On November 17, 1998, the Commission Staff (Staff) filed testimony for Phase I, Community of Interest Determination. Based on a review of geographic and telephone usage information, Staff concluded that none of the proposed 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 December 10, 1998, Michael Grant, an Administrative Law Judge (ALJ) with the Commission, issued a Proposed Order recommending that the EAS petition be dismissed based on a review of 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 Halsey exchange and the Albany, Corvallis, and Shedd exchanges.

Geography and Demography

The Halsey, Albany, Corvallis and Shedd telephone exchanges lie in the Willamette Valley in western Oregon. The petitioning exchange, Halsey, consists of approximately 750 access lines and is served by Roome Telecommunications, Inc. (Roome). The target exchanges, Corvallis, Albany, and Shedd, consist of approximately 32,000, 26,000, and 320 access lines, respectively. The Corvallis and Albany exchanges are served by U S WEST Communications, Inc. (USWC). The Shedd exchange is served by CenturyTel of Oregon, Inc. (CenturyTel).

The Halsey exchange serves a small rural community with little centralized businesses. Currently, the exchange offers a grocery store, a small bank, one restaurant, a post office, and a beauty parlor. Due to the lack of local services, Halsey exchange residents depend heavily on neighboring communities to meet their basic needs.

Because Halsey is located in Linn County, many exchange residents seek services in Albany, the county seat. The city of Albany is located approximately 20 miles north of Halsey and directly accessed via Interstate 5 or State Route 99E. Albany is a relatively large metropolitan area that offers many essential goods and services, including governmental services for Linn County residents.

Many Halsey residents also seek goods and services in Corvallis, the county seat for Benton County and located some 18 miles to the northwest. Like Albany, Corvallis is a relatively large city that offers a wide variety of businesses. Because Albany and Corvallis are located just 11 miles from each other, the two county seats have consolidated certain governmental offices and rely on each to provide a fuller array of services to citizens of both counties.

Schools

The Central Linn School District provides local schooling for children in the Halsey exchange. Of the district’s 720 school children, 108 live in the Shedd exchange, six live in the Albany exchange, and two live in the Corvallis exchange. The school district relies on the Linn County Educational Service District, which is located in Albany.

Some Halsey exchange customers attend classes at the Oregon State University in Corvallis or at the Linn Community College in Albany.

Government

As noted above, the Halsey exchange is located in Linn County and is served primarily by governmental offices in Albany. These services include the County Courts, District Attorney’s Office, building inspector, tax assessor, and health services. Halsey exchange residents also rely on Corvallis for some county and other state governmental services located in that city. Because many Halsey exchange residents work as dairy, mint, berry, or grass seed farmers, they rely on agricultural vendors and agencies located in both cities. For example, seed testing facilities and farm extension offices are located in Corvallis, while the federal Department of Agriculture has offices in Albany.

Medical Services

There are no medical or dental providers located in the Halsey exchange. As a result, local residents rely equally on practitioners located in Corvallis or Albany. A large number of general providers and specialists are located in each city. Each city also has a hospital. Halsey exchange residents also use pharmacies located in both Corvallis and Albany.

Emergency Services

The Halsey exchange is served by a local volunteer fire district. It is dispatched from the Linn County Sheriff’s office in Albany.

Business Dependence and Interdependence

Most Halsey exchange residents are engaged in agriculture and, consequently, rely on the services of many farm and equipment vendors for essential business goods and supplies. These farmers can obtain chemicals and fertilizers within the local calling area. All other vendors, however, are located outside the Halsey exchange, primarily in Corvallis or Albany. These vendors include farm implement dealers, tractor and machinery repair, seed buyers, veterinary services, spray services, fuel suppliers, hardware and building supplies, and produce or commodity buyers.

Commuting Patterns

While most of the Halsey residents are engaged in farming activities, Pope & Talbot and the James River Corporation each have large mills located within the exchange. Each plant employs approximately 400 workers, making the combined workforce about equal in size to the entire population of the Halsey area. Only two percent of the mills’ workers, however, actually live within the Halsey exchange. Almost all of the workers commute from Corvallis, Albany, Eugene-Springfield, and other outlying areas to work at the mills. In turn, some Halsey exchange residents not engaged in farming commute outside the local calling area to work at the large variety of businesses in Corvallis or Albany. Several work at the Oregon State University or at Hewlett-Packard in Corvallis. Others work at Teledyne Wah Chang in Albany.

Results of the Objective Criteria Test

Toll Avoidance

Many Halsey residents engage in a variety of toll avoidance practices. Residents often avoid toll calls by combining a trip to Albany or Corvallis with their telephone activities. Others relay calls through neighbors and friends, or make calls after commuting to Albany or Corvallis. A large majority of local residents rely on cellular phones. Of the approximately 55 residents that attended the hearing, over 40 had cellular phones and used them regularly to make calls to businesses, relatives, or friends living in Corvallis and Albany. Other residents use beepers

The Commission concludes that the Halsey petitioners have established, through demographic and other evidence that a community of interest exists with the Corvallis and Albany telephone exchanges. The evidence establishes a sufficient dependence with the Corvallis and Albany exchanges to warrant EAS conversion.

The Halsey exchange is a rural agricultural area that offers virtually no business or professional services for its residents. Corvallis and Albany are the closest cities where a sizable number of businesses and professional services are available. Each city lies approximately 20 miles from the city of Halsey and, together, provide the necessary services to meet the basic needs of exchange residents. These include educational, governmental, medical and other professional services, as well as farming supplies. A majority of Halsey exchange residents not engaged in farming also commute to Corvallis and Albany to work.

Because an overwhelming majority of Halsey exchange customers rely on both cities to meet their basic needs, many view Corvallis and Albany as one region offering all essential goods and services. Indeed, because of the close proximity between the two county seats, even the local governments of each counties and recognized this fact and have consolidated certain services to more effectively serve the citizens of both counties.

The Halsey petitioners also established that an overwhelming majority of customers engage in a variety of toll avoidance activities. Many residents simply save calls and make them in the Albany or Corvallis exchanges. A large number rely on the use of cellular phones. Had these calls been capable of measurement and been included in Staff’s analysis, it is possible that the Halsey customers would have satisfied the Commission’s objective criteria for a community of interest with the Corvallis exchange. Indeed, the petitioners narrowly failed the calling volume criterion—making an average of 3.76 toll calls per month to the Corvallis exchange—and failing the customer distribution criterion by just over ten percent. While the numbers were not as large for the proposed Halsey/Albany interexchange route, the inclusion of this uncounted toll activity may have been sufficient to exceed the Commission’s objective standards.

The Commission further concludes, however, that the Halsey petitioners have failed to establish a sufficient community of interest with the Shedd exchange. Like Halsey, the Shedd exchange is a rural agricultural community with little or no centralized businesses. As a result, most Halsey residents have little reason to call the Shedd exchange. While some petitioners offered evidence of ties to Shedd—most significantly with reference to the schools—all testified to stronger ties to Corvallis and Albany. This decreased reliance is also reflected in the objective criteria test. The calling pattern data showed that an average of only 1.92 calls were placed per line per month from the Halsey exchange to the Shedd exchanges, and that just over 20 percent of the Halsey customers made at least two toll calls per month to the Shedd exchange. Both figures were considerably lower than those for the Corvallis and Albany exchanges. See Appendix B.

In summary, the Halsey petitioner’s demographic evidence showed strong ties to both Corvallis and Albany exchanges. The Commission concludes that such evidence, when viewed with the results of the objective community of interest findings, persuasively establishes that a community of interest exists with the Halsey, Corvallis, and Albany telephone exchanges. The EAS petition should proceed to Phase II (tariff analysis). The Commission further concludes that the petitioners have failed to establish a community of interest with the Shedd exchange. That portion of the EAS petition should be dismissed.

ORDER

IT IS ORDERED that:

1.  The Halsey exchange petitioners have established a community of interest with the Corvallis and Albany exchanges based upon demographic, economic, financial, and other evidence. That portion of the petition shall enter Phase II, the rate and cost phase of this proceeding. For Phase II, the Halsey/Albany and Halsey/Corvallis portion of this docket will be grouped with other EAS dockets that complete Phase I by August 1. The serving telephone companies shall file proposed rates and supporting cost information by October 1, 1999.

2.  The Halsey exchange petitioners have failed to establish a community of interest with the Shedd exchange. That portion of the EAS petition is dismissed.