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On January 24, 2013, the Commission held its regularly-scheduled agenda meeting.  This was Commissioner Peterman’s first meeting since her appointment.  On the regular agenda, the Commission instituted a new rulemaking to comprehensively evaluate the California Teleconnect Fund’s goals and processes.  On the consent agenda, the Commission authorized Staff to submit FCC comments supporting proposals to open a proceeding that would evaluate issues related to the projected transition from a TDM-based network to a IP-based network.  The Commission also approved a settlement agreement between AT&T and Halo regarding disputes over interconnection obligations.  The Commission continued its hold on Draft Resolution L-436 addressing the confidentiality of documents and  the Proposed Decision modifying requirements for CPCN and WIR holders or applicants.  These and other items of interest on the Commission’s agenda are discussed in further detail below.
 
REGULAR AGENDA ITEMS

New Rulemaking Initiated to Comprehensively Examine the California Teleconnect Fund (Item 34, adopted by 5-0 vote) – This item adopts an Order Instituting Rulemaking (“OIR”) to determine whether the California Teleconnect Fund (“CTF”) is fulfilling its purpose, and whether the CTF’s current structure and administrative processes are adequate to further the program’s goals.                                                                    
 
The CTF was established to advance innovation in the delivery and use of advanced communications, ensure diversity of choices among services and providers and to ensure affordable and widespread access to California’s public networks.  Specifically, CTF was intended to enhance universal service goals by providing discounted rates for telecommunication services for qualifying schools, libraries, government-owned health care providers, and community based organizations.  The CTF program is funded by a surcharge assessed on revenues collected from consumers for intrastate telecommunication services.  The current surcharge rate is 0.079%.
 
The OIR seeks comments on whether:  (1) CTF’s goals should be modified to adapt to technological and market changes; (2) program eligibility requirements should be adjusted to ensure that program subsidies are allocated to intended recipients; (3) additional guidelines should be developed to evaluate eligibility applications from Community Based Organizations; (4) the range of services supported by CTF are consistent with the program’s goals; (5) additional conditions should be placed on providers desiring to offer CTF services; and (6) CTF’s budget and administration are consistent with program goals. 
 
The OIR was introduced by Staff, and Commissioner Ferron expressed his support.  Ferron mentioned that the OIR should consider whether to expand the program or maintain the status quo.
 
Commissioner Sandoval supports the OIR and expressed her appreciation for the opportunity to re-evaluate the CTF program.  Commissioner Sandoval noted that changes in technology, changes in federal and state legislation, and existence of the CASF program all support the need to re-evaluate the CTF program.  She also raised concerns as to whether changes in federal and state laws implicate jurisdictional issues that need to be addressed in the CTF program. 
 
Commissioner Florio also supports the OIR.  Commissioner Florio was specifically concerned with the CTF’s qualification criteria for community based organizations (“CBOs”).  He questioned whether CBOs should be allowed to qualify for CTF funding simply by providing educational instructions. 
 
Commissioner Peterman also offered support for the OIR and an evaluation of how to make the program more effective going forward. 
 
A copy of the Draft Order Instituting Rulemaking underlying this item is available at the following link.

A copy of the staff’s PowerPoint presentation of the CTF OIR is available on slides 15-22 at the following link.

CONSENT AGENDA ITEMS

Commission Authorizes CPUC Comments on Petitions to the FCC to Launch TDM-to-IP Transition (Item 37, approved on consent) – In this item, Staff requests authorization to file comments supporting the proposal from AT&T and the National Telecommunications Cooperative Association (“NTCA”) to open an FCC proceeding to address issues related the ongoing transition to an IP-based network.  AT&T’s petition requested that the FCC open a proceeding “to facilitate the telephone industry’s continued transition from legacy transmission platforms and services to new services based fully on the Internet Protocol” and proposed that the FCC conduct trials where some equipment would be retired and Internet Protocol-based services offered.  NTCA’s petition asked the FCC to open a rulemaking to examine the means of proposing and sustaining the evolution of the Public Switched Telephone Network to an IP-based network. 
 
The Comments would: (1) support NTCA’s proposal to examine how the existing regulatory structure might be adapted new all-IP world as a more rational approach that would be capable of ensuring consumer protection, competition or universal service; (2) raise concerns related to AT&T’s petition regarding state and federal jurisdiction with regard to COLR obligations; (3) recommend additional considerations related to AT&T’s proposal for all-IP trials; (4) raise concerns over NTCA’s recommendation for the FCC to confirm the status of interconnection in the all-IP world as being inconsistent with sections 251 and 252 of the Communications Act and the status of IP-enabled or Voice over Internet Protocol services; and (5) note additional policy issues including COLR obligations, service quality regulation, numbering administration, and defining universal service. 
 
Comments were due on January 28, 2013. 
 
A copy of the Commission’s Memorandum underlying this item is available at the following link,

A copy of the FCC’s public notice requesting comments is available at the following link.

A copy of AT&T’s Petition is available at the following link.

A copy of the National Telecommunications Cooperative’s Petition is available at the following link.
 
Settlement Agreement Between Pacific Bell and Halo (Item 27, adopted on consent) – This Decision approves a settlement agreement between AT&T California (“AT&T”) and Halo Wireless, Inc. (“Halo”).  AT&T had filed a complaint against Halo, alleging that Halo breached an interconnection agreement, which only authorized Halo to send wireless-originated traffic to AT&T, by also improperly sending landline-originated interstate, interLATA, or intraLATA toll traffic.  Halo denied the breach, claiming the relevant traffic was not subject to access charges because Halo was selling telephone exchange service to an Enhanced Service Provider end user. 
 
AT&T and Halo entered into settlement discussions following the conversion of Halo’s Chapter 11 bankruptcy proceeding into a Chapter 7 liquidation.  AT&T and Halo, through its Chapter 7 bankruptcy trustee, filed a Joint Motion to Approve Settlement Agreement (“Joint Motion”).  Under the terms of the Settlement Agreement, Halo admits to materially breaching the interconnection agreement by:  (1) sending landline-originated traffic to AT&T; (2) inserting incorrect charge number information on calls; and (3) failing to pay for facilities as required by the interconnection agreement.  The Settlement Agreement provides that Halo is liable to AT&T for (1) access charges on non-local landline-originated traffic Halo sent to AT&T for termination to AT&T’s end user customers; and (2) interconnection facilities charges Halo refused to pay to AT&T.  The amounts due will be determined by the Bankruptcy Court.  Finally, the Settlement Agreement provides that AT&T will be excused from further performance under the interconnection agreement as a result of Halo’s material breaches. 
 
The Decision determines that the Commission has authority to rule on the Joint Motion despite the bankruptcy proceeding by finding that the proceeding fell within the “for cause” exception to the automatic stay.  Specifically, the Decision finds that an exception is appropriate because the Commission has specialized expertise to interpret and enforce interconnection agreements, the proceeding was near complete, and a ruling on the Joint Motion would not interfere with Halo’s bankruptcy case.  Moreover, the Decision concludes that the Joint Motion is consistent with law and prior Commission decisions, is reasonable in light of the whole record, and in the public interest.
 
A copy of the Proposed Decision underlying this item is available at the following link.
 
Statutory Deadline Extended in AT&T v. Halo Case, (Item 16, adopted on consent) –This Decision extended the 12-month statutory deadline for resolving a case between AT&T California (“AT&T”) and Halo Wireless, Inc. (“Halo”) from February 12, 2013 to April 13, 2013.  The Decision determines that an extension is necessary to consider the Joint Motion for Settlement Agreement filed by the parties, which is approved by the Decision discussed above in Item 27. 
 
A copy of the Proposed Decision underlying this item is available at the following link.

Sprint’s Settlement Offer to Customer Approved (Item 24, adopted on consent) –
This Decision approves Sprint Communications Company, LP (“Sprint”)’s settlement offer to resolve a customer billing dispute.  Complainant claimed that Sprint improperly billed for uninitiated international calls.  Sprint asserted that calling records established that the international calls originated from Complainant’s home phone and the bills were true and correct.  Nevertheless, Sprint made a settlement offer of the entire disputed amount ($340) as a good faith gesture.  The disputed amount will be credited to Complainant’s account.
 
A copy of the Proposed Decision underlying this item is available at the following link.

LEGISLATIVE ITEMS
 
Telecommunications: Pay Telephones (Item 39, support position approved on consent) –  This bill would modify sections of the Public Utilities Code to require certain consumer protection disclosures to be applied to credit or debit card-activated telephones.  These disclosures would be posted as signage on card-activated telephones.  Similar disclosures currently apply to coin-activated telephones.  The purpose of the bill is to provide adequate disclosure of pricing plans and to prevent excessive charges by operator service providers of card-activated telephones.  The Commission supports this bill as written, but also suggests additional amendments to further protect consumers from undisclosed charges. 
 
A copy of the Legislative Memo underlying this item is available at the following link.

Proposed Legislation on California Advanced Services Fund (Item 40, support position approved on consent) – This bill would amend the Public Utilities Code to make any facilities-based non-telephone corporation broadband service provider eligible to apply for California Advance Service Fund (“CASF”) grants and loans.  These providers must also satisfy the requirements of the CASF program.  This bill was sponsored by the Commission on the directive of the pending CASF OIR considering the same modifications to the program.  The Commission is sponsoring this bill. 
 
A copy of the Legislative Memo underlying this item is available at the following link.
 
Proposed Legislation on Certificates of Public Convenience and Necessity (Item 41, support position approved on consent) – This bill would allow the Commission to adjust filing fees for applications for certificates of public convenience and necessity (“CPCN”), and for the mortgage, lease, transfer, or assignment of a CPCN.  The purpose of the bill is to ensure that the filing fees are sufficient to pay for the actual costs of CPCN-application reviews and to support additional staffing requirements as necessary.  The Commission is sponsoring this bill.  
 
A copy of the Legislative Memo underlying this item is available at the following link.
 
Proposed Legislation on the Deaf and Disabled Telecommunications Program (Item 42, support position approved on consent) – This bill would extend the sunset provision for collection of the Deaf and Disabled Telecommunications Program surcharge from January 1, 2014 to January 1, 2022.  The Commission supports this bill as the sponsor. 
 
A copy of the Legislative Memo underlying this item is available at the following link.
 
Proposed Legislation on Excavation Penalties (Item 43, held by President Peevey until 2/13/13) – This bill would (1) cap existing civil penalty amounts for negligent violations at $100,000 and for knowing and willful violations at $250,000; (2) classify failures to notify one-call centers as knowing and willful violations; (3) impose requirements on excavation incident investigation reports; (4) apportion penalty amounts among the prosecuting agencies engaged in the enforcement action; (5) not provide the Commission with additional legal authority or ability to receive reports from violators, one-call centers, or entities non-jurisdictional to the Commission; and (6) not provide the Commission with additional compensation for costs related to excavation incident investigations or the preparation of costs.  The purpose of this bill is to address inadequate enforcement of excavation violations by providing incentive and ability for other entities to prosecute these violations.  The Legislative subcommittee recommendation is for the Commission to support this bill.
 
President Peevey held this item, noting that while excavation penalties are an “important safety bill,” a hold would allow Commissioner Peterman an opportunity get up to speed on the issue.  He also indicated that in the next few weeks, the Commissioners would work with many stakeholders, Director Sadler, and the Office of Government Affairs on this item.
 
A copy of the Legislative Memo underlying this item is available at the following link.
 
SIGNIFICANT HELD ITEMS
 
Draft Resolution L-436 Modifying Confidentiality Standards Applicable to Documents Held by the Commission (Item 36, held by Staff until 2/13/13) – This Draft Resolution would adopt new regulations governing public access to Commission records and utility records held by the Commission.  The Draft Resolution has been revised three times, including a recent revision in mid-December.  The Commission has issued a letter indicating that it will pursue a new approach that will focus on safety-related records and workshops.

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

Revisions to the Certification Processes for Telephone Corporations Seeking or Holding CPCNs and WIRs
(Item 33, held by Peevey until 2/13/13 ) – This Proposed Decision would adopt revisions to the certification process for telephone corporations seeking or holding Certificates of Public Convenience and Necessity (“CPCN”) and wireless carriers seeking or holding Wireless Identification Registration (“WIR”).  The changes to the certification processes are intended to increase accountability for carriers, reduce the need for enforcement actions to be brought, and improve the Commission’s ability to collect fines, penalties, and bring restitution.  The Proposed Decision was recently revised and would establish a Phase II of the proceeding to determine performance bond requirements, as discussed below.
 
The Proposed Decision would require all applicants seeking or holding a CPCN or WIR to post a bond to facilitate the collection of fines, fees, surcharges, taxes, penalties, and restitution.  ILECs are specifically exempted from the bond requirement.  The bond amount for applicants seeking or holding a CPCN or a WIR would be initially set at $25,000.  In Phase II of the rulemaking, the Commission will determine, starting with input in workshops, a reasonable performance bond amount based on intrastate revenue and/or consumer protection considerations.  The bond amount for new applicants granted a CPCN or WIR that have not reported annual intrastate  revenues to the Commission would be $25,000. 
 
The Proposed Decision would also: (1) require CPCN applicants and wireless registrants to provide the Commission with resumes and detailed information on key officers, directors, and certain owners; (2) require applicants seeking to transfer licenses or registrations to verify compliance with Commission reporting, fee, and surcharge transmittals; (3) increase the application fee for new and transferred CPCN authority from $75 to $500, subject to legislative approval; (4) require wireless registrants to pay a $250 fee for new and transferred registration; (5) establish a minimum annual user fee of the Commission-established rate in effect at the time or $100, whichever is greater; and (5) require a new verification with specified language that certain key officers, directors, and owners were never associated with a telecommunications carrier that filed for bankruptcy, was sanctioned by the FCC or state regulatory agency, or was ever found civilly or criminally liable by a court.
 
A copy of the Proposed Decision underlying this item is available at the following link.
 
RTIGP Funding for the Channel Islands Project (Item 35, held by Florio until 2/28/13) – This Draft Resolution would authorize a Rural Telecommunications Infrastructure Grant Program (pursuant to AB 140) (“RTIGP”) grant in the amount of $2,693,000 to the Channel Islands Telephone Company (“Channel Islands”) for the construction of the Channel Islands Telephone Company Grant Project (“Channel Islands Project”).  Channel Islands currently has a limited-facility-based certificate of public convenience and necessity; however, it will need a full-facilities-based CPCN for this grant to become effective and this application is pending before the Commission (A.10-02-009).  The Channel Islands Project proposes to provide telephone service to four of the eight Channel Islands, San Miguel, Santa Barbara, Santa Cruz, and Santa Rosa.  The Draft Resolution would include a $35,000 allotment intended to supplement funds previously allocated under Resolution T-17151 to complete a CEQA review.  The Draft Resolution would also authorize the Commission’s Executive Director to enter into a contract with the County of Ventura to act as a fiscal agent for the Channel Islands Project. 
 
A copy of the Draft Resolution underlying this item is available at the following link.
 
NOTES AND COMMISSIONER REPORTS

President Peevey nominated Commissioner Sandoval to the California Public Utilities commission Low Income Oversight Board.  Commissioner Sandoval was unanimously approved.
 
President Peevey, Commissioner Sandoval, Commissioner Ferron, and Commissioner Florio all extended a strong welcome to Commissioner Peterman.  Commissioner Peterman introduced herself by noting her experience in a cross section of regulated utility industries and related areas, in particular electricity and natural gas planning, finance and regulatory economics, global development and research, transportation, consumer protection, and environmental justice issues.  
  


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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