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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
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
Fremont Telecom, Inc.
110 E. Main Street
St. Anthony, Idaho 83445
208/624-7300
Midvale Telephone Exchange
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
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
208/835-2211
Kendrick, Idaho 83537
208/835-2211
Kendrick, Idaho 83537
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
509/649-2211
Idaho Telecommunications
Competition Stalls
A surge in the level of activity by competitive local exchange companies (CLECs) at the end of the
last fiscal year led to optimism that competition was finally going to provide benefits for Idaho’s consumers.
That optimism proved to be premature as uncertainty at the national level caused most CLECs to curtail their
marketing as this fiscal year got under way.
The uncertainty concerned the long-term availability and pricing of facilities that CLECs purchase
from an incumbent local exchange carrier, such as Qwest. Incumbents are required to provide these
facilities, known as unbundled network elements, to competitors, rather than forcing the competitor to
duplicate the expensive network of the incumbent. The competitor leases these facilities at rates that are
designed to compensate an efficient incumbent for its costs, including a reasonable profit.
The determination of which facilities had to be made available to competitors has always been
controversial, and federal courts had rejected the first two attempts of the Federal Communications
Commission (FCC) to decide this issue. The third attempt, a split decision that was released at the beginning
of the fiscal year, reached some decisions, and delegated to the states the responsibility for fine-tuning the
list of facilities to make available for competitors. As the year came to a close, the courts rejected parts of
this new decision, effectively removing some of the more controversial elements from the list.
The most controversial of the elements, and the most important to residential competition, was
known as UNE-P, or UNE package, which consisted of the copper loop from the incumbent’s central office
as well as all the switching services to allow the competitor to serve the customer. UNE-P allowed a
competitor to serve a customer without a significant investment in local facilities. In theory, a competitor
would lease UNE-P until they had enough customers in a local area to justify making a local investment.
However, the incumbents claimed that the continued availability of UNE-P eliminated any incentive for
competitors to invest in facilities. In light of the last court decision the FCC has clearly indicated that UNE-
P will be phased out. In response to this development, AT&T, which had not yet aggressively entered the
Idaho market, announced that it was abandoning its marketing for residential customers.
An alternative to the UNE method, which relied upon regulatory bodies to determine prices and
products, was to encourage the companies to negotiate terms for these products on their own. While this
approach did not lead to much success nationally, Qwest did reach agreements with some of its competitors,
including MCI, which was becoming a significant competitor in Idaho with its nationally advertised
“neighborhood” product. MCI scaled back its national advertising last year and has not yet aggressively
marketed products under its new agreement with Qwest.
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 73 companies with certificates by June 30, 2003. However, only a handful
of these CLECs have made the market decision to actually provide service to Idaho customers.
In the year covered by this report, the commission also approved more than 80 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
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duplicating the existing facilities.
The Idaho Telecommunications Act of 1988 allowed telephone companies 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 services also come under the provisions
of Title 62. These companies set their own prices and file price lists with the commissioners for informal
purposes.
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
four years.
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 380 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 companies (ILEC) face effective
competition throughout an exchange, basic local exchange service provided by an ILEC to residential and
small business customers remains under the commission’s Title 61 rate-setting authority.
In 2002, Qwest sought price deregulation of its seven largest exchanges, claiming the availability of
wireless service was effective competition. The commission rejected Qwest’s request, claiming wireless
providers did not provide effective competition for landline phones..
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.
Broadband Tax Credit Reviews
In 2001, the governor signed House Bill 377 authorizing income tax credits for the installation of
qualifying broadband infrastructure in Idaho. Idaho Code § 63-3029B(3)(a)(ii). “Qualified broadband
equipment” is defined as those network facilities capable of transmitting signals that are at a rate of at
least 200,000 bits per seconds (bps) to a subscriber and at least 125,000 bps from a subscriber. To be
eligible for the tax credit, the taxpayer must apply and obtain “from the Idaho public utilities commission
an order confirming that installed equipment is qualified broadband equipment.”
Since its inception, the Idaho Public Utilities Commission has received applications for orders
confirming qualified broadband investments from over twenty different telephone, cable and wireless
broadband companies. To date, the commission has approved about $4.7 million of broadband
investment tax credits. A company’s actual tax credits are ultimately approved when it files at the Idaho
Tax Commission.
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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 (about 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 fourth 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.
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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 recover 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 0.3
cent ($0.003) 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 10 cents (residential) and 15 cents (business) for each line served.
Universal Service Fund Facts
July 1, 2003 -- June 30, 2004
Residential Business Toll Access
Statewide average $17.53 $31.67 $0.0526
125 percent of average $21.92 $39.59
Monthly surcharge rate $0.10/line $0.15/line
LD/WATS surcharge rate $0.003/min
Fund Activity
Balance 6/30/03 $ 861,281
Collections Disbursements
Local Surcharge $767,621 ATC $528,352
Toll Surcharge $718,169 Cambridge $167,381
Total $1,485,790 Direct Comm $221,848
Interest Earned $ 23,523 Fremont $123,894
Inland $ 43,161
Co. Disbursements $1,943,524 Midvale $379,660
Admin/Amort/ $ 12,534 Rural $316,128
Bank/Brkr Silver Star $163,101
T-Note $300,592 $1,943,524
Balance 6/30/04 $ 439,868
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Idaho Telephone Service Assistance Program
The Idaho Telephone Service Assistance Program (ITSAP), commonly 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
household.
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 commission maintained the monthly surcharge paid by all telephone users, including
wireless customers, at 12 cents per line. The average number of credit recipients increased by nearly 5%
to over 29,000 as of January 1, 2004.
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 $1,695,732,of which $851,449 (56 percent) was assessed on local exchange services and
$744,283 (44 percent) was assessed on wireless/cellular services. The fund balance as of December 31,
2003 was $231,714.
For the calendar year 2003, the total value of credits provided was $4,679, 298, with Idaho’s share
of the credits was $1,199,298, with the Federal share $3,480,000.
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.
In accordance with an FCC requirement, Idaho’s local exchange companies implemented 711 dialing
access to TRS service on October 1, 2001.
Hamilton Telecommunications also offers 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
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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
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 2004.
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.
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Telecommunications Case Reviews
March 26, 2004
TELEPHONE COMPANIES SEEK DELAY IN NUMBER PORTABILITY
Case No. GNR-T-04-1, Order No. 29452
An association representing 16 rural Idaho telephone companies were granted a six-month delay
from the Idaho Public Utilities Commission to implement number portability in their respective service
areas.
Number portability allows wireline customers to switch to wireless phones without changing
numbers. Wireless customers switching to another wireless company would also be able to retain their
number.
The Federal Communications Commission ordered that all local exchange telephone companies
have number portability in place by May 24. However, the FCC also said local exchange carriers with
fewer than 2 percent of the nation’s subscriber lines can petition their state commissions for a six-month
suspension.
The Idaho companies asking for the extension included Albion Telephone Company, Cambridge
Telephone Company, Filer Mutual Telephone Company, Custer Telephone Cooperative, Farmers Mutual
Telephone Company, Filer Mutual Telephone Company, Midvale Telephone Company, Mud Lake
Telephone Cooperative Association, Project Mutual Telephone Cooperative Association, Direct
Communications – Rockland, Rural Telephone Company, Silver Star Telephone Company, Columbine
Telephone Company, Oregon-Idaho Utilities, Rural Network Services, Inc., CTC Telephone, Fretel
Communications and Fremont Telecom.
Inland Telephone Company, with customers in rural areas northeast of Lewiston, filed a separate
petition seeking a six-month extension.
The member companies of the Idaho Telephone Association say they are pursuing an
economically and technically feasible way to provide number portability, but that a system upgrade is
required. The companies claim that waiting until the technology is complete will avoid significant adverse
economic impact on their customers.
Inland says the cost to upgrade its switch will be about $400,000. It has not yet received a request
for number portability.
All the companies say they will have number portability in place no later than Nov. 24.
The commission granted the delay but said the companies must provide written reports of their progress
toward LNP on July 23 and Sept. 24.
April 14, 2004
COMMISSION DENIES PETITION FOR TOLL-FREE CALLING
Case No. GNR-T-01-12, Order No. 29466
The Idaho Public Utilities Commission denied a petition by residents in the Pine-Featherville area
and residents in the Bruneau-Grand View to have toll-free calling between the two areas.
About 107 residents of the two communities signed petitions asking the commission to grant toll-
free extended area service (EAS) between the Bruneau/Grand View residents, served by CenturyTel of
the Gem State, and the Pine/Featherville residents, served by Rural Telephone Company.
EAS creates toll-free calling among exchanges, but the costs are recovered by increasing the basic,
local rates for all the customers within the exchanges. When considering a request for toll-free calling, the
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commission typically adheres a test of six community service standards. If the commission finds those
standards are met and the benefits of EAS outweigh the costs, EAS is usually granted.
The community of interest standards include geographic proximity between the exchanges; the
presence of geographic or other physical barriers such as mountains and rivers; a county-seat relationship;
a school district relationship; proximity to medical facilities and services; and the willingness of
customers to pay increased local rates.
An investigation by commission staff found the petition did not meet any of the standards.
Customers did not indicate an interest in paying higher local rates to accommodate EAS. The areas
between the exchanges are more than 50 miles apart, each is served by their own school districts and the
vast majority of the residents reside in separate counties. The schools serving all the exchanges have toll-
free access to the homes of all students and none of the residents have to make a toll call to reach their
county seat. Customers from the exchanges primarily rely on medical facilities in the Mountain Home or
Boise exchanges, which do not require toll calls.
The primary link, according to commission staff, is recreation. Staff indicated that some Bruneau-
Grand View residents have summer cabins in the Pine-Featherville areas.
Further, the commission noted that the Rural Telephone Company, serving Pine and Featherville,
receives universal service funding, a fund supported by all Idaho telephone customers to keep telephone
rates in rural, high-cost areas comparable to rates in urban areas, where is it less expensive to serve
customers. Universal service funds would likely be used to implement EAS in Rural’s territory,
commission staff found.
“The commission is reluctant to use USF funds contributed by Idaho ratepayers generally to
finance EAS between exchanges that have tenuous ties at best,” said the commission.
August 5, 2004
COMMISSION DENIES TOLL-FREE CALLING FOR THREE CREEK CUSTOMERS
Case No. GNR-T-00-41, Order No. 29546
The Idaho Public Utilities Commission is denying a petition by residents of the Three Creek area
in south-central Idaho to gain toll-free calling into the Magic Valley calling area.
The Three Creek exchange, which includes about 50 residential and 10 business customers, is
southwest of Twin Falls near the Nevada border. The exchange covers areas of Owyhee and Twin Falls
counties. It is served by Rural Telephone Company.
In November of 2000, the commission received a petition from about 28 residents of the exchange
asking for Extended Area Service (EAS) into the Magic Valley calling area. At the time of the petition,
the customers did not have a local Internet service provider, thus making Internet access cost-prohibitive
for school children and the community. Since then, Idaho Public Utilities Commission staff made Rural
Telephone aware of a grant opportunity from the U.S. Department of Agriculture’s Rural Utilities
Service. Rural Telephone was eventually awarded the maximum $400,000 to increase cable capacity.
Because local Internet access is now available, that particular need for EAS has been satisfied, the
commission said.
Rural Telephone estimates it would cost another $172,000 to provide toll-free calling into the
Magic Valley calling area. Calling data obtained before and after local Internet service was provided
indicates that typically 55 of the 60 Three Creek customers did not make calls into the Magic Valley
exchanges in the surveyed months.
Increasing customer bills from their current $21.63 per month to the maximum $24.10 would raise
only $1,482 of the annual upgrade costs required for toll-free service. The rest of the funding would have
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to come from the state Universal Service Fund, which subsidizes basic telephone service in high-cost,
rural areas.
The commission said it is reluctant to use USF funds provided by Idaho ratepayers to finance toll-
free calling when the need is questionable. “The commission recognizes the calling convenience that
accompanies EAS into a larger calling areas, but is concerned that so few customers would benefit in
proportion to the rate increases necessitated by EAS approval,” the commission said.
Nov. 12, 2004
TOLL-FREE CALLING IN SHOUP, SALMON EXCHANGES GRANTED
Case No. GNR-T-01-3, Order No. 29631
The Idaho Public Utilities Commission approved a request by Shoup residents for toll-free calling
into the Salmon and North Fork exchanges. Currently, calls from Shoup into Salmon and North Fork, and
vice versa, are long-distance, toll calls.
Because of the costs associated with extending toll-free areas, local rates for customers in the
exchanges will increase. For Shoup-area residents, their Rural Telephone Co. rate will increase from
$21.63 per month to $24.10. Business customers will pay $42, up from $40.68. The new rate is the same
that is paid by most customers of independent, rural Idaho telephone companies.
Rates will also go up by 9 cents per month for CenturyTel business customers in Salmon and
North Fork, who will also be able to call toll-free into Shoup. For residential customers, the new rate will
be $21.84 per month and for business customers, $39.86.
The toll-free calling is expected to begin in about two months.
A commission staff survey found that during July of this year, 21 out of 61 Shoup customers
averaged three calls to Salmon. Eighteen Shoup customers averaged more than 40 calls during the month
to Salmon. The commission received 10 comments from Shoup customers, all of whom favored an
increase in their basic rates to allow toll-free calling to Salmon and North Fork. It also received a petition
in favor from 31 homeowner members of a subdivision 13.5 miles from North Fork.
“We conclude that customers in these relatively isolated exchanges rely heavily on Salmon
schools, businesses and medical facilities to provide most the basic services customers use on a day-to-
day basis, but are not currently available without a toll call,” the commission said. The commission gave
particular weight to the fact that emergency calls from Shoup customers to 911 would be toll-free.
November 9, 2004
COMMISSION GRANTS MOTION TO DISMISS SOLDIERS MEADOW CASE
Case No. GNR-T-04-2, Order No. 29627
The Idaho Public Utilities Commission granted a motion by Qwest Corp. to dismiss a complaint
by Nez Perce County residents who wanted the telephone company to extend service to their area.
Soldiers Meadow residents petitioned for reconsideration but that petition was later denied.
Residents of the Soldiers Meadow Reservoir area wanted Qwest to extend landline service to their
properties, most of which are summer homes. Soldiers Meadow is outside Qwest’s service territory. The
commission agreed that Qwest is not obligated to serve the approximate 22 customers unless they are
willing to pay the estimated $7,800 per customer to extend the service. Qwest estimated construction
costs would be at least $180,000. Six of 22 residents who responded to a commission survey said they
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would pay up to $1,000, six said they would pay up to $200 and 10 said they were not willing to pay any
of the costs.
In granting Qwest’s motion to dismiss, the commission noted that only about seven property
owners are full-time residents of Soldiers Meadow and that all residents were aware landline telephone
service was not available when they purchased their properties.
Soldiers Meadow residents maintained they should be allowed service without installation charges
because residents of Forest, four miles away, receive service. However, Forest is within Qwest’s service
territory. Forest residents qualified for service without capital contributions under a tariff Qwest no longer
uses. Under the new Qwest tariff, customers inside Qwest territory can qualify for a $1,600 credit toward
installation costs, but are responsible to pay all costs above the credit amount. “It is indisputable that even
if Soldiers Meadow were part of Qwest’s service area, making the line extension tariff applicable, the
citizens are not willing to pay the construction costs above the $1,600 customer credit,” the commission
said.
July 29, 2004
COMMISSION DENIES FUNDING FOR TELECOM HIGH-COST SUPPORT
Case No. GNR-T-03-8 and GNR-T-03-16; Order No. 29541
Two wireless telecommunication providers will not qualify for subsidized support to offer services
in areas of rural Idaho already served by other telephone companies.
By a 2-1 vote, the Idaho Public Utilities Commission denied petitions by Nextel Partners and
Clear Talk, each of which sought designation as an “eligible telecommunications carrier” (ETC). The
designation would have qualified the companies for assistance from the Universal Service Fund.
The Universal Service Fund (USF) was created by Congress in the 1930s to ensure that citizens,
schools, libraries and health care facilities located in largely rural areas receive the same quality of service
and comparable rates to those who live in urban areas. It costs telephone companies more money to serve
in rural areas where there are fewer customers to pay for telephone lines, wires and switches. All
telephone companies providing interstate service must contribute to the USF and nearly all choose to pass
on their contribution to customers in the form of a line item that appears on customer bills. In Idaho,
customers contribute about 8 cents per residential line per month, 13 cents per business line per month
and $.0025 for every minute of long-distance calls within the state.
Both Nextel and Clear Talk already provide wireless service in the areas in which they seek ETC
designation but maintain they could expand services in their areas and also promote competition with
USF support. The Telecommunications Act of 1996 promotes two primary goals for the federal Universal
Service Fund: to provide for universal service in rural, high-cost areas and to encourage competition.
However, the majority on the commission said both companies were engaging in “cream
skimming” by seeking ETC designation only in the lower cost areas of the study areas pertinent to their
applications. For example, Clear Talk sought ETC designation for St. Anthony, but excluded the Island
Park area. Nextel applied for service in Rupert, but excluded Oakley, Minidoka and Norland.
Commissioners were also concerned that qualifying more areas for universal service support in
areas where there are already telecommunication providers that qualify for USF would drain the fund and
increase consumers’ costs to support the fund.
Commissioner Marsha Smith dissented from the majority opinion. “Although I share the
majority’s concern that granting these applications may adversely impact the federal USF, this concern is
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an insufficient basis to deny the application,” Smith said. “While this commission may not approve of a
support system that awards USF to multiple ETCs, that is the system that is in place today.” Smith said
the FCC is examining the issue of USF support in competitive areas but has not yet modified the
standards in place for granting ETC designation.
Further, Smith said Nextel Partners’ application should have been granted because the company
indicated it would make the same commitments to provide service outside its existing service areas.
“Nextel Partners’ dilemma is that it needs ETC status to obtain federal USF support to expand in high-
cost rural areas, but cannot get ETC status without expanding into such areas,” she said.
Nextel sought ETC status in areas served by Albion Telephone Company, Filer Mutual Telephone
Company, Farmers Mutual Telephone Company, Mud Lake Telephone Cooperative, Project Mutual
Telephone Cooperative, Rural Telephone and Citizens Telecommunications of Idaho.
Clear Talk sought ETC designation in areas served by Fremont Telecom, Project Mutual and
Citizens.
The majority of those companies were represented in the case by the Idaho Telephone
Association, which opposed the Nextel and Clear Talk petitions. Also intervening in opposition to the
applications were Project Mutual Telephone Cooperative and Citizens Telecommunications Company.
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