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On Thursday, April 16, 2009, the California Public Utilities Commission held its regularly scheduled agenda meeting. The meeting started off on a light note, with Commission President Peevey joking with fellow commissioners and staff about being named the “seventh most influential non-elected official in California” in an article in Capitol Weekly. The article is attached at the following link: http://capitolweekly.net/article.php?xid=xwt04g93b6d8w4. Notably, former CPUC Commissioner and current Schwarzenegger Chief of Staff Susan Kennedy is first on the list.

During the public speaker portion of the meeting, the focus was squarely on the Proposed Decision of Commissioner Chong proposing changes to the LifeLine program. Nine individuals, many of them either residents of single-residency occupancy (“SRO”) hotels or representing organizations that serve residents of SROs, urged the Commission not to rush to modify LifeLine, stating that it would cause significant quality of life issues for low-income, disabled and elderly people who rely on the program. The LifeLine Proposed Decision was held by Commissioner Grueneich for one meeting.

While the LifeLine reform Proposed Decision was held, the resolution implementing prequalification-related changes was adopted on the consent agenda, along with a decision establishing advice letter rules for special access services, and a decision and resolution addressing issues related to the state video franchise holder user fees. These and other telecommunications items of significance that were addressed during the meeting are described in further detail below:


REGULAR AND CONSENT AGENDA ITEMS

  • General Order 153 Revised to Accommodate Prequalification Implementation, T-17202 (Item 17, adopted on consent agenda) – The Commission adopted a resolution that revises General Order 153 (“GO 153”) to incorporate new requirements related to the shift to pre-qualification on July 1, 2009. The revisions adopted by the Commission also contain other administrative changes, including updated income eligibility requirements. Under the prequalification application system, a customer is no longer provisionally enrolled in LifeLine while awaiting certification approval from CertA. Instead, the customer must wait until his or her application is received, submitted and approved by CertA before receiving the LifeLine discount. Once approved, the customer is back-credited for any discounts he or she would have received during the interim pre-qualification period, starting with the time that the applicant made initial contact with the carrier. Although not directly related to prequalification, the Commission also determined that no conversion charge may be assessed on an applicant or claimed from the LifeLine fund if the applicant fails to qualify for the program. LifeLine income limits have been modified to $22,900 for households of up to two people, $26,900 for three-member households, $32,400 for four-member households, and $5,500 per year for each additional household member beyond four people. A recent draft of this resolution is available at http://docs.cpuc.ca.gov/word_pdf/AGENDA_RESOLUTION/99773.doc.

  • Special Access Price Change Advice Letter Rules Adopted (Item 4, adopted on consent agenda) – This decision establishes advice letter filing rules governing price changes to retail and wholesale special access service offerings from carriers operating under the Uniform Regulatory Framework. The decision focuses largely on establishing the “tiers” that are appropriate for special access price changes. The decision confirms that CLECs and IXCs can file special access price changes as Tier 1 advice letters. For URF ILEC special access services formerly classified as Category II under NRF, ILECs can use a Tier 1 advice letter to change the price of the service within previously-approved floors and ceilings. However, a Tier 2 advice letter will be required for ILECs to reduce the price of a special access service below a previously-approved floor. An ILEC must submit an application to increase the price of a special access service above a previously approved ceiling. For special access services previously classified as Category III, URF ILECs may change the price of the service through a Tier 1 advice letter, except for an increase in the maximum price of greater than 5%, in which case a Tier 2 advice letter will be required. The decision also concludes that use and user restrictions may not be imposed by any URF carrier on special access services, and that ILECs must continue to offer special access pursuant to tariff. A recent draft of this decision is available at http://docs.cpuc.ca.gov/word_pdf/AGENDA_DECISION/99594.doc.

  • 2008-2009 User Fees for State Video Franchise Holders Established, Res. T-17198 (Item 8, adopted on consent agenda) – By this resolution, the Commission set fiscal year 2008-2009 user fees for state video franchise holders. Each company’s share of the annual user fee is calculated based on the potential households to be served in a given holder’s state franchised territory. For each such household, the Commission will charge $0.0448 to the holder. Fees will be used by the Commission to implement and administer the state video franchise program under AB 2987, the Digital Infrastructure and Video Competition Act of 2006 (“DIVCA”). The total amount of user fees collected will be to equal the amount authorized in the Commission budget for DIVCA implementation, which for the 2008-2009 fiscal year was $950,000. A recent draft of the resolution allocating the user fee is available at the following link: http://docs.cpuc.ca.gov/word_pdf/AGENDA_RESOLUTION/99569.doc.

  • Household Basis for Calculating State Franchise Holder User Fees Continued Through Fiscal Year 2012-2013 (Item 18, adopted on consent agenda) — This decision clarifies that the Commission will retain the “potential household” basis for calculating the annual user fee for state video franchise holders through Fiscal Year 2012-2013. This decision modifies Decision 07-03-014, the Phase I Decision in the state video franchise docket. That decision provided that the user fee would be allocated on a revenue basis after the first fiscal year of the state video franchise program. In the time since the Phase I Decision was adopted, the Commission has recognized that the shift to the revenue-based user fee should be further delayed to avoid inequitable allocations of the user fee. Given the limited penetration by the large ILECs, shifting to a revenue basis in “year two” of the program would have imposed an inordinate share of the user fee on cable companies. Moreover, the allocation would have been further skewed by the fact that some entrants did not obtain state franchises until the middle of calendar year 2008, and therefore, they had $0.00 in state franchised revenue as of January 1, 2008, the date on which the revenue data would have been calculated to allocate the user fee. In light of these and other transitional concerns, the Commission deemed it prudent to continue the household-based system until Fiscal Year 2013-2014. A recent draft of this decision is available at the following link: http://docs.cpuc.ca.gov/word_pdf/AGENDA_DECISION/99622.doc.

  • AT&T Granted Authority to Detariff Retail Residential and Business Services, Res. T-17203 (Item 55, adopted on regular agenda) – The Commission adopted a resolution approving AT&T California’s advice letter 33423 requesting authority to detariff more than 90 residential and business services. The request was made pursuant to Decision 07-09-018, which permits URF carriers to voluntarily detariff certain retail telecommunications services. The Commission dismissed a joint protest filed by Division of Ratepayer Advocates and The Utility Reform Network, by which those parties argued that AT&T was attempting to detariff services that fall into the category of basic service, and therefore cannot be detariffed. The Commission concluded that this allegation was unfounded. The Commission also determined that content regulations would not be imposed upon AT&T’s Residential Service Agreement despite numerous consumer complaints that the Commission received suggesting that the agreement was incomprehensible and contained unreasonable terms. Nevertheless, Communications Division Director Jack Leutza noted that discussions with the Commission staff resulted in the Agreement being condensed to six pages, making it a much more user-friendly document. A recent draft of this resolution is available at http://docs.cpuc.ca.gov/word_pdf/COMMENT_RESOLUTION/99656.doc.

  • AB 140 Rural Infrastructure Grant Approved for Nordheimer Flat, Res. T-17204 (Item 12, adopted on consent agenda) – By this resolution, the Commission authorized its executive director to enter into a contract for construction of the Nordheimer Flat Line Extension Grant Project (“Nordheimer Flat Project”). Nordheimer Flat is an unserved area located within The Siskiyou Telephone Company’s Sawyer’s Bar Exchange Area. The 13,994-foot line extension will provide telephone service to private residences and a U.S. Forest Service campground. The resolution authorizes a grant to Siskiyou in the amount of $969,000 for construction of the project, and also empowers the Commission’s executive director to enter into a contract with the town of Fort Jones for fiscal agent services associated with the project. Further, the resolution finds that ILECs’ general line extension tariffs should not apply to AB 140 grants. Rather, line extension charges relative to the grant program should be embodied in separate tariffs. The resolution approves Siskiyou Telephone’s tariff revisions for that purpose. A recent draft of this resolution is available at http://docs.cpuc.ca.gov/word_pdf/COMMENT_RESOLUTION/98675.doc.

  • AT&T Application for Rehearing of Warmline Decision Denied (Item 69, adopted in closed session) – In its closed session, the Commission once again rejected AT&T’s arguments in opposition to the Commission’s interpretation of Public Utilities Code Section 2883, and the imposition of penalties on AT&T for violation of warmline requirements. The rejection of AT&T’s application for rehearing paves the way for a writ petition to further attack the Commission’s position, should AT&T choose to pursue this option.

  • Funding for AT&T Broadband Projects in Underserved Areas Approved, Res. T-17199 (Item 54, adopted on consent agenda) – The Commission approved AT&T’s funding request from the California Advanced Services Fund to fund broadband projects totaling $389,154 in “underserved” communities, including Vacaville ($171,914), Madera Acres ($43,301), Friant ($46,463), Clovis ($36,393) and Carmel ($91,083). A recent draft of this resolution, which includes maps of the affected areas, is available at http://docs.cpuc.ca.gov/word_pdf/AGENDA_RESOLUTION/99529.doc.

  • Motion to Disqualify Commissioners from Participation in Global NAPs / Cox Interconnection Dispute Denied (Item 13, adopted on consent agenda) – The Commission denied as moot a motion filed by defendant Global NAPs California, Inc. (“GNAPS”), to disqualify Commissioners Bohn and Chong from further participation in a proceeding involving a dispute between Cox California Telecom, LLC, and GNAPS over a network interconnection agreement. The motion cited an alleged bias by the Commissioners against GNAPS. The two Commissioners voluntarily recused themselves from participation in previous decisions in this proceeding due to the pendency of GNAPS’ disqualification motion. Since there were no further proceedings envisioned in this docket, and given the Commissioners’ previous recusal, GNAPS’ motion was denied as moot. A recent draft of this decision is available at http://docs.cpuc.ca.gov/EFILE/PD/98687.pdf.

  • Settlement Agreement Adopted Between Bigredwire.com, Inc., and Commission (Item 14, adopted on consent agenda) – The Commission granted the joint motion of Bigredwire.com, Inc., (“BRW”) and the Commission’s Division of Consumer Protection and Safety (“CPSD”) to adopt a settlement agreement requiring BRW to pay a fine of $20,000 based on its unlawful operation in California during the years 2000-2001 and from September of 2004 to the present; its failure to pay required fees and surcharges or to file required reports with the Commission during its operation in California; and its violation of Rule 1.1 by failing to disclose in its application for registration a settlement agreement with the Florida Public Service Commission and the prior revocation of its Certificate of Public Convenience and Necessity (“CPCN”) by the California PUC. Under the settlement, BRW also is required to pay all fees and surcharges owed to the Commission, to timely file required reports with the Commission, and to file a new application for registration that discloses the prior revocation of its CPCN and the settlement with the Florida Public Service Commission. CPSD will monitor BRW’s compliance with the settlement. A recent draft of this decision is available at http://docs.cpuc.ca.gov/word_pdf/AGENDA_DECISION/99479.doc.

  • CPCNs Granted to Competitive Carriers in URF Company Territories (Items 20 and 35, adopted on consent agenda) – The Commission granted Empire Unified Communications LLC (“Empire”) and OneSource Networks CLEC LLC Certificates of Public Convenience and Necessity to provide limited facilities-based and resold local exchange and interexchange telecommunications services in areas currently served by URF carriers. Recent drafts of these decisions are available at http://docs.cpuc.ca.gov/word_pdf/AGENDA_DECISION/98884.doc and http://docs.cpuc.ca.gov/word_pdf/AGENDA_DECISION/99212.doc.

  • Intervenor Compensation Granted to Consumer Groups in Connection with LifeLine Certification Rulemaking (Items 40, 41 and 44, adopted on consent agenda) – The Commission granted $15,989.98 to the National Consumer Law Center for contributions to Decision 08-08-029, which adopts the pre-qualification requirement for the California LifeLine program and resolves the remaining LifeLine Phase 2 issues. The Commission granted $49,194 to The Utility Reform Network for contributions to Decision 07-05-030, which revised General Order 153 to correct problems with the LifeLine program through short-term and long-term strategies and to improve outreach and education on new eligibility criteria, and Decision 08-08-029, discussed above. Finally, the Commission granted $55,575.56 to Disability Rights Advocates for its substantial contributions to both of these decisions. Recent drafts of these decisions are available at http://docs.cpuc.ca.gov/word_pdf/AGENDA_DECISION/99629.doc, http://docs.cpuc.ca.gov/word_pdf/AGENDA_DECISION/99232.doc, and http://docs.cpuc.ca.gov/word_pdf/AGENDA_DECISION/99305.doc.


SIGNIFICANT HELD AND WITHDRAWN ITEMS

  • Decision Addressing Reforms of the LifeLine Program (Item 52, held by Grueneich until May 7, 2009 for further review) – The Commission held over to its May 7, 2009 meeting a decision that would make fundamental changes to the LifeLine program. The changes contemplated in the proposed decision include de-linking California LifeLine from the AT&T basic rate structure, setting out a specific support discount at 55 percent of the highest basic rate of the state’s communications companies without regard to the telecommunication provider or technology of service selected, expanding the LifeLine program to cover data services for consumers who receive wireless equipment through the Commission’s Deaf and Disabled Telecommunications Program, extending the LifeLine program to wireless services, modifying the income-based criteria to match the low-income energy program (CARE) income-based criteria on an interim basis, and eliminating payments to carriers for administration and bad debt costs under the LifeLine program. A recent draft of this proposed decision is available at http://docs.cpuc.ca.gov/EFILE/PD/99342.pdf.

  • Decision Initiating Rulemaking to Consider Exemption from Public Utilities Code Requirements Related to Property (Item 53, held to May 7, 2009) – The Commission held a decision to its May 7, 2009 meeting that would initiate a rulemaking to consider a full exemption for all telecommunications carriers in California, except general rate case incumbent local exchange carriers, from Public Utilities Code section 851, which requires the disposition or encumbrance for all useful and necessary property. Section 853(b) of the Public Utilities Code allows the Commission to exempt any public utility from section 851 if applying those procedures is not necessary for the public interest. This rulemaking will consider whether granting a full exemption from section 851 is appropriate for URF carriers. A recent draft of this decision is available at http://docs.cpuc.ca.gov/word_pdf/AGENDA_DECISION/99816.doc.


LEGISLATIVE MATTER

  • Senate Bill Related to Information and Telecommunication Technologies Digital Literacy, SCR 8 (Item 63 on regular agenda) – The Commission voted to support a proposed bill, introduced in January by state Senator Padilla, that calls for the Governor to create the California Information and Communication Technologies Digital Literacy Leadership Council to promote broadband access and digital literacy skills throughout the state. Commissioner Chong noted the importance of education and adult technological literacy, and Commissioner Simon acknowledged the importance of the world wide web as an informational and career development resource. A recent draft of the CPUC memorandum explaining the Commission’s is attached at the following link, along with a copy of the bill: http://docs.cpuc.ca.gov/word_pdf/REPORT/99431.doc.


NOTES AND COMMISSIONER REPORTS

  • Commissioner Chong Testifies Before House Subcommittee — Commissioner Chong reported that she traveled to Washington, D.C., in early April to testify before the House Subcommittee on Communications, Technology and the Internet on California’s broadband project. She said legislators were especially interested in broadband mapping and how California is defining terms such as “unserved” and “underserved.” She also briefed the White House technology advisor on the state’s broadband efforts.

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