETC) for service areas in Idaho that are
currently serviced by other carriers. See Idaho Code ~ 61-610A and Order No. 29841. Also see
47 D.C. ~ 214(e)(2). A Notice of Application was filed on September 6, 2006. Order No.
30123.
Four entities intervened in this matter: The Idaho Telephone Association (ITA);
Citizens Telecommunications of Idaho dba Frontier Communications of Idaho ("Frontier
Potlatch Telephone Company, Inc. ("Potlatch"); and WWC Holdings Co., Inc. dba Alltel
Alltel"). Potlatch also filed a Motion for Limited Admission for its out-of-state counsel. No
objections were filed to any of the Petitions or to the Motion, and each was granted. Order Nos.
30123 , 30144, and 30178. On October 19, 2006, the Commission issued a Notice of Modified
Procedure and solicited comments on the Petition. Order No. 30152. Staff, Frontier, ITA and
Potlatch timely filed comments. The Company indicated that it may desire to file reply
comments and would do so on or before December 18, 2006. The Company did not file any
reply comments.
THE PETITION
According to the Petition, Inland is authorized by the Federal Communications
Commission (FCC) as the "B Band" cellular carrier in the northern section (within Idaho
County) of Idaho 2 (B-2) Rural Service Area (RSA). Petition at ~4. Inland is also licensed by
the FCC as the "B Band" cellular carrier and has the authority to serve the southern section of
Idaho 1 (B-2) RSA through a Rural Service Area Service Agreement and Option held by Inland
Telephone Company. Id. Inland is a commercial mobile radio service (CMRS) provider and
provides ihterstate telecommunications servIces. Id. Through this Petition, Inland sought
ORDER NO. 30212
designation as an ETC and to receive universal service support in certain rural and non-rural wire
centers located in Benewah, Clearwater, Idaho, Latah, Lewis and Nez Perce counties.
The Petition contained certain information related to the Company s local usage
plans, customer service and ability to provide service. The Company provided information
regarding several pricing options for its customers and provided its two-year plan.
The Company filed two supplements to its Petition, on September 27, 2006 and
October 12, 2006 (Supplement No.1 and Supplement No., respectively). These documents
provided further information following inquiry from Staff.
D ISCUSSI
Non-Rural Wire Centers
Inland identified two non-rural wire center service areas in its request: (1) Bovil
Deary, Genesee, Moscow, Orofino, Peck, Pierce, Potlatch, and Weippe (Verizon Northwest
Inc.) and (2) Cottonwood, Craigmont, Grangeville, Kamiah, Kooskia, Lapwai, Lewiston, and
Nez Perce (Qwest Corporation-ID). The Nez Perce and Coeur d' Alene Tribal reservations are
also located in wire centers classified as non-rural service areas.
Staff Comments: Staff noted that the federal Telecommunications Act ("the Act"
states that when a carrier meets the service requirements set forth in 47 D.C. ~ 214(e)(1) and
requests designation in a non-rural area already served by an incumbent local exchange carrier
(ILEC), the Commission shall designate more than one common carrier as an ETC. 47 D.c. ~
214( e )(2). Staff Comments at 3. Staff further noted that designating more than one ETC in a
non-rural service area is consistent with past Commission decisions in which the Commission
granted ETC status to wireless carriers in the non-rural wire centers in Idaho. See Orders Nos.
29261 29791 and 29686. Staff believes Inland meets all of the ETC requirements of the Act and
Commission Order No. 29841 that address non-rural wire centers. Staff Comments at 4.
Finding: We find that designating Inland as an ETC in the non-rural service areas is
consistent with the "public interest, convenience, and necessity" pursuant to 47 D.
~214(e)(2). Granting ETC designation to Inland in the non-rural areas will likely benefit the
consumers who are eligible recipients of Idaho Telecommunications Service Assistance Support
(ITSAP). This will further serve the public interest of the consumers who live in the Coeur
d' Alene and the Nez Perce Tribal territories and are thus eligible for the federal LifeLine and
Linkup support. Based upon past Commission decisions, and consistent with the requirements of
ORDER NO. 30212
Section 214 of the Act, we approve the Petition with regard to the non-rural wire centers set forth
above.
Partial Rural Wire Centers
Inland's Petition also requests designation as an ETC in partial areas of the wire
centers of Elk River and White Bird. These areas are served by Frontier, and both wire centers
cover a very rural and large geographic area. According to the Petition, these cities have an
estimated population of 156 and 106, respectively. Supplement No., Exhibit A at 1. It
unknown how many of these are year-around versus seasonal residents.
Staff Comments: Staff noted that the FCC and the Commission have raised concerns
about any petition that requests to serve only part of a wire center as it may lead to "cream
skimming" of customers within that area. See Order No. 29541 at 16. Inland's Petition provided
only population estimates, and no other data regarding the exact demographics of the customers
to be served in the partial wire centers. Without this information, it is difficult to determine that
cream skimming" of customers would not occur. Staff Comments at 4. Staff also commented
that there is no indication that Inland has future plans to serve the entire wire center. !d. Further
Staff pointed to Commission precedent denying a similar petition from another wireless carrier
due to a concern about that company "cream skimming" customers in partial wire centers. See
Order No. 29541.
Frontier Comments: Frontier expressed its similar concern about the potential for the
Company to engage in cream skimming in these partial wire centers. It cited the FCC's decision
in the Highland Cellular Order in which the FCC concluded that a rural carrier may not be
competitive in anything less than an entire wire center, and "the competitor must commit to
provide the supported services to customers throughout a minimum geographic area.Frontier
Comments at 4 (citing Federal-State Joint Board on Universal Service, Highland Cellular, Inc.
Petition for Designation as an Eligible Telecommunications Carrier for the Commonwealth of
Virginia CC Docket No. 96-, Memorandum Opinion and Order, FCC 04-37 (reI. April 12
2004)). Frontier requested that the Commission deny Inland's Petition as to these partial wire
centers.
ITA Comments: The IT A also expressed concern that the Petition sought to cover
only parts of Frontier s service territory, noting the possibility of cream skimming. ITA
ORDER NO. 30212
Comments at 2. ITA requested that the Commission deny the Petition as to areas serviced by
rural telephone companies. Id. at 4.
Finding: We find that the Petition does not adequately address the more stringent
ETC requirements applicable to partial wire centers and that granting ETC designation in these
partial rural wire centers will pose an undue burden on the ILEC. The Petition does not identify
the areas within these wire centers that will be served, nor the potential consumer base that they
plan to serve. In addition, the map provided in the Petition to illustrate the requested areas does
not provide any illuminating information as to the population or boundaries of these areas. All of
this information is important to conduct an analysis as to whether cream skimming may occur as
rural wire centers often contain pockets of lower-cost, more profitable customers. We find that
the Company has not set forth a public interest benefit such that it would warrant an exception to
past Commission decisions. Granting ETC status in these partial wire centers may have the
effect of leaving the ILEC as the carrier of last resort for the highest cost customer and could
result in cream skimming of the population. We deny the Petition as to its request for ETC
designation in the partial wire centers of Elk River and White Bird.
Rural Wire Centers
The Petition also included the rural wire centers of Juliaetta, Kendrick and Troy, in
the Potlatch Telephone Company, Inc. service area, and Leon and Lenore in the Inland
Telephone Company service area. When considering a petition for ETC designation in rural
areas, an evaluation of whether the designation is in the public interest is a key factor. Order No.
29841 at 15. We have also directed applicants for ETC designation to provide other information
that is vital for determining whether the company could provide reliable, adequate service to
customers for whom it would receive DSF support. See Order No. 29841.
Public Interest Analysis
We previously denied the ETC petitions of two wireless carriers, IA
Communications, Inc. dba NTCH-Idaho, Inc. and Clear Talk and NPCR, Inc. dba Nextel
Partners (Case No. GNR- T -03-8), because each applicant failed to carry its burden
demonstrating that its petition, which applied to areas served by rural telephone companies, was
in the public interest. See Order No. 29541. We have found that those seeking ETC designation
in rural areas have the burden of proof to demonstrate that the public interest would be served by
ORDER NO. 30212
granting their petitions. Id. at 6 (citing Virginia Cellular, LLC Petition for Designation as an
ETC, 19 F.R. 1563 , 1574 (2004)).
Staff Comments Staff evaluated Inland's five primary public interest arguments
promoted in its Petition. The Company first argued in its Petition that"... an ETC designation
will promote competition and facilitate provision of advanced communications services to the
residents of rural Idaho... .Petition at ~ 32. Staff noted that Inland does not provide any
further information regarding which "advanced communications services" are referenced nor
does the Company s two-year plan provide additional information. Staff Comments at 6.
Second, the Company asserted that designating it as an ETC in these areas was in the
public interest because "(o)ne of the principal goals of the Telecommunications Act of 1996, was
to 'promote competition and reduce regulation in order to secure lower prices and 'high-quality
services for American telecommunications consumers..
.'.
Petition at ~ 33. Staff commented
that the presumptive benefits of competition alone, as presented in the Petition, are not sufficient
to satisfy the public interest requirement. Staff believes that the bald assertion, without evidence
or data to show how competition will address the wants and needs of the service area, is not
enough to find that competition would be promoted or that there will be benefits to the areas
customers. Staff Comments at 7.
Third, the Company referenced the granting of ETC petitions in Wyoming, Arizona
and South Dakota to other wireless companies. Petition at ~~ 34 , and 37. Staff contends that
this argument is not strong enough to meet the standard of demonstrating a public benefit to the
customers in these areas. Staff Comments at 7. Staff points out that Inland's Petition must stand
on its own merits and not rely on the grant of ETC status to other companies in other
jurisdictions. Id.
Fourth, the Company asserted that
, "
(i)n most rural areas wireless telephone service
is today a convenience, but it will not emerge as a potential alternative to wireline service unless
high-cost support is made available to drive infrastructure investment." Petition at ~ 36. While
this may be valid, Staff did not believe it constitutes a compelling public interest statement with
regard to ETC designation. Staff Comments at 7. Staff commented that the Company provided
no specific data or evidence regarding the needs of the customers in the wire centers or that
infrastructure improvements will not occur without high cost support. Id.
ORDER NO. 30212
Last, the Company stated
, "
(w)ith high cost support, Inland Cellular will have an
opportunity to create a network that is capable of convincing customers to rely on wireless
service as their primary phone.Petition at ~ 38. Staff believes this statement is invalid with
regard to the meaning of the Petition. Staff Comments at 7. Staff commented that the purpose of
ETC designation is not to create an environment that will encourage customers to rely on
wireless service as their primary service provider. Id.
Staff further noted that the wire centers of Leon and Lenore are in the service area of
Inland Telephone Company, a Company affiliate. Inland Telephone Company currently
qualifies for and receives federal high cost Universal Service Support (USF), as well as Idaho
USF support. See Order No. 23838. Staff commented that if an ETC designation were to be
granted to the Applicant, both Inland Telephone Company and Inland Cellular could potentially
receive USF support in Leon and Lenore wire centers. This creates the possibility of cross-
subsidy issues and does not serve the public interest. Id. at 8.
Potlatch Comments: Potlatch asserted that public interest standards arising from the
FCC certification rules require a cost-benefit analysis that takes into account "the impact of the
designation on the universal service fund." Potlatch Comments at 13. Potlatch commented that
the Petition does not include any information or analysis of this impact, and thus the cost-benefit
analysis cannot, by definition, be performed to complete the evaluation as to whether the
Company meets the public interest standard. Id.
Finding: We find that the Company has not presented sufficient argument or
evidence to demonstrate that it would be in the public interest to grant the Petition as to the rural
service areas. General statements regarding the concept of competition and its assumed benefits
are not persuasive. No evidence is presented by the Company to demonstrate how it will
specifically provide a benefit to the consumers in the requested wire centers. It cannot be
presumed that benefits associated with different companies in different states are applicable to
the Company or the customers in its requested service areas.
In addition, ETC designation is a means to advance universal service and to provide
for secure and reliable telephone service to low-income consumers who may otherwise have
difficulty affording the monthly rates. It is not meant as a mechanism to promote the use of one
telecommunications technology over another. The proliferation of wireless may be a result of an
ORDER NO. 30212
ETC entering the area, but it is not a compelling argument as to how the public interest is
advanced.
Two-Year Network Improvement Plan
Each company desiring ETC designation in a rural area must provide a two-year
network improvement plan that describes 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. Order No. 29841 does not specify the timing of the two-year
plan.
Staff Comments : Staff recommended, that at a minimum, a two-year plan should be
forward-looking and should not include any period prior to the filing date of the application.
Staff Comments at 8. Staff commented that in its original filing, the Company provided a two-
year plan for 2006 and 2007. Staff then requested an update for 2007 and 2008. In its
supplemental filing, Staff observed that Inland moved much of what it originally included in the
2006 plan year to 2007. Id. (citing Supplement No.1 at ~ 13-18). Inland stated this budget
adjustment is normal for the Company as it operates practically debt free, and redirecting funds
toward other sites that require improvement or expansion, or to new sites that are needed because
of demand, is standard operating procedure. Supplement No.1 at ~ 15. It also stated that many
of the improvements planned for 2006 will not be performed until 2007. Id. They further
emphasize that cellular is a highly competitive industry and that in order to answer demand, the
Company must have flexibility to remain competitive. Id. Staff questioned the Company s use
of competition to justify ETC designation as a benefit for consumers and an excuse to not
provide a firm two-year plan. Staff Comments at 8.
Staff also acknowledged that flexibility may be required in business planning, but
believes an ETC-designated company must present a solid plan to satisfy the public interest
analysis. Id. at 9. Without this requirement, Staff believes that it would be difficult to refute the
possibility that the Company may be shifting funds to address the demand to better paying
customers or more densely populated areas over the demand in the more rural areas, thus posing
the specter of cream skimming. Id.
ITA Comments: ITA also commented on the Company s two-year plan. ITA
believes that the information presented by the Company comprised a "generalized narrative
about budgeted improvements" that mostly described "data and broadband data services, which
ORDER NO. 30212
are not supported services under current USF rules ... ." ITA Comments at 3-4. ITA further
stated that the Company did not present a wire-center-by-wire-center plan or how the projects set
forth will improve signal quality, coverage or capacity or other pertinent details. Id. at 4. ITA
also argued that the Company did not provide a solid commitment to improvements in any part
of the requested service areas. Id.
Potlatch Comments: Potlatch voiced similar concerns in its comments, stating that
the Company makes no assertion as to whether the two-year plan sets forth improvements that
are part of its ordinary course of business or whether they are additional items that the Company
will perform upon the grant of ETC designation. Potlatch Comments at 6. Potlatch asserted that
it believes that Inland did not meet the Commission s requirements with regard to the two-year
requirement in not stating its intended improvements with specificity on a wire-center-by-wire-
center basis. Id. at 8. In addition, Potlatch commented that the Company did not describe in its
plan how the proposed improvements would improve signal quality, coverage or capacity, nor
did it express specificity on any potential project. Id. at 8-
Findings: We find that the two-year plan presented by the Company in its Petition
and supplemental filings is inadequate. We take this as an opportunity to clarify the timing of
the plan. The two-year plan submitted as part of an application for ETC designation should
begin on January 1 of the year following the date of filing the application.
In addition, the plan should demonstrate a strong commitment to improving the
relevant rural areas that the applicant would serve. Most businesses and industries require a
certain amount of flexibility to be able to respond to changing circumstances; however, that need
does not override a company s ability to forecast probable improvements to be performed within
the near future. Being designated an ETC is a privilege and comes with responsibilities
including a commitment to provide reliable, adequate service. The current Petition does not
present sufficient evidence that the Company would meet this condition.
Ability to Remain Functional in Emergencies
The Commission has stated that it "understands different carrIers III different
industries and geographic areas will have different technological challenges and opportunities to
meet these functional requirements." Order No. 29841 at 10. The ETC applicant must show that
it has a "reasonable amount of back-up power to ensure functionality without an external power
ORDER NO. 30212
source, is able to re-route traffic around damaged facilities, and is capable of managing different
traffic spikes resulting from emergency situations.Id. at 11.
Staff Comments Staff believes the Petition minimally satisfied this requirement.
Staff Comments at 9. Staff noted that a rural consumer who does not have neighbors in close
proximity or who is located far from a health facility, police, fire, and other emergency services
is more dependent on reliable telephone service than those located in more densely populated
non-rural areas. Id.
In the Petition, Inland stated that it has "battery back-up (good for a minimum of four
hours) and a standby generator at the central office, as well as at all cell sites." Petition at ~ 27.
It further stated that
, "
(it) maintains redundant routes to the outside world should a route be cut
off. Inland Cellular has technicians on call should trouble develop at any time.Id. Inland does
not state the number of technicians who are available, where they are located, and how soon they
would be on site to begin diagnostics and repair functions. Staff Comments at 9.
Inland asserts that in an outage, its cellular customers could receive service from any
of its roaming partners should its service remain intact and a signal can be obtained. Supplement
No.2 at ~ 8. Staff does not believe a backup plan that relies on a roaming partner s signal
constitutes a sound emergency plan. Staff Comments at 10.
Inland further suggested that customers could get into their automobiles with their
cellular phone and drive until a signal is attained. Supplement No.1 at ~ 21. Once again, Staff
does not believe this to be a prudent element of an emergency plan. Staff Comments at 10. Staff
believes it is not reasonable for a customer caught in an emergency caused by a natural disaster
such as a wildfire or blizzard, to drive their automobile until a signal is reached. Id.
Staff further commented that in neither of these scenarios does Inland explain how
the Company would handle the premium per minute billing of the roaming charges that may be
incurred. Id. Staff believes that these additional costs would likely pose a burden to a low- or
fixed-income customer who is an ITSAP or a federal LifeLine recipient. Staff does not believe
the Petition adequately conveys the Company s ability to handle a serious emergency. Id.
Potlatch Comments Potlatch expressed doubts about the Company s emergency
plan, and commented that the rugged terrain of the proposed service area would make the
Company s stated solution of looking for a roaming partner a "dubious proposition at best."
Potlatch Comments at 10-11.
ORDER NO. 30212
Findings: We find the Company provided the required information regarding its
back-up power capacity, its ability to re-route wireless traffic and how it manages traffic spikes
arising from emergency situations. Taking into account this information and other information
supplied by the Company, however, we have concerns about its ability to remain functional in an
emergency. We encourage each applicant for ETC designation to address any issues that the
relevant rural areas' geography may present in considering its plan to remain functional in
emergencIes. It is not clear the Company has an understanding of the terrain in the rural areas of
this Petition. The rural mountainous terrain in these areas means that service coverage may be
spotty, and relying on another wireless carrier s service when the primary carrier s service is
inoperable cannot be considered an adequate plan to remain functional in an emergency.
Likewise, it is not practical to rely on the customers ' ability to travel during or in the aftermath
of harsh weather, which is common in these areas. With little indication of how many
technicians are on-hand or how long it may take them to reach affected service posts, we cannot
make a determination that the Company s back-up power capacity is adequate, or that the
Company would be able to address outages and related issues. We understand that some
situations make any telecommunications service nearly impossible in some rural areas, especially
during rough weather; however, the Petition appears to lack serious planning for the particular
challenges that these areas may present.
Local Usage Plan
Potlatch expressed concerns about the Company s local usage plans.Potlatch
Comments at 11. Potlatch noted that the Company provided information on two of its existing
calling plans as options to meet the local usage plan requirement. Id. Potlatch stated that the
Company offered no specific basic universal service plan customized for the customer base
associated with ETC designation. Id. In addition, Potlatch noted, the Petition did not
demonstrate that these plans are comparable with the basic service of the ILEC. Id. at 12.
Potlatch contends that any petitioner for ETC certification in Idaho should be able to establish a
specific basic universal service plan comparable to the ILEC. Id. It further contends that this
plan should be separately identified in marketing materials and advertised on the Company
website. Id. Lastly, Potlatch asserted that the Company s plan of$19.95 for 150 minutes should
not be found to meet the needs of the customers in the service area. Id. Potlatch urged the
ORDER NO. 30212
Commission to "require a specific basic universal service offering with adequate local usage as a
condition of the receipt ofETC designation.Id. at 13.
Findings: We appreciate Potlatch's concerns in this regard; however, as noted in
Order No. 29841, we do not require that the plan be "comparable" to the ILEC's offerings.
Order No. 29841 at 12. We require only that the applicant file its local usage plan to assist in
identifying any benefits to consumer choice that the applicant may provide as a part of the public
interest analysis.
ORDER
IT IS HEREBY ORDERED that Inland Cellular Telephone Company s Petition for
eligible telecommunications carrier designation as to the non-rural wire centers set forth in
Exhibit B therein is granted.
IT IF FURTHER ORDERED that the Petition as to the partial rural wire centers and
the rural wire centers set forth in Exhibits C and D therein is denied.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one (21) days of the service date of this Order with regard to any
matter decided in this Order. Within seven (7) days after any person has petitioned for
reconsideration, any other person may cross-petition for reconsideration. See Idaho Code ~ 61-
626.
ORDER NO. 30212
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this .;l
'? f1'-
day of December 2006.
MARSHA H. SMITH, COMMISSIONER
ATTEST:
*fJ.Je D. Jewell
Commission Secretary
O:INC-O6-cg5
ORDER NO. 30212