27043.pdf

Office of the Secretary
Service Date
July 10, 1997
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF
SILVER STAR TELEPHONE COMPANY'
REQUEST TO APPROVE A SPECIAL
SERVICES CONTRACT.ORDER NO. 27043
CASE NO. SIL-97-
On February 27, 1997, Silver Star Telephone Company requested that the Commission
approve a "special services contract" so that Silver Star may provide telecommunication services to
R. Simplot's Smoky Canyon Mine. The mine is located in the Idaho portion of U S WEST
Communications' Afton, Wyoming exchange. On March 6, 1997, the Commission issued a Notice
of Modified Procedure soliciting written comments concerning Silver Star s request. Union
Telephone Company objected to Silver Star serving the mine because Union had entered into, but
had not closed, a purchase agreement for the Afton exchange. The Commission scheduled oral
argument in this matter April 16, 1997. Following oral argument and a review of the record, the
Commission fmds there is no basis to restrict Silver Star from serving the mine. Consequently, the
special contract is approved.
BACKGROUND
A. The Applicauon
Silver Star proposed to construct and offer high-speed digital telecommunication services
to the Smoky Canyon Mine. Silver Star asserted that services included in the special contract are
beyond the scope of the Company s normally tariffed Title 61 services. Consequently, Silver Star
requested that the Commission authorize the provision of such services to the mine by approving the
special contract. The Commission exercises authority over utility service contracts pursuant to Idaho
Code ~~ 61-305 and -502. Silver Star proposed to serve the mine without requiring interconnection
with US WEST's facilities in the Afton exchange.
As set out in greater detail in the contract, Silver Star will provide the necessary
equipment to be installed at the mine for voice and data communications services. In response to
ORDER NO. 27043
a production request, Silver Star stated that "special circuits transmitting data would terminate in
Pocatello, Idaho, on Simplot's corporate network." Silver Star Response to AT&T production
request No. 13 (attached as Exhibit D to Union Telephone s Motion to Compel). The mine s local
calling area would depend upon "the POTS/or trunks chosen by J.R. Simplot. . .. If Simplot chooses
Freedom, Idaho, POTS/or trunks, the calling area would be all of Star Valley, Wyoming including
Freedom, Idaho, Alpine, Idaho, and Tygee Valley, Idaho.Id.
Silver Star stated that "all portions of the Special Services Contract (are) confidential
proprietary and trade secrets pursuant to Commission rules, the Idaho Trade Secrets Act, LC. ~ 48-
801 et seq. and LC. ~ 9-340." Transmittal letter (dated February 24, 1997). Silver Star maintained
that the contract is exempt from public disclosure because
it contains information concerning the methods, techniques and processes by
which the service (to the mine) will be provided, and the costs and charges
therefor. By its nature, this information is not already available to, generally
known by, or easily ascertainable by the general public or Silver Star
competitors, and Silver Star has exercised reasonable efforts to maintain its
confidentiality .
Id. Silver Star claimed that disclosure of information contained within the special services contract
would provide its competitors or potential competitors with economic value. Disclosure would also
allow Silver Star s competitors to target its customers and to know the basis for its charges for
competitive telecommunications services. "Silver Star is aware of no reason why treatment ofthe
special services contract as confidential would impair the public interests.Id.
Given Silver Star s assertion that the special contract constitutes a trade secret, the
contract has been maintained by the Commission under seal and has not been disclosed to the parties
or the public. Silver Star did make the contract available to the Commission and the Staff for their
in camera review.
B. The Prior A/ton Proceeding
In August 1993 , US WEST and Union Telephone filed a joint Application to sell the
Idaho portion of the U S WEST Afton exchange to Union.! In addition to the sale of the physical
Approximately one-third of the Afton exchange is located in Idaho and the remaining portion is in Wyoming. Afton
was one of eight U S WEST exchanges in Wyoming sold to Union Telephone. Union Telephone is a Wyoming
corporation with its principal place of business in Mountain View, Wyoming.
ORDER NO. 27043
assets, U S WEST and Union Telephone sought permission to transfer the Certificate of Public
Convenience and Necessity (the service area franchise) for the Idaho portion of the exchange from
U S WEST to Union. The Commission exercises authority over the certificate transfer pursuant to
Idaho Code ~~ 61-526 and -528. There are approximately 40 local access lines in the Idaho portion
of Afton-Iess than 2% of the total number of lines in the entire exchange. A similar application
to transfer US WEST's Wyoming Certificate of Public Convenience and Necessity for the Afton
exchange was also filed with the Wyoming Public Service Commission (WPSC).
In October 1993, Silver Star filed a competing Application with this Commission to
expand its Certificate of Public Convenience and Necessity to include the Idaho portion of the Afton
exchange. Silver Star opposed the sale and transfer of the Afton exchange to Union Telephone.
that time, Silver Star suggested that the Idaho Commission "await the decision of the Wyoming
Commission before conducting hearings" on its competing Idaho Application. With the concurrence
ofthe parties, action on the two Applications was stayed. Order No. 25243.
In February 1994, the Wyoming Commission issued an Order denying the sale of the
Afton exchange to Union and, instead, directed that U S WEST transfer the exchange to Silver Star.
The WPSC's decision was subsequently overturned in February 1996 by the Wyoming Supreme
Court with instructions to approve the transfer to Union Telephone. Union Telephone Co.
Wyoming PSC 910 P.2d 1362 (Wy. 1996).
In September 1996, this Commission issued Order No. 26619 requesting written
comments concerning the remaining Idaho cases. On October 18, 1996, U S WEST, Union
Telephone and Silver Star filed a Stipulation in the Idaho cases. The Stipulation provided that Silver
Star did not oppose the Commission s approval of the US WEST-Union sale and transfer of the
Certificate of Public Convenience and Necessity. However, Silver Star desired to preserve its
competing Application to serve the Idaho portion of the Afton exchange.
In Order No. 26687 issued November 15 , 1996, the Commission conditionally approved
the sale of the Afton exchange and the transfer of the Certificate to Union Telephone. The
Commission ordered that Union Telephone
file its Articles of Incorporation with this Commission and complete those
actions necessary to register as a foreign corporation with the Idaho Secretary
of State. Union is further ordered to submit its (new) Certificate of Public
Convenience and Necessity showing the Idaho portion of the Afton
ORDER NO. 27043
exchange. Union shall complete these actions within 60 days of the closing
of the sales transaction.
Order No. 26687 at 7. Silver Star's competing Application to expand its certificated service area to
include Afton was dismissed without prejudice. Id.
C. Procedural History of This Case
On March 6, 1997, the Commission issued Order No. 26826 containing a Notice of
Application and a Notice of Modified Procedure for this case. The Notice of Application portion
stated that "the Afton exchange is in the process of being sold by US WEST to Union Telephone
Company." Order No. 26826 at 1. The Notice of Modified Procedure invited interested persons to
submit written comments concerning Silver Star s request for approval of the special services
contract no later than March 20, 1997. Id at 2-3. Timely comments were filed by Silver Star, Union
Telephone, the Commission Staff, and AT&T Communications. On March 27, 1997, Silver Star
filed a response to those previously filed comments. On March 28, 1997 , Union Telephone filed
reply comments to Silver Star s response.
Following its review of the written comments, the Commission issued Order No. 26883
scheduling oral argument for April 16 on the legal issues in this matter. More specifically, the
Commission sought oral argument concerning the applicable provisions of: (1) the Idaho
Telecommunications Act (Idaho Code ~~ 62-601 et seq.
);
(2) the federal Telecommunications Act
of 1996 (47 US.C. ~~ 251 et seq.
);
and (3) House Bill No. 313 which amended the Idaho
Telecommunications Act (1997 Sess. Laws ch. 192). The Commission also stated that "it appears
that the underlying facts (in this case) are not in dispute." Order No. 26883 at 7. Silver Star, Union
the Staff and AT&T participated in the oral argument.
On April 18, 1997, Union Telephone served a discovery request upon Silver Star seeking
a copy of the "special services contract." Silver Star objected to the discovery request and on
May 15 , Union Telephone filed a Motion to Compel. On May 28 , 1997, Silver Star requested that
the Commission issue a protective order essentially denying Union s Motion to Compel.
ORDER NO. 27043
D. The Federal Telecommunications Act
A brief review of the Telecommunications Act of 19962 is helpful to understanding the
issues in this case. The Telecommunications Act is generally intended to foster competition in all
telecommunication markets, including the local service market. Except as noted below, the Act
allows new competitive local exchange carriers (CLECs) to enter the established local service market
of incumbent local exchange carriers (ILECs). Idaho ILECs have historically operated as regulated
monopolies in their service areas. See Idaho Code ~ 62-615(1) (repealed July 1 , 1997). Idaho has
about 20 ILECs including U S WEST, GTE, and Silver Star. An ILEC may also be considered a
CLEC when it competes in the local market of another ILEC.
Entry into the local service market is to occur in one of three ways: (1) through the
purchase of unbundled network elements from the ILEC; (2) through the purchase of wholesale local
services from the ILEC for resale by the CLEC to customers; or (3) through the CLEC's construction
of its own facility-based network. In the first two instances, the CLECs and ILECs enter into an
interconnection" agreement that contains the terms and conditions for the CLEC to "interconnect"
to the ILEC' s network for the purpose of offering competitive local exchange service.
Subsections 251 (b) and (c) of the Act list the interconnection obligations of all LECs and
additional obligations ofILECs, respectively. All LECs have obligations to provide resale, number
portability, and dialing parity. 47 U.C. ~ 251(b). Subsection (c) lists additional interconnection
obligations ofILECs including the duty to: negotiate in good faith; provide interconnection; provide
unbundled access; offer for resale at wholesale rates any telecommunication service; provide a
reasonable public notice of changes in facilities or networks affecting interoperability; and provide
for collocation.
Although the Act generally promotes competition in local exchange markets, it
recognizes that competition may not exist or may not be in the public interest in certain rural local
markets. Consequently, rural LECs3 are exempt from the obligations of Section 251(c) until they
receive an interconnection request and the state commission determines that competition is in the
Pub. L. No. 104-104 110 Stat. 56 (codified in scattered sections at 47 US.C. ~~ 151 etseq.
The term "rural telephone company" is generally derIDed as a small LEC serving rural America and does not
include the Bell Operating Companies (BOCs) such as U S WEST. See 47 U.C. ~ 153(37) and Idaho Code ~ 62-
603(10) (July 1 , 1997).
ORDER NO. 27043
public interest. 47 U.C. ~ 251 (t)(l)(A). In addition to this "automatic" exemption, rural LECs
may seek suspensions or modifications from the obligations listed in subsections (b) and ( c). A rural
LEC may petition the state commission for a suspension or modification of the obligations. The
state public utilities commission "shall grant" the petition if it finds that such suspension or
modification is necessary to avoid: significant adverse economic impact on users, imposing a
requirement that is unduly economically burdensome, or imposing a requirement that is technically
infeasible; and is consistent with the public interest. 47 U.C. ~ 251(t)(2).
Finally, Section 253(a) of the Telecommunications Act provides that no state may
prohibit "the ability of any entity to provide any interstate or intrastate telecommunications
services." States may continue to impose on a competitively neutral basis actions to preserve and
advance universal service and to manage public rights-of-way. 47 U.C. ~~ 253(b) and (c). Section
253(t) also provides protection for rural LECs by allowing states to require a CLEC to serve all
customers in a rural service area if the CLEC desires to offer services in such an area.
THE POSITIONS OF THE PARTIES
A. Silver Star
Silver Star noted in its comments, that it has entered into a contract with Simplot to
provide the mine with "dedicated, high-volume data and voice transmission and bundled services
through more than five access lines." Silver Star Comments at 1. At oral argument, Silver Star
asserted that the mine will own all the facilities that are to be located within the Afton exchange and
located on the Simplot premises. Tr. at 2-3. Silver Star explained that the special use permit issued
by the Forest Service requires that the mine own all the facilities within the Forest Service boundary.
Silver Star s facilities will be located within its certificated service area.The point of
interconnection for the Simplot facilities and the Silver Star facilities will be located within the
Wayan exchange. Tr. at 3. Silver Star stated that under Idaho and federal law, it "is entitled to
provide, and Smoky Canyon is entitled to obtain, the services contemplated by the Contract
regardless of the fact that the Smoky Canyon Mine is located within an area presently certificated
to U S WEST Communications, Inc." Comments at 2. The Company declared that the special
contract was negotiated in arms-length bargaining and that the mine has chosen to obtain services
from Silver Star.
ORDER NO. 27043
1. The Idaho Telecommunications Act of 1988.Silver Star argued that when U S WEST
elected to remove its non-basic local exchange services from the Commission s Title 61 regulation
U S WEST consented to competition for Title 62 services. Because the mine is currently served by
more than five lines, such Title 62 services are subject to competition. Silver Star noted that its
position is further supported by Idaho Code ~ 62-605(3) which provides that neither Title 61 nor
Title 62 prevents "any person or entity from providing telecommunications services in competition
with a telephone corporation as to those services which have been excluded from regulation under
Title 61. . .." Silver Star claimed that the exclusive franchise provisions contained in Idaho Code
~ 62-615(1)5 only apply to services which remain subject to the Commission s Title 61 authority,
i.e., none of which are provided to the mine.
2. The federal Telecommunications Act.Silver Star noted that the purpose of the federal
Act was "to accelerate rapidly private sector deployment of advanced telecommunications and
information technologies to all Americans by opening all telecommunications markets to
competition.
. . .
" Silver Star Comments at 4 citing H.R. Conf. Rpt. No.1 04-458 (1996) (emphasis
added). The Company argued that Section 253 ofthe federal Telecommunications Act provides that
no state statute or regulation "may prohibit or have the affect of prohibiting the ability of any entity
to provide any interstate or intrastate telecommunications service." 47 U.C. ~ 253(a); Tr. at 4, 8.
This section explicitly allows Silver Star to enter the Afton local exchange market and compete for
the mine s business. Title 61 or Title 62 statutes that limit Silver Star s ability to compete are
preempted by the federal Act. Tr. at 30.
The Commission s traditional regulatory authority is found in Title 61 of the Idaho Code. The Idaho
Telecommunications Act of 1988 added a new chapter to Title 62 and created a modified form of regulation for
telephone companies providing other than basic local exchange services in Idaho. Basic local exchange service for
business customers with five or fewer access lines remains under the Commission s Title 61 ratesetting authority.
US WEST elected to remove its non-basic local service from the Commission s Title 61 authority in March 1989. The
requested telecommunications services to be provided by Silver Star would be subject to the Commission s Title 61
ratesetting authority.
Idaho Code ~ 62-615(1) provided that Certificates of Public Convenience and Necessity for telephone corporations
providing Title 61 basic local service "shall represent an exclusive service area franchise for telecommunication services
which remain subject to title 61. . . within the certificated area of such telephone corporation. . . ." This subsection was
repealed with the recent amendments to the Idaho Telecommunications Act effective July 1 , 1997.
ORDER NO. 27043
Silver Star next insisted that the exemption, modification, and suspension provisions
concerning rural telephone carriers under Section 215(t) are not applicable in this instance. "Silver
Star is seeking to provide intrastate competitive service in this exchange as a facilities-based carrier.
It's not requesting or requiring interconnection or resell.Tr. at 12.Consequently, the
interconnection provisions do not apply. Silver Star also maintained that U S WEST is not a rural
carrier as defined in the Act nor has U S WEST petitioned for suspension or modification of the
Section 251 provisions. Tr. at 10. Likewise, Union has not filed any petition for modification or
suspensIOn.
3. House Bill 313. The Company next insisted that a major goal of House Bill 313 was
to extend the competitive provisions of the 1988 Act. Tr. at 12. The Bill amended various
provisions ofthe Idaho Telecommunications Act to conform to the recent federal Act and to promote
reasonable local competition in Idaho where practicable. Idaho Code ~ 62-602 (July 1, 1997).
Silver Star pointed out that Section 5 of the Bill repealed the exclusive franchise provision once
contained in 62-615(1). "Thus, if there were any lingering questions regarding Silver Star s right
to provide services, and Smoky Canyon s right to choose its provider under the Contract, or
regarding the public policies behind those rights, H.B. 313 eliminates them.Id at 5. Silver Star
argued that there is no other provision of the 1997 amendments to the Idaho Telecommunications
Act which would prohibit Silver Star from serving the mine.
4. Ownership of Afton.Turning to the issue of whether Union could be considered the
incumbent or owner of the Afton exchange, Silver Star asserted that Union has neither equitable title
nor ownership in this exchange. Tr. at 14. The Company asserted that the sale has
not been consummated, and may never be consummated. As a "successor
to U S WEST in the certificate or service area, Union acquires no greater
protection from facilities-based competition for Title 62 services than U S
WEST had. Any exemption or suspension that Union might obtain from the
requirements of the 1996 Act if it acquires the exchange from U S WEST
would apply only to resale or interconnection. Neither resale nor
interconnection are contemplated by the Contract.
ORDER NO. 27043
Comments at 5. Silver Star renewed its request that the Commission approve the contract and
protect the contract from public disclosure.
B. Union Telephone
1. Ownership of Afton. Union first asserted that it should be treated as the equitable
owner of the Afton exchange. Union observed that the Commission s Order No. 26687 approved the
sale and certificate transfer of the Afton exchange and dismissed Silver Star s Application to amend
its certificate to serve the same area. Union argued that but for Silver Star s conduct in attacking the
sale of the Afton exchange, the sale would have been consummated by now. Tr. at 19. Union
characterized Silver Star s conduct as asking the Commission "to sanction (Silver Star s) conduct
and allow it to raid the exchange under the guise of deregulation, pirating away profitable customers
which help maintain lower rates for less profitable residential rural customers." Union Comments
at 4.
2. State Utility Law. Union relied upon several state statutes to support its position.
First, as the equitable owner of the Afton exchange, Union asserted it is entitled to possess an
exclusive franchise to provide telecommunication services pursuant to Idaho Code ~ 62-615(1 V
Tr. at 20. Union insisted that Silver Star is attempting to take advantage of a "window of
opportunity" attributable to the prolonged Idaho and Wyoming regulatory proceedings "which abuse
has unjustly delayed consummation of the Afton exchange to Union Telephone." Comments at 5.
Union has closed on the other seven Wyoming exchanges. Tr. at 19. If the sale had been
consummated, Union would have sought to serve the Afton exchange on an exclusive basis.
Second, Union Telephone asserted that Silver Star may not begin construction of
facilities to serve the mine until it has obtained a certificate from the Commission that the present
and future public convenience and necessity (Idaho Code ~ 61-526) requires such construction. Tr.
at 24. Union maintained that service to the mine "is a direct interference with Union Telephone
AT&T concurred with Silver Star's interpretation of the federal Act, the Idaho Act, and House Bill 313. Tr. at 27.
AT&T did express concern that Silver Star may, or has the potential to, subsidize its Title 61 services with any Title 62
services it might furnish the mine. The Staff maintained that the Commission need not be concerned with cross
subsidization pursuant to Idaho Code ~ 61-622A because all the proposed services to the mine are Title 61 services.
Tr. at 28. To the extent that Silver Star may earn a profit under the contract
, "
it may work to reduce (Silver Star
revenue requirement for all services and the need for an explicit Idaho USF subsidy." Reply Comments at 3.
As previously mentioned, the exclusive franchise provision formerly contained in Section 62-615(1) was repealed
on July 1 , 1997.
ORDER NO. 27043
equitable ownership of the Afton exchange system." Comments at 6. Union insisted that this is not
a case of a customer installing its own equipment as is its federal right. It is a fiction that Silver Star
is not serving this mine in the Union exchange. Tr. at 24.
Third, Union argued the Commission has an obligation to protect the public interest and
ensure customers are provided with high quality services. Tr. at 25. The Commission should review
this contract in light of its authority to determine just and reasonable rates, ensure adequate levels
of service, prohibit discrimination, and prohibit cross-subsidization. Idaho Code ~~ 61-301
, -
302
315
, -
526, and 62-613.
3. The federal Telecommunications Act.Union next asserted that Section 253(b) ofthe
federal Act allows the Commission to impose regulations concerning universal service, public safety,
consumer protection and quality of service so long as it is done on a competitive neutral basis. Tr.
at 22. It is the FCC that must decide whether laws are preempted per Section 253(d). Union argued
that nowhere "in the 1996 Telecommunications Act is there a statement that competition should
automatically be allowed where the equitable owner of the exchange is a rural carrier." Reply
Comments at 2.
Union also argued that Section 253(t) evidences Congress' concern that competitors not
cherry pick" or "pirate" large and lucrative customers served by rural telephone company. Tr.
23. In pertinent part, Section 253(t) provides that
it shall not be a violation of this section for a State to require a
telecommunications carrier that seeks to provide telephone exchange service
or exchange access in a service area served by a rural telephone company to
meet the requirements. . . for designation as an eligible telecommunications
carrier for that area before being permitted to provide such service.
47 U.C. ~ 253(t). Before a carrier may be designated as an eligible telecommunications carrier
(ETC), it must generally offer telecommunication services "throughout the service area and advertise
the availability of such services and the charges therefore using media of a general distribution." 47
C. ~ 214(e). Union argued this section creates a specific exception to the general prohibition
contained in 253(a) to discourage competitors from merely pirating large rural customers instead
serving an entire service area. Tr. at 23.
4. Disclosure of the Contract.Finally, Union Telephone argued the special services
contract should be made public and Union should have the right to review it. Tr. at 19. Union
ORDER NO. 27043 10-
maintained that the "closure" of the special contract hampers its ability to comment upon Silver
Star s proposal. Union insisted that various utility statutes "require that Union Telephone be able
to review and comment upon Silver Star s 'special services contract.'" Comments at 8; Tr. at 21.
Without reviewing the Silver Star contract, Union maintained it is uncertain whether the mine is
getting the most reasonable deal. Union declared that it has no ability to contract with Simplot until
the Afton sales transaction closes.
Union also takes issue with Silver Star s position that there is no interconnection
required. Union maintains that it does not know if interconnection will occur because Silver Star
has not provided the contract to the parties for review. Tr. at 26.
DISCUSSION
1. Who "owns" the Afton exchange.The threshold question to be decided in this case
is whether U S WEST (the current certificate holder) or Union Telephone (the purchaser) is the
owner of the Afton exchange. The answer to this question may be dispositive. If the Commission
determines that the owner of the Afton exchange is indeed US WEST, then it is argued that service
to the mine is a Title 62 service, rural protections afforded by state and federal laws are not
applicable, and federal law permits CLECs to enter the Afton local market. On the other hand, if
the Commission were to find that Union Telephone is the "equitable owner" of the Afton exchange
then various provisions of federal and state statutes may preclude Silver Star from serving the mine.
We now turn to this issue.
In Order No. 26687 issued November 18, 1996, the Commission approved the sale of the
Afton exchange from U S WEST to Union Telephone. That Order required Union Telephone to
complete certain actions "within 60 days ofthe closing ofthe sales transaction." Order No. 26687
at 7. Silver Star maintains that the Afton transaction has not been completed. Silver Star Comments
at 5. Union Telephone acknowledges that the sales transaction has not been closed. Tr. at 19. Based
on these uncontested statements we find that the Afton transaction has not been completed. In
addition, the Commission may reasonably infer that the transaction has not closed because Union
has not filed its Articles ofIncorporation nor a new Certificate of Public Convenience and Necessity
for the Idaho portion of the Afton exchange as required by Order No. 26687.
ORDER NO. 27043 11-
Having determined that Union Telephone is not in fact the owner of the Afton exchange
, it has not closed on the transaction, we now turn to Union s argument that it should be
considered the equitable owner of the Afton exchange. In essence, Union argued that "but for
Silver Star s conduct before the Wyoming and Idaho Commissions as well as the FCC, the sale
would have closed by now. Tr. at 19. However, our review ofthe record reveals that Union neither
offered nor specifically explained how and in what manner Silver Star s conduct has precluded it and
U S WEST from closing. As we observed in our prior Order in this matter, both state regulatory
commissions and the FCC have approved the sale of the Afton exchange to Union. Order. No.
26883 at 7. It appears there were no regulatory barriers to closing. Indeed, Union may have been
able to close the sale anytime after Silver Star filed the present Application in February.
Consequently, based on the record before us, we are constrained to find that Union has failed to
present substantial and competent evidence demonstrating why it has not closed the transaction or
why it should be considered to be the equitable owner of the Afton exchange.
Having concluded that Union Telephone has not satisfactorily demonstrated that it is
entitled to be considered the equitable owner of the Afton exchange, it is apparent U S WEST
remains the owner of the Afton exchange. Silver Star has persuasively argued that the state and
federal Telecommunications Acts permit it to compete for the mine s services. Based upon the
uncontested representations, we fmd that the mine is currently being provided with U S WEST Title
62 services. Consequently, Silver Star is permitted under state law to offer the mine competing
services. Under the Idaho Telecommunications Act Idaho Code ~ 62-605(3) provides that neither
Title 61 nor Title 62 shall "prevent any person or entity from providing telecommunication services
in competition with a telephone corporation as to those services which have been excluded from
regulation under title 61.
Based upon the particular facts of this case, we further find that Silver Star need not
amend its Certificate of Public Convenience and Necessity to include the mine in its service area.
Silver Star asserted that the mine will own all ofthe facilities and equipment necessary outside of
Silver Star's service area. Thus, Silver Star s plant and the interconnection point between the mine
and the Company will be located in Silver Star s service area.
We next turn to the services provided under the contract. Because Silver Star has not
elected to remove its non-basic services from our Title 61 jurisdiction, it therefore follows that the
ORDER NO. 27043 12-
telecommunications services offered in the special contract are Title 61 services. As Union argued
and we accept, the Commission has the authority to determine that the rates and quality of service
are fair, just and reasonable. Tr. at 6. After reviewing the contract, we find the contract rates are
reasonable because the rates are set above Silver Star's comparable tariff rates for such services. We
further find it is reasonable to presume that the contracted services will be of sufficient quality to
meet the needs of the mine. Drawing such a presumption is reasonable given the arms-length
bargaining between the parties, the sophistication of the purchaser, and the lack of any objection
from the mine in this proceeding.
2. Is the contract a trade secret?We now turn to Union Telephone s Motion to Compel
disclosure of the special services contract. After the oral argument, Silver Star and Union Telephone
filed additional motions. On May 15, 1997, Union Telephone filed a Motion to Compel requesting
that the Commission direct Silver Star to produce a copy of the "special services contract." By way
of reply, Silver Star filed a Motion for Protective Order on May 28, urging the Commission to deny
Union s Motion to Compel. On June 5, 1997, Union Telephone filed a response to Silver Star
Motion for a Protective Order.
In its Motion for a Protective Order, Silver Star stated that the contract contained
information concerning the "means, methods techniques and processes" by which
telecommunication services are going to be supplied to the mine. Motion for Protective Order at 4.
Silver Star maintains that this information "create ( s) independent economic value to Silver Star by
not being known by its competitors.Id.
Union s Motion compels us to consider whether the special services contract is subject
to public disclosure or should be protected from disclosure as a trade secret pursuant to the Idaho
Trade Secrets Act Idaho Code ~ 48-801 et seq. The Idaho Trade Secrets Act defines a trade secret
as "information, including a formula, pattern, compilation, program, computer program, devise
method, technique, or process, that:
Derives independent economic value, actual or potential, from not being
generally known to, and not being readily ascertainable by proper means
by, other persons who can obtain economic value from its disclosure or
use; and
Is the subject of efforts that are reasonable under the circumstances to
maintain its secrecy.
ORDER NO. 27043 13-
Idaho Code ~ 48-801(5). In addition, an otherwise public record may be exempt from public
disclosure under the Idaho Public Records Law if it is a trade secret. Idaho Code ~ 9-340(4)(a).
Resolution of this issue requires the Commission to balance two competing interests and
statutory schemes. On the one hand, documents submitted to the Commission for its regulatory
consideration are generally deemed to be public records and available for public inspection. Idaho
Code ~ 9-338. In addition Idaho Code ~ 61-305 provides that every utility "shall file with the
commission. . .and keep open to public inspection schedules showing all rates. . .together with all
rules, regulations and contracts. . .which in any manner affect or relate to rates. . .or services." On
the other hand, Idaho has enacted the Trade Secrets Act and specifically provided that trade secrets
may be exempt from public disclosure. Idaho Code ~~ 48-801 and 9-340(4). The parties have not
brought to our attention and we are unaware of any Idaho cases construing the Trade Secrets Act.
Having reviewed the information contained in the contract, we find such information
does not have independent economic value and much of it has already been disclosed or is
ascertainable by proper means. Through the course of this proceeding, Silver Star disclosed what
services it will provide the mine-voice and high-speed data services. Silver Star has also publicly
admitted that it will provide telecommunication services from the mine to the Company s Wayan
exchange, and eventually Pocatello. Tr. at 2-3. The contract further provides that the charges for
the telecommunication services "are subject to change due to Federal and State Tariff and rate
changes." Thus, the contract service rates are not specifically developed by some formula or
compilation of costs/investment/earnings but are derived from federal and state tariffs-tariffs
available for public inspection. What has not been publicly disclosed thus far is the actual manner
of how the services are to be provided to the mine.
We further find that the pricing information contained in the contract was certainly
available to the other party to the contract-R. Simplot. The contract contains no restriction on
the use of such information by either of the parties to the contract. The mine may be at liberty to
divulge such information to a potential competitor of Silver Star or to anyone for that matter. See
Carbonic Fire Extinguishers v. Heath 547 N.E. 2d 675 (Ill. App. 1989). We believe that making
the contract available for public inspection furthers the legitimate public interest that information
used by the Commission should, to the extent practical, be available for public scrutiny. Requiring
special contracts be made public also comports with our past practices regarding special contracts
ORDER NO. 27043 14-
for other utility industries. See Order Nos. 25988 22759,22736. Based on the facts of this case and
the reasoning set out above, we conclude that the information contained in the contract does not
qualify as a trade secret and should not be exempt from public disclosure.
Not withstanding our resolution of this dispute, we do recognIze that as
telecommunication markets become more competitive there is a corresponding need to protect
information qualifying as a trade secret from public disclosure. Our decision in this case does not
imply any disagreement with that principle. We find only, based on the facts of this case, that the
contract information in question does not meet the statutory test of a trade secret.
I t is our intention to make the contract available for public inspection. In fairness to
Silver Star, we will withhold the contract until the afternoon of July 18 , 1997. We believe that this
will provide ample opportunity for Silver Star to review our Order and to seek a stay of our decision
to make the contract available for public inspection, if it believes such action is necessary. This will
also provide Union with sufficient time to review the contract within the time limit set for
reconsideration.
ULTIMATE FINDINGS OF FACT AND CONCLUSIONS OF LAW
Silver Star Telephone Company is a telecommunications corporation subject to our
regulatory jurisdiction pursuant to Idaho Code, Title 61 and 62. Union Telephone Company is a
Wyoming telephone corporation certified by the Wyoming Public Service Commission to conduct
utility operations in Wyoming. This Commission has jurisdiction over the special services contract
pursuant to Idaho Code ~~ 61-305 and 61-502.
We find that Union Telephone has failed to demonstrate by substantial and competent
evidence that it should be considered the equitable owner of the Idaho portion of the Afton exchange.
We further fmd that state law permits Silver Star to offer telecommunications services in competition
with those Title 62 services offered by US WEST in southern Idaho. We further find that the terms
of the special contract entered into between the Smoky Canyon Mine and Silver Star are just and
reasonable and in the public interest.
We further find that information contained in the special contract does not meet the
statutory standards of a trade secret to justify exemption from public disclosure under the Idaho
Trade Secrets Act and the Idaho Public Records Act.
ORDER NO. 27043 15-
We conclude that there is no basis to restrict Silver Star from serving the mine and that
Silver Star s request to approve the special services contract should be granted.
ORDER
IT IS HEREBY ORDERED that Silver Star s request to approve the special services
contract is granted.
IT IS FURTHER ORDERED that Union Telephone s Motion to Compel is granted and
Silver Star s Motion for Protective Order is denied. The special services contract shall be made
available for public viewing as a public record not exempt from disclosure no earlier than the
afternoon of July 18, 1997.
THIS IS A FINAL ORDER. Any person interested in this Order (or in issues fmally
decided by this Order) orin interlocutory Orders previously issued in this Case No. SIL-97-1 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 Case No. SIL-
T -97 -1 . Within seven (7) days after any person has petitioned for reconsideration, any other person
may cross-petition for reconsideration. See Idaho Code ~ 61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
day of July 1997.
J ~~~
RALPH N SON, COMMISSIONER
~~
,J
MARSHA H. SMITH, COMMISSIONER
ATTEST:
~A~ e.
~~~
Myrna J. Walters
Commission Secretary
cm/O:SIL-97-1.dh3
ORDER NO. 27043 16-