On June 29, 2017, the California Public Utilities Commission (“CPUC”) held its most recent agenda meeting. The meeting addressed two significant telecommunications items: (1) the Order Instituting Investigation (“OII”) Into the Creation of a Statewide Database or Census of Utility Poles and Conduit in California and the Order Instituting Rulemaking (“OIR”) Regarding Access by Competitive Communications Providers to California Utility Poles and Conduit Consistent with the Commission’s Safety Regulation; and (2) approval of funding for the “Gigafy Phelan Underserved Broadband” project under the California Advanced Services (“CASF”) program. As most of the Commissioner’s noted, the consolidated pole safety OII/OIR seeks to address an “ambitious” set of issues relating to pole and conduit infrastructure, safety and access. The Commissioners voted unanimously to approve this consolidated OII/OIR. Although the Gigafy Phelan project was held for voting to the July 13th Commission meeting in light of Frontier’s recent and vigorous challenge, this item produced significant discussion among the Commissioners and Communications Division staff. The agenda also featured items by which the Commission would take positions on a wide variety of public utility bills before the Legislature, but this item was again held. A rulemaking to consider the inclusion of “text messaging” in the funding base for the public policy programs was approved as part of the Consent Agenda. These and other items of interest addressed during the Commission meeting are summarized below.
REGULAR AND CONSENT AGENDA ITEMS
OII Initiated Addressing the Creation of a Statewide Database or Census of Utility Poles and Conduit in California and OIR Opened Regarding Access by Competitive Communications Providers to California Utility Poles and Conduit Consistent with the Commission’s Safety Regulation (Item 22, Approved 5-0 Vote) – This OII portion of this new proceeding considers the possible creation of a shared database on information relating to utility poles and underground conduit. The OII will first identify what relevant data should be collected in light of safety considerations and the Commission will then consider how to make this data available to stakeholders and the Commission. The OIR portion of this proceeding stems for Ordering Paragraph 5 of the decision in the competition docket (D.16-12-025) and relates to pole and conduit access and management. The OIR will ostensibly involve three phases. Phase I will address the rights of CLECs and broadband Internet access service (“BIAS”) providers to attach equipment to existing utility poles. It will also address the Wireless Infrastructure Association’s (“WIA”) petition for access to poles and associated rights-of-way in support of wireless offerings. This Rulemaking is consolidated with WIA’s petition in the OIR to consider Amendments to the Revised Rights of Way Rules Adopted in D.16-01-046 (R.17-03-009) to consider how the Rights-of-Way Rules should be applied to facilities installed by CLECs to support and enable the provision of service by wireless carriers. The Commission explained that the WIA Rulemaking is already underway and that it does not intend to slow down that proceeding. Phase II will address Joint Pole Association and “one touch make-ready” procedures for pole attachments as requested by Google in the competition docket. These issues will be more comprehensively scoped at a later date. Phase III will address other pole and conduit issues suggested by D.16-12-025.
Named respondents are the pole owners and pole attachers on which initial data requests were served by staff in January. Joint pole/use associations as agents of the utilities are also named Respondents for the sole purpose of responding directly to Commission data requests. Opening comments and prehearing conference (“PHC”) statements on Phase I of the Rulemaking are due within 40 days of the issuance of the OII. Opening comments and PHC statements on Phase I of the OIR are due within 60 days of issuance of the OIR.
President Picker expressed his strong support for this proceeding which he views as essential for safety as there is currently no map or single place where it is possible to locate all utility poles and underground conduits. He believes that a shared database is critical to address safety issues and barriers to access, particularly in emergency situations such as wildfires. He noted that the Commission held a workshop in March to understand the tracking and monitoring of new attachments and that most utilities offload this data to pole authorities, but that it is not shared with Communications Division or competitors. He also noted that Connecticut is in the process of developing a database and that Germany and the European Union have developed databases.
Commissioners Guzman-Aceves and Peterman largely echoed President Picker’s support and safety considerations. Commissioner Guzman-Aceves also highlighted the importance of a shared database for cities and counties.
Commissioner Randolph focused more on improving access and promoting competition and expressed concerns based on the competition proceeding that pole and conduit infrastructure functioned as bottlenecks inhibiting competition. She stressed the need to collect quantitative data and evidence relating to access to poles and underground conduct in this proceeding.
Commissioner Rechtschaffen noted the jurisdictional issues associated with the broad scope of the OII/OIR, including as to whether the rules developed could be expanded to wireless facilities. Section 5 of the OII/OIR is devoted to the Commission’s jurisdiction over poles, conduit and rights-of-way. In addition, the Commission acknowledged some of the limits on its jurisdiction over BIAS providers as a jurisdictionally interstate service and noted that it will maintain safety jurisdiction over all pole attachers, including BIAS providers, without restricting their market entry. The Commission will proceed based on the current definition of BIAS as a “telecommunications service” although it also acknowledged the FCC’s recent notice of proposed rulemaking that would reclassify BIAS and broadband transport back to “information services.”
Following a this discussion, the item was adopted by a unanimous 5-0 vote. A draft copy of the adopted OII/OIR is available at the following link: http://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M191/K499/191499332.PDF.
Rulemaking Initiated to Consider Inclusion of Text Messaging Services in Scope of Public Policy Surcharges(Item 3) –This rulemaking will consider whether to consider text messaging services “telecommunications services” or “information services,” for the purposes of applying the Commission’s public purpose fund surcharges. This rulemaking was initiated in response to a petition for rulemaking from the CTIA-The Wireless Association. While CTIA presented its petition with arguments to demonstrate that text messages are information services, the proposed rulemaking would evaluate the issue more generally. In comments on the petition for rulemaking, Joint Consumers (including TURN) argued that text messages should be within the Commission’s jurisdiction. Combined opening comments and PHC statements on the OIR are due within 50 days of the effective date of the OIR. The proposed order instituting rulemaking underlying this item is available here: http://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M191/K414/191414901.PDF.
Work Plan for the Development of Fire Map 2 Amended (Item 7, adopted on consent agenda) – This decision amends the work plan adopted by D.17-01-009 for the development of “Fire Map 2” by eliminating the requirement to develop the Shape C fire-threat map and revising the schedule so that a Tier 1 advice letter containing the final statewide Shape B fire-threat map will be submitted by November 27, 2017. The Commission found that eliminating the requirement of a Shape C fire-threat map will avoid the public safety and security issues associated with the Shape C map which would show the location of all utility overhead electric lines in high fire-threat areas. In addition, the Commission concludes that existing fire-safety regulations which apply only to high fire-threat areas in Northern California on the interim fire-threat maps shall apply only to areas in Northern California designated as Tier 3 (extreme fire threat) on Shape B of Fire Map 2. Similarly, the existing fire-safety regulations which apply only to high fire-threat areas in Southern California on the interim fire-threat maps shall apply only to areas in Southern California designated as Tier 3 (extreme fire threat) on Shape B of Fire Map 2. The proceeding remains open to consider new fire safety regulations for High Fire Threat Districts identified in Fire Map 2. The adopted decision in this matter was issued on June 30, 20-17 as D. 17-06-024 and is available here: http://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M191/K628/191628745.pdf.
Wireless Identification Registration Conditionally Approved for Lycamobile USA, Inc (Item 9, adopted on consent agenda) – This resolution conditionally approves the Wireless Identification Registration application of Lycamobile subject to at $10,000 fine for operating without authority after the Commission had revoked its operating authority for failure to report and remit surcharges and User Fees, and the failure to post a performance bond despite multiple notices from the Commission. The final resolution underlying this item is available here: http://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M191/K626/191626833.PDF.
GoDaddy.com, LLC Granted a Certificate of Public Convenience and Necessity (Item 15, adopted on consent agenda) – This decision grants GoDaddy.com, LLC a Certificate of Public Convenience And Necessity to provide resold interexchange telecommunication services throughout the state of California. GoDaddy will purchase, on a wholesale basis, toll-free telephone numbers and associated interexchange services and resell those numbers as part of a virtual office service. The decision noted that GoDaddy had disclosed four confidential settlements by its parent company of claims alleging failure to disclose or misrepresentations to consumers. GoDaddy also disclosed that the Chairman of the Board of the parent company, is a board member of Model N, Inc. and a party to a settlement in 2015 of a lawsuit alleging misrepresentations and omissions of fact in connection with disclosures made during an initial public stock offering. The decision noted that these disclosures do not preclude the granting of a CPCN as the record does not reflect that the applicant or its management are implicated in a course of conduct or activity which would preclude granting a CPCN. The proposed decision underlying this item is available here: http://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M189/K382/189382746.PDF.
Cost of Living Adjustment of 2.14 Percent Adopted for Intervenor Rates (Item 8, adopted on consent agenda) – This draft resolution adopts a COLA of 2.14 percent for work performed in the 2017 calendar year, using the methodology approved in Resolution ALJ-303 and based on economic changes from the fourth quarter of 2015 to the fourth quarter of 2016. The Commission intends to adopt a COLA for 2018 using the same methodology and economic data. The draft resolution underlying this item is available here: http://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M188/K974/188974687.PDF.
SIGNIFICANT HELD ITEMS
Approval of Funding for the Grant Application of Race Telecommunications, Inc., from CASF up to the Amount of $27,629,599 for the Gigafy Phelan Underserved Broadband Project in San Bernardino County (Item 4 on Consent Agenda, Discuss and Hold) – Although this item was held as a result of a late filed challenge by Frontier Communications, it engendered a full Commission discussion, and accounted for a significant portion of the Commission’s meeting. Commissioners Randolph and Peterman appeared inclined to approve the project, while Commissioners Guzman-Aceves and Rechtschaffen requested that Communications Division staff engage in additional efforts to meet and confer with Race and Frontier to facilitate a potential alternative resolution. President Picker indicated that he was undecided and described the potential benefits resulting from Race’s proposed project that would rely on CASF and Frontier’s proposal that would rely on Connect America Fund Phase II monies.
The Gigafy Phelan project is designed to install a fiber-to-the-premises (“FTTP”) system to 7,606 households over 98 square miles in low income areas in underserved communities in and around Phelan and Piñon Hills in San Bernardino County. The total project value is $46,049,332 at projected subsidy cost of $3,633 per household, below the mean of just over $4,512 for all previously approved last-mile projects. The project is one of the highest-scoring pending project applications on the CASF’s project evaluation scoring matrix (in D. 12-02-015) and the Phelan and Piñon Hills areas to be served are Commission-adopted “priority areas.” The project would provide broadband infrastructure in the areas that would benefit educational, medical and public safety entities. The applicant is “Race Telecommunications, Inc.,” a fiber-based CLEC provider of next generation Voice Over Internet Protocol, Internet Protocol television, and traditional cable/satellite television for more than 12 years. It has significantly expanded over the past decade and been awarded eight prior CASF grants, including four in 2016.
Race’s original funding request sought $48,295,774, or 60% of estimated total project costs of $75,420,613. This request was modified in response to a parallel application in the same area from Ultimate Internet Access, Inc. (“UIA”). UIA subsequently withdrew its application following a challenge by Charter. Charter submitted a challenge to Race’s application asserting that it was planning on or before December 31, 2016 to begin offering Internet service capable of advertised speeds of 60 Mbps down/4 Mbps up in its existing video franchise in Phelan. Charter subsequently informed CD in January 2017 that it had completed upgrades in the area and provided supporting data. CD subsequently removed the census blocks within Race’s project area from CASF eligibility. Race subsequently updated its proposal to the one being consider in the current draft resolution.
At the beginning of the Commission meeting, Al Morrissette, a Director of the Phelan Piñon Hills Community Services District, provided public comments in support of the proposed resolution to approve CASF funding for the Gigafy Phelan project. He noted that his community is primarily underserved or unserved by broadband resulting in significant access issues for local residents, including students who are unable to use the virtual school program and businesses who must shut down when there are outages as there was just last Tuesday. He expressed his disappointment that the Commission chose to hold the vote on this resolution until the next meeting and noted the struggles of local residents with Frontier’s DSL service.
The new Communications Division (“CD”) Director, Cynthia Walker, introduced the item, noting that the applicant had met all of the criteria under the program, and observed the significant decrease in the initial funding as a result of a competing application and challenge by Charter. She also explained that this project will reach the most households of any last mile CASF project approved by the Commission. She explained that the hold was a result of a late challenge by Frontier and that staff was in the process of reviewing Frontier’s plans to determine how serious it was and conducting discovery on Frontier regarding its plans. Frontier’s proposal will offer slower DSL speeds and reach about 1,100 less households than Race’s project, but it will require no CASF funding. Ms. Walker noted that CD is recommending support of the Gigafy Phelan project because the CASF program depends on applicants coming in and this was one where the Commission had more than one applicant and CD does not want to discourage applicants. She fears rejecting this project would put a pall on the CASF program in terms of applicants. She did note, however, that CD does not want to subsidize projects that would otherwise be built.
An extensive conversation amongst the Commissioners ensued. Commissioner Randolph was most supportive of the project and said she would have voted “yes” today as Race met all of the criteria and would serve a high priority area designated by the Commission. Commissioner Peterman believed the Commission should consider Frontier’s comments, but noted that she believed Frontier’s buildout plans were ambiguous and not clearly underway. She also expressed her concerns about the individual comments received and any further delay for the community. In the end, Commissioner Peterman appeared supportive of Race’s proposal and noted it was reasonably priced per household.
Commissioner Rechtschaffen was disappointed that Frontier hadn’t filed comments sooner and inquired more about the status of Frontier’s plans. CD staff explained that it was convinced based on discovery that Frontier had concrete plans to buildout fiber to DSLAM in the Gigafy Phelan project area. Commissioner Rechtschaffen also expressed concern about the Commission’s ability to enforce Frontier’s buildout plans as he believed the conditions of the Verizon merger would only give the Commission limited enforcement ability as the Frontier project would be funded by CAF.
President Picker was more supportive of Frontier’s challenge and expressed uncertainty about Race’s ability to timely complete its proposed project in light of the number of Southern California Edison poles needing replacement. He also noted that Frontier has demonstrated its commitment as a high quality provider dedicating to improving service and explained that its late filed comments may result from the fact that it only recently received the grant through the CAF program. In response, Commissioner Peterman asked whether Frontier had discretion to deploy elsewhere using its CAF monies and CD indicated that this was possible, including in other areas of San Bernardino County.
Commissioner Guzman-Aceves was supportive of Race’s proposal, but noted that she does not believe FTTP is necessary for all homes even though it may be needed for certain anchor institutions, such as hospitals, schools and libraries. She therefore requested that CD meet and confer further with Frontier and Race to determine if a compromise is possible with respect to proposed project territories. Commissioner Rechtschaffen agreed with her recommendation. Although he noted that Race exceeded the CASF requirements and that the Commission does not want to discourage CASF applicants, the Frontier broadband project relies solely on federal funds and the Commission must be careful stewards of the CASF funding.
The proposed resolution held until the July 13th meeting is available here: http://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M191/K502/191502760.PDF.
Commission Positions on Key Legislation (Items 25-31, Held Until 7/13) – Every year, the Commission takes positions on key bills under consideration by the Legislature affecting public utilities, the Commission’s governance, and related matters. A wide variety of bills are on the Commission’s agenda for evaluation, and they will be informed by memoranda from the Commission’s Office of Government Affairs (OGA). Specific information regarding the Commission’s positions will likely be revealed closer to the time that the Commission will have to take positions.
COMMISSIONER AND MANAGEMENT REPORTS
En Banc Hearing on Environmental Justice and Disadvantaged Communities on July 6 at 1-5 p.m. – President Picker and Commissioner Guzman-Aceves expressed support for an upcoming environmental justice en banc hearing that will include discussion of how to displace fossil fuels in a cost-effective way. Additional information regarding this hearing is available here: http://www.cpuc.ca.gov/calEvent.aspx?id=6442453767.
Commissioner Guzman-Aceves Stressed the Importance of Community Outreach for the Commissioners – Commissioner Guzman-Aceves recently attended a public participation hearing (“PPH”) for a rate case and highlighted the importance of Commissioner personal attendance at PPHs and other community outreach to see the impact of proposed rate increases on local communities. She noted that even when proposed rate increases may appear small to the Commissioners, it is important to visit the affected communities and hear from residents regarding the impact of the proposed rate increases.
President Picker’s Chief of Staff Nick Chaset To Resign – President Picker announced that Mr. Chaset will resign to become the Executive Director of Community Choice Aggregation (“CCA”) in Alameda County. James Ralph, President Picker’s legal adviser, will become the interim Chief of Staff.
40th Anniversary of the Administrative Law Judge Division – Chief Administrative Law Judge Karen Clopton provided a history of the Administrative Law Judge division and growth throughout the years and noted the diverse background and experience of many of the ALJs ranging from tango dancers, jazz musicians and Russian literature majors to tax LLMs, engineers and economists. All ALJs are trained at the National Judicial College. ALJ Clopton also noted that they will be adding 11 new positions to the administrative law judge division this year.