THE CUTTING EDGE : Out of the Loop : Sierra Hamlet Encounters Static in Its Battle With PUC for Phone Service

By AMY HARMON

Nov. 8, 1995 12 AM PT

TIMES STAFF WRITER

KENNEDY MEADOWS, Calif. — It’s not as though they’re asking for the information superhighway, here among the pinyon pines where houses are heated by wood stoves and mail gets delivered to the general store.

The residents of Kennedy Meadows would be happy with a dial tone. “We might even want to get a fax,” allows Jan Gant, owner of Grumpy Bears’ Resort, home of some of the finest beef jerky in the West.

It doesn’t seem like an unreasonable request, really. This is the 1990s, after all, and most towns in America have enjoyed phone service for some time now. Two years ago, the second-smallest phone company in the state even saw a business opportunity here for 130 or so lines, and filed for permission to install them.

But after months of skirmishing with the state Public Utilities Commission, Kennedy Meadows is believed to be the last community of its size in California to be denied access to the nation’s telephone network.

The problem is that constructing a phone system for a remote mountain village is an expensive proposition, and under the state’s current regulatory policy, it’s one the rest of California’s 19 million ratepayers would have to subsidize.

The average cost to install a line in California is $4,000 to $6,000, while for Kennedy Meadows it would be as much as $20,000.

And at a time when the PUC is trying to convert the rigidly regulated phone utilities to open competition, some within the commission have argued that serving a small number of people at great cost is not in the interest of the state’s other telephone customers.

Today, the PUC is expected to vote on a compromise proposal from the Ducor Telephone Co. as to how the company would construct the network and pay the estimated $1.6 million for the initial hookup.

Under the amended application, Kennedy Meadows residents would pay basic monthly service charges fixed at 150% of the rate paid by phone customers in GTE territories. That works out to about $28 a month, the highest rate in the state. Ratepayers throughout the state would contribute a little over $100,000 a year, mainly to repay the low-interest loan that would finance construction of the town’s network.

If it does not go through, Ducor executives say they will abandon the fight. But however the case is resolved, the battle in Kennedy Meadows may signal the difficulties rural communities are likely to face in the new era of telecommunications competition.

Underpinning the state’s universal service policy, which mandates that phone rates stay roughly equivalent regardless of location, is the notion that providing phone service to the broadest number of individuals is to everyone’s advantage. But the Kennedy Meadows case raises questions about when the costs of such a public policy outweigh its social benefits.

“It’s been the state’s policy to get phones everywhere,” says Scott Cauchois, project manager for the PUC’s Division of Ratepayer Advocates. “But this is a really expensive service, and you have to ask if it’s really in the public’s interest.”

In choosing to live far from the squalor of civilization, PUC officials say, the settlers in this subalpine meadow on the Kern Plateau may have traded in their inalienable right to a telephone.

But Kennedy Meadows residents--many of whom have become extraordinarily well-versed in the arcane bureaucratese of telecommunications policy--note that phones could also serve skiers who detour off U.S. 395 while traveling between Southern California and Mammoth Mountain, or the thousands of hikers, campers and fishermen who come through town each summer.

If they have a cellular phone, would-be callers are usually directed six miles down Nine Mile Canyon Road to the orange rock, a marker for the one spot on the mountain where, when all the elements are in alignment, cellular calls can penetrate to the world below.

“They ask to use the phone and I say ‘We don’t have a phone,’ ” says Gant. “So they say ‘No, really, I’ll pay you $20, I’ll pay anything, I just need a phone.’ ”

Gant and her husband paid $5,000 to install an antennae atop Grumpy Bears’, one of two places in town where radio phones sometimes work. But it costs $5 to make or receive a call, plus 50 cents a minute. The alternative is a 25-mile drive to the pay phone in Pearsonville.

Like many Kennedy Meadows residents, the Gants moved to the southern end of the Sierra Nevada to escape the constant ringing of phones. Jan worked in a dental office in Downtown Los Angeles and was tired of the traffic. But the beef jerky orders keep flowing in--they smoke 1,400 pounds a month--and they’d like to be able to place an advertisement in the Yellow Pages.

Others simply want to talk to their families. “When we first moved up here, I didn’t want a phone,” says Jack McMillan, a retired engineer. “But as you get older, you realize you want to talk to your kids.”

But the overriding reason community members cite is public safety. Volunteer Fire Chief Matt Heflin says in emergencies he is usually waved down by a neighbor who comes to find him by car. Then he radios for help to whomever can make a call for an ambulance, or reinforcements.

During the two-year struggle, the back-and-forth between Kennedy Meadows and the PUC has sometimes taken on a personal tone. Residents took particular offense when a memo by the PUC’s Division of Ratepayer Advocates (DRA) referred to them as “mountain men.”

“We can do without phones,” says Kent Whitham. “The point is we shouldn’t have to. We have a phone company who wants to provide it for us. Its just the DRA doesn’t want us to have it.”

Whitham, who commutes about 50 miles one-way to his job at the China Lake Naval Weapons Center, led a group of residents to testify before the PUC in San Francisco last spring.

The PUC has not yet implemented its plans to create a competitive local exchange business. Once that happens, the theory is that the market will take care of supply and demand.

But Eric Wolfe, vice president of Ducor, a family-owned phone company that has specialized in providing phone service to remote areas, says a purely market-driven system will result in rural communities not being served at all. He notes that Pacific Bell, GTE and Contel all declined to provide service for Kennedy Meadows.

“They want to transition from a monopoly system, to let the costs lay where they’re incurred,” Wolfe says. “But if there are no safety measures taken for rural areas, we won’t be able to afford to do business and they just won’t be served.”

It’s a hard lesson for the do-it-yourself crowd in Kennedy Meadows to stomach: They’ve always been free to form their own telephone company, but building a system without subsidies would have been prohibitively expensive.

“We can furnish our own power, we have our own well, we get propane hauled in,” says resident Ed Brehmer. “But to get phones we have to go to the PUC.”

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Hello?

Kennedy Meadows residents say they want phone service. But the PUC questions whether California ratepayers should subsidize it.