3. Discussion

3.1. CEQA Compliance

Pursuant to CEQA and Commission Rule 2.4, the Commission examines projects to determine any potential environmental impacts in order that adverse effects are avoided and environmental quality is restored or enhanced to the fullest extent possible under CEQA. In Rule 2.4(b), the Commission recognizes that the Secretary for Resources has exempted certain classes of projects from CEQA. In cases where such exemptions apply, we are not required to issue an EIR or Negative Declaration.

3.2. Public Wireless' Proposed CEQA Review Process

As discussed above and in Proponent's Environmental Assessment (Application Exhibit B), Public Wireless' proposed construction activities include installation of communications equipment on previously existing utility poles and other structures. These activities are expected to be relatively minor in scope and take place primarily in existing, well-used rights-of-way and utility easements in developed areas. In addition, individual undertakings expect to be geographically dispersed such that these activities will not be heavily concentrated in particular areas. For these reasons, and by their very nature, Public Wireless asserts, these activities fall within the following classes of projects that are exempt from CEQA and for which neither an EIR nor a Negative Declaration is required.

· Class 1 Exemption: operation, repair, maintenance, leasing or minor alteration of existing public or private structures and facilities, with negligible or no expansion of an existing use. This includes existing facilities used to provide public utility services. 14 CCR Section 15301.

· Class 3 Exemption: construction including water main, sewage, electrical, gas and other utility extensions of reasonable length to serve such construction. This includes the construction of limited numbers of new small facilities or utility extensions. 14 CCR Section 15303.

Public Wireless' proposed activities involve construction of reasonably short utility extensions (Class 3). In order to provide its service, Public Wireless also intends to utilize the existing conduits, poles, and other facilities of local cable operators (Class 1). Exemption of these activities is consistent with Commission precedent. Public Wireless' proposed new construction activities are similar to those undertaken by other carriers that we have decided are categorically exempt from CEQA. See, e.g, D.06-04-063 (ClearLinx Network Corporation); D.06-04-067 (CA-CLEC LLC).

Public Wireless says that it does not know at this time all of the specific areas where it may have to undertake construction. Public Wireless therefore requests approval to utilize a procedure for expedited review of Public Wireless' projects once Public Wireless is aware of a specific site(s) in which it plans construction. The proposed procedure, described in Application Exhibit B, tracks the expedited review procedure that we have approved for ClearLinx, CA-CLEC, and other carriers. Such a process will expedite CEQA review and is appropriate for the type of construction outlined here, which will be categorically exempt. By establishing this expedited review process, we are able to review the information on a specific project to confirm that it is categorically exempt from CEQA or explain why further environmental review is required. At the same time, the proposed CEQA review process will enable Public Wireless to undertake construction of its projects in an efficient manner without experiencing delays caused by an unnecessarily protracted CEQA review.

Similar to the procedure approved for ClearLinx, CA-CLEC, and other carriers, the following procedure will be used to obtain Commission approval of applicant's claimed CEQA exemptions for proposed construction projects:

· Applicant will provide the Commission's Energy Division with:

o A detailed description of the proposed project, including:

· Customer(s) to be served;

· The precise location of the proposed construction project; and

· Regional and local site maps.

o A description of the environmental setting, to include at a minimum:

· Cultural, historical, and paleontologic resources;

· Biological resources; and

· Current land use and zoning.

o A construction workplan, to include:

· Commission Preconstruction Survey Checklist-Archaeological Resources;

· Commission Preconstruction Survey Checklist-Biological Resources;

· A detailed schedule of construction activities, including site restoration activities;

· A description of construction/installation techniques;

· A list of other agencies contacted with respect to siting, land use planning, and environmental resource issues, including contact information; and

· A list of permits required for the proposed project.

o A statement of the CEQA exemption(s) applicable to the proposed project; and

o Documentation and factual evidence sufficient to support a finding that the claimed exemption(s) is (are) applicable.

· The Energy Division will review applicant's submission for the proposed project to confirm that the claimed exemption(s) from CEQA are applicable.

· Within 21 days from the date of applicant's submittal, the Energy Division will issue either:

o A Notice to Proceed (NTP) and file a Notice of Exemption with the State Clearinghouse, Office of Planning and Research, or

o A letter of denial stating the specific reasons why the claimed exemption(s) are not applicable to the proposed project.

We have reviewed the application and Supplement and find that:

· Applicant's proposed facilities-based project activities are very limited;

· These activities would in almost all circumstances be very likely to qualify for an exemption from CEQA; and

· The proposed process for reviewing the applicability of CEQA exemptions to applicant's facilities-based projects is not only adequate for the Commission's purposes as CEQA Lead Agency, but is also in the public interest because it enables Applicant to respond in a timely manner to requests for service without the delay or burden of a full CEQA review when such review is unnecessary.

We therefore approve applicant's proposed process for Commission review of claimed CEQA exemptions for construction projects undertaken pursuant to applicant's full facilities-based authority, based on the specific facts of this case with the following modifications related to the Commission's Energy Division review and approval or disapproval of the proposed exemptions.

· If the Energy Division disapproves applicant's claimed CEQA exemption(s), and issues a letter of denial to applicant, applicant shall either re-design the specific project and facilities and then reapply for a finding of exemption from CEQA, or file a formal application with the Commission seeking the requisite approval and full CEQA review, before commencing any construction activities.

Applicant shall not perform any full facilities-based construction activities without first obtaining an NTP from the Energy Division or authorization by the Commission after the requisite environmental review.

Public Wireless seeks authority to provide its services in those exchanges where the Commission has authorized local competition. At present, competitive local exchange service may be provided in the geographic areas of California serviced by AT&T, Verizon, Citizens, and SureWest. In addition, Public Wireless seeks inter-Local Access and Transport Area (interLATA) and intraLATA authority on a statewide basis.

We have previously determined that the public convenience and necessity require that competition be allowed in the provision of competitive local exchange service, R.95-04-043/I.95-04-044. Granting this application will benefit the public interest by expanding the availability of technologically advanced telecommunications services within the state.

Whenever possible, Public Wireless will use existing streetlights, poles, towers, buildings, fiber, conduits, ducts, rights-of-way, trenches, and other facilities, and structures of telecommunications carriers, utilities, and municipalities. As a result, the estimated cost of construction is expected to be relatively low. Public Wireless' annual fixed and operating costs are expected to be fully within the financial resources available to Public Wireless, through existing financing, procurement of additional financing and anticipated revenues. Public Wireless will secure financing through initial investments in the corporation and by future revenues generated by its provision of services. Public Wireless is financially qualified to offer the telecommunications services for which authority is sought. Attached to the application as Exhibit D is a copy of Public Wireless' 2006-2008 balance sheet, statement of cash flows, and statement of operations. Also attached to the application as Exhibit E is a copy of Public Wireless' recent bank statements, which confirm that Public Wireless possesses a minimum of $100,000 that is reasonably liquid and available. Because Exhibits D and E contain highly proprietary and competitively sensitive information, Public Wireless has been given confidential treatment of Exhibits D and E.

Public Wireless presently does not contemplate utilizing services purchased from other telecommunications carriers for which deposits are required. As a result, Public Wireless will not be required to submit deposits to other telecommunications carriers in connection with the construction of its primary network or the provision of its services. Public Wireless' demonstration of its financial qualification therefore is limited to evidence of possession of a minimum of $100,000 in unencumbered funds. If in the future, Public Wireless pursues the purchase of services from other carriers that require deposits or otherwise is required to provide deposits to such carriers, it will notify the Commission and promptly comply with any regulatory requirements such a development may trigger. Thus, Public Wireless fully meets its financial qualifications.

3.3. Proposed Rates

Public Wireless will offer its services on a nondiscriminatory basis pursuant to tariffs as well as individual case basis contracts. A draft of Public Wireless' proposed tariff, which describes its services, rates, and terms and conditions for service, is attached to its application as Exhibit F. Public Wireless will submit a final tariff with final rates upon grant of the authority it seeks.

3.4. General Order 104-A Statement

Public Wireless is not a publicly traded company, and has no proxy statements, 10Ks or annual reports to provide. Further, Public Wireless states that none of its officers, directors, or stockholders, whether record or beneficial owners of stock, have a material financial interest (as that term is defined in Section 2 of GO 104-A) in any transaction involving the purchase of materials or equipment, or the contracting, arranging or paying for construction, maintenance, or service for or on behalf of applicant.

3.5. Expected Customer Base

Public Wireless' estimate of its customers for the first and fifth years is contained in Exhibit G to the application. Because Exhibit G contains highly proprietary and competitively sensitive information, Public Wireless has received confidential treatment of Exhibit G.

3.6. Managerial and Technical Competence

Public Wireless has the managerial and technical qualifications necessary to provide the proposed services in its service territory. Attached to its application as Exhibit H are the biographies of Public Wireless' key technical personnel and management team. These biographies reflect that Public Wireless possesses significant managerial and technical expertise for operating a telecommunications company, consistent with the Commission's requirements. To the best of applicant's knowledge, neither applicant, any affiliate, officer, director, partner, nor owner of more than 10% of applicant, or any person acting in such capacity whether or not formally appointed, has been sanctioned by the Federal Communications Commission or any state regulatory agency for failure to comply with any regulatory statute, rule, or order.