6-2500-14248-2

P5316, 407, 421/PA-00-1564

STATE OF MINNESOTA

OFFICE OF ADMINISTRATIVE HEARINGS

 

FOR THE MINNESOTA PUBLIC UTILITIES COMMISSION

 

In the Matter of Qwest Corporation, Citizens Communications Company, and Citizens Telecommunications of Minnesota Joint Application for Approval of Sale of Property and Authority

SUMMARY OF PUBLIC HEARINGS

          Public hearings were held by telephone conference according to the following schedule:

DATE	TIME	PLACES	PUBLIC SPEAKERS[1]
May 7	3:00 p.m.	Thief River Falls and Crookston	5
May 8	1:30 p.m.	Mahnomen, Detroit Lakes and Hawley	10
May 8	6:30 p.m.	Bemidji and Cass Lake	6
May 9	9:00 a.m.	Wadena, Staples, Fergus Falls, Battle Lake and Henning	18
May 9	2:00 p.m.	Morris, Swanville, Sauk Centre and Glenwood	14
May 10	10:00 a.m.	Brainerd and Nisswa	8
May 10	2:00 p.m.	Little Falls, Royalton and Holdingford	9
May 14	11:00 a.m.	Redwood Falls, Morton, Marshall, Tracy, Gaylord, Appleton and Litchfield	14
May 14	6:00 p.m.	Ortonville/Big Stone, Willmar, Olivia, Bird Island and Montevideo	28
May 15	11:00 a.m.	Luverne, Jackson, Pipestone and Caledonia	4
May 17	6:00 p.m.	Grand Marais, Tofte, Finland, Silver, Bay and Cook	33
May 18	1:00 p.m.	Moose Lake, Barnum and Park Rapids	10

          In addition to those speaking at the hearings, approximately 275 written comments were received from members of the public during the comment period that ended May 31, 2001.[2]

At each of the sessions, there was an introduction by the Administrative Law Judge, a statement by the Public Utilities staff, statements by representatives from Qwest, Citizens, the Department of Commerce and the Residential and Small Business Utility Division of the Attorney General’s Office.  These were followed by questions and statements from the public.

The largest number of comments was devoted to the lack of reasonable Internet access, DSL and other advanced services.  The second largest number of comments came from former Northwestern Bell/US West retirees who were concerned about their concessions, and other retirement issues.  The third largest group of comments dealt with inadequate service quality from Qwest.  There were a variety of other topics mentioned.  The Administrative Law Judge has grouped comments relating to each topic below.

Fast Internet Access, DSL and Advanced Services

          The single most commonly voiced issue in these hearings was the demand for reasonably adequate Internet access and advanced services.  This came from businesses, community leaders, and ordinary citizens. 

Internet access is no longer a luxury for many businesses.  It has become a necessity.  For example, even a small country grocery store has been asked to send orders to its supplier via the Internet.  And, a Ford dealership reports that Ford Motor Company no longer sends much of its information to dealers by mail, nor will it accept information from dealers by mail.  It demands that files be sent electronically over the Internet.  Ford requires each of its dealers to maintain a web site, which is hosted, online at Ford’s server.  In order to make this web site worthwhile it must be kept up to date.  Using a normal Qwest line in Montevideo, it took two hours to program one page.  The same task can be accomplished in 20 minutes using a T-1 line.  And a CPA firm in the same community needs to be able to transmit and receive large files and spreadsheets if it is to remain competitive.  The bank in town is willing to pay more money in order to get better service, but it can not get what it needs from Qwest.[3] The Montevideo clinic administrator believes that high-speed access is vital to quality health care delivery.  Those four comments, from just one community, represent scores of comments from businesses throughout the exchanges in question – high speed Internet access is a necessity.

          Community leaders have recognized the increasingly important role that high-speed telecommunications access is playing in economic development decisions.  The record is replete with statements from mayors, county boards, chambers of commerce and even unique telecommunications advocacy coalitions, pleading for the availability of fast Internet access, DSL and advanced services in order to keep their communities attractive to businesses.  Years ago, there would not have been any need for something called “Technology and Telecommunications Project for Southwest Minnesota” ("TNT"), but now there is.  More than a score of cities and counties in the southwest part of the state have submitted letters in support of TNT’s “settlement proposal” designed to assure that there are adequate monies set aside from the Qwest/Citizens sale to install DSL/DSLAM capability in each of 13 specified communities within a hundred and eighty days of the closing of the sale.  Similarly, years ago there would not have been the need for an entity known as “KandiLink”, which is a telecommunications advocacy group.  Next door to them is “Renville Connect”, a similar group.  Throughout the state, community leaders have felt it necessary to form these kinds of entities in order to advance the case that their areas must be provided with adequate telecommunications.  These technologies not only to attract new “high-tech” businesses, but also maintains the existing businesses that must compete with businesses in larger urbanized areas that do have modern telecommunications.

          Finally, the record contains over one hundred comments from individuals who report inadequate infrastructure to make even modest use of the Internet.  They report modem speeds of 1.2K, 1.4K, 4.8K, 12K, 14-24K, 15.6K, and 16K.  While such speeds were barely adequate years ago, many people find them totally inadequate today, even for personal use.  They ask why they should pay for a 56K modem when they can only get 4.8K, or less, from their telephone line.

          In response to these concerns, Qwest points out that the system which it deployed historically was designed to carry voice, not data, and without upgrades, it can not be expected to provide high speed data access.  Qwest and Citizens agree that if the sale does go through, Citizens will honor the commitment to provide DSL to the seven communities which are scheduled to receive DSL as part of the merger between Qwest and US West.  Beyond that existing commitment, however, Citizens states that it will add DSL and other high speed access services only as it is “economic” to do so.  But, Citizens points out that it currently operates 115 exchanges in Minnesota, and it is installing DSL in 28 of them this year alone.

          DSL is not “the holy grail” for some persons.  At least one person from an advocacy group testified that DSL is no longer new technology, is old technology, and advanced services like video conferencing and voice messaging ought to be available.  Moreover, there are severe distance-from-switch limitations for DSL.  Persons living more than a few miles from a switch can not use DSL.  But they do want improvements that will allow them reasonable Internet access.[4]

Retirees' Concerns

          The second most commonly voiced issue came from Northwestern Bell and US West retirees, who were concerned about their “concessions” which are part (apparently) of their pension plans.  These concessions vary from individual to individual, depending upon when they retired, but it appears that retirees are receiving all or a portion of their local telephone service free of charge, as well as some long distance service.  The retirees’ concerns relate to the continuance of these concessions if the sale goes forward.  Both the Administrative Law Judge and PUC staff, as well as representatives of Qwest, attempted to explain the Commission’s jurisdictional decision announced in the US West/Qwest merger case, but those explanations did not deter retirees from commenting and writing concerning their pension benefits.  Their concerns included not only concessions, but also cost of living adjustments, medical benefits, and a smattering of other pension matters.  The Administrative Law Judge will not discuss them further here, based on his understanding of the jurisdictional decision reached in the merger case.

Qwest Quality of Service Issues

          Public comments about Qwest’s quality of service were, for the most part, positive, with the notable exceptions of DSL/Advanced Services and unserved areas in Cook County.  There were a significant number of negative comments, however, which can be grouped into categories of excessive delays in obtaining new service, and poor lines/poor switches.

          Excessive delays have occurred in the provisioning of new lines and business services.  For example, a customer in the southern part of the Staples exchange indicated that people have to wait “months and months” to get service.  This customer attempted to get a telephone for a public pool, ordering it in March.  All through the summer she was told “it is coming next week, it is coming next week,” but it did not get installed until November.  This caused the community to have to spend money to have a person sit at the pool with a cell phone.  This customer was told that there would be a reimbursement for the delay, but she has heard nothing.  She recently called Qwest about it, and was told “you will hear in the future”.  This caused another participant at the hearing to state that fines and refunds were a poor substitute for good quality service.  At a different location, a business owner complained that he ordered three new business lines in December of 1999 and did not receive them until February of 2000.

          A customer from the Litchfield area wrote that he tried for more than two months to add a second line to his home in the fall of 1999.  At first he was told that the new line would be installed “within two weeks”.  After three weeks had passed, he called Qwest, and was told that it would be in “by next week”.  He tried every week for two months to get the new line, and finally in frustration told Qwest to “forget it”.  He wrote as follows: “I would like to get a second line for [my] home still but I am not about to give Qwest the new business.  I know the real reason they didn’t give me a new line is because they didn’t have the equipment in the local office to handle the lines and weren’t about to spend any money on a system they were selling."

          The next general category of complaints was in the area of “poor lines and poor switches”.[5] These included:

In Crookston, Sharon Neet characterized the existing service quality from Qwest as “pretty abysmal”.  Sometimes she can not get a dial tone, other times it is hard to dial long distance.  Persons calling her report busy signals even when she is not on the telephone.  Sometimes the phone rings but there is no caller on the line when it is picked-up.  When Neet complained last year, Qwest indicated that it would make upgrades, but Neet has not noticed any improvement.  Jason Topp, on behalf of Qwest, indicated that Qwest did repair some trunks and added new trunks in December and January, and that upgrades are still ongoing.  He indicated that both the AFOR Plan and merger agreement contained provisions with respect to these kinds of complaints, and that Qwest is aware of the problems in Crookston.

In Crookston, Tom Lenertz, has complained to Qwest about service problems, and was told “you just have to live with it”.  He then complained to the Public Utilities Commission and now his problems are getting resolved.  His problems include dialing a number and getting a message indicating that “this call can not be completed as dialed”, but then redialing it and redialing it until, sometimes after 10 to 20 tries, the call will go through.  He uses an automatic dialer for this purpose.  There used to be very frequent outages at his work location at the River View Health Care Association, but this appears to have been solved earlier this year.  At the Sisters of St. Joseph’s in Marywood, he was unable to directly dial a number in Grand Forks, and had to go through the operator (who was able to get through every time).

In Mahnomen, Dean Johnson, City Manager, stated that numerous times attempts to direct dial long distance calls are met with a recording stating “sorry, all lines are busy at this time”.  Johnson believes that Qwest has not invested adequate monies in plant and equipment to serve Mahnomen, and that Mahnomen is “way behind” its neighbors which are served by smaller telephone companies.  Jason Topp, on behalf of Qwest, responded that Qwest has made investments in the Mahnomen area.  Topp went on to say that the comparison with Mahnomen’s neighbors points out one of the advantages of the proposed sale, in that Citizens' focus is on serving smaller communities and rural areas.

In Staples, Betty Marrotzke also complained about an inability to dial long distance, particularly in the evening.  She stated that after 6:00 p.m., it didn’t matter whether she was calling Bemidji or Minneapolis, all she got was recordings.  Marrotzke also stated that her service to the Internet is almost worthless, because it is so slow.  On a good day, she can get between 12K and 24K, but other days are worse.  She has been told by her ISP that the line is very poor, an opinion, which has been, confirmed by local Qwest service personnel.  Marrotzke stated that no company in the high-tech industry would come to a place that has such lousy telecommunications services, and that it was vital that the quality of service be improved.

In addition to the foregoing, there were roughly twenty other comments about inadequate equipment or lines.  In some areas for example, where the soil is particularly sandy, it is difficult to obtain an adequate ground, and there is frequent damage to telephone equipment (and answering machines, modems, etc. attached to the telephone line) from lightening.  Other persons complained about frequent “all circuits are busy” recordings obtained by persons trying to call them from nearby communities.  But, these comments must be viewed in the context of the numerous (roughly 100) persons who commented orally or in writing that they were satisfied with the quality of service (except for DSL, and Cook County). 

Many persons responded to the Notice of Hearing by writing a short note on the bottom of the Notice and returning it to the Commission in the self-addressed envelope provided.  Those comments, more often then not, were things like “service has been fine, but stop changing companies”, or, “no complaints about service but I’m against all these mergers”.

In Fergus Falls, Allan Anderson is generally satisfied with his service.  He once called for service on a Saturday, and within one hour, received a call back to make an appointment for the service.

In Fergus Falls, Muriel Dinsmore stated that she has a telephone in Fergus Falls and also one at her lake cabin in Clitherall, and that both of them are “just fine” in terms of current service.  She was relieved to hear that the proposed acquisition would not change her telephone numbers.

In summary, it appears from the public comments that Qwest has done a good job of providing “POTS” [Plain Old Telephone Service].  While there are still a few problem areas and customers, they are few in relation to the number of satisfied customers.  The major source of complaints is no longer POTS – it is demands for improved Internet access and service to unserved areas (Cook Co.).

Fears about Citizens

          Many persons asked what changes would come as a result of the proposed sale and were relieved to hear that Citizens intends to acquire the lines, switches, and other equipment currently owned by Qwest, as well as adopting Qwest’s current tariff.  What that means, for most of the inquiries, is that there will be no change in (a) the quality of service and (b) the availability and cost of service.  In addition, Citizens intends to try to hire as many of Qwest’s local service personnel as it can.  While there are obstacles, such as seniority and pensions, which some suggested would hinder Citizens attempts to hire Qwest personnel, Citizens will at least try to do so.  Members of the public are concerned about having an adequate number of local service personnel who can respond promptly when problems occur.

          Rate stability was also raised by many persons, in the sense that they thought it inevitable that a new company would raise rates.  Many of the brief written comments on the notices of hearing expressed sentiments such as “not opposed to sale, but don’t raise rates!”  A banker and two other persons knowledgeable about the industry expressed the opinion that Citizens was paying “top dollar” for these exchanges and access lines compared with other sales around the country.  They opined that Citizens would either have to raise rates or provide only minimal service in order to make a profit.

          A number of persons asked about EAS boundaries, indicating that maintaining current EAS service was very important to them.  They were pleased to learn that Citizens had no plans to change EAS boundaries.  A smaller number of people inquired about LATA boundaries, particularly those who were knowledgeable enough about the industry to understand that LATA boundaries could make a big difference in the price of a call.  They were informed that the sale would not change LATA boundaries. 

A number of persons asked how they were supposed to comment on the proposed sale when they had never heard of Citizens and knew nothing about them.  But a few persons did comment.  A handful of persons (fewer than five) expressed concerns about Citizens ability to provide adequate customer service for the new exchanges.  One individual lives in Arizona part of the year.  He has Citizens Communications as his local carrier there.  He used to have MCI World Com as his long distance carrier in Arizona, but he was “slammed” and found his service transferred to an unknown company called “Keystone”.  He made numerous telephone calls and sent letters to Citizens in an attempt to get the matter rectified.  He reports that he is no further along now than he was in January.  He had to switch his long distance to Citizens in order to get away from the high charges from Keystone, but he did not want to switch his long distance to Citizens.  He reports that dealing with Citizens has been very frustrating.

A Qwest customer in Nisswa wrote in opposition to the proposed sale, as follows:

I have had previous experiences with Citizens Communications which were very unpleasant – especially the attitude and discourtesy of the persons I dealt with in an effort to cancel telephone billings from them.  I would hope that if this change takes place we should have some assurance and guarantee of quality service.

Another Qwest customer from the Mankato area wrote as follows:

Qwest has always provided quality and reliable service.  Their repair department has been the most responsive of any telco that I have dealt with.  I have had experience with Citizens Communications since they bought the GTE/Horizon exchanges in Minnesota last year, and their customer service is one of the worst that I have had to work with.  My bad experience with Citizens was not just once, but on three separate occasions.  I shutter to think I have to deal with Citizens, in regards to the exchanges that are now Frontier.  It appears to me by the time all of this is done, Citizens Communications will have most of the exchanges in the state.  They have proved they can’t handle a few, what will happen when they also have Frontier and Qwest exchanges?

Another citizen wrote that: “we have heard complaints from folks in the Cambridge, MN area about this company [Citizens].”

The Administrative Law Judge does not recall any positive statements from persons who had experience dealing with Citizens.

Lutsen/Caribou Trail/Cook County Unserved Territory

          On May 31, 2000, a formal complaint was filed by approximately 105 persons urging that the Commission investigate the lack of telephone service in the Lutsen, Minnesota area.  More particularly, the Petitioners live on or near Clara Lake, Tait Lake, Holly Lake, and Christine Lake.  These areas are all north of the Lutsen ski resort area.  At the present time, they receive no “hard wire” (as opposed to wireless) telephone service.  At least one couple on Clara Lake has paid $6,500 for a telephone line to be installed to their home (and business), but otherwise persons living in that area must either rely on wireless telephones or drive down to highway 61 in order to obtain telephone service.  The nearest reasonable Internet service is available at the Grand Marais Public Library, which is a substantial distance away.

          At least seven years ago, Air Touch Wireless assured individuals that they would be able to have cell phone service if they purchased a high power (3-watt) Motorola “bag phone” and, in some cases, erected a Yagi antenna above their houses.  For some persons, this arrangement proved to be generally satisfactory, although it was expensive and provided very slow (4.8K or less) Internet access.  Within the last two years, however, the quality of the service has deteriorated.  It is analog service, rather than digital, and the current provider, Verizon Wireless, has made technical changes that have dramatically reduced the signal strength inland from highway 61.  Verizon’s goal is to serve the highway 61 corridor, as well as the towns of Grand Marais, Isabella, Silver Bay and Two Harbors.  It has placed reflectors on some of its antennas so that those antennas would provide a better signal to the highway 61 corridor.  The problem with those reflectors, however, is that they have reduced the signal strength inland of the highway.  Verizon does not intend to install anymore inland towers, or make any changes to provide better service to inland customers.  Moreover, it is focussing on digital, rather than analog, and has reduced its offerings of analog service to only one billing plan – 60 minutes of airtime per month for $24.99.  Petitioners fear that eventually Verizon will abandon its analog service entirely and they will be left with no service at all.  Even the local Verizon dealer has signed the petition (and written individually) requesting hard line service for this area.

          Qwest has estimated a cost of $2.2 million to install a buried cable to serve the Petitioners with basic service.[6]  This figure would not support the provision of advanced services such as DSL.  The precise cost of providing that level of service is not known, but appears to be at least $1.4 million extra.

          It is obvious from both the oral testimony at the hearing and written comments in the file that many of the affected residents are concerned for their health and safety in the absence of reliable telephone service.  A medical professional at Clara Lake testified regarding three incidents where residents were unable to promptly summon medical help.  She testified about the importance of the “golden one hour” which occurs immediately after an injury, and of the proven difference in outcomes if medical help can be administered during the first hour.  She spoke of the frustration that she felt as a child lay dying, and the inability to promptly summon a helicopter from Duluth.  Not only did they need to reach 911 to summon it, but then the helicopter had to be directed in to a nearby landing area.  She testified about the difficulties which occurred as a result of poor wireless telephone contact, and that ultimately the child died.  This testimony caused another speaker to ask when we began equating dollars with human lives, labeling the situation “obscene.”  Other residents spoke about various incidents that had occurred involving no telephone service at the time of the death or serious illness of a parent, the death of a friend, the inability to communicate with a loved one who was hospitalized, and even the fact that they were afraid to have their children invite friends over because they could not be sure that they could summon help if anything were to happen to the friend.  Persons spoke about the inadequacy of the cell phone service, its unreliability and its sporadic and unpredictable outages.  They spoke of their unwillingness to carry on confidential conversations, give out credit card numbers, and otherwise use the cellular telephones for normal day to day activities.  Many spoke of Internet access as being “slim or none”, indicating that the slow speeds and erratic connections made it virtually unusable.  Persons who desired to conduct business from this area have either had to go into Grand Marais, or, in some cases, drive to Duluth.

          A number of persons cited section 706 of the Telecommunications Act of 1996 as requiring that they be provided with “affordable, adequate and available” telephone service.  That section provides, in part, as follows:

(a)            The [Federal Communications] Commission and each state Commission with regulatory jurisdiction over telecommunications services shall encourage the deployment on a reasonable and timely basis of advanced telecommunications capability to all Americans … by utilizing … measures that promote competition in the local telecommunications market, or other regulating methods that remove barriers to infrastructure investment.

(b)            The [Federal Communications] Commission shall … initiate a notice of inquiry concerning the availability of advanced telecommunications ability to all Americans …[and] shall determine whether advanced telecommunications capability is being deployed to all Americans in a reasonable and timely fashion.  If the [Federal Communications] Commission’s determination is negative, it shall take immediate action to accelerate deployment of such capability by removing barriers to infrastructure investment and by promoting competition in the telecommunications market.[7]

911 Redundancy

          One of the specific items raised by the Department in its opening statement at the start of each of the hearing sessions was 911 redundancy.  The Department’s spokesperson alleged that the metro area generally enjoyed 911 redundancy but that other areas do not.  The Department asked for reaction to that situation, and it got some.

          Some areas of the state are served by 911 facilities located far away.  In Cook County, for example, the 911 computer is located in Duluth.  The Cook County Sheriff testified that there is no redundancy between Cook County and Duluth, so that if the cable is cut by a backhoe or other incident, the county loses access to the Duluth computer.  He indicated that it takes about an hour to move 911 to a new location by manually switching a circuit.  The cable between Tofte and Duluth has not been cut since enhanced 911 went into service, but there have been local cuts twice in the past year and a half.  He would like to have greater redundancy between Cook County and Duluth.

          In Hawley, Lisa Jetvig noted that two times in the past four years, there has been no long distance service in or out of the city of Hawley.  Both times were the result of cut phone lines.  This is not only an inconvenience, but could have serious repercussions because 911 calls have to go to Moorhead, and without telephone lines, the city has lost its 911 service.  She believes there ought to be some kind of back up systems for 911 calls when phone lines are accidentally cut or otherwise out of service.

 

Other persons spoke more generally about the need for 911 redundancy.  One person, for example, noted that it made no sense to install a redundant circuit in the same trench as the primary one, because if one is cut, it is likely the other will be cut as well.  Two persons spoke about a major connecting line between Willmar and St. Cloud, indicating that if that line is cut, many communities lose 911 service.  It has happened about once every summer over the past few years.

          More persons were interested in redundancy for all communications, rather than just the few who mentioned 911.  Persons spoke of the need for reliable and redundant communications for all purposes, but especially for businesses.  They spoke in terms like “route diversity” and “self healing”, echoing many of the ideas that were expressed in terms of reasonably fast Internet access - - that modern telecommunications is not a luxury, it is a necessity, particularly in non-urban areas where businesses are trying to compete at a number of levels (personnel, transportation, and increasingly telecommunications) against urban counterparts.  At least one person urged that the Commission condition the sale of exchanges on the provisioning of advanced services, redundancy, and route diversity.

Competition

          Another issue where the Department solicited comments was on the topic of competition.  The Department noted that Qwest is currently required to open its network to competitors, and asked whether Citizens should be required to assume the same open network obligation.  The responses to this inquiry were universally affirmative.

          A number of the persons who voiced dissatisfaction with the quality of service they have received from Qwest also expressed the desire for competition.  And a few of those who received the Notice of Hearing from Qwest indicated that they already had switched, or were contemplating switching to a competitive local provider.

          CLECs had an opinion on the matter.  Arvig Communications, a CLEC operating in Detroit Lakes, Mahnomen, Hawley and other locations, relies on leased network elements from Qwest, and desires that as a condition of this sale Citizens be required to open its network to competitors to the same degree that Qwest has been required to.  Citizens responded that it would be essentially adopting the existing interconnection agreements entered into by Qwest, and that it would be providing the same services.  A Department representative then asked Arvig if it would prefer to use an electronic interface to order services from Citizens, including repair orders.  Arvig indicated that it would prefer an electronic interface.  Becker County purchases some local services from an authorized reseller of Qwest services, and inquired whether there would be any impact if the exchange were sold to Citizens.  Citizens responded that Citizens would honor all interconnection agreements and similar arrangements with resellers, and the sale should not have any impact on resellers.  The Becker County representative then indicated that he understood that the lack of an electronic interface had required that orders be rekeyed at the Qwest desk, which had caused some problems in the past, that would be alleviated by an electronic interface.  Citizens replied that it had an electronic interface for CLECs in some of its existing interchanges, but was not sure what would happen in Detroit Lakes.

          In Bemidji, Paul Bunyan is offering competing service to Qwest, and stated that it would continue to offer competing service to Citizens if the sale goes through.

          The Administrative Law Judge can not recall any statements made opposing competition.  The closest was one writer who urged the Commission to not “deregulate the telephone industry”. 

Voice Messaging

          The final item that the Department’s representatives raised at each of the hearings, and urged that persons respond to, was voice messaging.  They asked whether persons wanted it.  The responses were few, but all that mentioned it did want it.  A number of people indicated that they had moved from Denver or the Twin Cities to one of the exchanges, and were surprised upon their arrival to discover that voice messaging was not universally available throughout the Qwest system.  Those that mentioned having used voice messaging in the past all stated that they wished it were available at the present time.  However, their numbers were few.

 

 

 

 

 

                                                                    Respectfully submitted,

                                                                

 

ALLAN W. KLEIN

Administrative Law Judge

 

 

Dated this __19th____ day of July, 2001.