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On October 11th, 2012, the Commission held its regularly-scheduled agenda meeting.  No telecommunications items were discussed on the regular agenda, but the Commission adopted the budgets for the California Teleconnect Fund program and the Deaf and Disabled Telecommunications Program for Fiscal Year 2013-14.  Additionally, the Commission approved a California Teleconnect Fund program surcharge rate increase to approximately seven times the current rate.  The Commission once again held Draft Resolution L-436, which would adopt new regulations governing public access to Commission records and utility records held by the Commission.  These and other items of interest on the Commission’s agenda are discussed below.

CONSENT AND REGULAR AGENDA ITEMS

California Teleconnect Fund Expense Budget Approved for Fiscal Year 2013-14   (Item 3, adopted on consent agenda) –  This Resolution adopts the following budget item recommendations for the California Teleconnect Fund (“CTF”): (1) a FY 2013-14 budget of $92,429,000; (2) an increase of the annual appropriations cap by $194,000 to $92,429,000; and (3) set a cap of $11,167,000 on the total discounts available for community colleges for FY 2013-14.  CTF was created to enhance universal service goals by providing discounted rates for telecommunication services for qualifying schools, libraries, government-owned health care providers, and community based organizations.  The CTF program is funded by a surcharge assessed on revenues collected from consumers for intrastate telecommunication services.  The current surcharge rate is 0.079%, but the Commission approved an increase to 0.59% effective December 1, 2012, as discussed below.

The CTF recommended budget would be allocated to carriers providing CTF discounted services ($86.646 million); interest payments ($50,000); financial and compliance audits ($750,000); Advisory Committee expenses ($34,000); CPUC Staff costs ($1.112 million); inter-agency costs ($289,000); programming and automation expenses ($2.148 million); and outreach services ($1.4 million).  DRA raised concerns on whether the CTF program is funding the appropriate entities and urged the Commission to re-examine whether certain categories of entities still require CTF subsidies.  The Resolution determines that DRA’s concerns are broader than the scope of the budget resolution and is appropriately addressed in an Order Instituting Rulemaking.

In a previously-circulated Draft Resolution, the Communications Division recommended a budget of $117,233,000 to accommodate the projected cost increases related to a newly implemented outreach program.  However, Staff reduced the appropriations after determining that it would be financially imprudent to project expenses two years into the future based on limited data from a new program.

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

California Teleconnect Fund Surcharge Rate Increase Approved  (Item 6, approved on consent agenda) – This Resolution approves the California Teleconnect Fund (“CTF”) surcharge rate increase from 0.079% to 0.59%, an increase to approximately seven times the current rate.  This makes the CTF the second largest surcharge, eclipsed only by the LifeLine surcharge.  The current CTF surcharge generates less revenue per month than expenses paid by the program and has been supplemented by several loan repayments from the Department of Financing.  The increased CTF surcharge would allow the CTF to meet its expense obligations by generating $46.144 million in revenue during FY 2012-13 and $93.263 million during FY 2013-14.  Carriers must assess a CTF surcharge rate of 0.59% on revenues collected from end users for intrastate telecommunications services subject to surcharge beginning on December 1, 2012.

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

Deaf and Disabled Telecommunications Program Expense Budget Approved for Fiscal Year 2013-14 (Item 2, adopted on consent agenda) – This Resolution adopts an expense budget recommendation of $63.1 million for FY 2013-14 for the Deaf and Disabled Telecommunications Equipment and Relay Service Program (“DDTP”).  The DDTP provides specialized equipment to the deaf and hard of hearing throughout the State of California.  The proposed budget will be allocated to CPUC staff costs ($1.38 million), delivery of DDTP services ($30.1 million), DDTP administration expenses ($721,500), California relay services ($13 million), equipment purchases ($17.4 million), committee expenses ($310,000), EPAC ($110,000) and TPIC ($120,000).

In a previously circulated Draft Resolution, the Communications Division initially recommended a budget of $76.11 million.  After considering actual program expenses during FY 2011-12, anticipated program expenses for FY 2012-13, and predicted expenses for the FY 2013-14, CD revised the recommended budget to reduce appropriations for California relay services ($5 million) and for equipment purchases ($8.4 million).

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

G3 USA Telecom, Inc. Granted a Certificate of Public Convenience and Necessity (Item 18, adopted on consent agenda) – This Decision grants G3 Telecom USA, Inc. (“G3 Telecom”) a Certificate of Public Convenience and Necessity to provide resold interexchange service in the State of California.  G3 Telecom’s principal place of business is located in Toronto, Ontario, Canada but it plans to offer prepaid and postpaid long distance service to business and residential customers in the State of California.  This Decision also declines to impose a sanction on G3 Telecom for its failure to disclose a citation issued by the Canadian Radio-Television and Telecommunications Commission (“Canadian Commission”) to its affiliate for violation of telemarketing rules.  The Decision finds that G3 Telecom did not violate Rule 1.1 because the citation resulted from the activities of third-party telemarketers who were marketing G3 Telecom’s services, the problems have been corrected, and no penalty was imposed by the Canadian Commission based on the citation.

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

Statutory Deadline Extended for Resolution of Dispute Between Fones4All  and AT&T (Item 19, adopted on consent agenda) – This Order extends the one-year deadline for concluding the dispute proceeding between Fones4All Corporation (“Fones4All”) and Pacific Bell Telephone Company, d/b/a AT&T California (“AT&T”) to December 2, 2013.  In the complaint filed by Fones4All on December 28, 2007, Fones4All alleges that AT&T failed to block toll calls and improperly billed toll charges and directory assistance calls.  In August 2008, Fones4All filed for bankruptcy protection and the bankruptcy filing automatically stayed, by operation of law, this proceeding.  As a result of the bankruptcy filing, the statutory deadline has been extended five times and the current statutory deadline is on December 2, 2012.  Fones4All and AT&T have asserted that the bankruptcy process will likely resolve the parties’ claims against the other.  Since the bankruptcy proceeding is still pending and there is no indication that the bankruptcy proceeding will be concluded by the current statutory deadline, this Order finds that an extension of the statutory deadline to December 2, 2013 is reasonable.

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

OH Holdco, LLC Authorized to Acquire Control of Astound Broadband LLC (Item 21, adopted on consent agenda) – This Decision authorizes a transaction whereby OH WDH Holdco, LLC (“Oak Hill Holdco) will acquire indirect control of Astound Broadband, LLC (“Astound”) by acquiring Astound’s holding company, WaveDivision Holdings, LLC (“Wave”).  Astound is a wholly owned subsidiary of Wave and a certificated subsidiary providing facilities-based local and interexchange services in California.  No transfer of Astound’s CPCN, assets, or customers will occur with this transaction.  Additionally, the transaction will not cause any immediate change in the direct ownership or legal structure of Astound and it will continue to provide service at current rates, terms and conditions and the transaction. 

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

Clear Rate Communications, Inc. Granted a Certificate of Public Convenience and Necessity (Item 25, adopted on consent agenda) – This Decision grants Clear Rate Communications, Inc. a certification of public convenience and necessity to provide facilities-based and resold local exchange telecommunications services in the service territories of Pacific Bell Telephone Company, d/b/a AT&T California, and Verizon California Inc.  The Decision also sets forth a list of deficiencies in the tariff filed by Clear Rate, including the lack of Clear Rate’s CPUC assigned utility ID and sample forms such as applications for service, regular bills and contract forms.  These deficiencies must be corrected in Clear Rate’s initial tariff compliance filing.  Additionally, the Decision requires Clear Rate to report surcharges and user fees regularly, to file an affiliate transaction report, and to file an annual report. 

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

SIGNIFICANT HELD ITEMS
 
New Order Instituting Rulemaking to Evaluate CASF Eligibility Requirements (Item 22, held by Staff until 10/25/12) – This item would open a rulemaking proceeding to consider modifying the California Advanced Service Fund (“CASF”).  This proceeding would evaluate whether the eligibility requirements for participation in CASF should permit an entity that is not a “telephone corporation” to apply for CASF infrastructure grants and loans.  The draft OIR for this proceeding has not been released.

Frontier, SureWest, and Verizon’s Application for Exemption of URF Carriers from General Order 77-M’s Annual Reporting Requirement (Item 28, held by Staff until 10/25/12) – This Proposed Decision would deny Citizens Telecommunications Company of California Inc. d/b/a Frontier Communications of California (“Frontier”), SureWest Telephone (“SureWest”), and Verizon California Inc. (“Verizon”) (collectively, the “Applicants”)’s application for exemption of Uniform Regulatory Framework (“URF”) incumbent local exchange carriers (“ILECs”) from General Order 77-M (“GO 77-M”)’s annual reporting requirement.  GO 77-M requires the disclosure of utility executive compensation and payments to dues, donations, subscriptions, and contributions directly or indirectly paid by each utility.

The Applicants requested an exemption on the basis that the information required in the GO 77-M reports are unnecessary to the Commission because it no longer exercises rate-regulation over the URF ILECs.  The Proposed Decision would find that the purpose of the GO 77-M reports extends beyond the Commission’s rate-setting responsibilities.  Specifically, the Proposed Decision would determine that compliance with GO 77-M continues to be necessary for the following reasons:  (1) the data is necessary for the Commission to ensure reasonable rates; (2) since URF ILECs benefit from LifeLine and CHCF-B subsidies they should be held to a level of regulation; (3) the data is necessary to monitor cross-subsidization as it relates to basic residential video services; (4) annual reporting is necessary to promote transparency; and (5) compliance with GO 77-M is in the public interest.

In addition, this Proposed Decision would direct Staff to develop an OIR to review GO 77-M’s definition of the term “compensation” and to review the reporting thresholds for salaries.

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

Draft Resolution L-436 Modifying Confidentiality Standards Applicable to Documents Held by the Commission (Item 29, held by staff until 10/25) – This Draft Resolution would adopt new regulations governing public access to Commission records and utility records held by the Commission.  The Resolution would repeal the long-standing  procedures for obtaining information and records from the Commission, now embodied in G.O. 66-C.  These rules would be replaced with a new G.O. 66-D.  G.O. 66-D would eliminate the current protections for documents which, if revealed, would create an “unfair business disadvantage.”  It would also shift the burden of proving confidential designation of utility information and data to the utility at the point of submission.  The Draft Resolution directs the Staff to develop a publicly accessible index of information on the confidentiality presumptions applicable to broad classes of records and, where applicable, establish the legal basis for withholding records from the public.

The Draft Resolution would also increase public access to safety-related documents and records by ordering the creation of a safety information portal on the CPUC’s internet site.  Under the Draft Resolution, the Staff would be directed to maintain a publicly accessible index or database of safety related records and information in the custody of the CPUC.  The index or database would provide links to such safety-related records.  
  
A copy of the Draft Resolution underlying this item is available at the following link.

LEGISLATIVE WRAP-UP
 
The Office of Governmental Affairs (“OGA”) presented its annual Legislative Wrap-Up.  In 2012, the OGA monitored a total of 134 bills.  Of these 134 bills, 89 bills failed and the OGA took positions on 27 bills.  Of the 45 bills that were sent to the Governor, the OGA took positions on 29 bills.  The OGA took positions on a total of 56 bills.  Of the OGA’s 21 “support” positions, 5 were defeated, 16 passed, and 16 were signed by the Governor.  Of the OGA’s 18 “neutral” positions, 7 were defeated, 11 passed, and 10 were signed by the Governor.  Of the OGA’s “oppose” positions, 15 were defeated, 2 passed, and 0 were signed by the Governor.  Additionally, the OGA sponsored six bills in 2012 and they were all safety-related. 
 
The OGA monitored four telecom-related bills.  Two of the telecom-related bills were signed by the Governor and two of the bills failed.
 
SB 1161 (Padilla) prevents the Commission from prospectively regulating VoIP without legislative authorization except under certain circumstances.  SB 1161 was signed by the governor and the OGA did not have a position on this bill.  The OGA believes that this bill leaves the CPCN’s rights and privileges unclear and will require follow-up action to determine how public purpose programs would operate in an environment where service providers do not hold CPCNs but wish to participate and obtain subsidies.  Anticipated personnel requirements include one additional member from the ALJ division, one member from the Legal Division, and one temporary member from the Communications Division. 
 
SB 379 (Fuller) clarifies that CHCF-A subsidies may be used to subsidize the deployment of broadband-capable facilities.  SB 379 was signed by the Governor and the OGA’s position was support if amended.  The OGA’s requested amendments were not incorporated into the bill.  As a follow-up, the Commission will need to interpret and adopt all the necessary changes to the CHCF-A program through rulemaking and implementation proceedings.  Anticipated additional personnel requirements include one member from the ALJ division, one member from the Legal Division, and one member temporarily from the Communications Division. 
 
AB 1050 (Ma) would have established prepaid wireless surcharge to be levied at the point of sale and would cover most state and local fees and collections.  The author decided not to move this bill.  It was opposed by OGA.  This bill will be reintroduced next year by a different author.  SB 1160 (Padilla) would have prevented service shut-offs except in extraordinary cases.  OGA took a neutral position.  This bill was vetoed by the Governor.  Both the author and the Governor have expressed interest in reconsidering this topic next year. 
 
The OGA also monitored two bills related to disclosures of the Commission’s public records.  Both bills failed.  AB 1541 (Dickinson) would have made state law mandate document disclosure by default but include broadly-worded exemptions.  This bill was opposed by the OGA and it was held on suspense on the Senate Appropriations Committee.  SB 1000 (Yee) would have facilitated document disclosure subject to the Public Records Act.  This bill was supported by the OGA and it failed to pass out of the Assembly Utilities and Commerce Committee.
 
The OGA also presented on 2012-13 budget actions.  For the 2012-13 year, 32.5 new permanent positions are authorized.  Additionally, eight temporary positions will be created, including four positions to administer the State Broadband Data and Development Grant Program.  
 
A copy of the OGA’s presentation underlying this summary is available at slides 20-72 at the following link.

NOTES AND COMMISSIONER REPORTS
During the public session, several speakers spoke out in favor of President Peevey’s Proposed Decision on the basic service definition.  These speakers placed significant emphasis on the need for a technologically neutral definition of basic service by expanding the definition to include new technologies like wireless and VoIP.  They also stressed the importance of mobile technology as communities begin to move away from traditional landline services.  A homeless youth advocated his support for including mobile technology in the definition of basic service by noting his challenges in finding employment without access to a mobile device.
 
Other speakers spoke out in favor of Commissioner Florio’s Alternate Decision.  These speakers focused on the need for high-quality, reliable service.  Another speaker offered comments supportive to TURN’s pending proposal to extend the California LifeLine rate freeze
 
Many speakers spoke out against the Commission’s decision to defer PG&E hearings related to the San Bruno explosion to allow closed-door settlement discussions.  These speakers included residents of San Bruno County, the Vice-Mayor of San Bruno, and the mother of a victim.  The speakers advocated for transparency and justice against PG&E.  These same speakers also called for President Peevey’s removal from the Commission and stated that they would petition the Governor for his removal.  President Peevey commented in response to these public speakers and noted that the investigation from the San Bruno explosion is complete, publicly available and already extremely detrimental to the utility.  He explained that the Commission’s decision to defer the hearings is intended to expedite the process through settlement discussions.  He also noted that any settlement agreement developed during these discussions will be publicly brought before the Commission and will be placed in the record prior to being approved. 
 
The Consumer Protection and Safety Division (“CPSD”)provided a presentation on payphone inspections in the State of California.  There are currently three payphone inspectors and each inspector covers approximately 1/3 of California.  These inspectors inspect 10-20 payphones on a daily basis for violations that include blocked access to safety-related numbers, physical safety issues like broken glass, overcharging by payphones, and ensuring 911 connectivity.  The inspection process begins with the inspector establishing weekly targets based on criteria such as low income areas, areas with recent fires or frequent offenders.  Violations are sent to payphone owners and the inspectors later re-inspect the payphones to ensure compliance.  Approximately 75% of the reported violations are corrected upon re-inspection despite the lack of a penalty mechanism.  Commissioner Sandoval thanked the CPSD for their efforts and noted the continued importance of payphones in California in the event of a natural disaster.  Specifically, she referenced Japan’s tsunami disaster where the wireless towers went down but the payphones were still operational despite being inundated by the tsunami. 
 
A copy of the CPSD’s presentation is available at slides 109-120 at the following link.

Commissioner Simon noted his attendance at the MobileCon conference hosted by CTIA.  He appreciated the opportunity to discuss the challenges in bringing broadband to a broader audience.  He also attended the Federal Communications Bar Association (“FCBA”)’s meet-and-greet reception with FCC Commissioner Mignon Clyburn.  There, he had the opportunity to discuss cyber security issues and predatory pricing schemes that target the inmate populations.  Commissioner Simon then expressed his regret for Mervyn M. Dymally’s recent passing and noted Mr. Dymally’s commitment to increasing broadband access.
 
Commissioner Sandoval noted her participation at the Diversity En Banc with President Peevey and Commissioner Simon in Los Angeles.  At the Diversity En Banc, they discussed emerging opportunities to increase diversity and the current barriers to participation.  She also noted her attendance the FCBA’s reception with FCC Commissioner Clyburn.  Finally, she noted her attendance at the FCBA’s symposium on privacy in the mobile era and in particular, mobile app privacy issues.  In her discussions at this event, she highlighted the Commission’s recent Decision on privacy rules with regard to smart meters and she discussed the principles of data minimization.  She also noted that the Attorney General’s Office has now organized a new privacy unit.  President Peevey also noted his attendance at the Diversity En Banc which he felt was the best attended to date.  
  


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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