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On July 10, 2014 the Commission held its regularly-scheduled meeting.  No telecommunications items were addressed on the regular agenda.  On the consent agenda, several telecommunications companies were granted CPCN authority but at the same time fined $10,000 for operating in California without requisite authority or for inadequate disclosures associated with its CPCN application.  In addition, the Commission held the Draft Resolution that would address an outstanding rehearing issue in Calaveras’s 2009 General Rate Case, and placed another hold on the Proposed Decision addressing DIVCA franchise renewals.  These and other items of interest are identified below.   
 
CONSENT AGENDA
 
CallFire Granted CPCN and Fined for Rule 1 Violation (Item 8, adopted on consent) – This Decision grants CallFire, Inc. (“CallFire”) a certificate of public convenience and necessity (“CPCN”) to provide resold and limited facilities-based 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 of California (“Citizen”), and SureWest Telephone (“SureWest), and interexchange service throughout California. 
 
CallFire proposes to provide voice and access services to business and carrier customers, but may offer residential services in the future.  CallFire will be providing service through a combination of resale of ILEC services and CallFire’s own facilities and equipment collocated in existing central offices or carrier hotels.  Depending upon business and economic circumstances, CallFire may also provide local exchange, interexchange, exchange access, and dedicated transport services in the future.  This Decision concludes that CallFire’s proposal to install equipment into existing buildings and structures will not have an adverse impact upon the environment and as a result additional CEQA approval is not required at this time.  In addition, the Decision concludes that CallFire meets the financial and technical qualifications necessary to be granted a CPCN. 
 
This Decision further approves a Settlement Agreement between CallFire and the Commission’s Safety and Enforcement Division (“SED”), which resolves issues set forth in SED’s protest of CallFire’s CPCN application.  SED protested CallFire’s CPCN application on the basis that CallFire’s application failed to disclose the existence of a Consent Decree with the Federal Trade Commission, and thereby violated Rule 1.1 of the Commission’s Practice and Procedure.  Pursuant to the Settlement Agreement, CallFire stipulates to an inadvertent Rule 1.1 violation for its failure to disclose the FTC settlement agreement and agrees to pay a settlement of $10,000 to the State of California’s General Fund.  The Decision concludes that the in light of the whole record, the settlement is reasonable, consistent with law, and in the public interest. 
 
A copy of the Proposed Decision underlying this item is available at the following link  
 
Smart Card Granted CPCN and Fined $10,000 for Operating Without Authority in California (Item 12, adopted on consent) – This Decision grants Smart Card Services, Inc. (“Smart Card”) a certificate of public convenience and necessity (“CPCN”) as an Interexchange Carrier Telephone Corporation to offer for sale prepaid phone cards providing international calling services.  The Decision grants Smart Card’s CPCN as part of a Settlement Agreement between the Commission’s Safety and Enforcement Division (“SED”) and Smart Card. 
 
Smart Card is a corporation operating and existing under the laws of the State of California, and its principal place of business is in Florida.  Smart Card offers prepaid phone cards for sale that provide international calling services, and Smart Card began selling phone cards in California before obtaining the requisite operating authority.  In May 2013, the Commission’s Communications Division notified Smart Card that it was unlawfully providing telecommunications services in California, to which Smart Card responded by stating that it would apply for a CPCN. 
 
Smart Card subsequently filed its CPCN application in December 2013, which was protested by SED for Smart Card’s violation of the Public Utilities Code by operating without authority in California.  The Settlement Agreement resolves all issues set forth in SED’s protest, by requiring Smart Card to acknowledge that prepaid calling card companies must comply with the Commission’s registration requires and that it had failed to obtain the required authority prior to its calling cards being used in California.  The Settlement Agreement also imposes a $10,000 penalty on Smart Card.  This Decision concludes that the Settlement Agreement reasonable in light of the record, is consistent with law and precedent, and is in the public interest. 
 
The Decision further concludes that Smart Card has met the Commission’s requirement for obtaining a CPCN, and specifically on the basis that it is financially and technically qualified, it has no history of misconduct, and because it has had no prior investigations by the FCC or any law enforcement or regulatory agency. 
 
A copy of the Proposed Decision underlying this item is available at the following link:  
 
Sage Granted a Certificate of Public Convenience and Necessity (Item 17, adopted on consent) – This Decision grants Sage Communications Inc. a limited facilities-based certificate of public convenience and necessity (“CPCN”) to provide resold and limited facilities-based 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 of California (“Citizen”), and SureWest Telephone (“SureWest), and interexchange service throughout California. 
 
Sage is a California-based company that proposes to provide local exchange services to business and residential customers through the reselling of services provided by other carriers.  Sage intends on leasing facilities from a variety of telecommunications carriers.  The Decision concludes that Sage does not intend to construct any facilities other than equipment to be installed in existing buildings or structures, therefore granting this CPCN would have no adverse impacts on the environment and a CEQA review is unnecessary.  The Decision also concludes that Sage has demonstrated that it has met the Commission’s minimum financial requirements, and has made a reasonable showing that it has the managerial and technical expertise in telecommunications to obtain a CPCN. 
 
A copy of the Proposed Decision underlying this item is available at the following link
  
Total Call Mobile Conditionally Designated an ETC (Item 9, adopted on consent) – This Resolution conditionally grants the request of Total Call Mobile’s, Inc.’s (“Total Call”) 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. 
 
This Resolution determines that granting Total Call’s request for ETC designation is in the public interest and that Total Call meets all applicable environmental, technical, and financial requirements in Resolution T-17002 and, as applicable, the ETC rules recently adopted in the Lifeline Reform Order (FCC 12-11).  Total Call will 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.  Total Call will be governed by the certification and verification processes administered by the California LifeLine third-party administrator.
 
The Resolution further explains that Total Call’s ETC designation approval shall be contingent upon the following: (1) Total Call shall submit to the Communications Division’s Director a copy of the information submitted to USAC and a copy of Total Call’s certification of approval from USAC with 30 days of receipt from USAC of its compliance regarding the federal Lifeline wireless plan; (2) a review by the CPUC California LifeLine staff of Total Call’s marketing materials and publications prior to distribution; and (3) the requirement that Total Call include wireless mobility safety language on all distributed federal Lifeline materials and on the company website. 
 
A copy of the Draft Resolution underlying this item is available at the following link:  
 
Statutory Deadline Extended to Resolve Consumer Complaint Against AT&T (Item 16, approved on consent) – This Decision extends the statutory deadline to resolve two consolidated consumer complaints against Pacific Bell Telephone Company dba AT&T (“AT&T”).  The Complaint involves disputed billing charges and a request by Complainant for a refund and transfer of service. The statutory deadline is extended until July 12, 2015.  After the initial complaint was filed, AT&T credited the disputed charges to Complainant’s account in the interest of resolving the complaint.  Notwithstanding the accommodation, Complainant subsequently filed a second complaint alleging that Complainant’s telephone service had not been transferred properly.  Due to several procedural events, including the conversion of the complaint from an expedited complaint status, a reassignment of the proceeding to a different ALJ, the consolidation of the two complaints, and a determination that hearings are necessary, the Decision concludes that an extension is appropriate.  Specifically, additional time is necessary to address the now-consolidated complaints, set evidentiary hearings, and/or facilitate the resolution of the complaints through the Commission’s Alternative Dispute Resolution program.    
 
A copy of the Proposed Decision underlying this item is available at the following link:  
 
HELD ITEMS
 
Draft Resolution Addressing Rehearing Issues Related to Calaveras’s 2009 General Rate Case (Item 10, held by staff until 8/14/14) – This Draft Resolution would address, after four and one-half years, a single issue identified for further evaluation by the Commission in a rehearing decision of Calaveras’s 2009 General Rate Case (“GRC”). 
 
Calaveras filed its General Rate Case (“GRC”) on December 21, 2007, with a 2009 test year.  On January 29, 2009, the Commission adopted Resolution T-17184, which authorized Calaveras to receive $2,071,163 in California High Cost Fund A (“CHCF-A”) support based on a 2009 test year.  On March 2, 2009, Calaveras filed an Application for Rehearing asserting, amongst other issues, that Resolution T-17184 did not reasonably calculate the benefits to salary ratio applied to reduce benefits expenses, that the Commission improperly eliminated compensable employee sick leave and vacation, and that the Resolution did not support the determination that ratepayer funding the Employee Profit Sharing Plan (“EPSP”) should be 10% and not 15%.  In October 29, 2009, the Commission adopted D.09-10-057 denying rehearing on all issues except for the issue regarding the funding level for EPSP (“Rehearing Decision”).  In order to address the EPSP issue, the Rehearing Decision ordered Calaveras to respond to several data requests, which Calaveras timely addressed and supported with three separate reports prepared by wage and benefits economists and specialists. 
 
Now, almost five years after the Rehearing Decision was issued, this Draft Resolution would summarily reject and dismiss Calaveras’s arguments and the evidence presented, and would conclude that Calaveras provided no reasonable basis for its recommendation.  The Draft Resolution would specifically determine that Calaveras’s responses and evidence presented, including the three separate expert reports, were “non-responsive.”  Accordingly, the Draft Resolution would conclude that the information submitting by Calaveras failed to provide sufficient evidence that would support a finding that the ratepayer funding to the EPSP should be 15% rather than 10%.  
 
While the Draft Resolution would dismiss the evidence presented by Calaveras that a 15% EPSP factor would be appropriate, the Draft Resolution also does not provide any basis for the determination that a 10% contribution factor is appropriate.  
 
 
A copy of the Draft Resolution underlying this item is available at the following link:  
 
Proposed Amendments to Franchise Renewal Provisions of DIVCA (Item 37, held by Staff until 8/14/14) – This Proposed Decision would amend General Order (“G.O.”) 169 and would adopt procedures for implementing the franchise renewal provisions of the Digital Infrastructure and Video Competition Act of 2006 (“DIVCA”).  DIVCA was enacted by the Legislature to create a new state video franchising process on the basis that “increasing competition for video and broadband services is a matter of statewide concern.”
 
The Proposed Decision explains that the procedures and criteria for renewing a state-issued video franchise are set forth in Public Utilities Code Section 5850(a)-(d), which provides that the criteria and process described in Section 5840 shall apply to a renewal registration and that the Commission shall not impose additional or different criteria.  The two exceptions under Section 5850 require the renewal process to be consistent with federal laws and regulations and provide that the Commission shall not renew a franchise if the video service provider is in violation of any final non-appealable court order.  Accordingly, the Proposed Decision would conclude that the process for renewing state-issued franchises must be identical to the original application process set forth under Section 5840, subject to the two exceptions.
 
The Proposed Decision would conclude that the process outlined in Section 5850 is consistent with the federal informal process, except that it does not provide an opportunity for notice and comment.  Accordingly, the Proposed Decision would modify G.O. 169 to include an opportunity for notice and comments for all franchise renewal requests, limited to the narrow grounds under which a franchise renewal could be denied.  The Proposed Decision would also require an expedited renewal application may not be submitted more than six months before the existing franchise expires, on the basis that it will prevent early applications filed in anticipation of violating a final non-appealable court order. 
 
The Proposed Decision would also provide that a California franchise renewal applicant that wishes to invoke the federal formal application process provided in 47 U.S.C. § 546 would be required to file and serve an application as provided in Article 2 of the Commission’s Rules of Practice and Procedure.  Under the Commission’s Rules, an Administrative Law Judge would be assigned to the proceeding and a specific procedural schedule would be adopted for the issues presented in the renewal application.  The Proposed Decision would conclude that this portion of the California video franchise renewal process would also be consistent with the federal formal process.  
 
In order to ensure that the Commission does not renew a video franchise if a video service provider is in violation of any final non-appealable court order issued pursuant to the California video franchise law, the Proposed Decision would require applicants to attest that no such violations are occurring or are alleged to be occurring.  If a violation has been found, the applicant must submit an order or ruling showing that the violations have been cured. 
 
For applicants that the Commission deems ineligible for franchise renewal based on the limited DIVCA criteria, the Commission’s Executive Director would be required to send a letter to the applicant within 30 days from the submission of the application, which would toll the 44-day application clock.  Following this notice from the Executive Director, the Commission would issue a decision or resolution denying the application, which would provide the applicant with a vehicle to seek an appeal of the decision. 
 
The Decision would reject all other remaining recommendations from parties on the basis that they seek a broader scope and expansive procedural steps for the franchise renewal process than is permissible under applicable law.
 
A copy of the Proposed Decision underlying this item is available at the following link
  
WITHDRAWN ITEMS
 
Staff’s Request to File Comments on FCC’s Rulemaking on the Open Internet (Item 41, withdrawn) – This item would have authorized staff to file comments in response to the FCC’s Notice of Proposed Rulemaking, which sought comments on: (1) the question of “[w]hat is the right public policy to ensure that the Internet remains open?”; (2) the FCC’s proposal to enhance its transparency rules; (3) its proposal to adopt rules against blocking and discrimination; and (4) whether the FCC had the statutory authority to adopt those rules.  Comments would have been due on July 15, 2014.   
 
A copy of the FCC’s Notice of Proposed Rulemaking is available at the following link
 
COMMISSIONER REPORTS
 
CPUC’s Safety Policy Statement (Item 45, approved 5-0) – Commissioner Picker introduced an agency-wide “Safety Policy Statement,” and explained that the statement is intended to inspire a culture of compliance with utilities and the Commission that would inspire maximum achievable safety.  He highlighted that the Policy Statement was intended to be a “living document,” and should be continuously discussed. 
 
He explained that the starting point of the Safety Policy was the goal of striving to achieve a goal of zero accidents and injuries across all the utilities and business regulated by the Commission, along with the Commission itself.  The Safety Policy would require the Commission to commit to a set of guiding principles, including: (1) continually assess and reduce safety risks posed by the companies it regulates; (2) hold companies and their extended contractors accountable for safety of their facilities and practices; (3) be accountable for the oversight of safety in the industry the CPUC regulates; and (4) provide clear guidance on expectations for expectations for safety management and outcomes. 
 
The Safety Policy would direct Commission staff to evaluate safety management proposals and to prepare a recommendation for the Commission to adopt going forward.  It is anticipated that a proposal or recommendation will be developed within the next six months.
 
Commissioner Sandoval supported the safety statement and policy, and expressed a preference for the FAA’s disclosure approach to safety, explaining that the FAA has encouraged a culture of disclosure from top to bottom, and did not necessarily correlate disclosure with penalties.  Commissioner Peterman expressed her appreciation for the comprehensive safety statement, and especially the inclusiveness of all relevant parties, including Commissioners, utilities, and intervenors. 
 
A copy of the Safety Policy Statement is available at the following link:  
 
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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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