9. DRA's Protest

DRA does not oppose granting approval of the merger application contingent on the Commission including certain ratepayer protections. First, DRA argues that Joint Applicants should not be allowed to include the three smaller ILECs in calculating its California High Cost Fund-B Draw. According to DRA, it would be unreasonable to permit Joint Applicants to draw B-Fund subsidy money when none of the three smaller ILECs had chosen to apply for A-Fund subsidies for a number of years.³ DRA believes that such a restriction would also be entirely consistent with the Commission's stated objective of reducing the size of the B-Fund. Thus, DRA contends, the Commission should prohibit Frontier-California from including three smaller ILEC service areas when calculating its B-Fund draw.

Second, DRA argues that Joint Applicants should be directed to file a petition to modify D.97-09-115. According to DRA, the Application amounts to a request to modify a prior Commission decision since Joint Applicants intend to transition the three smaller ILECs from their current traditional rate-of-return regulatory format to URF. DRA agrees that while it may be possible for Joint Applicants to obtain the relief it seeks via this Application, the Joint Applicants must raise to the Commission the full range of issues that are implicated by the merger request. DRA notes that in D.95-07-054, the Commission expressly limited its authorization of local competition to the territories of Pacific Bell Telephone Company (previously doing business as AT&T) and GTE California (now Verizon California, Inc.). And in D.97-09-115, in the same Local Competition Docket, the Commission extended the coverage of the adopted rules for local exchange competition to include the

service territories of California's two mid-sized incumbent local exchange

carriers, Roseville Telephone Company (now SureWest) and Citizens Telephone Company. DRA contends that in this Application, Joint Applicants are attempting to modify D.97-09-115 to include, under local competition rules, the territories of the companies it is seeking to merge without addressing the extent competition was allowed in these areas. Accordingly, DRA believes that the Commission should direct Joint Applicants to follow proper Commission procedure and file a separate petition for modification before approving this Application.

³ The A-Fund requires cost and revenue documentation in order to receive funding; the B-Fund does not.