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ANNUAL REPORTPage 45 IDAHO PUBLIC UTILITIES COMMISSION
IDAHO PUBLIC UTILITIES COMMISSION Page 462003
ANNUAL REPORT
Telecommunication Utilities Under
IPUC Rate Jurisdiction
Albion Telephone Corp (ATC)
P.O.Box 98
Albion, Idaho 83311-0098
208/675-5335
Cambridge Telephone Company
P.O.Box 86
Cambridge, Idaho 83610-0086
208/257-3314
CenturyTel of Idaho, Inc.
P.O.Box 1007
Salmon, Idaho 83467
208/756-3300
CenturyTel of the Gem State, Inc.
P.O.Box 9901
805 Broadway
Vancouver, Washington 98668
360/905-5800
111 A Street
Cheney, Washington 99114
509/235-3170
Frontier, A Citizens Communications
Company
4 Triad Center, Suite 220
Salt Lake City, Utah 84180
801/321-6602
P.O.Box 926
201 Lenora Street
McCall, Idaho 83638
208/634-6150
Inland Telephone Company
103 South Second Street
P.O.Box 171
Roslyn, Washington 98941
509/649-2211
Fremont Telecom, Inc.
110 E. Main Street
St. Anthony, Idaho 83445
208/624-7300
Midvale Telephone Exchange, Inc.
P.O.Box 7
Midvale, Idaho 83645-0007
208/355-2211
Verizon Northwest, Inc.
17933 N.W. Evergreen Parkway
P.O.Box 1100
Beaverton, Oregon 97075
503/629-2281
208/765-4351 (Coeur d’Alene)
800/483-4100 (Moscow)
208/263-0557, Ext. 204 (Sandpoint)
Oregon-Idaho Utilities, Inc.
P.O.Box 190310
Rincon Station
San Francisco, California 94119-0310
415/597-7811
714 Main Street
P.O.Box 1406
Caldwell, Idaho 83605
208/454-7800
Pine Telephone System, Inc.
P.O.Box 706
Halfway, Oregon 97834
541/742-2201
Potlatch Telephone Company
P.O.Box 138
702 E. Main Street
Kendrick, Idaho 83537-0138
208/835-2211
Rockland Telephone Company, Inc.
P.O.Box 269
147 W. 4th Avenue
Rockland, Idaho 83271
208/548-2345
Rural Telephone Company
704 W. Madison Avenue
Glenns Ferry, Idaho 83623
208/366-2614
Silver Star Telephone Company,
Inc.
P.O.Box 226
Freedom, Wyoming 83120
307/883-2411
Troy Telephone Company
P.O.Box 138
702 E. Main Street
Kendrick, Idaho 83837-0138
208/835-2211
Teton Telecom Communications
P.O.Box 900
Driggs, Idaho 83422
208/354-3300
Qwest Communications
North and South Idaho
P.O.Box 7888 (83723)
999 Main Street
Boise, Idaho 83702
800/244-1111
2003
ANNUAL REPORTPage 47 IDAHO PUBLIC UTILITIES COMMISSION
Idaho Telecommunications
Competitive Local
Exchange Carrier
Certificates
Approved in FY03
15
Total Approved
(as of 7/1/03)
58
A list of companies
issued certificates to
provide basic local
exchange service is
available at
www.puc.state.id.us/
FILEROOM/
UTILITIES.pdf
Interconnection
Agreements
Agreements or
Amendments
Approved in FY02
67
Developing Competition
Competition may finally be emerging in Idaho, as the number of custom-
ers selecting a competitive carrier started to increase significantly at the close of
this fiscal year. It has now been more than seven years since the passage of the
federal Telecommunications Act of 1996 made it legal for competition to de-
velop for local exchange services, but making competition legal did not make it
happen immediately. After an initial stage of optimism, competitive activity in
Idaho stalled, caught in the general economic downturn that nearly dealt the
competitive telecommunications sector a deadly blow. However, in the closing
months of the year, the number of Qwest customers selecting an alternative
provider increased significantly, possibly signaling the start of a competitive
future, at least for some parts of Idaho.
Although regulatory barriers to competition in Idaho have been elimi-
nated, many Idaho consumers still do not have a choice, and those who do have
choices are not enjoying the full advantages of competition envisioned by
Congress. Market forces, and not legal or regulatory barriers, are the primary
factors leading to the slow progress of competition in Idaho. The Idaho Public
Utilities Commission approved 15 more applications for Certificates of Public
Convenience and Necessity to provide competitive local exchange service
during the year covered by this report, and had granted a total of 58 companies
with certificates by June 30, 2002. However, only a handful of these competi-
tive local exchange companies (CLECs) had made the market decision to
actually provide service to Idaho customers.
In the year covered by this report, the commission also approved more
than 65 interconnection agreements and amendments to previous agreements
between incumbent telephone companies and competitors, including those
providing wireless or paging services. These agreements specify the terms and
conditions for connecting one company’s system to the others so that calls may
transfer seamlessly from one company to the next. They also include the terms
and conditions under which an incumbent will sell its services, or the individual
network elements that CLEC’s may use to provide competitive services without
duplicating the existing facilities.
The Idaho Telecommunications Act of 1988 allowed telephone compa-
nies to elect modified regulation for all but basic local exchange service to
customers with five or fewer lines at one location. U S WEST chose partial
deregulation under Title 62 for its territory in southern Idaho, beginning April 1,
1989. All telecommunications companies that only provide long distance ser-
vices also come under the provisions of Title 62. These companies set their own
prices and file price lists with the commissioners for informal purposes.
IDAHO PUBLIC UTILITIES COMMISSION Page 482003
ANNUAL REPORT
Approximately 400 long distance companies have price lists on file with
the commission, although the number actually providing service to Idaho
customers is estimated to be only a fraction of that. After years of increasing
growth in the number of price lists on file, this number remained relatively stable
the past three years. The general economic downturn and the acute downturn
in the technical sector was visible here with the number of new filings matched
by the number of price lists withdrawn due to mergers, bankruptcies and
decisions to cease operations in Idaho.
Services provided by the new CLECs are not rate-regulated, but, in
accordance with the provisions of Title 62, are subject to the commission’s
rules. Telecommunications companies not providing basic local service, such as
a long distance company, are also not subject to rate-setting authority of Title
61, but must comply with Title 62 rules. Upon complaint, the commission may
hold hearings and order changes if the public interest is adversely affected, and
may resolve disputes between companies. Title 62 regulations require that price
lists be filed with the commission.
Commission staff reviewed more than 450 price lists or revisions to
price lists during the year. While the commission does not review the actual
prices in the price lists, staff checks the terms and conditions of the price list for
compliance with applicable commission rules. The commission retains the
authority to review the quality, availability, terms and conditions of service
offered by economically deregulated Title 62 companies.
Until the commission determines that incumbent local exchange compa-
nies (ILEC) face effective competition throughout an exchange, basic local
exchange service provided by an ILEC to residential and small business cus-
tomers remains under the commission’s Title 61 rate-setting authority. Qwest
sought price deregulation of its seven largest exchanges, claiming competition
from wireless providers met the criteria for effective competition (See QWE-T-
02-25.).
More than 75 tariff revisions for price regulated services were reviewed
and approved by the commission during this year. Most of these involved the
introduction of new vertical or advanced services or adjustments to prices or
fees made necessary by orders of the Federal Communications Commission or
IPUC orders.
Approximately 400
companies had Title
62 price lists on file
with the Commission
at the end of June,
2002.
2003
ANNUAL REPORTPage 49 IDAHO PUBLIC UTILITIES COMMISSION
Local exchange companies
In addition to the North Idaho service area of Qwest which remains fully
regulated and subject to the provisions of Title 61, there are 16 other local
exchange companies whose services are still fully regulated by the commission.
Qwest’s Southern Idaho operating company is by far the largest local exchange
company, with more than 67 percent of the customer lines (approximately
500,000) in the state. Verizon is a distant second, with nearly 130,000 access
lines (about 18 percent). The Qwest North service area is the third largest, with
36,000, or 5 percent.
Frontier, formerly known as Citizens, is Idaho’s third largest local
exchange carrier with more than 20,000 access lines (3 percent). Fourteen other
regulated telecommunications companies also serve Idaho residents, as well as
six mutual or cooperative companies. These 20 companies serve the remaining 7
percent.
Teton
Communications
Ave. Residential Rate
= $24.10
Ave. Business Rate
= $42.00
CenturyTel of Idaho
Ave. Residential Rate
= $21.75
+ $3.50 rural adder
Ave. Business Rate
=$39.77
+ $3.50 rural adder
CenturyTel of the
Gem State
Ave. Residential Rate
= $24.10
+ $3.50 rural adder
Average Business
Rate
= $39.77
+ $3.50 rural adder
Potlatch Telephone
Company
Ave. Residential Rate
= $12.17
Ave. Business Rate
= $18.20
IDAHO PUBLIC UTILITIES COMMISSION Page 502003
ANNUAL REPORT
Telecommunications Case Reviews
QWEST PETITION FOR DEREGULATION DENIED
Case No. QWE-T-02-25, Order No. 29360
The Idaho Public Utilities Commission denied a petition by Qwest
Corporation to deregulate pricing of local telephone rates in seven urban areas
in southern Idaho. Had the commission granted the petition, Qwest would have
been able to increase or decrease basic local exchange rates in those seven
areas without commission approval.
The Idaho Telecommunications Act says the commission shall cease
regulating basic local exchange rates when the incumbent telephone corporation
– in this case, Qwest – can show that effective competition exists for local
calling. Qwest maintained that a number of cellular (wireless) telephone provid-
ers in the Boise, Nampa, Meridian, Caldwell, Twin Falls, Pocatello and Idaho
Falls areas offer effective competition to Qwest’s landline service.
“The commission was not persuaded by Qwest’s evidence that cellular
service effectively competes for local service customers of Qwest’s wireline
service,” the commission said. “On the evidence presented to us, we cannot
find that cell phones are functionally equivalent and competitively priced to
Qwest’s local service.”
Qwest cited the results of a Federal Communications Commission
study indicating that 3 to 5 percent of wireline customers nationwide are replac-
ing their landline phone with a wireless phone. But Qwest did not show that
those numbers apply to Qwest exchanges here, the commission said. Even if
they did apply to Idaho, “substitution rates of 3 to 5 percent do not demon-
strate that cell phone service effectively completes with wireline service.”
The commission said its conclusion is similar to one reached by the
FCC in its Aug. 21 Triennial Review Order which said, “Neither wireless nor
cable has blossomed into a full substitute for wireline telephony.”
The commission said it also had a public interest concern regarding the
potential for Qwest rate increases. “Nowhere in the record does Qwest con-
tend it is considering lowering its basic local service rates as the result of
competitive pressure it currently faces from cellular service.”
In a motion to re-open the record after the official case record had
closed, Qwest volunteered to forego rate increases through 2004 and then limit
its rate increases to $6.60 per month for residential customers and $9.49 per
month for small-business customers through 2007. “The public interest is
served if basic service rates are deregulated only when effective competitive
forces exist to protect customers from monopoly pricing,” the commission said.
“In that environment, it would not be necessary for Qwest to volunteer to limit
increases in its local service rates.”
Commissioners cited exhibits in the case that show wireless plans are
Midvale Telephone
Exchange
Ave. Residential Rate
= $22.48
Ave. Business Rate
= $40.91
Qwest South
Ave. Residential Rate
= $17.15
Ave. Business Rate
= $32.02
U S WEST North
Ave. Residential Rate
= $15.51
Ave. Business Rate
= $29.38
Fremont Telcom
Company
Ave. Residential Rate
= $24.10
Ave. Business Rate
= $42.00
2003
ANNUAL REPORTPage 51 IDAHO PUBLIC UTILITIES COMMISSION
priced from $3.95 per month to $58.67 per month higher than Qwest’s basic
local service. Those cell phone prices do not include the $1.50 per month for
directory listing or fees for 911 service and number portability, all of which will
soon appear on cell phone service bills.
The commission agreed with intervening parties in the case who main-
tained that cellular service is not yet “functionally equivalent” to wireline technol-
ogy, as is required by state statute. For example, cell phones are not yet
equipped to handle multiple extensions as would be required at a small business
or “roll over” features that allow an incoming call on any of several local lines
serving a small business. Further, cell phones cannot provide facsimile capabili-
ties and only very limited Internet functions with research features.
Much of the case dealt with two different interpretations Section 62-
622(3) of Idaho Code. Qwest maintained the Legislature intended to allow for
deregulation if competition for basic voice service exists within an area and that
functions other than voice service, such as facsimile or Internet technology, were
irrelevant to the case.
However, the commission, citing legislative intent language, ruled that
“actual competition means more than the mere presence of a competitor” and
needs to be “substantive and meaningful,” offering service functions similar
enough to wireline that customers are willing and able to switch to a cellular
service as a substitute to basic local service.
The commission acknowledged Qwest exhibits that show an increase in
cell phone customers and a small decrease in the number of local service lines in
six of the seven exchanges. However, Qwest presented no evidence to show a
correlation between the two, the commission said.
“Qwest candidly admitted it ‘never attempted to provide a precise loss
of lines attributable to wireless competition,’ ” the commission said. A PUC staff
witness testified that while Qwest lost 14,000 access lines since 2000, it gained
13,000 high-speed Internet (DSL) lines, indicating a large number of customers
who converted second phone lines with DSL lines. Revenues from DSL lines are
considerably higher than from a voice grade line, according to commission staff.
The order also denies a motion made by Qwest on Aug. 14 to re-open
the case record, which had been closed on July 11. Qwest’s motion sought to
fundamentally change the case from a price deregulation case to a pilot project
with price caps in the seven urban exchanges.
Public workshops and hearing regarding Qwest’s original application
were held in Pocatello, Twin Falls and Boise. The commission received written
comments from 38 customers and two organizations. Three customers sup-
ported Qwest’s proposal and the two organizations, the Twin Falls Chamber of
Commerce and the Boise Metro Chamber of Commerce, also expressed
support.
Most customers opposing Qwest’s petition cited affordable rates,
especially for senior citizens and low-income customers who want basic tele-
phone service without the extras that come with “packages” offered by Qwest
Direct
Communications
Ave. Residential Rate
= $24.10
Ave. Business Rate
= $42.00
ATC
(Albion Telephone
Company)
Residential = $24.10
Business = $42.00
Cambridge
Telephone Company
Ave. Residential Rate
= $24.10
Ave. Business Rate
= $42.00
Ave. Residential Rate
= $24.10
Ave. Business Rate
= $42.00
IDAHO PUBLIC UTILITIES COMMISSION Page 522003
ANNUAL REPORT
and wireless companies.
Copies of the commission’s order as well as other documents related to
the case are available on the commission’s Web site at www.puc.state.id.us.
Click on “File Room,” and then on, “Telecommunication Cases,” and scroll
down to Case No. QWE-T-02-25.
TOLL RESTRICTION SETTLEMENT APPROVED
Case No. QWE-T-03-15, Order No. 29337
September 26, 2003
The Idaho Public Utilities Commission accepted a settlement between
the Qwest Corporation and commission staff that increases the rate for toll
restriction service, but moves the service under commission regulation and
removes installation fees for residential customers.
Toll restriction prohibits access to long distance carriers on any line on
which it is installed. Qwest has more than 38,000 toll restriction customers in
Idaho. A typical toll restriction customer would be a parent with a teen line who
doesn’t want long-distance calls made from that line. Other toll restriction
customers include those who are low income or those who have had trouble
making long-distance payments in the past but want to retain a phone line for
local calls only. The settlement promotes universal service by allowing low-
income customers or customers with difficulties making past payments to obtain
local calling service without having to make a deposit.
The order, effective Oct. 1, means that toll restriction will no longer be
deregulated. As a deregulated service, Qwest would have been able to increase
or decrease fees for the service without commission approval.
As part of the settlement, the monthly fee for residential customers who
want toll restriction increases from 25 cents to 75 cents. For business lines, the
monthly fee increases from $1 to $2. Low-income customers who qualify under
the state’s Lifeline program will not be charged for toll restriction.
The settlement also removes the residential installation fee for the
service, which was $24 in Qwest’s northern Idaho territory and $13.50 in
southern Idaho. For business lines, the installation fee will be $13.50.
The settlement was approved on a 2-1 vote by the commission, with
Commissioner Marsha Smith dissenting. Smith concurred with the majority that
the service should be regulated, but did not agree with the decision to raise the
monthly fee.
“Although I recognize that the approved rates are low when compared
to the rates in other states, I believe that customers should not have to pay to
block their access to long-distance carriers,” Smith said.
The residential rate is the lowest in the 12 states where Qwest has a toll
restriction fee.
Ave. Residential Rate
= $15.77
Ave. Business Rate
= $27.75
Ave. Residential Rate
= $18.92
Ave. Business Rate
= $36.19
Ave. Residential Rate
= $17.50
Ave. Business Rate
= $35.10
Inland Telephone
Company
Ave. Residential Rate
= $21.63
Ave. Business Rate
= $40.68
2003
ANNUAL REPORTPage 53 IDAHO PUBLIC UTILITIES COMMISSION
Idaho’s Universal Service Fund
Telephone companies operating in Idaho have been required since July
1988 to contribute to a Universal Service Fund (USF) to ensure that the high
costs of small telephone companies do not result in rates that exceed the
statewide average by more than 25 percent. These local and long distance
companies are permitted to recover their contributions from local and long-
distance customers. Local exchange companies may apply for assistance from
this fund. They must submit proof to the commission that when they set their
local rates at 125 percent of the statewide average, they still do not fully re-
cover their cost of providing local service. The commission evaluates the
circumstances and determines whether and for what amount the company may
receive Universal Service funds.
Long distance companies connecting in-state long distance calls in
Idaho are required to remit a 0.25 cent ($0.0025) surcharge for each in-state
long distance minute. Those companies are also required to submit periodic
reports detailing their minutes of in-state toll usage. Local exchange companies
are required to remit on a monthly basis 8 cents (residential) and 13 cents
(business) for each line served. These rates did not change this fiscal year.
Universal Service Fund Facts
July 1, 2002 -- June 30, 2003
Residential Business Toll Access
Statewide average $17.58 $31.52 $0.0525
125 percent of average $21.98 $39.40
Monthly surcharge rate $0.08/line $0.13/line
LD/WATS surcharge rate $0.0025/min
Fund Activity
Balance 7/01/02 $ 646,286
Collections Disbursements
Local Surcharge $902,422 ATC $514,238
Toll Surcharge $752,894 Cambridge $167,381
Total $1,655,316 Direct Comm $110,081
Interest Earned $ 18,901 Fremont $43,161
Inland $362,366
Co. Disbursements$1,898,303 Midvale $221,847
Admin/Amort/ $ 11,600 Rural $316,128
Bank/Brkr Silver Star $163,101
T-Note $255,880 $1,898,303
Balance 6/30/03 $ 666,480
IDAHO PUBLIC UTILITIES COMMISSION Page 542003
ANNUAL REPORT
March 26, 2003
FEE TO AID LOW-INCOME IDAHOANS INCREASES
Case No. GNR-T-03-12, Order No. 29214
A surcharge on all residential, wireless and business phone lines will
increase from 10 cents per line per month to 12 cents effective May 1, 2003.
The Idaho Telephone Service Assistance Program (ITSAP), com-
monly referred to as a “lifeline” program, provides credits to low income
households to assist them to obtain and maintain telephone service. Because
the value of telephone service increases as more households have a telephone,
a small contribution from all non-participating households is used to fund this
program. In response to federal changes to the program, the Idaho Legislature
opened the program to all low-income households.
The credits include $3.50 per month per household in state funds, plus
$3.50 in matching funds from the federal government. In addition, the federally
imposed subscriber line charge of $6.50 is waived for ITSAP participants. The
combined value of federal and state credits is $13.50 per month per house-
hold.
The Department of Health and Welfare established and administers
application procedures and eligibility determinations. Utilities are provided a list
of the telephone numbers for qualifying households and automatically provide
qualifying households with the credits.
The commission is responsible for maintaining the fund and reimbursing
the telephone companies for the cost of providing these credits. Based upon
the estimates of the number of households eligible for the credits, the commis-
sion established the monthly surcharge paid by all telephone users, including
wireless customers, at 12 cents per line effective May 1, 2003. The average
number of credit recipients increased by nearly 15% to over 27,500 as of June
30th.
The ITSAP surcharge is assessed on residential, business, and wireless
users. The gross surcharge revenue is netted against the assistance credits paid
to eligible customers and the company’s administrative costs. Gross surcharge
revenues collected by telecommunications companies during the year totaled
$1,243,775,of which $743,229 (60 percent) was assessed on local exchange
services and $500,568 (40 percent) was assessed on wireless/cellular ser-
vices.
ITSAP
Summary
Jan, 02 - Dec, 02
Credits Provided
Idaho Share
= $1,159,039
Federal Match
= $ 3,224,169
Total Value
of Credits
= $4,383,208
Fund Balance
As of 12/31/02
= $18,371.13
2003
ANNUAL REPORTPage 55 IDAHO PUBLIC UTILITIES COMMISSION
TRS service is
available statewide
and may be reached by
voice by dialing
1-800-377-1363.
Contact with a
text-telephone
operator may be
made by dialing
1-800-377-3529.
As of October 1, 2001,
TRS can be accessed
from any phone simply
by dialing 711.
Questions or
comments regarding
the use of TRS
may be directed
from either a
text or voice
telephone to
1-800-368-6185.
Idaho’s Telephone Relay Service
Idaho inaugurated telephone relay service (TRS) on Dec. 1, 1992, for
the hearing- and speech-impaired. TRS requirements were created by the
Federal Communications Commission under Title IV of the Americans with
Disabilities Act of 1990. The 1992 Idaho Legislature established the manner in
which TRS has been implemented.
Under Idaho rules, the Idaho Public Utilities Commission established a
seven-member telephone industry committee to help select and advise a TRS
administrator. In 1992, the commission appointed Robert Dunbar as its first
TRS administrator.
This past year, Mr. Dunbar completed the federally required re-certifi-
cation process for the Idaho relay. This process is required every five years by
the FCC and addresses the operational standards, service offerings and perfor-
mance requirements of relay service.
In accordance with an FCC requirement, Idaho’s local exchange
companies implemented 711 dialing access to TRS service on October 1, 2001.
This year, Hamilton Telecommunications inititated internet-based relay
service. Hamilton Internet Protocol Relay (HIP Relay) is a 24-hour service that
allows individuals who are Deaf, Hard of Hearing or Speech Disabled to use
computers and other web devices to connect to HIP Relay via the Internet in
order to place a call to any standard telephone user, VCO user or HCO user.
At this time, NECA reimburses Hamilton for internet relay communication.
A TRS call may be initiated by a text telephone user or a standard
phone user. The caller dials 711 or a toll-free number to access the TRS center
and reaches a Communications Assistant (CA) who will process the call. The
caller gives the CA the number of the person to be called and the CA places the
call. The CA will type to the person with the text telephone and speak to the
person with the standard phone, relaying what is spoken/typed by each party.
“The idea is to allow as close to normal telephone service as possible
for hearing- and speech-impaired persons,” according to Dunbar.
Callers only pay the cost of the telephone call, as if the call was placed
directly between the telephones. Long distance calls are billed based upon the
points of origination and termination and many long distance companies bill them
on a reduced rate basis. No charge is assessed local calls.
TRS service is available statewide and may be reached by voice by
dialing 711 or 1-800-377-1363. Contact with a text-telephone operator is
made by dialing 1-800-377-3529. Questions or comments regarding the use of
TRS may be directed from either a text or voice telephone to 1-800-368-6185.
Information on Idaho’s TRS program is also available via the Internet at:
www.hamilton.net/relay/id/itrs.htm
All Idaho local exchange companies pay 4 cents per access line per
month. In-state long distance companies pay $0.0007 per bill minute to support
the TRS. The commission did not change this rate in 2003.