BAY COUNTRY ESTATES HOMEOWNERS ASSOCIATION, INC. 6343 Meadowland Drive P. O. Box 444 Dunkirk, MD 20754-9535 Tracy's Landing, MD 20779-0444 Home: 301-855-7009 Work: 202-606-2554 April 15, 1998 Mr. Daniel P. Gahagan Executive Secretary, Public Service Commission of Maryland 6 Saint Paul Street, 16th Floor Baltimore, MD 21202-6806 SUBJECT: Case # 8772, Investigation and Hearing on Expanded Calling Areas for Southern Maryland. Dear Mr. Gahagan: Enclosed for filing is the original and twenty (20) copies of Testimony in the above referenced proceeding, along with a disk version of the filing formatted in Word Perfect 5.1, entitled "ec8772.wp". If you have any questions regarding this filing, please do not hesitate to contact me. Your cooperation in this matter is appreciated. Thank you. Sincerely, Ivan (John) Petric President Enclosures cc: Parties of Record _______________________________________ BEFORE THE MARYLAND PUBLIC SERVICE COMMISSION April 15, 1998 In the matter of the Commission's * investigation into expansion of * Case No. 8772 local calling area boundaries * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * TESTIMONY OF IVAN PETRIC FOR CONSUMERS AND COMMUNITIES IN SOUTHERN MARYLAND AND SURROUNDING COUNTIES IN ANNE ARUNDEL, CALVERT, PRINCE GEORGE'S, CHARLES, SAINT MARY'S, MONTGOMERY, ET.AL. __________________________________ I. QUALIFICATIONS Q. Please state your name, address, and business affiliation. A. My name is Ivan Petric. I am the President of the Bay Country Estates Homeowners Association, Inc., in southern Anne Arundel County, Maryland. My address is 6343 Meadowland Drive, Dunkirk, MD 20754-9535. I am testifying on behalf of the consumers in Southern Maryland, and the Washington and Annapolis metropolitan areas. I am also a Management and Program Analyst with the U.S. Office of Personnel Management in Washington, D.C. I have been there since 1986. Q. Please summarize your background and qualifications. A. I hold a B.S. degree with high honors since 1974 from Morgan State University in Business Administration. Areas of concentration were statistics, economics and business. I have been living in southern Maryland since 1983. Prior to that time I lived in Baltimore. The area that I live in now, to my knowledge, was mostly rural farmlands. Since that time, the surrounding areas have grown a thousand fold. As an analyst for the U.S. government, I create projections based on data analysis, and other related conditions. Prior to that I worked as a District Manager for the News American, the Hearst Corporation, for 4 years. And before that I served as a Transportation Officer in the U.S. Army for 6 years, and prior to that I was a Police Officer in Baltimore City. Q. Have you ever testified before a state regulatory commission? A. No. This is my first opportunity to testify before a state regulatory commission. However, I have testified before the Maryland House of Delegates on this topic, and the U.S. Congress on a different subject. II. REASONS FOR TESTIFYING Q. What is the purpose of your testimony in this proceeding? A. In 1966, after seeing one too many high telephone bills, and the Congress pass a Telecommunications Act of 1996 that was to benefit the Communications industry, I was determined from that time, that I was going to do something that would be in a similar way a corresponding benefit for consumers. The reason I did that was two fold. I looked at our local calling area from the 257 exchange and thought to myself, "We have a phone exchange that is able to access local calling only in the immediate calling area within 8 to 10 miles, and points south towards Solomons Island 40 miles away. However, to call towards Annapolis, 20 miles away, and the D.C. metropolitan areas was a long distance toll call. This had not changed in more than 15 years. However, the area was multiplying in numbers by leaps and bounds. With population growth more than 50 percent higher. So, at that time I took up the pen and started writing and calling to find out what I could do to make a difference. That's when I was fortunate to make contact with Theresa Czarski, from the Office of the People's Counsel, who shared some previous case history and prior decisions that were made by the Commission on expanding local calling areas. That led me to create a Petition which I then circulated throughout the southern Maryland region in order to obtain a "Community of Interest" regarding an expansion of the local calling areas. I have collected over 16,000 signatures from consumers, including numerous letters of endorsement in support of this action from Senator Paul S. Sarbanes; Senator Barbara A. Mikulski; Congressman Steny H. Hoyer; Congressman Albert R. Wynn; Congressman Robert L. Ehrlich, Jr.; Senator Thomas "Mike" Miller; Senator Leo Green; Delegate George Owings III; Senator Bernie C. Fowler (retired); the Southern Maryland Delegation, Van T. Mitchell Chairman; as well as Chairman Bert L. Rice and the Anne Arundel County Council; Chairman Ron Russell and the Prince George's County Council; President Murray D. Levy and the Charles County Board of Commissioners; President Hagner R. Mister and the Calvert County Board of Commissioners; President Barbara R. Thompson and the St. Mary's County Commissioners; Gary Hodge of the Tri-County Council; the Dunkirk Area Concerned Citizens Association; the Calvert Chamber of Commerce, the Wooded Valley Estates Homeowners Association, the Bannister Neighborhood Association, the Riverdale Baptist Church, etc., throughout Southern Maryland showing a strong "Community of Interest," which was communicated to the PSC. Recently, endorsements for expansion of calling areas were also made by President Isiah Leggett of the Mongtomery County Council, and County Executive Douglas Duncan. As well as Delegates Raymond Beck and Adriene A. Mandel. Q. Was your Petition and Complaint acknowledged by the Commission? A. As originally submitted, No. The petitions and complaint were made with the express intent that the PSC would honor this information as strong support for an overall investigation, but it appears that this was not the case, as the support for this measure was not considered by the PSC staff. As a result only 2 exchanges were considered to be looked at in the North Beach Exchange, with the Commission's staff indicating that Dunkirk and the surrounding communities meant the immediate homes in the area calling from the North Beach exchange, versus 30 exchanges in Montgomery County. When in fact the surrounding communities were all of the immediate exchanges in our immediate 35 mile radius. Further, it appears that the Commission's staff's efforts to gather data were hampered by certain other factors. 1) BA-MD had ceased collecting proprietary data; 2) the data produced was different from that previously submitted to the PSC for application of the community of interest standard; and 3) the calling patterns between communities had increased dramatically from 1994 to 1997, including the calling habits between individual exchanges. Q. What would you like to see as a modified local calling area? A. First, I want to draw an analogy to what I said previously. From the Dunkirk area we are able to make local calls south towards Solomons Island 40 miles away using the North Beach Exchange, but we are not able to call towards Annapolis, 20 miles away, and the D.C. metropolitan area 30 miles away. However, those consumers that have purchased a foreign exchange from Upper Marlboro 10 miles away, can call some local numbers within the annexed exchange and anywhere from 50 to 80 miles as a local call from the same area. And those that purchased a West River foreign exchange can call towards the Annapolis metropolitan area. And everyone else is trapped with local toll calls. Therefore, I believe that the same calling area application should be available to all as a local calling area. Mr. Ronald Isaacson will testify about the converging issues that are specific to Montgomery County. Further, Ms. Charlene Cohen has already testified before the Commission in prior years about the disparity in the calling areas, and has suggested that we create one large LATA in Maryland. Q. What methodologies, if any, do you believe should be used by the Commission for determining changes in local calling areas? A. The Commission's staff has already indicated that the previous policy to evaluate expansion of local calling areas was faulty, and that the data reflects an "old" methodology which measured percentages. Because of revolutionary advances in the telecommunications industry, to include cellular phones, telephone traffic measurements are no longer a valid medium as we head into the millennium. Second, the PSC must search for a new definition and methodology to expanded calling areas policy, and steer clear of the old, pre-competitive test of how many calls are made from area A to B. First, a lot of calls that otherwise may be made simply will not occur due to cost; secondly, a lot of customers during the last two years have been sending e-mails in lieu of making those local or long distance toll calls, so the traditional (particular pre-internet test) likely is no longer valid. The reason I say that is because the data that was submitted by the local long distance carriers has by and large proved to be meaningless data from which a valid sample could not be adequately used to test any reasonable theory. Furthermore, the data submitted by BA-MD shows that the bulk of its consumer traffic was from consumers whose "community of interest" was demonstrated by obtaining the foreign exchange to reach the Washington and Annapolis metropolitan areas. In Maryland, Bell Atlantic's charge is more than $15 per X amount of mileage charges. However, in northern Virginia, according to Senator Hogan's letter dated November 20, 1996, to Michael J. Travieso of the Office of People's Counsel, it is approximately $.50 for the same service. In researching data for this case, I found that other states were doing away with previous traditional measures that were used to examine a community of interest standard. Several states even passed legislation to give their citizens expanded local calling areas. While others required each telephone company to conduct a survey from one to five years to determine whether a change in the local calling area would be merited based on calling patterns. Others would look to see where the majority of the long-distance calls were made to. This resulted in considerable variation in the size of local calling areas in neighboring exchanges, with some callers benefitting from overly large calling areas while other customers paid long-distance charges to make essential calls to doctors, schools, police/fire departments, etc. Charges for expanding local calling areas was not consistent either; some customers were making unlimited calls within an extensive area for their basic telephone rate, while others sometimes paid a substantial additive to their basic telephone rate to achieve the same comparable local calling area. Q. How should the PSC fix the current policy? A. The PSC's proposed rule should eliminate the current method of calculating percentages of local calls to neighboring communities to determine if the local calling areas are adequate and meets basic needs. Instead, the PSC should adopt a rule that would modify the definition of "basic telephone service" to include a local calling area that is adequate to allow customers to reach community services, including medical facilities, local government offices, elementary and secondary schools and metropolitan commercial centers. A local calling area in the suburbs should encompass at least 36 towns. Or it may be that a local calling area could encompass 2 or 3 counties for service to be adequate considering basic needs. Q. Who should pay for the financial and rate impacts (if any) from making such changes? A. With pending competition for local service, and Bell Atlantic already charging consumers hundreds of dollars on a monthly basis for "mileage" charges for an FX line depending where they live, Bell Atlantic has more than collected its fair share of reasonable profits from consumers for the past 20 years. Also, we don't want the PSC or Bell Atlantic to argue that it costs more to serve rural areas because this in fact is not true. Rural customers have been paying a larger rate than other consumers in the State for the same service for years. Further, an increase in rates would harm business costs and harm rural economies. Higher phone rates would also increase the telecommunications costs of local governments. The true fact of this matter is that rural telephone users are able to make far fewer calls to telephone exchanges without incurring long distance toll charges than do urban users. In this way, we are actually receiving less service than urban and city users do. If the PSC is looking for a good reason why rural rates should be lower, this is certainly one. Also, given the rapid rise in the Internet, including highly inexpensive voice-over-internet alternatives, the real issue is not whether Bell Atlantic gets to keep captive all current revenues. The real choice is whether the toll revenues that would be foregone if the expanded calling areas are allowed will be converted to local/EAS revenues of BA-MD, or whether the lion's share will rapidly transition to alternate communications paths, i.e., voice over internet or internet messages, over a third party carrier, in which case BA-MD simply loses anyway. Further, many long distance companies are already offering 5.9 cents a minute to about 7.5 cents/minute, etc. As a result, consumers are by-passing BA-MD to take advantage of these rates. Not only that, but many carriers are charging calls at 10 second increments, while BA-MD is rounding up their long distance charges to the next higher minute, thus causing rates to be even higher. And that needs to be corrected also in this arena. Lastly, arguments about costs have been heavily overstated for years. The real impact on BA-MD should be measured in terms of, "What are the TSLRIC (total service long run incremental costs) of providing the expanded service. The key is COST, NOT revenue protection for BA-MD. We believe that the cost of transport is de minimis -- long haul transport costs are almost a non-factor these days, as the rapidly declining cost of toll calls by the long distance carriers over the past two years has been clearly demonstrated. The only other question is, how much extra switching is involved (will BA-MD need to switch thru say a second tandem, which otherwise would not occur). Even those costs if they were real would be relatively negligible. On the revenue side, first the real revenue impact would also be quite low. For example, for competitive reasons, U.S. West has advocated turning all of Minnesota into one LATA!; second, quarter-over-quarter, BA has been reporting record earnings for at least several years now, whereas the Commission ordered Bell Atlantic to cut access charges by $32 million (Order # 72348) and pass these savings to consumers, and certainly BA has had enough fiscal wherewithal to acquire NYNEX; and third, in this post-Telecom Act, pro-competitive world, retention of monopoly revenues should not be the driver anyway. According to the FCC, Bell Atlantic controls more than 90 percent of the state's 12.3 million local telephone lines. Q. Do you foresee any difficulty for this process to obtain a waiver of the LATA boundary changes from the FCC? A. We do not foresee any problems with this particular request. The FCC has been approving changes to LATA boundaries throughout the United States for the past three years, as long as the changes enhance the calling areas. ___________________________________ CERTIFICATE OF SERVICE I certify that a copy of the foregoing document(s) in Case No. 8772 was/were sent by regular mail, unless otherwise indicated below, this day to each of the following: Daniel P. Gahagan, Esq. Executive Secretary Public Service Commission 6 St. Paul Street, 16th Flr. Baltimore, MD 21202-6806 410-767-8067; 410-333-6495 (Fax) Parties: Janice M. Flynn, Esq. Sarah R. Lazarus, Esq. Office of Staff Counsel Public Service Commission 6 St. Paul Street, 17th Flr. Baltimore, MD 21202-6806 410-767-8120; 410-333-6086 (Fax) Michael J. Travieso, Esq. Theresa V. Czarski, Esq. Maryland Office of People's Counsel 6 St. Paul Street, Ste. 2102 Baltimore, MD 21202-1631 410-767-8150; 410-333-3616 (Fax) Mr. Ivan (John) Petric, President Bay Country Estates Homeowners Association, Inc. 6343 Meadowland Drive Dunkirk, MD 20754-9535-1 301-855-7009 (Home); 202-606-2554 (Work) 202-606-1163 (Fax) Robert D. Lynd, Esq. Bell Atlantic-Maryland, Inc. Constellation Place 1 E. Pratt Street, 8 East Baltimore, MD 21202 410-393-7477; 410-393-7547 (Fax) Matthew W. Nayden, Esq. Stephanie A. Baldanzi, Esq. Ober, Kaler, Grimes & Shriver AT&T Communications of Maryland, Inc. 120 E. Baltimore Street Baltimore, MD 21202-1843 410-685-1120; 410-547-0699 (Fax) 202-408-8400; 202-408-0640 (Fax) Mark Keefer, Esq. AT&T Communications of Maryland, Inc. 3033 Chain Bridge Rd., Room 3-D Oakton, VA 22185 703-691-6047; 703-691-6093 (Fax) Cathy Thurston, Esq. Sprint Communications Co. 1850 M Street, NW, Ste. 1110 Washington, D.C. 20036 202-828-7425; 202-828-7403 (Fax) Prince Jenkins, Esq. Allen M. Freifeld, Esq. MCI Telecommunications Corp. 1133 N.W. 19th Street Washington, D.C. 20036 202-736-6104; 202-736-6876 (Fax) Michael A. McRae, Esq. Senior Regulatory Counsel Teleport Communications Group, Inc. Regulatory & External Affairs 2 Lafayette Centre, Ste. 400 1133 NW 21st Street Washington, D.C. 20036 202-739-0032; 202-739-0044 (Fax) J. Edward Davis, Esq. Lisa M. O'Mara, Esq. J. Edward Davis & Associates 409 Washington Ave., Ste. 909 Towson, MD 21204 410-494-9000; 410-823-6839 (Fax) (for Cable TV Assn. of Maryland, Delaware, and D.C.) Russell M. Blau, Esq. Robin F. Cohn, Esq. Swidler & Berlin, Chartered 3000 K Street, N.W., Ste. 300 Washington, D.C. 20007-5116 202-424-7500; 202-424-7645 (Fax) (for RCN Telecom Services of Maryland, Inc.) Mr. Ronald A. Isaacson 12481 Walnut Cove Circle Germantown, MD 20874-1586 301-353-9153; 301-972-0142 (Fax) Interested Persons: Honorable Paul S. Sarbanes U.S. Senate 2nd & C Sts., NE, SH309 Washington, D.C. 20510 202-224-4524; 202-224-1651 (Fax) Honorable Barbara A. Mikulski U.S. Senate 2nd & C Sts., NE, SH709 Washington, D.C. 20510 202-224-4654; 202-224-8858 (Fax) Honorable Wayne T. Gilchrest U.S. House of Representatives 332 Cannon House Building Washington, D.C. 20515-2001 202-225-5311; 202-225-0254 (Fax) Honorable Steny H. Hoyer U.S. House of Representatives 1705 Longworth House Building Washington, D.C. 20515-2005 202-225-4131; 202-225-4300 (Fax) Honorable Robert Ehrlich, Jr. U.S. House of Representatives 315 Cannon House Building Washington, D.C. 20515-2001 202-225-3061; 202-225-3094 (Fax) Honorable Albert R. Wynn U.S. House of Representatives 418 Cannon House Building Washington, D.C. 20515-2001 202-225-8699; 202-225-8714 (Fax) Honorable Thomas V. Mike Miller Maryland State House, #107 Annapolis, MD 21401-1991 301-858-3700; 301-858-3910 (Fax) Honorable Leo Green 212 James Senate Office Bldg. Annapolis, MD 21401-1991 301-858-3631; 301-858-3174 (Fax) Honorable Leonard H. Teitelbaum 205 James Senate Office Bldg. Annapolis, MD 21401-1991 301-858-3151; 301-858-2409 (Fax) Honorable Patrick J. Hogan 316 James Senate Office Bldg. Annapolis, MD 21401-1991 301-858-3686; 301-858-3617 (Fax) 1-800-492-7122, Ext. 3686 Honorable Van T. Mitchell Chairman, Southern Maryland Delegation 216 Lowe House Office Bldg. Annapolis, MD 21401 301-858-3247; 301-858-3252 (Fax) Honorable George W. Owings III 217 Lowe House Office Bldg. Annapolis, MD 21401-1991 301-858-3231; 301-858-3252 (Fax) Honorable Raymond Beck 225 Lowe House Office Bldg. Annapolis, MD 21401-1991 301-858-3037; 301-858-3850 (Fax) Honorable Adrienne A. Mandel 220 Lowe House Office Bldg. Annapolis, MD 21401-1991 301-858-3045; 301-858-2411 (Fax) Honorable Murray D. Levy President, Charles County Board of Commissioners 200 Baltimore St. La Plata, MD 20646 301-870-3000; 301-645-0560 (Fax) Honorable Bert L. Rice Chairman, Anne Arundel County Council 44 Calvert St. Annapolis, MD 21404 301-970-8250, Ext 1401; 410-222-1755 (Fax) Honorable Ronald Russell Chairman, Prince George's County Council 14741 Governor Oden Bowie Dr. Upper Marlboro, MD 20772 301-952-3695; 301-952-4862 (Fax) Honorable Hagner Mister President, Calvert County Board of Commissioners 175 Main St. Prince Frederick, MD 20678 301-855-1243; 410-535-5594 (Fax) Honorable Barbara R. Thompson President, St. Mary's County Board of Commissioners 23115 Leonard Hall Dr. Leonardtown, MD 20650 301-475-4461; 301-475-4935 (Fax) Honorable Isiah Leggett President, Montgomery County Council 110 Maryland Ave. Rockville, MD 20850 301-217-7900; 301-217-7940 (Fax) Honorable Douglas M. Duncan Montgomery County Executive 101 Monroe St. Rockville, MD 20850 301-217-2500; 301-217-2517 (Fax) Arthur Bisson Executive Director Calvert Chamber of Commerce 226 Marrimac Court Prince Frederick, MD 20678 301-855-1930; 410-257-3140 (Fax) Mr. Woody Traylor MCI Metro 2250 Lakeside Boulevard Richardson, TX 75082 Sheryl A. Butler, Esq. Office of Judge Advocate General Department of the Army 901 N. Stuart Street, Ste. 713 Arlington, VA 22203-1837 703-696-1642; 703-696-2960 (Fax) Robert S. Fleishman, Esq. James P. Bennett, Esq. Baltimore Gas & Electric Company P.O. Box 1475 Baltimore, MD 21203 410-234-5607; 410-234-5690 (Fax) J. Manning Lee, Esq. Teresa Marrero, Esq. Teleport Communications Group, Inc. Two Teleport Drive, Ste. 300 Staten Island, NY 10311 718-983-2671; 718-370-4891 (Fax) Jeffrey Blumenfeld, Esq. Christy C. Kunin, Esq. Blumenfeld & Cohen 1615 M Street, NW, Ste. 700 Washington, DC 20036 202-955-6300; 202-955-6460 (Fax) Ms. Charlene L. Cohen, President National Association of Retired Federal Employees Maryland Federation Chapter 16920 Baederwood Lane Rockville, MD 20855-2013 301-977-9091 Mr. Alfonso Diaz Del Castillo 8710 King George Court Pomfret, MD 20675 301-934-5656; 301-934-2111 (Fax) Ms. Lucille Parkerson 11323 Shannon Court LaPlata, MD 20646 301-753-1985; 301-836-8151 (Fax) Ms. Eileen M. Curley 12150 Laramie Lane Lusby, MD 20657 410-326-0630 Mr. David W. Cole Ms. Dawn A. Cole 37412 E. Lakeland Drive Mechanicsville, MD 20659 301-884-5339 Mr. Horace Y. Edwards Ms. Dolly K. Edwards 4986 Sentinel Drive, #201 Bethesda, MD 20816-3518 301-229-4875 Mr. Nicholas G. Andrews Ms. Dana R. Andrews 4619 Langdrum Lane Chevy Chase, MD 20815 301-652-2497 Mr. Eldon B. Erickson Ms. Patricia G. Erickson 11026 Webster Drive Lusby, MD 20657 301-326-2053 Mr. Richard D. Lawrence 4131 Birch Drive Huntington, MD 20639 410-535-1703; 202-682-7711 (Fax) Mr. Joseph P. O'Kane 2300 Apricot Arbor Place Odenton, MD 21113 410-551-2530; 301-688-0255 (Fax) Mr. John P. Winner 10800 Potomac Street Glendale, MD 20769 301-805-1261 Ms. Catherine Roche 23112 Pineywood Circle California, MD 20619 301-862-3998-H; 855-1903-W 410-535-4509 (Fax) Ms. Valerie A. Watson 1040 Walnut Avenue North Beach, MD 20754 410-741-5954 Ms. Michelle Harner 1317 Butternut Street Box 333 Shadyside, MD 20764 410-867-4673 Mr. Dennis Y. Howard 1705 Wickham Way Crofton, MD 21114 410-721-8739; 301-249-1063 (Fax) Mr. William B. Glascock, II P.O. Box 382 315 Strathmore Lane Solomons, MD 20688 410-326-4357 (Home); 410-326-1052 (Work) Mr. Modesto S. Rivera 806 Solomons Island Road Prince Frederick, MD 20678 410-535-4242 Mr. L. T. Pimental 1517 Widows Mite Road Edgewater, MD 21037-2144 410-956-3238 (Home); 301-261-4545 (Work) 410-956-4700 (Fax) Ms. Leah L. Horak 2150 Stinett Road Huntington, MD 20639 410-535-5764 (Home); 410-741-6025 (Work) Mr. James S.D. Ray 6085 Tapir Place Waldorf, MD 20603 301-638-3422 Mr. Larry E. Johnson 2755 Mill Hill Road Waldorf, MD 20603 301-638-3035 Mr. Sherman W. Benton 3501 29th Place Temple Hills, MD 20748 301-702-2872 Mr. Howard M. Clements 5202 Grenock Drive Lothian, MD 20711-2803 301-627-6387 Ms. Kathryn R. Clagett 2590 Davidsonville Rd. Gambrills, MD 21054 301-261-3342; 410-721-2715 Mr. James H. Crawford P.O. Box 236 Bryantown, MD 20617 301-870-2036 Mr. Peter Perry, President South County Coalition, Inc. P.O. Box 154 Davidsonville, MD 21035 Mr. Ronnie W. Pitcock, Jr. 38 Lark Bunting Lane Littleton, CO 80127 1-888-947-2638 April 15, 1998 (Date) Ivan Petric On behalf of the Bay Country Estates Homeowners Association, Inc. And Surrounding Communities, et.al. P.O. Box 444 Tracy's Landing, MD 20779-0444 (Residence Address) 6343 Meadowland Drive Dunkirk, MD 20754-9535-1 301-855-7009 (Home) 410-257-0398 " 202-606-2554 (Work) 202-606-1163 (Fax)