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On Thursday, October 2, 2008, the California Public Utilities Commission held its regularly-scheduled agenda meeting. The decision addressing Phase II issues in the “in language” proceeding was adopted, as was the decision establishing construction standards for pole-top antennas. An additional, shorter legislative wrap-up was held, supplementing last week’s longer wrap-up, in light of the fact that the Governor has now either signed or vetoed all pending utility-related bills on his desk.


REGULAR AND CONSENT AGENDA ITEMS

  • Decision Addressing Phase II Issues In “In-Language” Proceeding Adopted (Item 32, adopted 5-0) – This decision resolves Phase II of the “in-language” proceeding. The decision addresses three issues relative to Limited English Proficiency (“LEP”) customers: (1) whether to adopt tracking and reporting of LEP consumer complaints and language preference information, (2) whether to require carriers to provide fraud notification to LEP consumers, and (3) whether to adopt relaxed rules governing market trials in languages other than English. As to the first issue, the Commission concluded that complaint reporting and preference tracking could be better handled by the Commission itself rather than relying on information collected from the carriers. Complaints and inquiries – both “in language” and otherwise – will be recorded using the Commission’s Consumer Information Management System (CIMS). Periodically, the statistics from these data will be posted on the Commission’s website. Published statistics will be presented as “contacts per 100,000 wireline telephone lines or wireless accounts” so that comparisons will be possible between carriers of different sizes. On the second issue, the Commission decided not to mandate the provision of fraud notification to LEP consumers. Finally, the Commission limited market trials to six months in duration but did not limit their geographic scope.

    Although the decision was adopted unanimously, the Commissioners expressed divergent views as to its potential effectiveness. Commissioner Grueneich commented that she would have gone further and had “more direct regulation,” but that the decision represented a “reasonable compromise.” She noted that the Commission would be monitoring the issue closely and also promised to ensure that CIMS was working properly. Commissioner Chong noted that the Commission would create a “bridge between the community organizations and the PUC.” She expressed her expectation that the “in language” rules, and specifically the use of CIMS, would help make the Commission more responsive to customer complaints. The most recent version of the decision is available at the following link: http://docs.cpuc.ca.gov/word_pdf/AGENDA_DECISION/91602.doc.

  • Uniform Construction Standards for Pole-Top Antennas Established (Item 33, adopted 5-0) – The Commission approved a decision adopting a proposal to revise General Order 95 to establish uniform construction standards for wireless antennas installed on utility poles above or between power lines operating at between zero and 50,000 volts. The decision sets six feet as the safe minimum clearance that must be allowed. The stated purpose of the adopted revisions is to facilitate the expansion of California’s wireless infrastructure in a way that protects the safety of workers and the public, minimizes costs and potential environmental impacts, and maintains the reliability of equipment and facilities attached to poles by electric utilities and telecommunications providers. This decision builds on the Commission’s decision in February 2007 dealing with antennas below power lines. The final decision is available at the following link: http://docs.cpuc.ca.gov/word_pdf/FINAL_DECISION/91745.doc.

  • Consolidation of Citizens Communications Company’s Four ILECs Approved (Item 20, adopted on consent agenda) – The Commission approved an application requesting the consolidation and merger of Frontier Tuolumne, Frontier-Golden State, and Frontier-Global Valley into Frontier-California. Frontier-California is a mid-sized ILEC regulated under the Uniform Regulatory Framework and its service area is open to regulated wireline competition. The three smaller ILECs being merged into Frontier-California operate under a rate-of-return regulatory structure and their service areas are not open to regulated wireline competition. Under the consolidation and merger, the smaller ILECs will be incorporated into the service territory of Frontier-California and will be subject to competition. The decision includes a Settlement Agreement between Frontier and the Division of Ratepayer Advocates (DRA) providing that Frontier will not include the three merged service areas in its High Cost Fund-B draw until the Commission has concluded its pending review of the B-Fund. Additionally, the basic primary residential rates of the three merged entities will be capped at their current levels until January 1, 2011. The most recent version of the decision is available at the following link: http://www.cpuc.ca.gov/EFILE/PD/91131.pdf.


SIGNIFICANT HELD AND WITHDRAWN ITEMS

  • Proposed Decision Regarding Removal of Copper Loops (Items 31/31a, Held until 11/6 for consideration of alternate) – This proposed decision would decline to adopt rules requiring carriers to seek the Commission’s permission before permanently retiring copper wire local loops. The California Association of Competitive Telecommunications Companies (CALTEL) initiated this application proceeding requesting a set of rules addressing retirement of copper facilities. The proposed decision would require instead that whenever an ILEC files a copper retirement notice with the FCC, it must file copies concurrently with Commission staff and all CLECs that interconnect with the ILEC. If necessary, the ILEC would negotiate in good faith for 30 days with any CLEC that seeks to use the copper loop that the ILEC intends to retire, and the ILEC and CLEC would arbitrate the dispute if the negotiations fail. The proposed decision also leaves open the possibility for Commission intervention should the process of copper retirement result in harm to service. Commissioner Simon released an alternate decision and Commissioner Chong’s proposed decision was subsequently revised, apparently to resolve differences between the proposed decision and the s alternate. Commissioner Chong’s revised proposed decision is available at the following link: http://docs.cpuc.ca.gov/efile/PD/91754.pdf.

    The alternate decision would establish a process to facilitate access to copper facilities for CLECs. This process would require the ILECs to file a Tier 2 Advice Letter with the Commission’s Communication Division listing details regarding the planned retirement any time they file a retirement notice with the FCC. The rules would apply to copper retirement of both business and residential customers. The most recent draft of the alternate decision may be found via the following link: http://www.cpuc.ca.gov/EFILE/ALT/91626.pdf.

  • Proposed Decision Regarding Unbundled Network Element (UNE) Reexamination Process (Item 30, held by Staff until 12/4) – This proposed decision determines the adopted UNE reexamination process that will apply to AT&T and Verizon. A price cap mechanism would be adopted for annual updates to the UNE rates for Verizon and AT&T, and periodic cost-study proceedings to update UNE rates would be conducted pursuant to Section 252 of the Telecommunications Act of 1996. These proceedings would be based on the Total Element Long Run Incremental Cost (TELRIC) methodology. The proposed decision establishes a schedule for future TELRIC costing proceedings for AT&T and Verizon, and mandates the use of the HM 5.3 model in those proceedings. The text of the proposed decision is available at the following link: http://docs.cpuc.ca.gov/word_pdf/AGENDA_DECISION/85941.doc.

  • Decision and Alternate Regarding Transaction between Warburg Pincus, Electric Lightwave (ELI), and Eschelon Telecom (Items 2/2a, held until 11/6) – The proposed decision would approve prospectively a transaction in which Warburg Pincus Private Equity X acquires indirect control of ELI and Eschelon. However, the proposed decision would deny a request to approve the transaction on a retroactive basis and a request to dismiss the application on the grounds that the transaction did not result in a transfer of control under Public Utilities Code Section 854. Despite finding of violation of Section 854 due to the parties having finalized the transaction without the Commission’s advance approval, the proposed decision would impose no fines. The most recent draft of the proposed decision is available at the following link: http://www.cpuc.ca.gov/EFILE/PD/86841.pdf.

    The alternate decision in this matter would grant the request to dismiss the application for approval of a transfer of control. Describing the circumstances as a close call, the alternate decision would find that Section 854 does not apply to the transaction. Since the Commission has not previously determined whether to view stock transfers on a fully diluted or non-diluted basis, the alternate decision does not take this factor into account. Looking at other factors of control, the alternate decision would find that no transfer of control has occurred. Alternatively, even if Section 854 were to apply, the alternate decision would use the Commission’s authority under Section 853(b) to dismiss the application. Section 853(b) allows the Commission not to apply Section 854 if it finds it is not necessary in the public interest. The most recent draft of the alternate decision may be found at this link: http://docs.cpuc.ca.gov/Cyberdocs/AgendaDoc.asp?DOC_ID=E16428.


NOTES AND COMMISSIONER REPORTS

  • Legislative Wrap-up -– Commission Governmental Affairs Director Pam Loomis provided a report to the Commission regarding the final outcome of legislative items affecting the Commission during the most recent session. The telecommunications-related and other bills of particular significance to the CPUC are outlined below.

    • Senate Bill 780 (signed into law) – This law extends the sunset dates for the California High Cost Funds A and B. The CHCF-A is extended four years, until 2013, and the CHCF-B is extended three years, until 2012, with a related basic service affordability study due by July 1, 2010. The Commission is in charge of conducting the study.
    • Senate Bill 1149 (signed into law) – This law extends the sunset date for the grant program that provides funding for CHCF-A until January 1, 2013.
    • Assembly Bill 2885 (signed into law) – This law authorizes the CPUC to enforce the standards and requirements of the Business & Professions Code for consumer disclosure and services applicable to sellers of prepaid calling cards and services.
    • Senate Bill 1772 (signed into law) – This law requires the CPUC Commissioners to report payments made at their behest for $5,000 or more in the aggregate from the same source in the same calendar year to the Fair Political Practices Commission. It was clarified that this bill applies only to the CPUC, and applies to any contributions of any kind. Commissioner Grueneich asked the Commission’s General Counsel to prepare a memorandum to assist the Commissioners’ compliance with this standard.
  • Customer Response to AT&T Detariffing — A significant number of public speakers addressed AT&T’s new Residential Service Agreement, which went into effect on October 1, 2008 as part of AT&T’s detariffing process. The speakers expressed their concern that agreement appears to allow AT&T to impose its own terms without adequate customer notice and legal remedies.

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