II. Background
CTC is a California corporation operating as a public utility telephone company under the jurisdiction of the Commission. CTC is the incumbent service provider within rural southwest Calaveras County and offers digital subscriber line (DSL) service over its telephone lines. CTC's property is comprised of wire, cable, land, easements, central office equipment, buildings and other pertinent equipment.
CTC currently provides a mixture of Plain Old Telephone Service (POTS), and unregulated Internet access and video services to the customers in its Poker Flat service area located in CTC's Copperopolis exchange.4 Its current video network is offered to minimal DSL areas and new fiber-to-the-home (FTTH) deployments.
CTC's data services in the Poker Flat service area are currently limited to the existing three mega bits per second (Mbps) or less downstream due to current transport agreements through Pacific Bell Telephone Company, doing business as AT&T California (AT&T) and Sprint Communications Company, LP (Sprint). CTC currently delivers digital voice through a recently upgraded softswitch allowing traditional voice and next generation Voice over Internet Protocol (VoIP) services.5 The majority of the existing subscribers receive CTC's data services over its copper facilities utilizing DSL technology delivery.
CTC intends to provide POTS, internet access and video services over a fiber to the home (FTTH) platform to the customers located in its Poker Flat service area, which is part of CTC's Copperopolis exchange. According to CTC, the Poker Flat area is a high cost and high demand area in need of additional services for which CTC's existing offerings are insufficient. Due to the increasing demand for broadband services, CTC claims that it needs to improve its facilities for the benefit of this community and its residents by adding broadband in its Poker Flat area.
A. Financial Information
In its Income Statement for the fiscal year ending June 30, 2010, as provided by CTC on October 22, 2010, CTC reported that it generated total operating revenues of $8,871,389 and a net income of $972,930. CTC's Balance Sheet, as of the same date, shown as part of the information provided by CTC on October 22, 2010, is summarized in the following table.
Table 1
Balance Sheet as of June 30, 2010
Assets Amount
Current Assets $ 2,844,501
Marketable Securities 1,901,031
Net Property, Plant, and Equipment 14,376,401
Total Assets $19,121,933
Liabilities & Stockholder's Equity
Current Liabilities $ 1,660,322
Long Term Debt6 7,613,205
Deferred Income Taxes 1,186,220
Common Stock 25,000
Other Capital 10,136
Accumulated Other Comprehensive Loss (236,686)
Retained Earnings 8,863,736
Total Liabilities & Equity $19,121,933
4 POTS is the voice-grade telephone service that remains the basic form of residential and small business service connection to the telephone network in most parts of the world. Due to the wide availability of POTS, forms of communications devices such as modems and facsimile machines are designed to use POTS to transmit digital information.
5 VoIP is a general term for a family of methodologies, communication protocols, and transmission technologies for the delivery of voice communications and multimedia sessions over internet protocol (IP) networks, such as the Internet. Other terms often used interchangeably with VoIP are IP telephony, internet telephony, voice over broadband, broadband telephony, and broadband phone.
6 CTC's long-term debt consists of mortgage notes payable to the United States of America, administered by the RUS. The notes are currently secured by all of CTC's property.
