3. What Rules Will Ensure Timely Consideration of Requests for Extensions of Deadlines?

The ACR initiating this phase of this rulemaking reviews the statutory provisions concerning requests for extensions. It notes that:

... [u]pon filing of an application for extension, the Commission must hold a hearing in the holder's service area (Pub. Util. Code § 5890(f)(2)), determine whether the holder "made substantial and continuous effort to meet the [build-out] requirements" (Pub. Util. Code § 5890(f)(4)), and, if so, "establish a new compliance deadline." (Id.) Regarding the timing of an application for extension, Pub. Util. Code § 5890(f)(1) states: "After two years of providing service under [DIVCA], the holder may apply to the [Commission] for an extension to meet the requirements of subdivision (b), (c), or (e)."4

The ACR further notes that "Upon review of the Phase II comments and these statutory provisions, it appears that the Commission should implement the provisions by further specifying the timing and processing of applications for an extension."5 The ruling then proposes to add a rule requiring the filing of an extension application "as soon as practicable, once the holder determines that it cannot meet one or more of the build-out deadlines."6 In no event can an application for an extension be filed "later than the deadline for which an extension is sought."7 The application for an extension should state a "good cause" for granting the extension, and contain a new schedule with reasonable "compliance deadlines."8 Finally, the ruling proposes that the "Commission's Rules of Practice and Procedure will govern participation in extension applications."9

3.1. Position of Parties Concerning Proposed Rule for Extensions

Concerning the proposed rule for extensions, Verizon notes an ambiguity in the proposed rules regarding extension applications, namely that proposed Rule I.D [GO 169] could be read as requiring the extension applicant to use the same form as prescribed for requests seeking grant or amendment of a state video franchise. Verizon argues that the "application form is extremely precise and contains questions tailored to DIVCA's requirements for granting a franchise."10 Verizon suggests that requests for extension "be handled according to Commission Rule 2.1 regarding applications in general."11

AT&T "supports the Scoping Memo's proposals regarding extension applications ... "12 Similarly, CCTA states that the proposed extension provisions "mirror the requirements imposed by DIVCA, and thus appear noncontroversial."13

The Small LECs object to the Commission's imposition of a requirement that applications for extensions be filed "as soon as practicable after determining that it is unlikely to meet a particular deadline."14 The Small LECs argue that this requirement is inappropriate for two reasons:

First, it ignores Section 5890(f)(l)'s standard that an extension application may not be filed prior to two years after commencing service. Second, the Commission should not memorialize in its rules highly subjective standards that will be difficult to enforce and which place franchise holders in a position where determining compliance is ambiguous at best.15

They recommend that as an alternative the Commission offer "to freeze the compliance period pending a determination of the application's merits."16 Under this proposal an applicant who applies for an extension "four months prior to a build-out deadline would have at least four months to satisfy that deadline if its application were denied."17

3.2. Discussion

In response to Verizon, we agree that there is no reason to adapt our current video franchise application form to address extensions, a purpose for which it was not intended. As a result, we elect to resolve the ambiguities identified by Verizon by revising GO 169 Rule I.D to read as follows:

"Application" means, as appropriate, either (1) an Application in the form prescribed in this General Order 169 if the Applicant seeks grant or amendment of a State Video Franchise, or (2) an Application in the form prescribed by Rule 2.1 of the Commission's Rules of Practice and Procedure if the Applicant seeks an extension of time to meet the requirements of subdivision (b), (c), or (e) of Public Utilities Code Section 5890.

The result of this amendment is to enable applicants for extensions to follow Rule 2.1 of the Commission's Rules of Practice and Procedure as Verizon suggests.

In response to the Small LECs, we do not see a conflict between our proposed rule and the statutory provision of § 5890(f)(1), which states that a request for extension cannot be filed prior to two years after commencing service. The first deadline imposed by the statute is two years after service commences, and a request for extension that is filed on that day would both be consistent with the law and our proposed rule. To clarify, we will amend the wording of Section VI.G as follows:

The Application for extension must be filed as soon as practicable after the State Video Franchise Holder determines that it likely will not be able to meet one or more requirements of subdivision (b), (c), or (e), as applicable, but no sooner than two years from the commencement of service. In no event should the Application for extension be filed later than the earliest deadline under any of the requirements for which an extension is sought. (Italics indicate changes from the language proposed in Appendix A of the ACR of March 27, 2008.)

The modified language makes it clear that requests for modification will not be accepted until after two years of service.

Concerning the Small LECs suggestion that we "freeze the compliance period pending a determination of the application's merits,"18 we decline to adopt such a procedure. To some extent, "freezing the compliance period" grants an automatic extension of the statutory deadlines triggered by the request for an extension. Section 5890(f)(3) clearly contemplates that the grant of an extension follows the review of factors that the franchise holder alleges have caused the delay. As a result, we find the procedure we adopt herein, which grants an extension only following the review of an application by the Commission, more consistent with the statutory language and statutory intent than the procedure proposed by the Small LECs.

We also do not find the language "as soon as practicable" to be "highly subjective standards that will be difficult to enforce."19 The goal of the language is to encourage early applications for extensions when a franchise holder realizes that it cannot meet a statutory deadline. Also, the Commission's chief goal will be enforcing the statutory deadlines and standards for build-out, not enforcing a filing deadline, which, even if stated as a specific number of days, would be somewhat arbitrary. Within this context, we believe the guidance of "as soon as practicable" offers a reasonable guideline to filings.

In summary, based on these considerations, we find the revised rule contained in Appendix A to be reasonable. Moreover, it is in the public interest to establish a process that permits the timely and expeditious review of requests for extensions. Finally, the proposed rules are consistent with the statutory provisions and intent of DIVCA.

4 Id. at 3. DIVCA is the Digital Infrastructure and Video Competition Act of 2006 (DIVCA), Assembly Bill 2987 (Ch. 700, Stats. 2006).

5 Id. at 4.

6 Id.

7 Id.

8 Id.

9 Id.

10 Comments of Verizon California Inc. (U1002) on Assigned Commissioner's Ruling and Scoping Memo for Phase III (Verizon Opening Comments), April 16, 2007, at 2.

11 Id.

12 Opening Comments of AT&T on Assigned Commissioner's Ruling and Scoping Memo for Phase III, Issued March 27, 2008 (AT&T Opening Comments), April 16, 2008, at 1.

13 Comments of the California Cable and Telecommunications Association on the Assigned Commissioner's Ruling and Scoping Memo for Phase III (CCTA Opening Comments), April 16, 2008, at 1.)

14 Opening Comments of Calaveras Telephone Company (U1004C), Cal-Ore Telephone Co. (U1006C), Ducor Telephone Company (U1007C), Foresthill Telephone Co. (U1009C), Happy Valley Telephone Company (U 1010 C), Hornitos Telephone Company (U1011 C), Kerman Telephone Co. (U1012C), Pinnacles Telephone Co. (U1013C), The Ponderosa Telephone Co. (U1014C), Sierra Telephone Company, Inc. (U1016C), The Siskiyou Telephone Company (U1017C), Volcano Telephone Company (U1019C), Winterhaven Telephone Company (U1021C) on Phase III Issues (Opening Comments of Small LECs) April 16, 2008, at 1.

15 Id. at 2.

16 Id.

17 Id.

18 Id.

19 Id.

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