20040701_882.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER SMITH
COMMISSIONER HANSEN
LEGAL
WORKING FILE
FROM:DOUG COOLEY
DATE:JUNE 29, 2004
RE:PETITION FROM RESIDENTS OF THE THREE CREEK AREA
REQUESTING EAS INTO THE MAGIC VALLEY CALLING AREA.
CASE NO. GNR-00-41.
BACKGRO UND
On November 2 , 2000, the Commission received a Petition from approximately twenty-
eight residents of the Three Creek area requesting extended area service (EAS) into the Magic
Valley Calling Area. The Magic Valley Calling Area consists of consists of the Twin Falls
Jerome, Richfield, Bliss, Buhl, Castleford, Hollister, Dietrich, Eden, Gooding, Hagerman
Hazelton, Kimberly, Murtaugh, Shoshone, Wendell, and Filer exchanges. Customers in Three
Creek have local calling only within the exchange. The Three Creek exchange is served by
Rural Telephone Company and consists of approximately forty residential and ten business
customers. The exchange borders Nevada and covers areas of southern Owyhee and Twin Falls
counties. At the time of the petition, these customers had no local Internet service provider.
In January 2001 , the Commission opened Case No. GNR-00-41 to investigate local
calling into the Magic Valley Calling Area. In 2001 , Rural Telephone submitted its estimates to
implement the requested EAS. With estimates that exceeded $600 000, Staff believed the
prospect of EAS for approximately 60 customers would be too expensive. The largest portion of
Rural Telephone s cost involved replacing 17 miles of cable between the Three Creek central
office and the Signal Butte microwave facility that sends and receives all telephone traffic in and
out of the exchange. The existing cable was at capacity and could not expand to handle
increased traffic if EAS were granted or if local Internet service were made available.
DECISION MEMORANDUM JUNE 29, 2004
Staff visited the Three Creek exchange and met with Rural Telephone to explore other
alternatives in October 2001. During this time, Staff made Rural Telephone aware of a grant
opportunity from the U.S. Department of Agriculture s Rural Utilities Service (RUS) to install
dial-up Internet access facilities in rural areas. Rural Telephone was eventually awarded the
maximum amount of $400 000 in July 2002. Construction to increase capacity along the
17-mile route was completed in late 2003 and Rural Telephone recently began offering local
Internet access via dial-up and DSL.
With traffic capacity increased as a result of the RUS grant, Staff asked Rural Telephone
to submit a revised cost estimate for providing EAS from Three Creek into the Magic Valley
Calling Area. On March 22, 2004, Staff received a revised cost estimate of approximately
$172 000 to implement EAS from Three Creek into the Magic Valley. This estimate includes
upgrading the 2GHz (Giga Hertz) microwave transmitter to a 6GHz microwave. This upgrade
would also require Rural Telephone to obtain licensing for the 6GHz microwave with the Federal
Communications Commission and install an added microwave repeater site to reach the
receiving facilities at Jerome Butte. Because the RUS grant was aimed at providing local
Internet access to the Three Creek school and community, Rural Telephone prefers to save the
limited remaining capacity on the 2GHz microwave for growing Internet customers. Rural
Telephone believes much of the demand for EAS has been satisfied with the provision of local
Internet access and points out that the majority of Three Creek customers make no calls into the
Magic Valley. The calling data obtained before and after the provision of local Internet access
indicates that typically 55 of the approximately 60 Three Creek customers made no calls into the
Magic Valley exchanges in the given months.
STAFF RECOMMENDATION
Customers in Three Creek currently pay $21.63 per month for telephone service. If the
EAS were granted and rates were increased to $24.10 (the rate paid by other rural Idaho
customers with EAS), approximately $1 482 of the annual upgrade costs would be recovered
with the remaining costs coming from the Idaho Universal Service Fund. Staff believes the
added burden on the Idaho Universal Service Fund is not justified for so few callers and suggests
that toll rates are an affordable and more equitable alternative to implementing the requested
EAS. Petitioners principally wanted EAS into the Magic Valley Calling Area because dial-up
Internet access was only available to Three Creek customers via a toll call. With local Internet
DECISION MEMORANDUM JUNE 29, 2004
access now available, Staffhas not received a single inquiry regarding this EAS case and
recommends GNR-00-41 be closed without further input or analysis. In the alternative, the
Commission could continue this case by proceeding with a public comments or public hearings
regarding the requested EAS.
COMMISSION DECISION
1. Does the Commission wish to close Case No. GNR-00-41?
2. Does the Commission wish to proceed with public comments or public hearings?
3. Does the Commission wish to proceed with this case in another way?
~-7 g Cooley
DC:udmemos/three creek dec memo 3
DECISION MEMORANDUM JUNE 29, 2004