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On December 18, 2014, the Commission held its last regularly-schedule agenda meeting for the 2014 calendar year.  On the regular agenda, the Commission approved a decision adopting changes to the rules and regulations governing the CHCF-A program.  On the consent agenda, the DDTP surcharge was increased to 0.50% effective February 1, 2015.  In addition, it was also the last meeting for President Peevey whose term ended at the end of 2014 and for Executive Director Clanon who retired after 30-years of service at the Commission.  These and other items of interest are discussed in further detail below. 
 
REGULAR AGENDA
 
Rules and Regulations Modifying the CHCF-A Program Adopted (Item 66, adopted 5-0) – This Decision addresses the Phase I issues in the CHCF-A proceeding, and adopts rules and regulations modifying the existing CHCF-A program.  Specifically, the Decision addresses the following issues: (1) whether affiliate broadband revenues or profits should be considered in establishing a regulated telephone company’s intrastate revenue requirement; (2) whether a company’s operating costs should be standardized; (3) whether Small LEC territories should be opened to wireline competition; (4) how the Commission should account for changes in federal subsidies; (5) what metrics should be used to develop basic rates; (6) what are the appropriate standards for determining whether broadband-capable facilities are reasonable; (7) whether it is necessary to establish “fair-market rates” for affiliate use of regulated networks; (8) whether changes to procedural rules governing the CHCF-A program are necessary; and (9) whether Public Utilities Code Section 710 impacts CHCF-A carriers’ regulatory obligations. 
 
This Decision makes the preliminary determination to not adopt broadband imputation and to not open the Small LEC territories to competition.  However, these conclusions are to be re-evaluated following the results of a Commission-sponsored “Broadband Networks and Universal Service” study in Phase 2.  In addition, the Decision adopts the FCC’s crudely-developed Corporate Operations Expense Caps and implements a two-step mechanism for determining whether changes in federal subsidies can be recovered from the CHCF-A.  The Decision also increases basic service rates from $20.25 (additional charges excluded) to a minimum of $30 (all additional charges included) and a maximum of $37 (all additional charges included).  The exact basic service rate is to be addressed and set in each individual company’s rate case. 
 
This item was introduced by Commissioner Sandoval.  She began by highlighting the rural characteristics of California, and explained that while California has very large cities, including the top ten largest cities in America, the state also has 10% of the rural population of the United States.  She also highlighted the fact that the land mass of California is overwhelmingly rural.  She then explained that there are still 13 rural telephone companies that serve the rural communities of California and that many of these companies serve in places that are the “geographic jewels of California.”
 
Commissioner Sandoval explained that the CHCF-A proceeding is intended to help foster long standing state and federal commitments to universal service, which is the principle that everyone should have access to communications and everyone is better off when others have access to communications.  She reiterated that reliable communications is important to ensure public safety and that it is necessary to ensure that access to communications is available at just and reasonable rates.  However, she emphasized that the CHCF-A is a high cost fund, and these areas by their nature require higher costs to serve.  She emphasized that the terrain in California increases these challenges because there are “really huge mountains,” in addition to valleys and trees that mean other technologies are simply not a viable substitute to wireline technology.
 
She underscored that one of the purposes of the proceeding was to implement the mandates and intent of Senator Fuller’s bill, SB 379, codified as Public Utilities Code Section 275.6.  She explained that Section 275.6 requires the Commission to consider funding broadband-capable networks as well as high-quality voice networks in the rural areas served by rural telephone companies.  SB 379, she explained, recognizes that it is important to invest in networks of the future and that reliable communications access is critical for economic participation, safety, health, and the future. 
 
Commissioner Peterman indicated that she supported the proposed decision.  She noted that the was broadly supportive of the original proposed decision but was concerned that the original proposed decision would have implemented a rate increase that may not have been properly vetted by parties and was not authorized through a general rate case.  As a result, she was “very happy” that the proposed decision was revised to set a basic rate floor and ceiling and that the specific rates will be set in the individual companies’ rate cases. 
 
Commissioner Florio also expressed his support for the proposed decision.  He highlighted the revisions to the proposed decision that would provide for a process for a general rate case plan to be developed.  Commissioner Florio also highlighted that he was “struck” by comments in the proposed decision about speakers at the public participation hearings who were not customers of the Small LECs but wished they were.  He observed that these customers generally have higher rates, but the quality of service offered by the Small LECs must be much better than what is being provided by the larger companies.  He explained that this weighed heavily on his opinion on the issue of competition, noting that it seems to indicate that regulation is better in certain areas. 
 
A copy of the final decision underlying this item is available at the following link
 
CONSENT AGENDA
 
DDTP Surcharge Rate Increases from 0.20% to 0.50%, Effective February 1, 2015 (Item 5, adopted on consent) – This Resolution increases the surcharge rate for the Deaf and Disabled Telecommunications Program (“DDTP”) from Telecommunications carriers and interconnected VoIP service providers are required to revise the CHCF-A surcharge rate assessed on revenues collected from end users for intrastate telecommunications services, effective February 1, 2015.
 
The Resolution explains that absent a surcharge rate adjustment, it is projected that the DDTP fund balance would be in a deficit in excess of $50 million by the end of Fiscal Year (“FY”) 2015-16.  However, a surcharge rate adjustment would prevent a deficit and result in a projected fund balance of approximately $5.3 million at the end of FY 2015-16.
 
A copy of Resolution T-17458 is available at the following link:   
 
Rules Adopted for the CASF Broadband Housing Account (Item 19, adopted on consent) – This Decision adopts rules and regulations for administering the California Advanced Services Fund (“CASF”) Broadband Public Housing Account.  The Broadband Public Housing Account was created as a separate CASF account by Senate Bill 740 in order to support the deployment of broadband infrastructure and adoption programs in eligible publicly-supported housing committees.  This account will be funding through $20 million from the CASF Broadband Infrastructure Grant Account and $5 million from the Broadband Revolving Loan Account.  Of these funds $20 million will be reserved for grants and loans to finance projects connecting publicly-supported housing communities and $5 million will be reserved for adoption programs in those communities.
 
CASF Broadband Public Housing Account funding is limited to publicly subsidized multifamily housing developments owned by: (1) a public housing agency that has been chartered by the state, city or county in the state, and has been determined to be a public housing agency by the U.S. Department of Housing and Urban Development; or (2) an incorporated nonprofit organization as described in Section 501(c)(3) of the Internal Revenue Code that is exempt from taxation, and has received public funding to subsidize the construction or maintenance of housing occupied by residents whose annual income qualifies as “low” or “very low” income according to federal poverty guidelines. The Decision also explains that the CD staff estimated that there are 300,000 to 400,000 publicly-supported housing communities in California, and since approximately 15% of those are located in rural areas, 15% of the Broadband Public Housing Account funds will be reserved specifically for rural projects until December 31, 2015.   
 
The CASF Broadband Public Housing Account will award grants and loans to finance up to 100% of installation costs of connecting a publicly-supported housing community, but not maintenance or operation costs.  Reimbursements will be approved for the following expenses: (1) networking equipment, including hardware and software and wireless access points; (2) low voltage contracting; (3) modems or routers; (4) engineering and design; (5) hardware warranty; (6) installation labor from the MPOE to the individual unit; and (7) taxes, shipping, and insurance costs directly related to broadband equipment deployed under the CASF Broadband Public Housing Account.
 
The CASF Broadband Public Housing Account will award grants and loans to finance up to 85% of the costs for adoption projects, and will reimburse for the following expenses:  (1) education and outreach efforts and materials; (2) desks and chairs to furnish a designated space for digital literacy; (3) acceptable computers and devices and software intended for use in a computer lab or household; (4) digital literacy instructors; (printers for a computer lab or other designated space for digital literacy; and (5) routers; and (6) provision of residential technical support. 
 
Further information regarding applications for funding and eligibility requirements is available in Appendix B of this Decision.
 
A copy of the final decision underlying this item is available at the following link
  
Stand Up Wireless Conditionally Designated as an ETC (Item 14, adopted on consent) – This Resolution conditionally grants the request of Global Connection, Inc. of America dba Stand Up Wireless’ request to be designated as an Eligible Telecommunications Carrier (“ETC”) to provide federal Lifeline wireless service to qualifying customers in California in the service areas of the Uniform Regulatory Framework (“URF”) carriers, and specifically excluding the Small Local Exchange Carriers’ (“Small LECs”) service areas. 
 
Global Connection is a prepaid wireless service provider with principal offices in Norcross, Georgia.  In March 2012, the Commission issued Global Connection its Wireless Identification Registration number, authorizing it to operate as a commercial mobile radio service provider in California.  Global Connection provides local telecommunications services through the United States, and is designated as an ETC-only wireline provider in six states.  Global Connection, under its dba “Stand Up Wireless,” provides prepaid wireless telecommunications services using the Sprint PCS network on a wholesale basis.  “Stand Up Wireless” accesses Sprint’s PCS network infrastructure and wireline transmission facilities to operate as a mobile virtual network operator through an agreement with Boomerang Wireless, LLC, dba Ready Mobile. 
 
As a ETC provider of federal Lifeline wireless service, Global Connection dba Stand Up Wireless will offer three plans ranging from $12.65 per month to $35.75 per month.  The Plans will also allow additional minutes to be purchased.
 
The Resolution concludes that Global Connections dba Stand Up Wireless generally complies with all FCC and CPUC requirements to be designated an ETC.  In addition, the Resolution directs Global Connection to: (1) submit to the Communications Division Director an Information Only report quarterly, beginning in the first quarter of 2015 identifying service requests from customers living in the designated service area but outside of its existing network coverage; (2) file an updated ZIP + 4 code data, as obtained from the Small LECs; (3) comply with all applicable Commission rules and regulations, including reporting and payment of the User Fees and universal service public purpose program surcharges; (4) submit marketing materials to the CPUC LifeLine staff for review prior to distribution and advertising; and (5) file required information with USAC to certify that its federal Lifeline wireless plans meet federal requirements, and to submit a letter confirming compliance to the Communications Division Director. 
 
A copy of Resolution T-17466 is available at the following link
 
LightSpeed Networks Granted CPCN (Item 21, adopted on consent) – This Decision grants LightSpeed Networks, Inc. (“LightSpeed”) a certificate of public convenience and necessity (“CPCN”) to provide full facilities-based and resold competitive local exchange service throughout the service territories of Pacific Bell Telephone Company, Verizon California, Inc., SureWest Telephone, and Citizens Telecommunications of California, Inc.  LightSpeed is also authorized to provide interexchange service throughout the State of California. 
 
LightSpeed is a Oregon-based company that will provide a variety of fiber-based dedicated network and point-to-point services, which may be used for transmission of either voice or data communications.  LightSpeed will serve educational institutions, municipal government agencies, healthcare and financial institutions, small to enterprise-size business, and other customers.  LightSpeed will not provide residential local exchange services.
 
The Decision explains that LightSpeed has met the financial, managerial, and technical qualifications necessary to be granted a CPCN.  In addition, the Decision concludes that LightSpeeds’ proposed construction projects do not appear to have significant environmental impacts and authorizes LightSpeed to utilize the expedited CEQA review process for proposed projects pursuant to its full facilities-based authority. 
 
A copy of the final decision underlying this item is available at the following link
  
Telco Connection Granted CPCN Authority (Item 22, adopted on consent) – This Decision grants Telco Connection LLC (“Telco”) a certificate of public convenience and necessity (“CPCN”) to provide resold interexchange service in California based on an application submitted in February 2013.  Telco initially applied for the same authority through an application submitted in 2012.  However, the Consumer Protection and Safety Division (“CPSD”) protested Telco’s application and asserted that Telco violated Rule 1.1 for failing to identify irregularities with its affiliate’s regulatory history.  In addition, the CPSD identified regulatory enforcement and investigatory action taken while its affiliate’s CEO managed the affiliate as the sole officer.  In D.13-02-020, Telco’s 2012 application was denied for Rule 1.1 violations, and Telco was directed to reapply for authority when it could demonstrate that it has sufficiently rehabilitated.
 
The Decision concludes that that it is appropriate to authorize Telco to provide interexchange services in California because its 2013 application provides sufficient indications that Telco has rehabilitated.  Specifically, the Decision notes that Telco properly disclosed its prior regulatory violations committed by it or its affiliates before other regulatory agencies, and that Telco has not committed any new violations.  In addition, the Decision also observes that the 2013 application was not protested, the Commission has not received any complaints about Telco or its CEO, Telco is in full compliance with California’s regulatory requirements, and Telco has expressed a willingness to engage a regulatory consultant to review its CEO’s actions for the first year.  Accordingly, the Decision finds that Telco meets the managerial and technical requirements necessary to be granted a CPCN. 
 
A copy of the final decision underlying this item is available at the following link
 
LCB Expands its CPCN Authority (Item 30, adopted on consent) – This Decision expands LCB Communications LLC (“LCB”) certificate of public convenience and necessity (“CPCN”) to provide full facilities-based local exchange service in the service territories of Pacific Bell Telephone Company, Verizon California, Inc., SureWest Telephone, and Citizens Telecommunications of California, Inc.  LCB was previously granted a CPCN to provide limited facilities-based and resold local exchange, IntraLATA, and InterLATA interexchange telephone services in the same service areas. 
 
The Decision concludes that LCB meets the environmental, financial, managerial, and technical requirements necessary to provide full facilities-based local exchange services.  In addition, the Decision concludes that LCB’s proposed construction projects do not appear to have significant environmental impacts and authorizes LCB to utilize the expedited CEQA review process for proposed projects pursuant to its full facilities-based authority. 
 
A copy of the final decision underlying this item is available at the following link
  
Ultimate Internet Access Granted CPCN Authority (Item 31, adopted on consent) – This Decision grants Ultimate Internet Access, Inc. (“Ultimate Internet”) a certificate of public convenience and necessity (“CPCN”) to provide full facilities-based and resold competitive local exchange service throughout the service territories of Pacific Bell Telephone Company, Verizon California, Inc., SureWest Telephone, and Citizens Telecommunications of California, Inc.    The Decision also authorizes Ultimate Internet to provide full facilities-based resold interexchange service throughout the State of California. 
 
Ultimate Internet will provide high speed internet via fiber optic cable and facilities directly to homes and businesses.  Ultimate Internet intends to focus on providing fiber optic infrastructure to be used by other telecommunications providers and other large commercial customers, including the provision of broadband internet service to underserved areas, high-capacity data transport between financial institutions, government offices, or other businesses.  It is anticipated that the fiber infrastructure could also be used to provide private voice and data networks for medical institutions, schools, and businesses. 
 
The Decision concludes that Ultimate Internet meets the environmental, financial, managerial, and technical requirements necessary to provide full facilities-based local exchange services.  In addition, the Decision concludes that Ultimate Internet’s proposed construction projects do not appear to have significant environmental impacts and authorizes Ultimate Internet to utilize the expedited CEQA review process for proposed projects pursuant to its full facilities-based authority. 
 
A copy of the final decision underlying this item is available at the following link:  
 
Miracle Communications’ CPCN Authority Reinstated (Item 32, adopted on consent) – This Decision adopts a settlement agreement between Miracle Communications Inc. (“Miracle”) and the Safety and Enforcement Division, in which Miracle certificate of public convenience and necessity is extended to allow it to provide resold interexchange service in California. 
 
Miracle was granted operating authority and a registration to provide resold inter and intra-local access and transport services in California as a non-dominant interexchange telecommunications carrier in 1999.  However, in 2012, the Commission revoked Miracle’s operating authority and canceled its license for failure to post a performance bond.   Miracle subsequently filed an application for registration to reinstate its operating authority, including proof of a performance bond.  The application was protested by the Commission’s Safety and Enforcement Division (“SED”) for potential Rule 1.1 violations because Miracle’s application indicated that its license and operating authority was never revoked or limited in any jurisdiction.  Miracle asserted that the application was submitted in response to its revocation, and that the inaccurate response was inadvertent and not intended to mislead the Commission. 
 
These issues were ultimately resolved by a settlement agreement between Miracle and SED.  The key terms and commitments of the settlement agreement are as follows: (1) Miracle admits that it violated Rule 1.1 for inaccurately indicating that it had never had its operating authority or license revoked or restricted in its application form; (2) Miracle agrees to pay a penalty of $6,000 to the State of California General Fund for violation of Rule 1.1; and (3) the parties agree that the authority sought by the application does not constitute retroactive authority. 
 
The Decision concludes that the settlement agreement is in the public interest, as it avoids the time, expense, and uncertainty of additional hearings and further litigation.  The Decision also concludes that the proposed penalty amount is reasonable in light of additional costs of further litigation and because Miracle only fell out of compliance with the Commission’s rules for failure to post a performance bond.  The Decision notes that no consumer complaints have been made regarding Miracle’s service and that Miracle has complied with all the Commission’s requirements for timely payment of surcharges and fees. 
 
Further, the Decision finds that reinstating Miracle’s operating authority is appropriate because Miracle has demonstrated that it meets the environmental, financial, managerial, and technical qualifications necessary to be issued a CPCN. 
 
A copy of the final decision underlying this item is available at the following link:  
 
Customer Complaint Against Verizon Resolved (Item 33, adopted on consent) – This Decision resolves a customer complaint filed against Verizon California, Inc. (“Verizon”) alleging that Verizon improperly sold Complainant a “bundle” of voice and internet services that increased Complainant’s monthly bill.  The Complainant states that the transaction was initiated following a service letter received by Complainant from Verizon indicating that landline service issues in Complainant’s service area required Verizon to transition his service to fiber optic technology, “at no charge.”  Verizon asserts that the “at no charge” offer applied only to voice service, not to internet service, and only applied to the transition from basic voice over copper to basic voice over fiber.  Verizon also claims that Complainant ordered the bundle of services, which included several vertical voice features and increased internet speed from 1 mbps to 25 mbps and that Verizon has offered several times to remove the added voice features and lower the internet speeds to lower the monthly bill, but that Complainant has declined or backed out each time.  It is Verizon’s position that the Complainant seeks “feature rich services and very high speed internet services for the cost of basic service.” 
 
The Decision concludes that Verizon acted inappropriately with this customer, failed to respond to the Complainant’s near-immediate request to remove additional services, and to restore the Complainant’s services to the services provided prior to when the “service letter” was delivered to Complainant.  The Decision finds that the Complainant clearly expressed his wishes to Verizon, and repeatedly indicated that he merely wanted to have his “previous phone’s services and no more.”  For these reasons, the Decision orders Verizon to restore the Complainant’s telephone service to basic LifeLine telephone service, to remove all internet charges from Complainant’s bill, to stop attempting to collect amounts for internet services beyond what Complainant has already paid, and to refrain from any attempt to “true up” Complainant’s past disputed bills for taxes and fees. 
 
A copy of the final decision underlying this item is available at the following link
 
UCAN and Greenlining Awarded Compensation in the AT&T and T-Mobile Merger Proceeding (Items 41 and 42, adopted on consent) – These Decisions grants $11,339.75 and $154,100.50  in intervenor compensation to the Utility Consumers’ Action Network (“UCAN”) and The Greenlining Institute (“Greenlining”), respectively, for their contribution to D.12-08-025, which dismissed the Commission’s investigation into the proposed acquisition of T-Mobile USA, Inc. (“T-Mobile”) by AT&T Inc. (“AT&T”).  The investigation was deemed moot by D.12-08-025 based on the withdrawal of the merger application by AT&T and T-Mobile before the FCC.  Notwithstanding the dismissal of the investigation, the decisions each find that UCAN’s and Greenlining’s participation in the investigative proceeding constituted “substantial contribution” that would have produced benefits for ratepayers had the merger application had not been withdrawn.  Therefore, the decisions conclude that the majority of UCAN’s and Greenlining’s claimed costs and expenses are reasonable.  The decisions order T-Mobile and AT&T to pay UCAN and Greenlining their respective shares of the award, based on their California-jurisdictional telecommunications revenues for the 2011 calendar year. 
 
A copy of the final decision awarding intervenor compensation to UCAN is available at the following link:  
  
A copy of the final decision awarding intervenor compensation to Greenlining is available at the following link:    
 
HELD ITEMS
 
Black Economic Council, National Asian American Coalition, and Latino Business Chamber of Greater Los Angeles’s Request for Intervenor Compensationin the AT&T and T-Mobile Acquisition Proceeding (Item 43, held by Staff until 1/15/15) – This Proposed Decision would grant $42,505.15 in intervenor compensation to the Black Economic Council, National Asian American Coalition, and Latino Chamber of Greater Los Angeles (“Consumer Groups”) for its contribution to D.12-08-025, which dismissed the Commission’s investigation into the proposed acquisition of T-Mobile USA, Inc. (“T-Mobile”) by AT&T Inc. (“AT&T”). 
 
The investigation was deemed moot by D.12-08-025 based on the withdrawal of the merger application by AT&T and T-Mobile at the FCC.  Notwithstanding the dismissal of the investigation, the Proposed Decision would find that some of the Joint Consumer’s participation in the investigative proceeding constituted “substantial contribution” and would have produced benefits for ratepayers had the merger application had not been withdrawn.  The amount awarded would be a reduction by 82.45% from the Consumer Group’s initial claim of $242,243.  The Proposed Decision explains that certain claims were denied on the basis that the comments did not directly concern the effect of the merger on competition, were outside of the scope of the investigation, and because some of the Joint Consumers’ contributions were duplicative of other parties. 
 
A copy of the Proposed Decision underlying this item available at the following link:  
  
CLOSED SESSION ITEM
 
Application for Rehearing of T-Mobile Decision (Item 74, adopted) – This Decision denies the applications for rehearing of D.13-05-031 and D.14-06-025 (“Decisions”) filed by New Cingular Wireless.  In D.13-05-031, the Commission awarded $255,944.03 in intervenor compensation to TURN for its substantial contribution in responses to the numerous issues raised in the Commission’s investigation into the proposed acquisition of T-Mobile USA, Inc by AT&T Inc. (“AT&T”). In D.14-06-025, the Commission awarded $20,246.82 to CforAT in intervenor compensation for its contribution in the same proceeding. 
 
New Cingular Wireless alleged in its applications for rehearing that the Commission acted in excess of its authority by awarding intervenor compensation was inappropriate because the merger application was withdrawn and no substantive decision was issued by the Commission.
 
New Cingular argued that because the merger was abandoned with no resulting order or decision of the Commission, the prerequisite required by Section 1802(i) does not exist and intervenor compensation could not be awarded.  This Decision disagrees with New Cingular, stating that the language in section 1802(i) is not to be intended as literally as New Cingular Wireless claims.  The Decision states that 1801.3(b) intends for intervenor compensation statutes to be “administered in a manner that encourages effective and efficient participation of all groups that have a stake in the public utility regulation process.”  The Decision concludes that denying intervenor compensation where a merger is abandoned would discourage effective and efficient participation of intervenors to spend time and resources to aid in the Commission’s investigations.  The Decision also concludes that denying intervenor compensation because the merger application was withdrawn would be inconsistent with legislative intent and unfair to the intervenors who invested significantly in the process.  The Decision also highlights that awarding intervenor compensation where a proceeding is closed through no fault of the intervenor is consistent with Commission precedent in past decisions.
 
A copy of the final decision underlying this item is available at the following link:  
 
MANAGEMENT REPORTS
 
Executive Director Clanon announced his resignation after 30-years of service at the Commission in order to pursue further graduate studies and musical performance.  Commissioner Florio and Commissioner Sandoval both expressed their gratitude to Executive Director Clanon for his service and the times they have worked together. 
 
This meeting was President Peevey’s last meeting and Executive Director Clanon provided him with an award for his service to the Commission.  Commissioner Peterman noted that President Peevey has had a tremendous impact in California and in the world of utility regulation, especially on energy issues.  Commissioner Florio similarly expressed his appreciation for President Peevey’s work over the years.  Commission Sandoval commended President Peevey for his consistent leadership and foresight.  She also expressed appreciation for his commitment to increasing diversity, making markets more competitive and transparent, and his support for broadband development.  Commissioner Picker observed that his experiences with the Commission have been very closely tied to President Peevey. 
 
During the public session, numerous speakers spoke of President Peevey’s many accomplishments over the years.  Former Commissioners, current practitioners, and political figures all spoke highly of President Peevey and commended him for his service.   
 
President Peevey concluded the meeting with a summary of his accomplishments, a discussion of his many goals during his tenure, and his perspective of energy, telecommunications, and water policies today. 
 
It was announced shortly after the meeting that Commissioner Picker would be appointed President and Liane Randolph would be appointed as the newest Commissioner. 
 
 
 

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