motiontodismiss.doc

CHERI C. COPSEY
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, ID 83720-0074
Idaho State Bar No. 5142
Tele: [phone]
FAX: [phone]

Street Address for Express Mail:
472 W WASHINGTON
BOISE, ID 83702-5983

Attorney for the Commission Staff

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

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

STAFF MOTION TO DISMISS PETITIONS FOR EAS

COMES NOW the Staff of the Idaho Public Utilities Commission, by and through its Attorney of record, Cheri C. Copsey, Deputy Attorney General, and moves the Commission pursuant to Commission Rule 56 (IDAPA 31.01.01.056) to dismiss the Petitions requesting toll-free extended area service (EAS) between the Midvale Yellow Pine, Warren and Warm Springs exchanges and the Citizens Telecommunications Company of Idaho’s McCall and Cascade exchanges.
Based on Staff’s analysis of the calling data and other community-of-interest factors, the Staff concludes 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 clearly 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. Therefore, since almost no Midvale or Citizens’ customers in these exchanges appear to have a community-of-interest with the requested calling areas, the Petitions should be dismissed 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. Exh. A. Citizens provides local exchange service to McCall and Cascade.
On March 1, 1999, Staff received a second “Petition” with seventeen (17) signatures (some unreadable) containing no addresses and no phone numbers. Exh. B. Staff called the individual who submitted the “Petition” 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. A copy of the Commission form was sent.
On March 12, 1999, another Petition was received requesting EAS for Midvale’s Warren exchanges into McCall and Cascade. Exh. C. 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. Exh. D. This Petition complied with Commission requirements and the Petitioners included phone numbers, addresses and how much each Petitioner was willing to pay for EAS. Nearly all of the Petitioners had already signed earlier Petitions. Only one Petitioner was willing to pay ten dollars ($10) more per month for the requested EAS. Midvale’s residential customers currently pay $14.80 per month.

Midvale has seventy-five (75) lines in Yellow Pine, fifty (50) lines in Warren and forty (40) lines in Warm Lake.

THERE IS NO DEMONSTRABLE COMMUNITY-OF-INTEREST BETWEEN MIDVALE’S YELLOW PINE, WARM LAKE AND WARREN EXCHANGES AND CITIZENS’ MCCALL AND CASCADE EXCHANGES.

The Commission evaluates Petitions for EAS by examining several factors designed to determine 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. In March 1999, Staff served discovery on Midvale and Citizens designed to determine the community-of-interest between the relevant exchanges. In particular, Staff requested calling data for April 1998, August 1998 and January 1999. Staff’s request was designed to ensure that the calling data were not biased by seasons. Both Citizens and Midvale filed responses to Staff discovery requests.
In addition, Staff investigated the community-of-interest using the community-of-interest factors adopted by the Commission in Order No. 26311.
1. The call volume and call distribution factors demonstrate that there is no community-of-interest.

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. Call distribution is the number or percentage of customers making calls from the home exchange to the requested exchange. The higher the call volume and/or the higher the call distribution, the stronger the demand for calling between or among communities. Order No. 26311 at 7.
Both Citizens and Midvale provided calling data to Staff. The calling data dramatically demonstrate that neither Midvale customers in the requesting exchanges nor Citizens customers in the McCall and Cascade exchanges call each other. In the Warm Lake exchange, for example, only one (1) line (a business line) out of the exchange’s forty (40) lines makes any calls to Cascade or McCall. In the Warren exchange, only three (3) lines out of fifty (50) make any calls to Cascade and between eight (8) to twelve (12) lines make any calls to McCall. Fewer than nine (9) lines out of seventy-five (75) lines in the Yellow Pine exchange make any calls to Cascade or to McCall.
a. Call Distribution. The following charts summarize the calling distribution for both the requesting exchanges and the requested exchanges. They demonstrate there is no community-of-interest between these exchanges.
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.)
b. Calling Volume. The calling volume for the requesting exchanges also does not support granting EAS. For example, Warren customers make the most calls per line to McCall of all the requesting exchanges and they only make about one (1) call per line per month to McCall. The calling volumes for all the other requesting exchanges demonstrate that those customers make an average of less than one (1) call per line per month to either McCall or Cascade. Citizens’ customers make virtually no calls to any of the Midvale exchanges.
c. Customer toll bills. 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, most Midvale customer 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 that 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.
2. The additional EAS factors outlined by the Commission in Order No. 26311 do not indicate there is a community-of-interest.

Calling data are not used in isolation to determine the community-of-interest between exchanges. Likewise, toll usage data alone are insufficient in evaluating the need for EAS. Therefore, the Commission identified several additional factors that may indicate two exchanges share a community-of-interest. These factors should be 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.
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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.
a. Geographic factors. Yellow Pine is located in fairly rugged and mountainous terrain in the Payette National Forest approximately 45 miles east of McCall and 90 miles from Cascade. Exh. E (map). Yellow Pine residents can reach McCall 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 is also located in mountainous terrain in the Payette National Forest and is approximately 25 miles from Cascade and more than 60 miles from McCall. 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. Like Yellow Pine residents, some of the road is dirt road.
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.
b. Other Factors. Yellow Pine has a public school for kindergarten students through high school students with 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, 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, 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, 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. This fact reduces the need for EAS in order to provide access to some essential services.
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.

THE COMMUNITY-OF-INTEREST FOR THE REQUESTING EXCHANGES
INTO MCCALL AND CASCADE IS TOO MINIMAL TO JUSTIFY
POTENTIALLY INCREASING DISTRIBUTIONS FROM USF OR RATES FOR CITIZENS’ AND MIDVALE CUSTOMERS

Just as the Commission found in Order No. 28114 rejecting Atlanta customers’ Petition for EAS into the U S WEST Treasure Valley EAS Region, 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. 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. 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. In this case, both Midvale and Citizens’ customers would see a rate increase. 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. (In the last Petition, Warren customers indicated they would not support EAS if it cost them $10.00 or more per month. Their rates are currently $14.80 per month for residential service.)
Moreover, where one or both of the affected local exchange carriers are also an Idaho USF recipient, granting EAS may also increase the distributions from USF, thereby increasing surcharges paid by all telephone customers. Midvale received $195,020 in Idaho USF distributions in 1999. Idaho USF Annual Report to the Commission for the period of July 1, 1998 through June 30, 1999.
Significantly, in this case, the community-of-interest factors are even weaker than those that exist for customers in Atlanta. For example, 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. 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. Clearly, these Petitioners’ community-of-interest is even weaker than that of the customers in Atlanta and the Commission should so find.
Moreover, Staff finds that the real issue driving the Warren requests for EAS may be a desire for toll free Internet access. This raises real concerns for Staff for two reasons. Because Internet traffic (ISP traffic) may be subject to reciprocal compensation, this may heavily impact Midvale. It can be predicted that the majority of minutes would be into an ISP provider in McCall and, therefore, Midvale may have to pay Citizens (or another competitive local exchange carrier, if a competitor enters Citizens’ market) for that traffic. This could create a revenue shortfall to be made up by USF or rate increases for Midvale customers. In addition, it is difficult to predict what the impact would be on the need for additional facilities to handle the additional traffic.

Finally, like Atlanta, 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. Therefore, like the situation in Atlanta, there is simply not a sufficient community-of-interest between these petitioning communities to justify raising Midvale’s rates, raising Citizens’ rates, increasing distributions from the Idaho USF and increasing USF surcharges to pay for those increased distributions. In summary, the case for granting EAS cannot be made and the Commission should dismiss the Petitions.
DATED at Boise, Idaho, this day of October 1999.

_______________________________
Cheri C. Copsey
Deputy Attorney General

Technical Staff: Doug Cooley

M:midt981_cc-mot-dism

EAS is not free. The costs associated with converting a former long-distance toll route to a “toll-free” EAS route are usually recovered from the affected customers by increasing their rates for local service. Those costs are not limited to the requesting exchanges, there are also substantial costs that must be borne by the requested exchanges. In this case, Citizens’ customer rates would also increase.
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.
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.
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.
The calling volumes range from approximately 0.08 calls per line per month for Warren to Cascade to approximately 0.53 calls per line per month for Warm Lake to Cascade.
The only line making any calls is a business line.
Moreover, the rates for McCall and Cascade exchanges were recently raised from $9.85 to $17.50 per month for residential lines and from $19.75 to $35.10 per month for business lines as part of a rate rebalancing. Order No.  27789. Neither McCall nor Cascade received a significant change in EAS or service for those rate increases.

STAFF MOTION TO DISMISS -2-