10. Joint Applicants' Response

With regard to the first issue, Joint Applicants point out that in D.07-09-020, the Commission initiated a review of the current B-Fund program and is reviewing a variety of changes to the B-Fund, including the implementation of "reverse auctions" to determine B-Fund eligibility. As a result, eligibility and other requirements to participate in the B-Fund may be substantially revised. Also, Joint Applicants contend that the addition of 22,000 residential access lines served by the merger of the three small ILECs to the B-Fund would have a less than significant impact on the B-Fund because the aggregate number of lines that would actually participate in the B-Fund would be fewer than 2,000 primary residential lines.

In response to DRA's concerns, Joint Applicants state their willingness to stipulate to the following language regarding the participation of the three smaller ILEC access lines in the existing B-Fund program:

Frontier will not include the merged affiliate properties, Frontier-Golden State, Frontier-Tuolumne and Frontier-Global Valley into the High Cost Fund-B claims process until the Commission has concluded its review of the B-Fund as ordered in D07-09-020, specifically, the resolution of the remaining issues contained in Ordering Paragraph 13.

Joint Applicants believe that this stipulation should resolve the issues raised by DRA regarding the High Cost Fund-B program.

Next, regarding the petition for modification issue, Joint Applicants respond that DRA's proposal to require the Commission to modify its 1997 decision is not necessary because, following the merger, the service territory of the three smaller ILECs would be encompassed in Frontier-California's service territory and Frontier-California's service territory will continue to remain open to competition. Joint Applicants believe the solution to ensure that the merged properties are open to competition is to have that clarified in the Commission order and decision approving the merger - that Frontier-California's service territory is now expanded to include the merged properties. Instead of the administratively cumbersome process of seeking a modification of D.97-09-115, Joint Applicants propose that the Commission issue a finding in this proceeding that states that the service territory of Frontier-California that is open to CLEC competition includes the expanded service territory of the three smaller ILECs being merged into Frontier-California. Joint Applicants suggest that the Commission's Order state:

The Commission finds that the service territory of Frontier-California identified in D.97-09-115, includes the expanded territory of Frontier-Golden State, Frontier-Tuolumne and Frontier-Global Valley and that with the merger of the three small Frontier ILECs into Frontier-California, Frontier-California has expanded the geographic scope of Frontier-California's service area subject to local exchange competition.

Joint Applicants believe that with this finding, the Commission would effectively address DRA's concerns regarding D.97-09-115.