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On May 15, 2014, the Commission held its regularly-scheduled meeting.  On the consent agenda, the Commission approved the Order Instituting Investigation to address call completion issues in rural areas of California and adopted an “oppose” position on AB 1639, the bill intended to address the Commission’s untimely processing of small telephone company rate cases.  These and other items of interest are discussed in further detail below.
 
CONSENT AGENDA
 
Commission Opens Investigation into Rural Call Completion Issues (Item 27, approved on consent) – This item adopts an Order Instituting Investigation (“OII”) to review intrastate call completion failures in rural areas of the State of California.  The OII specifically seeks to better understand the causes of rural call completion failures, to evaluate how carriers can be encouraged to address call completion failures, to identify what existing rules could be revised or amended, and consider what new rules might be adopted.  The OII explains that rural California telephone customers are experiencing call completion problems, as shown by consumer complaints and based on a survey of rural and urban carriers by the Communications Division.  The OII also acknowledges and supports the FCC’s recent efforts to combat call completion failures through better tracking and enforcement. 
 
The OII suggests that rural call completion problems may be caused by Least Cost Routers that deliberately assign less profitable rural calls a lower priority compared to more profitable urban connections.  More specifically, the OII explains that originating carriers often contract with third-party IP-based intermediate providers for the interconnection of long distance calls, and that these Least Cost Routers may then subcontract with retail long distance IP providers to lower interconnection costs and circumvent the regulated intercarrier compensation mechanisms.  The OII notes that Least Cost Routers utilize routing tables, evolving software, and hardware technologies to identify and offer the most economical calling routes.  However, the OII also notes that if not properly supervised and executed, these arrangements may result in incomplete or uncompleted calls, and/or calls that are delayed or delivered with poor quality.  Notably however, Least Cost Routers, are not named as respondents to the OII.
 
A copy of the final Order Instituting Investigation underlying this item is available at the following link
 
Commission Opposes Legislation to Provide Timely Relief to Small Independent Telephone Corporations, AB 1693 (Perea) (Item 37(f), opposition adopted on consent) – This item adopts an “oppose” position on AB 1693 (Perea).  AB 1693 is intended to address and mitigate harm to small independent telephone corporations when general rate case applications are untimely processed and adjudicated by the Commission.  Specifically, AB 1693 would require the Commission to issue a final decision on a general rate case application of a small independent telephone corporation no later than 330 calendar days following the filing of the rate case application.  If a final decision is not issued within that timeframe, the bill would provide interim rate relief by providing that the proposed rate design articulated in the general rate case application would take effect on the 360th day, subject to true up.  If a final decision is not issued in the general rate case by the 540th day, then the interim rates would become final and effective as of the 360th day.  The Commission could still issue a decision addressing the rate case, but it would be effective only prospectively. 
 
The Staff Memorandum addressing this bill cites several reasons for its position.  First, the Staff states that the catalyst of this bill, the Kerman General Rate Case, is an anomaly because it was filed six weeks after the CHCF-A (R.11-11-007) rulemaking was opened.  The Staff Memorandum claims that the 2.5 year delay in processing the Kerman General Rate Case is unusual by the Commission’s own standards because the Commission has timely addressed nine of ten general rate cases between 2006 and 2011 within 12.5 months.  The Staff Memorandum further claims that the 18-month timeframe proposed by AB 1693 would shorten timeframes and result in overly-compressed schedules that would “threaten[] the due process of all parties and a thorough and complete hearing process leading to a fully developed record upon which to base a decision.”  The Staff Memorandum does not address  the Commission’s timely track record and ability to complete rate cases within 12.5 months and the current 18-month timeframe for completing ratesetting matters under Public Utilities Code Section 1701.5 with its discussions that an 18-month timeframe is compressed or shortened. 
 
The Staff Memorandum also claims that the interim process would “create a situation where the Commission’s decision “would essentially be void and of no effect” after 331 days.  The Staff Memorandum does not address the provisions proposed by AB 1693, which explains that the interim rates would be subject to true up if the Commission timely processed the general rate case application within 540 days, which is less than the 18-months. timeframe that the Commission has historically processed rate cases, as noted in the Staff Memorandum.
 
A copy of the Staff Memorandum underlying this item is available at the following link:  
 
Boomerang Wireless, LLC’s Designated an ETC(Item 2, approved on consent) – This Resolution conditionally designates Boomerang Wireless, LLC (“Boomerang”) as an Eligible Telecommunications Carriers (“ETC”) to provide federal wireless Lifeline service in the Uniform Regulatory Framework carrier service territories and exclude the Small Local Exchange Carriers’ service areas.  To limit its service to non-Small LEC territories, Boomerang will rely on data reflecting the zip+4 boundaries of Small LEC territories, to be provided by the Small LECs.
 
This Resolution determines that granting Boomerang’s request for ETC designation is in the public interest and that Boomerang 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).  Boomerang 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.  Boomerang will be governed by the certification and verification processes administered by the California LifeLine third-party administrator.
 
A copy of the Draft Resolution underlying this item is available at the following link:   
 
Cybernet’s Extends its CPCN Authority (Item 11, adopted on consent) – This Decision grants Cybernet Communications, Inc.’s (“Cybernet”) request to expand its Certificate of Public Convenience and Necessity (“CPCN”) authority to provide interexchange service in California and full facilities-based local exchange telecommunications services in 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”).  Cybernet was previously authorized to provide resold competitive local exchange service throughout the service territories of AT&T, Verizon, Frontier, and SureWest. 
 
The Decision concludes that CyberNet’s proposed construction activities fall within classes of projects that are exempt from CEQA.  Specifically, CyberNet proposes to install fiber optic cable and related equipment in existing conduits and existing buildings and infrastructure.  In light of these proposed projects, the Decision grants Cybernet’s request for an expedited review of its projects upon identifying specific sites upon which it plans construction projects.  The Decision specifies that CyberNet should not perform any full facilities-based construction activities without first obtaining appropriate authority from the Energy Division or authorization by the Commission after the requisite environmental review.  The Decision further finds that CyberNet meets the financial and technical qualifications to support the approval of its application. 
 
A copy of the Proposed Decision underlying this item is available at the following link:  
 
TAG Mobile Designated an ETC (Item 16, approved on consent) – This Resolution conditionally grants TAG Mobile, LLC’s (“TAG Mobile”) request to be designated as an Eligible Telecommunications Carrier (“ETC”).  This Resolution authorizes TAG Mobile to provide federal Lifeline wireless service in the Uniform Regulatory Framework carriers and excludes the Small Local Exchange Carriers service areas.  TAG Mobile is a Texas-based company that operates in California as a facilities-based carrier and mobile wireless reseller of Commercial Mobile Radio Services.  TAG Mobile expects to offer Lifeline wireless service on a prepaid basis using a combination of its own facilities and resale of Sprint and Verizon wireless network service.
 
This Resolution concludes that TAG Mobile satisfies the FCC requirements to receive federal ETC designation.  In addition, ETC designation is in the public interest and TAG Mobile meets the environmental, technical, and financial requirements set forth in Resolution T-17002 and the LifeLine Reform Order (FCC 12-11).  The Resolution further requires TAG Mobile to file annual ETC reports and specified information with USAC.  
 
A copy of the Draft Resolution underlying this item is available at the following link:  
 
$167,000 in CASF Funding Approved for Golden Country Consortium(Item 18, approved on consent) – This Resolution approves $167,000 in CASF funding from the Rural and Urban regional Broadband Consortia Grant Account to the Gold Country Consortium for its Gold Country Tahoe Basin Project.  The Resolution specifically approves a two-year budget, in which the first year’s budget will be $112,150 and the second year’s budget will be $54,750.  The grant is intended to supplement Gold Country’s Consortium’s existing budget and to provide it with the necessary resources to manage the new work required by the project.
 
The Gold Country Tahoe Basin Project is a regional initiative under the Gold Country Consortium.  Its purpose is to improve and expand broadband infrastructure, provide greater broadband access, and help facilitate broadband adoption around the Lake Tahoe Basin, with a particular focus on El Dorado and Placer Counties.  The purpose of the Tahoe Basin Project will be to engage in the following key activities: (1) infrastructure data collection, site survey, and mapping; (2) complete a broadband needs assessment; (3) prepare an analysis of the assessment; and (4) develop a broadband development plan implementation. 
 
This Resolution also exempts the Tahoe Basin Project from the funding limits in D.11-06-038.  The Resolution explains that D.11-06-038 caps grant funding at $150,000 per year for each consortium for the first year and a maximum total cap of $450,000 for three years.  As a result, this Resolution approves both the grant and exemption because the project presents the Commission with a unique opportunity to leverage the existing capabilities and leadership in the area, to provide economic development opportunities in the area, and to help meet the Commission’s goal of awarding CASF infrastructure projects that will serve 98% of households in California. 
 
A copy of the Draft Resolution underlying this item is available at the following link:  
 
HELD ITEMS
 
Commission Positions on Utility-Related Legislation (Item 37, all but 37(f) held until 6/12/14) – As in the last meeting and in an apparent departure from prior practice, the Commission issued a single item purporting to address the Commission’s positions on every one of the more than three dozen bills on which the Commission will be taking positions.  All of these sub-items were held except for Item 37(f), AB 1639 (Perea), a legislation that addresses Commission’s ultimately processing of rate cases.  That item was adopted on the consent agenda and is discussed in further detail above. 
 
Proposed Decision Addressing Cebridge’s Failure to Obtain Commission Approval for Transfer of Control (Item 5, held until 6/12/14) – This Proposed Decision would penalize Cebridge Telecom CA, LLC, Cequel Communications Holdings, LLC and Nespresso Acquisition Corporation (“Nespressso”) in the amount of $130,000 for these companies’ willful and knowing failure to obtain Commission authorization for the transfer of control as required by Section 854(a).
 
The Proposed Decision would conclude that the severity of the offense is higher in light of the fact that Cebridge’s late-filed application failed to reveal the complexity of the transaction and failed to identify all the parties to the transaction who were acquiring control over Cebridge.  Based on the apparent “dearth” of information in the application, the Proposed Decision explains that the size of the penalty is appropriate in order to prevent further harm to the regulatory process.  Specifically, the Proposed Decision explains that the Commission has enacted careful guidelines for the scrutiny of the owners of telecommunications utilities and that insufficient applications are a disregard of the advance approval process that prevents the Commission from meeting its regulatory responsibilities.
 
A copy of the Proposed Decision underlying this item is available at the following link
 
Proposed Decision Addressing Presiding Officer’s Decision Imposing $19 Million Fine on Teleseven (Item 39, held until 6/26/14) – This Decision addresses the appeal of a Presiding Officer’s Decision issued in December 2013 that found that TeleSeven LLC, Calling 10 LLC dba California Calling 10, and Patrick Hines were responsible for unauthorized charges to California consumers.  The Presiding Officer’s Decision also issued a $19 million fine for the violations.  Appeals were submitted by Patrick Hines and the Office of Ratepayer Advocates, and this Decision addresses one or both of these appeals. 
 
$2,238,806 in CASF Funding Approved for Shasta County Telecom’s CASF Project (Item 17, held until 6/12/14) – This Resolution approves $2,238,806 in CASF funding to The Shasta county Telecom, Inc. (“Shasta”) for its Shasta County Unserved and Underserved Broadband Project (“Shasta Project”).  This funding amount represents 60% of the total project cost of $3,731,344.  The Shasta project will extend high-speed Internet service to an estimated 331 square miles covering north of Bella Vista, Round Mountain, Montgomery Creek, and the Lake Margaret areas of Shasta County.  It is estimated that the Shasta Project will reach an estimated 1,444 households, of which 1,412 households are currently unserved.  At project completion, it is anticipated that 1,444 households will have broadband availabilities at advertised speeds of 20 Mbps down/10 Mbps up.  
 
The proposed project area is currently unserved by wireline technology and underserved by fixed wireless and mobile broadband.  Shasta estimates that 500 households within the project area do not have telephone services.  Shasta proposes to provide fixed wireless broadband and telephone services by installing fixed wireless transmitters and infrastructure on three mountain tops in Shasta County: Bear Mountain, Hatch Mountain, and Round Mountain.  These installations will provide high speed Internet service over a 331 square mile area.  Shasta will also plan on obtaining backhaul capabilities from Level 3 Communications and the telephone central office, connection to the PSTN, and Emergency 911 network will be located in an offsite co-location facility in San Diego, California.
 
A copy of the Draft Resolution underlying this item is available at the following link
 
SIGNIFICANT ENERGY ITEMS
 
Rulemaking Opened to Implement a Citation Program for Electric Utilities (Item 38, approved 5-0) – This item opens a rulemaking to implement a citation program for gas and electric utilities as required by SB 291 (Hill).  SB 291 mandated that the Commission establish a citation and appeals process as part of its safety enforcement program.  The proposed citation program will not apply to communications facilities. 
 
In developing the citation program, the OIR will evaluate numerous issues, including: (1) the criteria to be used by staff in issuing citations and determining penalty amounts, (2) the administrative limits on penalty amounts, (3) procedures for staff drafting, approval, and issuance of citations, (4) application of risk assessment analysis; (5) requirements for regulated entities to self-report potential violations; (6) consequences of self-reported potential violations; (7) the appeals process; and (8) procedures for monitoring and collecting data on violations. 
 
A copy of the final Decision underlying this item is available at the following link:  
 
COMMISSIONER REPORTS
 
Commissioner Sandoval Report on Visit to Eureka and Yreka Tribal Regions – Commissioner Sandoval gave a detailed presentation of her visit to the Yurok Nation.  She highlighted her visit to a community where the Commission recently helped to complete a project to provide telecommunications services through a Commission-authorized grant.  She noted that the service quality was not very good because of the technology being utilized and that she would follow up on options for improving the service quality.  She also discussed her visit to a family that recently received phone service and stressed the fact that that telephone service provides critical public safety benefits by recounting a story of how that family had to drive 45 minutes in order to place a 911 call during a medical emergency.  She also pointed out the community safety benefits, noting that since this family received telephone service, they have already used their phone to call 911 to report a fire. 
 
The Consumer Affairs Branch (“CAB”) then gave a presentation on CAB data on the Commission’s website.  It was explained that the Commission’s website reports complaints data based on industry, total contacts by utility providers, and informal complaints by utility providers.  For communications-related consumer complaints, as of March 2014, almost a quarter of customer complaints were associated with LifeLine. 
 
 
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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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