
    Application of PUTNAM COUNTY COMMISSION FOR EXTENDED AREA TELEPHONE SERVICE BETWEEN PALATKA AND CRESCENT CITY.
    Docket No. 71004-TP. Order No. 5258.
    Florida Public Service Commission.
    November 5, 1971.
    Nathan H. Wilson, Jacksonville, for the Southern Bell Tel. & Tel. Co.
    Hal Y. Maines, Lake Butler, for the North Florida Telephone Co.
    M. Robert Christ, for the commission and the public generally.
    
      Chairman JESS YARBOROUGH, Commissioners WILLIAM T. MAYO and WILLIAM H. BEVIS participated in the disposition of this matter.
   BY THE COMMISSION.

Pursuant to notice, the commission, by its duly designated hearing examiner, Walter R. Stedeford, held a public hearing on this matter on March 2, 1971, in Palatka.

The examiner’s report and recommended order was duly served on all of the parties. Exceptions to the recommended order were filed with the commission. Oral argument was heard on said exceptions on October 11, 1971. The entire record herein, including the application, the testimony adduced at the public hearing, the exceptions to the recommended order and oral argument heard thereon, has been examined by the full commission. After due consideration, the commission now enters its order in this cause.

This matter was initiated by the board of county commissioners of Putnam County in September, 1969, when the board passed a resolution requesting the commission to obtain extended area services between Palatka and Crescent City. The two affected telephone systems, to-wit: Southern Bell Telephone and Telegraph Company (Southern Bell) and North Florida Telephone Company (North Florida), were notified of the request made by the board of county commissioners of Putnam County.

In October, 1969, both telephone systems submitted reports to the commission relating to the telephone service between Palatka and Crescent City. The conclusion reached by both companies was that there was a low community of interest, and that extended area service between Palatka and Crescent City was not warranted, as more fully described hereinafter.

At the hearing, both companies testified relative to the present telephone service in Putnam County. Southern Bell owns and operates the Palatka telephone exchange, serving Palatka and the surrounding area within Putnam County, including the telephone exchanges of Pomona Park and Welaka. Southern Bell’s Palatka customers can originate and receive local calls on an unlimited basis to all other customers within the Palatka exchange, as well as to the Southern Bell exchanges of Pomona Park and Welaka. Further, Southern Bell’s Palatka customers can originate and receive local calls on an unlimited basis to and from all customers of the Florahome, Hastings and Interlachen exchanges of North Florida. As of January 1, 1971, there were 10,354 main telephones and PBX trunks in the Palatka local calling area.

North Florida owns and operates the Crescent City exchange. North Florida’s Crescent City customers can originate and receive local calls on an unlimited basis to all other customers within the Crescent City exchange, as well as the Pomona Park, Welaka and Pierson exchanges of Southern Bell. As of January 1, 1971, there were 855 customers served by North Florida’s Crescent City exchange.

The present existing telephone service between Southern Bell’s Palatka exchange and North Florida’s Crescent City exchange is on a toll basis. The toll rate mileage between these exchanges is 17 miles, and the day station-to-station toll rate is 25$ for a three-minute call.

The Crescent City exchange of North Florida is not contiguous to the Palatka exchange of Southern Bell. The two exchanges are separated by the Pomona Park and Welaka exchanges. Palatka has the largest concentration of people in Putnam County, and Crescent City has the second largest concentration of people in Putnam County.

The commission feels that there are two issues to be resolved in this case. The first, whether or not a sufficient community of interest exists between Crescent City and Palatka to authorize extended area service between those communities. The second issue being whether the establishment of an extended area service will be economically feasible when considered with the benefits derived from such service.

Southern Bell’s traffic studies conducted in September, 1970, showed a calling rate for Palatka to Crescent City of 28 per hundred main station calls. This does not indicate that 28% of Palatka’s customers called Crescent City during that month, but only that 28 of every hundred calls placed were to Crescent City. Actually, the evidence showed that 94.4% of the Palatka customers placed no calls to Crescent City during the month of September, 1970. Testimony was received that this was an indication of a very low community of interest between the two communities.

Studies introduced by North Florida which were conducted from November 15, 1970, to December 15, 1970, indicated 45.4% of the Crescent City customers made no calls to Palatka during that period. The same study showed that approximately 19.2% of the customers made only one call to Palatka, 8.7% made only two calls, 6.3% made three calls and approximately 20% made four or more calls from Crescent City to Palatka.

Based on the results of these studies, there does not appear to be a sufficient community of interest on the part of the two communities to justify granting the extended area service between them at this time.

With regard to economic feasibility, Southern Bell introduced studies to show that it would have to spend $206,000 during the first year to implement extended area service between Palatka and Crescent City. By the end of five years following the institution of service, Southern Bell would lose $203,900 under the present rate grouping. In order to prevent loss, the company stated that an exemption from the statewide rate grouping would be required. To offset the cost of extended area service without imposing the cost upon the general body of the rate payers elsewhere, Palatka residents would be required to pay an additional 30 per month. Each Palatka business telephone would have to pay an additional 70‡ per month and PBX trunks would have to increase by $1.05 per month.

North Florida testified that an additional investment of $130,000 would be required for the installation of extended area service between Crescent City and Palatka. Testimony showed that North Florida would sustain a loss amounting to $290,723 over a five year period. To recover these losses, the company stated it would have to increase monthly rates in the Crescent City exchange by $4.05 per resident, $6.20 per business line and $9.30 per PBX trunk. The addition of the Palatka exchange would result in a re-grouping which would cause rate increases of approximately $9,000 per year. Even with this increase, however, only 14.8% of the revenue., needed to finance the extended area service would be provided.

The commission finds that the studies introduced by Southern Bell and North Florida indicate that there would be a substantial financial cost in implementing the requested extended area service. Each public witness, without exception, gave testimony in favor of the service but indicated a reluctance to assume the financial burden of the project.

Based upon the facts listed above, it does not appear that the establishment of extended area service between Palatka and Crescent City would be economically feasible at this time.

Taking into consideration the entire record of the hearing, the examiner’s recommended order and exceptions filed thereto, it appears to the commission that a sufficient community of interest does not exist between Crescent City and Palatka that would justify extended area service between these two communities. The facts also show that it would not be economically feasible to require the institution of extended area service when considering the benefits that would be derived from such service.

The commission further finds that in order to keep abreast of the future possibility of extended area service between the two communities that the two companies involved file with the commission, annual traffic studies to determine the feasibility of extended area service at some future time.

It is therefore ordered that the extended area service requested by the Putnam County board of county commissioners for service between Palatka and Crescent City be and the same is hereby denied.

It is further ordered that North Florida Telephone Company and Southern Bell Telephone and Telegraph Company file with the commission annual traffic study reports indicating the feasibility of extended area service between Palatka and Crescent City, Florida.  