ORDER NO. 97-299

ENTERED AUG 06 1997

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

BEFORE THE PUBLIC UTILITY COMMISSION

OF OREGON

UM 818

DISPOSITION: COMMUNITY OF INTEREST FOUND

On October 9, 1996, customers in the Powers telephone exchange filed a petition with the Commission requesting extended area service (EAS) to the Myrtle Point, Coquille, and Coos Bay-North Bend telephone exchanges. A map of the exchanges is attached to this order as Appendix A.

On January 17, 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 only the requested interexchange route between Powers and Myrtle Point 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 January 27, 1997, Michael Grant, an Administrative Law Judge (ALJ), issued a Proposed Order adopting Staff’s findings and recommending that the portion of the Powers petition for EAS to the Coquille and Coos Bay-North Bend 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 July 9, 1997, ALJ Grant held a hearing on this matter in Powers, Oregon. Notice of the hearing was served to all parties, and was published twice in the Myrtle Point Herald newspaper. Approximately 115 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 Powers, Coquille and Coos Bay-North Bend telephone exchanges lie in Coos County in southwestern Oregon. The petitioning exchange, Powers, consists of approximately 350 customers and currently has no EAS with any other exchange. The Coquille exchange lies north of the Powers exchange and consists of approximately 3,500 access lines. It currently has EAS to the Myrtle Point and Coos Bay-North Bend exchanges. The Coos Bay-North Bend exchange lies farther north and consists of over 22,000 access lines. It has EAS to the Lakeside, Bandon, Coquille, and Myrtle Point exchanges. All three exchanges are served by GTE Northwest Incorporated.

Professional and Business Services

The Powers exchange serves an isolated logging and agricultural area just outside the Siskiyou National Forest. The area includes one incorporated city, Powers, which has a population of almost 700. The city of Powers is a small town that cannot support the commercial and professional services required to meet the basic needs of area residents. Currently, the city offers two small markets, an auto repair shop, a café and two taverns. Consequently, residents of the Powers exchange depend heavily on neighboring communities to meet their basic needs.

The city of Myrtle Point, located approximately 10 miles north of Powers, is the closest town that offers some additional commercial services. However, with a population of just 2,700, Myrtle Point is also a relatively small city with limited offerings for exchange residents. As a result, most customers of the Powers exchange rely on larger surrounding communities.

The city of Coquille, located about 20 miles north of Powers, offers a wide variety of business and professional services. As county seat for Coos County, it offers essential governmental services, including the Sheriff’s Office, District and Circuit Court Offices, County Tax Office, Department of Motor Vehicles, Veterans Services, and the Planning and Building Department. Coquille also offers financial, legal, and other professional services, as well as numerous retail businesses, groceries, and restaurants.

Exchange residents also rely on the Coos Bay-North Bend exchange for these services. The cities of Coos Bay and North Bend, located approximately 40 miles from Powers, form a relatively large metropolitan area that offers a wide variety of professional, commercial, and consumer services.

Employment

There are limited employment activities in the Powers exchange. The largest employer is the Forest Service, which employs approximately 30 people. Half of those, however, live in the Myrtle Point exchange and commute to Powers.

Many residents of Powers rely on Coquille for employment opportunities. Many commute to the larger city to work at government offices, the county hospital, and other industrial and commercial employers.

Schools

The Powers exchange is served by an elementary, middle, and high school located within the local calling area. Special needs children attend schools in Coquille.

Government and Jurisdictional Issues

The Powers exchange is located in Coos County and served by the county and state government offices in Coquille.

Medical, Dental, and Emergency Services

A small medical clinic is located within the Powers exchange, where local residents can obtain primary medical care. Most seek medical or dental care in Coquille and Coos Bay-North Bend. Coquille offers a selection of physicians and dentists, as well as the closest hospital. It also offers a pharmacy and other related medical services.

Toll Avoidance

Most Powers exchange residents engage in a variety of toll avoidance practices. Many residents who attended the hearing try to reduce their long distance charges by using alternative toll carriers or often avoid toll calls by combining a trip with their telephone activities. Others use cellular telephones.

OPINION

Issue

For the reasons shown in Appendix B, the Commission Staff determined that the Powers exchange petitioners failed to meet the calling volume and customer distribution requirements for the proposed Powers/Coquille and Powers/Coos Bay-North Bend interexchange routes. 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 those 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 Powers petitioners have established, through demographic and other evidence, that a community of interest exists with the Coquille and Coos Bay-North Bend telephone exchanges. The evidence presented at hearing establishes a sufficient degree of dependence by the Powers exchange residents on the Coquille and Coos Bay-North Bend areas.

The Powers area is a rural logging and agricultural community that offers virtually no business or professional services for its residents. Coquille is the closest city where a sizable number of businesses and professional services are available. Coquille lies approximately 20 miles from the city of Powers and provides the necessary services to meet the basic needs of Powers exchange residents. These include governmental, medical and other professional services, as well as a variety of commercial and retail services. A majority of Powers exchange residents also commute to Coquille to work.

The Powers petitioners also established that a large majority of customers engage in a variety of toll avoidance activities. Many residents who work in Coquille 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 Powers petitioners failed the objective criteria for a community of interest by only a small margin. A review of the measured calling data showed that an average of 3.52 of a required 4.0 toll calls per line per month were placed between the exchanges. Similarly, over 45 percent of the Powers customers, of a required 50 percent, placed at least two toll calls per month to the Coquille exchange.

These factors persuades the Commission that a community of interest exists between the Powers and Coquille exchanges. This conclusion establishes, in turn, the missing component of the geographic proximity requirement for the Powers/Coos Bay-North Bend interexchange route. Accordingly, the Commission concludes that a community of interest also exists between the Powers and Coos Bay-North Bend exchanges. The petition for EAS between the Powers, Myrtle Point, Coquille, and Coos Bay-North Bend exchanges proceeds to Phase II (tariff analysis).

ORDER

IT IS ORDERED that:

1. The Powers telephone exchange has established a community of interest with the Myrtle Point, Coquille, and Coos Bay-North Bend 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 Powers petition will be grouped with other EAS dockets that complete Phase I by August 1, 1997. The serving telephone companies shall file proposed rates and supporting cost information by October 15, 1997.

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.