On October 22, 2015, the Commission held its regularly-scheduled agenda meeting. No telecommunications items were addressed on the regular agenda, but on consent, the Commission approved a settlement in C.13-12-005, (The Utility Reform Network v. Pacific Bell Telephone Company D/B/A AT&T California). Pursuant to the settlement agreement, AT&T California’s authority to increase rates for basic residential telephone services is subject to certain restrictions until January 1, 2021. In addition, the Commission approved on consent a Resolution appropriating $627,496,000 for the 2016-2017 budget of California’s LifeLine subsidy program. Finally, also on consent, the Commission approved an application for a proposed merger transaction in which Odyssey Acquisition, LLC is expected to acquire ExteNet Systems-California, LLC.
The Commission held a Resolution that would revoke the operating authorities of 26 telephone carriers for their failure to comply with user fee, public purpose program surcharge, and performance bond requirements. These and other items of interest are discussed in further detail below.
Settlement of Complaint Regarding AT&T California’s Basic and Lifeline Rates for Residential Wireline Telephone Service (Item 2, approved on consent) – This decision, D.15-10-027, closes the rate setting proceeding in The Utility Reform Network v. Pacific Bell Telephone Company D/B/A AT&T California, C.13-12-005. As an initial procedural matter, the Commissioners voted unanimously on a motion to lift the hold on this agenda item from November 5, 2015 to October 22, 2015. In general, the settlement was reached on the following terms: (1) AT&T must freeze its rates for basic flat rate local exchange service, basic measured rate local exchange service, LifeLine flat rate local exchange service, and Lifeline measured rate local exchange service at the current level through the end of 2015; (2) starting in 2016, AT&T California will be allowed to raise its rate for each of these services by no more than a total of $3.00 over five years (until December 31, 2020), and no more than $1.00 per service per year over the five year period until December 31, 2020; (3) on January 1, 2021, the price caps will expire; and finally, (4) parties to the settlement agreed not to initiate or join any action before the Commission addressing the reasonableness of AT&T California’s rates for these services before January 1, 2021. The settlement was approved over the objections of the Office of Ratepayer Advocates. ALJ Bemesderfer issued the decision approving the settlement agreement.
A copy of the Proposed Decision approving this settlement agreement, and a redline version of same, are available at the following link.
Approving a Fiscal Year 2016-2017 Expense Budget for the California LifeLine Program(Item 11, approved on consent) – The approval on consent of Resolution T-17499 authorizes a 2016-2017 LifeLine budget in the amount of $627,496,000. This budget represents an increase of $281,597,000 over the 2015-2016 budget amount of $345,899,000. The substantial size of this budget increase is due mostly to continuing increases in the number of wireless subscribers. In 2016-2017, the number of eligible wireless subscribers is estimated to increase by almost one million households. The program has also become more attractive to qualified low-income households. Subscribers now have a choice of eleven (11) wireless service providers. At least nine (9) more providers are expected to become participants in the subsidy program over the 2016-2017 fiscal year. LifeLine is funded by a surcharge assessed against intrastate charges of all end-users of all telephone corporations and interconnected VoIP service providers in California. On October 1, 2015, this surcharge rate increased from 3.8% to 5.5%. LifeLine’s 2016-2017 budget is subject to final appropriations adopted in the Budget Act of 2016.
A copy of Resolution T-17499 is available at the following link.
Transfer of Control of ExteNet Systems (California), LLC to Odyssey Acquisition, LLC (Item 24, approved on consent) – The approval of the Decision Approving Transfer of Indirect Control, Including Certificates of Public Convenience and Necessity, of ExteNet Systems-California, LLC, To Odyssey Acquisition, LLC, (“Proposed Decision“) closes the application proceeding, A.15-08-003, and approves the proposed merger transaction between the acquiring entity, Odyssey Acquisition, LLC (“Odyssey”) and ExteNet Systems-California, LLC (“ExteNet”). ExteNet is a California-authorized provider of local exchange and interexchange telecommunications services. ExteNet designs, builds, owns and operates distributed networks for wireless service providers. ExteNet is a “carrier’s carrier” providing telecommunications services directly to wireless service providers and is not in the telecommunications retail business. Odyssey is a Delaware holding company with no operations. The Commission concluded that “[Odyssey’s] acquisition of indirect control of ExteNet-CA…will serve the public interest,” citing in part the fact that, “[Odyssey] is overseen by a management team with substantial experience in the telecommunications field….” See Proposed Decision, D.15-10-038 at 8.
A copy of the Proposed Decision underlying this item is available at the following link.
SIGNIFICANT HELD ITEMS
Decertifies Wireline Carriers for Failure to Report Intrastate Revenue and Pay Resulting From Public Purpose Program Surcharges and User Fees(Item 5, held until November 5, 2015) – Proposed Resolution T-17489 would revoke the operating authorities of 26 telephone carriers for failure to comply with California Public Utilities Code sections 401 through 405, and Commission decisions D.96-10-066 and D.10-09-017. Specifically, the subject telephone carriers failed to comply with two or more of the following requirements: (a) reporting and remittance of California Public Utilities Reimbursement Account Fee (User Fees) in accordance with California Public Utilities Code sections 401 through 405; (b) reporting and remittance of public purpose programs surcharges in compliance with Decision D.96-10-066; and (c) submission of a performance bond as ordered under D.10-09-017. The Commission issues operating authorities to telephone carriers and with this grant of authority, carriers must comply with certain requirements. Failure to comply may result in suspension or revocation of operating authority. To reinstate operations in California, each of the 26 telephone carriers must reapply for a new operating authority with the Commission and pay all applicable fees and surcharges, including a 25% fine on applicable fees and surcharges for all past periods of non-compliance.
A copy of the Proposed Resolution underlying this item is available at the following link.