DE 98-147
       Implementation of 2-Way Home and Contiguous EAS, 
         Expansion of EAS Between Boscawen and Concord
                Order Nisi Approving Stipulation
                    O R D E R   N O.  23,147
                       February 18, 1999
       APPEARANCES: Murray Plumb & Murray by John C.
     Lightbody, Esq. for Kearsarge Telephone Company, Chichester
     Telephone Company, Meriden Telephone Company, William Homeyer 
     for the Office of the Consumer Advocate on behalf of residential
     ratepayers, E. Barclay Jackson, Esq. for the Staff of the New
     Hampshire Public Utilities Commission.
               By Order No. 22,861, on March 9, 1998, the Commission
     approved 2-Way Home and Contiguous Extended Area Service (EAS)
     for all of Bell Atlantic's territory and ordered that independent
     local exchange carriers (ICOs) meet with the Staff of the
     Commission (Staff) and the Office of the Consumer Advocate to
     determine what rate changes, if any, would be necessary to
     implement 2-Way Home and Contiguous EAS in ICO territories.
     Kearsarge Telephone Company (Kearsarge), Chichester Telephone
     Company (Chichester), and Meriden Telephone Company (Meriden) are
     all ICOs and all subsidiaries of TDS Telecom. Collectively,
     Kearsarge, Chichester, and Meriden are hereinafter referred to as
     the TDS Companies.  The TDS Companies, Staff, and the OCA held
     technical discussions as ordered.
               On August 19, 1998, the TDS Companies filed a Petition
     to consolidate into a single company, Kearsarge, that would
     continue to provide local exchange service, doing business under
     the name TDS Telecom, in all of the exchanges and territories
     previously served by the TDS Companies.  The petition to
     consolidate also included a proposal for the implementation of
     2-Way Home and Contiguous EAS for the merged company.
               On September 18, 1998, in response to Staff's on-going
     inquiry into the earnings of the TDS Companies, the Commission
     opened Docket Nos. DR 98-157, 98-158, and 98-159 to investigate
     possible over-earnings.  By Order No. 23,092 (December 21, 1998),
     the Commission established temporary rates for each of the TDS
     Companies at current rates.
               On May 18, 1998, subscribers of Kearsarge filed a
     petition with the Commission, pursuant to N.H. Admin. Rules
     Chapter Puc 410, for 2-Way EAS service between the Boscawen and
     Concord exchanges. The Commission assigned docket number DE
     98-086 to the petition.  After a duly noticed public hearing on
     DE 98-086, the Commission issued Order No. 23,039 (October 7,
     1998) finding that Concord is the community of interest for at
     least a sizable group of the residents of Boscawen and ordering
     Staff and Kearsarge to develop a cost proposal for balloting of
     the Boscawen subscribers pursuant to N.H. Admin. Rule Puc 410.0. 
     Staff, the OCA, and Kearsarge agreed that, in the context of the
     consolidation, implementing Boscawen to Concord EAS could occur
     at a cost to ratepayers of $4.22 for residential ratepayers and
     $8.23 for business ratepayers.  If approved by Boscawen voting
     customers, the residential rate of $4.22 will result in a total
     amount no greater than the Bell Atlantic rate, when added to the
     agreed upon cost to implement Home and Contiguous EAS.  By Order
     No. 23,115 (January 26, 1999), the Commission ordered Staff to
     commence the balloting of the customers in the Boscawen Exchange
     for EAS expansion to Concord (a Bell Atlantic exchange) at those
     rate levels.  By motion filed February 4, 1999, Kearsarge
     requested that the Commission stay Order No. 23,115 until after
     the Commission's decision in this Docket No. DE 98-147.
               On January 14, 1999, the TDS Companies, Staff, and the
     OCA filed a Stipulation and Agreement (Stipulation) purporting to
     resolve all the issues pertaining to consolidation and to
     implementation of 2-Way Home and Contiguous EAS for the TDS
     Companies' territories, including a process for resolving the
     Boscawen to Concord EAS question.  A public hearing on the
     Stipulation was held at the Commission on February 2, 1999, at
     6:30 p.m.
               The TDS Companies, Staff, and the OCA agree that upon
     completion of the consolidation, Kearsarge would assume all the
     rights and obligations of the other TDS Companies to provide
     local exchange telephone service throughout the exchanges
     currently served, in accord with the terms and conditions of the
     current tariffs, as modified by the EAS provisions of the
     Stipulation.  As a result of consolidation, intrastate access
     rates would be averaged on a revenue neutral basis, and non-basic
     and non-recurring rates would be uniform for all exchanges. 
               The TDS Companies, Staff and the OCA agree that the
     merger would enhance the management and operation of the
     companies by permitting closer integration of activities such as
     customer billing, plant records systems, and repair service,
     among others.  In support, the TDS Companies aver that
     efficiencies will occur because of combining books and records,
     simplifying planning for growth and plant deployment.  No
     consolidation of offices or reductions in staff would now be
     necessary because of consolidations undertaken previously when
     each company was acquired by the TDS parent company.  However,
     the merged company would prepare a single set of financial
     statements, audits would occur for a single entity, and
     inter-company billing would be eliminated.  The merger would
     result in no changes in the operation or personnel of local
     offices in New Hampshire.  Customers of the merged company, TDS
     Telecom, would not experience name change confusion because the
     TDS Companies each discontinued using their individual company
     name over the last few years.  Furthermore, billing format would
     not change; office telephone numbers, fax numbers, and e-mail
     addresses would remain in place.  
               In order to protect against cross-subsidization by
     existing individual company customers, the Stipulation prohibits
     TDS Telecom from averaging any of the basic residential or
     business rates for any of the exchanges of the consolidated
     company.  The Stipulation also provides a two year moratorium
     during which TDS Telecom may not seek rate increases except for
     exogenous changes such as federal access rate changes or local
     number portability.  
               The Stipulation directs Staff and TDS Telecom to
     jointly develop a program of customer education about the
     consolidation.  The panel of witnesses presenting the Stipulation
     at hearing testified that the consolidation will cause no net
     harm and in fact may result in benefits to customers.
               Under the Stipulation, the rates proposed for polling
     Boscawen subscribers about the EAS expansion to Concord would be
     $4.22, considerably less than the full cost of implementing the
     change, should Boscawen subscribers vote favorably.  The Home and
     Contiguous EAS provisions of the Stipulation create Home and
     Contiguous EAS for all exchanges of TDS Telecom, with a rate
     increase of $1.95 in the basic residential rates of each exchange
     and various increases in the business rates of each exchange. 
               The cost of implementing Home and Contiguous EAS,
     according to Staff and the parties, consists of additional plant
     and of lost toll and access revenues.  The costs are $170,500
     more than the additional revenues generated by the rate
     increases.  TDS Telecom will not seek recovery of those costs.
               In recent years, since enactment of the
     Telecommunications Act of 1996, New Hampshire's competitive
     telecommunications carriers have implemented numerous mergers and
     acquisitions.  In Re Eastern Utilities Associates, 76 NH PUC 236,
     252(1991), we confirmed that the "no net harm" test, articulated
     as the public good standard in Grafton County Electric Light and
     Power Co. State, 77 N.H. 539, (1915) is the standard to be
     applied to a proposed merger or acquisition.  In essence, the "no
     net harm" test requires approval of a proposed merger if the
     public interest is not adversely affected.  Re Eastern Utilities
     Associates at 241, cited in Re CCI Telecommunications of New
     Hampshire, Inc.  81 NH PUC 844, 845 (1996).  
               We have reviewed the testimony and the Stipulation of
     the parties and Staff and will approve the proposed merger
     between Kearsarge, Meriden, and Chichester.  Based upon the
     representations of TDS Telecom and the totality of the
     circumstances, there is no net harm to the public as the result
     of the Stipulation.  Furthermore, the consolidation appears to
     produce benefits for the merged company and, potentially, for
     customers in the increasingly competitive environment.
               We have reviewed the testimony and the Stipulation
     regarding expansion of EAS to include Home and Contiguous
     exchanges.  Consistent with our findings in Docket No. 97-180, we
     find that New Hampshire customers will benefit from clear, easily
     understood, reasonably equitable EAS.  Home and Contiguous 2-way
     EAS is in the public good where it can be achieved (1) without
     increasing monthly rates for customers who receive no benefit
     from the EAS change, and (2) without hindering the federally
     mandated objective of a competitive telecommunications market. 
     Home and Contiguous 2-way EAS permits customers to make calls
     within their home exchange and every other exchange that is
     contiguous to the home exchange without incurring toll charges. 
     Any non-contiguous exchange which was formerly included in the
     local calling area would remain in the local calling area. 
     According to the proposal, in order to achieve Home and
     Contiguous 2-way EAS, basic residential rates will increase by
     $1.95 and basic business rates will increase by an amount that
     keeps them at or below the rates charged by Bell Atlantic. 
               The proposed EAS expansion affects six exchanges:
     Chichester, Meriden, New London, Andover, Boscawen, and
     Salisbury.  In order to allow for the expansion to occur, if
     approved, concurrently with the Bell Atlantic exchange expansions
     so as to minimize confusion, the public notice of the hearing on
     February 2, 1999, was relatively short.  Furthermore, icy weather
     conditions on the night of the hearing made travel to the hearing
     difficult.  Nonetheless, we heard from numerous members of the
     public.  We made special arrangements for three residents of New
     London to participate via conference call; approximately ten
     people attended the hearing; and we received a total of 99
     comments both before and after the hearing via telephone, regular
     mail and e-mail.  Of those comments, favorable comments
     outnumbered negative comments by a wide margin for Meriden,
     Salisbury, New London, and Andover.  Favorable comments regarding
     Boscawen and Chichester were only slightly more numerous than
     negative comments.  Although, we do not decide EAS cases upon a
     majority vote, we note that it appears more interested consumers
     believe this EAS expansion will benefit them than not.  Taking
     this in account, along with our finding that a uniform, equitable
     EAS is in the public good, we will approve the proposed EAS
               We have not acted upon Kearsarge's Motion for Stay of
     our Order No. 23,115 directing balloting of Boscawen customers
     regarding expansion of EAS to include the Concord exchange.  That
     motion requested a stay until after our final decision in this
     docket.  Because the rate increase upon which Boscawen customers
     will be polled is defined by the Stipulation, we will grant the
               Based upon the foregoing, it is hereby 
               ORDERED NISI, that the proposed merger of Kearsarge,
     Meriden, and Chichester as outlined above and in the Stipulation
     is Approved; and it is
               FURTHER ORDERED NISI, that the proposed expansion to
     Home and Contiguous 2-way EAS is Approved; and it is
               FURTHER ORDERED NISI, that the temporary rates
     currently in effect for Kearsarge, Meriden, and Chichester shall
     be revised pursuant to Schedules C, D, and E in the Stipulation;
     and it is
               FURTHER ORDERED, that The TDS Companies' Motion for
     Stay of Order No. 23,115 is granted; and it is
               FURTHER ORDERED, that the TDS Companies shall cause a
     copy of this order nisi to be published once in a statewide
     newspaper of general circulation or of circulation in those
     portions of the state where operations are conducted, such
     publication to be no later than March 2, 1999 and to be
     documented by affidavit filed with this office on or before March
     10, 1999; and it is
               FURTHER ORDERED, that all persons interested in
     responding to this order be notified that they may submit their
     comments on this matter before the Commission no later than March
     10, 1999; and it is
               FURTHER ORDERED, that this Order nisi shall be
     effective March 17, 1999, unless the Commission provides
     otherwise in a supplemental order issued prior to the effective
     date; and it is
               FURTHER ORDERED, that the TDS Companies shall file a
     compliance tariff with the Commission on or before March 24,
     1999, in accordance with N.H. Admin. Rules, Puc 1603.02(b).
               By order of the Public Utilities Commission of New
     Hampshire this eighteenth day of February, 1999.
           Douglas L. Patch       Susan S. Geiger     Nancy Brockway
               Chairman           Commissioner          Commissioner
     Attested by:
     Thomas B. Getz
     Executive Director and Secretary