4. Discussion
In this case, we must evaluate whether the Settlement Agreement between Broadvox and CPSD meets Commission requirements for approval. Under Rule 12.1(d), the Commission will not approve stipulations or settlements, whether contested or uncontested, unless the stipulation or settlement is:
· Consistent with the law,
· Reasonable in light of the whole record, and
· In the public interest.
We find that the Settlement Agreement meets the criteria for approval under Rule 12.1(d), as follows.
4.1. The Settlement is Consistent With Law and Prior Commission Decisions
Under Public Utilities Code Section 1001,6 telecommunications carriers must apply to the Commission for a CPCN before offering or providing telecommunications services to the public in this state. The Commission has discretion to deny the application if it finds that the management of the company is not fit to serve the public or has not demonstrated the ability to operate in a manner consistent with the law and regulatory requirements, in order to protect the public interest.7 The Commission's grant or denial of a CPCN is an exercise of the power of the state to determine whether the rights and interests of the public will be advanced by allowing the entity applying for the CPCN to offer services to consumers in California.8 Under state law, the Commission has broad powers to supervise and regulate public utilities in order to protect the public.9 Therefore, the Commission clearly has legal authority to require Broadvox to file an amended application which contains more complete disclosures of the regulatory history of the company and its owners, directors, and shareholders holding a 10 percent or greater ownership interest, and to condition its further consideration of this application upon the submission of proof by Broadvox that Yesil, who has been linked to many of the regulatory problems involving Broadvox's affiliates, no longer has any legal, equitable, or beneficial interest in Broadvox or its affiliates.
The Commission also clearly has legal authority to require Broadvox to pay a fine of $5,000, based on the company's failure to disclose both the bankruptcy of its affiliate, NeTel, Inc., and the regulatory violations by Broadvox's affiliates in which Yesil had an ownership interest or management role, in violation of Rule 1.1. Under Section 2107, the Commission may impose a fine ranging from $500 to $20,000 for a violation of a Commission Rule.10 Under Section 2107, the Commission has discretion to determine the amount of the fine, based on the circumstances of each case.11
Although the Commission has, in some past decisions, imposed higher fines for violation of Rule 1.1,12 in other cases, the Commission has imposed lesser fines.13 Here, CPSD has agreed that a fine of $5,000 is reasonable because Broadvox's violation is less serious than violations in other cases in which higher fines were imposed, Broadvox's claim that its violation was inadvertent is not implausible, and Broadvox has cooperated with CPSD in this matter. Broadvox has also agreed to pay the $5,000 fine.
For all of the above reasons, we find that the Settlement Agreement is consistent with applicable law and previous Commission decisions.
4.2. The Settlement Agreement is Reasonable in Light of the Record as a Whole
We find that the Settlement Agreement is reasonable in light of the record as a whole.
A settlement is reasonable in light of the whole record if it is suggested by the seriousness of the allegations and the strength of the evidence, as well as the prehearing evaluations of the parties.14 Other relevant factors to a determination of whether a settlement is reasonable include the risk and expense of further proceedings, as well as the protection of the public interest.15
Here, Broadvox has admitted its failure to disclose the previous bankruptcy of its affiliate, NeTel, Inc., of which Yesil is President, Director, Secretary, and Treasurer, and the past regulatory problems of Broadvox's affiliates in which Yesil has an ownership interest or a management role, in violation of Rule 1.1. CPSD has represented to the Commission that Broadvox's claim that this violation was inadvertent was not implausible, and that upon the provision of proof that Yesil has no continuing ownership interest or management role in Broadvox, Broadvox appears to be fit to offer telecommunications services to customers in California. Broadvox has cooperated with CPSD in this investigation. Under these circumstances, the Settlement Agreement is reasonable and advances the Commission's interests in both promoting a competitive telecommunications market and ensuring that licensed telecommunications carriers in this state are fit to serve the public. This settlement also eliminates the need for additional proceedings on these issues, which would be expensive and time-consuming for the parties and the Commission.
We therefore find that the proposed Settlement Agreement is reasonable in light of the whole record.
4.3. The Settlement is in the Public Interest
The Settlement Agreement is in the public interest, because it will resolve the issues raised by the parties without the need for extensive, time-consuming, and costly Commission proceedings and litigation; will allow Broadvox to cure its violation of Rule 1.1 by paying the fine, and filing an amendment to the application with more complete disclosures; and will improve the management of Broadvox and the company's fitness to serve the public.16
In addition to the above criteria applicable to all settlements, we note that the Settlement Agreement fairly represents the affected interests, since Broadvox represents the interests of its shareholders, and CPSD represents the interests of all ratepayers in this state and the public. Finally, we note the Settlement Agreement includes sufficient information regarding the rights and obligations of the parties and is adequately clear for the parties and the Commission to understand its terms and for the parties to carry out the agreement.
6 All subsequent Code citations are to the Public Utilities Code, unless otherwise stated.
7 See D.04-05-033.
8 See Oro Electric Corporation v. Railroad Commission of California, 169 Cal. 455 (1915).
9 Section 701 states:
§ 701. Commission's authority to supervise and regulate public utilities
The commission may supervise and regulate every public utility in the State and may do all things, whether specifically designated in this part or in addition thereto, which are necessary and convenient in the exercise of such power and jurisdiction.
10 Section 2107 states:
§ 2107. Penalty for offenses not otherwise provided.
Any public utility which violates or fails to comply with any provision of the Constitution of this state or of this part, or which fails or neglects to comply with any part or provision of any order, decision, decree, rule, direction, demand, or requirement of the commission, in a case in which a penalty has not otherwise been provided, is subject to a penalty of not less than five hundred dollars ($500), nor more than twenty thousand dollars ($20,000) for each offense.
11 In determining the size of a fine, the Commission applies the criteria adopted in D.98-12-075, which generally include: a) the severity of the offense, b) the conduct of the utility, c) the financial resources of the utility, and d) the totality of the circumstances in each case. See D.07-05-040.
12 For example, see D.06-04-048, D.03-01-079, D.01-08-019, and D.09-06-013.
13 For example, see D.07-05-060, in which the Commission imposed a fine of $10,000 but suspended payment of all but $500 of the fine, upon the condition that the remaining $9,500 would be waived if the carriers did not engage in any additional violations for two years after approval of the settlement agreement.
14 D.00-09-034.
15 Id.
16 We note that after Broadvox's filing of an amendment to this application, the Commission will conduct further proceedings regarding whether Broadvox's application for a CPCN should be granted. We therefore do not prejudge here whether Broadvox is qualified for a CPCN in this state or whether the application will be granted or denied.
