28263.doc

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE PETITION FROM RESIDENTS OF YELLOW PINE AND WARREN AREA FOR EXTENDED AREA SERVICE AMONG THE YELLOW PINE, WARREN, MCCALL AND CASCADE EXCHANGES. )
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CASE NO. MID-T-98-1

ORDER DISMISSING
PETITIONS

ORDER NO. 28263

Beginning in fall 1998, Midvale Telephone Company customers in Warren and Yellow Pine filed several Petitions with the Commission for toll-free extended area service (EAS) among Midvale’s Yellow Pine and Warren exchanges and Citizens Telecommunications Company of Idaho’s McCall and Cascade exchanges.
On October 22, 1999, Staff filed a Motion to Dismiss the Petitions based on Staff’s analysis of calling data and other community-of-interest factors. Staff contended that there is not a sufficient community-of-interest between the requesting Midvale exchanges and the McCall and Cascade exchanges to support granting EAS to the Petitioners. Staff contended, in particular, that the calling data do not meet even a minimum threshold for consideration because the data demonstrate that very few Midvale customers in the requesting exchanges make any calls to McCall or Cascade.
Although Staff carefully informed the Petitioners’ representatives that they had a right to respond and object to Staff’s Motion, only one Petitioner filed a response.
Based on the record, the law, the Commission’s previous decisions, the facts presented in the Motion, Staff’s Motion and the one customer response, the Commission grants Staff’s Motion to Dismiss and dismisses the Petitions without prejudice.
BACKGROUND
On September 11, 1998, the Commission received a Petition from twenty-three (23) people for toll-free extended area service between Midvale’s Yellow Pine exchange and Citizens’ McCall and Cascade exchanges. Citizens provides local exchange service to McCall and Cascade.
On March 1, 1999, the Commission received a second “Petition” with seventeen (17) signatures (some unreadable) containing no addresses and no phone numbers. Staff stated it called the Petition sponsor and requested a new Petition be filed with the Commission complying with Commission requirements for printed names, phone numbers, addresses and an indication of how much those individuals would be willing to pay for EAS. Staff stated that it sent the Petition sponsors a copy of the Commission form.
On March 12, 1999, another Petition was received requesting EAS for Midvale’s Warren exchanges into McCall and Cascade. Staff indicated that fewer than one-third of those who signed the Petition appear in the current telephone book with Midvale telephone numbers.
On September 28, 1999, another Petition was received from approximately forty (40) Midvale customers in Warren requesting EAS into McCall and Cascade. This Petition complied with Commission requirements.
Midvale has seventy-five (75) lines in Yellow Pine, fifty (50) lines in Warren and forty (40) lines in Warm Lake. Midvale received $195,020.64 in disbursements from the Idaho USF in 1999. Idaho USF Annual Report to the Commission for the period of July 1, 1998 through June 30, 1999. Midvale’s residential customers currently pay $14.80 per month for basic local exchange service.
Yellow Pine and Warm Lake are located in fairly rugged and mountainous terrain in the Payette National Forest. Yellow Pine is approximately 45 miles east of McCall and 90 miles from Cascade. Warm Lake is approximately 25 miles from Cascade and more than 60 miles from McCall. Yellow Pine and Warm Lake residents can reach McCall and Cascade by road. The road between McCall and Yellow Pine is not fully paved. Yellow Pine residents must travel through McCall to reach Cascade. Warm Lake residents must travel through Cascade to reach McCall.

Warren is located north of McCall in a mountainous region, approximately 45 miles from McCall and 90 miles from Cascade. Some of the road is not paved.
Requesting exchanges, Yellow Pine and Warm Lake, are in the same county, Valley County, with McCall and Cascade. Valley County’s county seat is Cascade. Warren is in Idaho County with its county seat in Grangeville.
Yellow Pine has a public school for kindergarten students through high school students and according to Staff, there are between eight (8) and twelve (12) students attending in any one year. This year Yellow Pine only has six (6) students with two (2) in high school. Yellow Pine has no medical facilities or post office. It has a “bed and breakfast” and café/bar.
Warm Lake has no schools or medical facilities. Students living in Warm Lake would attend Cascade schools. However, according to Staff, Cascade school authorities indicated the Cascade schools have no students from Warm Lake.
Warren also has no schools or medical facilities. Students living in Warren would attend Grangeville schools. However, according to Staff, Grangeville school authorities indicated the Grangeville schools have no students from Warren.
All the communities have access to toll free calling for a variety of services. Many federal and state government offices have toll free numbers. For example, the Internal Revenue Service, OSHA, the Veterans Benefits Administration, Department of Labor, Social Security Benefits, Idaho Child Support, Idaho Mental Health, the Idaho Public Utilities Commission, Poison Control and Medicare Benefits have 1-800 numbers. Several banks, Boise State University, Idaho Power, cable companies, insurance companies, paging companies, travel companies; GTE, Citizens Telephone Company, a McCall pharmacy, a McCall optometrist and several McCall attorneys have toll free numbers. While hospitals in McCall and Cascade do not have toll free numbers, St. Luke’s Hospital in Boise and several Boise clinics, doctors and specialists do. Some Cascade dentists have toll free numbers.
Warm Lake and Yellow Pine customers have access to the Internet as a local call. However, Warren customers do not have access to the Internet as a local call.
STAFF MOTION TO DISMISS
Based on an analysis of calling data, geographic factors and other socioeconomic factors, Staff concluded that there is not a sufficient community-of-interest between the requesting Midvale exchanges and the McCall and Cascade exchanges to support granting EAS to these Petitioners. Staff contends, in particular, that the calling data do not meet even a minimum threshold for consideration because the data demonstrate that very few Midvale customers in the requesting exchanges make any calls at all to McCall or Cascade. Likewise, almost no Citizens’ customers make any calls to the requesting exchanges. Staff argued that the data suggest that contrary to the Petitioners’ assertions, there is relatively little community-of-interest among these communities.
Staff introduced the following charts summarizing call distribution and calling volumes. The call volume and/or the higher the call distribution, the stronger the demand for calling between or among communities.

Call Distribution
(Percentage of Requesting Midvale Exchange Lines making calls into the
Requested Citizens Exchanges)

Exchange 0 calls/mo. 1-9 calls/mo. 10-30 calls/mo. >31 calls/mo. Yellow Pine to
McCall 89%
(67 of 75 lines) 11%
((8 lines) 0.0% 0.0% Yellow Pine to
Cascade 89 %
(67 of 75 lines) 10%
(<8 lines) 0.004 %
((1 line) 0.0% Warm Lake to
McCall 97.5%
(39 of 40 lines) 0.0% 2.5%
(1 line) 0.0% Warm Lake to
Cascade 97.5%
(39 of 40 lines) 0.0% 2.5%
(1 line) 0.0% Warren to
McCall 81.3%
((41 of 50 lines) 13.3%
((7 of 50 lines) 5.3%
((3 of 50 lines) 0.0% Warren to
Cascade 94%
(47 of 50 lines) 6%
((3 of 50 lines) 0.0% 0.0%
Call Distribution
(Percentage of Citizens Exchange Lines making calls into the
Requested Midvale Exchanges)

Exchange 0 calls/mo. 1-9 calls/mo. 10-30 calls/mo. >31 calls/mo. McCall to
Yellow Pine 99.97% (res.)
100% (bus.) 0.03% (res.)
0.0% (bus.) 0.0% (res.)
0.0% (bus.) 0.0% (res.)
0.0% (bus.) McCall to
Warm Lake 100% (res.)
100% (bus.) 0.0% (res.)
0.0% (bus.) 0.0% (res.)
0.0% (bus.) 0.0% (res.)
0.0% (bus.) McCall to
Warren 99.86% (res.)
99.89% (bus.) 0.08% (res.)
0.11% (bus.) 0.06% (res.)
0.0% (bus.) 0.0% (res.)
0.0% (bus.) Cascade to
Yellow Pine 99.999% (res.)
99.76% (bus.) 0.0% (res.)
0.08% (bus.) 0.0007% (res.)
0.16% (bus.) 0.0% (res.)
0.0% (bus.) Cascade to
Warm Lake 99.93% (res.)
100% (bus.) 0.07% (res.)
0.0% (bus.) 0.0% (res.)
0.0% (bus.) 0.0% (res.)
0.0% (bus.) Cascade to
Warren 100% (res.)
100% (bus.) 0.0% (res.)
0.0% (bus.) 0.0% (res.)
0.0% (bus.) 0.0% (res.)
0.0% (bus.)
Staff also introduced information regarding the average toll bills for the requesting exchanges. According to information from the 1998 USF Administrator’s report, the statewide average revenue per line for intrastate toll calls is just over $11.00. By comparison, Staff argued that most Midvale customers toll bills in the requesting exchanges are low. In Yellow Pine, for example, residential customers who actually make toll calls pay less than $2.50 per month in toll. Business customers in Yellow Pine pay even less – less than $1.00 per month. Those Warren residential customers [between seven (7) and eleven (11) lines out of fifty (50) total lines] who actually make any calls to either McCall or Cascade incur the highest average toll charges – $10.39 per customer – still under the statewide average of $11.00. The few business customers in Warren who make toll calls to McCall or Cascade incur less than $2.00 per month per line in toll charges. The only Warm Lake customer who incurs toll is a business customer who pays over $25.00 in toll charges per month.
Staff also analyzed the community-of-interest using the other community-of-interest factors, like access to toll-free “800” numbers for essential or government services, adopted by the Commission in Order No. 26311. Staff stated that these communities are geographically remote, do not have children in schools in the requested exchanges, McCall or Cascade, and enjoy access to a large number of 1800 government and business services.
Based on the facts, Staff argued that there is simply not a sufficient community-of-interest between these petitioning communities to justify raising Midvale’s rates, Citizens’ rates and distributions from the Idaho USF. Staff relies on the Commission decision in Order No. 28114 where the Commission rejected Atlanta customers’ Petition for EAS into the U S WEST Treasure Valley EAS Region.
Finally, Staff argued that determining the strength of community-of-interest between two exchanges is a critical first step in ascertaining whether EAS is appropriate because EAS is never free. Staff suggested that granting EAS almost always causes a rate increase for both the petitioning exchange customers and the requested exchange customers to cover the costs for providing EAS. According to Staff, in this case, both Midvale and Citizens’ customers would see a rate increase. Moreover, Staff suggested that if the majority of customers are not actually making calls or do not need to make calls to the requested exchange, then granting EAS and raising their rates merely subsidizes those few customers who do. Staff also suggested that where one or both of the affected local exchange carriers are also an Idaho USF recipient, like Midvale, granting EAS may also increase the distributions from USF, thereby increasing surcharges paid by all telephone customers.
Staff argued that the community-of-interest factors in this case are even weaker than those that exist for customers in Atlanta. For example, Staff stated that unlike the communities in these Petitions, on average, Atlanta customers made almost eight (8) calls per month per line into Boise and more than ninety percent (90%) of the Atlanta’s lines placed nearly two (2) calls per month to Mountain Home. Order No. 28114 at 5. In denying Atlanta customers’ Petition, the Commission found “that the community-of-interest for the Atlanta exchange into the U S WEST Treasure Valley EAS Region is minimal.” Id. at 10. In this case, according to the calling data, almost ninety percent (90%) of customers in Yellow Pine make no calls to McCall or Cascade; ninety-eight percent (98%) of Warm Lake customers make no calls to McCall or Cascade; and, eighty-two percent (82%) of Warren customers make no calls to McCall with nearly ninety-four percent (94%) making no calls to Cascade. Staff suggested that calling volumes are even weaker. Warren customers (with the highest calling volume) make just over one (1) call per line per month to McCall. All other requesting exchanges have calling volumes well under that. Therefore, Staff argued that the Petitioners’ community-of-interest is even weaker than that of the customers in Atlanta and the Commission should dismiss the Petition.
CUSTOMER NEALEY RESPONSE
One response to the Staff Motion was received from Midvale customers Kenneth and Shannon Nealey. They made two points: the basic rate was incorrect and Citizens’ customers do call Warren from McCall.
The Commission understands the Nealeys’ opinion that Staff’s statement regarding Midvale customers’ basic rate was incorrect. However, the basic local exchange rate is $14.80 and although they are payable monthly, the other charges that appear on Midvale customer bills are different monthly surcharges that are not part of the basic local exchange rate. In addition, the Commission agrees with the Nealeys that some Citizens’ customers call Warren. The calling data appearing in the Staff Motion reflect that less than one percent of Citizens’ residential customers make calls to Warren.
COMMISSION FINDINGS
The Commission evaluates Petitions for EAS by examining and weighing several factors designed to demonstrate whether there is a sufficient community-of-interest between the requesting exchanges and the requested exchanges to justify raising customer rates in those exchanges to cover the costs for providing toll free calling between them. See Order No. 26311, Case No. GNRT9313.
As a starting place, the Commission analyzes calling data and toll usage data because that is direct tangible evidence of whether the requesting exchanges have a community-of-interest with the requested exchanges. Calling data and toll usage data, however, are not used in isolation to determine the community-of-interest between exchanges. Therefore, the Commission has identified several additional factors that may indicate two exchanges share a community-of-interest. These factors are evaluated when assessing the propriety of granting EAS.
The first category of factors includes: [1] geographic proximity (distance between exchanges); [2] the presence of geographic or other physical barriers (mountains, rivers, valleys) between exchanges; [3] county seat relationship (are both exchanges in the same county); [4] the relationship to school district (do both exchanges share the same school district); [5] the proximity to medical facilities and services; and [6] the willingness of customers to pay increased rates.
* * *
The secondary set of factors include: [1] the number of lines in the home exchange(s) and the target exchange(s); [2] toll-free access to information providers (e.g., Internet, on-line databases, distance learning resources); and [3] the number of foreign exchange, private line, and 1-800 customers in each exchange. The community-of-interest factors listed above in addition to calling data are the criteria we will utilize to evaluate existing and future EAS requests.

Order No. 26311 at 8-9.
In this case, the Commission finds that Staff properly evaluated the data and the above identified factors. Like in its decision in Order No. 28114, the Commission is mindful of the fact that when evaluating an EAS request by customers in an exchange supported by USF, it should remember the USF is funded in whole by surcharges paid by all telephone customers. The Commission is also aware that granting EAS increases basic local exchange rates for customers in the requested exchanges McCall and Cascade, as well. Therefore, the Commission carefully scrutinizes requests for EAS to ensure that decisions granting EAS that potentially impact the surcharges paid by all Idaho telephone customers and/or increase rates for the requested exchange customers are justified. In other words, the burden is on the Petitioners to demonstrate that the requesting exchanges have a real need for EAS because there is a community-of-interest. That is the first step in any EAS evaluation. Where the data do not indicate a community-of-interest among the exchanges, the Commission will deny the Petition. In this case, the calling data, average toll and other factors simply do not support granting EAS. Where nearly eighty-two percent (82%) of the customers in Warren make no calls to McCall and approximately ninety-four percent (94%) make no calls to Cascade, it is difficult to justify increasing rates or USF surcharges for EAS among those communities. Yellow Pine customers make even fewer calls to either exchange (eighty-nine percent [89%] make no calls).
Therefore, based on the relatively slight community-of-interest demonstrated by the data, the Commission finds that it is too minimal to justify potentially increasing distributions from USF, thereby increasing surcharges paid by all telephone customers or increasing rates for the McCall and Cascade customers.

O R D E R
IT IS HEREBY ORDERED that the Petitions requesting EAS among the Yellow Pine, Warren, McCall and Cascade exchanges are denied.
THIS IS A FINAL ORDER. Any person interested in this Order (or in issues finally decided by this Order) or in interlocutory Orders previously issued in Case No. MID-T-98-01 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 or in interlocutory Orders previously issued in this in Case No. MID-T-98-01. Within seven (7) days after any person has petitioned for reconsideration, any other person may cross-petition for reconsideration. See Idaho Code  61626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
day of January 2000.

DENNIS S. HANSEN, PRESIDENT

MARSHA H. SMITH, COMMISSIONER

PAUL KJELLANDER, COMMISSIONER

ATTEST:

Myrna J. Walters
Commission Secretary

O:midt981_cc2

According to Staff, only three (3) lines out of fifty (50) in the Warren exchange make any calls to Cascade and no more than twelve (12) lines make any calls to McCall. Only nine (9) lines out of seventy-five (75) lines in the Yellow Pine exchange make any calls to Cascade or McCall.
It is not clear that these are all Midvale customers because some of the signatories did not include telephone numbers.

There were a number of duplications and customers signing who had the same phone number.
In the Warm Lake exchange only one (1) line out of forty (40) lines makes any calls to Cascade or McCall. In the Warren exchange, only three (3) lines out of fifty (50) makes any calls to Cascade and no more than twelve (12) lines make any calls to McCall. Only nine (9) lines out of seventy-five (75) lines in the Yellow Pine exchange make any calls to Cascade or McCall.

Call distribution is the number or percentage of customers making calls from the home exchange to the requested exchange. Order No. 26311 at 7.

Call volume is calculated by dividing the total number of calls from the home exchange to the requested exchange by the number of lines in the home exchange. Order No. 26311 at 7.
The only line making any calls to McCall or Cascade is a business line.

ORDER DISMISSING PETITIONS

ORDER NO. 28263 1

Office of the Secretary
Service Date
January 20, 2000