Order 15651 - Bell Atlantic: Extended Telephone Service Request by Petition

 

STATE OF RHODE ISLAND AND PROVIDENCE PLANTATION

DIVISION OF PUBLIC UTILITIES & CARRIERS

ORDER

On February 20, 1998, the George Wiley Center submitted a signatory petition  [1 A petition was signed by 22 individuals on February 19, 1998 at a meeting sponsored by the Coordinating Campaign to Eliminate Poverty Among Rhode Island Children organization and co-sponsored by the Woonsocket Neighborhood Development Corporation and the Gray Panthers. A subsequent petition was submitted by the George Wiley Center which contained an additional 103 signatures.] with a transmittal letter to the Division of Public Utilities and Carriers ("Division") requesting that the local telephone calling area of the City of Woonsocket and towns south of Woonsocket be expanded to include the Providence Exchange  [2 The Woonsocket exchange consists of the municipalities of Woonsocket, North Smithfield, northern Lincoln, and the northeasterly portion of Burrillville (762, 765, 766, 767, and 769 exchange numbers). The local calling area includes the Blackstone, Massachusetts locality, and the Centredale, Cumberland Hill, Pascoag and Pawtucket exchanges.]  An amended petition was submitted to the Division on May 13, 1998 from the Gray Panthers and the George Wiley Center which requested that individual Woonsocket telephone users be provided the option to choose whether they want to call the Providence Exchange toll-free and would result in rate group classification  [3 If residence subscribers of the Woonsocket Exchange were provided the capability to call the Providence Zone, the exchange would be reclassified from its present Rate Group 13 to Rate Group 21 resulting in a monthly increase of $3.11. For the purpose of determining monthly exchange rates for main telephone services, an exchange or zone is classified in a rate group according to the total number of main exchange lines in the local service area that can be reached toll-free. Exchanges and zones are reclassified when the number of main exchange lines in the local service area exceeds the upper limit of the rate group for a two year period. When a local calling area exceeds the upper rate group limit under a mandated calling area change, the two year waiting period is waived.] for only those who select the option.

Pursuant to Rhode Island General Law Section 39-4-3, the Division is mandated to conduct a hearing concerning complaints made against a public utility by any twenty-one qualified electors. A notice was placed in The Call, a Woonsocket local newspaper, announcing a hearing to solicit public comment regarding the filed petitions.

The public notice reflected the rate impact of the proposed local calling area expansion on Woonsocket telephone users that results from the rate group reclassification schedules on file with the Public Utilities Commission. Reclassification results in an increase of $3.11 per month for unlimited one-party residence customers [The current monthly rate for unlimited residence service for Woonsocket in Rate Group 13 is $14.15 and would increase to $17.26 in Rate Group 21]. Measured residence and measured business customers would not experience any increase beyond the uniform statewide rate of $6.17 and $17.91 respectively. In place of toll calling to the Providence exchange, measured customers would pay message units at the rate of 10.41  cents for each five minute period of a call.

A public hearing was conducted on May 27, 1998, in the Woonsocket City Council chambers. Twenty-eight speakers spoke in favor of the proposed expansion of the Woonsocket local calling area with one person opposing. The comments focused on the inability of Woonsocket subscribers to call the metropolitan Providence area as compared to other parts of the state which are further away in distance yet enjoy the luxury of calling Providence toll-free. Additional comments addressed the necessity to contact the Providence medical community, the importance of local calling between Woonsocket and Providence for economic development purposes, and the financial hardship of high-priced toll calls on low income telephone users.

There were two petitions from the George Wiley Center submitted into the record that contained one hundred twenty-five signatures. In addition, there were eighteen form letters affixed to the petition along with seventy-eight signatures from the public supporting the calling expansion proposal. Correspondence was also received from Senator Marc A. Cote, Representative Nancy L. Benoit, North Smithfield Town Administrator Kenneth M. Bianchi, Woonsocket Mayor Susan D. Menard, Burrillville Town Clerk Nancy M. Faford, a Burrillville Town Council Resolution supporting the petition - President Kevin P. Menard, Connecting for Children and Families Executive Director - Terese Curtin, Diocese of Providence - Monsignor George Frappier, Alliance for the Mentally Ill of Rhode Island - Registered Nurse M. Robyn Sprigg, Hypertension and Nephrology Inc./North Main Primary Care Clinical - Assistant Professor Richard A. Cottiero, M.D., and Northern RI Community Mental Health Center - Executive Director Christian L. Stephens.

On June 5, 1998, the Division requested that Bell Atlantic provide written responses to the Woonsocket petitions and to Senator Marc A. Cote's letter regarding inequities in the telephone exchange rate structure. On July 15, 1998, Bell Atlantic filed their response opposing any expansion of the calling area.

The company stated that any expansion of the local calling area would be in direct conflict with past regulatory efforts to promote fair competition in the telecommunications environment in Rhode Island. The company indicated that customers in the Providence exchange would also likely experience an increase in their basic exchange rates in the future as they also would have an enlarged local calling area. The company highlighted their past efforts in expanding the availability of optional toll calling plans, reducing toll rates over the last several years, and to maintain basic exchange services at affordable prices. Lastly, the company addressed an issue that was not mentioned in the public notice, change in the local calling area would result in "grandfathered" flat-rate business services be converted to measured services as a result of reclassification into Rate Group 21. The offering of unlimited business service has been discontinued for over two decades.

Bell Atlantic's objection to the amended petition to allow optional local calling to Providence focused on the following area:

(a) upsetting the balance in the provision of local telephone service,

(b) eliminating the traditional exchange concept,

(c) creating a precedent for customer-specific calling areas throughout the state,

(d) undermining the concept of traditional two-way or reciprocal local calling between exchange areas,

(e) substantially increasing investments and expenses to modify the telephone network and operations of the company, and

(f) increasing telephone customer confusion.

Bell Atlantic's correspondence also disputed the recommendation offered by Senator Marc A. Cote. Senator Cote highlighted a perceived disparity in the basic telephone rate structure whereby the Providence exchange has three times as many telephone exchange lines in its local calling area but yet the rate in only about $3.00 more per month compared to Woonsocket subscribers. He suggested that Woonsocket's current exchange rate level should be reduced in view of the reduced calling capability or as an offset, the Providence exchange should be added to Woonsocket's local calling area. Bell Atlantic disagreed with the Senator's analysis because it failed to recognize the lower costs associated with providing telephone service to high density areas such as Providence compared to lower density areas. The company further stated that Woonsocket's basic telephone rates are reasonable and comparable to other exchange areas in view of the cost differential of providing local telephone service to rural and urban areas throughout the state.

Discussion

Rhode Island General Law Section 39-4-9 provides that there must be a finding that rates are unjust or unreasonable, or otherwise in violation of regulatory statutes in order for the Division to substitute rates. In the Division's evaluation of the facts brought forth by the petitioners and the participants during the public hearing, it does not appear that Bell Atlantic's basic telephone rate structure for the Woonsocket exchange is unjustly discriminatory or that there is any evidence in the record establishing a violation(s) of regulatory statutes.

The issue of determining unreasonable rates, as it applies to the Woonsocket exchange, is one of supposition. The Division has consistently been the recipient of public voices addressing unjust and unreasonable telephone rates. In some instances those expressed concerns have been found to be valid. Conversely, there have been instances where the complaints were unfounded. We cannot conclude that the basic exchange charges for Woonsocket or any other exchange in Rhode Island are unreasonable. The public has always been provided an opportunity to render their objections to telephone rate increases and the governmental process has always centered on universal and affordable basic telephone service. We believe that basic telephone exchange rates have remained stable in Rhode Island throughout the years and note that increases have been below inflation levels. Therefore, we reject the speculation that Woonsocket's exchange rates are unreasonable.

With regards to the amended petition for Woonsocket subscribers to optionally call Providence, the Division repudiates the proposition as being too adverse to the present rate structure with potential profound implications on future telephone calling areas and rates. We concur with Bell Atlantic's conclusion that creating customer specific calling areas for Woonsocket will expedite the demise of the current exchange concept and could lead to higher rates and increased customer confusion. In addition, the Division notes that Bell Atlantic worked hard at introducing optional services such that customers do have a choice in tailoring their services to meet their needs.

Contrary to our rejections on some of these issues, we will not discount the voices of Woonsocket telephone users requesting change. Earlier this year, the Division rejected a petition filed on behalf of Manville [4 The Manville community is located in northern part of the Lincoln municipality and is in the Woonsocket telephone exchange. The town of Lincoln is divided into three exchanges - Woonsocket, Pawtucket and Providence. The Manville section is the only portion of the Lincoln municipality that is unable to call Providence on a local basis.] residents seeking to extend their local calling area. The decision was founded on the basis that sufficient optional calling services were available, and it was envisioned that local competition would respond to customer desires.

The Division believes that competition in the residence market is developing slower than expected and may be stalled. We are of the opinion that it is an appropriate time to hear from the company's subscribers in the Woonsocket exchange as to what they want in their local calling area and, more importantly, what they are willing to pay. The company has said since the Taylor Study was performed that 70% of their customers are satisfied with their local calling areas. A new poll will help to test the validity of the study which is several years old.

Accordingly, it is

(15651) ORDERED:

1. Bell Atlantic is hereby directed to conduct a poll of all Woonsocket exchange customers to determine their willingness to permanently expand their local calling area to include the Providence exchange. The poll shall contain informational material and a separate polling ballot.

A. The informational material shall include the following:

a. Brief and concise facts regarding the proposed extended local calling area and the rate impact on different classes of telephone users. Notification must also be included to existing "grandfathered" flat-rate business customers who will be converted to measured service.

b. Notification that only one ballot shall be counted for each billed customer account.

B. The ballot is to include:

a. Available space for the customer's signature along with the address and telephone number.

b. Brief instructions about ballot completion.

c. The deadline for completed ballots to be returned must be in a conspicuous location on the ballot.

d. Return postage affixed on the ballot.

e. Return address to be designated by the Division at a later date

2. Bell Atlantic must establish a telephone number for the sole purpose of re-mailing a ballot to those who did not receive or misplaced the original ballot. Bell Atlantic may not use the call-in process as means to have a dialogue with inquiring customers about the poll.

3. Bell Atlantic must submit a draft of the informational material and polling ballot for the Division's review by September 25, 1998.

4. Bell Atlantic must distribute polling material to Woonsocket billing customers by October 16, 1998.

5. Expansion of the Woonsocket local calling area will be considered if a majority of the customers in the Woonsocket exchange accept the expansion proposal. The poll will not be considered valid unless a majority of the ballots are returned.

DATED AND EFFECTIVE AT PROVIDENCE, RHODE ISLAND, ON AUGUST 6, 1998.