ORDER NO. 95-1061

ENTERED OCT 4, 1995

THIS IS AN ELECTRONIC COPY

BEFORE THE PUBLIC UTILITY COMMISSION

OF OREGON

UM 749

DISPOSITION: NO COMMUNITY OF INTEREST FOUND;

PETITION DISMISSED

On March 23, 1995, customers in the Imbler telephone exchange filed a petition with the Commission requesting extended area service (EAS) to the Union and Cove telephone exchanges. A map of the exchanges is attached to this order as Appendix A.

On May 9, 1995, 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 none of the requested interexchange routes satisfied 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 May 30, 1995, Michael Grant, a Hearings Officer for the Commission, issued a Proposed Order adopting staff's findings and recommending that the Imbler petition be dismissed based on the failure of those routes to meet the objective community of interest criteria. 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 September 13, 1995, the Hearings Officer held a hearing on this matter in Imbler, Oregon. Approximately 20 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 Imbler, Cove, and Union telephone exchanges lie in Union County and are served by GTE Northwest, Inc. The petitioning exchange, Imbler, consists of approximately 500 access lines and currently has EAS to the Elgin and La Grande telephone exchanges. The Cove exchange lies southeast of Imbler and consists of approximately 400 access lines. It currently has EAS to the Union and La Grande exchanges. The Union exchange is the largest of the three exchanges and lies directly south of the Cove exchange. It consists of approximately 1000 access lines and currently has EAS to the Cove and La Grande exchanges.

Imbler is a rural agricultural community that offers no professional or commercial services to its local residents. Exchange residents, therefore, seek these services in La Grande. Many area residents have extended family throughout the county, including relatives who live within the Cove and Union telephone exchanges.

Schools

Imbler exchange residents are served by the Imbler School District, which consists of an elementary and secondary school. Approximately 350 students attend the schools, approximately 40 of whom live in the Cove and Union telephone exchanges.

The Imbler, Union and Cove School Districts are members of the Wapiti Athletic League, which is comprised of Eastern Oregon schools that compete in sports. Imbler children also participate in county-wide activities through 4-H and Future Farmers of America (FFA) that involve students who live within the Cove and Union telephone exchanges.

Government and Jurisdictional Issues

The Imbler, Cove and Union telephone exchanges are located within Union County and are served by the county government in La Grande.

Medical and Dental Services

Imbler residents rely on La Grande for medical and dental services, as no such services are offered within the Imbler exchange.

Toll Avoidance

Some Imbler residents engage in a variety of toll avoidance practices. Residents often avoid toll calls by combining a trip with their telephone activities. Others relay calls through neighbors or friends in La Grande to make calls to Union or Cove.

OPINION

The demand for EAS in Oregon is growing substantially. In many parts of the state, local telephone exchange boundaries no longer bear any relation to actual communities. Improved transportation, communications, and the general growth of cities and towns have expanded the boundaries of what local citizens view as their community. Many customers in suburban and rural areas desire toll-free calling to population centers.

The conversion of long distance traffic to EAS, however, creates new problems. Telephone companies may face significant loss of long-distance revenue, placing upward pressure on basic service rates. The conversion to EAS also shifts costs from high-volume to low-volume telephone users, creating a potential for inequity. Due to those reasons, the Commission must first find that a "community of interest" exists between the petitioning exchange and requested exchanges to justify EAS conversion.

Objective Criteria

In our statewide EAS investigation, Docket No. UM 189, we adopted three objective criteria for determining the existence of a community of interest between exchanges. These criteria, which make use of readily available geographic and telephone usage information, require: (1) that the petitioning exchange and target exchange(s) have contiguous exchange

boundaries;(2) that an average of four toll calls per access line per month be placed between the contiguous exchanges; and (3) that more than 50 percent of customers in the petitioning exchange make at least two toll calls per month to the target exchange(s).

In this case, GTE provided calling pattern data for the three exchanges involved in this proceeding. Staff reviewed the data and determined that the Imbler/Cove interexchange route failed two of the three objective community of interest criteria. Although the two exchanges are indirectly contiguous, a maximum average of only 1.04 toll calls per access line were placed between the exchanges, and an average of only 18.4 percent of the Imbler customers made at least two or more calls to the Cove area. Staff made similar determinations with respect to the Imbler/Union interexchange route. The two exchanges also satisfy the geographic proximity requirement; however, a maximum average of only 1.84 toll calls per access line were placed between the exchanges, and an average of only 27.48 percent of the Imbler customers made at least two calls to the Union exchange.

Demographic Evidence:

In adopting the three objective criteria, we acknowledged that calling pattern data may not always reflect the presence of a community of interest. For that reason, if an EAS petition fails to met the objective criteria, we allow a petitioning exchange to request a hearing to establish a community of interest through demographic, economic, financial, or other evidence. We adopted the following test for "community of interest" in cases where petitioners rely on such 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

In our examination of EAS, we have recognized that the existence of a community of interest is not easily proved. See Order No. 89-815 at 10. The objective criteria and demographic standards are designed to ensure that there is a sufficient calling relationship between the petitioning exchange and the target exchange(s). If such a relationship does not exist, the EAS conversion may result in unfair cost shifts from high-volume to low-volume telephone users. When an EAS route is implemented, not only will a new EAS rate be established for the petitioning exchange, but rate increases may occur in target exchanges as well. If there is a community of interest between the telephone exchanges, we believe that a rate increase will be justified. Otherwise, rate increases may not be fair or equitable. For that reason, our analysis must take into account the unique impact of the high volume user upon the low volume telephone user.

Those residents of Imbler who attended the hearing presented information in an attempt to show a community of interest by demographic, geographic, and economic means. All witnesses showed a strong desire for the proposed EAS. Many witnesses referenced high toll bills and outlined various methods of toll avoidance. The evidence presented also established that some Cove and Union school children attend schools in Imbler.

There was little evidence offered to establish that residents within Imbler, the petitioning exchange, rely on either the Cove or Union exchange for necessary services. The Cove and Union exchanges are relatively small and offer few if any services to Imbler residents. The Imbler exchange does, however, have EAS to the much larger La Grande exchange, which readily satisfies the basic needs of Imbler customers. On this record, the Commission is unable to find a sufficiently strong dependence by the Imbler exchange on the Union or Cove area, or that these three exchanges have become integrated to such an extent that it is no longer appropriate to require toll calling between them.

The Commission concludes that the demographic and other evidence presented in this matter, when viewed with the results of the objective criteria test, does not make a sufficiently strong showing to establish that a community of interest exists between the Imbler, Cove, and Union telephone exchanges. Accordingly, the petition for EAS should be dismissed.

ORDER

IT IS ORDERED that:

1. The Imbler telephone exchange has failed to establish a community of interest with either of the following exchanges: Cove and Union.

 

2. The petition for EAS between Imbler exchange and the Cove and Union exchanges is dismissed.

 

 

 

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.