Phil Nyegaard Public Utility Commission State of Oregon January 11, 2006 Creating an Extended Area...
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![Page 1: Phil Nyegaard Public Utility Commission State of Oregon January 11, 2006 Creating an Extended Area Service (EAS) Region.](https://reader036.fdocuments.net/reader036/viewer/2022062518/56649ea95503460f94bade61/html5/thumbnails/1.jpg)
Phil NyegaardPublic Utility Commission
State of Oregon
January 11, 2006
Creating an Extended Area Service (EAS)
Region
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2
Overview of Presentation
Explanation of EAS and process for getting it
EAS region process
Answers to specific questions
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Defining Some Terms
Access Charge – A charge from local phone companies to long distance companies for use of their facilities
Exchange – The local calling area (Geographic area covered by flat local charge)
EAS Route – EAS between two exchanges Flat Rate – A constant monthly charge Measured Rate – A per minute charge Toll – Another word for long distance
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What is EAS?
A replacement for long distance (toll) service
Inter-exchange service Two rate options:
Flat rate Measured rate Can switch back and forth for 6 months without
charge 2,008 EAS routes in Oregon 182 EAS routes in Lane, Linn, Benton, and
Lincoln counties If four county region created, 2,170 new
routes would be added
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5
Advantages of EAS
Cheaper calling for some customers to neighboring exchanges
Minimizes impacts of outdated exchange boundaries
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Disadvantages of EAS
Necessarily involves raising some customer bills while lowering others
In a few cases, leads to local rate increases
EAS rates not uniform Customers of small companies generally pay
more
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EAS Regions vs Individual EAS Routes
Individual EAS Routes Most common form of EAS
Appropriate when a particular EAS route desired
Routes can be added incrementally
EAS Regions Two regions (Portland and Southern
Oregon) exist in Oregon
Appropriate when multiple exchanges all want uniform access to each other
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Revenue Neutrality Policy
Adding EAS routes may not affect phone company earnings
Increased profits unacceptable to customers and PUC
Phone companies cannot be ordered to lose money
Reality of revenue neutrality: Higher bills for some customers Lower bills for others
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Individual EAS Route Process
Phase 1: Petitioning
Community of Interest
Phase 2: Costs/Rates
Staff Investigation
Stipulation
Commission Order
EAS Deployment
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EAS Region Process
In general terms, this is the process: Investigation opened if broad support from
cities, counties, and legislators is evident If there isn’t broad support, alternative region
could be proposed, or idea dropped Establish region boundaries Calculate EAS rates for all exchanges Present rates to customers at public
comment hearings and/or polling PUC decision based upon customer reaction Implementation of region, if authorized
No petitions required
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11
Setting Region Boundaries
Input from four counties essential PUC would work with legislators to
create advisory task force Up to 12 members Comprised of affected citizens Task force would make
recommendations to the PUC Oregon law requires final boundary
decision to be made by PUC
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Calculation of EAS Rates (Cost Basis)
Some PUC-approved costs recovered through toll or access charges
EAS causes loss of toll and access revenues
EAS creates new costs EAS increases number and duration of calls Increased traffic requires new facilities New facilities are a cost of EAS
EAS rates = lost revenues + new costs
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Calculation of EAS Rates (Types)
Two types of EAS rates Flat rate (higher for business)
Measured rate
In a few cases, a local rate increase needed Only done to avoid high flat EAS rate
Has never happened for large phone companies
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Calculation of EAS Rates (Process)
Companies file proposed rates
Company rate proposal based on recent traffic (usage) data
PUC staff analyzes proposed rates and traffic data
PUC staff and companies negotiate rate stipulation
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Presentation of Rates to Customers
Done at public comment hearings in
region
In some cases, customer balloting is
done
No EAS if rates unacceptable to
customers
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Commission Order
Would be issued after public comment phase
Would be issued about 12 months after region boundaries set
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Implementation of EAS Region
If region established by PUC, implementation would take up to six months Phone companies need time to plan and
install new facilities
Without new facilities, “fast busy” problem would occur
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Portland EAS Region
First EAS Region in Oregon 33 exchanges, operated by ten phone
companies – approximately one million access lines
Flat EAS Rates in Portland EAS Region Range from $2.20 to $21.35 for residential
service Range from $3.27 to $28.40 for business
service
Measured EAS rate 8 cents/minute or less
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Southern Oregon EAS Region
Implemented in October 2004 18 exchanges, operated by four phone
companies – approximately 150,000 access lines
Flat EAS Rates in Southern Oregon EAS Region Range from $2.20 to $12.04 for residential
service Range from $3.27 to $24.08 for business
service
Measured EAS rate 6 cents/minute or less
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Proposed Four County EAS Region
Would involve ten phone companies Approximately 71% of affected access
lines served by Qwest
Would include 49 exchanges – approximately 246,000 access lines
Would actually cover slightly more than four counties
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Area Code Observation
43 of 49 exchanges in four counties are in 541 area code
If the six (6) 503/971 exchanges included in EAS region, entire 541 area code would need to go to 10 digit dialing immediately 541 area code will go to 10 digit dialing in
about 2010 anyway
If the six (6) 503/971 exchanges dropped from proposed region, number of companies involved would drop from ten to six
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Rate Bands
Telephone companies don’t set a unique EAS rate for each exchange
Instead they use EAS rate bands A company’s rate band applies to its entire
service territory The more people you can call toll free, the
higher your EAS rate
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Rate Bands (continued)
Current QWEST EAS Rate Matrix
Business
Rates
EASBand
AccessibleEAS Lines
Residential
Rates
$7.49C 600,001 - 999,000 $4.97
$1.95A 1 - 50,000 $1.28
$3.27B 50,001 - 600,000 $2.20
29 exchanges in Band A 29 exchanges in Band B 6 exchanges in Band C
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Rate Band Effect of a Four County EAS Expansion on Qwest
Eight exchanges would move from Rate Band A to B Corvallis, Eugene-Springfield, Florence, Mapleton,
Newport, Siletz, Toledo, and Jefferson All else equal, the residential EAS surcharge
for these exchanges would increase from $1.28 per month to $2.20 per month
Creation of new region would also increase rates to cover implementation costs Qwest customers outside of new region would see
higher rates, too Other telephone company rate bands would
produce a similar result
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Specific Questions
What would four county region rates be? Why not have a uniform flat rate for the
region? Would region “cherry picking” be allowed? Would there be a trial period for the EAS
region? Would exchanges outside region be allowed
to keep current EAS routes? Would exchanges outside region be allowed
new individual routes within region? How would the new region’s EAS rate
coordinate with Nationwide toll plans?
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What Would Four County Region Rates Be?
Rates cannot be calculated until final boundaries set
Portland and Southern Oregon rates provide general insights
Rates would vary among exchanges and companies
Flat rates would generally be higher for smaller companies because of smaller customer base
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Why Not Have a Uniform Flat Rate for the Region?
This idea considered, but not adopted, for previous regions
Two major problems Companies do not have same costs
Costs would have to be pooled
High potential for unhappiness in Qwest exchanges because of higher bills despite lower costs
Could cause excessive use of measured rate
Ramifications for all Oregon EAS
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Would Region “Cherry Picking” be Allowed?
No. Customers/exchanges would have
access to uniform region
“Cherry picking” would add substantial
complexity:
Uniform 49 exchange region would require
2,352 analyses of traffic and engineering data
to set rates
Complex analyses of adequacy of facilities
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… “Cherry Picking” (continued)
Exchange “cherry picking” could require
Thousands of additional traffic analyses
More complex facility analyses
Customer “cherry picking” could require
Millions of traffic analyses
Even more complex facility analyses
Access to individual calling data
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Would There be a Trial Period for the EAS Region?
No. Allowing customers/exchanges to
drop out would change rates of
remaining customers
In extreme case, future of region could
be jeopardized
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Would Exchanges Outside Region be Allowed to Keep Current EAS
Routes?
Yes, even though doing so permits “toll
avoidance” strategy
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Would Exchanges Outside Region be Allowed New Individual Routes Within
Region?
No, because of “toll avoidance”
concerns
Outside exchanges would be allowed
to join entire region
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How Would the New Region’s EAS Rate Coordinate with Nationwide Toll Plans?
Many customers have a Nationwide Toll Plan
with their toll carrier. Maximum flat rate for unlimited nationwide
calling
Includes interstate calls and intrastate calls
EAS rate would be in addition to a
Nationwide Toll Plan Flat rate or Measured EAS is billed by local carrier
Nationwide Toll Plan is billed by toll carrier
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Thank you for your time
This presentation and other EAS information is available at
www.puc.state.or.us