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On December 3, 2009, the California Public Utilities Commission held its regularly scheduled agenda meeting. The main telecommunications issue addressed at the meeting was the Resolution approving California Advanced Services Fund (CASF) “matching” funding for The California Broadband Cooperative of California’s “Digital Middle Mile” project along Highway 395. Significantly, the Commission granted the Applicant’s request for funding even though the Applicant will only be responsible for 1% of the project costs. This and other telecommunications items of interest on the Commission’s agenda are discussed in further detail below.


REGULAR AND CONSENT AGENDA ITEMS


  • CASF “Matching” Funding Approved for The California Broadband Cooperative of California’s Digital 395 Middle Mile Project(Items 39/39a, 39a adopted 4-1) – The Commission approved $19,249,717 in contingent CASF funding for the non-profit, member-run and owned organization, the California Broadband Cooperative, Inc.’s (CBC) Digital 395 Middle Mile network project in Mono, Inyo, Eastern Kern and northwest San Bernardino counties. The project is designed to provide “middle mile” connectivity along Highway 395. There were two competing Draft Resolutions proposed for alternate grant amounts – $10,149,422 (representing 10% funding) and $19,249,717 (representing 19% funding). The Commission approved the $19,249,717 contingent grant 4-1, with Commissioner Bohn dissenting. The larger amount was recommended by Director Leutza as an exception to the 10% standard CASF funding cap for federal ARRA “matches” because the CBC did not have the financial wherewithal to provide matching funding. The project proposes to construct a 448 mile 10-Gigabit high capacity fiber optic middle mile/backhaul route along Highway 395 stretching from Barstow to the Nevada State line at Topaz Lake, providing a “middle mile” link to over three dozen communities in that area, creating route redundancy, and improving broadband access by 28,000 households. Commissioner Simon supported the 19% funding, but expressed concern regarding the issue of transparency in the per-household costs. Commissioner Chong spoke at length regarding the reasons for the exception to the 10% cap, noting that the project highlights how important CASF and broadband ARRA monies are to communities such as these that have been “bypassed by the information superhighway.” She noted that this project will provide telehealth access to 12 health care facilities in the area, provide broadband access to many schools and libraries in this area, and provide 26 public safety entities with faster broadband access. “These communities would not likely see broadband access in my lifetime except for this project,” Commissioner Chong stated. Commissioner Bohn voted against the 19% funding on the grounds that any applicant seeking funding under the CASF should have sufficient “skin in the game,” and that he did not believe the 1% investment in the project was a sufficient contribution to the total project costs. Bohn quipped that “while this is the holiday season, we should not be playing Santa Claus with other people’s money.” Despite Bohn’s objections, the Resolution was adopted 4-1. The Draft Resolution associated with this item is available here.
  • Small Business Exemption Under G.O. 133-C Expanded to Trouble Reporting Requirements, Effective January 1, 2010 (Item 22, adopted on consent agenda) – This Decision limits reporting for customer trouble reports to local exchange services provided to residential and small business customers. Small business customers are defined as those with five or fewer lines. Decision 09-07-019, adopted General Order 133-C, contained a set of service quality measures, including customer trouble reports (six reports per 100 lines for reporting units with 3,000 or more working lines and lower standards for smaller units; 8 trouble reports per 100 working lines for units with 1,001-2,999 working lines; and 10 trouble reports for units with 1,000 or fewer working lines). By this Decision, the Commission granted the California Association of Competitive Telecommunications Companies’ (CALTEL) petition to modify that Decision and General Order 133-C to limit reporting for customer trouble reports, and to conform the reporting limitation for customer trouble reports to local exchange services provided to small business customers as adopted for other measures in that Decision. The Proposed Decision associated with this item is available here.   
  • CPUC to Offer Comments to FCC Regarding Federal Universal Service Program and Intercarrier Compensation Policies(Item 41, adopted on consent agenda) – The FCC has sought comments on the size of the Universal Service Fund (Fund), the contribution methodology for the Fund, transitioning from the current high-cost support mechanism to one that would support broadband deployment, and other issues related to intercarrier compensation (ICC) policies, all in connection with the FCC’s broadband initiative. The CPUC’s Legal Division recommends that the CPUC provide comments on both universal service reform and on ICC reform. As for Universal Service Reform, the Staff recommends that the FCC (1) establish a pilot project that would provide a limited number of low-income subscribers with Lifeline/Link-up broadband support for equipment and monthly Internet access service, in order to gauge the cost of providing that service more globally; (2) establish a separate limited fund to support broadband deployment in unserved and underserved areas after the current economic stimulus broadband deployment projects are finished and accurate mapping is available; and (3) recognize that carrier of last resort obligations should continue to be determined by the states. As for ICC Reform, the Staff recommends that the CPUC advocate that the FCC not address ICC reform as part of the National Broadband Plan, but rather in current open rulemakings. The draft memorandum containing the Legal Division recommendations is available here
  • Statutory Deadline Extended in Malibu Fire Investigation (Item 23, adopted on consent agenda). This Decision extends the statutory deadline for resolving the Commission’s investigation of the October 2007 Malibu Canyon Fire Investigation from January 29, 2010 to January 31, 2011, to accommodate the projected December 2010 issuance of the Commission’s decision in this proceeding (Investigation 09-01-018). The purpose of the Malibu Canyon fire proceeding is to determine whether any of the named utilities, which include Pacific Bell Telephone Company dba AT&T California and AT&T Mobility LLC (“AT&T”), Southern California Edison Company, Cellco Partnership LLP dba Verizon Wireless, Sprint Communications Company LP, and NextG Networks of California, Inc., violated any statutory law or Commission order, rule or requirement with respect to facilities that may have caused the Malibu Canyon Fire in October 2007. The Order Extending Statutory Deadline is available here.  
  • Statutory Deadline Extended in Adjudicatory Case Involving XO Communications and Fones4All Corporation(Item 26, adopted on consent agenda) – The Commission extended the 12-month statutory deadline in a case filed on June 15, 2008, by XO Communications Services, Inc., (“XO”), which alleges that Fones4All Corporation (“Fones4All”) owes XO for switching and transport services related to the migration of Fones4All’s customers to AT&T California and Telscape Communications, Inc. Fones4All filed for bankruptcy protection in August 2008, which automatically stayed the case. The Commission has therefore extended the 12-month statutory deadline for resolving the proceeding until June 15, 2010, to continue to accommodate the bankruptcy stay. The Order Extending Statutory Deadline is available here

SIGNIFICANT HELD AND WITHDRAWN ITEMS


  • Determination of Ratemaking Treatment for Rural Telephone Bank Stock Redemption Proceeds(Item 6, held by Staff until 12/17/09) – This Decision would resolve the Small LECs’ application, prompted by previous Commission directives in certain Small LEC rate cases, to address “gain on sale” implications of the recent stock redemption associated with the dissolution of the Rural Telephone Bank. The Proposed Decision would depart from the established “gain on sale” rules and allocates all redeemed stock proceeds, including all gains and all principal investments, to ratepayers. The record in this proceeding was recently reopened for the submission of additional evidence. That additional evidence was submitted by the Small LECs on November 19, 2009. The Proposed Decision associated with this item is available here.
  • Decision Addressing Guidelines for Customer Education Programs Regarding Backup Power Systems (R.07-04-015)(Item 37, held by Commissioner Chong until 12/17/09) – This Decision would conclude the Commission’s investigation into reliability standards for telecommunications emergency backup power systems. The Decision would: (1) adopt guidelines for customer education programs for facilities-based providers of telephony services who provide service to residential customers via technologies that require backup power on the customer’s premises; (2) direct service providers to enhance their existing customer education programs to meet these new guidelines; and (3) require service providers to file an advice letter within 180 days of the decision, detailing their customer education programs. The Proposed Decision associated with this item is available here.  
  • TracFone Wireless, Inc.’s Request for ETC Designation in California (Item 38, held by Staff until 12/17/09) – TracFone Wireless, Inc. (TracFone) sought to be designated as an ETC in order to receive federal universal service support to provide LifeLine discounts in connection with its resold, wireless prepaid service. This Draft Resolution would find that designation of TracFone as an ETC is not in the public interest because TracFone had both failed to collect and remit public purpose program surcharges and user fees as is required under the California Public Utilities Code. TracFone has argued in the face of considerable Commission precedent that it did not have to collect and remit such fees because it is not a public utility. The Draft Resolution would further direct the Communications Division to institute an investigation into why TracFone should not be ordered to collect and remit all those user fees/surcharges, and be penalized for its failure to do so previously. The Draft Resolution associated with this item is available here
  • $8,216,583 CASF Grant for the California Valley Broadband Middle and Last Mile Project(Item 40, held by Staff until 12/17/09) – This Resolution would adopt contingent funding in the amount of $8,216,583 for the California Valley Broadband (CVB) project. CVB is a consortium of the principals of Moreno Trenching Ltd, Mika Telecom Group, and MT2 Telecom, LP, and the CVB project would deploy a fixed wireless network using two unregulated (WiFi) frequencies and one licensed (WiMAX) frequency to deliver high speed internet services to the Central Valley (including Sacramento, Solano, San Joaquin, Stanislaus, Merced, Madera, and Fresno counties), as well as Voice over IP (VoIP). The total project cost is $82,216,583, and 10% ($3,216,583) is being requested from the California Advanced Services Fund (CASF) as a match to CVB’s 80% ARRA fund request. The Draft Resolution associated with this item is available here.    

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