ORDER NO. 99-406

ENTERED JUL 15 1999

This is an electronic copy. Appendices and Footnotes may not appear.

OF OREGON

UM 896

DISPOSITION: COMMUNITY OF INTEREST FOUND; EAS ROUTE

NECESSARY TO MEET CRITICAL NEEDS

SUMMARY

In this order, the Commission finds that a community of interest exists between the Westport and Astoria telephone exchanges. The Commission further finds that extended area service (EAS) between the exchanges is necessary to meet the critical needs of the Westport petitioners due to the lack of basic and essential services in their own exchanges or a neighboring exchange. Accordingly, the Commission concludes that the petition for EAS should proceed to Phase II, the rate and cost phase.

Based on these findings, the Commission also finds that a community of interest exists between the Westport and Knappa exchanges. The Knappa exchange lies between the Westport and Astoria exchanges. Because petitioners have qualified for EAS to the Astoria exchange, the Commission concludes that an additional EAS route should also be implemented to the intervening exchange to avoid customer confusion as to toll-free calling areas.

Petition

On March 30, 1998, the customers of the Westport telephone exchange (petitioners) petitioned the Commission for extended area service (EAS) to the Knappa and Astoria telephone exchanges. A map of the affected exchanges is attached as Appendix A.

On September 17, 1999, Michael Grant, an Administrative Law Judge, held a hearing on this matter in Westport. Under then existing EAS policies, the Commission limited EAS expansion to neighboring exchanges. Thus, while the Westport petitioners provided evidence of an overwhelming reliance on businesses and services located in the Astoria exchange, they could not obtain EAS to that exchange without first establishing a similar reliance on Knappa, an intervening exchange. Given the relatively small size of the Knappa exchange, petitioners were only able to establish that both exchanges—Westport and Knappa—are dependent upon the Astoria exchange, not each other.

Modification of Standards

While the Westport petition was pending, the Commission initiated a generic investigation to examine the failure of certain rural exchanges to obtain EAS to communities on whom they rely for essential goods and services. After comment from industry representatives, rural customers, and other interested parties, the Commission modified EAS standards to allow these rural exchanges the ability to qualify for EAS if certain criteria are satisfied. See Order No. 99-038. These new standards are designed to permit EAS between non-contiguous exchanges if the EAS route is necessary to meet the critical needs of the customers in the petitioning exchange.

In adopting the new standards, the Commission allowed the Westport petitioners the opportunity to request additional proceedings to establish that their petition satisfies the "critical needs" requirement for non-contiguous EAS. The Westport petitioners subsequently asked that an additional hearing be held under the revised standards.

Hearing

On May 12, 1999, ALJ Grant held a second hearing on this matter in Westport. Approximately 14 people appeared in support of the petition. Based on a preponderance of the evidence in this record, the Commission makes the following:

Geography and Demography

The Westport, Astoria, and Knappa telephone exchanges lie in Clatsop County and are connected via U.S. Route 30. The petitioning exchange, Westport, consists of approximately 347 access lines and currently has EAS to the Clatskanie exchange. The Knappa exchange lies west of Westport and consists of approximately 1,330 access lines. It has EAS to the Astoria exchanges. The Astoria exchange lies further west and consists of approximately 8,173 access lines. It currently has EAS to the Jewell, Knappa, Warrenton, and Seaside exchanges. The Westport and Astoria exchanges are served by U S WEST Communications, Inc. (U S WEST). The Knappa exchange is served by CenturyTel of Oregon, Inc. (CentruryTel).

The Westport exchange is a rural logging and agricultural area that lies along the Columbia River. The exchange serves one of the largest employers in Clatsop County—the Fort James Company, a mill that employs some 1,750 employees. The exchange, however, offers few commercial and business services to its local residents. Currently, the exchange only has a restaurant, motel, two taverns, a gas station and a convenience store. Consequently, while many exchange residents work within the local calling area, most seek essential goods and services in neighboring communities.

The city of Clatskanie, located approximately 10 miles east of Westport in Columbia County, is the closest town that offers some basic services. Clatskanie offers a few grocery stores, a hardware supply store, a pharmacy, a sporting goods store, and an auto parts shop. The city also offers limited professional services such as insurance, accounting, and banking. With a population of just 1,800, however, Clatskanie is a relatively small town with limited offerings for Westport exchange customers. Furthermore, Clatskanie is located in Columbia County and, therefore, cannot provide essential governmental services to Westport residents.

Knappa, located about 11 miles west along U.S. Route 30, is the next closest town to Westport. That exchange, however, offers even fewer business and commercial services than Westport. It has a restaurant, gas station, hardware store, small market, and tavern. Consequently, most residents travel to Astoria, located about 28 miles west of Westport, to obtain essential goods and services. A majority of residents generally rely on Astoria for educational, governmental, professional, and social services. These include educational opportunities offered by the Clatsop Community College and other training programs, services offered through state and local governmental offices, as well as financial and legal services.

Schools

The Clatskanie School District, whose offices are located in Westport, primarily serves Westport exchange residents. While most area children attend school in Clatskanie, those living in the western portion of the exchange attend schools in Knappa.

The Clatskanie School District is offers public education from pre-kindergarten through high school. The school relies on services provided by the Clatsop County Educational Service District, which is located in Astoria. Several exchange residents attend classes at Clatsop Community College in Astoria.

Government

The Westport exchange lies primarily in Clatsop County and is served by county and state government offices in Astoria. As a result, local businesses and citizens must make long distance calls to obtain a variety of governmental and social services. These include the Circuit Courts, Children Services Division, Planning and Development, Adult and Family Services, Senior Services Division, Employment Division, Division of Motor Vehicles, Highway Department, District Attorney, and the Clatsop County Sheriff’s office.

The City of Westport is served by the post office located in Knappa.

Medical and Dental Services

The Westport calling area offers no medical and dental providers. Two dentists practice in the Clatskanie exchange. However, most Westport exchange residents rely on Astoria for primary and specialized medical and dental care. Astoria offers a hospital and a sizable number of medical and dental providers.

Commuting Patterns

Due to the lack of centralized businesses, a majority of Westport exchange residents commute outside the local calling area to work in neighboring cities. A recent survey revealed that over 50 percent of respondents worked in Astoria or Knappa. Many Westport residents work in county and state government offices in Astoria, or at many retail and tourist-related businesses located in Knappa.

Toll Avoidance

Many Westport exchange residents engage in a variety of toll avoidance practices. Residents often avoid toll calls by combining a trip to Astoria or Knappa with their telephone activities. Commuters simply save calls and make them while they are at work or visiting the neighboring calling areas. A large number of local residents also use alternative carriers for calls to Astoria. The Fort James plant, which has 13 access lines, uses an alternative carrier to place some 10,600 calls annually to the Astoria exchange. These calls were not included in the calling pattern data used in the figures below.

Results of the Objective Criteria Test

U S WEST and CenturyTel provided telephone usage information for the Westport, Astoria, and Knappa telephone exchanges. That data is summarized in Appendix B and adopted as fact. With regard to the proposed Westport/Knappa interexchange route, the usage information shows that an average of 2.69 toll calls per month were placed between the exchanges and 19.60 percent of Westport exchange residents made at least two or more toll calls to the Knappa exchange. With regard to the proposed Westport/Astoria interexchange route, the calling data shows that an average of 3.28 toll calls per month were placed between the exchanges and 38.55 percent of Westport exchange residents made at least two or more toll calls to the Astoria exchange.

Applicable Law

In order to establish a community of interest with a non-contiguous exchange, petitioners must meet two primary criteria:

1. Community of Interest. Petitioners seeking EAS to a non-contiguous exchange must first establish that a community of interest exists with that exchange. The Commission has established two methods by which a petitioning exchange can establish a community of interest. The first is an objective test based on telephone usage information. This test requires that an average of 4 or more toll calls per line per month be placed between the petitioning and target exchange, and that at least 50 percent of customers in the petitioning exchange make at least 2 toll calls per month to the target exchange. See Order Nos. 89-815 and 92-1136.

The second method, available to those exchanges that fail the calling pattern requirements of the objective criteria test, is the demographic showing test. Under this test, a hearing is held to give the petitioning exchange the opportunity to demonstrate a community of interest by reference to demographic, social, economic, and other factors. See Order No. 89-815.

2. Critical Needs. Petitioners seeking EAS to a non-contiguous exchange must also make a showing of "critical needs." Under this showing, petitioners must demonstrate that the proposed EAS is necessary to meet the critical needs of customers because of the lack of essential goods and services in their own exchange or in a contiguous exchange. In evaluating the critical needs of customers, the Commission will consider the customers’ access to emergency, dental, medical, professional, business, educational, and governmental services. See Order No. 99-038.

Community of Interest Determination

The Commission concludes that a community of interest exists between the Westport and Astoria telephone exchanges. Although petitioners failed to meet the Commission’s objective criteria, they successfully established that a community of interest exists with the Astoria exchange through demographic information.

A community of interest exists "where there is a social, economic, or political interdependence between two areas or where there is a heavy dependence by one area on another area for services and facilities necessary to meet many of its basic needs." Order No. 87-309 at 8. The evidence presented in this docket establishes a sufficient dependence by the Westport exchange on the Astoria exchange to warrant EAS conversion.

The Westport exchange offers virtually no business or professional services for its residents. Astoria, located approximately 28 miles from the city of Westport, is a relatively large urban center that offers Westport exchange residents reasonable access to a variety of professional and business services, as well as other commercial activities. The city of Astoria also serves as the county seat for Clatsop County and, as such, provides essential governmental services to Westport exchange residents.

The Westport 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 Astoria or Knappa. A large number rely on the use of cellular phones. Many customers use the services of alternative toll carriers. In fact, the exchange’s largest employer places hundreds of calls to the Astoria exchange each month via alternative carriers. Had these uncounted toll calls been capable of measurement and been included in Staff’s analysis, it is possible that the Westport customers would have satisfied the Commission’s objective criteria for a community of interest with the Astoria exchange.

In summary, the Westport petitioners’ demographic evidence showed an overwhelming reliance on the Astoria exchange. That reliance, with the amount of toll avoidance, persuades the Commission that a community of interest exists between the Westport and Astoria exchanges.

Critical Needs Determination

The Commission further concludes that the EAS route between Westport and Astoria is necessary to meet the critical needs of the Westport customers because of the lack of essential goods and services in their own exchange or a neighboring exchange. As stated above, Westport is a relatively small community with insufficient resources to support the needs of local residents. As a result, local residents rely on other areas for basic goods and services.

Two neighboring exchanges, Knappa, and Clatskanie, cannot reasonably meet these needs. The Knappa exchange, while slightly larger in size, offers even fewer business and commercial services than Westport. As a result, its local residents also rely heavily on the businesses and services available in the Astoria. The Clatskanie exchange is larger and offers some basic goods and services. Those services are limited, however. Furthermore, Clatskanie is located in Columbia County and, therefore, cannot provide essential governmental services to Westport residents. Under the circumstances, the Commission concludes that neither exchange can readily satisfy the critical needs of Westport exchange customers.

CONCLUSION

The Commission concludes that a community of interest exists between the Westport and Astoria telephone exchanges. The Commission further concludes that the EAS route is necessary to meet the critical needs of the customers of the Westport exchange.

Based on these conclusions, the Commission further finds that a community of interest exists among the Westport and the intervening Knappa exchange. In cases where petitioners establish a community of interest with a non-contiguous exchange and demonstrate that the EAS route is necessary to meet their critical needs, the Commission will also declare that a community of interest exists between the petitioning and intervening exchange(s). Establishing new EAS routes to both the target and intervening exchanges will avoid customer confusion as to long distance calling areas. Otherwise, a call to a neighboring exchange would be more expensive that a call to a distant one. See Order No. 99-038 at 5 and 11.

ORDER

IT IS ORDERED that:

A community of interest exists between the Westport and Astoria telephone exchanges.

The extended area service route between the Westport and Astoria exchanges is necessary to meet the critical need of the Westport petitioners because of the lack of essential goods and services located in their own exchange or an intervening exchange.

A community of interest exists between the Westport and Knappa telephone exchanges.

4. This completes Phase I of this docket. It is now ready to enter Phase II, the rate and cost phase. For Phase II, the Westport petition will be grouped with all other EAS dockets that complete Phase I by August 2, 1999. The telephone companies serving the Westport, Knappa, and Astoria telephone exchanges shall file proposed rates and supporting cost information by October 15, 1999.

Made, entered, and effective _____________________________.

A party may request rehearing or reconsideration of this order pursuant to ORS 756.561. A request for rehearing or reconsideration must be filed with the Commission within 60 days of the date of service of this order. The request must comply with the requirements in OAR 860-014-0095. A copy of any such request must also be served on each party to the proceeding as provided by OAR 860-013-0070(2). A party may appeal this order to a court pursuant to ORS 756.580.