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On September 19, 2013, the Commission held its regularly scheduled agenda meeting.  There were no telecommunications items discussed on the regular agenda, but the Commission adopted the fiscal year 2014-15 program expense budgets for the CHCF-A, CHCF-B, and CASF programs.  In addition, the Commission held the proposed decision that would designate Cox as an ETC pursuant to a settlement between TURN and Cox  These and other items of interest on the Commission’s agenda are discussed in further detail below.

CONSENT AGENDA ITEMS

CHCF-A Program Expense Budget Adopted for Fiscal Year 2014-15 (Item 19, adopted on consent) – This Resolution adopts an expense budget recommendation of $39.548 million for the for fiscal year 2014-15 for the California High Cost Fund-A (“CHCF-A”) program.  The proposed budget is based on the following program expenditures:  (1) carrier payments ($37,838,000); (2) audit costs ($745,000); (3) Program Claim Automation costs ($420,000); (4) administrative committee costs ($20,000); (5) inter-agency fees ($290,000); (6) staff and administrative costs ($395,000); (7) State Controller costs ($8,000); and (8) costs for the Financial Information System ($228,000). 
 
A copy of the Draft Resolution underlying this item is available at the following link
 
CASF Program Expense Budget Adopted for Fiscal Year 2014-15 (Item 17, adopted on consent) – This Resolution adopts an expense budget recommendation of $82,663,504 for the for fiscal year 2014-15 for the California Advanced Services Fund (“CASF”).  The proposed budget is based on the following program expenditures:  (1) CPUC personnel costs ($883,800); (2) travel costs ($44,000; (3) loan underwriting and servicing costs ($37,608); (4) information technology costs ($16,692); (5) inter-agency costs ($162,000); (6) audit costs ($795,800); (7) broadband mapping contracts ($1,500,000); (8) State Controller costs ($4,000); and (9) costs for the Financial Information System ($183,000). 
 
A copy of the Draft Resolution underlying this item is available at the following link
 
CHCF-B Program Expense Budget Adopted for Fiscal Year 2014-15 (Item 18, adopted on consent) – This Resolution adopts an expense budget recommendation of $22.392 million for the for fiscal year 2014-15 for the California High Cost Fund-B (“CHCF-B”).  The proposed budget is based on the following program expenditures:  (1) carrier payments ($20,777,000); (2) audit costs ($671,100); (3) Program Claim Automation costs ($34,800); (4) inter-agency fees ($266,000); (5) staff and administrative costs ($523,600); (6) State Controller costs ($6,000); and (7) costs for the Financial Information System ($167,000). 
 
A copy of the Draft Resolution underlying this item is available at the following link

NextG Settlement Agreement Conditionally Approved (Item 7, adopted on consent) – This Decision resolves the Commission’s investigation into the 2007 Malibu Canyon Fire as to NextG Networks of California, Inc. (“NextG”) by conditionally approving a settlement agreement between the Commission’s Safety and Enforcement Division (“SED”) and NextG.  The Malibu Canyon Fire occurred when Santa Ana winds swept through Malibu County and three utility poles fell to the ground and ignited a fire.  In September 2012, the Commission adopted D.12-09-019, which approved resolved the investigation as to AT&T, Sprint, and Verizon by approving a settlement agreement between the Consumer Protection and Safety Division (“CPSD”) and those carriers.  NextG was not a party to that settlement agreement. 
 
The settlement agreement contains the following terms and conditions: (1) admission by NextG that one of these poles was overloaded in violation of General Order (“G.O.”) 95; (2) NextG agrees to pay $14.5 million, of which $8.5 million will be a fine paid to the State of California General Fund and $6 million will be used to conduct a safety audit of all of NextG’s poles and pole attachments in California; (3) all audit and remedial work necessitated by the audit must be complete within three years from the date the audit starts; and (4) all costs for remedial work on substandard facilities will be in addition to the $14.5 million payment. 
 
The Decision approves the settlement agreement subject to the following conditions:  (1) NextG shall commence the safety audit within 60 days from the effective date of the decision; (2) the $6 million provided for the safety audit shall only pay for material, labor, and services that are directly related to the safety audit, and not administrative or overhead costs; (3) the safety audit shall assess whether NextG’s poles and pole attachments in Malibu Canyon can withstand maximum Santa Ana windstorms; (4) SED may specify the audit plan, methods, procedures, and other details in the safety audit; (5) SED may seek additional fines and remedies if the safety audit finds other substandard facilities later involved in an accident or outage; (6) every pole and pole attachment shall undergo a safety audit within 30 days of installation; (7) SED may specify the content, format, and other details of the bi-monthly reports that NextG must submit to SED; and (8) SED shall prepare a report that summarizes the results of the safety audit, along with lists that describe significant safety issues and the remedial actions taken.
 
 
The Decision concludes that the settlement agreement should be adopted subject to the above conditions because it resolves the alleged violations identified in the investigation in a manner that protects public safety, reasonable in light of the whole record, consistent with the law, and in the public interest. 
 
A copy of the Proposed Decision underlying this item is available at the following link

Local Access Services LLC Granted CPCN (Item 30, adopted on consent) – This Decision grants Local Access Services LLC (“Local Access”) a certificate of public convenience and necessity (“CPCN”) to provide resold limited facilities-based local exchange in the service territories of Pacific Bell Telephone Company d/b/a AT&T California (“AT&T”), Verizon California Inc. (“Verizon”), Citizens Telecommunications Company of California, Inc. d/b/a Frontier Communications of California (“Citizens”), and SureWest Telephone (“SureWest”), and interexchange telecommunications services in California.
 
Local Access proposes to initially serve business and carrier customers, although it may expand services to residential customers in the future.  Local Access also intends to provide additional local exchange, interexchange, exchange access, and dedicated transport services in the future.  Local Access will provide its service through a combination of resale of incumbent local exchange carrier services in combination with the use of unbundled network elements purchased from the ILEC and Local Access’ own facilities and equipment collocated in the existing central offices and/or carrier hotels. 
 
This Decision determines that Local Access meets the financial, technical, and environmental requirements necessary to be granted a full a CPCN.  In addition, the Decision requires Local Access to obtain a continuous performance bond of $25,000 and submit a Tier-1 advice letter by March 31st.  The Decision also requires Local Access to comply with all applicable Consumer Protection Rules, and to pay annual user fees and public purpose surcharges. 
 
A copy of the Proposed Decision underlying this item is available at the following link

Complaint Against Verizon Dismissed (Item 29, adopted on consent) – This Decision dismisses a customer complaint against Verizon California, Inc. (“Verizon”) for lack of jurisdiction.  The complaint included allegations for breach of contract, fraud, and misrepresentation for: (1) Verizon’s failure to fix complainant’s computer; (2) charging the telephone account for computer virus and hardware protection that was not provided; and (3) internet services that could not be utilized because of the complainant’s non-operative computer. 
 
Verizon asserted that the Commission lacked jurisdiction because the complainant’s computer was Customer Premises Equipment (“CPE”), which is regulated by the Federal Communications Commission (“FCC”).  Moreover, Verizon asserted that the issues regarding internet services and computer virus and hardware protection are also preempted by FCC regulation.  Nevertheless, as a courtesy, Verizon provided full refunds and credits for the cost of the virus and hardware protection services and high speed internet services.
 
The Decision concludes that Verizon accurately stated the relevant law and agrees that the Commission lacks jurisdiction to address CPEs and information services due to federal preemption. 
 
A copy of the Proposed Decision underlying this item is available at the following link

Customer Complaint Against Sprint Resolved (Item 31, adopted on consent) – This Decision resolves a customer complaint filed against Sprint Telephony PCS, LP (“Sprint”).  The complaint involves a dispute between the parties regarding the payment of an early termination fee (“ETF”) on an iPhone 5.  The customer asserts that a Sprint salesperson waived the ETF in connection with an upgrade from a Blackberry phone to an iPhone, which Sprint denies. 
 
Through the Expedited Complaint Proceeding, Sprint offered the following settlement: (1)the ETF should the customer cancel service at this time would be reduced from $350 to $180; (2) if the customer cancelled the service or account on or after May 8, 2014, there would be no ETF; and (3) the customer may retain both the Blackberry and iPhone5 devices.  The customer has not responded to Sprint’s settlement offer.  Nevertheless, the Decision determines that Sprint’s offer meets the demands of the complaint, and the customer’s silence will be treated as acceptance of the settlement of the offer. 
 
A copy of the Proposed Decision underlying this item is available at the following link:  
 
SIGNIFICANT HELD ITEMS

Proposed Decision Regarding Cox’s ETC Application (Item  13, held by staff until 10/3/13) – This Proposed Decision would designate Cox California Telcom, LLC (“Cox”) as an Eligible Telecommunications carrier (“ETC”) by adopting a settlement agreement between Cox, the Greenlining Institute (“Greenlining”), and The Utility Reform Network (“TURN”). 
 
Cox filed an application for ETC designation in September 2012.  DRA protested on the basis that the Commission may lack authority under SB 1161 to designate Cox as an ETC because Cox utilizes Voice over Internet Protocol (“VoIP”) technologies to provide retail telephone service.  SB 1161, which amended Section 710 of the Public Utilities Code, prohibits the Commission from regulating VoIP or IP-enabled services unless delegated by federal law or statute.  DRA also requested that the Commission clarify its jurisdiction over Internet Protocol (“IP”) based telephone services prior to designating Cox as an ETC.  Cox argued that under Section 214(e)(2), the Commission must designate a common carrier as an ETC for the purposes of receiving federal universal services if it offers services designated by the FCC for federal universal service support and advertises the availability of such services using media of general distribution.  Cox further argued that it qualifies as a common carrier even though it utilized VoIP to provide services. 
 
To resolve these issues, all parties to the proceeding engaged in settlement discussions.  A settlement agreement was reached between Cox, Greenlining, and TURN.  The settlement agreement designates Cox as an ETC subject to the following terms and conditions:  (1) Cox provides Basic Service and LifeLine service pursuant to its tariff; (2) Cox operates as a common carrier as it offers Basic Service and LifeLine service to the public on a nondiscriminatory basis; (3) Cox will comply with current and future laws applicable to providers participating in the state and/or federal LifeLine programs; (4) the Commission will have authority to address and resolve inquiries and complaints that it receives related to Basic Service and Lifeline service provided by Cox; and (5) Cox will comply with G.O. 96-B with respect to the rules governing detariffing Basic Service and LifeLine service, withdrawing such services and/or modifying rates for such services.
 
DRA opposes the settlement agreement, asserting that it does not resolve the issues raised in the scoping memo and does not clarify whether consumer protection laws would apply.  The Proposed Decision notes that Cox is a CPCN holder bound to the terms of its CPCN, which requires compliance with the Public Utilities Code and all of the Commission’s rules, decisions, and orders.  AT&T does not oppose the settlement agreement to the extent that it only applies to Cox.  However, AT&T objects to any effort to apply the proposed settlement to any other party because it would be a denial of due process. 
 
The Proposed Decision would conclude that the settlement agreement is consistent with applicable state and federal law, reasonable in light of the whole record, and in the public interest.  Specifically, the Proposed Decision would find that consumer interests are represented through TURN and Greenlining and that the settlement agreement would not be prejudicial to other providers because it would only bind Cox.  Moreover, the Proposed Decision would find that the settlement agreement is in the public interest because it would allow Cox to continue providing LifeLine service to low-income customers. 
 
A copy of the Proposed Decision underlying this item is available at the following link:  
 
A copy of the Draft Settlement Agreement is available at the following link:

Rejection of Resolution T-17382 Regarding RTIGP for Channel Islands Telephone Company (Item 8, held by staff until 10/3/13) –This Draft Resolution would affirm the rejection of Resolution T-17382, which rejected the Channel Islands Telephone Company’s (“CITC”) request for funding from the Rural Telecommunications Infrastructure Grant Program (“RTIGP”).  Resolution T-17382 was rejected by a vote of the Commissioners at the March 21, 2013 Commission meeting.  On May 20, 2013, the CITC filed an advice letter requesting the issuance of a formal written opinion regarding Resolution T-17382.
 
The Draft Resolution would explain that Resolution T-17982 was rejected for the following reasons:  (1) the proposed project was not cost effective as it would cost $2.692 million and would not serve a single residential customer on the islands; (2) the benefit of the project for visitors to the island were questionable, and it was not clear whether the project would enhance responsiveness by emergency personnel on the islands; and (3) the project was strongly opposed by the Chumash Indian community.
 
This Draft Resolution would also approve $93,791.31 to reimburse the CITC for Phase 2 preparation costs as provided under Section 276.5, which permits reimbursement for preliminary engineering feasibility studies.  Finally, the Draft Resolution would also approve an additional $18,000 to complete the Energy Division’s CEQA review. 
 
A copy of the Draft Resolution underlying this item is available at the following link

Bigredwire.com, Inc.’s CPCN Application (Item 10, held by Sandoval until 10/3/13) – This Proposed Decision would deny without prejudice Bigredwire.com, Inc.’s (“BRW”) application for a certificate of public convenience and necessity (“CPCN”) to provide resold interexchange service on the basis that BRW is not financially viable at this time.
 
BRW is a Delaware corporation that was granted a CPCN to provide inter and intra-LATA services in California as a non-dominant interexchange carrier in 2001.  BRW’s CPCN was revoked in 2004 for failure to file annual reports and remit fees and surcharges to the Commission.  However, BRW continued operating without authority and continued collecting fees and surcharges from customers without remitting  them to the Commission.  In 2007, BRW filed for registration as an Interexchange Carrier Telephone Corporation, which was protested by the Consumer Protection and Safety Division, now known as SED.  SED protested on the basis that BRW continued providing telecommunications services to consumers following revocation of its CPCN in 2004 and BRW violated Rule 1.1 by not disclosing that it had been subject to sanctions by the Commission and the Florida Public Services Commission.  BRW and SED entered into a settlement agreement, which directed BRW to file an amended application within 30 days and imposed both a $20,000 fine to the State General Fund and a $41,264.80 in back fees and surcharges. 
 
The Proposed Decision would conclude that BRW does not meet the financial qualifications and viability necessary to obtain a CPCN.  Specifically, an applicant must demonstrate that it has a minimum of $25,000 cash or cash equivalent to meet expenses and sufficient additional resources to cover all deposits required.  While BRW indicates that it is currently providing service and generating revenue, BRW provides no information about where it is providing service or its agreements with telecommunications carriers.  The Decision would find that it is impossible to determine the amount and source of BRW’s revenue in which to determine whether BRW has the financial resources required to be issued a CPCN.  Moreover, BRW has twice requested temporary reduction in monthly installment payments on the fines imposed by the settlement agreement due to financial hardship and has defaulted under the terms of the settlement agreement.  As of February 2013, BRW continues to owe $7,245.83 of the $20,000 fine and $16,787.10 of the $41,264.80 unpaid surcharges and user fees. 
 
Given BRW’s history of operating without authority from the Commission and collecting user fees and surcharges from customers without remitting them to the Commission, the Proposed Decision would order BRW to notify all of its customers that it is not authorized to provide telecommunications services in this state.  In addition, the Communications Division would also be directed to notify all carriers that BRW is or could be doing business with that BRW’s CPCN was revoked in 20004 and that any such carriers must discontinue providing such services within 60 days of issuance of the Decision.
 
A copy of the Proposed Decision underlying this item is available at the following link
 
COMMISSIONER REPORTS
 
Commissioner Florio introduced his new telecommunications advisor, Eric Van Wambeke who will be replacing Liz Podolinsky.
 
Commissioner Sandoval attended a Lifeline awareness event in Washington D.C. 
 
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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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