20130320Comments.pdf

NEIL PRICE
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
P0 BOX 83720
BOISE, IDAHO 83720-0074
[phone]
BAR NO. 6864
20IP14R20 *NSi38
1OAc PU" UTILITIES C; fON
Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5918
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF )
NEXUS COMMUNICATIONS, INC. FOR ) CASE NO. NCI-T-11-01
DESIGNATION AS AN ELIGIBLE )
TELECOMMUNICATIONS CARRIER IN )
IDAHO. ) COMMENTS OF THE
) COMMISSION STAFF
COMES NOW the Staff of the Idaho Public Utilities Commission, by and through its
attorney of record, Neil Price, Deputy Attorney General, and in response to the Notice of
Application and Notice of Modified Procedure issued in Order No. 32717 on January 22, 2013, in
Case No. NCI-T- 11-01, submits the following comments.
BACKGROUND
On April 6, 2011, Nexus Communications, Inc. ("Nexus" or "Company") filed an
Application, pursuant to 47 U.S.C. § 214(e)(6) of the Communications Act of 1934 ("the Act"),
47 C.F.R. § 54.201 etseq., and Order No. 29841, seeking designation as an eligible
telecommunications carrier ("ETC") in the State of Idaho for the sole purpose of receiving
Lifeline/Link-up ("Lifeline") support. Application at 1. The Lifeline program is intended to
provide telecommunications service to eligible low-income customers by using federal USF
STAFF COMMENTS 1 MARCH 20, 2013
revenues to make such services more affordable. Idaho participates in the residential Lifeline
program pursuant to Idaho Code § 56-901. See Order No. 21813.
On September 17, 2012, Nexus filed an amendment to its original Application describing
how it will comply with the new requirements of the Federal Communication Commission's
("FCC") rules for the Lifeline Universal Service program instituted by the FCC's November 18,
2011 ("Connect America Fund Order") and February 6, 2012 ("Lifeline Reform Order") Orders.
Amendment at 1.
On March 18, 2013, Nexus filed the second amendment to its Application. In this
amendment the Company describes in more detail how it will comply with several new
requirements in the Connect America Fund Order and the Lifeline Reform Order. The
amendment also includes updated information provided to Commission Staff in data responses
submitted prior to the release of these order. Second Amendment at 1.
The Application
Nexus is an Ohio corporation with its principal place of business in Lewis Center, Ohio.
Nexus has been issued a Certificate of Authority by the Idaho Secretary of State. Application
Exhs. B and C. The Company states that it will serve its Idaho consumers through wireless
technology, i.e., commercial mobile radio service ("CMRS"). Id. at 3. Nexus does not seek, and
will not accept federal High Cost support for Idaho. Id. at 1. Rather, Nexus asserts that it will
"offer services that give low income consumers a simple and effective means of obtaining
critically needed communications services while managing their family budgets and avoiding bill
shock." Id. at 2.
If approved for ETC designation, Nexus intends to offer services using a combination of
its own facilities and the resale of another carrier's facilities.' The Application includes a list of
76 wire centers it intends to serve in Idaho. Application Exh. A. Nexus states that it is designated
as an ETC in 26 states and provides wireline service as an ETC in 13 states, and as a wireless
service provider in 18 states. Third Amended Compliance Plan at Summary.
In the amendment to its Application, filed on September 17, 2012, Nexus describes how
the Company will comply with the new requirements as stated in the FCC rules for the Lifeline
Universal Service program instituted by the FCC's November 18, 2011 Connect America Fund
'Production Request No. 5 Response. Confidential Exhibit A.
STAFF COMMENTS 2 MARCH 20, 2013
Order and the February 6, 2012 Lifeline Reform Order. Amendment at 1. Additionally, the
Company declares that it has received a forbearance from the Facilities Requirement of Section
47 U.S.C. § 214(e)(1)(A). Id. at 6.
On December 31, 2012, the Company submitted its Third Amended Compliance Plan
filed with the FCC and the FCC's Public Notice (DA 12-2063, released on December 26, 2012)
announcing the FCC Wireline Competition Bureau's acceptance of Nexus's Compliance Plan.
Nexus's Lifeline Service Offerings
Nexus states that it will offer three standard Lifeline plans: 1) 250 free minutes per month
with no carryover, and one text per airtime minute; 2)125 free minutes per month with carryover
of unused minutes/SMS 3 to the next month, one text per airtime minute, and $0.20 per
international text sent or received; and 3) 68 free minutes with unused minutes/SMS carryover to
the next month, two texts per airtime minute, and $0.20 per international text sent or received.4
The Company states that other offerings may be available. Nexus will impose a standard
activation fee of $72.00 applicable to all new service activations including the Lifeline service.
See Response to Request No. 26.
The Company states that the Idaho Lifeline subscribers may also purchase additional
airtime cards in seven denominations ranging from $3.00 to $50.00 that allow additional airtime
of 20 to 950 minutes, respectively. Id. International SMS text messaging is available at a rate of
$0.20 per each international text sent or received. The rate for directory assistance calls is $1.50
per request. Nexus permits Lifeline subscribers to block international calls at no additional
charge. No deduction of minutes will be incurred for calls to *611 customer service department
or to 911 emergency services. Second Amendment at 11-12. Calls from the handset to check or
retrieve voicemail count against the voice minutes provided by the plan. Calls from a source
other than the handset to check or retrieve voicemail messages and incoming calls that leave a
voicemail message are free to the Nexus end user. Id.
2 All plans include at no extra charge; free 911-compliant handset; and "anytime" nationwide minutes that can be
used for domestic calls, including local or intrastate/interstate long distance calls. Second Amendment at 10- 11.
Short Message Service (SMS) is a text messaging service.
"This plan is described as an offering that Nexus does not actively market. "Although available to subscribers, it is
rarely selected except by a few subscribers who infrequently use voice service and more frequently send text
messages." Id. at 10.
STAFF COMMENTS 3 MARCH 20, 2013
The Federal Lifeline and Link Up Reform and Modernization Order
On February 6, 2012, the FCC released a Report and Order ("the Order") to
comprehensively reform the low-income program of the Universal Service Fund ("USF"). The
Order substantially strengthens protection against waste, fraud, and abuse; improves program
administration and accountability; improves enrollment and consumer disclosures; initiates
modernization of the program for broadband; and constrains the growth of the program in order to
reduce the burden on all who contribute to the USF.5 The Order also establishes rigid
requirements for ETCs to obtain annual customer certifications to prevent duplication of lifeline
benefits.
Nexus explains how it will conform to the requirements outlined in the Order, including
the requirements associated with Lifeline subscriber eligibility/certification, annual re-
certifications, public safety and 911 /E91 1 access, and procedures to prevent waste, fraud and
abuse of Lifeline funds. See Amended Compliance Plan of Nexus Communications, Inc.
Nexus's Compliance Plan
The FCC approves compliance plans pursuant to the Order as a condition of obtaining
forbearance from the facilities requirement of the Communications Act of 1934, as amended, for
the provision of Lifeline service.6 In the Order, the FCC found that "a grant of blanket
forbearance of the facilities requirement, subject to certain public safety and compliance
obligations, is appropriate for carriers seeking to provide Lifeline-only service. ,7 Therefore, the
FCC conditionally granted forbearance from the Act's facilities requirement to all
telecommunications carriers seeking Lifeline-only ETC designation, subject to the following
conditions: (1) compliance with certain 911 and enhanced 911 (E91 1) public safety requirements;
and (2) Bureau approval of a compliance plan providing specific information regarding the
carrier and its service offerings and outlining the measures the carrier will take to implement the
obligation contained in the Order. Accordingly, the Third Amended Compliance Plan of Nexus
Communications, Inc. was reviewed and approved by the FCC on December 26, 2012.
See Lifeline and Link Up Reform and Modernization et a!, WC Dkt no. 11-42 et al., Report and Order and Further
Notice of Proposed Rulemaking, FCC 12-11, at paras. 361-38, Appendix A (rd. Feb. 6, 2012).
6 Id at paras. 379-380 (rel. Feb. 6, 2012).
FCC Public Notice DA 12-828, WC Docket Nos. 09-197 and 11-42 (rel. December 26, 2012 at 1-2.
8 The FCC's Wireline Competition Bureau.
FCC Public Notice DA 12-2063, WC Docket Nos. 09-197 and 11-42 (rel. December 26, 2012 at 1.
STAFF COMMENTS 4 MARCH 20, 2013
STAFF ANALYSIS
Staff has reviewed Nexus's Application along with the Company's FCC-approved
Compliance Plan. Staff analyzed the Company's Application to verify compliance with the
requirements of the federal Telecommunications Act of 1996, the Lifeline and Link Up Reform
and Modernization Order and Commission Order No. 29841. In addition, Staff has reviewed
Nexus's request for ETC designation in the 76 non-rural wire centers identified in Exhibit A of
the Application.
Public Interest Considerations
When applying the public interest test in an Application for ETC designation, Staff
believes there are two considerations that merit discussion.
1.Contribution to Idaho Programs. As in the TracFone Wireless Inc. ETC Application
and all subsequent pre-paid wireless ETC Applications, the Commission considered the carrier's
contribution to the Idaho Telephone Service Assistance Program ("ITSAP") fund and to the Idaho
Emergency Communications Act ("IECA") fund and determined that it was in the public interest
to require an ETC to contribute to these funds. See Case No. TFW-T-09-01; Order No. 32301 at
9. Nexus states that it "will collect and remit all applicable surcharges and pay applicable taxes
and fees, including those related to universal service funding pursuant to chapter 9 of title 56 of
the Idaho Code and the emergency communications fee collected pursuant to Idaho Code § 31-
4804. Specifically, Nexus will remit applicable 911 and ITSAP surcharges based on its entire
Idaho subscriber base." Second Amendment at 12. Based upon the foregoing, Staff believes that
Nexus intends to make the required contributions to the ITSAP and IECA programs.
2.Cream Skimming Analysis. The Commission weighs whether the potential benefits of
ETC designation outweigh the potential harms. One consideration is the Applicant's commitment
to provide universal service throughout the rural areas or, if not, whether the potential for "cream
skimming" exists.
Nexus's list of exchanges in its proposed service area are all currently in the legacy Qwest
Corporation's non-rural service area. Application Exh. A. Staff believes that the Company's
exclusion of high-cost support in its Application makes this cream skimming analysis moot.
STAFF COMMENTS 5 MARCH 20, 2013
Network Improvement Plan
In the Idaho ETC Designation Order, the two-year network improvement and progress
report is required of all ETCs receiving high-cost support. See Commission Order No. 29841 at
18. However, as with the Cricket Communications, Inc.'s ETC Application, the Commission
determined that a two-year network improvement plan was not applicable to Lifeline-only ETCs
and granted Cricket's ETC designation. See CRI-T- 11-01, Order No. 32501.
Additionally, the FCC amended section 54.202 to clarify that a common carrier seeking
designation as a Lifeline-only ETC is not required to submit a five-year network improvement
plan as part of its application for designation as an ETC. In the USF/ICC Transformation Order
and FNPRM, the FCC included a new requirement in section 54.202, requiring a common carrier
seeking to be designated as an ETC by the Commission to submit a five-year plan describing its
proposed network improvements and upgrades. However, as Lifeline-only ETCs do not receive
funds to improve or extend its networks, the FCC stated that it "saw little purpose in requiring
such plans as part of the ETC designation process."° Nexus's Application seeks only low-
income USF support as a Lifeline-only ETC designation. Thus, the requirement to provide a
network improvement plan does not apply to this Application and Staff believes Nexus is exempt
from Idaho's two-year network improvement plan requirement.
Ability to Remain Functional in Emergencies
Nexus states that it "commits to remaining functional in emergency situations." Since
Nexus will "provide services in part through the use of facilities obtained from a major carrier
vendor for wireless spectrum and other related wireless services, Nexus will provide to its
customers the same ability to remain functional in emergency situations as is currently provided
by the vendor to its own customers." This includes "access to a reasonable amount of back-up
power to ensure functionality without an external power source, re-routing of traffic around
damaged facilities and the capability to manage traffic spikes in the event of emergency
situations." Second Amendment at 9. The Company states that its underlying carrier is "widely
recognized for the quality and reliability of its wireless network." Third Amended Compliance
Plan at 4. "All Nexus' vendor's cell sites consist of facilities with sufficient backup power that is
1 0 See Lifeline and Link up Reform and Modernization et a!, WC Dkt no. I 1-42 et al. Report and Order and Further
Notice of Proposed Rulemaking, FCC 12-11 at para 386.
STAFF COMMENTS 6 MARCH 20, 2013
both independent from a municipal power supply and provides sufficient backup power to permit
the site to remain functional until municipal power can be restored. In addition, all sites,
including the mobile switching center, have redundant transport and routing capabilities." See
Productions Request No. 10 Response. Staff believes Nexus, as a reseller of wireless services,
satisfies this requirement.
Adequate Financial Resources
In Order No. 29 84 1, the Commission "determined that our current certification process
requires a certain showing of financial capability, and that is sufficient for the Commission's
purposes." Idaho Code § § 61-526 through -528, IDAPA 31.01.01.11 and 112 (Rules 111 and
112), and Procedural Order No. 26665.11 In response to Production Request No. 21, Nexus
submitted its current financial statements under seal as Confidential Exhibit C. In the first
amendment, Nexus addressed its financial and technical capability to provide Lifeline service.
The Company states that it had been in business since 2000; operated as a competitive local
exchange carrier since 2001; received its first ETC designation in June 2006; and is now focused
on providing service to low income consumers. Nexus explains that it initially began providing
its services over wireline technology, and has responded to strong customer demand by offering
wireless technology as well. Amendment at 4.
Nexus states that its management has many years of experience in the telecommunications
industry and that it supplements its underlying wireless carrier with its own network facilities,
back-office and operations support systems, which Nexus operates. The Company asserts it has
made a significant financial investment to integrate these systems and it owns and operates its
own switching and other facilities located in the state of Ohio, which are housed in a Tier IV co-
location facility. Id. Lastly, Nexus states it is financially stable and fully capable of honoring its
service obligation to customers and federal and state regulatory obligations. Staff believes the
Company has adequate financial resources to provide Lifeline services.
Other ETC Designation Requirements
Additional requirements for ETC designation are detailed in Appendix 1 of Order No.
29841 and are discussed in more detail below.
Order No. 29841 at 20.
STAFF COMMENTS 7 MARCH 20, 2013
1.Common Carrier Status. Nexus is a common carrier as defined in U.S.C. Title 47.
Application at 3.
2.Provide the Universal Services. Nexus will provide each of the supported services
identified in Section 54.101 of C.F.R. Title 47, as amended by the FCC on December 23, 2011
and February 6, 2012, throughout its designated service area. Id. at 4.
3.Advertising. Nexus will advertise the availability and rates for its services described
in the Application through media of general distribution. Id. at 7.
4.The Commitment and Ability to Provide Supported Services. Consistent with the
requirements of 47 C.F.R. § 54.202(a)(1)(i), Nexus states that it commits to provide the supported
services throughout the proposed designated service area, consistent with applicable requirements
including the Commission's ETC service provisioning requirements. Id.
5.A commitment to Consumer Protection and Service. Nexus commits to continuing
compliance with all applicable state and federal consumer protection and service quality
standards, as well as the Cellular Telecommunications and Internet Association's (CTIA)
Consumer Code for Wireless Service. The Company states that it "has already adopted this code
for its existing operations, and will honor the code in the proposed designated service area." Id. at
8.
6.Description of the Local Usage Plan. Nexus states that it will offer three prepaid
wireless service plans as well as other offerings. These plans include a combination of local and
domestic long distance calling and texting as described earlier under Nexus's Lifeline Service
Offering. Production Request No. 37 Response.
7.Tribal Notification. The Company states that it "will provide a copy of the
Application of the affected tribal government or tribal regulatory authority of the tribal areas it
intends to serve. The applicable tribal areas include those of the Nez Perce Tribe, the Shoshone-
Bannock Tribe, and the Coeur d'Alene Tribe." Second Amendment at 12.
Staff believes Nexus fulfils the aforementioned ETC designation requirements where
applicable for a Lifeline-only ETC designation.
STAFF RECOMMENDATION
Staff has reviewed Nexus Communications, Inc's Application for designation as a
Lifeline-only ETC. Staff believes that the Application demonstrates the Company's commitment
STAFF COMMENTS 8 MARCH 20, 2013
to fulfill the obligations of an ETC in Idaho. Nexus will provide all universal service supported
by the federal USF throughout its service territory; it has addressed all of the public interest
questions that accompany an ETC Application; the Company's compliance plan has been
approved by the FCC; the Company will provide multiple pricing plans which will increase
customer choice for low-income service in Idaho; and the Company demonstrates that it has the
financial capabilities of providing lifeline service. Nexus also states it will contribute to the
ITSAP and IECA funds.
Staff believes Nexus's Application for designation as an ETC is in the public interest and
should be approved for those wire centers listed in Exhibit A of the initial Application.
Respectfully submitted this ? Day of March 2013.
Neil Price
Deputy Attorney General
Technical Staff: Grace Seaman
I :umisc:comments/ncit 11.1 npgs comments
STAFF COMMENTS 9 MARCH 20, 2013
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 20TH DAY OF MARCH 2013,
SERVED THE FOREGOING COMMENTS OF THE COMMISSION STAFF, IN
CASE NO. NCI-T-11-01, BY MAILING A COPY THEREOF, POSTAGE PREPAID,
TO THE FOLLOWING:
DANIELLE FRAPPIER
BRIAN A NIXON
DAVIS WRIGHT TREMAINE
1919 PENNSYLVANIA AVE NW
STE 800
WASHINGTON DC 20006
E-MAIL: [e-mail]
[e-mail]
STEVEN FENKER, PRESIDENT
NEXUS COMMUNICATIONS INC
3629 CLEVELAND AVE
STEC
COLUMBUS OH 43224
E-MAIL: sfenkerl @earthlink.net
SECRETARY
CERTIFICATE OF SERVICE