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On January 21, 2010 the California Public Utilities Commission held its first agenda meeting of the year.  There were several “big ticket” telecommunications items on the agenda.  The Commission unanimously adopted customer education guidelines in the backup power proceeding, and based on some last-minute negotiations between Commissioner Simon and Commissioner Peevey, the rules will apply to VoIP services in addition to traditional telephone services.  The Commission also adopted the annual CHCF-A funding resolution, but deferred consideration of certain of the Small LECs’ CHCF-A claims for reimbursement for certain regulatory changes to future resolutions.  The Commission also approved nearly $18 million in CASF “matching” funds to Broadband Associates International’s Northeastern California Project, and nearly $8 million in CASF “matching” funds for California Valley Broadband to pursue wireless broadband projects in the San Joaquin Valley.  The Rural Telephone Bank matter was held pending the completion of the comment cycle on the Revised Proposed Decision.  These and other telecommunications items of interest on the Commission’s agenda are discussed in further detail below.


REGULAR AND CONSENT AGENDA ITEMS


  • Guidelines Adopted for Customer Education Programs Regarding Backup Power Systems (R.07-04-015) (Item 52, adopted 4-0) – After nearly three years of workshops, comments, and other input from interested parties, the Commission adopted the Proposed Decision of Commissioner Simon as its final Decision in this proceeding.  This Decision concludes the Commission’s investigation into the reliability standards for telecommunications emergency backup power systems.  This proceeding was initiated at the direction of the California Legislature in AB 2393 (Levine 2006).  The Decision:  (1) adopts 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) directs service providers to enhance their existing customer education programs to meet these new guidelines; and (3) requires service providers to file advice letters within 180 days of the decision, detailing their customer education programs.
     
    This past December, Commissioner Peevey issued an Alternate Proposed Decision, an Alternate that was inherited from Commissioner Chong.  The main difference between the Alternate and Commissioner Simon’s original Proposed Decision was that the Alternate eliminated the proposed assertion of jurisdiction (and therefore applicability of the customer education guidelines) to Voice over Internet Protocol (VoIP) service providers in the original Proposed Decision.  In response to the issues raised in Commissioner Peevey’s Alternate, Commissioner Simon revised his Proposed Decision sufficiently to satisfy the concerns of the other Commissioners.  The revised Proposed Decision removes the Commission’s assertion of jurisdiction over VoIP providers generally, but retains the invocation of for purposes of furthering public safety.  In its jurisdictional analysis, the Commission relies on the generic term “telephony services” to define the scope of the customer education requirements.  Commissioner Peevey withdrew his Alternate Proposed Decision the day before the agenda meeting, and the Simon Proposed Decision received all four Commissioner votes.
     
    Commissioner Simon spoke at length regarding this Decision, which he championed as a victory for California consumers and public safety.  Simon noted that this Decision “represents the culmination of an epic three-year long proceeding.”  Alluding to Hurricane Katrina, and the current crisis in Haiti, Simon underscored the critical role that communications infrastructure fulfills in maintaining public safety, and the vital importance of educating customers about the limitations of that infrastructure.  Simon described that, unlike copper wires, coaxial cable and fiber do not always provide power to the customer premises sufficient to maintain service to customers during power outages.  He described these customer education requirements as a way to address this problem in a “lighthanded” but responsible way.  On the issue of jurisdiction, Simon noted that he has “long held that we cannot rely on voluntary commitments to protect the property and safety of the people of California.”  With a stern tone, Simon affirmed that California would not “abdicate its responsibility over VoIP” and that “the state police power should never be diluted” for any particular interest group.  Peevey, Bohn, and Grueneich also provided comments in support of the item, and Simon expressed appreciation regarding Commissioner Chong’s role in the process.
     
    The Decision associated with this item is available here.  The Press Release discussing this item is available here.   
  • 2010 California High Cost Fund-A Support Adopted for Small LECs (Item 33, adopted on consent agenda) – This resolution adopts total Calendar Year 2010 California High Cost Fund-A (CHCF-A) support of $35,535,158.38 for 10 Small LECs.  The allocation of the funding is more specifically delineated in the Proposed Resolution, which is available here.    
     
    In a departure from its prior Commission practices, the Resolution defers consideration of various proposed adjustments to CHCF-A funding to account for “regulatory changes of industry-wide effect” addressing wireless compensation, Virtual NXX, and jurisdictional separations issues.  Despite arguments from the Small LECs that the FCC’s 2005 T-Mobile Order and the Commission’s implementation of that order in its Cingular arbitration proceeding resulted in clearly-defined lost revenues that are recoverable from the CHCF-A, the Resolution defers an examination of that issue to a further proceeding.  The Resolution adopts a similar approach to lost revenues associated with implementation of the Commission’s VNXX policy.  Finally, the Resolution fails to adequately account for NECA changes in the manner in which high-capacity circuits are jurisdictionalized. 
  • $7,893,700 CASF Grant Approved for the California Valley Broadband Middle and Last Mile Project (Item 54, adopted on consent agenda) – This Resolution adopts contingent funding in the amount of $7,893,700 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.  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 areas in Sacramento, Solano, San Joaquin, Stanislaus, Merced, Madera, and Fresno counties).  CVB would also provide VoIP service via its network.  The total project cost is $78,937,009, and 10% ($7,893,700) is being requested from CASF as a match to CVB’s 80% ARRA fund request. 
     
    In response to the Draft Resolution underlying this item, several parties offered comments noting that CVB was attempting to receive CASF funding for areas that are already adequately served by other carriers.  Comments to this effect were provided by Comcast, Kerman Telephone Company, The Ponderosa Telephone Co., and Sierra Telephone, Inc.  Based on these comments, some adjustments were made to exclude certain areas from the CVB funding proposal that are served by Comcast, Kerman, and/or Sierra.  
     
    The decision also notes that as of December 17, 2009, $57.61 million has been granted for 38 projects covering 11,045 square miles and 115,706 potential households.  An older version of the Draft Resolution associated with this item is available here.
  • Verizon Granted $2,147,110 in CASF Funding for the Cazadero and Timber Cove Areas of the Sea Ranch Project (Item 9, adopted on consent agenda) – This Resolution adopts $1,872,017 in California Advanced Services Fund (CASF) funding for Verizon California Inc.’s (Verizon) Sea Ranch project.  Verizon sought a CASF grant for $1,872,017, representing 40% of the total project cost, including Contribution in Aid of Construction (CIAC) funding of $452,747. Verizon does not plan to seek federal ARRA funds in connection with this project.  Verizon’s Sea Ranch Project would cover three project area locations in Sea Ranch, Timber Cove, and Cazadero, and would provide for the construction of 19 miles of new fiber-optic line extending from Verizon’s Timber Cove wire center to the Sea Ranch central office, eventually enabling the backhaul of traffic to Verizon’s Novato facilities.  The Draft Resolution associated with this item is available here.      
  • $18,012,964 CASF Grant Approved for Broadband Associates International, Inc.’s Northeastern California Project (Item 23, adopted on consent agenda) – This Resolution adopts contingent funding in the amount of $18,012,964 for Broadband Associates International, Inc.’s (BBA) Northeastern California project, which involves the construction of 800 miles of fiber-optic infrastructure from its existing backbone at State Highway 299 to rural areas in 12 Northern California counties.  This project would provide an overall coverage area of approximately 6,000 square miles.  The affected counties include Shasta, Modoc, Tehama, Lassen, Plumas, Sutter, Colusa and Lake counties. The project would feature multi-strand fiber optic cable and optical multiplexors and virtual local area network technology software to allocate bandwidth on a shared IP trunk.  The Resolution notes that when completed, BBA will provide connection for the Corporation for Education Network Initiatives in California’s (CENIC) California Research and Education network (connecting 11 county offices of education, 599 K-12 schools, five community colleges, and the California State University at Chico), Level 3’s worldwide backbone including internet services, long haul transport, content and video delivery, data/voice services, and last mile service to households in certain select areas.  The total project cost is $180,129,635, and 10% is being requested from CASF as a match to BBA’s 80% ARRA fund request.  BBA is also requesting a 10% matching fund waiver request  The Draft Resolution associated with this item is available here
  • Investigation into the Pacific Telesis Group’s “Spin-Off” Proposal Closed (Item 24, adopted on consent agenda) – This Decision resolves a Commission investigation into the Pacific Telesis Group’s spin-off of its wireless subsidiaries in 1993.  In 1994, Pacific Telesis’s independent auditors provided a report to the Commission finding that the Pacific Telesis’ spin-off had complied with a Separation Agreement, with the Commission’s associated decision, and with the Commission’s affiliate transaction rules.  No further action took place following submission of the report.  In 2004, the assigned ALJ issued a ruling soliciting comments on the proceeding, and only AT&T California and the Division of Ratepayer Advocates filed comments.  AT&T urged that the proceeding should be closed because the issues to be addressed in the proceeding were either moot or academic.  AT&T also pointed out that even if there were issues remaining to be addressed in the proceeding, too much time had passed since the relevant events to conduct a fair hearing.  DRA disagreed, arguing that the alleged impropriety that gave rise to the proceeding still required adjudication.  After considering these comments, the Decision concludes that there is no compelling need to address DRA’s stated concerns, and that “it appears well past the time to close this aged proceeding.”  And with that, the proceeding is closed.  The Draft Resolution associated with this item is available here
  • Interconnection Dispute Resolved Between Sprint and AT&T California (Item 11, adopted on consent agenda) – This Decision grants Sprint Communications Company L.P.’s (“Sprint”) request that Pacific Bell Telephone Company d/b/a AT&T California extend its current interconnection agreement (ICA) with Sprint for three years.  As a condition of the merger between AT&T California and Bell South, the Federal Communications Commission (FCC) imposed a condition that AT&T California/BellSouth Corporation permit a requesting carrier to extend its current interconnection agreement for a period of up to three years.  AT&T California argued in the proceeding that this requirement should be construed to mean an additional three year term beyond the original expiration date (the term began in 2004), which would have meant Sprint could not extend the term any further.  The Commission disagreed, stating that the plain language of the FCC’s merger directive requires AT&T to extend its ICA with Sprint for an additional three years from the end date of the current agreement.  The Decision provides that Sprint’s agreement with AT&T will continue until three years from the effective date of the Decision.  The Proposed Decision associated with this item is available here
  • CPCN Granted to Entelegent Solutions, Inc. (Item 13, adopted on consent agenda) – This Decision grants a certificate of public convenience and necessity (CPCN) to Entelegent Solutions, Inc. (Entelegent) to provide limited facilities-based and resold competitive local exchange services in California.  Entelegent is a North Carolina corporation, and currently holds a CPCN authorizing the provision of inter- and intra-local access and transport area services in California as a non-dominant interexchange carrier.  The Commission found that Entelegent met all the requirements to be granted a CLEC authority, and this Decision grants such authority.  The Proposed Decision associated with this item is located here.
  • Pacific Lightwave Granted CLEC Authority (Item 32, adopted on consent agenda) – This Decision grants Pacific Lightwave a CPCN to provide full facilities-based local exchange telecommunications services as a non-dominant competitive local carrier to residential and business customers within California, in the service areas of AT&T California, Verizon California Inc. (Verizon), SureWest Telephone, and Citizens Telecommunications Company of California Inc. d/b/a Frontier Communications of California.  Pacific Lightwave proposes to acquire leased facilities from other providers and build wireless solutions for placement where traditional development has been cost-prohibitive or difficult, and install and operate equipment to support wireless backhaul service for voice service.  A copy of the Proposed Decision associated with this item is available here.
  • Corrections and Modifications Made to Decision Adopting Settlement Agreement and Granting Cheap2Dial Telephone, LLC Nondominant Interexchange Carrier Certificate of Public Convenience and Necessity (Item 41, adopted on consent agenda) – On November 20, 2009, the Commission granted Cheap2Dial Telephone, LLC (Cheap2Dial) a CPCN to operate as an interexchange carrier and authority to do business as a switchless reseller of long distance service in California.  The original decision (D.09-11-010) left out a standard ordering paragraph and related decisional language granting Cheap2Dial’s requested exemption from tariffing requirements.  This Decision corrects and modifies that decision.  The Proposed Decision associated with this item is available here.  
  • Disability Rights Advocates Granted $24,118 in Intervenor Compensation for Contribution to Investigation into Telecommunications Service Quality (Item 42, adopted on consent agenda) – This Decision awards $24,118.60 in intervenor compensation to Disability Rights Advocates for its “substantial contribution” to the Commission’s investigation into service quality standards for all telecommunications carriers and revisions to General Order 133-C (D.09-07-019).  The proceeding focused on the question of what constitutes “good telecommunications service quality” and “how that service quality should be measured, monitored and enforced.”  The Commission instituted the proceedings in light of changes to the regulatory framework and the importance of ensuring continued provision of high-quality telecommunications services.  The Decision associated with this item is available here.   
  • CPUC Comments Authorized in Response to Petition for Rulemaking Proposing New Rules for Universal Service High-Cost Support at FCC (Item 57, adopted on consent agenda) – The National Cable and Telecommunications Association (NCTA) filed a petition for rulemaking at the FCC proposing that the Commission establish procedures to reduce the amount of universal service high-cost support provided to areas where government subsidies are no longer necessary to ensure service.  The CPUC here authorizes its staff to file reply comments in support of reform of the high cost funding mechanism to reduce such support.  In those comments, the CPUC will also express concerns about the NCTA proposal including the potential of the proposal to unfairly advantage competitive wireline carriers, increase the draw on California’s CHCF-A Fund, unfairly benefit states that have not deregulated, and shift costs from the interstate to the intrastate arena without required changes in separation rules. 

SIGNIFICANT HELD AND WITHDRAWN ITEMS


  • Determination of Ratemaking Treatment for Rural Telephone Bank Stock Redemption Proceeds (Item 6, held until February 4, 2010) – This Proposed 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 original Proposed Decision in this proceeding would have departed from the Commission’s “gain on sale” rules by allocating the full value of redeemed RTB stock to ratepayers, including the value of patronage shares received by RTB borrowers.  The Revised Proposed Decision released in December 2009 suffers from similar errors, although the theories underlying those errors have shifted.  Parties filed opening comments on the Revised Proposed Decision on January 21, 2010, and reply comments will follow on January 28, 2010.  The Proposed Decision associated with this item is available here
  • Resolution Adopting CASF Funds for Mother Lode Broadband Project (Item 53, withdrawn) – This Draft Resolution would have adopted funding from the CASF totaling $3,110,064 for the Mother Lode Broadband Project of Telenational Communications Inc./Rapid Link Inc. and Mother Lode Internet.  The Mother Lode project would construct broadband infrastructure in “unserved” and “underserved” areas of Alpine, Amador, Calaveras, Mariposa and Tuolumne counties.  The Draft Resolution associated with this item is not currently available online.   
  • Comments to be Filed in Response to FCC Inquiry Regarding Rural and Urban Rates, and Petition for Rulemaking Proposing New Rules for Universal Service High-Cost Support  (Item 56, held to February 4, 2010) – In Qwest Communications International, Inc. v. FCC, the U.S. Court of Appeals for the Tenth Circuit remanded the FCC’s decision providing high-cost universal service support to non-rural carriers.  The FCC plans on issuing interim changes to the universal service support rules, and seeks comments on whether it should (1) define “reasonably comparable” rural and urban rates in terms of rates for bundled local and long distance services, and/or (2) require carriers to certify that they offer such bundled local and long distance services at reasonably comparable rates for rural and urban zones.  The Commission’s Legal Staff seeks authority to prepare comments addressing issues raised in the public notice.

NOTES AND COMMISSIONER REPORTS


  • CPUC Efforts to Put Additional Decisions Online – On a happy note for CPUC practitioners, Commissioner Peevey reported that the Commission is working to post searchable Commission decisions from 1911 to the present on the Internet.  This Commission is partnering with Google Scholar to implement this project.
  • Commissioner Bohn Adds Robert Haga to Staff – Commissioner Bohn announced an important addition to his office.  Robert Haga, formerly of Commissioner Chong’s staff.  Mr. Haga will be focusing on telecommunications and legal matters

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