ORDER NO. 98-185

ENTERED MAY 04 1998

This is an electronic copy. Appendices may not be included.

BEFORE THE PUBLIC UTILITY COMMISSION

OF OREGON

UM 861

DISPOSITION: COMMUNITY OF INTEREST FOUND

Introduction

On July 15, 1997, customers in the Triangle Lake telephone exchange filed a petition with the Commission requesting extended area service (EAS) to the Junction City and Eugene-Springfield telephone exchanges. A map of the exchanges is attached to this order as Appendix A.

On December 18, 1997, the Commission Staff (Staff) filed testimony in this proceeding for the Phase I, Community of Interest Determination. Based on a review of geographic and telephone usage information, Staff concluded that the requested interexchange routes did not satisfy the objective community of interest criteria set forth in Order Nos. 89-815 and 92-1136. Staff’s testimony is summarized in Appendix B, attached to this order and incorporated by reference.

On December 29, 1997, Michael Grant, an Administrative Law Judge (ALJ), issued a Proposed Order adopting Staff’s findings and recommending that the Triangle Lake petition for EAS to the Junction City and Eugene-Springfield exchanges be dismissed. Petitioners subsequently requested an opportunity to establish, through demographic, economic, financial, or other evidence that a community of interest exists between the three exchanges.

On March 24, 1998, ALJ Grant held a hearing on this matter in Blachly, Oregon. Notice of the hearing was served to all parties. Approximately 100 people attended the hearing in support of the petition. Based on the evidence submitted in this matter, the Commission makes the following:

FINDINGS OF FACT

Geography and Demography

The Triangle Lake, Junction City, and Eugene-Springfield telephone exchanges lie in Lane County in western Oregon. The petitioning exchange, Triangle Lake, consists of approximately 150 access lines and currently has EAS with the Horton and Deadwood exchanges. The Junction City exchange lies east of the Triangle Lake exchange and consists of approximately 5,340 access lines. It currently has EAS to the Bellfountain, Harrisburg, Horton, Monroe, and Eugene-Springfield exchanges. The Eugene-Springfield exchange lies south-east of Junction City and consists of over 130,000 access lines. It has EAS to 13 neighboring telephone exchanges. The Triangle Lake exchange is served by Pioneer Telephone Cooperative, while the Junction City and Eugene-Springfield exchanges are served by U S WEST Communications, Inc.

The Triangle Lake exchange serves an isolated area within the Coast Range. Most exchange residents live in and around two small towns, Triangle Lake and Blachly. The area is best known for Triangle Lake, a lake that provides recreational opportunities for residents and tourists. Many of the homes in the area are vacation property and used primarily during the summer.

The Triangle Lake area offers almost no commercial or professional services for local residents. There is but one seasonal store in the Triangle Lake exchange. Exchange residents, therefore, seek essential goods and services in neighboring communities. The city of Junction City, located approximately 25 miles east of Triangle Lake via State Route 36, is the closest town that offers these essential services. Junction City, a rapidly growing community, offers a variety of retail businesses, several grocery stores, restaurants, and professional services.

Exchange residents also rely on the Eugene-Springfield exchange for these services. Eugene-Springfield, located approximately 35 miles from Triangle Lake, is a relatively large metropolitan area that offers a wide variety of professional, commercial, and consumer services.

Schools

The Triangle Lake exchange is served by a local school that offers public instruction for children K-12. Many of these students participate in sporting events and other extracurricular activities with schools located in Junction City and Eugene.

Children with special needs attend schools in the Eugene-Springfield area. Many residents also attend continuing education classes at Lane Community College or the University of Oregon in Eugene.

Government and Jurisdictional Issues

The Triangle Lake, Junction City, and Eugene-Springfield exchanges are served by the county government in Eugene-Springfield.

The Triangle Lake exchange is served by a post office in Blachly.

Medical, Dental, and Emergency Services

One-part time primary care physician works in the Triangle Lake exchange. Most residents, however, seek medical and dental care in Junction City and Eugene-Springfield. Both areas offer a variety of medical and dental services, as well as pharmacies. Eugene-Springfield also offers a hospital.

The Triangle Lake exchange is served by police and fire departments located in Eugene-Springfield.

Employment

The Triangle Lake exchange serves a rural agricultural community that offers few employment activities. Some residents are engaged in independent farming and logging activities. Others earn a living providing support services to these activities, such as working as accountants or as farriers. A large number of local residents commute to Junction City and Eugene-Springfield, which offers a large number of employment opportunities.

Toll Avoidance

Most Triangle Lake exchange residents engage in a variety of toll avoidance practices. Many residents save calls and make them while they are in Junction City and Eugene. Others use cellular telephones or relay calls through friends.

OPINION

Issue

For the reasons shown in Appendix B, the Commission Staff determined that the Triangle Lake exchange petitioners failed to meet the customer distribution criterion for the proposed Triangle Lake/Junction City interexchange route. This failure also caused the failure of the geographic proximity criterion for the proposed Triangle Lake/Eugene-Springfield interexchange route. The question presented in this proceeding, therefore, is whether the petitioners have established, through demographic, economic and other evidence, that a community of interest exists between the Triangle Lake and Junction City exchanges.

Applicable Law

In Phase I of an EAS investigation, the Commission determines whether there is a "community of interest" between the petitioning exchange and the target exchange(s). The Commission has adopted the following test for "community of interest" in cases where petitioners rely on demographic evidence:

A community of interest exists where there is social, economic, or political dependence or interdependence between the petitioning and requested exchange(s) sufficient to justify conversion to EAS. In making this determination, the Commission will review the following factors: (1) geographic and demographic information; (2) location of schools; (3) governmental and jurisdictional issues; (4) emergency services; (5) social services; (6) medical and dental providers; (7) employment and commuting patterns; (8) business and commercial dependence or interdependence; (9) transportation patterns; (10) the results of the objective criteria test; and (11) other factors deemed relevant by the Commission. The record need not contain evidence on each factor so long as the Commission can conclude that the record as a whole establishes sufficient interdependence or dependence between the exchanges. In the Matter of the Consolidated Applications For Expansion of the Portland Extended Area Service Region, Order No. 93-1045 at 12.

Resolution

The Commission concludes that the Triangle Lake petitioners have established, through demographic and other evidence, that a community of interest exists with the Junction City telephone exchanges. The evidence presented at hearing establishes a sufficient degree of dependence by the Triangle Lake exchange residents on the Junction City area.

The Triangle Lake exchange encompasses a rural logging and agricultural community that offers virtually no business or professional services for its residents. Junction City is the closest city where a sizable number of businesses and professional services are available. Junction City lies approximately 25 miles from Triangle Lake and provides many of the necessary services to meet the basic needs of local residents. A large number of Triangle Lake exchange residents also commute to the nearby exchange to work.

The Triangle Lake petitioners also established that a large majority of customers engage in a variety of toll avoidance activities. Many residents who work in Junction City simply save calls and make them in the neighboring exchanges. Others access other toll providers or use cellular phones. This fact is significant, given the fact that the Triangle Lake petitioners failed the objective criteria for a community of interest with the Junction City exchange by only a small margin. A review of the measured calling data showed that 45.48 of a required 50 percent of the Triangle Lake exchange customers placed at least two toll calls per month to the Junction City exchange.

These factors persuade the Commission that a community of interest exists between the Triangle Lake and Junction City exchange. This conclusion establishes, in turn, the missing component of the geographic proximity requirement for the Triangle Lake/Eugene-Springfield interexchange route. Accordingly, the Commission concludes that a community of interest also exists between the Triangle Lake and Eugene-Springfield exchanges. The petition for EAS between the Triangle Lake, Junction City, and Eugene-Springfield exchanges should proceed to Phase II (tariff analysis).

ORDER

IT IS ORDERED that:

1. The Triangle Lake telephone exchange has established a community of interest with the both the Junction City and Eugene-Springfield telephone exchanges.

2. This completes Phase I of this docket. The petition is now ready to enter Phase II, the rate and cost phase of this proceeding. For Phase II, the Triangle Lake petition will be grouped with other EAS dockets that complete Phase I by August 1, 1998. The serving telephone companies shall file proposed rates and supporting cost information by October 15, 1998.

Made, entered, and effective ________________________.

A party may request rehearing or reconsideration of this order pursuant to ORS 756.561. A party may appeal this order pursuant to ORS 756.580.