ORDER NO. 99-512

ENTERED AUG 20 99

This is an electronic copy and appendices and footnotes may not appear.

OF OREGON

UM 910

DISPOSITION: COMMUNITY OF INTEREST FOUND BETWEEN SELMA AND GRANTS PASS; EAS ROUTE NECESSARY TO MEET CRITICAL NEEDS OF CUSTOMERS

SUMMARY

In this order, the Commission finds that a community of interest exists between the Selma and Grants Pass telephone exchanges. The Commission further finds that extended area service (EAS) between the exchanges is necessary to meet the critical needs of the Selma 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.

Petition

On October 15, 1998, the customers of the Selma telephone exchange (petitioners) petitioned the Commission for EAS to the Grants Pass telephone exchange. A map of the affected exchanges is attached as Appendix A.

On July 7, 1999, the Commission Staff filed testimony for Phase I, Community of Interest Determination. Based on a review of geographic and telephone usage information, Staff concluded that the petition failed the Commission’s objective criteria for a community of interest. See Order Nos. 89-815 and 92-1136. Staff’s testimony is summarized in Appendix B and incorporated by reference.

On July 8, 1999, Michael Grant, an Administrative Law Judge (ALJ), issued a proposed order adopting Staff’s findings and recommending that the petition be dismissed. Petitioners subsequently requested an opportunity to establish, through demographic and other evidence, that a community of interest exists between the Selma and Grants Pass telephone exchanges.

On August 3, 1999, ALJ Grant held a hearing on this matter in Selma. Approximately 23 people appeared in support of the petition. Based on a preponderance of the evidence in this record, the Commission makes the following:

The Selma and Grants Pass telephone exchanges lie in southwest Oregon near the Siskiyou Mountains. The petitioning exchange, Selma, consists of approximately 900 access lines and currently has EAS to the Cave Junction exchange. The Grants Pass exchange consists of approximately 32,000 access lines and has EAS to the Glendale, Murphy-Provolt, Rogue River, and Wolf Creek exchanges. The Selma exchange is served by Citizens Communications (Citizens). The Grants Pass exchange is served by U S WEST Communications, Inc. (U S WEST).

The Selma exchange is a rural agricultural, logging, and recreational area that offers limited services to exchange residents. Currently, Selma has a small market, antique shop, post office, and video store. Due to the lack of services, Selma exchange residents seek essential goods and services in neighboring communities.

Most residents turn to Grant Pass, located about 20 miles north of Selma, for basic goods and services. Grants Pass is a relatively large metropolitan area that offers a variety of commercial goods and services, as well as employment opportunities. Local businesses include grocery stores, hardware and building supply stores, automotive repair shops, and clothing stores. Grants Pass also offers banking, legal, insurance, tax preparation, and other professional services.

The only other nearby town is Cave Junction, located about 10 miles south of Selma. Cave Junction offers some basic goods and services to Selma residents. It has a small grocery store and a handful of retail businesses. Cave Junction, however, is also a small rural community (pop. 1300) with limited commercial and business services.

Residents of the Selma exchange live in Josephine County and are served by county offices in Grants Pass. These include offices for the County Sheriff, District and Circuit Courts, and District Attorney. A number of state and federal offices are also located in Grants Pass, such as Adult and Family Services, Senior Services Division, Employment Division, Department of Motor Vehicles, Highway Department, and Department of Forestry.

Citizens and U S WEST provided monthly telephone usage data for the Selma, Cave Junction, and Grants Pass telephone exchanges. That data, summarized in Appendix B and adopted as fact, shows that an average of 11.38 calls per access line per month were placed between the Selma and Grants Pass exchanges, and that 67.68 percent of the Selma customers made at least two toll calls per month to the Grants Pass 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 1 toll call 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

Based on a review of calling pattern data, the Commission concludes that a community of interest exists between the Selma and Grants Pass exchanges. The calling pattern data reveals that an average of 11.38 toll calls per access line per month were placed between the exchanges, and 67.68 percent of Selma exchange customers made at least two calls to the Grants Pass exchange. These calling pattern figures exceed the Commission’s objective criteria for establishing a community of interest.

Critical Needs Determination

The Commission further concludes that the EAS routes between Selma and Grants Pass is necessary to meet the critical needs of the Selma customers. Selma is a small community with insufficient resources to support the needs of local residents. As a result, local residents have become heavily dependent on the businesses and services available in the Grants Pass exchange. The city of Grants Pass is a relatively large urban community that offers Selma residents reasonable access to a variety of professional and business services, as well as retail and other commercial activities.

In addition, Grants Pass is the county seat of Josephine County and, as such, provides essential governmental services to residents of the Selma exchange. These services include all aspects of county government, including the County Sheriff, District Attorney, and Circuit Court, as well as a number of state agencies such as the Senior Services Division, Employment Division, and Department of Motor Vehicles.

The Commission further concludes that the critical needs of the Selma residents are not reasonably met by services in their own exchange or a neighboring exchange. As stated above, the Selma exchange serves a relatively small and isolated community with few centralized businesses. The few services that are available are extremely basic in nature and insufficient to meet the needs of the local residents. As such, local residents must rely on neighboring communities to meet their basic needs. While the Cave Junction exchange is nearby, it also serves a small community with limited services. It cannot provide Selma residents access to emergency, dental, medical, professional, business, and governmental services.

CONCLUSION

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

ORDER

IT IS ORDERED that:

1.    A community of interest exists between the Selma and Grants Pass telephone exchanges.

2.    The Selma/Grants Pass EAS route is necessary to meet the critical need of the Selma petitioners because of the lack of essential goods and services located in their own exchanges or a contiguous exchange.

3. This completes Phase I of this docket. It is now ready to enter Phase II, the rate and cost phase. For Phase II, the Selma petition will be grouped with all other EAS dockets that complete Phase I by August 1999. The telephone companies serving the Selma and Grants Pass 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.