2. Background

Shasta is a California corporation in good standing with its principal place of business in San Diego.

Shasta filed this application for authority from the Commission to establish facilities-based fixed Internet protocol (IP)-based wireless telephone service in a rural area of Shasta County that currently lacks telecommunication service. 1 The proposed system will be capable of providing high-quality voice grade telephone service to area residents, and will also have broadband data capability that can be used to access the Internet, communicate by e-mail, and utilize other broadband applications. The system will enable area residents and visitors to communicate from points other than fixed wireless telephone terminals using mobile cell phones equipped with Wi-Fi access capability.

Provision of this service will require Shasta to install equipment and facilities consisting of small solar-powered transmitters where power is not available, and antennas and other equipment on existing structures or new towers and in new shelters at sites to be developed by the Indian Springs School District (District). In Resolution (Res.) T-16943, the Commission authorized the disbursement of funds to the District, as fiscal agent under the Rural Telecommunications Infrastructure Grant Program, for the construction of 10 cell tower sites within the area that Shasta plans to serve. Shasta's application is predicated on the assumption that it will utilize the District's towers for the system it plans to establish.2

Shasta plans to provide service using IP-CDMA2000 (3G) mobile communications technology, a technology that has been successfully deployed around the world and, according to Shasta, is well-suited for use in the proposed service area. Shasta has tentatively selected UTStarcom as its vendor. The UTStarcom system uses IP transmission for all on-net communications and communications with other IP networks. Communications between Shasta's network and the public switched telephone network (PSTN) or other non-IP networks will be routed via a gateway that Shasta will install.

Shasta will use a CDMA radio access network (RAN), which consists of a UTStarcom iCell compact radio frequency system (RFS), an iCell Pico IP Base Transceiver System (BTS), and an iCell Soft Base Station controller (sBSC). This equipment is compact, and can fit in a 27.5" x 36.5" x 34" case. If it is installed on a rack, it has a 19" rack-mount footprint. A RAN will be installed at each tower site constructed by the District and, where an existing source of power is available, will be powered by 240 V single phase power generated by an array of solar photovoltaic panels at the site. The antennas accompanying each RAN will include an omni antenna and a 1.8 meter K-band iDirect remote satellite terminal/antenna, with lightning arrestors, installed on the District's towers.

The RANs will be connected via a DAMA (Demand Assigned) VSAT satellite network, which will also connect the RANs to Shasta's core voice and data network equipment located at the District's Indian Springs School site. The core equipment will consist of a UTStarcom Sonata SE mobile switching center (MSC) server, home location register (HLR), intelligent media gateway (IMG), signaling gateway (SGW), and operations maintenance center (OMC), and a Total Control 200 packet data switching module (PSDN).

Shasta states that this project will require no trenching for installation of cables, and very little other outside plant construction. Shasta contends that the equipment it intends to install in existing structures is no different than that which may be installed by a competitive local carrier (CLC) pursuant to a limited facilities-based authorization granted in accordance with Decision (D.) 99-10-025 in Re Competition for Local Exchange Service (1999) 2 CPUC3d 700. That decision granted CPCNs to applicants whose equipment would be located in previously existing structures, but deferred granting full facilities-based authority until any pending environmental issues were resolved. Thus, the decision granted authority that is limited to the use of existing structures, because it could be seen with certainty that there is no possibility that such facilities installations might have a significant adverse effect on the environment.

With respect to facilities other than those to be constructed or installed in existing structures by Shasta, Shasta contends that it is likely the project will be exempt from review under the California Environmental Quality Act (CEQA), Public Resources Code 21000 et seq., because it will fall within one or more categorical exemptions established by the CEQA Guidelines (Tit. 14 Code of California Regulations, Section 15000 et seq.) However, the specific locations at which some of the components of Shasta's system will be installed depend upon the sites that the District selects for construction of its towers. For this reason, some environmental impacts are unforeseeable at this juncture. Shasta consequently proposes to utilize the procedure adopted in D.06-04-030, in Application for NewPath Networks, LLC for a Modification of its Certificate of Public Convenience and Necessity in Order to Provide Competitive Local Exchange, Access and Non-Dominant Interexchange Services (April 13, 2006) to address the construction of the distributed antenna networks that it plans to utilize.

The Commission recently adopted this procedure in D.08-05-07 In the Matter of the Application of Channel Islands Telephone Company, for a Certificate of Public Convenience and Necessity to Construct Telecommunications Facilities and to provide Local Exchange and Interexchange Service to and within certain previously unserved Channel Islands ( May 15, 2008). The Commission approved the application of Shasta's affiliate, Channel Islands Telephone Company, to build a telecommunications system to serve rural territory in the Channel Islands, but deferred environmental review for reasons similar to those presented here. If this decision follows the modified CEQA review process adopted in that decision, once Shasta has identified the specific siting for all of the components of its project, it will submit detailed documentation to the Commission's Energy Division to enable it to determine whether the project is exempt from CEQA review, as Shasta expects it will be. The Energy Division will accordingly either issue a Notice to Proceed and file a Notice of Exemption with the State Clearinghouse, or issue a letter of denial, in which event the project will become subject to the normal application and environmental review process under CEQA.3

The final scope of Shasta's system will depend upon the extent to which the District builds out tower sites with its Rural Telecommunications Infrastructure grant. Assuming complete build-out, Shasta estimates that the total cost of constructing its proposed system will be $3,239,915.4 Shasta proposes to finance construction and individual start-up costs primarily through private investors. Following the startup of operations, Shasta expects to meet ongoing operating costs though revenues generated by the sale of its services, ongoing federal universal service funding, and revenues recovered through its participation in National Exchange Carrier (NECA) access pooling.

1 At the request of the assigned administrative law judge (ALJ), Shasta filed an Amendment to the Application on October 6, 2008, to furnish the requisite showing of financial qualification to support the Application.

2 The District had not commenced construction of the sites at the time Shasta filed this application, as no carriers had yet expressed interest in joining with the District to establish telecommunications service in the area. Res. T-16943 reflects the Commission's concern that the current absence of service endangers the health and safety of residents and visitors throughout the county.

3 According to representations in the District's Rural Telecommunications Infrastructure grant application, the District will be required to apply for use permits from the County of Shasta and permits from the United States Forest Service before constructing its towers. These two agencies, respectively, will take lead responsibility for compliance with the requirements of CEQA and the National Environmental Policy Act, 42 U.S.C. § 4321 et seq., concerning those permitting activities.

4 A detailed breakout of this estimated construction cost is furnished in Exhibit C to the Application.

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