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The Commission held its last regularly-scheduled agenda meeting of 2015 on December 17, 2015.  Several significant matters relevant to telecommunications were addressed, including  a Decision that fines New Day Broadband One, LLC in the amount of $10,000 for its alleged noncompliance with certain provisions of the Digital Infrastructure and Video Competition Act of 2006 (“DIVCA”).

Two significant items were also held, namely, a proposed decision adopting revisions to the service quality rules of G.O. 133-C, and a decision on Rasier-CA, LLC’s appeal of the Presiding Officer’s Decision finding it in violation of Rule 1.1.

These and other items of significance on the agenda are addressed below.

CONSENT AGENDA ITEMS

$10,000 Penalty Levied Against New Day Broadband One, LLC, for Alleged Violations of the Public Utilities Code and Federal Regulations. (Item 23, signed on consent) – The Decision fines New Day Broadband One, LLC, (“New Day”) in the amount of $10,000 for alleged noncompliance with certain terms of DIVCA (i.e., Pub. Util. Code sections 5840, 5860), pursuant to the Commission’s authority over video service providers .  In particular, the Decision finds that New Day operated without the required state franchise from the Commission from 2008 to 2014, failed to collect and remit franchise fees, and failed to notify the FCC of its acquisition of the video franchise.

New Day is a company based in Las Vegas, Nevada.  The Commission issued an Order Instituting Investigation (“OII”) after receiving complaints from several local governments that New Day was operating without a valid video franchise and failed to remit franchise fees to the local governments as required by law.  The Commission also received consumer complaints alleging lack of service, service disconnections and poor customer service.

The investigation of the Commission’s Safety and Enforcement Division (“SED”) revealed that New Day allegedly acquired video franchises from New Wave Broadband and DCA Cablevision, and began providing video and high speed internet service in rural areas of Trinity, Plumas, Tehama, Sierra, and Shasta Counties, beginning in October 2008.  The investigation further found that New Day allegedly failed to notify the FCC of its acquisition of these franchises.  Finally, SED also found that although New Day collected franchise fees from its rural Tehama County system subscribers from September 2012 to May 2013, New Day allegedly did not remit those fees to the respective local governments.  In May 2013, New Day discontinued video service to customers in Tehama County.  In December 2014, New Day ended all operations in California.

In determining the appropriate penalty amount, the Decision considered that New Day’s elimination of its services allegedly left an underserved customer base without alternatives for video service.  The Decision further reasoned that New Day’s actions allegedly caused economic harm to its competitors which were compliant with the rules and laws relating to the collection and remittance of franchise fees.

The Decision ultimately concluded that New Day violated Pub. Util. Code section 5840 by failing to obtain a video franchise from the Commission when it began operating video services in California; violated Pub. Util. Code. section 5860 when it failed to collect and remit franchise fees; and finally, that New Day violated 47 CFR 76.1610 when it failed to notify the FCC of the change in operational status of the video franchises it acquired and began operating in California in October 2008.

A copy of the Final Decision is available at the following link:

CASF Grant Application Approved in Favor of Anza Electric Cooperative Inc. in the Amount of $2,662,450 for the Connect Anza Project.  (Item 19, approved on consent) –The Resolution (T-17503) adopts CD’s recommended funding amount of $2,662,450 for the Connect Anza Project, or 60% of the estimated total project cost of $4,437,418, with Anza Electric Cooperative, Inc. (“AEC”) matching funds in the amount of $1,774,967.  The Connect Anza Project will provide approximately 3,751 households over 213 square miles with access to broadband service at speeds of at least 50 Mbps on both downloads and uploads, and at a cost of $710 per household.

AEC is a non-profit member-owned electricity cooperative.  AEC currently provides power to approximately 3,900 customers in Southwest Riverside County.  AEC owns and maintains over 10,000 poles and other physical infrastructure required for cable installation.

AEC will install a fiber to the premises (FTTP) system in the high desert areas southwest of the San Jacinto Mountains and approximately 120 miles southeast of Los Angeles.  The FTTP subject area is just north of the San Diego County border in southwestern Riverside County and encompasses the Anza Valley communities of Anza, Aguanga, Lake Riverside Estates, and Reed Valley.  AEC also plans to serve approximately 170 trailer homes by installing fixed wireless.  AEC has already installed a 3-mile fiber segment in the downtown Anza area.

The Connect Anza Project will directly benefit the Cahuilla band of Indians, who comprise an estimated 70 households within the subject area, in addition to, the Cahuilla Creek Casino and other tribal buildings contained on the Cahuilla reservation.  Retired people, who comprise a large portion of the local population, as well as children and college students, are also expected to greatly benefit from AEC’s FTTP deployment.  There are two public schools, a private primary school, and a private university within the subject area.  AEC is expected to complete the Connect Anza Project within 24 months of December 17, 2015.

A copy of the Final Resolution is available at the following link:

http://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M156/K883/156883679.PDF

$10 Million Settlement Approved Between TracFone Wireless, Inc. and the Commission’s Safety and Enforcement Division of the Investigation and Related Proceedings Regarding TracFone’s Alleged Failure to Collect and Remit Public Purpose Program Surcharges and User Fees.   (Item 30, signed on consent) – The Decision approves an all-party settlement agreement between TracFone Wireless, Inc. (“TracFone”), a California prepaid wireless carrier, and the Commission’s Safety and Enforcement Division (“SED”).  Pursuant to the settlement agreement, TracPhone will pay $10 million to the general fund to resolve all issues related to an investigation the Commission instituted in December 2009.

The Commission instituted an investigation of TracPhone on the alleged basis that TracPhone did not collect or remit user fees from 2004 through 2012 and did not collect or remit public purpose program surcharges from at least 2000 through 2012.  The investigation proceeding was bifurcated into two phases.  In Phase 1, the Commission determined that TracPhone is a telephone corporation operating as a public utility in California, and, as such, TracPhone is required to pay user fees and public purpose program surcharges on all intrastate call revenue from any of the services TracPhone provides in California.

In Phase 2, the Commission set out to analyze the amount by which TracPhone is past due.  Decision (D.14-01-037) determined that TracPhone allegedly owed $24,397,441.17 for past due user fees and public purpose program surcharges, including interest.  TracPhone applied for rehearing of the amount-setting Decision in Phase 2 and the application for rehearing was denied (D.15-05-032).  On September 4, 2015, SED and TracPhone filed their “All-Party Motion for Commission Adoption of Settlement.”  The settlement agreement resolves all issues before the Commission pursuant to the investigation and all related proceedings.

During the meeting, Commissioner Florio expressed his gratitude for staff’s and the ALJ’s diligent work on this matter and also expressed his appreciation that TracPhone and SED were able to reach a satisfactory settlement.

A copy of the Final Decision is available at the following link:

http://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M156/K747/156747562.PDF

Transaction Approved Transferring Control of Cebridge Telecom CA, LLC from Cequel Corporation to Altice, N.V.   (Item 33, signed on consent) – Cequel Corporation (“Cequel”) is a Delaware corporation with its principal business office in St. Louis, Missouri.  Cequel indirectly controls 100% of the interests of Cebridge Telecom CA, LLC (“Cebridge”).  Cebridge is a Delaware limited liability company with the same business address as Cequel’s.  Cebridge does business as Suddenlink Communications, a cable operator providing cable television, voice over internet protocol (“VoIP”), broadband internet access and telecommunications services in California and sixteen other states.  Cebridge will continue to operate as Suddenlink Communications under its current Commission authority and continue to provide the same services it currently provides to its existing customers.

Altice N.V. (“Altice”) is a Dutch public company with its principal place of business located in Amsterdam, the Netherlands.  Altice is a provider of fixed and mobile voice, video and broadband services in a range of markets throughout Western Europe, Israel and the Caribbean.  The transaction is Altice’s first entry into the United States telecommunications market.

The Decision reasoned that the transaction will have a positive impact on consumers because it will give Cebridge access to Altice’s operational expertise, scale and capital resources.  Additionally, the Decision considered that the transaction will strengthen Cebridge’s competitive position in the local exchange and interexchange telecommunications market, thereby increasing competition, generally.  No protests to the transaction were filed.  Based on its findings that the transaction satisfies the requirements of Pub. Util. Code Section 854 and is consistent with the public interest, the Decision ultimately approved the transaction.

A copy of the Proposed Decision is available at the following link:

LifeLine Customer’s Two Complaints Against AT&T Denied.   (Item 37, signed on consent) – In 2013 and 2014, Mr. Jordan Rosenberg (“Mr. Rosenberg”), a residential LifeLine customer, filed two complaints against Pacific Bell Telephone Company d/b/a AT&T California (“AT&T”).  See C.13-07-004; C.14-05-014.

Mr. Rosenberg’s first complaint, filed in May 2013, alleged unreasonable delays in processing a service transfer request relating to his wireline service.  Mr. Rosenberg made his service transfer request by letter and did not use one of AT&T’s approved methods, which are by phone or through AT&T’s dedicated internet portal.  In addition to seeking damages for the alleged delays, Mr. Rosenberg’s complaint also requested that the Commission require AT&T to change its internal policy requiring customers to submit transfer of service requests either by phone or using the internet.  Mr. Rosenberg’s second complaint, filed in May 2014, again alleged that AT&T failed to timely process a letter from him as a request to transfer service.  In this complaint, Mr. Rosenberg also alleged service-related difficulties, including that his phone line did not have a dial tone, and that an AT&T technician arrived at his residence without an appointment.

AT&T’s Office of the President eventually intervened to assist Mr. Rosenberg with the alleged circumstances underlying both of his complaints.  The Presiding Officer’s Modified Decision (the “Decision”) analyzed Mr. Rosenberg’s complaints pursuant to the standards set forth in Pub. Util. Code sections 451 and 1702.

Pursuant to Pub. Util. Code section 451, the Decision reasoned that AT&T provided ample justification for the reasonableness of its policy to require phone or internet contact to effectuate a service transfer.  Specifically, AT&T cited customer security and privacy considerations, in addition to, legal mandates, including Commission rules, which require AT&T to disclose information to customers about the potential costs associated with service transfers.  The Decision did note, however, that “to avoid future ‘customized requests,’ AT&T is well advised to consider ways in which it can more widely convey its transfer of service procedures to consumers.”  Modified Decision at p. 12.  Pursuant to Pub. Util. Code section 1702, the Decision reasoned that Mr. Rosenberg failed to demonstrate that AT&T violated any provision of the Public Utilities Code or its rules and regulations.  Based on these findings, the Decision denied both of Mr. Rosenberg’s complaints against AT&T.

A copy of the Modified Presiding Officer’s Decision is available at the following link:

$33.116 Million in California High Cost Fund-A Support for Calendar Year 2016 Adopted  (Item 15, adopted on consent) –The Commission adopted a Resolution authorizing a total of $33.116 million in California High Cost Fund-A (CHCF-A) support for Calendar Year (CY) 2016 to be disbursed among the following ten Independent Small Local Exchange Carriers (“Independent Small LECs”):  Calaveras Telephone Company, Cal-Ore Telephone Co., Ducor Telephone Company, Foresthill Telephone Co., Kerman Telephone Co., Pinnacles Telephone Company, The Ponderosa Telephone Co., Sierra Telephone Company, Inc., The Siskiyou Telephone Company, and Volcano Telephone Company.  The remaining three Independent Small LECs, Happy Valley Telephone Company, Hornitos Telephone Company, and Winterhaven Telephone Company did not request CHCF-A support for CY 2016.  The adoption of $33.116 million in CHCF-A funding for CY 2016 represents an increase of 0.4% over the CY 2015 CHCF-A funding amount of $32.995 million.

A copy of the Final Resolution is available at the following link:

SIGNIFICANT HELD ITEMS

Proposed Revisions to Service Quality Rules for California’s Public Utility Telephone Companies Are Under Consideration (General Order 133-D) .  (Item 50, held by CPUC Staff until January 14, 2016, and later withdrawn) – This Decision would adopt revised rules governing service quality for regulated telecommunications carriers.  In 2011, the Commission opened a rulemaking (R.11-12-001) to review telecommunications carriers’ performance in meeting existing service quality performance standards and to assess whether there is a need to establish a penalty mechanism for future substandard service quality performance.  As provided in the Proposed Decision and Attachment B thereto, G.O. 133-D would implement revisions to G.O. 133-C, such as, imposing automatic fines specific to certain service quality standards in chronic failure status; creating a customer refund mechanism for customers that have been out of service for more than 24 hours; reducing the time out of compliance regarding the requirement to file a Corrective Action Plan from two consecutive quarters to two consecutive months; extending the application of the service quality rules to certain facilities-based interconnected VoIP providers; and extending the application of the service quality rules to wireless carriers.

On December 29, 2015, ALJ Bushey issued a ruling in this proceeding, the Assigned Administrative Law Judge’s Ruling Setting Dates For Comments And Reply Comments On Proposed Revisions To General Order 133, Section 4, to extend the reporting of Major Service Interruptions to interconnected VoIP providers who are required to submit surcharge filings pursuant to Public Utilities Code Section 285.

A copy of the Proposed Decision is available at the following link:

A copy of the ALJ’s Ruling is available at the following link:

Modified Presiding Officer’s Decision is Expected on Order to Show Cause Why Rasier-CA, LLC Should Not be Held in Contempt and Fined Over $7 Million for Rule 1.1 Violations.   (Item 38, held by CPUC Staff until January 14, 2016) – The Presiding Officer’s Decision (“POD”), issued on July 15, 2015, found that Rasier-CA, LLC (“Rasier”) was in contempt of Commission Decision D.13-09-045; in violation of Rule 1.1 of the Commission’s rules; and further found that Rasier’s license to operate should be suspended for its alleged failure to fully comply with D.13-09-045.   Decision 13-09-045 set forth various reporting requirements on California Transportation Network Companies (“TNCs”), including Rasier.   The POD made several findings with regard to Rasier’s alleged Rule 1.1 violations in connection with its alleged failure to fully comport with the reporting requirements of D.13-09-045.   According to the POD, Rasier allegedly refused to provide certain data and then offered insubstantial and misleading legal arguments and other claims in an effort to justify the alleged deficiencies.   For these reasons, the POD concluded that Rasier allegedly failed to comply with California law and further misled the Commission “by an artifice or false statement of law by asserting multiple legal defenses that were unsound,” and further concluded that Rasier’s “conduct warrants the imposition of penalties or fines” in the total amount of $7,326,000.   (POD at 60).

On August 14, 2015, Rasier appealed the POD, contending that the POD erred in part by finding that Rasier was in violation of Rule 1.1 for asserting multiple unsound legal defenses.  On appeal, Rasier argues that Rule 1.1 is not implicated by potentially flawed legal arguments.  Rather, Rasier contends, Rule 1.1 targets false or misleading statements of fact, the withholding of material information that misleads the Commission, or the failure to update an incorrect statement of fact.  Rasier also argues that the POD erred by incorrectly interpreting prior Commission Decisions to provide that Rule 1.1 violations apply to alleged failures to comply with a Commission order.  Rasier distinguishes alleged disobedience with a Commission order from acts or omissions that deceive or mislead the Commission.  It argues that it is allegedly responsible for, if anything, mere disobedience, and, therefore, no Rule 1.1 violations should attach.

A copy of Rasier’s Appeal is available at the following link:

Grant Application of Race Telecommunications Inc. from the California Advanced Services Fund (CASF) in the Amount of $8,895,520 for the Five Mining Communities Underserved Broadband Project (Draft Resolution T-17488).   (Item 51, held by President Picker for further review until January 14, 2016) – This item would address the “Five Mining Communities Underserved Broadband Project,” one of two currently proposed CASF projects from Race Telecommunications (“Race”).   The project would provide FTTP high-speed gigabit broadband availability to 959 households over a 5.9 square mile project area at a cost of $7,815 per household, made possible through a $8,895,520 CASF grant.   The project area is located in the northwestern corner of San Bernardino County, along with small portions of eastern Kern County, and southeastern Inyo County.   The Draft Resolution states that this project would yield social and economic benefits to the five communities in the form of improved access to e-health services and online educational and economic opportunities and enhanced battery backup and 911 reliability.

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

Grant Application of Race Telecommunications Inc. from the California Advanced Services Fund (CASF) in the Amount of $6,580,007 for the Gigafy Mono County Underserved Broadband Project (Revised Draft Resolution T-17477)   (Item 52, held by CPUC Staff until January 14, 2016) – This item would address the Gigafy Mono County Underserved Broadband Project (“Gigafy Mono Project”), the second currently proposed CASF project from Race. According to the Revised Draft Resolution, this project would extend high speed internet to 399 households spread amongst 5.6 square miles covering South Chalfant, Benton, Benton Hot Springs, Swall Meadows and Mono City, in Mono County, California, at an average cost of $13,889 per household.   The Revised Draft Resolution recommends approval of the CASF grant in the amount of $6,580,007.

Race originally requested $7,633,459 in total support, based on the inclusion of an additional community, Lee Vining, within the proposed project area.   However, the Commission’s Communications Division (“CD”) made findings that wireless broadband is already available in Lee Vining at served speeds.   As such, CD recommended removal of Lee Vining from the project area.

The Revised Draft Resolution would also rescind the grant of funds for the Verizon Crowley Lake and Swall Meadows project as previously authorized (Resolution T-17350).  Resolution T-17350 authorized a CASF grant to Verizon to partially serve the Crowley Lake/Swall Meadows area with 3 Mbps down and 1 Mbps up service.  Verizon provided the basic broadband service according to its CASF grant, but it has not sought project reimbursement following the initial infrastructure deployment.  The Revised Draft Resolution reasons that rescinding the grant of funds for the Verizon Crowley Lake/Swall Meadows Project would release these monies for other projects.

A copy of the Revised Draft Resolution is available at this link:

COMMISSIONERS’ REPORTS

Commissioner Sandoval spoke at a hearing convened by Assembly Member Wood of the Select Committee on the California Rural Digital Divide.   Commissioner Sandoval explained that she and Assembly Member Wood are both committed to working to bridge the digital divide not only in rural communities, but also in other low-income and disadvantaged communities.

Commissioner Sandoval also met with the California Secretary of Housing and Urban Development.   They discussed their shared desire to partner on California Advanced Services Fund (CASF) programs designed to connect California’s subsidized public housing to the internet.   In particular, they plan to work on initiatives that couple improvements to energy efficiency in public housing with increases in broadband access.

On November 12, 2015, Commissioner Peterman and Administrative Law Judge Karl Bemesderfer were both assigned to the telecommunications Competition OII (I.15-11-007) in connection with the rehearing of D.08-09-042 .   Commissioner Peterman provided a brief update on the progress of that proceeding.

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