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On Thursday, November 20, 2014, the Commission held its regularly-scheduled agenda meeting.  No telecommunications items were addressed on the regular agenda, but, on consent, the Commission approved surcharge rate increases for both the CHCF-A and LifeLine programs, effective January 1, 2015.  The CHCF-A surcharge rate will increase from 0.18% to 0.35% and the LifeLine surcharge rate will increase from 1.15% to 2.4%.  These and other items of interest are discussed in further detail below. 
 
CONSENT AGENDA
 
CHCF-A Surcharge Rate Increased From 0.18% to 0.35%, Effective January 1, 2015 (Item 8, approved on consent) – This Resolution increases the surcharge rate for the California High Cost Fund-A (“CHCF-A”) program from 0.18% to 0.35%.  Telecommunications carriers and interconnected VoIP service providers are required to revise the CHCF-A surcharge rate assessed on revenues collected from end users for intrastate telecommunications services, effective January 1, 2015.
 
The Resolution explains that if the current surcharge rate remains at 0.18%, CD forecasts that the CHCF-A fund balance would decrease from approximately $20 million as of June 30, 2014 to $0.00 by approximately October 2015. The Resolution also explains that the Commission typically targets a six month reserve of forecasted expenditures for the CHCF-A program, and that the fund has already been reduced to less than a reasonable six-month reserve.  In order to arrive at the target the six-month reserve of forecasted expenditures, the Resolution concludes that it is necessary to increase the surcharge rate from 0.18% to 0.35%, effective January 1, 2015. 
 
A copy of the Draft Resolution underlying this item is available at the following link
 
LifeLine Surcharge Rate Increases From 1.15% to 2.4%Effective January 1, 2015 (Item 14, approved on consent) – This Resolution increases the surcharge rate for the California LifeLine program from 1.15% to 2.4%.  Telecommunications carriers and interconnected VoIP service providers are required to revise the LifeLine surcharge rate assessed on revenues collected from end users for intrastate telecommunications services, effective January 1, 2015.
 
The Resolution explains that a surcharge rate increase from 1.15% to 2.4% is necessary to accommodate the increase in LifeLine expenses, “primarily due to increase[s] in Carrier Claims by wireless service providers.”  The Resolution also notes that the Fiscal Year 2014-15 ending balance is forecasted at approximately $97 million, and, coupled with the anticipated $249.583 million in funding anticipated by increasing the surcharge rate, this will allow the program to meet its budgeted expenditures of $337.464 for Fiscal Year 2015-16.  Further, the additional surcharge revenues will also allow the fund to retain a total balance of three to four months of monthly expenditures. 
 
A copy of the Draft Resolution underlying this item is available at the following link
 
Q Link Wireless’s Request for ETC Designation Denied (Item 5, approved on consent) – This Resolution denies the request of Q LINK WIRELESS LLC (“Q LINK”) to be designated as an Eligible Telecommunications Carrier (“ETC”).  Q LINK was issued a Wireless Registration Identification number to operate as a reseller of Commercial Mobile Radiotelephone Services (“CMRS”) on February 9, 2012.  In August 2012, Q LINK filed an Advice Letter requesting ETC designation to receive federal support for providing federal prepaid wireless Lifeline service in the service in the Uniform Regulatory Framework (“URF”) carriers’ service areas. 
 
The Resolution first states that Q LINK has repeatedly failed to provide consistent and accurate information in its application and in its responses to the Communications Division’s data requests.  The Communications Division staff issued several data requests to Q LINK seeking: (1) information on its affiliates’ owners, principals, and/or operating officers; (2) clarifications regarding the company’s officer names, corporate organizational structure, and service complaints; (3) information related to pricing affiliations of Q LINK’s personnel and customer care functions.  Notwithstanding these data requests, Q LINK failed to disclose an affiliated business relationship. 
 
In addition, the Resolution also concludes that Q LINK’s request does not comply with Federal ETC Rules.  Specifically, the Resolution finds the following:  (1) Q LINK is not actively marketing its federal Lifeline service and does not directly advertise its Lifeline service on its website in a manner similar to that represented in its Advice Letter, nor does Q LINK identify any retail outlets by name that sell its Lifeline service and replenishment cards; (2) Q LINK has not addressed the specific steps it would undertake to assess whether it would be capable of providing service to potential customers in the service areas it seeks ETC designation; (3) Q LINK has not submitted financial information necessary to determine if the company would be able to operate without Lifeline subsidy money; and (4) as discussed above, Q LINK has repeatedly offered inconsistent information regarding the extent of its management’s technical experience because Q LINK appears to be managed by one person, thereby raising concerns about the company’s claimed telecommunications experience. 
 
The Resolution also identifies issues regarding Q LINK’s ability to comply with state LifeLine rules.  In particular, the Resolution identifies concerns regarding Q LINK’s proposed plans as presented in the Advice Letter.  The Resolution notes inconsistencies in pricing plans identified in the Advice Letter and Q LINK’s website, and observes that Staff has been unable to confirm whether a different California-specific website would be created.  Based on information on Q LINK’s existing website, the cost of purchasing additional minutes, and based on the assumption that the average Lifeline user would use 615 minutes a month, the Resolution concludes that two of three of Q LINK’s proposed service plans are more expensive than other off-the-shelf retail offerings.  Therefore, the Resolution concludes it is not in the public interest to approve Q LINK’s proposed service offerings.
 
Following the issuance of the Draft Resolution underlying this item, Q LINK requested an extension to file comments.  The request was denied by Director Dulin on the basis that Communications Division staff has been working with Q LINK’s attorney throughout 2014 and that the company was provided more time to provide comments than is typically permitted pursuant to the Commission’s rules.  Although Q LINK subsequently filed comments, the Resolution concludes that the comments did not adhere to the terms in the Notice of Availability, were unnecessarily argumentative, and attempted to propose three new Lifeline plans that were not previously identified by Q LINK.  The Resolution also concludes that each of Q LINK’s assertions in comments were factually incorrect, including Q LINK’s claims that:  (1) it is compliant with all state and federal ETC rules; (2) it is financially and technically capable of providing Lifeline service; (3) that it sufficiently identified affiliated companies; and (4) that the company did not have the opportunity to discuss its operations with staff before the release of information. 
 
Accordingly, as a result of the inaccuracies and misstatements in Q LINK’s advice letter filing, incomplete and non-responsive answers to staff data requests that indicate an intent to mislead staff, and concerns regarding the abilities and telecommunications expertise of Q LINK, the Resolution denies Q LINK’s request for ETC designation.
 
A copy of the Draft Resolution underlying this item is available at the following link:  
 
ACA Prepaid’s Application for to Obtain a CPCN Dismissed Without Prejudice (Item 7, approved on consent) – This Decision dismisses ACA Prepaid, Inc.’s (“ACA”) application to obtain a Certificate of Public Convenience and Necessity as a telephone corporation for lack of prosecution. 
 
The Decision identifies multiple events whereby ACA has failed to respond to requests for information, including an initial ruling requiring ACA to submit its Articles of Incorporation and to disclose what deposits are required to be provided to other telecommunications carriers in order to provide the services set forth in the application.  To date, ACA has not responded to the ruling requesting information.  In addition, the Decision notes that ACA also did not respond to the Commission’s Safety and Enforcement Division (“SED”) protest of the application based on ACA’s unauthorized operation in California (which was acknowledged in the application) and the non-disclosure of a key official in the application, which the Decision finds is a violation of Rule 1.1 of the Commission’s rules.  Finally, the Decision points to a recent duly-noticed prehearing conference that ACA and its counsel did not attend. 
 
In light these events, the Decision concludes that it is appropriate to dismiss ACA’s application for lack of prosecution without prejudice to it re-filing the request at a later date.  To the extent that ACA does choose to re-file, the Decision directs ACA to reference this application and to address the issues raised in SED’s protest.  Further, the Decision also orders SED to take all necessary action to compel ACA to cease and desist its unauthorized operations. 
 
A copy of the Proposed Decision underlying this item available at the following link:   
 
Telrite Corporation Request for ETC Designation Conditionally Granted (Item 13, approved on consent) – This Resolution conditionally grants the request of Telrite Corporation doing business as Life Wireless (“Life Wireless”) request to be designated as an Eligible Telecommunications Carrier (“ETC”) to provide federal LifeLine wireless service to qualifying customers throughout California including federally-recognized tribal lands.  Telrite does not seek California LifeLine funds at this time.  LifeLine is a prepaid wireless service provider that uses AT&T Mobility as its underlying carrier, and will offer services throughout AT&T Mobility’s wireless footprint.
 
This Resolution determines that granting Life Wireless’s request for ETC designation is in the public interest and that Life Wireless 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).  Life Wireless will also be required to file annual ETC reports and information with USAC describing the terms and conditions of any voice telephony service plans offered to Lifeline subscribers.  Life Wireless will be governed by the certification and verification processes implemented by the California LifeLine third-party administrator.
 
The Resolution further explains that Life Wireless’s ETC designation approval shall be subject to Life Wireless’s ability to address several outstanding items.  Specifically, Life Wireless did not specifically address commitments to file federal compliance reports, and Decision orders Life Wireless to file these reports, as required by the FCC.  The Resolution also notes that Life Wireless did not address more recent FCC ETC requirements, and it requires Life Wireless to address and include the information in its annual report.  Life Wireless shall also submit to the Communications Division’s Director a copy of the information submitted to USAC and a copy of Life Wireless’s certification of approval from USAC within 30 days of receipt from USAC of its compliance regarding the federal Lifeline wireless plan.  
 
A copy of the Draft Resolution underlying this item is available at the following link:  
 
Corcom Granted a CPCNto Provide Resold Competitive Local Exchange and NDIEC Services (Item 19, approved on consent) – This Decision grants Corcom’s request for a Certificate of Public Convenience and Necessity (“CPCN”) to provide resold competitive local exchange and non-dominant interexchange services in the service territories of AT&T California (AT&T), Verizon California Inc. (Verizon), Citizens Telecommunications Company of California, dba Frontier Communications of California, Inc. (Citizens), and SureWest Communications (SureWest) in California.
 
Corcom does not propose to deploy its own network facilities and intends to use existing facilities furnished by incumbent local exchange carriers.  Corcom will provide both interstate and intrastate local exchange and interexchange carrier services to residential and business customers.  In addition, Corcom will resell voice, broadband, data, internet access, and management features and functions.  Corcom acknowledges that some services will use IP-based technology, but Corcom states that it will be subject to the Commission’s jurisdiction and will abide by the Commission’s rules as to these services.  Based on the information provided by Corcom, the Decision concludes that Corcom meets the environmental, financial, technical and management expertise necessary to be granted a CPCN.
 
A copy of the Proposed Decision underlying this item available at the following link:   
 
Sprint Allowed to Discontinue Specified Resold Local Voice Services (Item 23, approved on consent) – This Decision grants Sprint Communications Company L.P.’s (“Sprint”) request for authority to discontinue its service offering designated as Sprint Integrated Local Service.  The retail services to be discontinued are resold local voice services, which are sold in a bundle with interexchange services marketed as “Sprint Complete Access.”  The offerings and features to be discontinued include local business lines, Integrated T1 Service and Digital Integrated T1 Service, Optional Calling Features, Operator Services, Directory Assistance and Directory Assistance, Listing Services, Toll Restrictions Services, Caller ID Blocking, Intercept Services, Direct Inward Dialing Numbers, and 9-1-1 Telecommunications Services.   
 
Sprint asserts that the discontinuance will not result in material hardship to the affected customers because these customers will have the option to retain all other telecommunications services provided by Sprint.  In addition, these customers can obtain alternatives to Sprint Integrated Local Service from other service providers that provide local connectivity to the remaining Sprint Complete Access services.  To the extent that the replacement local service provider chosen by the customer does not provide local access to all of the other Sprint Complete Access services, alternative providers of those services are readily available.  In addition, if a customer chooses to discontinue other Sprint services offered in the Sprint Complete Access bundle, these customers will be able to do so without penalty.
 
The Decision concludes that the proposed exit plan presented in Sprint’s application, which includes notifications to affected customers and to the industry, complies with the Commission’s rules governing the mass migration of customers.  In addition, the exit plan provides appropriate protections in connection with proposed discontinuation of service.  Accordingly, the Decision approves Sprint’s application to discontinue offering its Sprint Integrated Local Service to the 25 affected business customers who currently have this service.
 
A copy of the Proposed Decision underlying this item available at the following link:  
 
HELD ITEMS
 
UCAN’s Request for Intervenor Compensation in the AT&T and T-Mobile Merger Proceeding (Item 25, held by Staff until 12/4) – This Proposed Decision would grant $11,339.75 in intervenor compensation to the Utility Consumers’ Action Network (“UCAN”) for its contribution to D.12-08-025, which dismissed the Commission’s investigation into the proposed acquisition of T-Mobile USA, Inc. (“T-Mobile”) by AT&T Inc. (“AT&T”).  The investigation was deemed moot by D.12-08-025 based on the withdrawal of the merger application by AT&T and T-Mobile before the FCC.  Notwithstanding the dismissal of the investigation, the Proposed Decision would find that UCAN’s participation in the investigative proceeding constituted “substantial contribution” that would have produced benefits for ratepayers had the merger application had not been withdrawn.  Therefore, the Proposed Decision would conclude that the majority of UCAN’s claimed costs and expenses are reasonable.
 
A copy of the Proposed Decision underlying this item available at the following link:  
 
Greenlining’s Request for Intervenor Compensationin the AT&T and T-Mobile Acquisition Proceeding (Item 26, held by Staff until 12/4) –This Proposed Decision would grant $154,100.50 in intervenor compensation to The Greenlining Institute (“Greenlining”) for its contribution to D.12-08-025, which dismissed the Commission’s investigation into the proposed acquisition of T-Mobile USA, Inc. (“T-Mobile”) by AT&T Inc. (“AT&T”).  The investigation was deemed moot by D.12-08-025 based on the withdrawal of the merger application by AT&T and T-Mobile at the FCC.  Notwithstanding the dismissal of the investigation, the Proposed Decision would find that Greenlining’s participation in the investigative proceeding constituted “substantial contribution” and would have produced benefits for ratepayers had the merger application not been withdrawn.  Therefore, the Proposed Decision would conclude that the vast majority of Greenlining’s claimed costs and expenses are reasonable.  The Proposed Decision would order T-Mobile and AT&T to pay Greenlining their respective shares of the award, based on their California-jurisdictional telecommunications revenues for the 2011 calendar year. 
 
A copy of the Proposed Decision underlying this item is available at the following link:  
 
Black Economic Council, National Asian American Coalition, and Latino Business Chamber of Greater Los Angeles’s Request for Intervenor Compensationin the AT&T and T-Mobile Acquisition Proceeding (Item 29, held by Staff until 12/4) – This Proposed Decision would grant $42,505.15 in intervenor compensation to the Black Economic Council, National Asian American Coalition, and Latino Chamber of Greater Los Angeles (“Consumer Groups”) for its contribution to D.12-08-025, which dismissed the Commission’s investigation into the proposed acquisition of T-Mobile USA, Inc. (“T-Mobile”) by AT&T Inc. (“AT&T”). 
 
The investigation was deemed moot by D.12-08-025 based on the withdrawal of the merger application by AT&T and T-Mobile at the FCC.  Notwithstanding the dismissal of the investigation, the Proposed Decision would find that some of the Joint Consumer’s participation in the investigative proceeding constituted “substantial contribution” and would have produced benefits for ratepayers had the merger application had not been withdrawn.  The amount awarded is a reduction by 82.45% from the Consumer Group’s initial claim of $242,243.  The Decision explains that certain claims were denied on the basis that the comments did not directly concern the effect of the merger on competition, were outside of the scope of the investigation, and because some of the Joint Consumers contributions were duplicative of other parties. 
 
A copy of the Proposed Decision underlying this item available at the following link:  
  
COMMISSIONER AND DIVISION REPORTS
 
Commissioners Noted Participation in NARUC Annual Meeting – Commissioners Peterman, Florio, and Sandoval discussed their attendance at the annual NARUC meeting in San Francisco from November 16th through November 19th.  Commissioner Peterman noted that the conference was well attended by Commission staff and Commissioners, and that there was “terrific representation of the Commission” at the event.  Commissioner Sandoval mentioned that she moderated a panel on the water/energy/communications nexus, building upon discussions that have occurred within the Commission’s ongoing proceeding on that subject. 
 
Commissioner Sandoval Summarized Recent Public Discussions of Broadband Issues – Commissioner Sandoval noted that she co-chaired a meeting of the Federal-State Conference on Advanced Telecommunications Services on November 19th.  The conference involved three panels.  The first panel involved a summary of innovative Internet uses, which highlighted the wide diversity of ways in which firms, individuals, and communities are using the Internet to develop applications and content.  The second panel focused on academic and legal issues relating to the role of the states in regulating broadband, with a focus on Title I/Title II issues and the authority available pursuant to Section 706 of the Telecommunications Act.  The final panel focused on adoption, and examined what can be done to foster greater interest in and higher take rates for Internet access. Commissioner Sandoval also mentioned that a meeting of the Broadband Council took place on November 18th, and that it was a good opportunity to sit down with stakeholders to assess where the needs regarding broadband deployment and adoption.
 
Commissioners Discussed Recent Supplier Diversity En Banc – Several Commissioners offered positive comments regarding the discussion that took place on October 9, 2014 in Los Angeles to discuss supplier diversity issues.  The Commissioners underscored the importance of the issue, and Commissioners Sandoval and Peterman provided assurances that the Commission’s focus on supplier diversity will continue even after President Peevey steps down.
 
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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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