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On September 5, 2013, the Commission held its regularly-scheduled meeting.  There were no telecommunications items discussed on the regular agenda, but the Commission conditionally authorized an additional $10 million in funding for the California Broadband Cooperative to complete a 530 mile high-capacity fiber optic middle mile project.  In addition, the Commission once again held the Proposed Decision denying a request by consumer groups to open a rulemaking to evaluate privacy compliance practices for telecommunication carriers.  These and other items of interest on the Commission’s agenda are discussed in further detail below.

CONSENT AGENDA ITEMS

Additional CASF Funding Authorized to Complete the Digital 395 Project (Item 49, approved on consent) – This Resolution conditionally approves the California Broadband Cooperative’s (“CBC”) request for additional CASF funding of up to $9,928,715 to complete the Digital 395 Project.  The Digital 395 Project will be a 530 mile 10-Gigabit high-capacity fiber optic middle mile/backhaul route along U.S. Highway 395 from the southern terminus at Barstow, California to the Nevada state line at Topaz Lake in the North, and ultimately connecting in Carson City, Nevada. 

The Resolution determines that additional funding is necessary to address unforeseen cost increases.  The Commission initially awarded approximately $19.2 million to the CBC to cover approximately 19% of the total estimated project cost.  Additional project costs were to be funded by the NTIA (80%), in-kind contributions from local governments, and CBC’s main contractor Praxis Associates who holds a controlling interest in CBC.  Specifically, additional funding is conditionally authorized to cover: (1) the costs of new poles or undergrounding fiber due to the new pole loading factors recently adopted by the Commission; (2) unanticipated boring costs arising from certain permits due to environmental and cultural sites consideration; (3) construction costs for the distribution backbone to connect anchor institutions, communities, and other broadband providers; and (4) remaining administration and overhead labor costs to complete these tasks.

The Resolution also: (1) requires the CBC to provide the Communications Division with invoices document the cost overruns; (2) imposes an ongoing duty for CBC to inform the Commission of any additional cost increases; and (3) requires CBC to provide bi-weekly project updates to CD staff.

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

Settlement Agreement Resolving Cramming Allegations Against OSP Approved (Item 6, approved on consent) – This Decision approves a settlement agreement between the Safety and Enforcement Division (“SED”) and OSP Communications, LLC (“OSP), and OSP’s Owner and President, John Vogel.  This settlement agreement resolves all issues raised in the Commission’s investigation into whether OSP engaged in cramming practices.  Specifically, the investigation inquired into whether OSP caused unauthorized charges for collect calls to be placed on California consumers’ local telephone bills. 

During OSP’s operations, OSP used the collection services of billing agents, The Billing Resource LLC d/b/a Integretel (“Integretel”) and the Billing Resource LLC (“TBR”) to facilitate the placement of OSP’s collect call charges onto California consumers’ local telephone bills.  During the course of the investigation, the Commission ordered Integretel and TBR to place all monies they collected on behalf of OSP into an escrow or trust accounting pending the resolution of the investigation.  TBR complied with the Commission order by placing approximately $1.1 million an escrow account by TBR.  Integretel did not comply because it filed a voluntary petition for a Chapter 11 bankruptcy.  TBR alleges that Integretel continues to hold approximately $1.2 million in funds relating to collections from OSP. 

In the settlement agreement, OSP denies engaging in unfair, fraudulent, or unlawful business practices.  However, without admitting fault, OSP and Mr. Vogel recognize that erroneous charges may have been billed to California consumers on behalf of OSP.  The settlement agreement contains the following key components:  (1) Mr. Vogel will personally pay $100,000 for erroneous billing of California consumers; (2) OSP will disgorge all profits for collect call charges that California consumers alleged were neither authorized nor received during the period June 1, 2007 through June 3, 2009; (3) OSP will make full reparations to California consumers in the amount of $5,700,000; (4) OSP will pay a penalty of $2,785,400 to the California General Fund; and (5) OSP and Mr. Vogel agree not to conduct any telecommunications business in the state of California for a period of 25 years. 

The Decision determines that the settlement is reasonable in light of the whole record, despite convincing evidence that Mr. Vogel and OSP will be unable to make the payments called for in the settlement agreement.  The Decision concludes that the settlement agreement avoids significant potential litigation costs, and removes impediments to the recovery of $2.1 million held by billing aggregators for the benefit of the crammed customers.  The Decision “reluctantly” concludes that the settlement terms provide a net public benefit by achieving partial recovery for the crammed customers and preventing OSP and Mr. Vogel from operating telecommunications business in California for a substantial period.

The Decision further imposes an additional $100,000 fine onto Mr. Vogel for intentionally misleading the Commission in violation of Rule 1 of the Commission’s rules.  The Decision explains that during negotiations leading to the settlement agreement, Mr. Vogel represented that he and OSP had the ability to make certain reparation payments.  However, based on information supplied in Mr. Vogel’s bankruptcy filing, the Decision concludes that Mr. Vogel is insolvent and will not be capable of meeting the payment requirements set forth in the settlement agreement.  Therefore, the Decision finds the additional fine appropriate. 

To avoid settlement agreements where respondents are unable to meet the terms of an agreement, the Decision further encourages SED to: (1) adopt aggressive and timely protocols for determining whether a respondent has the means to pay restitution and/or penalties; and (2) develop a process for securing over a respondent’s assets at the earliest possible point of an investigation. 

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

A copy of the proposed settlement agreement underlying this item is available at the following link

Sprint’s Motion to Extend Confidential Treatment of Certain Documents ( Item 37, approved on consent) – This Decision grants a motion by Sprint Communications Company L.P. (“Sprint”) for a two-year extension of confidential treatment of an unredacted Lease Agreement and Product Orders.  These documents were initially filed under seal pursuant to an ALJ ruling dated February 17, 2004 in a proceeding authorizing Southern California Edison Company to lease optical fibers to Sprint.  Confidential treatment of these documents have been extended several times since the initial ruling.  This Decision concludes that Sprint has met its burden of demonstrating that the documents continue to qualify for confidential treatment under Public Utilities Code Section 583 and General Order 66-C. 

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

PTUS, Inc. Authorized to Acquire Control of Primus Telecommunications Inc. (Item 40, adopted on consent) – This Decision approves a transaction that allows the transfer of control of Primus Telecommunications, Inc. (“PTI”) to PTUS, Inc. (“PTUS”).  PTI holds a CPCN to provide interexchange and local exchange telecommunications services in the State of California and is a wholly-owned subsidiary of Primus Telecommunications Holdings, Inc. (“PT Holdings”).  Under the Public Utilities Code, any transfer in ownership of a CPCN-holding entity must be approved by the Commission.  PT Holdings is a wholly owned subsidiary of Primus Telecommunications Group, Incorporated (“PTGI”).  PTGI is a global facilities-based integrated provider of advanced telecommunications products and services, including traditional and IP voice, data, broadband Internet, collocation, hosting and outsourced managed services.  In this transaction, PTUS will acquire all of PTI’s stock from PTGI’s wholly-owned subsidiary, PT Holdings.

The Decision finds that the change in ownership will not adversely impact PTI’s operations or financial status.  Moreover, the Decision concludes that PTUS has sufficient financial resources to operate PTI, along with the necessary managerial and technical expertise in telecommunications. 

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

SIGNIFICANT HELD ITEMS

Petition for Rulemaking on the Privacy Practices of Telecommunications Corporations (Item 3, held by Florio until 10/3/13) – This Proposed Decision would deny a Petition for Rulemaking (“Petition”) to modify the privacy practices telecommunications carriers filed on November 8, 2012 by the Consumer Federation of California, The Utility Reform Network, and the Privacy Rights Clearinghouse (“Petitioners”).  The Proposed Decision would find that it is not clear that a review of telecommunications companies’ privacy practices in California is necessary at this time. 
 
The Petitioners requested that the Commission open a new rulemaking to review the privacy practices of telecommunications carriers and to develop wireless privacy standards.  The Petition identifies potential concerns related to the collection and use of personal information by telecommunications corporations, including companies that provide wireless telecommunications services.  The Petition also asks the Commission to develop standards for collecting, handling, and sharing customer information to ensure that customers are aware of what information may be collected and how that information may be used, and to protect the privacy of customer’s information.  The Petition further requests that the Commission extend the proposals identified in the Petition to third parties under contract with telecommunications providers, such as distributors of phone applications or “apps.”  In addition, the Petition suggests that existing laws and policies at the state and federal level fail to offer adequate protection for customer information.
 
The Petition was opposed by CTIA – the Wireless Association (“CTIA”) and Pacific Bell Telephone Company dba AT&T California (“AT&T”), and MetroPCS California Inc. (“MetroPCS”).  The opposing parties argued that the Petition was procedurally and substantively improper.  Specifically, the parties asserted that the Petition failed to state a clear justification for new rules and failed to include any specific language for those rules.  In addition, these parties argued that existing laws and policies already protect the privacy of customer information and additional rules are unnecessary.  The opposing parties also argued that the Petition attempted to reach non-regulated services and providers beyond the Commission’s jurisdiction, such as third-party software developers that create “apps.”
 
The Proposed Decision would recognize the importance of protecting the privacy of customer information, and notes that it is addressing issues related to privacy of energy user data in the ongoing Smart Grid proceeding.  However, the Proposed Decision would find that the Petition fails to provide examples of actual breaches of customer privacy by telecommunications corporations.  The Proposed Decision would also find that current federal and state laws exist to govern the treatment of potentially sensitive customer information held by telecommunications providers, as well as businesses in general.  Finally, the Proposed Decision would conclude that the Petition fails to clearly identify the types of information the petitioners believe are accessible to or collected by telecommunications corporations that are not currently protected by CPNI and other existing privacy protections.  

A copy of the Proposed Decision underlying this item is available at the following link
 
 
Resolution Confirming the Rejection of Channel Islands Telephone Company’s Request forRTIGP Funding (Item 21, held by staff until 9/19/13) – 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

 
PUBLIC SESSION
 
During the public session, multiple speakers spoke about ridesharing services like Uber, Lyft, and Sidecar.  The companies provide taxi-like services, and the Commission is currently evaluating methods for regulating this industry.  Current taxi drivers demanded that the Commission impose regulations similar to those imposed on taxi drivers onto ridesharing services.  Users of ridesharing services spoke about their positive experiences and urged the Commission to adopt regulations that would allow these services to continue. 

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