5. Procedural History
At the Commission's public meeting on December 17, 2009, the Commission voted to issue Resolution T-17235, which, among other things, denied TracFone's request to be designated as an Eligible Telecommunications Carrier12 (ETC) for the purpose of being deemed eligible to receive federal universal support for its services. Resolution T-17235 found that it would not be in the public interest to designate TracFone as an ETC because TracFone had failed to collect and remit, and expressly had refused to collect and remit, PPP surcharges and user fees.13
On December 17, 2009, the Commission also issued the above-captioned Order Instituting Investigation (December 17, 2009 OII). The December 17, 2009 OII sought to determine whether TracFone violated any provision of the Public Utilities Code, or our general orders (GO), other rules, or requirements by, as established by Resolution T-17235, failing and refusing to pay PPP surcharges and user fees on its intrastate telephone revenues.14
In response to the issuance of the December 17, 2009 OII, TracFone filed a motion for stay of the OII. TracFone also filed an application for rehearing of Resolution T-17235.15 The motion for stay argued that the potential scope of the proceeding overlapped with a Petition (P.) 09-12-018, filed on December 11, 2009 pursuant to § 1708.5 by Verizon Wireless.16 Verizon Wireless' petition sought Commission review of, among other things, the obligations of prepaid wireless carriers, generally, with respect to the user fees and PPP surcharges. TracFone and others commented that foundational legal issues set forth in the December 17, 2009 OII were more properly addressed on an industry-wide basis under the process outlined in Verizon Wireless' petition, P.09-12-018. The Commission eventually denied this petition. This occurred on July 29, 2010, by D.10-07-028. In the interim, however, other pertinent events occurred.
TracFone's application for rehearing of Resolution T-17235 essentially argued that the Commission committed legal error by finding that TracFone acted unlawfully without providing TracFone with an opportunity to be heard in an evidentiary hearing regarding the alleged violations of law.
On May 7, 2010, the Commission issued D.10-05-021. D.10-05-021 vacated Resolution T-17235. In vacating the resolution, the Commission also modified the December 17, 2009 OII to, among other things, include as allegations certain findings made in Resolution T-17235 regarding TracFone's failure to collect and remit the PPP surcharges and user fees. The Commission's order to vacate this resolution was made in response to the application for rehearing of the resolution filed by TracFone.
In modifying the December 17, 2009 OII, D.10-05-021 specifically added the following factual and legal allegations to this proceeding:
a. Whether TracFone failed to collect and remit PPP surcharges and user fees, and if so, for what period of time, and the laws, rules, orders and directions that were impacted?
b. If found in violation, should TracFone be fined pursuant to provisions of Public Utilities Code Section 2101, et seq.?17
In adding these two additional questions to this proceeding, D.10-05-021 also functioned to amend the preliminary scoping memo previously set forth in the December 17, 2009 OII.
Accordingly, as directed by Ordering Paragraph 8 of D.10-05-021, the assigned Administrative Law Judge (ALJ) held a prehearing conference on July 20, 2010 to inquire into the need for additional comments on the preliminary scope of the December 17, 2009 OII, as amended by D.10-05-021. During the prehearing conference, TracFone requested the opportunity to comment on the preliminary scoping memo, as amended by D.10-05-021. TracFone's request was granted and it filed opening comments on August 3, 2010.18 CPSD subsequently filed timely reply comments on August 13, 2010.
In comments on the scope of the OII, TracFone urged the Commission to delay issuing a scoping memo in this proceeding until, at a minimum, such time as the Commission identifies the scope of any potential rulemaking to be issued in response to above-referenced P.09-12-018, which addressed prepaid wireless issues on an industry-wide basis. However, on July 29, 2010, by D.10-07-028, the Commission denied P.09-12-018.19 In denying the petition, the Commission expressed an intent to issue a rulemaking in the near future on topics related to, but broader than, those set forth in the petition of Verizon Wireless. To date, no industry-wide rulemaking has been issued.
On August 25, 2010, the assigned Commissioner issued a scoping memo ruling in this OII and an amended scoping memo ruling on September 30, 2010.
CPSD filed a motion for summary adjudication on September 28, 2010. A response in opposition to the motion was filed by TracFone, and Verizon Wireless sought permission to appear as amicus curiae and for leave to file a brief. On January 11, 2011, the ALJ denied Verizon Wireless' request as premature. On January 26, 2011, the ALJ issued a ruling granting, in part, the motion for summary adjudication by CPSD.
In that January 26, 2011 ruling the ALJ found TracFone operated as a public utility telephone corporation under California law and determined that the issue of whether TracFone operates as a public utility and telephone corporation under California law would not be addressed at evidentiary hearing. By this decision, we confirm the ALJ's ruling.
Evidentiary hearings were held from February 1, 2011 through February 3, 2011. During the hearings, CPSD presented its witness, Ms. Tan-Walsh and TracFone presented Mr. Pollak and Mr. Salzman. In addition, both sides introduced prepared testimony and other exhibits.
TracFone and CPSD filed timely opening briefs in March 2011 and timely reply briefs in April 2011. TracFone's February 22, 2011 motion to admit the affidavit of Warren Townsend into evidence is granted. Verizon Wireless filed a motion for leave to appear as amicus curiae and for leave to file an amicus brief on March 16, 2011. The motion is denied today on the basis that Verizon Wireless' motion seeks to expand the scope of this proceeding. On March 16, 2011, CPSD filed a motion for official notice the December 21, 2009 testimony of Mr. Pollak before the Indiana Utility Regulatory Commission. This motion is denied. The parties filed various other motions ruled on separately by the ALJ and not specifically identified here. We adopt the all the rulings of the ALJ.
The Presiding Officer's Decision (POD) issued on November 18, 2011. TracFone filed an appeal on December 19, 2011. CPSD filed a response to the appeal on January 6, 2012. TracFone filed a motion for oral argument on January 12, 2012.
This proceeding remains open for consideration of the issues in phase 2.
12 TracFone sought designation as an ETC in its Advice Letter Number 1 filed on August 20, 2008. Section 214 (e)(2) of the Communications Act of 1934, as amended, and section 47 C.F.R. § 54.202, provides state commissions with the primary responsibility for designating ETCs. Only carriers that have been designated as ETCs are eligible to receive federal universal service support. Section 214(e)(2) of the Act gives state commissions the primary responsibility for granting ETC designations.
13 Resolution T-17235 at 29.
14 December 17, 2009 OII at 7.
15 Application 10-01-015 (Application of TracFone Wireless, Inc. (U4231C) for Rehearing of Resolution T-17235) filed January 19, 2010.
16 The following entities are doing business as Verizon Wireless in California: Cellco Partnership, California RSA No. 4 Limited Partnership, Fresno MSA Limited Partnership, GTE Mobilnet of California Limited Partnership, GTE Mobilnet of Santa Barbara Limited Partnership, Los Angeles SMSA Limited Partnership, Modoc RSA Limited Partnership, Sacramento Valley Limited Partnership, and Verizon Wireless LLC.
17 D.10-05-021 at 2.
18 July 20, 2010 (OII prehearing conference) Reporter's Transcript (RT) 55:5-8.
19 D.10-07-028 at 1-2.
