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On Friday, February 20, 2009, the California Public Utilities Commission held its second regularly-scheduled agenda meeting of 2009. The meeting began with on lively note, with several members of the public speaking out about proposed rate increases in the Edison rate case (ultimately, that item was held). A handful of individuals from small communities in Northern California that would be the targets of California Advanced Services Fund funding also spoke during the public comment period, which provided a strong backdrop for the Commission’s adoption of those items. The CASF items were the main telecommunications-related matters on the agenda; these and other items of interest are summarized below.


REGULAR AND CONSENT AGENDA ITEMS

  • Decisions awarding funding for the Highway 299 Broadband Network Project and AT&T California Advanced Services Fund Unserved Area Applications (Items 57 and 58, adopted on regular agenda) – The Commission approved California Advanced Services Fund (“CASF”) funding requests for two separate projects in “unserved areas” where high-speed Internet access is currently unavailable. First, the Commission awarded $7,830,720 to Broadband Associates, International, Inc., for the Highway 299 Broadband Network project, which represents 40 percent of the total project cost of that unserved area application. Several people from the Humboldt area spoke in favor of this funding during the public comment period, and the Commission acknowledged that approximately 5,700 households in Trinity, Humboldt, and Shasta counties would benefit from the project, which will provide broadband coverage along the Highway 299 corridor. The Commission also adopted funding of $216,832 for four AT&T broadband projects in assorted unserved areas throughout the state, including Comptche, Alta, Warner Springs, and Carmel Valley. The funding will serve 482 households in those communities. Several individuals from Comptche spoke in favor of the funding, urging the Commission to pass the resolution despite the fact that the project would not mean the installation of “super-duper” fast broadband. Apparently, while at least 150 people who live in and around Comptche (pop. ~ 368) support the project, and signed a petition urging AT&T to upgrade their Internet service from dial-up to broadband, there are other community members who want to hold out for higher quality broadband, and use CASF funding for that purpose. In voting to pass the resolution, the Commission acknowledged that the broadband will not be the fastest available, but will provide service that is significantly faster than the current dial-up service. The Commission lauded AT&T for submitting proposals as to each community. Recent drafts of these decisions are available at http://docs.cpuc.ca.gov/word_pdf/COMMENT_RESOLUTION/96220.doc and http://docs.cpuc.ca.gov/word_pdf/COMMENT_RESOLUTION/96222.doc.

  • Decision Extending Deadline Applicable AT&T/O1 Reciprocal Compensation Dispute (Item 27, adopted on consent agenda) – The Commission extended the deadline applicable to a complaint filed by AT&T California in March 2008 alleging that O1 Communications, Inc., wrongly billed AT&T at reciprocal compensation rates for traffic delivered by AT&T to O1 bound for Internet service providers, despite the fact that such ISP-bound traffic is subject to the 0.0007-per-minute-of-use rate set forth in the ISP Remand Order issued by the Federal Communications Commission in 2001. AT&T alleged it conducted an analysis of traffic studies and data supplied by O1, which indicated that 98 percent of the total local traffic that AT&T delivers to O1 in California is ISP bound. AT&T seeks an order requiring O1 to bill AT&T for the transport and termination of traffic in a manner that is consistent with its traffic study, and also for the Commission to issue an order requiring the parties to amend their current Interconnection Agreement to implement and effectuate accurate billing in the future. O1 responded to the complaint in April 2008, admitting that in July 2003, AT&T invoked the ISP terminating compensation plan set forth in the ISP Remand Order, but O1 denied that this plan is applicable to all traffic identified in the complaint. Instead, O1 contends that the traffic at issue in the complaint is subject to the terms of the Appendix Reciprocal Compensation (“RC Appendix”) that is part of the interconnection agreement between the parties, and that its billings to AT&T are consistent with the RC Appendix. O1 acknowledges that there are disputed issues of material fact, but O1 believes that before the Commission addresses those issues, AT&T should be required to comply with the dispute resolution provisions of the ICA, and the Commission should conduct a rulemaking since the complaint represents the first time that AT&T has sought to establish a “methodology for rebuttal of the of the 3:1 presumption set forth in the ISP Remand Order and determination of the data requirements sufficient to support such a rebuttal of that presumption.” Given the complexity of the matters raised, and the fact that the assigned ALJ has not been able to devote time to this particular matter given two other matters that also raise important complex issues, the Commission granted an extension of time until March 4, 2010, for the ALJ to decide whether a rulemaking should be conducted, and which factual issues raised by the defendant require a hearing. A recent draft of the Commission’s decision is available at http://docs.cpuc.ca.gov/word_pdf/AGENDA_DECISION/96980.doc.

  • Decision Approving Settlement Agreements Adopting UNE Re-examination Process (Item 26, adopted on consent agenda) – The Commission approved settlement agreements between the California Association of Competitive Telecommunications Companies (“CALTEL”) and AT&T California, and between CALTEL and Verizon California Inc., relating to the process for future re-examination of the rates for Unbundled Network Elements (“UNEs”). The settlement agreement with AT&T provides that an indexing mechanism applies to UNE recurring rates set in the Commission’s order D.04-09-063, as subsequently modified D.05-05-031. The rates will be calculated annually in advice letter filings modifying the UNE recurring rates in interconnection agreements on October 1 of each year beginning in 2010, running through October 1, 2015. Rates will continue for one or more renewal terms, each on a three-year basis, unless notice is given by either party to terminate the agreement six months in advance of the conclusion of any term. The settlement agreement with Verizon provides that a lock-out process applies to UNE recurring rates set in D.06-03-025, as subsequently modified by D.07-10-003. The term of the lock-out process shall be from December 1, 2008, through October 1, 2014. Verizon may not file a UNE rate proceeding with the Commission until the end of the term, and only after notice, which shall be no later than six months prior to the anticipated date for such filing. A recent draft of this decision is available at http://docs.cpuc.ca.gov/word_pdf/AGENDA_DECISION/96882.doc.

  • Decision Approving Settlement Between NextG Networks and CPUC Consumer Protection and Safety Division (Item 23, adopted on consent agenda) – This decision approves a settlement between NextG Networks of California and the Commission’s Consumer Protection and Safety Division (“CPSD”). The CPSD was investigating NextG to determine if it had violated the terms of its limited facilities-based Certificate of Public Convenience and Necessity (“CPCN”) by failing to obtain the necessary Commission licensing and environmental review. NextG filed a motion to dismiss, arguing that the alleged violations of the CPCN were based upon licensing and environmental review requirements that are discriminatory and unlawful under Section 253 of the Federal Communications Act. NextG’s motion was denied. The parties subsequently reached a settlement, approved by ALJ Karl Bemesderfer, requiring NextG to deposit $200,000 into the State of California’s General Fund. A recent draft of the Commission’s decision is available at http://docs.cpuc.ca.gov/word_pdf/AGENDA_DECISION/97002.doc.

  • Decision Granting Vanco Direct USA’s Request for Transfer of Ownership and Control to Capital Growth Acquisition, Inc. (Item 24, adopted on consent agenda) – The Commission approved a request by applicant Vanco Direct USA, LLC, to transfer ownership of Vanco to Capital Growth Acquisition, Inc. Vanco holds certificates of public convenience and necessity to provide interLATA and intraLATA telecommunications services in California as a switchless reseller and to provide resold local exchange telephone service. The Commission determined that Capital Growth Acquisition met the required fitness showing for approval of transfer of Vanco to Capital. Capital is a Delaware corporation formed for the purpose of purchasing Vanco, and is a wholly owned subsidiary of Capital Growth Systems, Inc. (“CGSI”), a publicly traded corporation with principal offices in Chicago that, according to Vanco’s application, “delivers telecom logistics solutions to a global client set consisting of systems integrators, telecommunication companies, and enterprise customers,” and “helps customers improve efficiency, reduce cost, and simplify operations of complex global networks, with a particular focus on access networks.” Capital will purchase 100 percent of the limited liability assets of Vanco, and once the transaction is complete, Vanco will become a wholly owned direct subsidiary of Capital and an indirect subsidiary of CGSI. Vanco will continue to provide service to existing customers under currently applicable rates, terms and conditions. A recent draft of this decision is available at http://docs.cpuc.ca.gov/word_pdf/AGENDA_DECISION/96987.doc.

  • Decision Dismissing Application of Everycall Communications, Inc. (Item 4, adopted on consent agenda) – The Commission dismissed an application submitted by Everycall Communications, Inc., dba All American Home Phone, dba Local USA, for failure to prosecute the application. In dismissing the application, the Commission specifically cited Everycall’s failure to respond to a letter from the assigned administrative law judge requesting information regarding applicant’s fitness to provide service. The applicant sought a Certificate of Public Convenience and Necessity to Offer Resold and Limited Facilities-Based Local Exchange and Interexchange Telecommunications Services. A recent draft of the Commission’s decision rejecting this application is available at http://docs.cpuc.ca.gov/word_pdf/AGENDA_DECISION/97231.doc.

  • Decision Ordering Payment of $231,973 to TURN for Contributions to Commission Decisions (Item 41, adopted on consent agenda) – This decision orders payment of $231,973.31 to The Utility Reform Network (“TURN”) for its substantial contributions to D.07-09-018, D.07-09-019, and D.08-04-057, decisions issued in the Uniform Regulatory Framework proceeding. Since the first two decisions are related to issues concerning all providers of telecommunications services in California, the Commission ordered that that portion of the award, $95,289.64, be paid from the Intervenor Compensation Fund, while the third decision addresses issues specific to AT&T California, and thus AT&T will pay TURN $136,683.67 for its work on that particular decision. A recent draft of this decision is available at http://docs.cpuc.ca.gov/EFILE/PD/96129.pdf.

  • Decision Awarding Latino Issues Forum $14,370 for Contributions to Commission Decision (Item 44, adopted on consent agenda) – The Commission awarded Latino Issues Forum (“LIF”) $14,370.73 in compensation for its substantial contribution to D.08-06-020, a decision which centered around a comprehensive review of the Commission’s Telecommunications Public Policy Programs, specifically Payphone Programs, Deaf and Disabled Telecommunications Program (“DDTP”), and California Teleconnect Fund (“CTF”). The award will be paid from the Commission’s intervenor compensation fund. A recent draft of this decision is available at http://docs.cpuc.ca.gov/EFILE/PD/96317.pdf.


SIGNIFICANT HELD AND WITHDRAWN ITEMS

  • Decision Awarding Funding for the Laytonville Broadband Project (Item 56, held until the March 12, 2009, regular Commission meeting) – The Commission held its decision as to funding of the Laytonville Broadband Project until its March 12, 2009, meeting. This would award $54,000 to Willits OnLine LLC and its subsidiary company, Rural Broadband Now! LLC, for the Laytonville “unserved area” broadband project. The funding would represent 40 percent of the total project cost of $135,000. A recent draft of this decision is available at http://docs.cpuc.ca.gov/word_pdf/COMMENT_RESOLUTION/96218.doc.


NOTES AND COMMISSIONER REPORTS

  • Chong Report Regarding Stimulus Package / CASF Overlaps — Commissioner Chong announced that a workshop is being organized on the Advanced Services Fund docket regarding the economic stimulus broadband provision. The date of the workshop has not yet been announced.

  • Personnel Changes in Peevey’s Office – Commission President Peevey announced that Carol Brown is his new chief of staff, replacing Nancy Ryan, who is now the Commission’s deputy executive director for policy and planning.

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