2. Background
On April 27, 2011, SureWest Telephone (SureWest) applied for an exemption from California Public Utilities (Pub. Util.) Code § 851, which, among other things, requires it to request authority to encumber all or part of its assets for the purpose of securing indebtedness.2 No protests were filed.
SureWest, a subsidiary of SureWest Communications, provides telecommunications services in portions of Sacramento and Placer Counties in California. SureWest operates as an incumbent local exchange carrier (ILEC),3 and is regulated in California under the uniform regulatory framework (URF).4 Other URF ILECs include AT&T, Verizon, and Frontier Communications of California (Frontier).5
2.1. Prior Consideration of URF ILEC Exemption from Section 851
We have considered exemptions of URF ILECs from § 851 in two recent proceedings. In both, we granted partial exemptions, neither of which included an exemption from the requirement that an URF ILEC request authority to encumber all assets for securing indebtedness.
In A.06-07-026, AT&T requested authority for full exemption from § 851 for the disposition or encumbrance of necessary and useful property. SureWest and Verizon supported this application and requested that the exemption requested by AT&T apply to all URF ILECs.6 The responding ILECs favored full exemption but would accept CLEC/nondominant interexchange carrier (NDIEC) - equivalent treatment as an interim measure.7 Even though we determined that an application by a single carrier is not the appropriate proceeding in which to consider a full exemption, we decided to include URF ILECs in any relief granted AT&T in A.06-07-026.8 In D.07-11-048 in that proceeding, we denied the request by AT&T for full exemption from § 851, but extended to all of the URF ILECs relief from the requirements of § 851, subject to certain limitations.9 We also, deferred consideration of full exemption by URF ILECs from § 851 to a rulemaking.
In Rulemaking (R.) 09-05-006, we considered, among other issues, the full exemption of both mid-size and large URF ILECs from § 851 with regard to the disposition or encumbrance of necessary and useful utility property.10 In its opening comments regarding the scope of R.09-05-006, SureWest supported exemption of URF ILECs from § 851. By D.10-05-019, we granted URF ILECs further exemptions from § 851 with respect to the disposition of certain non-controversial assets, but did not grant them full exemption from § 851. 11
2 All subsequent statutory references are to the Public Utilities Code, unless noted otherwise.
3 Basically, an ILEC is a local telecommunications provider that operates in the United States that was in existence on the date the Telecommunications Act of 1996 was enacted. This includes independent telephone companies such as SureWest (formerly Roseville Telephone) and General Telephone (which has since been absorbed into Verizon), as well as the Regional Bell Operating Companies, which resulted from the breakup of the AT&T in existence at that time.
4 During the late 1980's and early 1990's, in various proceedings, we addressed issues such as pricing flexibility and alternative ratemaking for basic telecommunications service rates which resulted in a New Regulatory Framework (NRF) applicable to telecommunications providers in California. NRF was authorized for Pacific Bell Telephone Company d/b/a AT&T California (AT&T) and Verizon California, Inc. (Verizon) in Decision (D.) 89-10-031, for Frontier in D.95-11-024, and for SureWest in D.96-12-074. Since the NRF decisions were issued, changes in the voice communications market have occurred, in particular, increased competition from the inclusion of multiple wireless carriers; competitive local exchange carriers (CLECs); and cable television companies. In 2005, we undertook a comprehensive review of the regulation of local exchange carriers in R.05-04-005. By D.06-08-030, we further changed rate regulation for California's four largest ILECs, including SureWest, by adopting a URF. By that decision, we eliminated such requirement as price regulations, and price caps; relaxed the procedural requirements for the four ILECs when offering new services and filing tariffs; reduced or eliminated accounting rules that cause regulatory accounts to diverge from financial accounts; and eliminated all monitoring reports tied to NRF governing the ILECs, replacing them with standardized reporting requirements consistent with reports provided by all carriers to the Federal Communications Commission.
5 Throughout this decision we refer to SureWest, AT&T, Verizon, and Frontier collectively as URF ILECs.
6 See D.07-11-048 at 2.
7 See D.85-11-044 for NDIEC authority and D.97-01-015 for CLEC authority.
8 See D.07-11-048 at 4-5.
9 See D.07-11-048 at Ordering Paragraph 2.
10 See R.09-05-006 at 1 and 7. Also considered exemption by CLECs and NDIECs from § 851.
11 See D.10-05-019 at 2.
