ORDER NO. 99-451
ENTERED AUG 02 1999
This is an electronic copy. Appendices and footnotes may not appear.
BEFORE THE PUBLIC UTILITY COMMISSION
OF OREGON
UM 921
| In the Matter of the Petition for Extended Area Service by the SHEDD TELEPHONE EXCHANGE. | ) ) ORDER |
DISPOSITION: COMMUNITY OF INTEREST FOUND
On February 2, 1999, the customers in the Shedd telephone exchange filed a petition with the Commission requesting extended area service (EAS) with the Halsey telephone exchange. A map of the exchanges is attached to this order as Appendix A.
On May 26, 1999, 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 the proposed interexchange route 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 June 3, 1999, Michael Grant, an Administrative Law Judge (ALJ) with the Commission, issued a Proposed Order recommending that the EAS petition be dismissed based on Staff’s testimony. Petitioners subsequently requested an opportunity to establish, through demographic, economic, financial, or other evidence, that a community of interest exists between the Shedd and Halsey exchanges.
On July 1, 1999, ALJ Grant held a hearing on this matter in Shedd, Oregon. Based on the preponderance of the evidence in the record, the Commission makes the following:
FINDINGS OF FACT
Geography and Demography
The Shedd and Halsey telephone exchanges lie in the Willamette Valley in western Oregon. The petitioning exchange, Shedd, consists of approximately 320 access lines
and is served by CenturyTel of Oregon, Inc. (CenturyTel). The Halsey exchange consists of approximately 750 access lines and is served by Roome Telecommunications, Inc. (Roome).
The Shedd exchange is a small agricultural community with almost no centralized business. Currently, the exchange offers a small market, restaurant, and post office. Due to the lack of local services, Shedd exchange residents depend heavily on neighboring communities to meet their basic needs.
Halsey, located just 5 miles south of Shedd, is the closest community that offers some basic goods and services. While also a relatively small community, Halsey offers a grocery store, bank, and beauty parlor to Shedd residents. It is also home to Fort James, the largest area employer. Many grass seed farmers in Shedd also rely on seed companies, fertilizer manufacturers, and seed testing laboratories located in Halsey.
Some Shedd exchange residents also seek goods and services in Albany, the county seat for Linn County. The city of Albany is a relatively large metropolitan area that offers many retail and commercial services. However, Albany is located some 14 miles from Shedd and not as conveniently accessed as Halsey.
Schools
All children who live in the Shedd exchange attend the Central Linn School District in Halsey. Because these schools are located outside the local calling area, Shedd parents and students incur high toll bills when calling for rides, class assignments, school activities, or to talk to friends.
Government and Social Services
As noted above, the Shedd exchange is located in Linn County and is served primarily by governmental offices in Albany. The area’s State Representative, however, lives in Halsey.
Meals on Wheels, which provides meals for senior citizens to Shedd, is located in Halsey.
Medical Services
There are no medical or dental providers located in the Shedd or Halsey exchange. As a result, local residents from both communities rely on practitioners located in Corvallis or Albany.
Emergency Services
A local volunteer fire district serves the Shedd and Halsey exchanges. The district has station houses in all both areas, and makes numerous long distance calls to each other, as well as to volunteers that live in both exchanges. Many volunteers that live in Shedd must call the station house in Halsey to obtain important information. The district is dispatched from the Linn County Sheriff’s office in Albany.
Results of the Objective Criteria Test
CenturyTel and Roome
provided calling pattern data for the Shedd and Halsey telephone exchanges. Staff reviewed the data and determined that the interexchange route narrowly failed the Commission’s objective community of interest criteria. Those criteria require that: (1) the exchanges be contiguous; (2) an average of four toll calls per month per line be placed between the exchanges; and (3) at least 50 percent of the customers in the petitioning exchange make at least two toll calls per month to the target exchange. See Order Nos. 89-815 and 92-1136.The proposed interexchange route satisfied the first two criteria, as the Shedd and Halsey exchanges are contiguous and an average of 4.62 toll calls per month were placed between the exchanges. The route, however, failed the final criterion, as only 44.54 percent of Shedd customers made at least two toll calls per month to the Halsey exchange.
Toll Avoidance
Many Shedd residents engage in a variety of toll avoidance practices. Residents often avoid toll calls by combining a trip to the Halsey exchange with their telephone activities. Given the short distance between the areas, many residents simply find it less expensive to travel to Halsey rather than make a toll call. Many farmers have purchased business radios to make calls between the Shedd and Halsey exchanges. Others residents rely on cellular phones.
OPINION
For the reasons shown in Appendix B, the Commission Staff determined that the Shedd exchange petitioners failed to meet the calling volume and customer distribution requirements for the proposed Shedd/Halsey 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 those exchanges despite the failure of the objective criteria test.
Applicable Law
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 Shedd petitioners have established, through demographic and other evidence, that a community of interest exists with the Halsey telephone exchange. The evidence establishes a sufficient dependence with the Halsey exchange to warrant EAS conversion.
The Shedd exchange is a rural agricultural area that offers virtually no business or professional services for its residents. Halsey is the closest city that offers basic goods and services. These include a bank, grocery store, fertilizer and seed dealers, and other support businesses. Halsey is also the home of the Central Linn School District, which provides schooling for all children who live in the Shedd exchange.
The Shedd petitioners also established that a majority of customers engage in a variety of toll avoidance activities. Many residents simply save calls and make them in the Halsey exchange. A large number of residents rely on the use of cellular phones or business radios to avoid toll charges. Had these calls been capable of measurement and been included in Staff’s analysis, it is possible that the Shedd customers would have satisfied the Commission’s objective criteria for a community of interest with the Halsey exchange. Indeed, the petitioners narrowly failed the customer distribution criterion, with almost 45 of a required 50 percent of Shedd customers making at least two toll calls per month to the Halsey exchange. The inclusion of this uncounted toll activity may have been sufficient to exceed the Commission’s objective standards.
In summary, the Shedd petitioner’s demographic evidence showed strong ties to the Halsey exchange. 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 between the Shedd and Halsey telephone exchanges. The EAS petition should proceed to Phase II (tariff analysis).
ORDER
IT IS ORDERED that the Shedd exchange petitioners have established a community of interest with the Halsey exchange based upon demographic, economic, financial, and other evidence. The petition shall enter Phase II, the rate and cost phase of this proceeding. For Phase II, 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 15, 1999.
Made, entered, and effective ________________________.
_________________________ Ron Eachus Chairman |
___________________________ Roger Hamilton Commissioner |
___________________________ Joan H. Smith Commissioner |