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On June 25, 2015, the Commission held its regularly-scheduled agenda meeting.  On the consent agenda, adopted a Resolution to increase the LifeLine surcharge rate from 2.40% to 3.80% effective August 1, 2015.  The Commission also adopted a Decision establishing a rate case plan for the CHCF-A recipients.  In addition, the Commission issued yet another hold on the Proposed Decision that would modify the CTF program.  These and other items of interest are discussed in further detail below.
 
CONSENT AGENDA

Resolution Increasing LifeLine Surcharge from 2.40% to 3.80% (Item 10, approved on consent) – This Resolution approves a LifeLine surcharge rate increase from 2.40% to 3.80% effective August 1, 2015.  All telephone corporations and interconnected VoIP service providers must assess a LifeLine surcharge rate of 3.80% on revenues collected from end users for intrastate telecommunications services subject to the surcharge on their end users’ bills rendered on or after August 1, 2015.  The Resolution explains that the increase is necessary because of the increases in carrier claims by wireless service providers, and that if the surcharge remained at 2.40%, the California LifeLine fund would accumulate a deficit in excess of $16.213 million by the end of Fiscal Year (“FY”) 2015-16.

A copy of Resolution T-17479 is available at the following link.

Rate Case Plan Adopted for CHCF-A Carriers (Item 18, approved on consent) – This Decision adopts a Rate Case Plan to be applied in the General Rate Case Applications filed by California High Cost Fund-A (“CHCF-A”) recipients.  In addition to establishing an application cycle and benchmarks for processing rate cases, the Rate Case Plan also directs the CHCF-A recipients to initiate a Cost of Capital proceeding.

The Rate Case Plan also establishes internal rate case processing benchmarks, and would result in a total processing timeframe of 450-480 days or 15-16 months.  Although the Rate Case Plan claims that all rate cases will be completed between 390-420 days, this timeframe does not include the “pre-application process,” which would include the submission of a Notice of Intent sixty days prior to the formal filing of the application, along with extensive discovery pursuant to a set of Minimum Data Requirements from the Office of Ratepayer Advocates.

A copy of D.15-06-048 is available at the following link.

AT&T Granted Retroactive Deviation from Public Utilities Code Section 320 (Item 14, approved on consent) – This Resolution grants AT&T California’s (“AT&T”) request for retroactive deviation from the requirements of Public Utilities Code Section 320 for overhead facilities installed in 17 separate locations along Highway 1, Highway 9, Highway 49, Highway 50, Highway 89, Highway 580, and Laureles Grade Road.  The Resolution also imposes an $85,000 fine for failure to secure timely authorization to deviate from Section 320, which mandates the underground placement of all future electric and communication distribution facilities that are proposed to be placed within 1,000 feet of a state scenic highway.

The Resolution explains that during a voluntary and self-initiated compliance review of its facilities records, AT&T identified 4,003 miles of distribution facilities in 17 different locations that were placed aerially in proximity to state and county-designated scenic highways between 1975 and 2006.  AT&T was unable to locate records indicating that it requested and received authority from the Commission to deviate from Section 320 for these facilities.

The Resolution concludes that it is appropriate to grant retroactive authority as the total cost of replacing these locations from aerial to underground facilities would be approximately $1.6 million.  Further, none of the local or jurisdictional authorities in the area expressed disapproval or opposition to the existing facilities.  Accordingly, the Resolution explains that retroactive approval is appropriate, subject to the $85,000 fine.

A copy of Resolution T-17482 is available at the following link.

Integrated Path Granted CPCN (Item 27, approved on consent) – This Decision grants Integrated Path Communications, LLC (“IPC”) a certificate of public convenience and necessity (“CPCN”) to provide resold and limited-facilities-based local exchange services in the service territories of AT&T, Verizon, Frontier, and SureWest, and interexchange service in California.

IPC is a New York based company, and will provide services to business customers in California.  IPC will provide last mile broadband solutions on an individual case by case basis, along with data private line and data network services, virtual private network configurations, and backhaul/transport connectivity.

The Decision concludes IPC meets the environmental, financial, and technical qualifications necessary to be granted a CPCN.

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

Staff Authorized to Submit Comments on First Responder Network (Item 48, approved 5-0) – This item authorizes the staff to file comments in response to the First Responder Network Authority’s (“FirstNet”) Nationwide Public Safety Broadband Network Special Notice.  The Notice seeks feedback on related to a subsequent RFP used to procure services to build the Nationwide Public Safety Broadband Network.  The staff will submit comments urging FirstNet to ensure: (1) adequate financing for the network; (2) adequate network coverage, both in terms of geographic area and harmonized network throughput; (3) adequate speeds and performance testing; and (4) that FirstNet require the latest commercially available technology.

Tom Glegola of the Communications introduced this item and presented on the staff’s recommendations on comments.  Commissioner Sandoval thanked the staff for their work on this item and noted that the FirstNet builds on existing networks, which tends to leave out mountainous regions that not only have large populations but are important for recreation as well.

A copy of the staff’s memorandum on this item is available at the following link:
http://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M152/K870/152870746.PDF.

HELD

Proposed Decision on Modifications to the CTF Program (Item 3, discussed and held until July 27, 2015) – This Proposed Decision would resolve Phases 1 and 2 issues regarding the California Teleconnect Fund (“CTF”) and would adopt restated program goals and modifications to the CTF program.  The restated goals would effectively modify the program into a direct Internet access program.  Specifically the proposed restated goals would be as follows: (1) advance universal service by providing discounted rates to qualifying schools, maintaining pre-school, kindergarten or any of the grades 1 to 12, inclusive, community colleges, libraries, hospitals, health clinics and community organizations; (2) bring every Californian direct access to advanced communications services in their local communities; (3) ensure high-speed internet connectivity for community CTF-eligible institutions at reasonable rates; and (4) increase direct access to high-speed internet in communities with lower rates of internet adoption and greater financial need.

The Proposed Decision would also modify the CTF program by eliminating CTF discounts for voice services, a proposal that was heavily opposed by many parties in the proceeding.  The Proposed Decision would also establish a group of categorically eligible participants for certain schools, community colleges, libraries, hospitals and health clinics.  In addition, the Proposed Decision would revise the eligibility criteria for community base organizations, including: (1) limiting CBO eligibility to those entities with revenues less than $5 million (from $50 million); (2) requiring a qualifying CBO to provide a qualifying service in a manner that constitutes 50% or more of a CBO’s mission; (3) requiring CBOs to provide services directly to individuals at specific geographic locations; (4) requiring a majority of members of the Board of Director to be members of the community the organization serves; and (5) eliminate discounts for purely administrative purposes.  For additional details regarding the proposed rules, please Appendix A of the Proposed Decision.

Commissioner Peterman, the Assigned Commissioner on this proceeding introduced the item.  She explained that the CTF program is critical to bridging the digital divide and providing support for institutions to access communications advanced services.  She noted that the Proposed Decision, which addresses Phase 1 and Phase 2 issues, was the product of “good input and consensus from stakeholders.”  She also explained that the Commission will examine implementation issues in Phase 3.  According to Commissioner Peterman, the proceeding was the first comprehensive examination of the program, which has increased significantly in size.  To address these issues, the Proposed Decision would adopt restated goals to meet statutory obligations to provide direct access to advanced communications services and high speed connectivity by modernizing rules and updating eligible services, including the phase out of subsidies for voice services.  Commissioner Peterman took this opportunity to justify the  decision to eliminate CTF subsidies for voice services, explaining that it was necessary to align the California program with the corresponding E-Rate eligibility guidelines.  She relied on the FCC’s conclusions that voice services are a legacy service when dial up was the primary mechanism for accessing broadband, and since it is no longer the primary means of accessing broadband, that she did not believe that universal service goals would suffer by eliminating voice services from the program.  She concluded by stating that she was seeking to ensure that the Commission is being reasonable and following statutory goals, while being fiscally responsible.

Commissioner Sandoval raised concerns that the Proposed Decision was failing to reflect the California-specific record, and the fact that schools and other eligible institutions do apply for and use voice services.  She also noted that voice services are critical to 911.  She acknowledged that the E-Rate program was eliminating voice services, but the purpose of the program is not to mirror the FCC, who paints with a broad brush, but to complement the federal program and to fill in the gaps where possible.  Commissioner Sandoval correctly argued that the CTF program is a California-specific program that can and should address California needs, particularly with regard to public safety and access to reliable 911 calls.

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

Proposed Decision and Alternate on the Comcast/Time Warner Merger  (Items 45 and 45a, held until July 23) – This Proposed Decision would grant the application of Comcast Corporation (“Comcast”), Time Warner Cable Inc. (“Time Warner”), Time Warner Cable Information Services (California), LLC (“TWCIS”) and Bright House Networks Information Services (California, LLC (“Bright House”) for approval of the transfer of control of TWCIS and Bright House to Comcast.  The Proposed Decision would also grant the application of Comcast, TWCIS and Charter Fiberlink CA-CCO, LLC (“Charter Fiberlink”) to transfer a limited number of business customers and associated regulated assets to Charter Fiberlink.

The Proposed Decision would grant the transfer applications subject to an extensive list of conditions intended to mitigate significant public interest concerns that would result from the proposed merger.  Specifically, the Proposed Decision would find that the anti-competitive effects of the merger would hinder broadband development in California and that Comcast’s Internet Essentials program has performed poorly in closing the digital divide in California and fulfilling universal service goals.

In order to mitigate the concerns raised by consumer groups, the Proposed Decision would impose twenty-five conditions, including the following:  (1) Comcast shall extend the Lifeline program on the same basis as Time Warner; (2) Comcast shall collect and report annually for a five year period on the merged entities efforts at meeting supplier diversity goals; (3) Comcast shall make available in multiple languages, as specified, information regarding the necessity for using backup batteries in connection with a VoIP-based telephone system in connection with power outages; (4) Comcast shall offer all of its California customers the ability to use Roku or other independent video programming platforms, on the same basis that Time Warner did, for five years; (5) Comcast shall extend its Internet Essentials program at a minimum of 10Mbs/1Mbps to at least 45% of eligible households within two years of the merger; (6) Comcast shall, within 2 years of the merger, upgrade facilities to provide minimum broadband service speeds at 10Mbs/1Mbps and within 5 years at 25Mbps/3Mbps; and (7) multiple reporting requirements to assess the status of Comcast’s compliance with the conditions.  A complete list of the proposed conditions are contained in Appendix A to the Proposed Decision.

An Alternate was issued by Commissioner Florio, which would deny the merger based on the finding that the merger would not be in the public interest that could not be mitigated by conditions, as suggested by the Proposed Decision.  However, this issue has become moot since Comcast has announced that it is no longer pursuing this merger.

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

A copy of the Alternate is available at the following link.

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If you have any questions about the above items or the underlying proceedings in which they arose, please do not hesitate to contact us.

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