On October 29, 2009, the California Public Utilities Commission held its regularly scheduled agenda meeting. The Proposed Decision in the Rural Telephone Bank Stock Dissolution matter was again listed as “held” until the November 20, 2009 CPUC meeting. The major telecommunications matter on the Commission’s agenda was the decision approving the transfer of 13 California telephone exchanges from Verizon Communications Inc. to Frontier Communications Corporation. In a Commissioner report, Commissioner Chong noted that broadband ARRA grants are expected to be released in mid-December as opposed to mid-November, as was originally expected. These and other telecommunications items of interest on the Commission’s agenda are discussed in further detail below.
REGULAR AND CONSENT AGENDA ITEMS
- Frontier/Verizon Transfer of Assets Approved (Item 55, adopted 5-0) – This Decision approves the transfer of 13 California telephone exchanges from Verizon Communications Inc. and its subsidiaries (Verizon) to Frontier Communications Corporation and its subsidiaries (Frontier). It also approves a settlement between the telephone companies, the Division of Ratepayer Advocates (DRA) and The Utility Reform Network (TURN) imposing certain conditions on approval of the transaction. Commissioners Peevey and Chong both spoke in praise of Frontier and its commitment to broadband service for rural areas and small communities, as well as the reasonableness of the settlement.
The transfer of assets approved by this decision is part of a multi-state transaction in which Verizon wants to transfer operating companies in several states to Frontier. In California, the transfer involves property in 13 exchanges: Crescent City, Klamath, Smith River, Hiouchi and Gasquet in Del Norte County, Orick in Humboldt County, Alpine in Alpine County, Coleville in Mono County, Earp Big River, Havasu Landing and Parker Dam in San Bernardino County, Blythe in Riverside County, and Palo Verde in Imperial County. Frontier will now provide long distance service to certain customers in those 13 exchanges. Upon closing, Frontier will own and control the Verizon assets in the above California exchanges, becoming the fifth-largest ILEC in America, with 8.6 million voice and broadband connections, more than 7 million access lines, and $6.5 in annual revenues.
This application was resolved by a Settlement Agreement between Frontier, Verizon, DRA, and TURN, the interested parties to the case. The Settlement Agreement provides basic residential service rate caps and a cap on rates for other intrastate local telephone services for a period of one year. Despite the rate freeze, Frontier will be permitted to request reasonable recovery for the impact of any exogenous events that materially impact the operations of the transferred exchanges. The Settlement Agreement also imposes separate service quality reporting requirements for the transferred exchanges. The Proposed Decision associated with this item is available at: http://docs.cpuc.ca.gov/WORD_PDF/AGENDA_DECISION/109063.DOC. Attachments and an Appendix to the Proposed Decision are available at: http://docs.cpuc.ca.gov/PUBLISHED/GRAPHICS/109065.PDF.
- Application Requirements Adopted for Non-Licensed Providers Applying for CASF Grant Money in Connection with ARRA Funding (Item 56, adopted 5-0) – This Resolution adopts application requirements and guidelines for non-licensed broadband providers applying for California Advanced Services Fund (CASF) grant money in conjunction with an application for American Recovery and Reinvestment Act (ARRA) funding to support broadband infrastructure. The Resolution supplements and modifies the CASF rules in D.09-07-020. With the adoption of AB 1555 during the 2009 legislative session, CASF funds are being made available to entities without CPCNs. This Resolution conforms existing CPUC practice surrounding CASF grant applications to the requirements of AB 1555 by clarifying that non-CPCN holders can apply for grants. The Resolution also specifies that the background check, financial and performance audit, and performance bond requirements are applicable to non-licensed CASF applicants. The Draft Resolution associated with this item is available at: http://docs.cpuc.ca.gov/WORD_PDF/AGENDA_RESOLUTION/109099.DOC.
- TC Telephone LLC’s Granted Authority to Become Wireline “LifeLine Only” Eligible Telecommunications Carrier in AT&T’s Service Territories (Item 34, adopted on consent agenda) – This item approves TC Telephone LLC’s (TC Telephone) request to be an ETC in California solely for the purpose of offering LifeLine discounts to eligible customers. TC Telephone had previously been granted a CPCN to operate as a limited facilities-based and resale provider of competitive local exchange services in the service territories of AT&T, Verizon California Inc., SureWest Telephone Company, and Citizens Telecommunications Company of California Inc., and interexchange services in California. TC Telephone applied for ETC status in a July 2009 Advice Letter, and indicated that it would not seek high cost support funds. By this Resolution, TC Telephone is granted limited ETC status sufficient to give it access to federal LifeLine discounts. The Draft Resolution associated with this item is available at: http://docs.cpuc.ca.gov/word_pdf/AGENDA_RESOLUTION/108527.doc.
- Inyo Networks, Inc.’s CASF Grant Approved (Item 57, adopted on consent agenda) – This Resolution approves $2,247,308 in contingent CASF funding for Inyo Networks, Inc.’s (“Inyo”) last mile project in and around Inyo County. The funds approved pursuant to this Resolution represent 10% of the project costs plus the costs for Contributions in Aid Construction to deploy a combination of underground fiber-to-the-premises and WiMax technology to serve customers in underserved areas in Inyo, Kern, Mono and San Bernardino counties east of the Sierras. The total project cost is estimated at $22,473,077, and the 10% amount is being requested from CASF as a match to their 80% ARRA funding request. The Draft Resolution associated with this item is available at: http://docs.cpuc.ca.gov/WORD_PDF/FINAL_RESOLUTION/109167.DOC.
- Frontier’s Alturas Middle Mile CASF Broadband Project Approved (Item 58, adopted on consent agenda) – This Resolution approves $225,918 in contingent CASF funding for the Alturas Middle Mile project by Citizens Telecommunications Company of California dba Frontier Communications Company of California (Frontier). This funding represents 10% of the project costs to extend fiber from Fall River Mills in Shasta County along Highway 299 to Alturas in Modoc County. This project will serve both to reinforce Frontier’s network, allowing Frontier to increase speeds of broadband service in underserved areas, and to extend service to adjacent unserved areas. The total project cost is estimated at $2,259,181, and the 10% amount is being requested from CASF as a match to Frontier’s 80% ARRA funding request. The Draft Resolution associated with this item is available at: http://docs.cpuc.ca.gov/word_pdf/AGENDA_RESOLUTION/108894.doc.
- CASF Funding Approved for The California Broadband Cooperative of California’s Digital 395 Middle Mile Project (Item 60, adopted on consent agenda) –This Resolution adopts $10,149,422 in contingent CASF funding for the non-profit member run and owned organization, the California Broadband Cooperative, Inc.’s (CBC) Digital 395 Middle Mile network project in Mono, Inyo, Eastern Kern and northwest San Bernardino Counties. The project proposes to construct a 448 mile 10-Gigabit high capacity fiber optic middle mile/backhaul route along Highway 395 stretching from Barstow to the Nevada State line at Topaz Lake, providing a “middle mile” link to over three dozen communities in that area. The 10% amount is being requested from CASF as a match to their 80% ARRA funding request, and CBC will fund the remaining 10%. Mono County representatives spoke in favor of this item during the public comment portion of the meeting. The Resolution was approved on the consent agenda. The Draft Resolution associated with this item is available at: http://docs.cpuc.ca.gov/word_pdf/AGENDA_RESOLUTION/108990.doc.
- San Diego Gas & Electric Denied Requested Memorandum Account Related to Implementation of Phase 1 Rules in Safety Infrastructure Proceeding (Item 54, adopted on consent agenda) – This Resolution denies San Diego Gas & Electric’s (SDG&E) request to establish a Pole Attachment Communication Maintenance Memorandum Account (PACMMA) to record incremental third-party costs incurred by SDG&E to bring “Communications Infrastructure Providers’” (CIPs) facilities attached to their distribution structures into compliance with G.O.95. By this Resolution, the CPUC finds that private agreements between the electric utilities and communications infrastructure providers are an acceptable way to allocate G.O. 95 rights and obligations as to joint pole facilities, and that SDG&E can use civil remedies as a means of recovering costs if CIPs violate such contractual agreements. The Draft Resolution also notes that the Commission expects uncorrected CIP infractions on joint poles to decrease because of the new G.O. 95 burden placed on CIPs of periodic CIP facility inspections in the Safety Infrastructure Proceeding (R.08-11-005). The Draft Resolution associated with this item is available at: http://docs.cpuc.ca.gov/WORD_PDF/AGENDA_RESOLUTION/108905.DOC.
- Statutory Deadline Extended for Resolution of Investigation of Cox Communications and San Diego Gas & Electric Company Related to the 2007 Guejito Fire (Item 33, adopted on consent agenda) – This item extends the statutory deadline for resolution of Commission Investigation 08-11-007, a proceeding to examine concerns the operations and practices of Cox Communications (Cox) and San Diego Gas & Electric Company (SDG&E) regarding the utility facilities linked to the Guejito Fire of October 2007, and their alleged failure to cooperate with the CPSD. This past July, the parties advised the Commission that they had reached settlement agreements in principle on key terms. The parties requested an extension of the statutory deadline for resolution of the proceeding from November 6, 2009 to May 6, 2010 in order to accommodate the parties’ efforts to finalize and submit the settlement agreement. The Proposed Decision associated with this item is available at: http://docs.cpuc.ca.gov/word_pdf/AGENDA_DECISION/108250.doc.
- Statutory Deadline Extended for Resolution of Investigation of SDG&E Related to the 2007 Witch and Rice Fires (Item 39, adopted on consent agenda) – This Decision extends the statutory deadline applicable to Commission Investigation 08-11-006, a proceeding concerning whether SDG&E violated the Public Utilities Code, Commission General Orders, or other rules or requirements with respect to utility facilities linked to the “Witch” and “Rice” fires of October 2007. As with the similar item, above, the parties advised the Commission that they had reached settlement agreements in principle on key terms. The parties have requested an extension of the statutory deadline from November 6, 2009 to May 6, 2010 in order to accommodate the parties’ efforts to finalize and submit a settlement agreement. The Proposed Decision associated with this item is available at: http://docs.cpuc.ca.gov/word_pdf/AGENDA_DECISION/108273.doc.
- Private Industry Council of Butte County, Inc.’s Granted Authority to Become 2-1-1 Provider for Nevada County (Item 35, adopted on consent agenda) – By this Draft Resolution, the CPUC grants Privacy Industry Council of Butte County, Inc.’s (PICBC) authority to provide 2-1-1 Information and Referral (I&R) services to all of Nevada County for an indefinite term. 2-1-1 is the national dialing code to be used by customers for locating non-emergency community I&R providers. Upon dialing 2-1-1, callers are routed to a referral service and agency that provides information concerning social services such as housing assistance, utility bill assistance, food assistance, and other non-urgent services currently unaddressed through either 9-1-1 or 3-1-1. PICBC is a California non-profit corporation that applied for authority to provide I&R services in Nevada County. PICBC’s funding for provision of such services to Nevada County comes from the Nevada County 2-1-1 Community Board, which is made up of 12 agencies and five Nevada County departments. The Draft Resolution associated with this item is available at: http://docs.cpuc.ca.gov/word_pdf/AGENDA_RESOLUTION/108323.doc.
- Deadline Extended for Resolution of Rulemaking Related to Review of CPUC’s Telecommunications Public Policy Programs (R.06-05-028) (Item 42, adopted on consent agenda) – This item extends the statutory deadline for resolution of R.06-05-028, the proceeding to comprehensively review the CPUC’s Telecommunications Public Policy Programs, including the Universal Lifeline Telephone Service (Lifeline), Payphone Program, Deaf and Disabled Telecommunications Program, and the California Teleconnect Fund. Commission Decision 08-06-020 addressed four of the five Telecommunications Public Policy Payphone Programs at issue, with the only remaining program under review being the Lifeline Program. By this Decision, the Commission extends the statutory deadline to resolve examination of the Lifeline Program to December 28, 2009. The Proposed Decision associated with this item is available at: http://docs.cpuc.ca.gov/word_pdf/AGENDA_DECISION/108318.doc.
- ADMA Telecom, Inc. Granted Nondominant Local and Interexchange Carrier Certificate of Public Convenience and Necessity (Item 5, adopted on consent agenda) – ADMA Telecom, Inc. (ADMA) is a Florida corporation offering prepaid calling card services. It applied to operate as a switchless local and interexchange carrier telephone corporation in California. This Decision finds that ADMA met the requirements for registration, and grants ADMA’s request for a CPCN to provide local exchange service in the service territories of Pacific Bell Telephone Company, Verizon California, Inc., SureWest Telephone Company, and Citizens Telecommunications Company of California, Inc. The Decision also grants ADMA interexchange telecommunications services within California. The Proposed Decision associated with this item is available at: http://docs.cpuc.ca.gov/WORD_PDF/AGENDA_DECISION/108862.DOC.
- West Coast Voice & Data, Inc. Granted Certificate of Public Convenience and Necessity to Provide Limited Facilities-Based and Resold Local Exchange and Interexchange Services (Item 29, adopted on consent agenda) – West Coast Voice & Data, Inc. (West Coast) is a Nevada corporation doing business in California, and located in Irvine. It has applied for authority to provide limited-facilities based and resold competitive local exchange services in the service territories of Pacific Bell Telephone Company, Verizon California, Inc., SureWest Telephone Company, and Citizens Telecommunications Company of California, and interexchange services in California. This Decision finds that West Coast has met the CPUC’s rules for authority to provide such services, and grants the requested Certificate of Public Convenience and Necessity (CPCN). The Proposed Decision associated with this item is available at: http://docs.cpuc.ca.gov/word_pdf/AGENDA_DECISION/108118.doc.
SIGNIFICANT HELD AND WITHDRAWN ITEMS
- Determination of Gain on Sale Treatment for Rural Telephone Bank Stock Dissolution Proceeds (Item 9, held to 11/20/09 by Staff) — In 2007, the Small LECs sought a determination of any “gains on sale” associated with the Rural Telephone Bank (RTB) stock redemption proceeds the Small LECs had received as a result of the dissolution of the RTB. The Proposed Decision would allocate all gains derived from the RTB stock redemption to ratepayers even though the vast majority of the stock was never placed in rate base. In addition, the Proposed Decision would depart from the “gain on sale” doctrine by allocating the principal shareholder investments in the RTB to ratepayers. The Proposed Decision was held once again in light of the ALJ’s Ruling reopening the record for the submission of additional evidence. The Proposed Decision associated with this item is available at: http://docs.cpuc.ca.gov/EFILE/PD/107001.pdf.
- Resolution Denying TracFone Wireless, Inc.’s Request for Eligible Telecommunication Carrier Designation (Item 59, held to 12/3/09 by Commissioner Simon) – TracFone Wireless, Inc. (TracFone) sought to be designated as an ETC in order to receive federal universal service support to provide LifeLine discounts in connection with its resold, wireless prepaid service. This Draft Resolution would find that designation of TracFone as an ETC is not in the public interest because TracFone had both failed to collect and remit public purpose program surcharges and user fees as is required under the California Public Utilities Code. TracFone has argued in the face of considerable Commission precedent that it did not have to collect and remit such fees because it is not a public utility. The Draft Resolution would further direct the Communications Division to institute an investigation into why TracFone should not be ordered to collect and remit all those user fees/surcharges, and be penalized for its failure to do so previously. The Draft Resolution associated with this item is available at: http://docs.cpuc.ca.gov/WORD_PDF/AGENDA_RESOLUTION/109055.DOC.
- Decision Adopting Settlement Agreement and Granting Cheap2Dial Telephone, LLC Nondominant Interexchange Carrier Certificate of Public Convenience and Necessity (Item 31, held by Legal Staff until 11/20/09) – Cheap2Dial Telephone, LLC’s (Cheap2Dial) initial application for registration as an interexchange carrier and authority to do business as a switchless reseller of long-distance service in California was protested by the Commission’s Consumer Protection and Safety Division (CPSD) based on concerns that Cheap2Dial had been unlawfully operating in California as a telephone corporation without a license for 15 months. CPSD also alleged that Cheap2Dial had made certain misrepresentations to the Commission in its application in that it had failed to disclose a previous sanction by the Ohio Public Utilities Commission. CPSD and Cheap2Dial filed a joint motion for adoption of a settlement agreement resolving CPSD’s issues, and requiring Cheap2Dial to pay a penalty of $10,000 to the General Fund and $3,108.43 in related amounts to the Commission. This Proposed Decision would adopt the settlement agreement, and would grant Cheap2Dial’s registration CPCN. The Proposed Decision associated with this item is available at: http://docs.cpuc.ca.gov/word_pdf/AGENDA_DECISION/108132.doc.
- CPUC Comments Under Consideration in FCC Proceeding Addressing Broadband Deployment and Adoption on Tribal Lands (Item 61, withdrawn from consent agenda) – The Federal Communications Commission (FCC) seeks comment by November 9, 2009 on identifying and remedying barriers to broadband deployment and adoption on Tribal lands. The CPUC’s Legal Division Staff is requesting authority to submit comments to the FCC identifying projects on tribal lands funded by the CPUC through the Rural Telecommunications Infrastructure Program. The draft memorandum summarizing the Legal Division recommendations is not currently available.
- CPUC Comments Under Consideration in FCC Proceeding Regarding Government Promotion of Broadband Deployment, Adoption, and Broadband Technology (Item 62, withdrawn from consent agenda) – The FCC also seeks comment by November 6, 2009 about how governments promote broadband deployment and adoption, and how digital technologies and broadband deployment can improve civic engagement, government at all levels, and the lives and welfare of residents and businesses. The Legal Division Staff is requesting authority to identify ways in which California has employed broadband technology to improve the lives of its residents, including CASF, the California Teleconnect Fund, the Deaf and Disabled Telecommunications Program, and telemedicine projects. The draft memorandum summarizing the Legal Division recommendations is not currently available.