I. Summary

VarTec Telecom, Inc. (Applicant) seeks a certificate of public convenience and necessity (CPCN) under Public Utilities Code Section 1001 for authority to provide limited facilities-based and resold local exchange telecommunications services as a competitive local carrier (CLC).¹ In addition, it requests approval of its purchase of Choctaw Communications, LLC. (Choctaw)². By this decision, we grant the requested CPCN subject to the terms and conditions set forth below. In addition, we adopt a settlement between the Commission's Consumer Services Division (CSD) and Applicant.

Pursuant to the settlement, Applicant³ admits that the following four violations occurred:

1. Applicant sold U.S. Republic Communications, Inc. (USRC) without prior Commission authorization.

2. USRC failed to provide USRC customers with notice of the sale of USRC.

3. Applicant purchased Choctaw without prior Commission authorization.

4. Applicant sold Choctaw to 1-800-Reconex without prior Commission authorization.

Applicant will pay a fine of $20,000 for each of the above violations, for a total fine of $80,000. In addition, Applicant will pay restitution of $25 to each of 101 former long distance customers of USRC who alleged unauthorized long distance charges by USRC.

¹ A CLC is a common carrier that is issued a CPCN to provide local exchange telecommunications service for a geographic area specified by such carrier. ² By D. 00-01-036, the Commission approved the conversion of Choctaw Communications, LLC to Choctaw Communications, Inc. d/b/a Smoke Signal Communications. ³ With regard to the violations discussed herein, Applicant and VarTec Telecom Holding Company, a wholly owned subsidiary of Applicant (VarTec Holding), are collectively referred to as "Applicant." This is not intended to alter the settlement in which the parties stipulate that VarTec Holding was the entity that owned and controlled USRC and Choctaw from the time the companies were acquired to the time they were sold.