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On November 6, 2014, the Commission held its regularly-scheduled agenda meeting off-site in Bakersfield.  No telecommunications items were addressed on the regular agenda, but the Fiscal Year 2014-15 budget for all telecommunications programs were adopted on consent.  In addition, the Commission opened a rulemaking to address the Commission’s rules and guidelines regarding the disclosure of confidential documents in its possession.  These and other items of interest are discussed in further detail below.
 
CONSENT AGENDA

CHCF-A Program Expense Budget of $43,328,000 for FY 2015-16 Adopted (Item 9, approved on consent ) – This Resolution approves a Fiscal Year (FY) 2015-16 expense budget recommendation of $43.328 million for the California High Cost Fund A program (“CHCF-A”).  Unlike in previous years, the carrier claims estimate adopted for the FY 2015-16 budget is based on an adjustment made by the Communications Division to forecasts submitted by the CHCF-A recipients.  The adopted budget is comprised of the following cost estimate: (1) state operations ($1,474,077); (2) carrier claims ($41,813,000); (3) Financial Information System for California (FI$Cal) ($41,000); and (4) state controller’s office expenses ($237).
 
A copy of the Draft Resolution underlying this item is available at the following link
 
Rulemaking Opened to Address Public Access to Confidential Documents Held by the Commission (Item 4, adopted on consent) – This item opens a rulemaking proceeding to address procedures for improving the public’s access to records that are not exempt under the California Public Records Act (“CPRA”) or other state and federal law.
 
The Order Instituting Rulemaking (“OIR”) explains that in Resolution L-436, the Commission articulated policies designed to ensure that the public would have easy access to certain safety-related data created by or furnished to the Commission.  In Resolution L-436, the Commission also committed to open this rulemaking. 
 
The OIR seeks to align the Commission’s confidentiality and disclosure rules and procedures with the CPRA and other provisions of California law.  Currently, the Commission’s confidentiality rules are embodied in General Order (“G.O.”) 66-C, which contains important protections for competitively-sensitive documents provided to the Commission. 
 
The Proposed G.O. 66-D is intended to remove the list of records that are exempt from public disclosure, remove Public Utilities Code Section 583 as authority for exempting records from public disclosure, and establish a procedure for the public to request records.  The Proposed G.O. 66-D was also modified to consider additional processes for entities whose information would be disclosed, including notice to the company, an opportunity to be heard, and a process for challenging the Commission’s response to a disclosure request.
 
 
A copy of the Proposed Decision underlying this item available at the following link:  

CASF Expense Budget of $97,831,451 for FY 2015-16 Adopted (Item 12, adopted on consent) – This Resolution approves a FY 2015-16 expense budget recommendation of $97,831,451 for the California Advanced Services Fund (“CASF”).  This amount is the same as the program budget adopted for FY 2014-15.
 
The expense budget is comprised of the following costs estimates: (1) state operations ($3,772,000); (2) infrastructure grants ($80,324,960); (3) consortia grants ($0); (4) infrastructure revolving loans ($3,456,986); (5) public housing grants/loans ($10,229,054); (6) state controller/state operations ($451); and (7) Financial Information System for California (FI$Cal) ($48,000).
 
A copy of Resolution T-17457 is available at the following link
 
LifeLine Program Expense Budget of $345,648,000 for FY 2015-16 Adopted (Item 13, adopted on consent) – This Resolution approves an expense budget recommendation of for Fiscal Year (“FY”) 2015-16 for the California LifeLine Program.  This amount represents an increase of $141,210,000 over the FY 2014-15 budget, which is almost double from last year. 
 
The Resolution explains that number of consumer wireline participants has been declining at a rate of approximately 19,000 per month in the last four years, and it is forecasted that by the end of FY 2015-16, there will be 600,000 wireline participants, a decrease of 347,959 subscribers from the end of FY 2013-14.  Although wireline subscribers are declining, the Resolution also forecasts that as more wireless carriers participate in the California LifeLine, the overall rate of customer loss will decrease as customers transfer from wireline to wireless.  Accordingly, the Staff forecasts that there will be 1.376 million wireless participants by the end of FY 2015-16. 
 
Based on the above forecasts, the Resolution adopts an anticipated carrier claim amount of $324,22,183, of which $114,182,342 would be attributable to wireline LifeLine claims and $210,037,841 would be attributable to wireless LifeLine claims.  The remainder of the LifeLine Program Expense Budget is comprised of the following estimates: (1) State Operations ($21,194,000); (2) State Controller expenses ($1,000); and (3) Financial Information System for California (FI$Cal) ($233,000).
 
A copy of Resolution T-17454 available at the following link
 
CTF Program Budget of $148,086,714 Adopted for FY 2015-16 (Item 15, adopted on consent) – This Resolution adopts an expense budget recommendation of $148,086,714 for the California Teleconnect Fund (“CTF”) in FY 2015-16.  This amount is an increase of $40,103,714 over the FY 2014-15 adopted budget of $107,983,000.  The budget is comprised of the following cost estimates: (1) carrier claims ($145,065,000); (2) state operations ($2,945,000); (3) financial operations ($76,000); and (4) state controller expenses ($714).
 
The Resolution notes that the CTF program has “increased tremendously over time” and that the Communications Division believes that the increases in total claims are due to external factors such as the Governor’s Educational initiative, higher demand by schools and libraries, changes to the E-Rate program, and increased CBO outreach efforts. 
 
The Resolution explains that part of the forecasted increase in carrier claims is due to changes in the federal E-rate program.  The first E-rate change involves the phasing out voice services as an E-Rate eligible service.  Since the CTF discount is currently applied after E-rate discounts, it is anticipated the amount eligible for CTF discount for voice services will be higher, and result in an increase to the CTF by $3.614 million.  The second federal change is the elimination of wireless data plans from E-Rate, which is projected to increase the CTF by $18.142 million.
The Resolution also recognizes that the Commission is considering modifications to the CTF program that may modify funding requirements, and that the Communications Division will monitor the progress in that proceeding.
 
In addition to adopting the FY 2015-16 budget for CTF program expenses, the Resolution also increases the program’s Community College funding cap from $11,379,000 to $11,555,014.
 
A copy of the Resolution T-17456 is available at the following link:  
 
CHCF-B Program Expense Budget of $20,001,737 for FY 2015-16 Adopted (Item 10, adopted on consent) – This Resolution approves a Fiscal Year (“FY”) 2015-16 expense budget recommendation of $20,001,737 for the California High Cost Fund B program (“CHCF-B”).  The adopted budget is comprised of the following cost estimate: (1) state operations ($1,441,500); (2) carrier claims ($18,536,000); (3) Financial Information System for California (FI$Cal) ($24,000); and (4) state controller’s office expenses ($237).
 
The Resolution explains that although carriers forecasted $18,822,000 in carrier claims, the Communications Division used a trend analysis to compute the FY 2015-16 carrier claims by comparing FY 2012-13 and FY 2013-14 claims paid amounts, and identified a 9.66% decrease in claim amounts.  In addition, the Resolution also explains that the Communications Division compared actual claims for FY 2012-13 and FY 2013-14, which reflected an over-budget of $7.86 million and $4.54 million, respectively.  Based on these calculations, the Resolution concludes that the Communications Division’s adjusted carrier claims forecast is reasonable. 
 
A copy of Resolution T-17466 is available at the following link
 
 
DDTP Program Budget of $65 Million Adopted for FY 2015-16 (Item 14, adopted on consent) – This Resolution adopts an annual budget for the Deaf and Disabled Telecommunications Equipment and Relay Service Program (“DDTP”) of $65 million for FY 2015-16.  This amount represents a $1.84 million increase from the budget adopted for FY 2014-15, and is based on a growth in the DDTP user base of 5% due to increased marketing and outreach efforts. 
 
The Resolution explains that the reasonableness of the DDTP projected budget recommendations were generally assessed based on a review of actual or annualized expenses incurred for the previous two fiscal years, which were compared to adopted budgets for those same fiscal years.  Using this methodology, cost estimates were adopted as follows: (1) Primary Program and Contract Administrator ($17.09 million); (2) Equipment Processing Center ($8.66 million); (3) marketing expenses ($3.11 million); (4) California Relay Service ($33 million); (5) technical consultant ($250,000); (6) audits ($80,000); (8) accommodations ($76,021); (9) rents and leases ($1.52 million); (10) DDTP program equipment ($7.63 million): (11) speech generating devices ($11.60 million); (12) CPUC Staff and Administrative Costs ($2.01 million); (13) committee costs ($160,725); (14) local assistance ($210,000); (15) state controller expenses ($0); (16) California State Library ($552,000); and (17) Financial Information System for California ($52,000).
 
A copy of the Draft Resolution underlying this item is available at the following link
  
Revisions to Application for Certificate and Registration Process for Telephone Corporations and Wireless Carriers (Item 17, adopted on consent) – This Decision revises the instructions for the financial requirements for the registration process of non-dominant interexchange carriers (“NDIECs”) established by Decision (D.) 10-09-017.  In D.10-09-017, the Commission adopted instructions that included a list of items that an applicant must provide to demonstrate that it maintains sufficient unencumbered cash and therefore has the financial ability to provide service as an NDIEC in California.  This Decision explains that the instruction list did not clearly effectuate the Commission’s intent, and clarifies the instruction list to remove ambiguities. 
 
This Decision explains that in D.10-09-017, along with several earlier Commission decisions, the instructions for demonstrating financial capability were inadvertently modified to permit an applicant to prove their financial ability by providing:  (1) an audited balance sheet for most recent fiscal year and an unaudited balance sheet as of the most recent fiscal quarter; (2) a bank statement as of the month prior to the date of filing the application, or (3) a third-party undertaking to provide the required amounts on behalf of the applicant.  The Decision explains that these combined Commission decisions resulted in unclear instructions, and resulted in applicants with both profitable and non-profitable (new businesses) satisfying the financial requirement by providing  a bank statement to show their financial ability. 
 
This Decision clarifies that a bank statement of the month prior to the date of filing is insufficient to demonstrate the ongoing financial responsibility of an applicant’s existing operations.  Accordingly, the Decision directs the Communications Division to revise the instructions to clearly state that applicants who have profitable interstate operations may meet the minimum financial requirement by submitting all three of the following items: (1) audited balance sheet for most recent fiscal year; (2) an unaudited balance sheet as of the most recent fiscal quarter; and (3) a bank statement as of the month prior to the date of filing the application.  This Decision also directs the Communications Division to revise the instructions to clearly state that applicants who do not have profitable existing operations must meet the financial requirements through the use of any of the financial instruments established by D.95-12-056, including cash or cash equivalent, a certificate of deposit, preferred stock proceeds or other corporate shareholder equity, or a line of credit. 
 
A copy of the Proposed Decision underlying this item is available at the following link:  
  
Tempo Telecom’s Request for ETC Designation Denied (Item 11, approved on consent) – This Resolution denies Tempo Telecom, LLC’s (“Tempo”) request to be designated as an Eligible Telecommunications Carrier (“ETC”) in California in order to receive federal Lifeline support.  Tempo did not seek support from the California LifeLine fund or ETC authority to operate in the Small LEC service areas.
 
This Resolution denies Tempo’s request for ETC designation because it would not be in the public interest to approve Tempo’s request.  The Resolution concludes that Tempo’s proposed plans would cost a Lifeline customer more per month than currently-approved and available Lifeline plans on the market.  The Resolution explains that although Tempo’s proposed 150 Minute Plan and 250 Minute Plan would have been free to Lifeline-eligible customers up to the minute threshold subscribed, additional airtime minutes would have been subject to steep per-minute costs.  Based on average minutes of use of 615 minutes for Lifeline customers, it is clear that Tempo’s proposed plans would cost 50% or more than other similar Lifeline plans.  The Resolution also notes that other approved prepaid Lifeline wireless plans with 500, 1,000, and unlimited minutes cost less than Tempo’s proposed plans, when adjusted for 615 average minutes of use.   
 
In response to the Draft Resolution underlying this item, Tempo submitted comments requesting that the Commission not adopt the Draft Resolution, or in the alternative, that the Commission hold the Draft Resolution to allow Tempo the opportunity to amend its Advice Letter or to file a new Advice Letter.  Tempo asserted that it believed that its proposed service offerings would add value to the marketplace, explaining that it offers the same offerings in other states and that the average low-income customer rarely purchases additional minutes.  The Resolution explains that the Communications Division has been using the same standard method of evaluating the costs proposed Lifeline plans since 2011, which also involves a comparison of service offerings with other similar federal Lifeline plans.  In addition, the Resolution notes that Tempo did not supply independent data substantiating its claims as to customer preferences for low-minute plans.  In addition, the Resolution also explains that Advice Letters cannot be amended once a draft resolution has been issued, but that Tempo may submit a new advice letter.
 
A copy of the Draft Resolution underlying this item is available at the following link:   
 
Verizon Customer Complaint Dismissed (Item 27, adopted on consent) – This Decision dismisses a complaint filed by a customer against Verizon Wireless, LLC dba Verizon Wireless (“Verizon”).  The complaint alleged that Verizon improperly disconnected the complainant’s wireless service and denied complainant’s request for a list of phone records and voicemail records.  The Decision dismisses the complaint on the basis that the complainant failed to appear at a duly-noticed hearing. 
 
A copy of the Proposed Decision underlying this item is available at the following link
 
HELD ITEMS
 
Greenlining’s Request for Intervenor Compensationin the AT&T and T-Mobile Acquisition Proceeding (Item 31, held until 11/20) –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
 
UCAN’s Request for Intervenor Compensation in the AT&T and T-Mobile Acquisition Proceeding (Item 32, held until 11/20) – 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 at the FCC.  Notwithstanding the dismissal of the investigation, the Proposed Decision would find that UCAN’s participation in the investigative proceeding constituted “substantial contribution” and 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 would be reasonable.
 
A copy of the Proposed Decision underlying this item available at the following link:  
  
MANAGEMENT REPORTS

Telecommunications Guiding Principles (Item 41, discussed) – Director Dulin once again presented the Communications Division’s proposed Telecommunications Guiding Principles, which have been modified to address concerns raised by Commissioners when he presented on the topic at the September 11, 2014 meeting.  The Guiding Principles now contain two additional policy goals, identified as goals #7 and # 8.  Goal #7 is to ensure that future rules are future-proof – simple, universal rules such as public safety, and prohibitions on fraud and abuse of market power – that are independent of current market configurations.  Goal #8 is to protect and maximize consumers’ access to innovation and choice through restraint and the least intrusive regulatory options.

Commissioner Florio also issued “Discussion Points” in advance of the meeting to facilitate the conversation regarding the Guiding Principles.  Commissioner Florio noted that he worked closely with Commissioner Sandoval on his Discussion Points, and explained that he would support a goal of engaging in  evidence-based decision-making consistent with state law, federal regulations and the Constitution.  Commissioner Florio would also support allowing stakeholders to participate in the creation of a Telecommunications Action Plan following the adoption of the Telecommunications Guiding Principles. 

Commissioner Peterman indicated that she would support a study on competition so that they could make a data based decision.  Commissioner Picker inquired into the practical application of the Guiding Principles to the Communications Division staff.  Director Dulin explained that he would take the principles and match it up with each sub-division of the Communications Division to “connect the dots” set forth by the guiding principles.

Several Commissioners also noted that they have heard from the public and stakeholders that they wanted an opportunity to formally comment on the Telecommunications Guiding Principles or at least be involved in the process.

A copy of the Communications Division’s Proposed Guiding Principles are available at the following link:

A copy of Commissioner Florio’s Discussion Points are available at the following link

ALJ DIVISION REPORT

Acting Chief ALJ Tim Sullivan gave a presentation on recent processes and tools implemented by the ALJ division to track their case loads and to streamline the processing of proceedings.  Sullivan explained that the impetus for these new processes was to address concerns regarding the length of CPUC proceedings.  ALJ Sullivan announced that the ALJ Division has created a tool that will allow ALJs to efficiently track pending open cases.  Through this tool, ALJ Sullivan explained that the ALJ Dvision will now have a “early warning system” to ensure timely processing of proceedings, enhanced transparency, and the ability to manage entire dockets and not just priority proceedings.  
 
COMMISSIONER REPORTS

Commissioner Sandoval announced that there will be a “706 Conference” held after the NARUC meetings on November 19, 2014, and she invited the audience to attend. 
 
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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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