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On Thursday, December 3, 2015, the Commission held its regularly-scheduled agenda meeting.  There were several significant telecommunications matters addressed, including the approval of the Frontier acquisition of Verizon’s wireline operations and the adoption of a CASF fiber project in Nevada County following significant discussion amongst the Commissioners as to the cost, necessity, and justification for the project.  In addition, the Commission adopted a significant penalty against Southern California Edison in connection with the San Onofre investigation, citing violations of ex parte rules and Rule 1.1 of the Commission’s Rules.  The Commission also approved a tariff adjustment for Siskiyou to clarify that mileage rates now apply only to “Off-Customer’s Premises Within Exchange Area,” given that “Off-Customer Premises Outside Exchange Area” service is no longer applicable.

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

REGULAR & CONSENT AGENDA ITEMS

Sale of Verizon California Landline Operations to Frontier Communications Corporation Approved  (Item 20, adopted on consent) – The Commission granted the March 18, 2015 joint application of Frontier Communications Corporation, Frontier Communications of America, Inc. (“Frontier”), Verizon California, Inc. (“Verizon California”), Verizon Long Distance LLC, and Newco West Holdings LLC (collectively, “Joint Applicants”) for approval of the transfer of control over Verizon California, Inc. and related approval of the transfer of assets and certifications.  This decision closes application proceeding A.15-03-005.
When the transaction closes in March 2016, approximately 2.2 million Verizon California customers will become Frontier customers, making Frontier the second-largest wireline telephone company in California.  The physical assets subject to the transfer include Verizon California’s wireline facilities and network systems infrastructure.
Joint Applicants’ application was submitted in March 2015, and was protested by the Center for Accessible Technologies (“CforAT”), the Greenlining Institute (“Greenlining”), The Utility Reform Network (“TURN”), Communication Workers of America (“CWA”), and the Commission’s Office of Ratepayer Advocates (“ORA”).  The proceeding included five rounds of testimony and voluminous briefing over the course of a seven-month period.  In addition, public participation hearings were held at 11 locations in and around Verizon California’s service territory.  Site visits and workshops also took place at 10 of these locations.
Over the course of the proceeding, Frontier agreed to several voluntary conditions.  These conditions include commitments to bring enhanced broadband to an additional 827,000 households, an agreement to offer broadband LifeLine in anticipation of federal requirements to do so, and agreements to submit a wide range of reports and meet additional service quality metrics, work force expansion goals, and diversity objectives.  These commitments are reflected in a series of settlement agreements, Memoranda of Understanding (“MOUs”) and a labor agreement executed in connection with the proceeding.
For the most part, the Commission approved the decision without any further conditions, although it did add requirements relating to Verizon’s service quality and G.O. 95 infrastructure non-conformance corrections.  The Decision also adds a further reporting requirement relating to redundancy that Frontier will have to submit for four years following the Transaction.

With the additional conditions, and the conditions incorporated through the MOUs and settlements, the Commission found that the statutory standard governing the transaction was met.  Public Utilities Code Section 854 governs the Commission’s approval authority over indirect transfers of control of certificated public utilities.  Pursuant to Section 854(a), the transaction must be in the public interest.  The Commission found that the transaction satisfied this requirement.  Similarly, the Commission also found that the transaction met the three-pronged requirements of section 854(b).  With respect to the requirements of section 854(c), the Commission found that without certain conditions, the transaction would fail to satisfy two of the subsections of section 854(c), namely, subsection (c)(2), pertaining to service quality; and subsection (c)(6), requiring that the transaction “be beneficial…to state and local economies and to the communities in the area served by the resulting public utility.”

Although the Frontier matter was on the consent agenda, a discussion ensued amongst the Commissioners regarding the Decision toward the end of the meeting, in which the Commissioners recognized Commissioner Sandoval and ALJ Bemesderfer for their diligent work on the proceeding.  The Commissioners also recognized Verizon for making improvements to its service quality and network systems infrastructure over the course of the proceeding, and expressed their enthusiasm regarding the significant benefits that Frontier’s stewardship will bring to customers, in particular, households in rural and remote areas, and those living on underserved tribal lands.

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

CASF Funding Approved for Bright Fiber Project in Nevada County (Item 41, adopted 4-1, President Picker dissented) – By this Decision, the Commission adopted Bright Fiber Network, Inc.’s grant application for CASF funding in the amount of $16,339,451 and loan funding of $500,000.  The Commissioners voted 4 to 1 to approve the grant with President Picker dissenting.  An estimated 1,963 households dispersed over approximately 21 square miles in the areas between Grass Valley and Colfax are expected to be affected by the installation of this gigabit high-speed FTTP system in rural Nevada County.

Prior to the vote, several Commissioners expressed reservations about the project based on the following:  the relatively high rate of subscribership needed to support the program’s long-term sustainability; the potential for redundancy of available broadband in certain areas and overlap with existing, established provider base; fostering an unfair advantage to Bright Fiber Network, Inc. over incumbent providers; the relatively high cost of service in a mostly low-income area; service availability limitations will require some customers to incur service extension costs; funding approval creates the appearance of double government funding in the project area, primarily due to an already-approved USDA RUS grant; and the fact that FTTP is expensive relative to deployment of fixed wireless infrastructure.
Robert Wullenjohn of the Commission’s Communications Division advocated for approval of the Bright Fiber Project based on its compliance with program requirements.  In support of the project, he highlighted some of the following points:  the project satisfies the CASF program rules; this fiber-based project is qualitatively different from the existing fixed wireless infrastructure and has the advantage in speed and reliability; unlike fiber-based infrastructure deployment, fixed broadband is limited by line of sight and other obstacles such as a lack of mobility and weather; the project supports the overall economic vibrancy of the state and is especially beneficial for children whose education depends on reliable internet access; the project will yield a reduction in greenhouse gases due to fewer and shorter trips in school buses and cars because more households will have reliable, high-speed internet access at home; and once the fiber is installed, then the fiber infrastructure will support surrounding areas even outside the project’s subject area.
Ultimately, following a significant discussion of the merits of the project amongst the Commissioners, the Commissioners voted to approve the project, with President Picker dissenting.
A copy of the Final Resolution is available at the following link.
Siskiyou Granted Authority to Delete Billing Terms and Clarify Application of Mileage Rates (Item 13, approved on consent) – On May 28, 2015, The Siskiyou Telephone Company (“Siskiyou”) submitted Advice Letter (“AL”) 396, as a Tier 2 AL, to request approval to eliminate the designation “Base Rate Area” and “Off-Customer’s Premises Outside Exchange Area” (“OPX Outside”) from the “Rates” section of Schedule A-11 of its tariff and to clarify that mileage rates now apply only to “Off-Customer’s Premises Within Exchange Area” (“OPX Within”) service.  Siskiyou also requested corresponding changes to the “Special Conditions” section.  Following its review, CD found that Siskiyou’s proposed tariff changes were appropriate and recommended approval of the Draft Resolution, which the Commission adopted on its consent agenda.
A copy of the Final Resolution is available at the following link.
Southern California Edison Company Penalized for Alleged Violations of Commission Rules, Including Ex Parte Rules and Rule 1.1 (Item 37, signed 4-0, Comm’r. Florio abstained) – The Decision imposes a $16,740,000 penalty on Southern California Edison (“SCE”) for eight violations of Rule 8.4 (involving ex parte contacts) and two violations of Rule 1.1 (the rule addressing attempts to mislead the Commission) in connection with a series of undisclosed ex parte communications between former Commission President Michael Peevey and SCE executives regarding the San Onofre Nuclear Generating Station (“SONGS”) Order Instituting Investigation (“OII”) and related SONGS proceedings.  The facts giving rise to the violations came to light beginning in February 2015 after SCE filed a late notice of ex parte communication regarding a meeting approximately two years earlier, in March 2013, between an SCE executive and Mr. Peevey, at a hotel in Warsaw, Poland.  The Decision imposes a penalty based on the late-noticed ex parte meeting and other related acts and omissions by SCE in the SONGS proceedings.

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

Deviation from Scenic Byway Undergrounding Requirements Granted to Crown Castle (Item 31, approved on consent) – This Decision grants the February 5, 2013 application of Crown Castle NG West, Inc.’s (“Crown Castle”) (formerly NextG Networks of California, Inc.) for approval to construct Distributed Antenna System (“DAS”) facilities in San Mateo County and to deviate from Pub. Util. Code section 320 requirements relating to undergrounding of facilities along designated Scenic Highways.

Crown Castle provides wireless carriers with point-to-point radio frequency transport and backhaul services that augment wireless broadband services in dense urban and isolated suburban or rural areas for its wireless carrier customers.  Crown Castle provides these services over non-switched, digital fiber-optic communications facilities referred to as DAS networks.
With its application, Crown Castle sought authority to construct DAS facilities in rural San Mateo County.  According to the project plan, the facilities would be installed primarily underground where the existing utility facilities are underground, and above ground where the existing utility facilities are above ground.  Antenna and node facilities must be located above ground in order to function properly.  Some of the facilities would be visible from portions of Route 1, which is a designated Scenic Highway, thereby triggering the protections of Pub. Util. Code section 320.
Pub. Util. Code section 320 requires, wherever feasible, the undergrounding of electric and communication distribution facilities within 1000 feet of a designated Scenic Highway if such facilities would be visible from the Scenic Highway.  In light of the significant benefits of the project, the Commission granted Crown Castle’s request for authority to deviate from section 320.  The project is designed to improve cellular service, enhance access to 911 and other emergency services for motorists and emergency first responders, and expand competition among wireless service providers in unserved and underserved areas of San Mateo County.  The Commission also analyzed the project pursuant to CEQA and found that it has minimal environmental impact and is consistent with CEQA.

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

Modus Rex, Inc. Granted a Certificate of Public Convenience and Necessity In Order to Provide Full Facilities-Based and Resold Local Exchange Service and Interchange Service  (Item 32, approved on consent) – This Decision approves the July 9, 2015 application of Modus Rex, Inc. (Modus Rex) for a certificate of public convenience and necessity (CPCN) to provide:  (1) full facilities-based and resold competitive local exchange telecommunications services in the service territories of Pacific Bell Telephone Company d/b/a 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 (2) full facilities-based interexchange services on a state-wide basis.  Modus Rex is now authorized to provide local exchange and interexchange services primarily on a wholesale basis to other carriers and service providers, to be used for wireless and internet backhaul, distributed antenna systems, data transport facilities, broadband local loops, and other local and interexchange network operations.

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

SIGNIFICANT HELD ITEMS

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 40, held by CPUC Staff until December 17, 2015) – This item would address the a proposed CASF project from Race Telecommunications, the “Five Mining Communities Underserved Broadband Project.”  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 $7,633,459 for the Gigafy Mono Underserved Broadband Project (Draft Resolution T-17477)  (Item 42, held by CPUC Staff until December 17, 2015) – This item would address another proposed CASF project from Race Telecommunications, the “Gigafy Mono Last Mile Underserved Broadband Project.”  According to the Draft Resolution, this project would provide safety benefits to 541 households spread amongst 6.33 square miles in South Chalfant, Benton, Benton Hot Springs, Swall Meadows, Lee Vining, and Mono City, in Mono County, California, by providing additional communication facilities and voice service at an average cost of $11,887 per household.  The total amount of the proposed CASF grant is $7,633,459.  The project would meet safety standards, including battery backup, E911 data and access to local PSAPs.  The Draft Resolution would also rescind the grant of funds for the Verizon Crowley Lake and Swall Meadows project as previously authorized in 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 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 Draft Resolution is available at this link.

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