Item: 2D Date: September 9, 1998 Dockets: UT-970545 - Minimum local calling area rulemaking UT-971074 - Petition for Waiver of WAC 480-120-400 through WAC 480-120-435 Company: Telecommunications General Staff: Jeffrey Showman, Policy Advisor Glenn Blackmon, Assistant Director-Telecommunications Bob Wallis, Rules Coordinator Jeff Payne, Regulatory Consultant Tim Zawislak, Policy Specialist Penny Hansen, Public Affairs Specialist Lori Kanz, Consumer Affairs Specialist Pam Smith, Consumer Affairs Specialist Recommendation: (1) Issue an order granting the petition for waiver of the existing EAS rule and accepting the settlement agreement entered into by Commission Staff and industry representatives (Docket No. UT-981074). (2) Direct the Secretary to withdraw the current proposed rule (CR-102) and file a substitute rule (CR-102) (Docket UT-970545). Discussion: For well over a year, the Commission has been working with the public and the telecommunications industry to redefine local calling areas such that customers generally can reach basic community services with a local telephone call. On May 27, 1998 the Commission proposed a rule to define the minimum local calling area for each local exchange. That proposed rule included a list of community services that should be accessible as a local call; listed towns and cities, at least one of which should be accessible as a local call; and provided for companies to recover cost and lost revenues resulting from larger local calling areas by raising local rates; The proposed rule was both praised and criticized by the public and telecommunications industry. Proponents argue it would eliminate inequitable situations where customers, primarily in rural areas, are required to pay long distance charges to reach basic community services that customers in more urban areas can reach as a local call. Critics argued that the rule is overly rigid and does not address some calling area problems; that it is overreaching and would result in excessive increases in local rates for expansions that customers do not actually want, and that it has unrealistic timelines for implementation. Docket UT-970545 September 9, 1998 Page 1 In August, Staff and companies agreed to an alternative to a prescriptive rule. Under this alternative approach, local telephone companies would be ordered to implement specified expansions of local calling areas on a specific timeline. Resulting increases in local rates would be generally limited to exchanges that received an expansion of local calling area. An important advantage of the settlement is that it does not have implementation uncertainties of a rule, where companies could seek waivers. If it is accepted, companies will move directly to implementation of broader calling areas and will do so subject to a Commission order. This would result in larger calling areas for several rural areas that today are isolated from their community services or are split between two local calling areas, including Coulee City, Almira, Hunters, Lake Quinault, Snoqualmie Pass, White Pass, Rimrock, Molson/Chesaw, Loomis, Tonasket, Glenwood, Roosevelt, White Swan, Bickelton, Mattawa, Chimacum, Brinnon, western Whitman County, Onalaska, Mossyrock, Salkum, Toledo, and Crystal Mountain. It also would remedy problems where the existing local calling area no longer matches the communities, including suburban Bellingham, central Washington area around Wenatchee, the Kitsap Peninsula, and parts of Snohomish County. (See Attachment A to this memo). On August 10, Staff recommended that the Commission circulate the settlement for public comment. Many members of the public telephoned and wrote on the proposal, and Staff appreciates their thoughtful comments. Of 70 phone calls, about the same number of customers were in favor of and opposed to the proposal. Comments in favor of the proposal thanked the Commission for listening to concerns and addressing problems; noted that rate increases seemed fair on balance, and observed that the proposal would enhance the quality of life for many residents. The primary reason for opposing the proposal was increased rates. Many people feel this represents an unfair “subsidy” to someone else, such as people who make long distance calls, business callers, or smaller communities they don’t want to call. Some comments expressed disappointment that certain communities would not receive expanded calling under the proposal. For instance, the Mayor and City Council members of Skykomish were expecting to receive expanded calling under the proposed rule, and were disappointed that they would not under the proposal. The Director of the Island County Economic Development Council was expecting Coupeville to be able to call Oak Harbor, and feels that Staff has ignored public input to the process. A number of comments expressed support for the proposal, yet noted that the expanded local calling routes do not meet all their needs. Many people from the Kettle Falls area suggested that Kettle Falls, Chewelah, and Colville should be a local calling area because community services are spread among those towns - the high school is in Kettle Falls, county government in Colville, and businesses in Chewelah. Humptulips residents are pleased to reach Aberdeen, but also want local calling to Ocean Shores and Copalis. Many from Kitsap County, including Poulsbo, Kingston, and Ollala, were disappointed that Kitsap County would not be a single local calling area. Citizens north of Pasco want to call Kennewick and Richland. Manson residents want to call Wenatchee. Staff considered previous public comments on the proposed rule in shaping the agreement. The proposal strikes a balance between expanding calling for areas in greatest need, while minimizing costly rate increases for all customers. Telephone companies would have sought waivers for some communities, so these areas would not have received expanded local calling even under the proposed rule. Century Telephone representatives have indicated they are open to considering solutions for Kettle Falls, and Staff intends to resolve this issue within the tariff filing (Docket UT-980908) that Century has already filed to implement this expansion. Conclusion: In defining the scope of local calling areas, the Commission must balance the interests of having wide calling areas and of having affordable basic rates, and it must do so considering the circumstances of each locality. Staff believes that this is better accomplished in the alternative approach than would be with a prescriptive rule. •This approach greatly reduces the prospects for local rate increases for customers who do not receive an expanded calling area. •It targets the expansions to areas where the current calling area is most clearly inadequate. •It also addresses some problems that would not have been remedied by the prescriptive rule. Staff recommends the Commission approve the settlement, by issuing orders accepting the petitions for waiver filed by local exchange companies, and direct the Secretary to withdraw the current proposed rule and file the attached rule for comment (CR-102). Docket No. UT-970545 September 9, 1998 Attachment A - Summary of EAS routes to be implemented under Petition for waiver Exchange Cities in local calling area Proposed Residential Monthly Rate Increase Implementation Schedule CenturyTel - Formerly known as PTI Coulee City to Almira Coulee City, Hartline, Almira Coulee City - $.73 Almira - $.23 Sept. 1998 Coulee City to Wilbur Coulee City, Hartline, Almira and Wilbur Wilbur - $.18 Sept. 1998 Coulee City to Creston Coulee City, Hartline, Almira, Wilbur and Creston Creston - no rate change Sept. 1998 Hunters to Chewelah Hunters to Colville Hunters, Cedonia, Bluecreek, Inchelium, Fruitland and Chewelah Hunters, Cedonia, Gifford, Inchelium, Fruitland, and Colville Hunters - $1.50 Feb. 1999 Feb. 1999 Lake Quinault to Aberdeen Lake Quinault to Humptulips Quinault, Amanda Park, Neilton and Aberdeen Quinault, Neilton, Amanda Park and Humptulips Quinault - $0.93 Humptulips - $0.55 Feb. 1999 Feb. 1999 Snoqualmie Pass to Issaquah, Bellevue, North Bend, Fall City and Carnation Snoqualmie Pass to Issaquah, Bellevue, North Bend, Fall City, Ames Lake, Snoqualmie and Carnation Snoqualmie Pass - $3.50 Feb. 1999 White Pass/Rimrock to Yakima White Pass, Rimrock, Tieton, Cowiche and Yakima White Pass/Rimrock: Unlimited calling - $7.50 Per minute measured calling -$0.12 Feb. 1999 Cowiche to Rimrock/White Pass Cowiche, Rimrock, Tieton, and White Pass Cowiche - No net increase Feb. 1999 GTE Molson/Chesaw to Oroville Loomis to Oroville Tonasket to Omak Molson, Chesaw and Oroville Loomis, Nighthawk and Oroville Tonasket, Riverside and Omak Molson, Chesaw, Oroville - $2.25 Loomis - $2.25 Tonasket - $2.25 March 1999 Stanwood/Camano Island to Everett, Marysville, Granite Falls, Silver Lake, Arlington Stanwood, Everett, Marysville, Granite Falls, Silver Lake, Arlington, Silvana, Lakewood, and Smoky Point, Mill Creek, Lake Stevens, Mukilteo. Stanwood - $3.25 Everett, Marysville, Granite Falls, and Silverlake - $0.50 Arlington - no rate change 120 days after WUTC approval Wenatchee Cluster Wenatchee, Mansfield, Withrow, Chelan, Entiat, Waterville, Douglas, Rock Island, Malaga, E. Wenatchee, Leavenworth, Peshastin, Dryden, Monitor, Cashmere, and Orondo All areas would pay $2.75 June 1999 Everson, Blaine, Custer, Sumas, Maple Falls, Lynden to Bellingham Bellingham, Blaine, Birch Bay, Custer, Ferndale, Clipper, Van Zandt, Deming, Nugents Corner, Kendall, Nooksack, Everson, Laurel, Lynden, Sumas and Maple Falls Customers in Everson, Blaine, Custer, Sumas, Maple Falls, Lynden will pay $4.25 June 1999 Sprint/United Glenwood to White Salmon Glenwood, White Salmon, Gilmer, Husum Glenwood - $2.00 Measured option available Oct. 1998 Roosevelt to Goldendale Roosevelt and Goldendale Roosevelt - $2.00 Measured option available Oct. 1998 White Swan to Yakima White Swan, Yakima, Brownstown, Union Gap White Swan - $3.75 Measured option available Feb.1999 Bickleton to Mabton Bickleton and Mabton Bickleton - $2.00 Mabton - $0.40 Measured option available Jan. 1999 Mattawa to Sunnyside Mattawa, Sunnyside, and Desert Aire Mattawa - $3.25 Sunnyside - $.40 Measured option available Jan. 1999 Chimacum to Port Ludlow Chimacum and Port Ludlow Chimacum - $.80 Measured option available Feb. 1999 Brinnon to Port Townsend Brinnon, Port Townsend, Discovery Bay Brinnon - $2.80 Measured option available March 1999 Poulsbo to Bremerton Poulsbo, Bremerton Poulsbo - $4.78 Measured option available March 1999 WITA Telephone Companies St. John to Colfax Endicott to Colfax LaCrosse to Colfax St. John to LaCrosse St. John to Endicott Currently under study by telephone companies: St. John to Colfax Endicott to Colfax LaCrosse to Colfax St. John to LaCrosse St. John to Endicott Companies will study and report back by Jan. 8, 1999 Onalaska to Centralia and Chehalis Onalaska, Centralia, Chehalis Onalaska - $8.00 Feb. 1999 Mossyrock to Centralia and Chehalis Mossyrock, Centralia, Chehalis, Ethel Mossyrock - $8.00 Feb. 1999 Salkum to Centralia and Chehalis Salkum, Centralia, Chehalis Salkum - $8.00 Feb. 1999 Toledo to Winlock, Chehalis, Centralia Toledo, Winlock, Chehalis, Centralia Toledo - $10.00 measured option $.11 per minute Three months after FCC LATA waiver is granted US WEST Crystal Mountain to Enumclaw Crystal Mountain, Enumclaw and Greenwater No charge March 1999 Notes 1. Telephone exchange boundaries do not always follow political boundaries. In some cases, only a portion of communities listed will be affected by expanded local calling Docket No. UT-970545 September 9, 1998 Attachment B - Proposed replacement language for minimum local calling area rule WAC 480-120-045. Local calling areas. (1) The Commission may expand local calling areas only under the most exceptional circumstances. The Commission will generally rely on long distance competition, local competition, and optional calling plans that assess additional charges only to participating customers to meet customer demand for alternate or expanded calling. (2) In evaluating requests for expanded local calling, the Commission will consider whether the local calling area is adequate to allow customers to call and receive calls from the following community services: community medical facilities, police and fire departments, city or town government, elementary and secondary schools, libraries, and a commercial center. In evaluating such requests, the Commission will consider the overall community of interest of the entire exchange, and may consider other pertinent factors such as customer calling patterns and the availability and feasibility of optional calling plans. WAC 480-120-400 through 480-120-435 are repealed.