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On September 21, 2006, the CPUC held its regularly scheduled agenda meeting. The agenda was brief, with only a few telecommunications-related items on the regular agenda. The Commission adopted an “Oppose” position on Proposition 90, an upcoming initiative that is intended to narrow the scope of “public uses” for which eminent domain can be used. The Commission also voted to offer comments on the FCC’s USF VoIP Order, and on carriers’ FCC Petitions for Forbearance from Title II and Computer Inquiry rules with respect to broadband services. The Commission also noted that an OIR will soon be issued to facilitate compliance with the recent video franchising legislation (AB 2987).

Further detail regarding the telecommunications-related items on the September 21, 2006 agenda is provided below:


REGULAR AND CONSENT AGENDA ITEMS

  • CPUC Opposes Proposition 90 (Item 26, Oppose 5-0) — After a brief introductory statement from general counsel Randy Wu, and some limited discussion, the Commissioners voted unanimously to oppose Proposition 90. This initiative was introduced during the September 7, 2006 Commission meeting, but a decision regarding the Commission’s position on it was deferred until this meeting at Commissioner Chong’s request. Randy Wu introduced the initiative by summarizing a memorandum prepared by the legal division on the subject. Wu noted that Proposition 90 would narrow the types of “public uses” for which eminent domain authority could be exercised. The proposition would also adopt a more expansive standard for payment of “just compensation,” and would give landowners the right to a jury trial on the question of whether or not property sought through eminent domain will be put to a “public use.” The implications of this legislation for public utilities are analyzed in further detail in the legal division memorandum, which is available at the following link: http://www.cpuc.ca.gov/word_pdf/REPORT/59788.doc. Mr. Wu also informed the Commissioners that he had been unable to obtain further information from the proponents of the bill regarding the scope of the exception for the CPUC’s regulation of “public utility rates.”

    Following Mr. Wu’s introduction, Commissioner Peevey offered a harsh criticism of Proposition 90, calling it a “solution in search of a problem.” As Peevey noted, the initiative goes far beyond what would be necessary to protect against the outcome of Kelo v. New London, the controversial United States Supreme Court case that has given rise to some public sentiment that eminent domain powers should be narrowed. This is particularly true since, according to Peevey, the fact pattern presented by the Kelo case could not occur under California law. Peevey expressed his fears that this proposition, if passed, would generate additional legal expenses for public utilities, and ultimately raise rates for public utility ratepayers. Commissioner Brown also strongly opposed the initiative, arguing that there is broad-based opposition to Proposition 90. As Brown jokingly remarked, “I am casting my lot with the Marxists at the Chamber of Commerce, the collectivists at the Small Business Association, the Fabian Socialists at the California Association of Realtors, . . . and with the central planners at Sempra, all of whom oppose this extreme, ill-considered measure.” Commissioner Grueneich echoed these sentiments, adding that she hopes the Commission will publicize its opposition to this measure, and work toward its defeat. Grueneich described Proposition 90 as “almost an abuse of our system” given how antithetical its terms would be to California’s interests. Commissioner Chong added briefly that “the Kelo decision is indeed flawed, but this thing goes too far.”

    Ultimately, the Commissioners voted 5-0 to oppose this measure, and agreed to put out a press release expressing this opposition.

  • CPUC Will Provide Late-Filed Comments on FCC’s USF VoIP Order (Item 24, adopted on consent agenda) – By this decision, the Commission directs CPUC staff to file comments on the FCC’s USF VoIP Order. This order was released on June 2, 2006 in WC Docket 06-122, and in that order, the FCC seeks comment on whether to eliminate or raise the interim safe harbor for wireless carriers and VoIP providers. The CPUC’s comments would make three points: (1) the order erred in granting wireless carriers the highest possible safe harbor percentage; (2) the order also gave VoIP providers an excessive safe harbor percentage, since this safe harbor was based on interstate toll figures rather than on figures for more analogous services; and (3) the order should be clarified to provide that the CPUC can compel VoIP providers to contribute to state public policy funds. The deadline for comments has already passed, but the CPUC will submit comments nevertheless.

  • Statutory Deadline Extended for Resolution of UCAN Warmline Complaint Against SBC and Cox (Item 10, adopted on consent agenda) – This decision extends the 12-month statutory deadline for resolving this adjudicatory proceeding between UCAN, SBC, and Cox. In this complaint proceeding, UCAN has alleged that SBC and Cox are not properly observing the 911 “warmline” requirement in Public Utilities Code Section 2883. Recently the proceeding has become bogged down with allegations that the carriers engaged in improper “ex parte” contacts, and extra time is needed to resolve all of the issues in this proceeding in light of the associated delays.

  • CPUC Will Provide Comments on FCC Petitions for Forbearance with Respect to Broadband Services (Item 23, adopted on consent agenda) – A number of carriers have filed petitions at the FCC seeking forbearance from Title II and Computer Inquiry rules with regard to their broadband services. As a result of this item, the CPUC will submit comments on those petitions.

  • Complaint Against AT&T for Unauthorized Toll Charges Resolved in Consumer’s Favor (Item 6, adopted on consent agenda) – Similar to the result reached in Higginbotham v. PacBell, D.02-08-069, the Commission in this case ruled in favor of an AT&T customer who alleged that he had no knowledge that calls to his internet service provider were local toll calls. Based on a finding that AT&T had not provided an adequate mechanism for the customer to discern between local calls and local toll calls, the Commission agreed with the customer’s argument that AT&T had not provided “just and reasonable service.” As in Higginbotham, the Commission found that the AT&T should not be entitled to take advantage of its own wrong.

  • SBC Customer Awarded Damages for Poor Service (Item 7, adopted on consent agenda) – In this customer complaint case against SBC, the complainant raised a variety of claims, from poor service and improper billing allegations to outright conspiracy. The complainant argued that he experienced intermittent static and other interference on his telephone lines, and that SBC refused to investigate or resolve these service issues. He also asserted that SBC had disconnected him without notice, intentionally withheld invoices to make his account appear delinquent, and generally treated him in a discourteous and misleading manner. Based on these and other allegations, the complainant sought refunds of all payments to SBC over a 7 1/2 year period, and $5000 in damages. SBC moved to dismiss the claims, alleging that the CPUC has no jurisdiction over the ISP-related claims, that the claims were barred under the applicable statutes of limitation, and that the complainant had failed to state a valid claim that would entitle him to relief. The Commission dismissed the claim for damages, noting that it lacks the jurisdiction to award damages, but that it can award reparations. To compensate the complainant for poor service, and with the consent of SBC and its affiliate SBC Advanced Solutions, the complainant was then awarded more than $3000 in reparations.

  • IElement Telephone Granted CPCN for Limited Facilities-Based and Resold Local Exchange and Interexchange Service (Item 3, adopted on consent agenda) – By this decision, the Commission granted authority to IElement Telephone of California, Inc. to provide limited facilities-based and resold local exchange and interexchange telecommunications services. This authority includes the authority to provide local exchange service in the service territories of AT&T, Verizon, SureWest, and Frontier. CPSD originally protested this CPCN application, alleging that IElement’s parent company had been sued twice in California, and raising questions about the prospective carrier’s ability to remain financially stable. Upon further investigation, CPSD withdrew its protest, but requested that various protections be put in place to ensure IElement’s financial stability. This decision finds that IElement meets the financial requirements for issuance of a CPCN, but also requires that the carrier submit audited financial statements demonstrating that the company is adequately funded during each of the next five years.

  • GVNI/Cricket Interconnection Agreement Approved (Item 13, adopted on consent agenda) – This item approves a CMRS interconnection agreement between Global Valley Networks, Inc. and Cricket Communications, Inc. This agreement is approved pursuant to Section 252 of the Telecommunications Act of 1996, and in accordance with G.O. 96-A.


SIGNIFICANT HELD AND WITHDRAWN ITEMS

  • Decision Adopting Rules for Mass Customer Migrations from CLECs Exiting the Market (Item 22, held by Peevey until 10/5 for further consideration) — The proposed decision under consideration by this item would adopt Mass Migration Guidelines governing the migration of customers from CLECs who are exiting the market to other carriers. Wherever possible, the migration would be achieved through an arranged carriers who is selected by the exiting CLEC, but the proposal would also call for the assignment of a default carrier, in the event that an arranged carrier cannot be identified. Default carriers would be selected by the Commission, and in most cases, the default carrier would be the carrier of last resort in the area of the exiting CLEC customers.

  • Decision Addressing Petitions for Modification of Decision Resolving Triennial Review Order Proceeding (Item 21, held by Brown until 10/5 for further consideration) – This item would resolve Petitions for Modification filed by Verizon and SBC with respect to the decision concluding the Triennial Review Order, 9-month phase. In particular, the large ILECs seek to reverse the requirement that batch hot cut process and pricing disputes be submitted to arbitration. The draft decision in this case would defer these issues to a pair of pre-hearing conferences in the consolidated arbitration proceedings for Verizon and SBC.

  • Possible CPUC Comments on ETC “Reverse Auction” Proposal (Item 25, held by staff until 10/5) – This item would direct the Commission staff to provide comments on the Federal-State Joint Board proposal to adopt a system of “reverse auctions” for selecting ETCs.


NOTES AND COMMISSIONER REPORTS

  • OIR to be Released to Implement Video Franchising Legislation (Chong) — In a brief but important report, Commissioner Chong outlined the Commission’s plans for complying with AB 2987, the video franchising legislation that was passed by the Legislature at the close of the recent session. That bill has been enrolled, and is awaiting the Governor’s signature. AB 2987 would give competitive video service providers the opportunity to obtain a statewide franchise, and the bill grants that franchising authority to the CPUC. Commissioner Chong announced that the Commission is working on a draft OIR and an associated proposed general order that will establish procedures for providers to apply for statewide video franchising authority. Chong expects to be able to put that draft OIR in front of the Commission at the next Commission meeting. According to Chong, the proposed general order would “closely track” the language of AB 2987, but it would also provide further detail about the Commission’s internal procedures for handling these requests. Chong noted that AT&T and Verizon are “raring to go” to file applications for statewide video authority, and that those carriers look forward to working with the Commission to craft appropriate procedures for processing those applications. The Commission hopes to have the new general order in place by the end of the year.

  • Deadline Rapidly Approaching for Implementation of New WMDVBE Clearinghouse Mechanism (Peevey) — Commissioner Peevey emphasized the importance of reaching consensus regarding a new procedure for operating the WMDVBE clearinghouse, the entity that verifies vendors’ eligibility under the WMDBVE program embodied in CPUC General Order 156. Peevey noted that while some utilities may be disappointed that their proposals were rejected, the Commission has already rendered a final decision on this issue, and the parties should move forward in establishing a collaborative method for shifting the clearinghouse responsibilities to carriers. Peevey stressed that there “can be no delay,” since the Department of General Services has made it clear that it will soon forbid the CPUC to issue payments to the existing administrator of the clearinghouse. Peevey underscored the importance of the WMDBVE program, and called upon parties to arrive at an expeditious solution.

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