On April 24, 2008, the California Public Utilities Commission held its regularly-scheduled agenda meeting. The meeting addressed several telecommunications-related matters, including a the resolution of AT&T’s proposed elimination of its “Rule 12” marketing and disclosure rules, and the implementation of two area code relief efforts in Southern California area codes. Further information about these and other telecommunications items on the agenda is provided below.
REGULAR AND CONSENT AGENDA ITEMS
AT&T Request to Remove “Asymmetric” Marketing, Disclosure, and Administrative Requirements in its Tariff Rule 12 Partially Granted (Item 24, adopted 5-0) – This decision resolves a dispute regarding the validity of two AT&T advice letters seeking modifications to certain marketing and disclosure rules embodied in AT&T’s Tariff Rule 12. The decision grants AT&T’s advice letters in part, but imposes requirements that AT&T affirmatively disclose the monthly cost of flat and measured rate basic service prior to discussing bundles with customers. Based on this decision, AT&T will also be required to post the flat and measured rate basic service rates and a description of those services on the same web page as the rates, terms, and conditions for bundled services, and displayed no less prominently than the bundled service offerings descriptions.
In the wake of the URF Phase I Decision, AT&T filed these advice letters to remove Rule 12 from its tariff. The basis for the proposed elimination of Rule 12 was ordering paragraph 21 of the Phase I Decision, which permitted the removal of “all asymmetric requirements concerning marketing, disclosure, or administrative processes.” The proposed removal of Rule 12 was sought notwithstanding the fact that the requirements of Rule 12 had been imposed pursuant to a prior enforcement action against AT&T (then Pacific Bell) for various “marketing abuses.”
TURN and DRA disputed AT&T’s advice letters as beyond the scope of the URF Phase I Decision and an inappropriate end run on the “marketing abuses” decision. The Commission provisionally granted the advice letters subject to further proceedings in the URF docket to determine the lawfulness and propriety of the proposed elimination of Rule 12. The Commission conducted evidentiary hearings on this issue, which led to this decision.
Commissioner Chong introduced this item by describing the tortuous procedural history associated with the dispute. Chong summarized the intent of the decision, noting that changes in the marketplace, and changes in AT&T’s own practices, justify the removal of some aspects of Rule 12. However, Chong emphasized that AT&T had failed to show that it had provided customers with sufficient information about its service offerings to allow them to make informed decisions. In light of this finding, the Commission is imposing requirements that AT&T describe basic service plans before talking about bundles, and that AT&T post information about basic service plans on its website. Commissioner Simon also offered support for the decision, but his support was more muted than Chong’s. Simon stated that he was somewhat “uncomfortable” with the finding that AT&T had met its burden of proof to justify the removal of various Rule 12 requirements. Nevertheless, Simon indicated that he would place his “faith in the market.” Simon did state that he “expect[s] staff to “keep a close eye on AT&T complaint trends” to identify any problems as they arise.
A recent draft of the decision resolving this matter is available at the following link: http://docs.cpuc.ca.gov/word_pdf/AGENDA_DECISION/81602.doc.
760 Area Code Split Adopted (Item 25, adopted 4-1) – Despite a vigorous dissent from Commissioner Simon, the Commission adopted an area code split for the 760 area code rather than the overlay that many carriers had been hoping for. During the next year, the Commission will implement the division of the 760 area code into a northern section, which will retain the existing area code, and a southern section, which will use the new 442 area code. The permissive dialing period will begin, and the 442 area code will be activated, in October 2008, six months from the effective date of the Commission’s order approving the split. The mandatory dialing period will begin six months from the commencement of the permissive dialing period, or one year from the effective date of the decision. The most recent draft of the order approving the split is available at the following link: http://docs.cpuc.ca.gov/word_pdf/AGENDA_DECISION/81570.doc.
Commissioner Peevey introduced this item, noting that this was a tough decision, but that something had to be done to prevent number exhaust in the 760 area code. Peevey stated that the majority of the public comments opposed any kind of relief, but, when pressed, the majority preferred a split to an overlay in this case. Peevey expressed understanding for all of the customer and industry perspectives involved, but concluded that this was the appropriate outcome in this case.
Commissioner Chong echoed these sentiments, noting that overlays are the preferred area code relief mechanism, but “not under these specific facts.” Commissioner Chong placed heavy reliance on the enormous geographic size of the 760 area code, observing that the space covered by the area code is larger than the state of Pennslyvania, and that Pennslyvania has 10 area codes. Most importantly, there are tangible, real-world differences between the southern and northern sections of the 760 area code. The northern portion is vast and extremely rural, and the residents of that portion are unlikely to travel through multiple area codes in their daily routines. By contrast, the southern portion encompasses parts of the San Diego metropolitan and surrounding suburban areas. The southern area has witnessed considerable growth, and residents are likely to travel through other area codes in their commutes and other activities in the area. As Chong noted, the northern and southern portions of the 760 area code bear little relation to one another.
Commissioner Simon dissented based on his conviction that overlays are the philosophically-correct mechanism for resolving potential area code exhaust. He described this split as simply “delaying the inevitable,” which in Simon’s opinion, is a move toward ubiquitous 10-digit dialing, and ultimately, 15-digit dialing. He characterized this decision as a short-sighted and arbitrary procedure for “picking winners and losers, like the colonial powers did in the treaty of Versailles.”
Ultimately, the decision approving the split was adopted 4-1 over Simon’s dissent.
818 Area Code Overlay Approved (Item 26, adopted on consent agenda) – By this decision, the Commission adopted California’s second area code overlay, thereby creating the 747 area code in the same geographic region served by the current 818 area code. Starting in October 2008, the “permissive dialing” period will begin in the 818 area code, whereby customers can begin dialing 1+10-digits. Mandatory dialing will commence one year from the date that this decision was issued, in April 2009.
While the 760 area code split decision generated significant controversy, the contemporaneous decision to overlay the 818 area code was unanimous, and relatively uncontroversial. The carriers all supported an overlay, and even most of the public comments favored an overlay rather than a split. Current data suggests that the 818 area code would exhaust in the third quarter of 2009 absent either a split or an overlay, so the Commission had to act in some way to prevent number exhaust.
Unlike the 760 area code, the 818 area code covers a relatively small geographic area in the Los Angeles Metropolitan area, in and around the San Fernando Valley. Customers in this area are much more accustomed to dialing 10-digits given the close proximity of other area codes. These factors seemed to be the main point of distinction between the conclusions reached regarding the 760 and 818 area codes. The final decision is available at the following link: http://docs.cpuc.ca.gov/WORD_PDF/FINAL_DECISION/81955.DOC
AT&T Complaint Case Against UNE-Based CLECs Regarding Non-Impairment Designations Resolved ((Item 19, adopted on consent agenda) – This item resolves AT&T’s complaint case against various CLECs who have relied on UNE-P offerings to compete in the local exchange market. Following the Triennial Review Remand Order (“TRRO”), AT&T issued a list of wire centers that, according to AT&T, had satisfied the “non-impairment” threshold under the FCC’s rules such that AT&T no longer had an obligation to provide high capacity loop and transport facilities at discounted rates. A dispute arose regarding many of the wire centers on this list between AT&T and CLECs Cbeyond COmmunications, Covad Communications, and Arrival Communications. The CLECs challenged AT&T’s methodology for determining “non-impairment,” and objected to the data used to determine the wire center designations as outdated. By this decision, the Commission affirmed the undisputed “non-impairment” designations, but denied AT&T’s request for a declaration that all of the disputed “non-impairment” designations were correct. However, AT&T may resubmit its list of “non-impaired” wire centers subject to modified criteria set forth in the CPUC’s decision. A recent draft of the decision is attached at the following link: http://docs.cpuc.ca.gov/WORD_PDF/AGENDA_DECISION/81794.DOC.
California Teleconnect Fund Surcharge Rate Reduced, T-17142 (Item 27, adopted on consent agenda) – By this Communications Division resolution, the Commission reduced the California Teleconnect Fund surcharge rate from 0.130% to 0.079%, effective June 1, 2008. The most recent draft of the resolution effectuating this reduction is available at the following link: http://docs.cpuc.ca.gov/WORD_PDF/FINAL_DECISION/81919.DOC.
AboveNet Communications, Inc. Obtains Authority to Provide Full Facilities-Based Local Exchange Service Subject to Expedited CEQA Compliance Procedure (Item 2, adopted on consent agenda) – This decision expands AboveNet Communications, Inc.’s Certificate of Public Convenience and Necessity to include full facilities-based authority in the large and mid-sized ILECs’ service territories. The Commission concluded that AboveNet had demonstrated both the financial and technical qualifications necessary for it to operate as a provider of local exchange telecommunications services. In granting this application, the Commission also granted AboveNet’s request to rely on a 21-day expedited CEQA compliance procedure for specific construction projects in existing rights-of-way that do not exceed five miles in length. Under the 21-day review process, AboveNet will submit a streamlined application to the Energy Division, and the Energy Division will either issue a Notice to Proceed within 21 days, or a letter explaining why the project does not qualify for expedited treatment. This expedited review process is similar to what the Commission adopted for certain other CLECs, including ClearLinx Network Corporation (D.06-04-063), NextG Networks of California, Inc. (D.07-04-045), and Trillion Partners, Inc. (D.07-11-028). The final decision approving AboveNet’s application is attached at the following link: http://docs.cpuc.ca.gov/WORD_PDF/FINAL_DECISION/81919.DOC.
Commission to Support Legislation to Further Limit the Publication of Wireless Telephone Numbers Subject to Technical Amendments, AB 2385 (Item 35, adopted on consent agenda) — By this decision, the Commission voted to support AB 2385, a bill that would prohibit non-telecommunications carriers from publishing telephone numbers of wireless subscribers without their express consent. The legislation would close a loophole in the general ban on publication of wireless telephone numbers and corresponding customer names in telephone directories. Public Utilities Code Section 2891.1 currently prevents such publication by wireless carriers without customer consent, but does not prevent third parties from publishing this information without such consent. AB 2385 would apply the same standard to carriers and third parties.
The Commission voted to support the bill with some technical amendments, as reflected in the attached report: http://docs.cpuc.ca.gov/WORD_PDF/REPORT/81940.DOC. The primary technical amendment stems from the Commission’s correct observation that the Commission does not have jurisdiction over third party directory entities. The Commission suggests that this restriction should appear in the Penal Code or elsewhere rather than the Public Utilities Code, so as not to convey the impression that the Commission would be primarily responsible for enforcing this provision. The current legislative schedule calls for AB 2385 to be considered by the Assembly Utilities and Commerce Committee this coming Monday, April 28, 2008.
Commission to Oppose Legislation to Relax Requirements for Commission Approval of Utility Mergers and Acquisitions Absent Significant Amendments, SB 1389 (Item 43, adopted on consent agenda) — By this decision, the Commission voted to take an “oppose unless amended” position on SB 1389, a bill that would significantly reduce the Commission’s oversight over mergers and acquisitions of California telephone companies. SB 1389 would remove the requirement that a non rate-of-return telephone corporation seek prior authorization from the CPUC under Public Utilities Code Section before consummating a merger or acquisition.
As reflected in the attached report, the Commission does not believe that it should be stripped of its ability to consider these applications: http://docs.cpuc.ca.gov/WORD_PDF/REPORT/81933.DOC. Rather, the Commission prefers a softening of the statutory requirements to remove the requirement that ratepayers receive at least 50% of the proceeds from the transaction, and that the applicant(s) meet the public interest and related standards in Public Utilities Code Section 854(b) and Section 854(c). Unless the bill is revised to follow this more moderate course, the Commission will remain opposed to it. SB 1389 was recently approved by the Senate Committee on Energy, Utilities, and Communications, and will next be heard by the Senate Appropriations Committee.
SIGNIFICANT HELD AND WITHDRAWN ITEMS
Decision to Extend Statutory Deadline for Resolution of AT&T Complaint Case with Various CLECs (Item 18, withdrawn) – Since the AT&T dispute with the UNE-based CLECs was resolved by the decision described above, this decision ordering an extension in the statutory deadline was unnecessary, and therefore, it was withdrawn.
Commission Position on Prepaid Calling Card Legislation, AB 2136 (Held by staff until 5/15) — This bill would impose additional requirements on companies using prepaid calling cards or service, requirements that these entities make available information about the advertised minutes and rates, and that customers be informed of increases in the rates.
Commission Position on Legislation to Modify “Change in Provider” Rules, AB 2307 (Held by staff until 5/15) — This bill would provide modify the current California “change in provider” rules to permit changes to be confirmed by methods other than “third-party verification.”
Commission Position on Legislation to Require Commission to Enact Further Rules to Protect Consumers From Undisclosed Prepaid Calling Card Charges, AB 2885 (Held by staff until 5/15) — This bill would call upon the Commission to enact further rules to protect the customers of prepaid calling card arrangements.
NOTES AND COMMISSIONER REPORTS
Bohn Announces Web Information About Small Business Expos — In the only Commissioner report, Commissioner Bohn announced that the schedule for his “Small Business Expos” is available online. Information about these events is available at the following link: http://www.cpuc.ca.gov/PUC/expos/.