20000927.doc

DECISION MEMORANDUM

TO: COMMISSIONER HANSEN
COMMISSIONER SMITH
COMMISSIONER KJELLANDER
MYRNA WALTERS
RON LAW
LOUANN WESTERFIELD
TONYA CLARK
DAVE SCHUNKE
RANDY LOBB
BEV BARKER
JOE CUSICK
DOUG COOLEY
LYNN ANDERSON
WORKING FILE
FROM:
DATE:
SEPTEMBER 27, 2000 RE: RATE CENTER CONSOLIDATION FOR QWEST, CASE NO. USW-T-99-21

On September 7, 1999, the Commission on its own motion initiated an investigation to examine actions which may delay the need for an additional telephone area code in Idaho. In particular, the Commission issued a Notice of Modified Procedure requesting comments on the consolidation of rate centers for U S WEST Communications (now Qwest) in its southern Idaho service area. Qwest, the Commission Staff, and GTE Northwest (now doing business as Verizon) filed comments. On September 19, 2000, Qwest also filed supplemental comments.
BACKGROUND
When the Commission issued its Notice of Modified Procedure in September 1999, the North American Numbering Plan Administrator reported that Idaho’s “208” area code was projected to last until 2006. More recently, the Administrator (Neu Star) projects that Idaho’s 208 area code will be exhausted in the first quarter of 2003. Although the FCC exercises primary jurisdiction over most issues concerning area codes, state commissions do exercise jurisdiction over the establishment of rate center boundaries and rate center consolidation.
Rate centers are the geographic locations typically used by local telephone companies for determining whether a call is a local or long-distance (toll) call. Historically, there is a rate center associated with each exchange and the local telephone company has at least one telephone prefix (NXX-xxxx) for each rate center. Each NXX has approximately 10,000 telephone numbers. In 1997, the Commission Staff estimated that approximately 300 of the 800 available NXX codes in the state were in use. In its Notice of Modified Procedure, the Commission observed that as of July 1999, over 530 codes have been assigned. Order No. 28144 at 2.
The establishment of rate center boundaries and rate center consolidation has an impact on NXX utilization and ultimately the need for a new area code. As local exchange competition emerges, each new local service provider must obtain an NXX for each rate center (exchange) in which it desires to offer service. For example, a competitor providing service throughout the Qwest Treasure Valley calling area, would normally obtain 18 NXX codes (corresponding to the 18 exchanges in the calling region), or approximately 180,000 telephone numbers. The real concern is that the demand for NXX prefixes would exceed the actual number of customers served by new local exchange competitors. If the demand for NXX codes could be reduced, the finite number of NXX codes could be conserved thereby postponing the need for a new area code.
In its Notice, the Commission recognized that reducing or consolidating the number of rate centers will reduce the number of NXX codes that each new LEC will require to serve a particular calling area. The Commission also recognized that the existence of the three large EAS regions in Qwest’s service area creates an opportunity to consolidate rate centers with minimum impact. Id. at 2. The Commission asked interested parties to address: 1) the appropriate areas for rate center consolidation; 2) the manner of consolidation and possible technical concerns; 3) implementation concerns (timing); and 4) potential cost recovery mechanisms, if necessary.
THE COMMENTS
Qwest filed initial comments while the Commission Staff and Verizon filed reply comments. In addition, Qwest recently filed supplemental comments (attached). These comments are set out in greater detail below.
Qwest’s Initial Comments. In general, Qwest “supports this Commission’s interest in preserving NXX codes in Idaho.” Comments at 2. In its comments, Qwest stated that it adheres to two general principles. First, the Company anticipates that the current dialing patterns for intra- and interLATA tolling calls will not change. Second, the Company believes that it is essential to protect the integrity of the present E911 routing system.
Qwest maintained that the public interest would be served by consolidating most of its rate centers into six clusters of exchanges and several single exchange rate centers. Under this scenario, each cluster would become a single rate center. In essence, consolidation would reduce the number of Qwest rate centers from approximately 38 rate centers to 6 rate center clusters. Consequently, a new local exchange company wishing to provide service in all six clusters would activate a single NXX in each rate cluster instead of assigning a new competitor an NXX for all 38 rate centers.
Qwest stated that what makes rate center consolidation possible is the alignment of local calling between exchanges. However, there are several exchanges that should not be included in a cluster. For example, Nampa, Caldwell, Blackfoot, and Burley should not be included in any cluster because there are no Qwest exchanges with precisely the same calling area as these exchanges. Id. at 6.
Qwest commented that one possible drawback to immediate rate center consolidation has to do with future extended area service (EAS) expansion. More specifically, if the Commission implements rate center consolidation, then future “EAS expansion must occur by rate center, not by individual exchange.” Id. This requirement arises because “once a rate center is consolidated, there is no longer any methodology whereby the network can distinguish between ‘pieces’ of the rate center so that some calls remain local while others be treated as toll.” Id. at 7. In its November 1999 comments, Qwest noted that if most of its exchanges were consolidated into six rate centers, then the impending EAS cases would require changes to the proposed clusters.
Turning to the issue of cost recovery for consolidation, Qwest did “not anticipate requesting compensation for the implementation of rate center consolidation in Idaho. . .due to the limited scope of the implementation required.” Id. at 9. Costs to implement rate center consolidation would be limited to reprogramming the Company’s billing system and would not require additional hardware in the network. Consequently, “[n]o request is being made at this time. . . .” Id.
Addressing the time required to implement the billing system updates, Qwest stated in its initial comments that it would not like to commit to any particular implementation date at this stage of the docket. In part, the Company’s reluctance was related to Y2K concern but the Company would be able to provide additional detail on possible implementation schedule in calendar year 2000.
Finally, U S WEST commented on the issue of E911 default routing. Default routing of 911 calls are “very rare and occur when calls placed to 911 either: (1) fail to carry their automatic number identification (ANI); or (2) the automatic line identifier (ALI) database does not contain 911 public service answering point (PSAP) routing information for the ANI that was sent. If rate centers are consolidated, there may be more than one PSAP rate center or cluster. Qwest maintained that if this occurs, each “service provider [must] establish a unique trunk group for each default PSAP located in each end office serving area.”
Verizon Reply Comments. In its reply comments, Verizon recommended that the Commission adopt rate center consolidation for Qwest in southern Idaho. In recommending consolidation, Verizon asserted that the following criteria should apply to any proposed rate center consolidation. In particular, Verizon suggested that consolidation rate centers should be contiguous and capable of local number portability, have identical local calling areas, and identical local exchange service rates. In addition, Verizon recommended that:
Consolidation not create undue technical implementation complications for service providers without establishing cost recovery mechanisms as part of the consolidation process.

Rate centers should not be consolidated across LATA or area code boundaries.

Consolidation must not affect the provision of critical emergency services such as 911.

Staff Reply Comments. Staff also supported the consolidation of Qwest rate center but recommended that consolidation be deferred until completion of several pending cases that entail EAS requests. Staff agreed that reducing the number of rate centers reduces the number of NXX codes each new service provider needs to serve a local calling area. In the long run, rate center consolidation “prolongs the life of the 208 area code and avoids the expense of adding a second area code for Idaho.” Staff Comments at 2.
The Staff stated that the cost, if any, in implementing rate center consolidation is far outweighed by the benefits. Id. at 3. The conservation of numbers in assigning single NXX codes for each cluster justifies consolidation. Staff asserted that given the benefits of consolidation, no specific cost recovery mechanism is necessary. Id.
Staff also endorsed the comments of Qwest that all exchanges included within a single rate center must share the same local calling area. Id. at 4. Once the Commission has completed its consideration of the pending EAS cases in the summer of 2000, then consolidation is appropriate.
Turning to the issue of 911 calling, the Staff observed that it was likely that more than one PSAP will be present in each clustered rate center. The Staff also agreed with Qwest that the “over whelming majority of calls to 911. . .should not present a problem.” Id. at 5. In those rate circumstances when calls do not contain the necessary ANI or ALI information, each new telephone service provider “will need to establish a new trunk group to each default PSAP in a rate center.” Id. Staff believes that calls to southern Idaho 911 systems all deliver ANI to the PSAP.
Qwest Supplemental Comments. On September 19, 2000, Qwest filed supplemental comments in this matter. The Company observed that since the outstanding EAS cases have been concluded, Qwest is now able to update its list of proposed rate center clusters. Since it filed its initial comments, Qwest asserted that there is a new issue which has arose regarding rate center consolidation. According to Qwest, the FCC issued a Further Notice of Proposed Rulemaking in March 2000 proposing to limit the assignment of new NXXs based upon the percentage of lines in use in a rate center. Qwest maintains that this proposal would prohibit the establishment of new NXXs in rate centers that have less than 50% of its lines in use. For example, if one exchange in a three exchange cluster experience considerable growth but the other two exchanges did not, conceivably, the FCC could deny the request for a new prefix in the exchange experiencing the population growth until the overall lines in service for the entire rate center reach 50%. Supplemental Comments at 1. No final decision has been issued yet.
Taking the FCC proposal into consideration, Qwest proposed consolidating most of its exchanges into eight clusters. The proposed clusters are
Emmett, Kuna, Melba, Meridian, Middleton, Star

Glenns Ferry and Mountain Home

Hailey and Ketchum

Pocatello and American Falls

Bancroft, Downey, Grace, Lava Hot Springs, McCammon, Montpelier, Preston, Soda Springs

Idaho Falls, Rexburg, Rigby, Ririe, Roberts, Shelley (including Firth)

Twin Falls and Jerome

Bliss, Buhl, Castleford, Eden/Hazelton, Gooding, Hagerman, Kimberly, Murtaugh, Shoshone/Dietrich, and Wendell

Supplemental Comments at 2. In addition, the following exchanges would remain separate rate centers: Boise, Idaho City, Afton, Burley, Caldwell, Nampa, New Plymouth, Payette and Wesier. Thus, Qwest would reduce its existing 42 rate centers into 17 rate centers.
The Company described the primary difference between its initial comments and the supplemental comments is to isolate the Boise and Idaho City exchanges. Rather than tying the Boise and Idaho City exchange into a single cluster, Qwest recommended that the Commission not consolidate either exchange given the possibility of future EAS requests to Boise. In addition, if the Commission were to grant EAS between Ontario, Oregon and Emmett, rate consolidation would generally require EAS to Melba and the balance of the exchanges in the first cluster.
Finally, Qwest requested that if the Commission is prepared to enact rate center consolidation, the Company requested that it be allowed 21 days to provide the Commission with an implementation date following receipt of the Order.

STAFF ANALYSIS
In light of the comments the Commission received in this matter, the Staff believes that it is appropriate and reasonable for the Commission to direct Qwest to implement rate center consolidation. As Qwest and the Commission Staff noted, completion of the numerous EAS cases this summer have resolved most of the outstanding EAS petitions. Given Qwest’s proposed rate clusters, Staff believes that the rate cluster and the remaining single rate-center exchanges strikes an appropriate balance between moving forward on consolidation and maintaining flexibility for the pending and future EAS petitions.
Staff concurs with Qwest’s proposed clusters with one minor modification. Staff would divide cluster No. 8 and create a ninth cluster composed of Eden/Hazelton, Kimberly, Murtaugh, and Shoshone/Dietrich. This would consolidate 38 exchange rate centers to 9 clustered rate centers. This ninth cluster would also provide some flexibility if there were further EAS pressures in the Magic Valley. Staff recommends that the Commission direct Qwest to implement consolidation and make the necessary billing changes no later than January 8, 2001.
COMMISSION DECISION
Does the Commission believe that it is appropriate to implement rate center consolidations for Qwest? In particular, does the Commission wish to adopt the Company’s eight proposed clusters or the Staff’s nine proposed clusters?
Does the Commission agree with the comments of the parties that there should be no cost recovery mechanism?
Does the Commission wish to fix a firm implementation date in the future, e.g., January 8, 2001, or allow Qwest 21 days to respond when it may make the billing changes necessary to implement consolidation?

vld/M:usw-t-99-21_dh2

As discussed below, Qwest recommends in its supplemental comments that eight rate clusters be established.
To demonstrate the rare occurrence of default calls, Qwest noted that the number of default calls to the city of Denver amounts to just two-tenths of 1% of the 911 calls directed to the city.

DECISION MEMORANDUM 2