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On Thursday, April 12, the Commission held its regularly-scheduled agenda meeting. Information about each of the telecommunications-related items addressed at Thursday’s meeting is provided below.


REGULAR AND CONSENT AGENDA ITEMS

  • Rulemaking Opened to Investigate Backup Power and Emergency Notification Issues (Item 63, adopted 5-0) — This item initiates a proceeding to examine telecommunications carriers’ backup power and emergency notification systems. The rulemaking is based on a legislative directive embodied in the 2006 bill AB 2393, under which the Commission is required to submit a report to the Legislature on these topics by January 1, 2008. The Legislature is concerned that “newer communications transmission technologies, including fiber optic and coaxial cable, may require distributed backup power systems” in a manner that was not previously necessary. Another concern is that there may be better ways to inform the public when emergencies take place. All certificated telephone providers are made respondents to the rulemaking.

    The OIR outlines a schedule for comments and workshops to address the issues in the proceeding. Initial comments on the OIR are due on May 4, 2007. After the initial comments, the Commission will hold a pair of workshops with the interested parties, one to address carriers’ emergency notification systems, and another to address backup power issues. Each workshop will result in a series of questions that will be sent to all carriers to gauge their existing practices, and solicit feedback regarding some forward-looking proposals. The responses to these requests will be compiled by the Commission staff into draft reports that will then be subject to comment by the parties. These reports will ultimately be provided to the Legislature.

    Chief ALJ Minkin introduced the matter, and after brief comments, it was adopted unanimously.

  • Video Franchising Procedures Slightly Modified to Include Standardized Franchise Certificate (Item 47, adopted on consent agenda) — This decision adopts a modified franchise certificate form reflecting the terms of the franchises awarded to successful applicants for video franchises. The franchise certificate now states that a franchisee is entitled to a grant of authority to provide video service in the specified area, a grant of authority to use the public rights-of-way, and a statement that the grant of authority is subject to “lawful operation” of video service to be provided under the franchise.

  • AT&T Granted “Default Carrier” Status With Regard to Former RCN Customers (Item 56, adopted on consent agenda) — This item authorizes RCN to discontinue providing local exchange and interexchange services, and cancels RCN’s CPCN. The decision also ratifies an earlier ALJ ruling designating AT&T as the “default carrier” under the Commission’s mass migration rules. As such, any customers who do not select another carrier will be assigned to AT&T.

  • Commission to Offer Comments at FCC on AT&T Petition for Forbearance from Cost Allocation, Jurisdictional Separation, Cost Apportionment, and Affiliate Transaction Rules (Item 65, adopted on consent agenda) — AT&T has filed a petition for forbearance from the FCC’s “cost assignment” rules, including the rules on jurisdictional separations, nonregulated activities, affiliate transactions, cost allocation, cost apportionment, and other related rules. The FCC has sought comment on AT&T’s petition, and there is momentum amongst state utilities commission commenters to oppose the petition. By this item, the Commission endorses the staff’s recommendation that the CPUC join the other state commenters in opposing AT&T’s petition. The CPUC’s comments would urge the FCC to deny “avoid piecemeal resolution” by preempting the outcome of the FCC’s ongoing examination of these issues. The CPUC would also argue that the cost assignment rules continue to have ongoing significance for customers and other carriers.

  • 2-1-1 Dialing Providers Assigned for Solano County (Item 16, adopted on consent agenda) – By this order, the Commission approves HELPLINK’s request to operate as the 2-1-1 dialing provider for Solano County.

  • NextG Granted Facilities-Based Local Exchange Authority on a Prospective Basis, Commission Considers Possible Penalties for Prior Violations of Limited Facilities-Based Authority (Item 62, adopted 5-0) — This item grants NextG Networks of California, Inc. full facilities-based authority to provide local exchange services in California. Until this order, NextG has operated strictly as a limited facilities-based transport carrier. NextG’s prior authority did not allow NextG to engage in ground-disturbing activity. Nevertheless, NextG did undertake construction that exceeded its authority, and then failed to disclose that information to the Commission in connection with its application for full facilities-based authority. Although the Commission grants NextG’s application for facilities-based authority going forward, it opens an investigation as to whether NextG’s prior actions should subject it to penalties.

    Commissioner Chong introduced this item, calling the prospective grant of authority “really quite routine.” Regarding NextG’s prior actions, Chong explained NextG’s argument that its ground-disturbing construction was conducted pursuant to the authority held by its wireless affiliates. Chong characterized this argument as “unpersuasive,” and noted that NextG was “not forthright” in bringing the relevant facts before the Commission. The investigation into NextG’s practices includes an examination of whether NextG violated Rule 1.1 of the Commission’s rules, which directs practitioners before the Commission “never to mislead the Commission or its staff by an artifice or false statement of fact or law.” The investigation could lead to penalties or other sanctions.

  • AT&T Petition to Modify Out-of-Service Standards and Penalties From Prior Complaint Case Denied (Item 21, adopted on consent agenda) — This item denies AT&T’s petition to eliminate out-of-service standards and penalty mechanisms adopted in D.01-12-021. That prior decision adopted “out of service” repair intervals, and a set of associated notice and penalty mechanisms designed to ensure that out of service times and repair intervals remain reasonable, and do not harm customer or competitors. AT&T’s petition argued that these rules should be eliminated as a matter of regulatory parity, since they apply only to AT&T. DRA filed a separate petition to modify seeking modifications to the methodology for calculating the metrics in D.01-12-021. This decision denies both petitions, based on the Commission’s finding that the issue of asymmetric regulation is being considered in Phase II of the Uniform Regulatory Framework proceeding, and that this issue is therefore “not ripe for resolution at this time.”

  • MCI Application Granted for NDIEC Exemption from USOA Bookkeeping Obligations (Item 33, adopted on consent agenda) — This order exempts all Non-Dominant Interexchange Carriers (NDIECs) from the obligation to keep books and records in accordance with the Uniform System of Accounts (USOA). The Commission had previously granted an exemption to all NDIECs providing both local and interexchange service, but this order extends that policy to all NDIECs, including pure NDIECs without any local component of their services.

  • Assorted Intervenor Compensation Awarded in Telecommunications Proceedings (Items 39, 42, adopted on consent agenda) — UCAN was awarded $37,050 in intervenor compensation in connection with its participation in the proceeding addressing SBC undergrounding efforts in the city of San Diego. The Greenlining Institute, Disability Rights Advocates, and TURN each received awards in connection with the Broadband over Power Lines proceeding.


LEGISLATIVE ITEMS

  • Commission Opposes Bill Requiring Additional Carrier Disclosures to Customers, AB 826 (Item 69, adopted 4-1) – With Commissioner Grueneich as the lone dissenter, the Commission voted to oppose AB 826, a consumer protection bill sponsored by Assemblyman Levine. If adopted, the bill would require telecommunications carriers to issue a host of additional customer disclosures, including service confirmation materials and additional information about the elements in bundled service offerings.

    The Commission’s legislative director Delaney Hunter introduced this item, noting that there was no legislative subcommittee recommendation on the bill since Commissioners Peevey and Grueneich could not agree on the proper approach. Following Hunter’s introduction, Commissioner Peevey stated his position on the matter. He began with a general philosophical statement that “as competition increases, regulation should decrease.” He then cited the findings in the URF Phase I decision that the telecommunications market is “not perfectly competitive,” but “workably competitive.” Peevey expressed concern that this bill would undermine the findings in URF, and prejudge the outcome of URF Phase II, which is devoted in part to an examination of what disclosures are appropriate in the URF environment. Peevey also observed that the legislation had not properly accounted for the regulatory disparities that it would create between Commission-regulated carriers and unregulated telecommunications providers.

    Commissioners Simon and Chong echoed Peevey’s sentiments. Simon reflected that “as an attorney and a law professor, [he] place[s] significant weight on precedent.” He amplified Peevey’s concerns about Phase II of URF by stating that he is “wary of prejudging issues.” Commissioner Simon also noted that he intends to take an active look at disclosure issues in the URF proceeding, and that he fully supports the adoption of whatever disclosures are necessary to ensure that consumer are receiving adequate information in the marketplace. Commissioner Chong emphasized that existing law already imposes significant disclosure obligations on carriers. Chong cited Public Utilities Code Sections 2896, 451, and 2890.2 to support her point.

    Commissioner Grueneich began her comments in support of the legislation by stating that “even in competitive markets, there is a role for regulation.” She stressed the need for clear rules in the consumer protection arena, and the importance of customer disclosures in ensuring that customers have information sufficient to make decisions about products and services. Grueneich mused that “[w]e operate within a whole framework of legislative directives, and in most areas, we seem to manage well.”

    Notwithstanding Grueneich dissenting view, the Commission issued an “oppose” position on AB 826, by a 4-1 vote.

  • Commission Opposes Bill Expanding Intervenor Compensation Program and Modifying Procedures for Selecting Commission President, AB 1157 Item 73, adopted on consent agenda) – The Commission voted unanimously to oppose AB 1157, which would permit unions, government agencies and publicly owned utilities to claim compensation for their participation in CPUC proceedings. It would also specifically permit groups that promote the public interest to claim compensation under the intervenor compensation program. Finally, the bill would require that the Commission President be selected by the Commissioners rather than being appointed directly by the Governor. The Commission’s opposition focuses on the intervenor compensation aspects of the legislation, since it could significantly increase the Commission’s workload and budget. The Commission’s legislative subcommittee memorandum finds that the “bill would not enhance the existing ability of these entities to participate in CPUC proceedings, but it would increase the costs born by ratepayers.”

  • Commission Opposes Bill Requiring Greater Electronic Access to CPUC Filings, SB 312 (Item 83, adopted on consent agenda) – The Commission voted unanimously to oppose SB 312, a bill that would require the Commission to electronically post all formal filings and prepared testimony for open rate setting and quasi-legislative proceedings. The Commission’s opposition stems from logistical and budgetary concerns. The Commission is concerned that the bill does not provide for additional appropriations to cover the significant additional costs that this electronic posting endeavor would generate. Further, the scope of the legislation is very broad, since the Commission has open proceedings going back into the mid-1990.

  • Commission Takes Neutral Position on California Teleconnect Program Expansion and Reform, SB 757 (Item 86, adopted on consent agenda) – The Commission took a neutral position on SB 757, a bill designed to reform the California Teleconnect Fund program. The legislation would add two additional sub-programs to the CTF, one to advance telemedicine issues, and another to provide additional online resources to students in grades 6 through 12. The Commission has concerns about the ongoing funding of these additional directives, since the only funding source identified in the legislation is a $150 million block of money that was borrowed from the CTF fund and placed in the general fund.

  • Commission Opposes Legislation Designed to Mandate Geographic Rate Averaging, SB 780 (Item 87, adopted on consent agenda) – The Commission voted unanimously to oppose SB 780, a bill that would undermine the Commission’s recent URF Phase I decision by legislatively-mandating that rates be averaged. The stated reason for this requirement is to keep rural rates at affordable levels, but the Commission has recently examined the issue and determined that rate deaveraging may occur. This bill could also conflict with determinations reached in the Commission’s ongoing inquiry into the operation of the California High Cost Fund B.

  • Commission Opposes Extension of Universal Lifeline Program to Include Broadband Credits, SB 1013 (Item 88, adopted on consent agenda) – The Commission voted unanimously to oppose SB 1013, a bill that would require the inclusion of broadband services in the Universal Lifeline Telephone Services program. The Commission’s opposition is based significantly on the Commission’s findings that the bill could “quadruple the costs of basic service” and thereby significantly increase the ULTS surcharge.

  • Commission Opposes Bill to Adopt Customer Service Standards in Connection with Video Service Offerings, AB 1647 (Item 81, adopted on consent agenda) – The Commission voted unanimously to oppose AB 1647, a bill that would require the Commission “to open a rulemaking or other appropriate proceeding, and in consultation with local entities, to adopt customer service standards for video providers that ensure capable and responsive customer service.” The bill would expand the existing law regarding state-issued video franchises by establishing a process for incorporating the “best practices” of local jurisdictions on the subject.


SIGNIFICANT HELD AND WITHDRAWN ITEMS

  • Proposed Decision Addressing Small and Mid-sized LEC Access Charge Reform (Item 27, withdrawn) — This proposed decision called for Small and Mid-sized LECs to remove the NIC and/or TIC elements of their intrastate access rates, and for CLECs to reduce their overall intrastate access rates to ILEC levels.

  • Proposed Decision Addressing Alleged Improper Ex Parte Contacts in Connection with 911 Warmline Complaint Case (Item 61, held by Chong until 4/12 for further review) – This decision would penalize both Cox and AT&T for allegedly engaging in impermissible ex parte contacts with Commissioner advisors with respect to an ongoing adjudicatory matter. These allegations of improper contacts stem from a complaint case by UCAN against Cox and AT&T for supposed violations of the 911 warmline obligations under Public Utilities Code Section 2883. In June 2006, AT&T and Cox brought a motion to stay that complaint case, and a related motion to open a generalized investigation of warmline issues in the Commission’s local competition docket. The carriers contend that the “ex parte” contacts giving rise to this item were focused on the motion rather than the merits of the complaint case.

  • Proposed Decision Permitting Verizon to Restructure Rates for Switching, Multiplexing, and Dark Fiber (Item 7, withdrawn) – This proposed decision would have granted Verizon’s request to restructure its rates for switching, multiplexing and dark fiber to reflect how Verizon currently provisions and bills for those elements. The proposed decision has been withdrawn.

  • Proposed Decision Denying Telecom House CPCN Application (Item 5, held by staff until 5/3) – This proposed decision would reject Telecom House’s application to expand its resold interexchange CPCN to also include resold local exchange service, based on findings that the carrier failed to timely submit required reports under the terms of its existing CPCN. This decision would also direct the Commission to revoke Telecom House’s existing CPCN if the carrier cannot resolve discrepancies regarding its income and user fee submissions for prior periods.


NOTES AND COMMISSIONER REPORTS

  • Clanon Takes Over as Commission Executive Director — Paul Clanon will now assume a new role as the Commission’s Executive Director. Clanon is taking over for Steve Larson, who has accepted a position as the President of Woodside Natural Gas, a Santa Monica based company. Clanon has worked at the Commission since 1984, and has served as Energy Division Director as well as Deputy Executive Director during his tenure.

  • Bob Lane to Leave Bohn’s Office for Sempra Position — Commissioner Bohn announced that his telecommunications and water advisor, Bob Lane, would be accepting a position at Sempra as manager of corporate regulatory policy. Commissioner Bohn read a brief resolution cataloguing Mr. Lane’s contributions to the Commission over his many years of service.

  • Chong Reports on Japan Visit — Commission Chong offered a brief report on her recent visit to Japan. By way of introduction, Chong observed that “even though California is the home of Silicon Valley, one has to go to Japan to study ultra-high-speed broadband networks.” According to Chong, Japan and South Korea have broadband speeds in the 50 megabits/second range, while the United States speeds are typical around 4 megabits/second. The prices for broadband access are also much cheaper in Japan and South Korea. Commissioner Chong and her advisors met with various representatives from Japan’s telecommunications regulatory agencies and industry groups to discuss Japan’s regulatory and policy goals in the telecommunications sector. Although Chong acknowledged that Japan does not face the same environmental and governmental process constraints that are present in the United States, she identified a number of areas where Japan is arguably ahead of the United States in its telecommunications regulatory policies. Japan’s telecommunications market has been deregulated now for several years. Japan has focused on telemedicine, tele-education, e-government, universal service issues, and broadband supply and demand issues. Of particular interest were Chong’s statements about how Japanese consumers can use their cell phones as an “e-wallet.” In Japan, cell phones can be used to purchase from vending machines, purchase public transportation tickets, and buy things in stores. One obvious concern that this technology raises is privacy, but Japan has apparently identified a number of solutions to protect consumers against fraud resulting from stolen cell phones. Some cell phones have thumbprint identification or retinal scans, and others have devices that automatically deactivate cell phones if they are more than a certain number of feet from a person. Chong concluded by stating that there is a “lot to admire about the Japanese success.”

  • Chinatown Bill Fair Praised as a Success — CSID Director Linda Serizawa gave a glowing report regarding the recent Commission-sponsored bill fair that was held in San Francisco’s Chinatown. She described the event as “entirely successful,” and showed pictures of telecommunications and energy utility representatives helping a crowded room of consumers from the Asian-American community. The Commissioners praised the staff for its efforts in this regard, but expressed hope that this effort can be expanded so that the Commission is not the primary point of contact in every case.

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