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On Thursday, January 29, 2009, the California Public Utilities Commission held its regularly scheduled agenda meeting, the first of 2009. Although there were no telecommunications items on the regular agenda, the Commission adopted resolutions in five Small LEC rate cases and the annual CHCF-A distribution order on its consent agenda. These and other telecommunications-related matters are discussed below.


REGULAR AND CONSENT AGENDA ITEMS

  • Small LEC Rate Case Resolutions Adopted (Items 61-65, adopted on consent agenda) – The Commission adopted resolutions resolving general rate cases for five small LECs: The Ponderosa Telephone Company, Calaveras Telephone Company, Inc., Cal-Ore Telephone Company, Ducor Telephone Company, and Pinnacles Telephone Company. These resolutions establish revenue requirements for each of these companies based on a 2009 test year. Significantly, the resolutions require the companies to raise their basic residential service rates to $20.25 based on an interpretation of the California High Cost Fund A rules that would condition funding upon maintaining a basic residential rate at 150% of AT&T’s basic rate. The resolutions also dramatically reduce Small LEC expenses based on capping allowed employee benefit expenses at 42% of the companies’ wages.

    The resolutions are effective immediately. The rate increases go into effect in March, but the differential between the $20.25 rate and the companies’ current rates for February will be collected through a surcharge. Recent drafts of these resolutions are attached below:

  • Resolution Adopting California High Cost Fund-A Support for Each of the 17 Small LECs for 2009 (Item 67, adopted on the consent agenda) – This Resolution authorizes total Calendar Year 2009 California High Cost Fund-A (“CHCF-A”) support of $27,697,358.43 for 17 small Local Exchange Carriers. Yearly allocations for companies not in rate cases are as follows: $1,902,161.09 for Foresthill Telephone Co., $4,639,000.96 for Kerman Telephone Co., $12,104,196 for Sierra Telephone Co., $3,617,062.93 for Siskiyou Telephone Co., and $4,467,413.45 for Volcano Telephone Co. Monthly support includes $158,513.42 for Foresthill, $386,583.41 for Kerman, $1,008,683 for Sierra, $301,421.91 for Siskiyou, and $372,284.45 for Volcano. The CHCF-A resolution also includes a portion of Ponderosa’s CHCF-A draw for 2009 for the amount attributable the impact of regulatory changes not included in its rate case. Except for Ponderosa, the Commission specified the whole CHCF-A draw for each of the rate case companies in each resolution resolving the companies’ rate cases. The monthly support payments for 2009 are to be paid by the Communications Division within 30 days after the close of each calendar month, subject to the availability of funds and the Commission and State adoption of budgets covering payment of the CHCF-A support. A recent draft of the Commission’s decision is available at http://docs.cpuc.ca.gov/word_pdf/AGENDA_RESOLUTION/96560.doc.

  • Decision Denying Skynet’s Motion for Leave to Withdraw Application for Registration as Interexchange Carrier Telephone Corporation (Item 18, adopted on consent agenda) – The Commission adopted a decision denying Skynet Communications, Inc.’s leave to withdraw its application for registration as an interexchange carrier in connection with its prepaid phone card service. The Commission rejected Skynet’s argument that it is not required to register with the Commission pursuant to Section 1013. Skynet had argued that Section 1013’s requirements were inapplicable because its prepaid phone cards are marketed to the international market, the Commission lacks jurisdiction, and the de minimus intrastate revenue Skynet receives is generated by visitors to California who use international phone cards as a matter of convenience.

    Skynet had previously submitted a registration application to the Commission. The Commission’s Consumer Protection and Safety Division subsequently requested additional information from Skynet regarding its inter- and intra-state activities. It was then that Skynet withdrew its application, maintaining that the Commission does not have jurisdiction over its activities since Skynet believes it does not provide intrastate service within California. The CPSD found that Skynet’s sole line of business in California is phone cards, and that it markets at least some of its phone cards as providing intrastate phone service. In denying Skynet’s motion for leave to withdraw its application, Skynet’s registration was approved, and the proceeding closed. A recent draft of the Commission’s decision is available at http://docs.cpuc.ca.gov/word_pdf/AGENDA_DECISION/96525.doc.

  • Decision Approving Interconnection Agreements Between Wireless Carriers and Small Local Exchange Carriers (Item 24, adopted on consent agenda) – This decision approves the Final Arbitrator’s Report in the arbitrated interconnection dispute between AT&T Mobility (formerly Cingular), and 11 rural local exchange carriers. In doing so, the Commission adopted reciprocal compensation rates for these carriers ranging from approximately .001 cents/minute to .01 cents/minute. A recent draft of this decision is available at http://docs.cpuc.ca.gov/word_pdf/AGENDA_DECISION/95743.doc.

  • Decision Extending 12-Month Deadline Applicable to O1/Verizon Adjudicatory Proceeding (Item 36, adopted on consent agenda) – The Commission extended the 12-month statutory deadline that is normally applied to a proceeding in the matter of complainant O1 Communications, Inc. and defendant Verizon California, Inc., to February 15, 2010. The complainant alleges in its original complaint, filed in February of 2008, that Verizon owes O1 Communications $182,500 under the parties’ interconnection agreement for terminating calls originating with Verizon customers and destined for internet service providers served by O1 Communications. Verizon filed both an answer to the complaint and a motion to dismiss. The Commission determined that given the complex legal issues involved in this matter, and the fact that the administrative law judge had not yet had the opportunity to consider the motion to dismiss, a 12-month extension of the deadline was appropriate. A recent draft of this decision is available at http://docs.cpuc.ca.gov/word_pdf/AGENDA_DECISION/96508.doc.

  • Decision Extending Statutory Deadline Pending Complainant’s Resolution of Fones4All Bankruptcy Proceedings (Item 40, adopted on consent agenda) – The Commission extended the statutory deadline in proceedings between Fones4All Corporation and AT&T California another 180 days to allow for the resolution of Fones4All’s bankruptcy proceeding and the issuance of a Presiding Officer’s Decision on any unresolved issues in the consolidated docket.

    Fones4All originally filed a complaint against AT&T California (formerly Pacific Bell Telephone Company) in December of 2007 seeking an order compelling AT&T to immediately insert toll blocking for each of Fones4All’s customers, an order requiring AT&T to refund all monies attributable to improperly billed toll charges and directory assistance call completion, an order compelling AT&T to immediately compensate Fones4All for the slamming of its customers, an order compelling AT&T to remit exemplary damages to Fones4All, and a declaratory judgment that AT&T unlawfully slammed Fones4All’s customers, breached its contractual duty to block toll calls, breached its contractual duty to provide pre-ordering functionality, and violated a Commission decision by overcharging Fones4All for UNE service. AT&T counterclaimed, demanding that Fones4All pay all amounts due under the interconnection agreement for the lease of all unbundled loops and wholesale telecommunications services in the total amount of more than $2.59 million, including late payment charges. The bankruptcy proceeding automatically stayed all proceedings surrounding AT&T’s counterclaims, and the Commission determined that proceedings surrounding the original claim also should be extended given the interconnectedness of all claims between the parties. A recent draft of the Commission’s decision is available at http://docs.cpuc.ca.gov/word_pdf/AGENDA_DECISION/96239.doc.

  • Resolution Authorizing Sunesys’ Request to Deviate from Undergrounding Requirements of the Public Utilities Code (Item 66, adopted on the consent agenda) – The Commission adopted a resolution authorizing Sunesys, LLC to deviate from the undergrounding requirements of the California Public Utilities Code section 320 (which applies to facilities installed within 1,000 feet of a state-designated scenic highway), and permitted Sunesys to attach communications facilities to existing poles along an approximately 1.2-mile section of Highway 9 in the town of Monte Sereno in Santa Clara County. Sunesys plans to install the facilities on Highway 9 as joint pole attachments to existing utility poles within existing rights-of-way, with an aerial fiber optic cable of approximately 1 inch in diameter. The starting point for the fiber will be just west of Daves Avenue in Santa Clara County, and the egress point will be just east of Rose Avenue in Monte Sereno. Sunesys provides high-speed dedicated access and multiplexing services primarily to school districts, libraries, and other non-profit, government, and large enterprise customers. This project should provide enhanced fiber optic telecommunications services – in the form of greater telephone capacity and expanded internet access capacity – to the UC Santa Cruz main campus and the west side of the city of Santa Cruz. A recent draft of the Commission’s decision is available at http://docs.cpuc.ca.gov/word_pdf/AGENDA_RESOLUTION/96562.doc.

  • Resolution Proposing Narrow Exception to Bagley-Keene Act to Accommodate DDTP Members (Item 72, adopted on the consent agenda) – The Commission proposed to add a new subdivision to the Public Utilities Code section 271 that creates a narrow exception to the Bagley-Keene Open Meeting Act with respect to the CPUC’s Deaf and Disabled Telecommunications Program (“DDTP”). The recommendation is for additional language in section 271 that allows members of the DDTP’s advisory committee to meet by teleconference or videoconference without each member who is participating being required to be in a public location, so long as at least one location at which members are present is publicly accessible. The justification for this exception is to make it easier for members of the advisory committee, who are disabled, to participate in meetings without having to travel long distances, which can be physically and financially burdensome for them. Under current legislation, members who wish to participate in advisory committee meetings from their own homes must agree to open their homes to the public. Many members of the advisory committee are reluctant to do this in order to participate in the meetings. A summary of this legislative proposal is available at http://docs.cpuc.ca.gov/word_pdf/REPORT/96320.doc.


SIGNIFICANT HELD AND WITHDRAWN ITEMS

  • Decision Applying Adopted UNE Reexamination Process to AT&T California and Verizon California Inc. (Item 60, withdrawn) – This item would have determined the Unbundled Network Element (“UNE”) reexamination process for AT&T California (formerly Pacific Bell) and Verizon California Inc. The decision would have adopted a price cap mechanism for annual updates to the UNE rates adopted for Verizon and AT&T, and determined that the state, under the Telecommunications Act of 1996, is required to conduct periodic cost-study proceedings to update UNE rates based on the Total Element Long Run Incremental Cost (“TELRIC”) methodology. The Commission established a schedule for TELRIC costing proceedings for AT&T and Verizon. A recent draft of the Commission’s decision is available at http://docs.cpuc.ca.gov/word_pdf/AGENDA_DECISION/95439.doc.


NOTES AND COMMISSIONER REPORTS

  • New CPUC Chief ALJ Announced — The Commission announced the appointment of new Chief Administrative Law Judge Karen Clopton. Ms. Clopton previously served as general counsel for the California Department of Corporations. She also has served as chief executive officer and general counsel for Workplace Consulting Consortium, chief or operations and corporate counsel for the San Francisco State University Foundation, chief of operations for the Port of San Francisco, and counsel for labor and employment at the law firm of Leland, Parachini, Steinberg, Matzger & Melnick. Ms. Clopton was formerly a partner at Cooper, White & cooper LLP.

  • Potential Budget Cuts at CPUC – In a brief Commissioner report, Executive Director Clanon mentioned that the Commission will be making some voluntary budget cuts in response to the Governor’s plea that California agencies should do so. These cuts may include furlough programs for certain employees, and various other unspecified cuts.

  • Chong Report on the Greening the Economy Conference — Commissioner Rachelle Chong reported she attended the Greening the Internet Economy conference on January 22-23 at UC San Diego, sponsored by the California Institute for Telecommunications and Information Technology and the CPUC. The symposium addressed sustainability and efficiency in the information and communications technology (“ICT”) industry. Google’s green energy czar, Bill Weil, was a keynote speaker, addressing his company’s efforts to reduce its energy footprint, and its renewable energy efforts with respect to its data centers. Chong reported that currently, ICT accounts for 2 percent of greenhouse gas emissions, but that this share is growing. Commissioner Peevey provided the keynote speech for the conference’s second day, speaking about the advanced metering and how initiative information technology is driving advances in efficiency and emissions reduction.

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