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HomeMy WebLinkAbout980914.docxQ.Please state your name and address. A.My name is Wayne Hart.  My business address is 472 West Washington, Boise, Idaho. Q.By whom are you employed, and in what capacity? A.I am employed by the Idaho Public Utilities Commission (IPUC; Commission) as a Telecommunications Analyst in the Telecommunications Section. Q.What is your educational background? A.I received a Master's Degree in Bacteriology from the University of Wisconsin in Madison, Wisconsin, and a Bachelor's Degree in Biological Sciences from Indiana University in Bloomington, Indiana. Q.Please outline your experience that is relevant to your testimony. A.I served as a Utilities Compliance Investigator since May of 1994, and have handled nearly 2500 complaints, comments and inquiries, with over 1500 of those involving telecommunications issues, since joining the IPUC Staff.  I served on the Staff team that performed a service quality audit of U S WEST in 1995 and 1996 for Case No. USW-S-95-4.  I joined the Telecommunications Staff in March of 1997. Q.Have you previously testified before this Commission? A.Yes.  I presented testimony in Idaho Power’s general rate case (IPC-E-94-5) in 1995, in the recent U S WEST and GTE rate cases (USW-S-96-5, GTE-T-98-5), and in other EAS cases. Q.What is the purpose of your testimony? A.The purpose of my testimony is to address the petitions received by the Commission requesting extended area service (EAS) from the customers in the U S WEST Communications, Inc. (U S WEST; Company) exchanges of Mountain Home and Glenns Ferry to the Treasure Valley extended calling area (Case No USW-T-97-6) and from the exchanges of Payette, New Plymouth and Weiser to each other and to the Treasure Valley extended calling area (Case No. USW-S-96-6).  I will respond to the community of interest factors as set forth in Commission Order No. 26311, which established guidelines and factors to be followed when evaluating EAS petitions. Q.What towns or communities are included in the Treasure Valley extended calling area the petitioners are requesting? A.The Treasure Valley extended calling area currently includes the communities of Boise, Caldwell, Eagle, Emmett, Idaho City, Kuna, Melba, Meridian, Middleton, Nampa and Star. COMMUNITY OF INTEREST STANDARDS Q.What are the criteria that the Commission established for EAS as set forth in Order No. 26311? A.Order No. 26311 states: we find that many of these factors are appropriate in evaluating the community of interest existing between two exchanges.  The factors may be divided into two categories.   We find that the first category carries more significance that the second category.  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.   We believe these factors, in addition to the calling data shall be designated as the primary factors or guidelines to be applied in evaluating community of interest for EAS routes. Q.What factors are in the second category? A.The Order goes on to state: The second set of factors represent refinements or adjustments to our primary community-of-interest factors.  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. MOUNTAIN HOME AND GLENNS FERRY Q.Let’s examine the Mountain Home and Glenns Ferry case first.  How do these exchanges fare in relationship to “geographic proximity”? A.As can be seen from Staff Exhibit No. 101, Mountain Home and Glenns Ferry share a border but neither shares a border with any of the exchanges in the Treasure Valley extended calling area.  The Mountain Home exchange is separated from the Boise exchange by Rural Telephone’s Tipanuk exchange, which has also petitioned for calling into the Treasure Valley extended calling area (Case No. GNR-T-97-9).  Mountain Home is 43 miles from Boise, while Glenns Ferry is 65 miles from Boise. Q.What about the presence of geographic or other physical barriers? A.The Mountain Home and Glenn Ferry exchanges share a contiguous boundary.  They are separated from the Treasure Valley extended calling area by a stretch of dessert.  However, changes in technology, better roads, higher speed limits and growth in both directions have now turned the trip between Boise and Mountain Home, which used to seem to take forever, into a matter of minutes.  With some development visible from nearly every point along the freeway, the once desolate and barren stretch is essentially being eliminated. Q.What about county seat relationships? A.All of the Mountain Home exchange and most of the Glenns Ferry exchange lie within Elmore County, of which Mountain Home is the county seat.  A small section of the Glenns Ferry exchange goes into Owyhee County.  These residents would need to call Murphy, the county seat, or Bruneau or Homedale, the larger cities in Owyhee County to obtain county services.  Murphy is served by U S WEST and is part of the Melba exchange, which is in the Treasure Valley calling area.  Homedale is served by Citizens and, depending upon the Commission’s decision in Case No. CTC-T-98-03, Homedale may also be included in the Treasure Valley calling area. Q.What about school district boundaries? A.The Mountain Home District reported a number of students who could not be reached without long distance calls.  However, these students lived in the Tipanuk, Pine, Atlanta, Boise River and Grandview exchanges, which are not directly under consideration in this case.  The Glenns Ferry District indicated they did not currently have any students outside of either the Glenns Ferry or Mountain Home exchanges.  Glenns Ferry already has EAS to Mountain Home. All the school districts indicated that teachers lived outside of the exchange in which the school was located and in the exchanges for which extended calling had been requested.  District officials also indicated parents often worked in the foreign exchanges and admitted that teachers and other officials were somewhat hesitant to contact the parents of these students because of the long distance charges, and that communication with such families suffered as a result. Q.What medical care is available locally? A.Medical facilities are available in each of these communities, and a number of physicians, dentists and other providers are available with a local call.  There is a hospital in Mountain Home that provides basic medical needs.  Glenns Ferry has a clinic, staffed with a Physician’s Assistant or Nurse Practitioner.  However, most specialized care would require a long distance call.  Q.How about other business and commerce needs? A.For the most part, these communities are fairly self reliant with a well developed business district.  Most of the day-to-day needs of residents can be found locally.  The combined business community of Mountain Home and Glenns Ferry includes banks, office supply stores, major grocery stores, farm supply stores, implement dealers, car and truck dealers, clothing stores, drug stores, and facilities providing most other common needs. Q.Have the customers indicated a willingness to pay increased rates? A.Yes, although the amount the customers indicated they would be willing to pay was somewhat less than Staff’s projection of the actual price impacts expected from a Commission decision to grant EAS over these routes.  Slightly more than half of the petitioners from the Mountain Home area indicated a willingness to pay more than $3 dollars a month more if EAS were granted, with more than 20% willing to pay more than $5 dollars a month. Q.Turning to the secondary criteria, what are the number of lines in the home and target exchanges? A.Staff Exhibit No. 102, which contains data U S WEST has identified as confidential, contains the average number of lines, both business and residential, for the affected exchanges. Q.What about access to information providers? A.This is an area which is improving.  Residents in each of these 2 exchanges have 3 Internet service providers that can be accessed with a local call.  Cyberhighway franchises are located in both Mountain Home and Glenns Ferry.  Micron Internet Services now has a local point of presence in Mountain Home.  In addition, there is one additional independent local business providing a local dial-up number in Mountain Home.  As Glenns Ferry currently has extended area service to Mountain home, customers in both of these exchanges can reach the Mountain Home dial-up numbers without incurring a toll charge. Q.What does the calling data indicate? A.In Case No. GNR-T-93-13, the various intervening parties recommended that the number of calls per line per month range from between 5 and 8 calls.  However, the Commission refused to endorse any specific number in that case, partially due to the unreliability of calling data. Q.What was the calling volume or average calls per customer per month? A.Customers from the Glenns Ferry exchange made an average of nearly 6 calls per month per line into the exchanges within the Treasure Valley calling area, with the Boise exchange accounting for nearly 5 of the 6 calls.  Customers from the Mountain Home exchange made a slightly higher number of calls, averaging just over 7 calls per month per line to the Treasure Valley calling area.  Again, calls to the Boise exchange made up the bulk of the calling, averaging over 5.5 calls per line per month. Q.What does the call distribution data indicate? A.Call distribution information for the calling region as a whole was not available.  However, using data for calling from these exchanges into the Boise exchange, which would typically be lower than the values for the region as a whole, gives some information about the distribution of calling from these exchanges. Q.What does the data for calling to the Boise exchange indicate? A.The information provided for Mountain Home and Glenns Ferry indicated that between 50% and 60% of the customers made 3 or more calls per month into the Boise exchange.  Approximately one third of the lines in Mountain Home and Glenns Ferry did not place any calls to the Boise exchange. Q.What do you conclude about the community of interest? A.While the community of interest between Mountain Home and Glenns Ferry and the other communities in the Treasure Valley extended calling area is not as strong as the other EAS cases in which I have testified, it is within the range that I would consider acceptable.  There is no question that Mountain Home and Glenns Ferry are a part of the regional economy of the Treasure Valley.  Many of the goods and services that were once available locally are now only available from Boise. Listening to the rush hour traffic reports, its clear that many individuals from the Mountain Home and Glenns Ferry areas work in the Treasure Valley as well. PAYETTE, NEW PLYMOUTH AND WEISER Q.Turning to the Payette, New Plymouth and Weiser case (Case No. USW-T-96-6), how do these exchanges fare in relationship to “geographic proximity”? A.As can be seen from Staff Exhibit No. 101, the Payette and Weiser exchanges share a border.  The New Plymouth exchange shares a border with Payette.  The New Plymouth exchange also shares a border with the Emmett and Caldwell exchanges, which are both part of the Treasure Valley extended calling area.  Using the vertical and horizontal coordinates formula, the same formula used by most long distance companies to calculate the distance between central offices, Weiser is 13 miles from Payette, 21 miles from New Plymouth, and 58 miles from Boise, the metropolitan center of the Treasure Valley extended calling area. Q.What about the presence of geographic or other physical barriers? A.Although Weiser is in the Weiser River drainage and Payette and New Plymouth in the Payette River drainage, there really isn’t much of a divide between the 2 drainages.  The land between these 3 communities is predominantly farmland.  The same can be said about the boundaries and land between New Plymouth and the Caldwell and Emmett exchanges of the Treasure Valley calling area.   Q.What about county seat relationships? A.The Payette exchange extends slightly into Washington County, but lies mostly within Payette County, of which Payette is the county seat.  The New Plymouth exchange also lies mostly within Payette County, but also includes a small portion of Gem County, of which Emmett is the county seat.  The Weiser exchange lies entirely within Washington County, of which Weiser is the county seat. Q.What about school district boundaries? A.School district boundaries are also shared by these exchanges.  Weiser School District officials indicated a number of families located in the Weiser District had Payette exchange phone numbers.  The Payette District indicated they had students attending their schools from the Weiser District with Weiser phone numbers.  However, these families chose to attend Payette instead of Weiser, often because of where the parents worked. All the school districts indicated that teachers lived outside of the exchange in which the school was located and in the exchanges for which extended calling had been requested.  District officials also indicated parents often worked in the foreign exchanges and admitted that teachers and other officials were somewhat hesitant to contact the parents of these students because of the long distance charges, and that communication with such families suffered as a result. Q.What medical care is available locally? A.Each of these 3 communities has access to both physicians and dentists with a local call.  There are hospitals in Weiser and Ontario (a local call from Payette) that provide basic medical needs.  Only New Plymouth would not be able to reach a hospital with a local call.  However, most specialized care would require a long distance call.  In addition, many residents of the Payette, and especially New Plymouth, exchanges would find the hospital in Caldwell (or Emmett), was closer than the hospital in Ontario, especially in terms of time. Q.How about other business and commerce needs? A.For the most part, these communities, especially Payette and Weiser, are fairly self reliant with a well developed business district.  Most of the day-to-day needs of residents can be found locally.  Both Weiser and Payette have banks, fast food outlets, office supply stores, major grocery stores, farm supply stores, implement dealers, car and truck dealers, clothing stores, drug stores, and facilities providing most other common needs. Q.Have the customers indicated a willingness to pay increased rates? A.Yes, although the amount the customers indicated they would be willing to pay was somewhat less than Staff’s projection of the actual price impacts expected from a Commission decision to grant EAS over these routes.  Payette-Weiser area customers signing the petitions were not willing to pay the $5.50 difference between current out-of-region rates and the in-region rates.  More than a quarter of those petitioners only indicated a willingness to pay less than $1 dollar, and nearly 60% only willing to pay between $1 and $3 dollars a month.  Only 16% indicated a willingness to pay more than $3 dollars a month.  While the response on petitions often indicates a desire, rather than willingness, this response does cause some concern. Q.Turning to the secondary criteria, what are the number of lines in the home and target exchanges? A.Staff Exhibit No. 102, which contains data U S WEST has identified as confidential, contains the average number of lines, both business and residential, for the affected exchanges. Q.What about access to information providers? A.This is an area which is improving.  Residents in each of these exchanges have at least one Internet service provider that can be accessed with a local call and many have a choice of 2 local providers.  Cyberhighway franchises are located in Payette, New Plymouth, and Weiser.  Micron Internet Services now has a local point of presence in Ontario which is a local call for Payette. Q.What does the calling data indicate? A.In Case No. GNR-T-93-13, the various intervening parties recommended that the number of calls per line per month range from between 5 and 8 calls.  However, the Commission refused to endorse any specific number in that case, partially due to the unreliability of calling data. Q.What was the calling volume or average calls per customer per month? A.Calling volumes from the Payette, New Plymouth and Weiser areas all exceeded the low end of the threshold values identified in GNR-T-93-13.  New Plymouth customers averaged a total of 11.4 calls per line per month into the Treasure Valley calling area.  As might be expected for an exchange that borders the Caldwell and Emmett exchanges, calling from New Plymouth was more dispersed through the calling area with less than half of the calls going to the Boise exchange, with the Emmett, Caldwell and Nampa exchanges each receiving approximately 15% of the New Plymouth calls.  Weiser customers made an average of just over 6 calls per line per month to the region with over half of those going to Boise.  Payette customers made just under 7 calls per line per month, with about half going to Boise. Q.What about calling between Payette and Weiser? A.Weiser callers placed an average of 2.6 calls per line per month into the Payette exchange, while Payette customers placed an average of 2.3 calls per month per line to Weiser.  New Plymouth customer placed an average of 1.8 calls per line per month into Weiser. Q.What does the call distribution data indicate? A.Call distribution information for the calling region as a whole was not available, however, using data for calling from these exchanges into the Boise exchange, which would typically be lower than the values for the region as a whole, gives some information about the distribution of calling from these exchanges. Q.What does the data for calling to the Boise exchange indicate? A.The calling data for Payette, Weiser and New Plymouth indicated that approximately half of the lines made 1 or more calls to Boise.  Call distribution data for calling between Weiser and Payette was not available. Q.What do you conclude about the community of interest? A.These communities lie on the outer edge of what is typically referred to as the Treasure Valley.  There is no question that there is a heavy reliance on Boise and the other large cities in the Treasure Valley extended calling area for many specialized needs.  These rural communities are growing more dependent upon the larger metropolitan cities, and this dependency is likely to continue to grow.  Many businesses, including those regulated by this Commission, have closed their rural branch offices in these cities and centralized their operations in the metropolitan cities.  The business districts in these towns, although stronger than some small towns, show the same kinds of changes that are occurring to small towns throughout the country.  Many of the goods and services that were once available locally are now only available from Boise, Caldwell or Nampa.  The calling volumes to the region, while lower than previous EAS cases in which I have testified, support the petitioners claim that these communities are part of the Treasure Valley. EAS COSTS Q.What costs are associated in providing EAS? A.In Order No. 27633, the Commission accepted a Stipulation Agreement between U S WEST and the Commission Staff that defined the terms for any compensation that U S WEST would receive if additional exchanges were added to the Company’s regional calling areas in Southern Idaho.  In summary, the Stipulation provides that the Company would be entitled to additional revenue of $0.0861 per toll minute of use, minus the net increase in revenues the Company would receive from raising the rates for the customers of the added exchanges to the “in-region” rates currently in effect. Q.What is the net result of your calculations? A.If all of these exchanges were added to the Treasure Valley region, the Company would be entitled to an additional amount that is just under $600,000 per year.   Q.What would the impact be on all U S WEST customers? A.The annual costs per customer would be approximately $1.50, or between 12 and 13 cents per month. Q.Does Staff recommend the Commission grant extended area service over these routes? A.Probably.  These cases both involve exchanges that are on the outer edge of what most would consider the Treasure Valley.  The community of interest ties, while present, are marginal.  In addition, these petitions were submitted at a time when the rate differential between the in-region and out-of-region rates was considerably less than it is today.  Staff questions whether the majority of customers in these exchanges would still support expanded area calling at the rates that would be required.  If the Commission determines that the majority of customers in these exchanges are willing to pay the in-region rates, Staff supports including these exchanges in the Treasure Valley calling area. Q.Some of the petitions requested extended area service to Ontario and other communities in Washington County as well.  Have you looked into these routes? A.Not yet.  When the petitions dealing with other exchanges in Washington County and Ontario were first received by the Commission, Staff felt it would make the case too complicated to deal with multiple companies and multiple states all at once.  Staff recommended, and the Commission agreed, to address the routes involving calls between U S WEST exchanges in this case, which had already been established, and to deal with the U S WEST routes first.  Staff expects to address the routes involving the other companies’ exchanges after a decision is reached in this case. Q.Does this conclude your direct testimony in this proceeding? A.Yes, it does.