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On April 10, 2014, the Commission held its regularly-scheduled agenda meeting.  On the regular agenda, the Commission approved a Resolution that granted Ponderosa $1,027,380 in CASF funding for its Cressman project.  The Resolution was approved unanimously by all five Commissioners after the Alternate that would only fund a portion of Ponderosa’s proposed project area was voted down in a 3-2 vote.  During the regular agenda, the Commission also approved CASF funding for three other project proposals by Sunesys and SurfNet.  These and other items of interest are discussed in further detail below:

REGULAR AGENDA

Ponderosa Granted $1,027,380 in CASF Funding for the Cressman Project (Items 34 and 34a, Item 34 approved 5-0, Item 34 not approved 3-2) – This Resolution grants $1,027,380 in CASF funding to Ponderosa Telephone Company (“Ponderosa”) for its Cressman Unserved and Underserved Broadband Project (“Cressman Project”).  This amount represents 60% of the total project costs, and will supplement Ponderosa’s funding of $684,920.  The project will bring fixed broadband services to the underserved Cressman area of Fresno County.  The project is designed to provide minimum advertised speeds of 6 Mbps/1.5 Mbps.  However, most of the households will likely receive service at 12 Mbps/1.5 Mbps, and some households will have access to service at 24 Mbps/2 Mbps thorough VDSL2 technology. 
The Cressman Project will upgrade an existing system and install new systems and infrastructure to provide high speed Internet service over a 3.56 square mile area.  Ponderosa will expand its existing network by extending fiber optic backhaul facilities and connecting to multiple Broadband Loop Carrier systems (“BLC”).  The fiber will extend from an upgraded BLC site at Sierra Cedars to two new BLC sites at Lower Cressman and Rush Creek.  The installations will also utilize Ponderosa’s existing copper distribution plants in a fiber-to-the-node configuration and deploy VDSL2 and ADSL2+ technologies to connect end users.

The Resolution finds that the project will have positive safety impacts by providing telephone and broadband access for emergency services in a remote area threatened by fire and harsh weather conditions.  In addition, the Resolution concludes that connecting the Cressman community’s access to anchor institutions surrounding the Cressman Project area will also be beneficial. 

Commissioner Florio had prepared an Alternate that would have only authorized $654,354 in CASF funding to support the Lower Cressman part of the project.  The Alternate would not have approved the request for funding to extend fiber optic to the Rush Creek segment of the project, concluding that it was “unreasonably expensive.” 

The Resolution was introduced by Communications Division Director Ryan Dulin, who explained that the Cressman project contained benefits and safety elements that factored into the staff’s support of the entire project proposal.  He noted that the project would provide service to a fire-prone region that is subject to harsh weather conditions, and that the project will reach 59 unserved households and provide benefits to anchor institutions and public safety entities.  He also explained that the project will also allow Ponderosa to eventually provide service to the Blue Canyon subdivision, where the United State Forest Service is located.  Finally, he highlighted that Ponderosa has been instrumental in the CASF program, and that it has brought broadband infrastructure to over 1,100 households, of which 1,081 of those households were considered unserved. 

The Alternate Resolution was introduced by Commissioner Florio.  He explained that his Alternate would provide funding of $654,000 to serve 65 households at approximately $10,000 per household.  He also explained that the Alternate reduces funding for the Rush Creek area, which he deemed “excessive” because it would serve five households at approximately $75,000 per household. 

President Peevey strenuously disagreed with Commissioner Florio’s analysis and reliance on the cost breakdown of the Rush Creek portion the CASF project proposal.  He stated that the cost of the project is “totally irrelevant” because Ponderosa’s long-term plan is to serve the Blue Canyon rural subdivision, and when it does, it will have to go through Rush Creek.  He then emphasized that the cost of serving those households “will still be high whether it’s done today or two years from now.”  He further criticized the alternate by stating that “[t]he only thing the alternate does – the only thing it accomplishes – is keeping broadband from those households in the interim.”

Commissioner Peterman expressed support for the Alternate, noting that she is generally supportive of “striking that balance between broadband deployment and prudent management of the funds.” 

Commissioner Sandoval did not support the Alternate.  She explained that it was important to understand that the Rush Creek project would help complete a fiber ring to improve regional reliability.  She then elaborated that it is important to build a telecom network or broadband network through a ring, which helps with healing and re-routing.  She then noted that she will be attending the public participation hearing in North Fork in mid-April, which is served by Ponderosa.  She expressed excitement at being able to have the opportunity to see the challenges of this mountainous area.  
Commissioner Picker did not express a position during the comment period, even though it was evident that he would become the deciding vote as to the fate of the Alternate.  As the last member to vote, he gave no indication of what his vote would be until the Alternate was moved, at which time he voted against the Alternate. 

After the Alternate was voted down, President Peevey moved the original Resolution for a vote.  All Commissioners voted in favor of the Resolution, since the Alternate was off the table.
 
A copy of the Draft Resolution underlying this item is available at the following link:  

A copy of the Alternate Draft Resolution is available at the following link

Sunesys Granted $10,640,000 in CASF Funding for Central Coast Project  (Items 28 and 28a, Item 28a approved 5-0; Item 28 not moved) – This item grants Sunesys, LLC (“Sunesys”) $10,640,000 in CASF funding. for the Connected Central Coast Unserved and Underserved Broadband Project (“Sunesys Project”).  The Sunesys Project will build a 91.18 mile middle-mile backhaul network from Santa Cruz to Soledad, and extend high-speed internet service to 430 square miles covering Castroville and the California Highway 156.  The proposed network will pass through 68 unserved and 1,069 underserved census blocks.  It is expected that the Sunesys Project will have the potential to enable last-mile providers to serve up to 11,124 households in the Central Coast. 

The Sunesys Project will provide broadband backhaul access at speeds of up to 100 Gbs per second per fiber strand from the City of Santa Cruz to Soledad, the first major fiber point-of-presence in the Salinas Valley.  The project will also partner with regional Internet Service Providers who provide last mile service in its proposed project area.  The Resolution explains that several last-mile service providers and local institutions have expressed interest in the project, and it is expected that last-mile service providers will lease connections from the network as bandwidth demands grow. 

The Draft Resolution would have granted $7,352,164 in CASF funding to Sunesys.    This amount would have represented 60% of the total project cost of $12,253,606.  This calculation was based on a total project cost, which was pro-rated and adjusted from Sunesys’ original proposal of $13 million in order to address served segments of Sunesys’ proposed project area.  However, Sunesys indicated that it could not and would not pursue the project if it only receives CASF funding for 60% of the project costs pursuant to the Draft Resolution prepared by staff. 

The Alternate issued by President Peevey’s office grants Sunesys $10,640,000 in CASF funding for the Sunesys Project, an approximate increase of $3.3 million from the Draft Resolution.  The award represents 90% of the pro-rated and adjusted total project cost, and exceeds the CASF program’s funding limitations of 70% of total costs in unserved areas and 60% of costs in underserved areas.  The Alternate concludes that it is appropriate to grant this award, despite the CASF program constraints, because Sunesys has indicated that it could not pursue the project if it only receives CASF funding for 60% of the project costs pursuant to the Draft Resolution prepared by staff.  The Alternate explains that Sunesys has proposed to charge a price of $8.50 per mile per month to internet service providers.  At these rates and at 60% CASF funding, the projected payback period would be 19 years, whereas at 90% CASF funding, the projected payback period would be five years.  Sunesys has claimed that a payback period of longer than five years would not provide a sound business plan, but nevertheless agreed to terms that would allow a 8 year payback plan. 

Commissioner Florio had expressed some hesitation over the Alternate exceeding the program limits at the last Commission meeting.  However, he withdrew his concerns at this meeting and voted in favor of the Alternate.  Commissioner Sandoval also supported the Alternate, emphasizing that the project was a middle mile project that would be critical in connecting last-mile providers. 

A copy of the Draft Resolution underlying this item is available at the following link

A copy of the alternate is available at the following link

CASF Funding Granted for Surfnet’s Two CASF Projects (Items – approved 5-0) These items address California Advanced Services Fund (“CASF”) funding requests for two Surfnet Communications, Inc. (“Surfnet”) projects, the Monterey Dunes Last Mile Underserved Broadband Project (“Monterey Dunes Project”) and the Paradise Road Last Mile Underserved Broadband Project (“Paradise Road Project”).  These Resolutions would approve $105,437 for the Monterey Dunes Project ($79,078 in grant funding and $26,359 in loan funding) and $237,272 for the Paradise Road Project ($177,954 in grant funding and $59,318 in loan funding).  

The Monterey Dunes Project is a last mile project that proposes to connect existing copper wire infrastructure and upgrade broadband facilities in the project area.  It is estimated that the project would reach 120 households.  The project extends high-speed broadband service to 0.58 square miles in the Monterey Dunes area by deploying high speed fiber to the home.  It is expected that the deployment would result in broadband service that is capable of reaching speeds of 100 Mbps up and 100 Mbps down using HPNA 3.0 technologies or ADSL 2. 
The Paradise Road Project proposes to extend high-speed broadband service to 3.30 square miles in the Paradise Road area, located in Northern Monterey County.  It is estimated that the project will reach 278 underserved households, including one anchor institution.  This project would also deploy high speed fiber to the home that is capable of reaching symmetrical speeds of 100 Mbps up and 100 Mbps down. 

Both projects are dependent on the completion of the Sunesys middle mile project, which will provide backhaul facilities and enable last mile connections in the areas.  As discussed in Item 34 and 34a, above, funding for the Sunesys project has been approved. 

A copy of the Draft Resolution underlying the Monterey Dunes Project is available at the following link

A copy of the Draft Resolution underlying the Paradise Road Project is available at the following link

CONSENT AGENDA

Transbeam Granted a CPCN (Item 19, approved on consent) – This Decision grants Transbeam, Inc. (“Transbeam”) a certificate to provide of public convenience and necessity (“CPCN”) to provide resold local exchange and non-dominant interexchange services AT&T California (“AT&T”), Verizon California Inc. (“Verizon”), Citizens Telecommunications Company of California, Inc. d/b/a Frontier Communications of California (“Citizens”), and SureWest Telephone (“SureWest”), and interexchange telecommunications service in California.

Transbeam intends to lease unbundled network elements and resold network services from underlying carries in order to provided dedicated switched local exchange and interexchange intraLATA and interLATA toll services.  Transbeam will also provide point to point broadband services for data transmission.  Transbeam does not intend to offer service to residential customers and will provide services exclusively to commercial subscribers.

The Decision concludes that Transbeam meets the financial, technical, and environmental requirements to be granted a CPCN.  The Decision also concludes that a CEQA review is not required because Transbeam does not propose to deploy its own network facilities and will use existing facilities. 

A copy of the Proposed Decision underlying this item is available at the following link

Statutory Deadline Extended in Verizon v. O1 Action (Item 20, approved on consent) – This Decision extends the statutory deadline for resolving a complaint filed by O1 Communications, Inc. (“O1”) against Verizon Business Services, Verizon Global Networks, Inc., and Verizon Access Transmission Services (collectively, “Verizon”).  In the complaint, O1 alleges that Verizon has failed to make appropriate payments for intrastate and interstate services pursuant to O1’s tariff and an interconnection agreement.  The Decision concludes that an extension of the statutory deadline is appropriate because the parties are in settlement discussions and additional time is necessary to give the parties an opportunity to settle the dispute.  Therefore, the deadline is extended from April 11, 2014 to April 11, 2015. 

A copy of the Proposed Decision underlying this item is available at the following link

Intervenor Compensation to Center for Accessible Technology (Item 30, approved on consent) – This Decision grants the Center for Accessible Technology (“CforAT”) $13,670.88 in intervenor compensation for its contribution to D.13-02-022 in the rulemaking to add VoIP service providers to the category of voice services who are required to fund California’s universal service programs.  The rulemaking was closed as moot following legislative action addressing the same issue. 

A copy of the Proposed Decision underlying this item is available at the following link

HELD ITEMS

Boomerang Wireless, LLC’s Request for ETC Designation (Item 7, held until 5/1/14) – This Draft Resolution would conditionally designate Boomerang Wireless, LLC (“Boomerang”) as Eligible Telecommunications Carriers (“ETC”) to provide federal Lifeline service in the Uniform Regulatory Framework carrier service territories and exclude the Small Local Exchange Carriers’ service areas.  The Draft Resolution would also determine that granting Boomerang’s request for ETC designation would be in the public interest and that Boomerang meets all applicable environmental, technical, and financial requirements in Resolution T-17002 and the ETC rules recently adopted in the Lifeline Reform Order (FCC 12-11). 

Additionally, the Draft Resolution would find that Boomerang’s Lifeline service would allow consumers to receive both federal and state subsidized wireline service and would not have an adverse effect on the state LifeLine fund.  Boomerang would also be required to file annual ETC reports and information with USAC demonstrating the terms and conditions of any voice telephony service plans offered to Lifeline subscribers.  

A copy of the Draft Resolution underlying this item is available at the following link:  

LEGISLATIVE SPECIAL MEETING

AB 1717 (Perea) (Item 48, Oppose Unless Amended Position Adopted) – A special meeting was held to authorize the Commission’s position with regard to AB 1717 (Perea), a bill that would modify the way surcharges are collected on some or all prepaid wireless services.  The item was introduced by Lynn Sandler, who explained that the bill is virtually identical to a bill that was introduced last year as AB 300.  She noted that AB 300 was ultimately vetoed by the Governor.  She asserts that the bill is unnecessary because prepaid providers are meeting their obligations for paying surcharges, and this mechanism would do nothing but push the responsibility for collections off the wireless providers, by shifting the responsibility for collecting surcharges onto retailers who install prepaid cards.  She posited concerns with the fact that the CPUC would have no jurisdiction over the retailers to enforce collection of these fees and the cost of implementing a point of sale mechanism would result in unnecessary costs to the state.  

Commissioner Florio explained that the Commission has generally refrained from taking positions on bills this year, but that he felt it was important to address this bill that was opposed by the Commission last year and rejected by the Governor himself.  He specifically admonished the author of the bill for making no substantive changes to the bill that would address concerns raised by the Governor. 

A copy of the current version of AB 1717 is available at the following link:

COMMISSIONER REPORTS

Commissioner Sandoval noted that she had a chance to speak about LifeLine program on Spanish Language television station.  She appreciated having the opportunity to talk about the program and raise awareness with the program.  She stated that there are 10,000 new subscribers since the program was modified to provide benefits to wireless services.  She then indicated that she attended the pre-hearing conference in the CHCF-A proceeding and that she looked forward to the public participation hearings that would be held in the next few weeks in North Fork, Jackson, and Yreka. 

COMMUNICATIONS DIVISION REPORT

Director Dulin gave a presentation on ETC carriers and the California LifeLine eligibility process.  He discussed in detail the current ETC eligibility process along with the California LifeLine process, explaining that a telecommunications carrier seeking to offer Federal Lifeline service must be approved by the Commission as an ETC.  In order to be designated as an ETC, the carrier must file an advice letter or application that is reviewed by the staff.  He then gave an overview of the staff’s review process.  In order to ensure compliance with ETC rules, the staff consults with the FCC on pending investigations, checks for complaints with other State Commissions, confers with the Consumer Affairs Branch for consumer complaints, among other due diligence. 

Director Dulin then explained the process for a telecommunications carrier to seek CPUC approval to offer California LifeLine.  In order to seek approval, the carriers must file and advice letter. 

Finally, Director Dulin explained that the review process for ETC and California LifeLine designation are challenging.  Specifically, he noted that it is often difficult to address FCC complaints as the FCC may not disclose this information to the CPUC.  Moreover, carriers that are subject to a Notice of Liability may be a result of the FCC finding carriers have duplicates.  Moreover, he explains that the findings are typically appealed and many of the appeals have not been resolved for over a year.  He also noted that the eligibility criteria for California LifeLine approval and ETC designation are different and prevent a more streamlined process.   

If you have questions regarding any of the above items, or the underlying proceedings in which they arose, please feel free to contact us.
 

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