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On September 11, 2014, the Commission held its regularly-scheduled agenda meeting.  On the regular agenda, the Commissioners discussed and ultimately held the item that would have authorized the transmission of comments to the FCC regarding its proposals to maintain an Open Internet.  In the closed session, the Commission addressed AT&T’s application for rehearing of the LifeLine Decision’s purported exemption of LifeLine customers from the Federal Excise Tax and the legality of the rate caps and the freeze on the Set Support Amount.  On the consent agenda, the Commission adopted a Resolution that would pre-authorize CASF funding for broadband infrastructure projects approved under the FCC’s rural broadband experiments program.  Separately, the Commission authorized staff to file comments or an ex parte letter to the FCC regarding the Federal E-rate program.  These and other items of interest are discussed in further detail below.
 
REGULAR AGENDA
 
Proposed Recommendations to the FCC Comments on an Open Internet (Item 30, held by President Peevey) – In this item, the Communications Division and Legal Division requested authority to submit comments to the FCC in response to a Notice of Proposed Rulemaking (“NPRM”), which set forth proposals to “ensure that the Internet remains open” (“Open Internet NPRM”).  The Open Internet NPRM was issued after the Court of Appeals for the District of Columbia vacated the FCC’s net neutrality rules adopted in its 2010 Open Internet Order on the basis that the anti-blocking and anti-discrimination rules imposed per se common carrier obligations on broadband services, which the FCC has classified as an information service.
 
The Communications Division proposed recommendations addressing the following issues: 
 
(A) The Transparency Rule.  CD proposed the following suggestions: (1) ISPs specifically tailor disclosure to meet the needs of edge providers and consumers; (2) support for the Open Internet Advisory Committee’s proposal to require the industry to use a standardize label for Internet service; (3) support the FCC’s proposal to require broadband providers to disclose in a timely manner to consumers, edge providers, and the public when they make changes to their network practices as well as any instances of blocking, throttling, and pay-for-priority arrangements; and (4) the CPUC would report to the FCC about CalSpeed application that is used by California consumers to measure broadband upload and download speeds. 
 
(B) No-Blocking Rule.  CD recommended that the Commission support a No-Blocking Rule, but specified that an effective No-Blocking Rule would require reclassifying broadband as a common carrier service.  Alternatively, should the Commission not support reclassification of broadband services, CD recommended that the Commission ask the FCC to include a requirement that ISPs offer a “minimum level of service” based on “an objective, evolving ‘reasonable person’ standard.”  This “minimum level of service” would operate in conjunction with the “No Commercially Unreasonable Practices” discussed below in (D).  
 
(C) Treatment of Mobile Internet Access Service.  CD recommended that the Commission submit comments supporting the FCC adoption of a No-Blocking rule for mobile broadband that would apply to all applications that compete with the mobile broadband Internet access provider’s other services, unless doing so is technically infeasible. 
 
(D) No Commercially Unreasonable Practices.  Should the Commission support reclassification, CD recommended that the Commission oppose a “commercially reasonable” standard in favor of a “no unreasonable discrimination” standard consistent with Title II of the Communications Act.  In the alternative, if the Commission did not support reclassification, CD recommended that the Commission support the FCC’s proposed “commercially reasonable” standard.
 
(E) Forbearance should the FCC reclassify broadband Internet services.  If the Commission supported reclassification, CD would further recommend that the FCC forbear from many common carrier regulations in order to avoid onerous and burdensome regulations on broadband Internet access, including rate regulating. 
 
The item was introduced by Helen Mickiewicz, Assistant General Counsel of the CPUC.  She outlined the basic procedural background underlying the classification of broadband Internet services as an information service and gave a summary of the FCC’s efforts in formulating rules to establish an “Open Internet.” 
 
Commissioner Peterman began the discussion by explaining that she is very supportive of promoting innovation and competition, and that she views the deployment of broadband infrastructure and the safe, reliable availability of that infrastructure at reasonable costs as critical for maintaining California’s competitiveness.  She emphasized that many innovations today rely on broadband infrastructure that is fast, reliable, and reasonably priced.  She expressed concern regarding studies and reports that she has reviewed that suggest that California is falling behind with regard to the availability of Internet infrastructure.  She explained that this backdrop led her to ask herself: “What type of open internet will best support innovation, competition, infrastructure, and protect consumers?”  She also raised several concerns about the FCC’s proposal and asked for additional clarification regarding the Staff analysis. 
 
Commissioner Florio stated that the reclassification of broadband Internet services would be the only thing that makes sense.  He noted that reclassification did not need to subject broadband Internet services to rate regulation, but at least to non-blocking and non-discrimination rules.
 
Commissioner Sandoval discussed the proposals outlined by the FCC, and requested clarification regarding the specific proposals, the logistics, and ambiguously defined terms including “minimum level of service” and “edge providers.” She also raised concerns about whether “commercial reasonableness” would be an appropriate standard for evaluating negotiations for content providers.
 
Commissioner Picker noted that both the Staff and ORA’s memoranda circulated to the Commissioners’ offices made a hard case that reclassification of broadband Internet service under Title II offered gave the strongest guarantees.  He indicated however, that he was not able to assess the other impacts that reclassification would have in the telecommunications marketplace.  He raised concerns that the efforts at creating “net neutrality” were in effect creating barriers to competition and raised concerns that reclassification would have a “chilling effect” on new entrants.  He explained that based on this observation, he could not support reclassification and questioned whether the CPUC should even weigh in on the FCC’s proceeding on this issue. 
 
After further discussions along these lines, this item was ultimately held by President Peevey.  
 
A copy of the Staff’s memorandum underlying this item is available at the following link
 
 
CLOSED SESSION
 
Decision Addressing AT&T’s Application for Rehearing of the LifeLine Decision (Item 39, adopted 5-0) – In this Decision the Commission modifies the Decision 14-01-036 (LifeLine Decision) and denies AT&T’s Application for Rehearing of the LifeLine Decision.  Following the issuance of the LifeLine Decision, AT&T filed a timely Application for Rehearing alleging: (1) the LifeLine Decision’s rate and support cap provisions for wireline providers as opposed to wireless providers were inconsistent with the Moore Act’s requirement that the program to be administered fairly, equitably, and without competitive consequences; (2) the LifeLine Decision  violates federal law requiring carriers contribute to universal service programs in a manner that is “equitable and nondiscriminatory,” and (3) the Commission violated federal law by exempting LifeLine customers from paying the Federal Excise Tax (“FET”).
 
The Decision concludes that the LifeLine decision is consistent with state law because it does not unlawfully discriminate against wireline providers.  Specifically, the Decision concludes that wireless providers may be treated differently on the basis that the Commission is prohibited by federal law from regulating wireless pricing or entry, and because wireless providers are voluntary participants of the LifeLine program. 
 
The Decision also concludes that the Commission had the right to continue to set a freeze on the LifeLine Set Support Amount because of its previous concerns about the affordability of LifeLine rates.  The Decision also noted the potentially unreasonable increases in the size of the fund and the level of surcharge needed to support the fund resulting from AT&T’s increases in basic service rates. 
 
The Decision also addresses AT&T’s arguments on the Federal Excise Tax issue raised in the LifeLine Decision, and clarifies that: (1) carriers will continue to be reimbursed from the fund for the amount of the federal excise tax a carrier pays on behalf of the LifeLine customer; and (2) that existing practices regarding collection and remission of the FET for LifeLine customers are not changed by the LifeLine decision. 
 
A copy of the Final Decision underlying this item is available at the following link
 
 
CONSENT AGENDA
 
CASF Matching Funds for FCC’s Rural Broadband Experiments (Item 6, approved on consent) –This Resolution pre-authorizes up to ten percent in matching funds from the California Advanced Services Fund (“CASF”) Infrastructure Grant Account for projects approved under the Federal Communications Commission’s (“FCC”) Rural Broadband Experiments in California. 
 
The Rural Broadband Experiments will utilize Connect America Fund (“CAF”) high cost support funds in the CAF reserve account to test how tailored economic incentives can advance the deployment of wireline and wireless next generation networks in rural, high cost areas.  Expressions of interest were submitted by entities nationwide in February of this year, including California entities, totaling a request of $11 billion in funding.  In July 2014, the FCC released an order adopting a $100 million budget for the Rural Broadband Experiments program, provided additional detail regarding how an entity would be chosen from among the applicants, and established further participant requirements. 
 
The Resolution explains that the Rural Broadband Experiments is structured as a cooperative process with other governmental entities in order to leverage resources and shared objectives.  In addition, the FCC has identified “cost-effectiveness” as the core criterion for selecting projects that are consistent with the geographic and technological parameters of the Rural Broadband Experiments program.  Therefore, the Resolution explains that pre-authorizing ten percent in matching funds will allow California applications be become more attractive because they will reduce federal contribution and leverage funding across state and federal agencies. 
 
A copy of the Final Decision underlying this item is available at the following link
 
 
Staff Authorized to Submit Comments or an Ex Parte Letter to the FCC Regarding the Federal E-Rate Program (Item 31, approved on consent) – This item authorizes staff to file comments or an Ex Parte letter on behalf of the Commission to the FCC regarding ways to continue to modernize and improve the federal E-rate program.  The E-rate program provides universal service funding to schools and libraries.  The comments or Ex Parte letter will address issues identified by the FCC’s Further Notice of Proposed Rulemaking, which sought comments on: (1) whether the FCC should limit the maximum term of multi-year contracts and how a five-year maximum contract length would affect schools’ and libraries’ ability to purchase from state mater contracts; (2) whether the FCC should grant a waiver to applicants if their state’s contracting duration requirement conflicts with the FCC’s requirement; (3) whether the FCC should consider the substantial reduction in real purchasing power of the E-rate budge that has not been adjusted for inflation between 1998 and 2001; and (4) whether the FCC should require consortia with only schools or school districts to use a weighted average formula that would account for the number of students in each member school or school district in addition to the individual discount levels for funding allocation purposes. 
 
Staff recommends filing reply comments to address any proposals set forth in opening comments that would substantially impact California or its CTF program.  If reply comments are not necessary, Staff will submit an Ex Parte letter to: (1) inform the FCC about California’s CTF program, along with the impact of the impact of the E-rate Report and Order on the CTF program; and (2) urge the FCC to explore ways to remove barriers that discourage eligible entities from applying for E-rate funding.  In addition, staff is authorized to submit reply comments addressing any proposals set forth in opening comments that may substantially impact
 
A copy of the Staff’s memorandum underlying this item is available at the following link
 
NMG Telecom’s CPCN Application Dismissed (Item 9, approved on consent) –This Decision dismisses, without prejudice, NMG Telecom LLC’s (“NMG”) application for a certificate of public convenience and necessity (“CPCN”) to operate as a limited facilities based local exchange and interexchange carrier within the State of California.  NMG filed its CPCN application on February 26, 2013 and an initial ruling was issued on July 25, 2013 to obtain additional information.  Following review of NMG’s responses to the initial ruling, a second ruling was issued on April 24, 2014 directing NMG to file a Compliance Report providing complete information necessary for the Commission to review NMG’s application, including: (1) documents showing that NMG’s funds exceeded $100,000 plus deposits required by the existing utilities that NMG would be using; (2) a statement of the amount of deposits needed to pay existing carriers in order to operate or $25,000 if the exact amount was not known; draft tariffs; (3) additional professional technical qualifications; and (4) clarification as to whether NMG was requesting non-dominant carrier status.  To date, NMG has not submitted financial or other documentation that meets these requirements.  Therefore, this Decision concludes that it is appropriate to dismiss NMG’s application for failing to file the Compliance Report.
 
A copy of the Proposed Decision underlying this item is available at the following link
 
 
Nationwide Long Distance Service’s Operating Authority Conditionally Reinstated (Item 11, approved on consent) – This Resolution conditionally reinstates Nationwide Long Distance Service, Inc.’s (“Nationwide”) Non-dominant Interexchange Carriers (“NDIEC”) authority.  Nationwide’s operating authority was previously revoked in April 2012 for failing to comply with the NDIEC performance bond requirement.  This Resolution explains that notices of non-compliance were sent to Nationwide during the period prior to revocation; however, Nationwide did not reply and its license was therefore revoked. 
 
The Resolution explains that Nationwide, reportedly unaware of the revocation, continued to operate and remit surcharges and fees to the Commission until the fall of 2013 when its access to the Commission’s universal service surcharge collection system, the Telecommunications and User Fees Filing System (“TUFFS”), was terminated.  Discussions between the Communications Division and Nationwide revealed that the notices for the performance bond delinquency may not have been delivered to Nationwide’s correct address.  The Resolution explains that Nationwide attempted to update its official contact information in January 2012, but that notice was directed to the attention of a retired CPUC employee in a different division, and accordingly was not entered into the CPUC’s database.  The Resolution further notes that Nationwide failed to follow the proper protocol for notifying the Commission of its change of address, but observed that Nationwide did contact the Commission following the termination of its TUFFS access. 
 
Therefore, the Resolution concludes that reinstating Nationwide’s license is appropriate given that: (1) a communication glitch occurred that affected Nationwide’s awareness of the performance bond compliance failure; (2) Nationwide has been in good standing with all other compliance matters, including paying user fees and surcharges; and (2) Nationwide has assured the CPUC that it will submit an updated bond and has taken steps to obtain this bond.  The Resolution specifically requires Nationwide to submit a performance bond within 5 business days of the Resolution’s adoption and requires Nationwide to report and remit within ten days all surcharges covering the period from when the TUFFS access was terminated to the date that TUFFS access was reinstated.  
 
A copy of the Draft Resolution underlying this item is available at the following link:  
 
i-wireless, LLC Conditionally Designated as an ETC (Item 13, approved on consent) – This Resolution conditionally grants the request of i-wireless, LLC’s (“i-wireless”) request to be designated as an Eligible Telecommunications Carrier (“ETC”) to provide federal LifeLine wireless service to qualifying customers in California in the service areas of the Uniform Regulatory Framework (“URF”) carriers, and specifically excluding the Small Local Exchange Carriers’ (“Small LECs”) service areas. 
 
This Resolution determines that granting i-wireless’ request for ETC designation is in the public interest and that i-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).  i-wireless will also be required to file annual ETC reports and information with USAC demonstrating the terms and conditions of any voice telephony service plans offered to Lifeline subscribers.  i-wireless will be governed by the certification and verification processes administered by the California LifeLine third-party administrator.
 
The Resolution further explains that i-wireless’ ETC designation approval shall be contingent upon the following: (1) i-wireless shall submit to the Communications Division’s Director a copy of the information submitted to USAC and a copy of i-wireless’ certification of approval from USAC with 30 days of receipt from USAC of its compliance regarding the federal Lifeline wireless plan; (2) a review by the CPUC California LifeLine staff of i-wireless’ marketing materials and publications prior to distribution; and (3) the requirement that i-wireless include wireless mobility safety language on all distributed federal Lifeline materials and on the company website. 
 
A copy of the Final Resolution underlying this item is available at the following link
  
AT&T Consumer Complaint Dismissed Regarding Alleged Improper Billing of Late Fee and 411 Charge (Item 14, approved on consent) – This Decision dismisses a consumer complaint against AT&T Mobility Wireless Operations Holdings, dba AT&T Mobility (“AT&T”).  Complainant alleged that AT&T improperly billed the customer a recurring late fee and a fee for a 411 information call.  In response to the filing of the complaint, AT&T credited the customer’s account for the full disputed amount of both the late fee and the 411 charge, effectively mooting the complaint.  Customer accepted the bill adjustment but disagreed that the matter is mooted, asking that the Commission take unspecified action against AT&T for continuing harassment for what AT&T characterizes as standard monthly billing for unpaid late fees and 411 charges.  The Decision concludes that monthly bills that include these fees do not constitute harassment and therefore concludes that the case is moot and dismisses the complaint.
 
A copy of the Proposed Decision underlying this item is available at the following link:
http://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M100/K984/100984340.PDF
 
TELECOMMUNICATIONS GUIDING PRINCIPLES
 
Director Dulin presented the Telecommunications Guiding Principles, which are intended to ensure that the Commission’s overall responsibilities can be fulfilled as the telecommunications industry continues to evolve.  He observed that the Communications Division was the only industry division that did not have existing overarching principles, and that establishing these policy goals would promote public safety, consumer protection, universal service, competition, and network reliability.  In order to implement the guiding principles, Communications Division staff will be expected to submit a comprehensive Action Plan within 180 days, and each of the Action Plan should effectuate a particular policy goal. 
 
A draft of the telecommunications guiding principles is available at the following link

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