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On May 7, 2015, Commission held its regularly scheduled agenda meeting.  On the consent agenda, the Commission opened a successor rulemaking to the pole safety proceeding to develop fire-threat maps and additional fire-safety regulations.  The Commission also adopted a Decision granting Pinnacles’ transfer of control application.  In addition, the Commission adopted a Decision that would allow Google Fiber and other similar entities access to poles and conduits if they can claim subscribers for a fee.  These and other items of interest are described in further detail below.

REGULAR AGENDA

Brighthouse Granted a CPCN (Items 49 and 49a, Item 49a approved 5-0) – In this item, the Commission adopts Commissioner Sandoval’s Alternate, which grants Bright Fiber Network’s (“Bright Fiber”) request for CPCN authority in the service territories of Pacific Bell Telephone Company d/b/a AT&T California and Verizon California Inc.

In Bright Fiber’s initial application, Bright Fiber explained that it was seeking a CASF grant to provide broadband service and that it would not initially provide any local exchange, access, or any voice services.  Bright Fiber further explained that as soon as it had a sufficient customer base and the necessary voice switch and interconnection capabilities, it would provide such voice services.  The Alternate explains that although Bright Fiber does not intend to provide local exchange voice, access, or other voice services immediately, that it anticipates providing voice services in the future.  The Alternate further notes that there is “no question that the facilities it plans to deploy will support such service.”
The Proposed Decision issued by ALJ Colbert, which was withdrawn at the last Commission meeting, would have denied Bright Fiber’s request on the grounds that Bright Fiber would only provide broadband service, and that it would not be providing any local exchange voice, access, or any voice services.  The Proposed Decision would have directed Bright Fiber to file another application when it was prepared to provide voice services.  The Proposed Decision explained that since the Commission does not exercise regulatory jurisdiction or control over IP or IP-enabled services, and because Bright Fiber did not definitively intend to become a telephone company, the application did not conform to the Commission’s rules for CPCN certification.
Commissioner Sandoval introduced this item, describing her reasoning for concluding that it is appropriate to grant a CPCN to an entity that anticipates providing voice services in the future.  She also emphasized that although there are distinctions between broadband and voice services, that she believes that customer demand for interconnected VoIP will eventually lead to Brighthouse offering this service, and that granting the CPCN will allow Brighthouse to go forward and to give access and choice to their customers.

Commissioner Florio expressed his support for the Alternate, and noted that there is not statutory requirement for a CPCN-holder to provide services within any specified timeframe.  He suggested that competitive services naturally encourage a company to provide services quickly and should be afforded flexibility, unlike monopolies.  He stated that this was an “elegant” solution because companies are not allowed to provide service without getting an CPCN.

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

A copy of Commissioner Sandoval’s Alternate is available at the following link.
CONSENT AGENDA
Rulemaking Opened to Develop Fire-Threat Maps and to Address Fire Safety Issues (Item 32, approved on consent) – This item opens a rulemaking proceeding to develop and adopt maps that depict areas of the State where there is an elevated risk of power-line fires igniting and spreading rapidly.  This rulemaking is intended as the successor proceeding to the R.08-11-005, the interminable pole safety proceeding.  This OIR closes R.08-11-005 for the purpose of Public Utilities Code Section 1701.5.
The proceeding will first develop and adopt two maps: (1) that depict the physical and environmental conditions associated with an elevated potential for utility-associated wildfires; and (2) to delineate the boundaries of a new High Fire-Threat District where stronger fire-safety regulations will apply.  Following the development of the new maps, the proceeding will assess the need for new and additional regulation as a result of those maps, as well as other implementation issues.

A copy of the Order Instituting Rulemaking is available at the following link.
Control of Pinnacles Transferred to Current President (Item 30, approved on consent) – This Decision approves the transfer of control of Pinnacles Telephone Company (“Pinnacles”) to Pinnacles’ current President and Chief Financial Officer following the death of its owner.  The transfer of control is pursuant to the trust administrative process and the testamentary intent of the owner.  The transfer will result in the current President holding 100% of the shares of Bryan Family Incorporated, which owns 100% of Pinnacles’ stock.  The Decision finds that the requested transfer will not impact the day-to-day operations of Pinnacles and that the transfer is in the public interest.  In addition, the Decision also concludes that Pinnacles’ President has had extensive experience and familiarity in the telecommunications industry.

A copy of the final decision underlying this item is available at the following link.

Google Fiber’s Petition to Modify DIVCA Decision (Item 5, approved on consent ) –  This Decision denies the petition of Google Fiber Inc. (“Google Fiber”) to modify the DIVCA decision to provide all state-franchise video service providers (“VSPs”) with the right to access public utility infrastructure (primarily by pole attachments or conduit access) in accordance with the rates, terms, and conditions of the right of way rules adopted in D. 98-10-058.

The denies Google Fiber’s petition because the Commission lacks statutory authority under the Public Utility Code and federal law to grant VSPs the right to access public utility infrastructure.  The Decision explains that such access is afforded under statute only to cable television companies and competitive local exchange carriers.  The Decision further explains that state-franchised VSPs classified as “cable television corporations” as defined by Public Utilities Code Section 216.4 remain eligible for access to public utility rights of way.  However,  the Decision explains that VSPs that are not classified as cable television corporations as defined by statute and do not have the right to access utility infrastructure.

The Decision further acknowledges that the FCC recently adopted the Net Neutrality Order, which reclassified broadband Internet access service under Title II of the Communications Act.  The Decision observes that the Net Neutrality Order allows broadband network providers to access poles, ducts, conduits, and rights-of-way owned or controlled by utilities in the same manner as cable operators and telecommunications carriers under 47 U.S.C. Section 224.  However, Decision clarifies that the conclusions reached in the Decision are primarily based on California law and does not take into consideration any effects of the Net Neutrality Order.

This Decision adopts the revisions that state that (1) define the term “cable” in Section 216.4 to include “wired facilities” and concluding that because “wired facilities” serve the same function as a “cable” in transmitting television programs to subscribers” that the term “wired facilities” is a “cable” within the meaning of Section 216.4; and (2) conclude that the term “cable” applies to any type of cable facility, including coaxial cable, fiber optic cable, or wired facility, that is used to transmit television programs to subscribers for a fee.

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

UIA Awarded $1,937,380 in CASF Funding for the Wrightwood Projectand $1,385,825 for the Helendale Project (Items 20 and 21, approved on consent) – These Resolutions approve funding from the infrastructure grant account of the California Advance Service Fund (“CASF”) for the installation of two fiber-to-the-premises (“FTTP”) system projects to Ultimate Internet Access (“UIA”): (1) $1,937,380 for a project in Wrightwood, California (“Wrightwood Project”); and (2) $1,385,825 for a project in Helendale, California (“Helendale Project”)  The CASF grant accounts for 60% of the total each of the project costs, and UIA will cover the remaining 40% of the project costs.

UIA is an independent Internet Service Provider based in the city of Ontario, California.  UIA was initially focused on business-to-business centers, but now provides residential communities with broadband services.  In addition, UIA was granted a CPCN by the Commission in late 2014 in D.14-12-050.
The Wrightwood Project will extend gigabit high-speed service to approximately 1,857 households, or 2,710 household units over a 3.2 square miles.  All customers will be capable of achieving speeds of 1 Gbps on both downloads and uploads.  UIA will install a FCC-licensed microwave backhaul from its middle-mile in the San Bernardino Valley to Table Mountain, and UIA will then access existing utility poles in the community of Wrightwood and will utilize them to run single-mode optical fiber throughout the community.
The Helendale Project will utilize existing conduit that currently passes 3,150 residential lots within the primary community of Helendale, of which 2,749 are established homes and 40 are businesses.  The households are expected to achieve speeds of 1 Gbps on both downloads and uploads.  UIA will remove existing co-ax cable and install fiber in its place.  The conduit was formerly used by Falcon Cable Company for cable TV, but was abandoned due to low subscribership numbers.  UIA will then install equipment on an existing antenna tower to establish a backhaul link to the UIA middle mile in San Bernardino Valley.  The existing conduit and antenna tower are currently owned by the Helendale Community Services District and are to be leased by UIA in a 10-year term.
A copy of the Resolution T-17475 for the Wrightwood Project is available at the following link.
A copy of the Resolution T-17478 for the Helendale Project is available at the following link.
Line Systems and Block Line Withdraw Application to Transfer of CPCN (Item 25, approved on consent) – This Decision grants the request of Line Systems, Inc. (“Line Systems”) and Block Line Systems, LLC’s (“Block Line”) request to withdraw their application for a transfer of the certificate of Public Convenience and Necessity and other assets, including the customer base, from Line Systems to Block Line.  The joint application was filed on July 18, 2014.  Following the joint application, the assigned Administrative Law Judge issued a ruling directing the applicants to provide additional information, in which the applicants sought an extension of time, indicated that they would amend their application, and alleged that Line Systems has no operations or customers under the Commission’s general jurisdiction.  However, the joint applicants never formally filed a response or an amendment.  Instead, on March 19, 2015, the applicants filed a motion requesting to withdraw the application because the applicants decided not to proceed with the proposed transfer.  This Decision determines that is reasonable to grant the applicants’ request to withdraw the application, but confirms that Line Systems is a telephone company and a public utility subject to the Commission’s jurisdiction.
A copy of the Final Decision underlying this item is available at the following link.
MTI Withdraws Application for a CPCN (Item 27, approved on consent) – This Decision grants MTI (USA) LLC’s (“MTI”) request to withdraw its application for a CPCN to provide prepaid calling card telecommunications services throughout the State of California.  MTI filed its application on December 23, 2014, which was protested by the Commission’s Safety and Enforcement Division (“SED”) on the basis that MTI had indicated on its application that it currently provides services throughout the state of California absent authorization.  SED’s protest also alleged that MTI’s affiliate, Aggregato, did not obtain authorization for its acquisitions of assets and merger with Krush in 2013.  Less than one month after SED’s protest, MTI filed a request to withdraw the application, based on its decision to wind down operations and dissolve its business in California.  MTI also stated that it had intended to withdraw its application prior to SED filing its protest, and that it intends to cooperate with SED to address any concerns.  SED did not oppose MTI’s motion for withdrawal.  Accordingly, the Decision determines that it is reasonable to grant MTI’s request to withdraw its CPCN application without prejudice.
A copy of the Final Decision underlying this item is available at the following link.
LCR’s Application for Reinstatement as a NDIEC Dismissed (Item 28, approved on consent) – This decision dismisses the application of LCR Telecommunications, LLC for reinstatement as a non-dominant interexchange carrier (“NDIEC”) because LCR’s operating authority was reinstated in Resolution T-17310.  LCR was originally registered as an NDIEC in 1998, but D.98-08-064.  However, on December 16, 2010, LCR’s operating authority was revoked for failure to comply with the Commission’s Reimbursement Account Fee Filing and Reporting Requirements for its 2009 User Fee.  The Communications Division subsequently determined that LCR’s apparent non-compliance was the result of LCR’s User Fees not being timely recorded by no fault of LCR, and reinstated LCR’s operating authority on February 10, 2011.
Unaware that its operating authority had been reinstated, LCR filed an application for reinstatement on April 14, 2014.  The application was protested by the Commission’s Safety and Enforcement Division, on the grounds that some of the information in the application was misleading.  Since LCR’s operating authority has already been reinstated, this Decision determines that it is appropriate to dismiss this application and to reimburse LCR its application fee of $250.

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

Talk America Withdraws CPCN Application (Item 29, approved on consent) – This Decision grants Talk America Services, LLC’s (“Talk America”) motion to withdraw its application for a Certificate of Public Convenience and Necessity to provide resold local exchange and interexchange telecommunications services in California.  Talk America is a subsidiary of Windstream Holdings, Inc. (“Windstream”) and filed its application on October 1, 2014.  The application was filed in connection with a transaction involving Windstream and certain of its indirect subsidiaries, in which Windstream companies intended to transfer all of their residential local exchange and long distance customers to talk America.  The application was protested by the Commission’s Safety and Enforcement Division (“SED”) for violation of Rule 1.1 of the Commission’s Rules of Practice and Procedure.  It not clear from the Decision what SED’s allegations specifically involved.  However, the Decision explains that Talk America’s motion to withdraw was based on its careful consideration of the protest filed and a re-evaluation of its operations in California, which would be insufficient to justify the costs of continuing to move forward with the application.

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

HELD ITEMS

Draft Resolution Directing Verizon Wireless to Pay $11,521,595 for Unpaid Public Purpose Surcharges and User Fees
(Item 3, held until 3/21) – This Draft Resolution would adopt a proposal by Verizon Wireless, Inc. LLC (“Verizon Wireless”) to resolve past unpaid public purpose program surcharges and user fees owed from the sale of prepaid wireless services prior to February 2012.  Verizon Wireless proposes a total payment of $11,521,595.  Of the proposed payment amount, $10,545,989 represents the full amount of all surcharges and user fees owed prior to February 2012 and $975,606 represents the interest on the amounts owed for the unpaid surcharges and user fees.

The Resolution explains that in 2008, the Utility Audit, Finance, and Compliance Branch (“UAFCB”) of the Commission’s Division of Water and Audits issued an audit report finding that Verizon Wireless had not paid surcharges and user fees on revenues collected from prepaid wireless services.  Verizon Wireless subsequently disputed this audit finding, arguing that prepaid wireless services were not taxable.  The UAFCB disagreed with Verizon Wireless, and asserted that all communication services are subject to the surcharge.  Shortly following these events, the Communications Director issued a letter citing the UAFCB report and requested that Verizon Wireless remit $386,685 for underpayments of surcharges, and applicable interest.  The Communications Division followed up on its request for payment twice.  In May 2009, Verizon Wireless remitted $44,957 in unpaid surcharges, stating that the amount represented payment for a portion of the surcharges in which Verizon Wireless conceded that it owed.  Verizon Wireless continued to refuse to pay the unpaid surcharges for its prepaid wireless services, which it contended were exempt from surcharges.  Verizon Wireless further requested that the Commission open a proceeding to resolve the dispute.  The Commission declined this request, and then focused on a review of TracFone Wireless, Inc. (“TracFone”), another prepaid wireless provider.  The Commission subsequently opened an Order Instituting Investigation into TracFone, resulting in decision in 2012 affirming that TracFone was obligated to collect and remit surcharges and user fees for intrastate revenues.

Following the TracFone decision, Verizon Wireless initiated meetings with the Communications Division to discuss ways to determine the amount owed to the Commission and to resolve the outstanding obligation for owed surcharges and user fees prior to February 2012.  Verizon Wireless had begun to pay surcharges and user fees beginning February 2012.  After reviewing its records, Verizon Wireless determined that it could identify revenue information going back to August 2005 showing intrastate revenues from prepaid wireless services totaling approximately $365 million.  The staff concluded that Verizon Wireless made a good faith effort to determine its revenues, and subsequently applied the associated public purpose surcharge and user fee rates in effect over that period, totaling $9,974,691 for unpaid surcharges and $571,298 for unpaid user fees.  In addition, the proposed payment amount would also include an interest assessment in the amount of $975,606.

A copy of the Draft Resolution underlying this item is available at the following link.

TracFone’s Request for ETC Designation (Item 4, held until 5/21/15) – This Resolution would conditionally grant the request of TracFone Wireless, Inc. dba SafeLink Wireless (“TracFone”) to be designated as a Eligible Telecommunications Carrier and a California LifeLine Provider throughout California, excluding Tribal Lands.  TracFone’s most recent request was filed on February 3, 2014 and amended on April 1, 2014 to specifically include the Small LEC territories.  Although we initially were prepared to protest TracFone’s amended advice letter, further research confirmed that the Commission was authorized to grant wireless, LifeLine-only ETC requests for authority in the Small LEC service areas based on FCC directives.

TracFone first sought ETC designation in 2008, but its initial request was denied on the grounds that it would not be in the public interest since TracFone refused to collect and remit public purpose surcharges.  The Commission’s investigation into TracFone’s practices was subsequently resolved in January 2014, when the Commission approved a decision fining TracFone $24 million.  Although TracFone filed an application for rehearing of the decision, it has since remitted payment for the fine and is currently in good standing as to all payments for user fees and public purpose program surcharges.

The Draft Resolution would approve three wireless service plans that provide a free or discounted handset and no cost activation fee: (1) a no charge unlimited minutes and texts plan; (2) a $27.60 plan with unlimited minutes and texts, and 2.5 GB data at 4G speed; and (3) a $17.60 plan with unlimited minutes and texts, and 1 GB data at 4G speeds.

The Draft Resolution would further direct TracFone to: (1) comply with all applicable state and consumer protection and service quality standard requirements; (2) submit all federal and state required annual compliance reports; (3) provide marketing materials to the CPUC for review prior to distribution and publication; (4) comply with CPUC User Fee and public purpose program surcharge requirements; and (5) submit its certificate of approval from USAC to the Communications Division Director.

A copy of the Draft Resolution underlying this item is available at the following link.

Proposed Decision and Alternate on the Comcast/Time Warner Merger  (Items 48 and 48a, held until May 21, 2015) – 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.

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.

WITHDRAWN ITEMS

Proposed Decision to Expand the Scope of the Rural Call Completion Investigation(Item 8, held until 5/7/15) – This Proposed Decision would have expanded the scope of the Rural Call Completion investigation proceeding to incorporate public safety issues related to 911 service.  Specifically, the Proposed Decision explained that based on recent 911 outages, including the FCC’s inquiry into a multi-state 911 outage in April 2014 and the recent 911 outage in the Napa area following the recent earthquake, that it would be appropriate to review of 911 call completion issues in California.  The Proposed Decision would also have added additional respondents to the investigation and direct all respondents to respond to as et of questions related to rural call completion issues and 911 call completion failures.

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

LEGISLATIVE ITEMS

AB 1262 (Wood) (Item 54, support position adopted) – In this item, the Commission approves a support position for Assembly Bill 1262, which would amend Public Utilities Code Section 281 to reallocate $5 million of the authorized funding of the California Advanced Services Fund (“CASF”) Broadband Infrastructure Loan Account to the CASF Rural and Urban Regional Consortia Grant Account.  The memo explains that the current Consortia Account has been fully allocated for consortia grantees during the grant cycle and that additional funding is necessary to help bridge the Digital Divide.

A copy of the Legislative Memo underlying this item is available at the following link.

PUBLIC SESSION

During the public session, a public speaker spoke on the proposed decision in the California Teleconnect Fund proceeding, and urged the Commission to revisit its prior discussions in 1995 regarding the definition of a CBO and to consider the effect of the removal of the CTF discount on over 7,000 nonprofits.

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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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