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On January 13, 2011, the California Public Utilities Commission held its first agenda meeting of the year.  The Commission approved an Order Instituting Rulemaking to require interconnected Voice over Internet Protocol service providers to contribute to California’s public purpose programs, and dealt with a number of ministerial items.  Items of interest on the Commission’s public agenda are discussed in further detail below.
 
REGULAR AND CONSENT AGENDA ITEMS 

  • Rulemaking Initiated to Require California Providers of VoIP to Fund California’s Universal Service Programs (Item 48, adopted 3-0 on regular agenda) – This Order Instituting Rulemaking (OIR) begins a Rulemaking to add California providers of interconnected Voice over Internet Protocol (VoIP) to the category of voice service providers required to fund California’s universal service programs, including the California LifeLine Telephone Program, the California High-Cost Fund A, the California High-Cost Fund B, the California Advanced Services Fund, the California Teleconnect Fund, and the Deaf and Disabled Telecommunications Program.  The OIR indicates that contributions should be required from intrastate end-users of interconnected VoIP service because the Federal Communications Commission had already undertaken similar action in regards to the Federal Universal Service Fund (USF) and found that “the application of state universal service contribution requirements to interconnected VoIP providers does not conflict with federal policies and could, in fact, promote them.” 

    According to the Communications Director, Jack Leutza, the objective of this program is to ensure that the universal service programs are adequately supported in a competitively & technologically neutral manner.  Commissioner Simon noted that the question is not open as to whether they should be added, but how to add them, and noted the timeliness of this OIR as the telecommunications industry transitions to these new voice IP technologies.  Initial responses to the OIR will be due 45 days after mailing.  The draft OIR associated with this item is available here

  • Fines Issued Contractors Strategies Group, Inc., Intella II, Inc., A&M Communications, TNT Financial Services, Limo Services, Inc., Calnev Communications, Inc., 1st Capital Source Funding & Financial Services, Inc. for Connecting Automatic Dialing Devices to Payphones (Item 26, adopted 3-0 on regular agenda) – This Decision adopts settlement agreements and a motion for summary adjudication regarding liability, resulting from the Commission’s investigation into the operations, practices and conduct of Contractors Strategies Group, Inc., Intella II, Inc., A&M Communications, TNT Financial Services, Limo Services, Inc., Calnev Communications, Inc., 1st Capital Source Funding & Financial Services, Inc., and their owners, to determine whether they violated California laws, rules and regulationsregarding connection of automatic dialing-announcing devices (i.e., robocalls) to customer-owned payphones (and thus avoiding approximately 10,000 per phone in “Dial Around Compensation” (DAC)).  The respondents together will pay fines totaling $18,413.78, release all claims to illegally generated DAC of $103,194, and are barred from future operation of customer owned pay phones.  The DAC will be divided between the State’s General Fund and Telecom Consumer Fund due to the administrative problems with direct refunds.  Commissioner Ryan called this Decision a “creative and equitable solution to unique case of wrongdoing,” and Commissioner Simon pointed out that the Decision constitutes a strong testament to the fact that the Commission is “prepared to take action against bad actors.”  The Decision associated with this item is available here
  • Verizon to Discontinue Annual Shared Asset Methodology Reporting Requirement (Item 19, adopted on consent agenda) – This Decision allows Verizon California, Inc. to discontinue the Annual Shared Asset Methodology Reporting Requirement adopted in Decision 04-03-038.  The Commission concludes that the Report no longer serves any useful purpose.  The Decision associated with this item is available here.
  • Certificate of Public Convenience and Necessity Granted to XYN Communications (Item 34, adopted on consent agenda) – This Decision grants a CPCN to XYN Communications of California, LLC to provide limited facilities-based and resold local exchange, intraLATA and interLATA interexchange telephone service in all AT&T California’s and Verizon California’s local exchange areas.  The Decision associated with this item is available here
  • Indirect Transfer of Control of Associated Network Partners, Inc. and Zone Telecom, Inc. to ANZ Communications LLC Approved (Item 33, adopted on consent agenda) – This Decision grants the unopposed application of Associated Network Partners, Inc. and Zone Telecom, Inc. for approval of an indirect transfer of control of the entities to ANZ Communications LLC.  The Decision associated with this item is available here
  • The Utility Reform Network Granted $19,003.50 for Contribution to OIR to Establish Rules Governing Transfer of Customers from Competitive Local Carriers Exiting Local Telecommunications Network (Item 36, adopted on consent agenda) – This Decision awards The Utility Reform Network $19,003.50 for substantial contribution to Decision 10-07-024, the Rulemaking to establish rules governing the transfer of customers from competitive local carriers exiting the local telecommunications market.  The Decision associated with this item is available here
  • Disability Rights Advocates Granted $8,683 for Contribution to Petition to Review Assessment of Surcharges for Public Policy Programs Related to Prepaid Wireless Services (Item 38, adopted on consent agenda) – This Decision awards Disability Rights Advocates $8,683 for substantial contribution to Decision 10-07-028, a Petition to adopt, amend or repeal a regulation pursuant to California Public Utilities Code Section 1708.5, specifically to review the assessment of surcharges for the Commission’s public policy programs with respect to prepaid wireless services.  The award will be funded by the ratepayers of Verizon Wireless, the original Petitioner in that proceeding.  The Decision associated with this item is available here.  

SIGNIFICANT HELD OR WITHDRAWN ITEMS

  • Draft Resolution Addressing Small LECs’ California High Cost Fund-A Administrative Committee Fund Adjustments Authorized for Calendar Year 2010 (Item 3, held until January 27, 2011 by Staff) – This Draft Resolution would resolve residual funding items for the Small LECs for 2010.  In October 2009, the 14 small Local Exchange Carriers (Small LECs) made their annual CHCF-A advice letter filings, requesting total CY 2010 CHCF-A support of $38.886 million.  On January 21, the Commission authorized $35.535 million in funding for 2010, and deferred a decision on requested carrier adjustments related to:  (1) revenue effects associated with National Exchange Carrier Association (NECA) separations methodology changes; (2) revenue effects associated with virtual NXX calls; and (3) revenue effect associated with wireless intercarrier compensation. 
     
    Although the Commission staff is still considering the issues, the current version of the Draft Resolution would address the three deferred items by: (1) approving the proposed NECA separations methodology revenue adjustments; (2) approving Foresthill and Kerman’s request for a CHCF-A adjustment related to the implementation of intercarrier compensation agreements with 01 Communications in the total amount of $77,972; and (3) allowing claims for the revenue effect of wireless intercarrier compensation changes following April 29, 2005, but denying claims for lost revenues prior to that date.  The Draft Resolution associated with this item is available here.  
     
  • Certificate of Public Convenience and Necessity Granted to DTS of CA, Inc. (Item 9, held by Staff until 1/27/11) – This Proposed Decision would grant a certificate of public convenience and necessity (CPCN) to DTS of CA, Inc. to construct telecommunications facilities and to provide local exchange and interexchange service to unserved territories in California.  The Proposed Decision associated with this item is available here
  • Pac-West Telecomm, Inc.’s Complaint Against Various Carriers for Failure to Pay Termination Fees Dismissed (Item 29, held to 1/27/11 by Staff) – This Proposed Decision would dismiss Pac-West Telecomm, Inc.’s (Pac-West) consolidated action alleging that defendants – carriers that provide Commercial Mobile Radio Service (CMRS) and transmit CMRS traffic to Pac-West for termination – wrongfully refused to pay Pac-West for termination services, and that the defendants should be required to pay an amount equal to the termination rate in Pac-West’s intrastate tariff.  The Commission would dismiss the complaints due to the pendency of an appeal of a Federal Communications Commission (FCC) decision upon which the complaints are based, and on the grounds that the conduct that Pac-West challenges appears to be permitted under current federal law and the complaints fail to state causes of action under California law for undue discrimination, unreasonable utility practices, or unjust enrichment.  The Proposed Decision would also authorize Pac-West to file a petition to reopen the proceeding if the FCC appeal is resolved in its favor.  The Proposed Decision associated with this item is available here.   

SIGNIFICANT ENERGY ITEMS   

  • Emergency Authorization Directing California Natural Gas Providers to Reduce Pressure on Certain Pipelines, and Search Pipeline Records (Item 41, adopted 3-0 on regular agenda)  This Decision results from the Commission’s emergency investigation into the San Bruno pipeline explosion tragedy.  The Commission has sent letters to natural gas providers including Pacific Gas & Electric Company, San Diego Gas & Electric Company, Southern California Gas Company and Southwest Gas Pipelines to direct a reduction of pressure on certain pipelines, and aggressively search pipeline records to identify segments in high consequence areas to be tested by those companies.  Those pressure tests, recommended by NTSB, will result in the resetting of maximum operating pressure on the weakest parts of the lines.   

    Commissioner Simon asked pointed questions of the Commission’s chief legal counsel regarding whether the PUC could have foreseen this incident.  PG&E’s records were apparently incomplete and inadequate, but the incident has brought these issues to light.  Simon called this Decision a “game changer for California and across the country,” indicating that the questions to be resolved are how pervasive this problem is, and whether it is indicative of a broader problem.  The Decision associated with this item is available here.   

MANAGEMENT AND COMMISSIONER REPORTS  

  • Commissioner Simon participated in an Advanced Communications Law & Policy Institute conference at New York Law School, where topics such as the National Broadband Plan, net neutrality, intercarrier compensation, and smart grid technologies were covered.  In recognition of a series of public speakers on the issue of raising basic utility rates, Commissioner Simon also ended the meeting by urging the utilities “find it in your heart to find solutions for people with need in these difficult times.”

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