skip to Main Content

On May 23, 2013, the Commission held its regularly-scheduled agenda meeting.  On the regular agenda, the Commission adopted a Decision modifying requirements for CPCN and WIR holders or applicants.  On the consent agenda, the Commission initiated a new rulemaking to implement franchise renewal provisions of the Digital Infrastructure and Video Competition Act of 2006 (“DIVCA”).  In addition, Happy Valley Telephone Company was authorized to discontinue its two-party LifeLine Service in its Minersville exchange due to lack of customer interest.  These and other items of interest are discussed in further detail below. 

REGULAR AGENDA

Revisions Adopted to the Certification Processes for Telephone Corporations Seeking or Holding CPCNs and WIRs (Item 34, adopted by a 5-0 vote) – This item adopts revisions to the certification process for telephone corporations seeking or holding Certificates of Public Convenience and Necessity (“CPCNs”) and wireless carriers seeking or holding Wireless Identification Registrations (“WIRs”).  As stated in the Decision, 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.  This Decision establishes a Phase II of the proceeding to determine performance bond requirements, as discussed below.
 
The Decision will require all new applicants seeking or existing providers holding a CPCN or WIR to post a bond to facilitate the collection of fines, fees, surcharges, taxes, penalties, and/or restitution.  However, Uniform Regulatory Framework (“URF”) and General Rate Case (“GRC”) Incumbent Local Exchange Carriers (“ILECs”) who are Carriers of Last Resort (“COLRs”), and their wholly-owned and majority-owned (51% or more) subsidiaries or affiliates, and corporate parent or holding company are specifically exempted from the bond requirement.  The bond amount for applicants seeking or holding a CPCN or a WIR will 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 will be $25,000. 
 
The Decision also: (1) requires CPCN applicants and wireless registrants to provide the Commission with resumes and detailed information on key officers, directors, and certain owners; (2) requires applicants seeking to transfer licenses or registrations to verify compliance with Commission reporting, fee, and surcharge transmittals; (3) increases 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) establishes a minimum annual user fee as the Commission-established rate in effect at the time or $100, whichever is greater; and (6) requires 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. 

Commissioner Sandoval introduced the item and announced the last minute revisions noted above.  She then explained that the performance bond requirement was developed in response to the failure of some CPCN holders to pay fines imposed by the Commission for various regulatory violations.  As a result, the California Controller’s Office recommended that the Commission impose a bond requirement onto CPCN holders to secure the payment of fines.  Commissioner Sandoval also explained that in light of the fact that COLRs are obligated to provide service in their territories and cannot withdraw service without a separate process that requires full Commission approval, it is appropriate to exempt these carriers from the requirement.  She then noted that CPCNs and WIRs serve as a license and permission for providers to offer service in California, and that the Commission had an important public safety role in standardizing the application process. 
 
Commissioner Florio expressed his support for the Decision.  He explained that it was long overdue that the Commission evaluated the regulatory framework for competitive carriers.  He noted that the performance bond is appropriate to address issues with companies failing to remit their surcharge revenues.  He further explained the importance of the application process, claiming that the Commission has limited jurisdiction over the regulation of many of these entities after they become CPCN or WIR holders.  In particular, he noted that it was important to require more comprehensive disclosure requirements on regulatory discrepancies and/or violations by these companies so that the Commission can evaluate their fitness as service providers. 

Commissioner Ferron supported the Decision, noting that it strikes the right balance with Commissioner Sandoval’s last minute revisions.  Commissioner Peterman also expressed her support, noting support for its consumer protection elements.
 
A copy of the Proposed Decision underlying this item is available at the following link:  

CONSENT AGENDA ITEMS

Rulemaking Opened to Adopt Video Franchise Renewal Procedures (Item 4, adopted on consent) – This item adopts a new rulemaking to evaluate the terms under which state video franchisees can seek renewal of their state-issued video franchise authorities under DIVCA.  The Order Instituting Rulemaking (“OIR”) outlines a series of questions regarding the appropriate approach for a renewal process and asks how the Commission can harmonize Public Utilities Code Section 5850(b) with the requirements of federal law.  Comments on this OIR will be submitted during June and July.  
 
A copy of the Proposed Decision underlying this item is available at the following link
 
Happy Valley Telephone Company Authorized to Discontinue Two-Party LifeLine Service in its Minersville Exchange (Item 9, adopted on consent) – This Resolution approves Happy Valley Telephone Company’s (“Happy Valley”) request to: (1) discontinue two-party LifeLine service for its Minersville exchange; and (2) modify its corresponding tariff sheets to reflect this change in service offering. 
 
Happy Valley filed its Advice Letter (“AL”) No. 388 on December 27, 2012.  AL No. 388 explained that Happy Valley had no customers subscribing to its Two-Party LifeLine Service for the Minersville exchange.  Two-Party LifeLine service allows two or more LifeLine eligible customers to be connected to and share the same telephone line.  Due to lack of customer interest, Happy Valley requested authority to discontinue Two-Party LifeLine Service and to remove the service from its tariff.  This Resolution approves Happy Valley’s AL No. 388 upon finding that this request will not adversely impact customers because no customers subscribe to the service. 
 
A copy of the Draft Resolution underlying this item is available at the following link
 
Settlement Agreement Approving Consolidation of Frontier Subsidiaries (Item 23, adopted on consent) – This Decision approves an all-party Settlement Agreement authorizing the consolidation of two Incumbent Local Exchange Carriers owned by Frontier Communications Corporation (“Frontier”).  Frontier controls Frontier Communications West Coast Inc. (“Frontier-West Coast”) and Citizens Telecommunications Company of California Inc. dba Frontier Communications of California (“Frontier-California”).  This Decision authorizes Frontier-West Coast to merge into Frontier-California. 
 
Frontier filed its merger application in December 2012 (“Application”).  The Application was protested by the Division of Ratepayer Advocates (“DRA”).  DRA’s protest focused on service quality issues, raising particular concerns with installation intervals and customer complaints.  DRA and Frontier engaged in settlement discussions to resolve the concerns raised by DRA. 
 
This Decision approves the merger by adopting the all-party Settlement Agreement, which provides the following conditions.  First, Frontier-California, will continue to participate in the High Cost Fund-B program (“CHCF-B”) on a stand-alone basis and will only include its pre-merger service territory in the CHCF-B.  Frontier will not include the territory of Frontier-West Coast in the CHCF-B claims process until the Commission concludes the second phase of the CHCF-B  as identified in Ordering Paragraph 13 in D.07-09-020.  If the CHCF-B docket (R.06-06-028) remains open upon the conclusion of the completed review of the CHCF-B fund, Frontier-West Coast will be allowed to participate in the CHCF-B.  Regardless, Frontier-West Coast will be permitted to participate in trial reverse auction and/or permanent reverse auction ordered by the Commission prior to the conclusion of the review of the CHCF-B. 
 
Second, after the merger transaction, Competitive Local Exchange Carriers (“CLECs”) will be allowed to enter into interconnection agreements and offer competitive local exchange service in the territory of Frontier-West Coast.  The parties have agreed that the Commission’s Decision will include a finding that the service territory of Frontier-California will include the expanded territory of Frontier-West Coast, which expands the geographical scope of Frontier-California’s service area subject to local exchange competition.
 
Third, following the approval of the proposed transaction, the basic primary residential rate for Frontier-West Coast will be capped for 12 months at the rate in effect on the date of the Commission’s order approving the merger.  Fourth, Frontier-West Coast will be subject to a separate local tariff until a Tier II Advice Letter to detariff is filed.  Fifth, Frontier-West Coast will be required for the next two years to continue complying with General Order 133-C reporting requirements for Small ILECs, which includes average installation intervals. 
 
This Decision approves the Settlement Agreement after finding that is reasonable in light of the whole record, is consistent with law, and is in the public interest.  Specifically, the Decision finds that the merger will increase operational efficiencies and enable the companies to operate under a consistent regulatory framework that offers advantages to its customers.   
 
The Proposed Decision underlying this item is available at the following link
 
A copy of the Settlement Agreement is also available at the following link
 
Sprint’s Application for Indirect Transfer of ControlApproved (Item 3, adopted on consent) –This Decision approves a transaction that allows Starburst II, Inc. (“Starburst II”) to become the direct parent of Sprint Nextel Corporation (“Sprint Nextel”) and the indirect parent of Sprint Nextel’s wholly-owned subsidiary, Sprint Communications Company, L.P. (“Sprint Communications”).  Starburst II is a newly formed entity of SoftBank Corp. (“SoftBank”).  Through Starburst II, SoftBank will invest $20.1 billion in Sprint Nextel and indirectly acquire approximately 70% of the shares of Sprint Nextel.  SoftBank is a publicly-traded holding company organized under the laws of Japan and headquartered in Tokyo.  SoftBank’s various subsidiaries and affiliates are engaged in a range of information technology and Internet-related businesses in Japan.  SoftBank’s wholly-owned subsidiary, SOFTBANK MOBILE Corp., is currently Japan’s third largest wireless carrier.  SoftBank holds no authorizations from the Commission, but one of its subsidiaries holds an FCC authorization to provide a private line service to another wholly-owned subsidiary of SoftBank. 
 
Sprint Communications’ application was protested by the National Asian American Coalition, Latino Business Chamber of Greater, L.A., and Ecumenical Center for Black Church Studies (collectively, “NAAC”).  The application was also protested by The Center for Accessible Technology, Division of Ratepayer Advocates, The Greenlining Institute, The National Consumer Law Center, and The Utility Reform Network (collectively, the “Consumer Groups”).
NAAC protested on the basis that the applicants had not adequately addressed the public interest benefits related to the proposed acquisition.  NAAC also detailed additional issues for the Commission to examine, including Sprint’s plans for accelerating broadband deployment, specific devices and services that Sprint planned on offering as a result of the acquisition, the CPUC’s jurisdiction over the wireless component of the acquisition, and the planned public benefit to California’s poverty-stricken ratepayers.  The Consumer Groups raised concerns about the potential impacts that the proposed transaction would have on ratepayers.  Specifically, the Consumer Groups were concerned with the impact on competition, quality of service, state and local economies, and the Commission’s ability to regulate public utilities.  The Consumer Groups urged the Commission to further investigate to ensure that risks to Sprint’s customers are mitigated. 
 
The Decision finds that the protests do not point to any specific instance where the applicants failed to meets the public interest showing.  In addition, the Decision notes that the protests do not identify general or specific harms that would impact ratepayers in California.  The Decision concludes that there is no aspect of the transaction that would be adverse to the public interest and that a change in ultimate ownership would not negatively impact Sprint Communications’ operations or financial status.  Moreover, the Decision finds that the applicants have demonstrated that the acquiring company, Starburst II, has sufficient managerial and technical expertise, as well as sufficient financial resources to operate the acquired carrier.  In addition, the Decision determines that the transfer of control would be appropriate and consistent with the Commission’s technical, safety, and environment requirements for granting CPCN authority to a telecommunications carrier. 
 
A copy of the Proposed Decision underlying this item is available at the following link
 
Public Interest Telecom dba Alternative Technologies Granted CPCN (Item 15, adopted on consent) – This Decision grants Public Interest Telecom of California dba Alternative Technologies (“Alternative”) a CPCN for authority to provide limited facilities-based and resold local exchange and interexchange telecommunications services in the service territories of Pacific Bell Telephone, Verizon California Inc., Citizens Telecommunications Company of California, Inc. and SureWest Communications.  This Decision finds that Alternative meets the financial and technical requirements to be granted a CPCN.  In addition, this Decision determines that CEQA review is unnecessary because Alternative will not be constructing any facilities, other than equipment to be installed in existing buildings or structures.
 
A copy of the Proposed Decision underlying this item is available at the following link
 
Impact Acquires Control of Matrix and AmericaTel (16, adopted on consent) – This Decision authorizes a transaction whereby Impact Telecom, Inc. (“Impact”) will acquire indirect control of American Tel (“AmericaTel”) and Matrix Telecom, Inc. (“Matrix).  All three companies currently hold Certificates of Public Convenience and Necessity (“CPCN”). 
 
AmericaTel is directly owned by MTAC Holding Corporation (“MTAC”).  AmericaTel provides domestic and international facilities-based and resold long distance services in 49 states.  In California, AmericaTel holds a CPCN to operate as a reseller of interexchange services.  Matrix is a Texas corporation and is a provider of domestic and international communications services, including local, long-distance, and toll-free voice services in all 50 states and the District of Columbia.  In California, Matrix is authorized to provide resold interexchange services.  Both AmericaTel and Matrix have had regulatory compliance issues and violations in the past that were disclosed in the application. 
 
Impact Telecom, Inc. (“Impact”) is a privately-held Nevada corporation.  Impact has redundant facilities located in several major cities.  Impact also interconnects providers from all over the world, including competitive local exchange carriers, incumbent local exchange carriers, and VoIP providers.  Impact also holds a CPCN to provide resold telephone service in California. 
 
Under the terms of the Stock Purchase Agreement (“Agreement”), Impact will acquire control over both AmericaTel and Matrix.  Impact proposed two transaction structures, both which result in Impact having indirect control of both companies.  In the first structure, Impact would continue to control AmericaTel and Matrix.  MTA would then acquire Impact.  In the second structure, MTA would retain control of Matrix and Impact would acquire MTA.  In addition, AmericaTel would be transferred to a new subsidiary of Impact. 
 
This Decision approves both of the proposed transactions, finding that the transactions will not be adverse to the public interest since all three companies involved already hold California issued CPCNs.  In addition, the proposed transactions will not change the ultimate ownership of AmericaTel and Matrix and will not adversely impact the operations or financial status of the companies.  Moreover, the Decision finds that Impact has sufficient managerial and technical expertise and sufficient financial resources to operate the acquired carriers. 
 
A copy of the Proposed Decision underlying this item is available at the following link
 
Statutory Deadline Extended in VAYA Telecom v. AT&T (Item 19, approved on consent) – This Decision extends the statutory deadline for resolving two consolidated complaints between VAYA Telecom, Inc. (“VAYA”) and Pacific Bell Telephone Company d/b/a AT&T California (“AT&T”).  The first complaint was filed by VAYA, seeking resolution of an Interconnection Agreement dispute with AT&T concerning AT&T’s billing of tandem switching elements of its interstate switched access tariff for certain transit traffic, including Voice over Internet Protocol (“VoIP”) traffic.  A second complaint was filed by AT&T against VAYA asserting that VAYA breached their Interconnection Agreement by delivering InterLATA traffic over Local Interconnection Trunks. 
 
These complaints were resolved by a Confidential Settlement Agreement approved by the Commission.  However, the terms of the Settlement Agreement were later rendered uncertain by pending state legislation, SB 1161, which limited Commission jurisdiction over VoIP communications services that were also at issue in the complaints.  SB 1161 was ultimately adopted.  While the legislation did not appear to be determinative of the issues raised in the complaint, the statutory deadline was previously extended to allow the Commission to fully evaluate the impacts of SB 1161.  However, the Commission has since determined that SB 1161 is not determinative of the issues raised in the complaint.  As a result, a President Officer’s Decision (“POD”) is now being drafted to resolve this issue.  The POD is expected to be completed by June 2013, and therefore an extension is appropriate. 
 
A copy of the Proposed Decision underlying this item is available at the following link
 
SIGNIFICANT HELD AGENDA ITEMS

Verizon’s Deviation from Public Utilities Code Section 320 (Item 8, held until 6/27/13) –This Draft Resolution would approve Verizon California Incorporated’s (“Verizon”) deviation from Public Utilities Code Section 320 for overhead distribution facilities installed without Commission approval in 2004.  Section 320 requires, where feasible, the undergrounding of all electric and communication distribution facilities to be erected in proximity to any highway designated as a state scenic highway.  Utilities may request authority for deviation through an advice letter process. 
 
In 2009, the Communications Division (“CD”) was notified of a possible Section 320 violation through a letter from a resident of Mono County, resulting in inquiries by CD Staff to Verizon.  In response to the inquiries, Verizon conducted an analysis and filed Advice Letters requesting deviation from Section 320 for the overhead distribution facilities installed in 2004 along State Route 395 in Mono County from Mile Marker 76.8 to Mile Marker 104.8. 
 
The Draft Resolution would determine that approving the deviation is appropriate because the cost of underground installations would have been twelve times the cost of an aerial installation. It explains that the CD Staff conducted a site inspection of the overhead distribution facilities and identified problematic areas that could be resolved to address safety and aesthetic concerns.  In addition, the Draft Resolution would also impose penalties on Verizon for non-compliance with Commission rules.  Therefore, the Draft Resolution would grant Verizon’s request for waiver of  Section 320 after documented completion of the following conditions:  (1) replacement of all aluminum cable dampers that are less prone to glare; (2) the completion of an audit for compliance with G.O. 95; (3) the development of a plan for future construction of overhead distribution facilities within California; and (4) payment of a $5,000 penalty for failure to comply with Section 320.  These conditions would have to be met within one year after this Draft Resolution is approved. 
 
A copy of the Draft Resolution underlying this item is available at the following link
 
LEGISLATIVE ITEMS
 
Proposed Legislation on 911 Service, AB 911 (Bloom) (Item 39, support position adopted on consent) – This bill would establish 911 emergency call technology requirements for multiline telephone systems (“MLTS”).  These requirements would become effective on January 1, 2019.  Specifically, this bill would require an MLTS operator in an area that has enhanced 911 capability to ensure that emergency calls placed from any telephone station on the MLTS is routed to a public safety answering point (“PSAP”) that provides automatic location information or automation number identification to the 911 network that connects to a PSAP.  This bill would also authorize civil penalties against MLTS providers who do not comply with the requirements outlined in the bill. 
 
According to the Commission, the purpose of this bill is to address a “widely acknowledged” public safety gap for calls that originate from large hospitals, public schools, large businesses, large chain stores, local government offices, and assisted living facilities.  When a caller dials 911 from telephone systems served by PBX equipment, the calls do not necessarily provide station-specific E-911 service unless the owner of the PBX has made arrangements with the 911 administrator to arrange for such identification  This problem can result in delivery of inaccurate caller location information to the PSAP and delays in emergency responders reaching customer locations. 
 
The Communications Division concludes that AB 911 addresses a safety problem that exists today and is consistent with R.10-04-011, a Commission rulemaking opened to address similar issues.  CD believes that the enactment of AB 911 would further the CPUC’s longstanding policy commitment to ensure that the public has access to reliable and efficient enhanced 911 networks.  In addition, AB 911 will not significantly increase costs to the CPUC except for incremental administrative costs to maintain accurate telephone station information.  The CD does recognize; however, the incremental administrative costs to large entities for the maintenance of accurate station information in addition to the costs to manufacturers of the equipment necessary to comply with AB 911.  The Legislative Memo does not address the cost impacts of this bill on service providers. 
 
A copy of the Legislative Memo underlying this item is available at the following link
 
A copy of the most recently amended bill is available at the following link
 
Proposed Legislation on the California Advanced Services Fund, AB 1299 (Bradford) (Item 43, support if amended position adopted on consent) – This bill would require the Commission to develop, implement, and administer the California Advanced Services Fund to encourage deployment and adoption of broadband to Californians living in publicly supported housing communities in urban regions without increasing, or assessing a new surcharge.  The bill is related to concerns raised by various Legislators that certain areas of Los Angeles are inadequately served with broadband.
 
CD recommends the following amendments:  (1) a clarification of the term “unit(s)” and whether “unit(s)” refer to a whole building-facility or an individual apartment; (2) conforming the poverty guidelines to comport with California’s state, city, and county publicly-owned low-income housing guidelines; (3) modification of the proposed language to clarify that residents of units may be eligible for a grant to fund a broadband adoption program without have existing access to broadband services but would qualify if the residents to be served has access or will have access to broadband services; and (4) verification that the housing community has not denied a right of access to any broadband provider that is willing to deploy broadband services in the facility for which the grant is sought. 
 
A copy of the Legislative Memo underlying this item is available at the following link
 
A copy of the most recently amended bill is available at the following link
 
Proposed Legislation on Service Interruptions, SB 380 (Padilla) (Item 46, held by Staff until 6/27/13) – This bill requires a governmental entity to obtain an order, signed by a judicial officer, before it can interrupt communications services for the purpose of public safety or to prevent the use of communications service for an illegal purpose.  Interruption of communications services must be limited to as long as reasonably necessary or once the danger justifying the interruption has abated. 
 
This bill is intended to address public outcry and free speech concerns over an incident where the Bay Area Rapid Transit (“BART”) agency shut down cellphone service at various stations in order to thwart a second protest in response to a BART police shooting that occurred in 2011.  BART initiated a temporary wireless service interruption and cited to the protest organizers’ plans to disrupt BART service by utilizing mobile devices to coordinate disruptive activities and to communicate the locations of BART police officers.
 
A copy of the Legislative Memo underlying this item is currently unavailable, however a copy of the most recently amended bill is available at the following link
 
Proposed Legislation on Earthquake Early Warning System, SB 135 (Padilla) (Item 45, held by staff until 6/27/13) – This bill would require the Office of Emergency Services to coordinate with specified state and federal entities to establish an early earthquake warning system in California.  This bill relies on the expansion of the current California Integrated Seismic Network and will require the development of technology to improve the detection of earthquakes. 
 
A copy of the Legislative Memo underlying this item is currently unavailable, however a copy of the most recently amended bill is available at the following link:  
 
COMMISSIONER REPORTS
 
Commissioner Peterman introduced her permanent staff and advisors. 

Commissioner Sandoval noted that she spoke at a luncheon where she discussed her personal approach to utility regulation and her attendance at a conference held by CTIA – The Wireless Association.  .  She also noted her attendance at two public participation hearings in connection with the ongoing LifeLine proceeding.  The first hearing was held in Rancho Cordova, which was attended by four public citizens.  She was impressed that the  the interested parties reflected the diversity of the community, which including a former Raiders player who works with children, a member of the Russian community, and individual who represents rural communities. 
 
The San Francisco public participation hearing was attended by more than 100 people, with more than 75 speakers.  She noted that most of these speakers were concerned with the insufficient minutes provided on wireless plans.  She explained that many of these low-income customers lived in Single Resident Occupancy hotels and relied on social programs like Social Security.  In attempting to resolve problems with these agencies, many of the speakers noted that they spent significant amounts of time on hold or navigating the phone tree in a manner that exhausted their minutes.
 
A copy of the Power Point slides presented at these public participation hearings is available at the following link
 
She also attended a conference held by CTIA – The Wireless Association.  At the conference, she raised the issue of low-income consumers facing the problem of utilizing their minutes while on hold with social service programs.  She noted that those she spoke with expressed a keen interest in working with the Commission to resolve this issue. 
 
 
 
*        *        *
 
If you have questions regarding any of the above items, or the underlying proceedings in which they arose, please feel free to contact us.
 
 
 
 

Linked Attorney(s)

Back To Top