20061127Comments.pdf

CECELIA A. GASSNER
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
BAR NO. 6977
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20G& NOV 21 PM 4: 28
ID,,\HOiIU,;II iG .
UTILITiES Cm~iM\SS!Oii
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 PETITION OF
INLAND CELLULAR TELEPHONE COMPANY )
FOR DESIGNATION AS AN ELIGIBLE
TELECOMMUNICATIONS CARRIER UNDER
47 U.C. ~ 214(e)(2).
CASE NO. INC-O6-
COMMENTS OF THE
COMMISSION STAFF
The Staff of the Idaho Public Utilities Commission (Commission), by and through its
Attorney ofrecord, Cece1ia A. Gassner, Deputy Attorney General, in response to the Notice of
Modified Procedure and Notice of Intervention Deadline in Order No. 30152 issued on
October 19 2006, submits the following comments.
THE APPLICATION
On June 29, 2006, Inland Cellular Telephone Company filed a Petition on behalf of
Washington RSA No.8 Limited Partnership dba Inland Cellular ("Inland" or "Company ) for
designation as an eligible telecommunications carrier (ETC) for service areas in Idaho that are
currently served by an incumbent local exchange carrier (ILEC). See Idaho Code ~~ 62-610A
and 62-610D and Order No. 29841. See also 47 US.C. ~ 214(e)(2).
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). Application at 2. Inland is also licensed
STAFF COMMENTS NOVEMBER 27 2006
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 interstate telecommunications services. Id. Inland seeks designation as an ETC and to
receive universal service support in certain non-rural wire centers located in Benewah
Clearwater, Idaho, Latah, Lewis and Nez Perce counties.
On September 6, 2006, the Commission issued a Notice of Application. Order
No. 30123. The Idaho Telephone Association, Citizens Communications ofIdaho dba Frontier
Communications of Idaho, Potlatch Telephone Company, and WWC Holding Co., Inc. dba
Alltel filed Petitions to Intervene. No objections were filed against any of these Petitions, and
the Commission granted each Petition. Order Nos. 30123, 30144 and 30178. In addition, the
Commission granted the Motion for Limited Admission filed by out-of-state counsel for
Potlatch. Order No. 30144.
On September 27, 2006, the Company filed certain supplementary information to support
the Application ("Supplement No.). The Company filed further supplementary information
for the Application on October 12 2006 ("Supplement No.
BACKGROUND
An ETC applicant has the obligation of complying with the federal and state
requirements for ETC status. In early 2005, the Federal Communications Commission (FCC)
adopted new rules pertaining to ETC designation under 214(e)(6). In the Matter of the Federal-
State Joint Board on Universal Service CC docket No. 96-45 (reI. March 17, 2005) 2005 WL
646635 ("FCC Order
The FCC's Order encouraged State commissions to adopt the new FCC rules when
deciding whether a carrier should be designated as an ETc. FCC Order at 1. The FCC also
clarified the "public interest" analysis and urged State Commissions to use this analysis. FCC
Order at 21-27.
After seeking public comment on the merits of the new FCC rules, the Commission
adopted new Idaho ETC requirements that mirror most, but not all of the FCC rules. See
Order No. 29841. The new Idaho ETC designation requirements are: (1) a commitment to
provide service throughout the proposed service area and a two-year network improvement plan
to demonstrate the commitment and ability to provide the supported services; (2) the ability to
STAFF COMMENTS NOVEMBER 27, 2006
remain functional in emergency situations; (3) a commitment to satisfy applicable consumer
protection and service quality standards, such as the CTIA Code, if applicable; (4) descriptions
of the applicant's local usage plan and that of the ILEC; (5) demonstration that granting the
carrier ETC status is in the public interest; and (6) tribal notification, if applicable. Order
No. 29841 at 21.
STAFF ANALYSIS
Staff has reviewed Inland's Application, including the two supplemental filings, and
conducted an analysis ofthe Company s fulfillment of the federal Telecommunications Act ("the
Act") and of Order No. 29841. In addition, Staff has analyzed the merits of awarding ETC
designation separately under the three wire center classifications of non-rural, partial rural wire
center, and rural wire center service areas.
Non-Rural Wire Centers
Inland identifies the non-rural wire center service areas as Bovil, Deary, Genesee
Moscow, Orofino, Peck, Pierce, Potlatch, Weippe (Verizon Northwest, Inc.) and Cottonwood
Craigmont, Grangeville, Kamiah, Kooskia, Lapwai, Lewiston, Nez Perce (Qwest Corp.ID). The
Nez Perce and Coeur d' Alene Tribal reservations are also located in wire centers classified as
non-rural service area.
The Act treats rural service areas differently from non-rural service areas for the
purposes of ETC designation. 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 ILEC
the statute provides that the Commission shall designate more than one common carrier as an
ETC. 47 U.c. ~ 214(e)(2).
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 Clear Talk, a wireless
company, in the non-rural Qwest wire centers in eastern Idaho and the Magic Valley
(Case No. GNR-03-8). See Order No. 29261. The Commission also granted ETC designation
to Western Wireless in the non-rural wire centers of Emmett, New Plymouth, and Weiser
(Case No. WST-05-1). See Order No. 29791. Finally, on January 13 , 2005 , the Commission
STAFF COMMENTS NOVEMBER 27 2006
approved the ETC Application of a wireline carrier, VCI Company, in the Qwest service areas
(Case No. VCI-04-1). See Order No. 29686.
Staff believes Inland meets all of the ETC requirements of the Act and of Commission
Order No. 29841 as they relate to non-rural wire centers. Designating Inland as an ETC in the
non-rural service areas is consistent with the "public interest, convenience, and necessity
pursuant to 47 US.C. ~ 214(e)(2). Staff also believes granting ETC designation in the non-rural
areas will benefit the consumers who are eligible recipients ofIdaho Telecommunications
Service Assistance Support (ITSAP). This decision further serves 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 section
214 of the Act, Staff, therefore, recommends approval ofETC designation for Inland in the non-
rural wire centers set forth in the Application.
Partial Rural Wire Centers
Inland's Application encompasses partial areas of the wire centers of Elk River and
White Bird that are served by Frontier Communications of Idaho. Both wire centers cover a very
rural and large geographic area. According to the Application, these cities have an estimated
population of 156 and 106 respectively. Supplement No., Exhibit A at 1. It is unknown how
many of these are year-around versus seasonal residents. Further, there is no indication that
Inland has future plans to serve the entire wire center.
The FCC has concluded that
, "
a rural telephone company s wire center is the appropriate
minimum geographic area for ETC designation because rural carrier wire enters typically
correspond with county or town boundary lines.See Highland Cellular ETC Designation
Order 19 FCC Red at 6438 , para. 33. This Commission voiced its similar determination
regarding Applications for ETC designation in partial wire centers in Case No. GNR- T -03-8. In
that matter, the Commission found that "(aJ request for ETC designation for an area less than the
entire study area of a rural telephone company generally raises concerns that an applicant intends
to "cream skim" in the rural study area." Order No. 29541 at 16. Inland's Application only
provides population estimates, and no other data regarding the exact demographics of the
customers to be served in the partial wire centers.
STAFF COMMENTS NOVEMBER 27 2006
Consistent with the FCC'(Highland CellularJ decision, the Idaho Commission denied
Clear Talk's ETC Application in Case No. GNR-03-8. See Order No. 29541. In that matter
Clear Talk sought ETC designation in a partial wire center. Order No. 29541 at 16. The
Commission stated
, "
we find that Clear Talk's lack of commitment to serve at least a full
wirecenter is problematic and thus its request is inappropriate in this case. We conclude for
these reasons that granting Clear Talk's Application is again not in the public interest." Order
No. 29541 at 19.
Staff believes that the Application does not adequately address the more stringent ETC
requirements applied to partial wire centers and that granting ETC designation in these partial
rural wire centers will pose an undue burden on the ILEC. Inland's Application does not identify
the areas within these wire centers that will be served, nor the potential consumer base that they
plan to serve. These facts are important in the cream skimming analysis as rural wire centers
often contain pockets oflower-cost, more profitable customers. Unfortunately, the Company
does not provide data to demonstrate that such cream skimming is unlikely. Inland does not
reasonably demonstrate a public interest benefit such that it would warrant an exception to past
Commission decisions. Staff believes that granting ETC status in these partial wire centers may
have the effect ofleaving the ILEC as the carrier oflast resort for the highest cost customer.
Staff, therefore, recommends denial of ETC designation in the partial wire centers of Elk River
and White Bird.
Rural Wire Centers
The Application also includes the rural wire centers of Juliaetta, Kendrick and Troy, in
the Potlatch Telephone Co., Inc. service area, and Leon and Lenore in the Inland Telephone
Company service area.
As noted above, the Act treats rural service areas differently for the purposes ofETC
designation. When a carrier meets the statutory ETC requirements and requests designation in a
rural area served by an ILEC, the federal Act provides the State commission with more
discretion, stating that the State commission may grant ETC designation to the additional carrier
provided that ETC designation for the additional carrier is in the public interest.
As with the partial wire center analysis, the Act and Order No. 29841 , greater emphasis is
placed on scrutinizing ETC Applications in rural service areas. Rural wire centers often have
widely disparate population densities, and therefore, highly disparate cost characteristics.
STAFF COMMENTS NOVEMBER 27 2006
FCC Order at 21-22. As such, Staff believes the public interest analysis plays a more important
role when reviewing ETC designation in rural service areas.
Public Interest Analysis
Under section 214 ofthe Act, the State commission must determine that an ETC
designation is consistent with the public interest, convenience and necessity. 47 U.
~ 214( e )(2). The Act further states that
, "
(b Jefore designating an additional (ETCJ for an area
served by a rural telephone company, the (state Commission under section 214(e)(2) or
Commission under section 214(e)(6)J shall find that the designation is in the public interest."
In accordance with the Act, and the ETC requirements of the FCC rules, the Commission
has stated:
(iJn 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 two wireless carriers, IAT
Communications, Inc. dba NTCH-Idaho, Inc., and Clear Talk and NPCR, Inc. dba Nextel
Partners (Case No. GNR- T -03-8), because both applicants failed to carry their burdens
demonstrating that their Applications, which applied to areas served by rural telephone
companies, were in the public interest. See Order No. 29541.
Applicants have the burden of proof to demonstrate that the public interest is served by
designating them as an ETC in these rural areas. Id. at 6 (citing Virginia Cellular, LLC Petition
for Designation as an ETC 19 F.R. 1563, 1574 (2004)). Inland's Application makes five
primary public interest arguments. Our analysis of each is below.
First, the Company states
, ".. .
an ETC designation will promote competition and facilitate
provision of advanced communications services to the residents of rural Idaho. .. ." Application
at ~ 32. The Company does not elaborate on which "advanced communications services" will be
provisioned by the Company and in which wire centers. This statement is also not supported
with specificity in the Company s Two-Year Network Improvement Plan.
STAFF COMMENTS NOVEMBER 27 2006
Second, the Company asserts
, "
(oJne 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..." Application at ~ 33.
The presumptive benefits of competition alone as presented in the Application are not sufficient
to satisfy the pubic interest requirement. The Company does not present any evidence or data
demonstrating how its services will further competition. Rather, it makes a bald assertion about
the general concept of competition without addressing the wants and needs of the areas affected
by the Company s request.
Third, the Company references the granting ofETC Applications in Wyoming, Arizona
and South Dakota to other wireless companies. Application at ~~ 34 , and 37. Some
statements contained in these paragraphs are anecdotal and are not quantitative or specific. Staff
believes Inland's Application must stand on its own merits and we cannot presume that benefits
associated with cases involving different companies in different states is applicable to this
Application. No evidence is presented by the Company to demonstrate how it will specifically
provide a benefit to the consumers in the requested wire centers.
Fourth, the Company asserts that
, "
(iJn most, rural areas, wireless telephone service is
today a convenience, but it will not emerge as a potential alternative to wire line service unless
high-cost support is made available to drive infrastructure investment." Application at ~ 36.
While this may be a valid argument, Staff does not believe it constitutes a compelling public
interest statement with regards to ETC designation. Again, the Company provides 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.
Last, the Company states
, "
(wJith 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." Application at ~ 38. Staff believes this statement is invalid.
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. ETC designation is a means to
advance universal service. ETC services are also meant to provide for secure and reliable
telephone services to low-income consumers who may otherwise have difficulty meeting the
monthly rates. It is not meant as a mechanism to promote the use of one telecommunications
technology over another.
STAFF COMMENTS NOVEMBER 27, 2006
Based on the Application, Staff does not believe that the Company has presented a
compelling public interest argument for the rural wire centers.
Staff also notes that the wire centers of Leon and Lenore are in the service area of Inland
Telephone Company, with whom, the Applicant is an 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. 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.
Two-Year 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. This ETC requirement
does not clearly specify the timing of the two-year plan. Staff recommends, that at a minimum, a
two-year plan should be forward-looking and should not include any period prior to the filing
date. Staff believes that a plan is a method to explain how a company gets from where it is to
where it wants to be. To that end, the use of historical data seems counter-intuitive to the
Commission s intent.
In the initial filing, dated June 29 2006, Inland presented a two-year plan that included
plan years 2006 and 2007. Application at ~ 25-26. Staff requested additional information for a
two-year network plan that included years 2007 and 2008. In its supplemental filing, Inland
appeared to move much of what they originally included in the 2006 plan year to 2007.
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. Id. 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. Supplement No.1 at ~ 15. Staff questions the Company s use of competition to
justify ETC designation as a benefit for consumers. Elsewhere in the Application the Company
implies that its services are needed because more competition in services is needed. Here, the
STAFF COMMENTS NOVEMBER 27 2006
Company provides an excuse of other competition in other areas to explain why it cannot
commit to specific improvements in these areas or to these customers.
Staff acknowledges flexibility may be required in business planning, but believes an
ETC-designated company must present a solid plan to satisfy the public interest analysis. Once
an ETC designation has been granted, the ETC must meet the statutory requirements of
submitting an annual report to the Commission that, among several requirements, includes a two-
year network improvement plan and a progress report. Order No. 29841 at 21. This requirement
is meaningless unless the Commission has a plan by which to analyze the progress of what the
Company said would occur to what the Company actually accomplished. Without this
requirement, 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.
Ability to Remain Functional in Emergencies
The Commission has stated that it "understands different carriers in different industries
and geographic areas will have different technological challenges and opportunities to meet these
functional requirements." Order No. 29841 at 10. The ETC requirements do not on their face
appear to favor one technology over another. Thus, to demonstrate the ability to remain
functional in 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 facilities, and is capable of managing different traffic spikes resulting
from emergency situations.Id. at 11.
Staff believes the Application minimally satisfies this requirement and, as such, warrants
some discussion as it relates to rural wire centers. 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.
In the Application, Inland states that they have "battery back-up (good for a mininlUm of
four hours J and a standby generator at the central office, as well as at all cell sites." Application
at ~ 27. They further state that
, "
Inland Cellular 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 that are available, where they are
located, and how soon they would be on site to begin diagnostics and repair functions.
STAFF COMMENTS NOVEMBER 27, 2006
Inland asserts that in an outage, its cellular customers could receive service from any of
Inland Cellular s roaming partners should their service remain intact and a signal can be
obtained. Supplement No.2 at ~ 8. Staff does not believe a backup plan that uses a roaming
partner s signal constitutes a sound emergency plan. The nature of wireless service in rural
mountainous terrain suggests 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 a
plan to remain functional in an emergency.
Inland further suggests that the customer could also get into their automobiles with their
cellular phone and drive until a signal is indicated on their device. Supplement No.1 at ~ 21.
Once again, Staff does not believe this to be a prudent element of an emergency plan. It is not
feasible to think that a customer caught in an emergency caused by a natural disaster such as a
wild fire or blizzard would be able to drive their automobile until a signal is reached.
In both of these scenarios , Inland does not explain how the Company will handle the
premium per minute billing of the roaming charges that may be incurred. These additional costs
would likely pose a burden to a low- or fixed-income customer who is an ITSAP or a federal
LifeLine recipient.
While the Application appears to meet the minimum requirements for demonstrating the
ability to remain functional in an emergency during a normal outage, the Company did not
acknowledge or present a concrete emergency backup plan or a disaster recovery plan. Staff
does not believe the Application adequately conveys the Company s ability to handle a serious
emergency.
SUMMARY
Staff believes the public interest analysis, the two-year network improvement plan, and
the ability to remain functional in an emergency are particularly important to the Idaho
consumers in the rural wire centers. As stated earlier, the presumptive benefits of competition
alone as emphasized in the Application are not sufficient to satisfy the public interest
requirement. Idaho consumers in the more rural wire centers are the most likely targets of cream
skimming, which is contrary to the public interest. These consumers may not receive the same
attention from the Company as it relates to various aspects of service whether responding to
repair issues or to normal upgrades and expansions. These consumers, after committing to a
service provider, may not benefit from future technological advances and service enhancements
STAFF COMMENTS NOVEMBER 27 2006
without Commission oversight of the Company s progress on the two-year network
improvement plan (which the Staff believes should be presented as forward-thinking from the
filing date). Finally, emergency preparedness is vital in the rural wire centers. Without a detail-
specific plan that is executable in an emergency, regardless of the cause, the rural consumers
have a greater likelihood of being without service for a longer period of time.
ST AFF RECOMMENDATION
Staff recommends that the Commission approve the Application as to the non-rural wire
centers listed in the Application. Staff further recommends the Commission deny the
Application as to the partial rural wire centers of Elk City and White Bird. Lastly, Staff
recommends that the Commission deny the Application as to the rural wire centers of Leon
Lenore, Juliaetta, Kendrick, and Troy.
Respectfully submitted this ().:f day of November 2006.
0uJ:!
Cecelia A. Gassner
Deputy Attorney General
Technical Staff: Grace Seaman
i: umisc :comments/ inctO6.2cggs .doc
STAFF COMMENTS NOVEMBER 27, 2006
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HEREBY CERTIFY THAT I HAVE THIS 27TH DAY OFNOVEMBER 2006
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN CASE
NO. INC-06-, BY MAILING A COpy THEREOF, POSTAGE PREPAID, TO THE
FOLLOWING:
JAMES K BROOKS
TREASURER! CONTROLLER
INLAND CELLULAR TELEPHONE CO
PO BOX 688
ROSLYN WA 98941
CONLEY WARD ESQ
GIVENS PURSL Y LLP
PO BOX 2720
BOISE ID 83701
INGO HENNINGS ON
MGR-GOV &EXT AFFAIRS
FRONTIER COMMUNICATIONS
PO BOX 708970
SANDY UT 84070-8970
KEVIN SAVILLE
ASSOC GENERAL COUNSEL
FRONTIER COMMUNICATIONS
2378 WILSHIRE BLVD
MOUND MN 55364
MORGAN W RICHARDS JR.
RICHARDS LAW FIRM
804 E PENNSYLVANIA LANE
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BARRYLHJORT
GUILLORY & HJORT
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DEAN J. MILLER
McDEVITT & MILLER LLP
PO BOX 2564
BOISE ID 83701
NATHAN GLAZIER
REGIONAL MANAGER, STATE AFFAIRS
ALL TEL COMMUNICATIONS INC
4805 THISTLE LANDING DR
PHOENIX AZ 85044
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