Background and Procedural History

We granted Old Winstar certificates of public convenience and necessity (CPCNs) to operate in California as a resale provider of interexchange services and as a facilities-based and resale provider of local exchange services in Decision (D.) 95-11-045 and D.95-12-057. Old Winstar was providing those services until very recently. However, on April 18, 2001, Old Winstar and certain of its affiliates filed for bankruptcy in Delaware, and it has operated under the protection of the United States Bankruptcy Court (Court) since that date.

On December 19, 2001, the Court approved the sale of the core domestic assets of Winstar Communications, Inc., the ultimate parent of Old Winstar, to

Winstar Holdings, LLC, a newly created entity. This sale contemplated the transfer of assets, including Old Winstar's CPCNs and customers, to New Winstar.¹ In D.02-03-021 (March 6, 2002) we granted the joint application of Old Winstar and New Winstar to conclude this transfer of assets.

The same parties now jointly request authority to discontinue facilities-based local exchange and interexchange wireline services in California, as well as facilities-based fixed wireless service in San Diego and San Jose. The applicants explain that this follows an extensive review of operations to determine the changes to the former Old Winstar business plan needed for New Winstar to provide high quality competitive telecommunications services at economical rates, and for assuring its long term viability as a competitive provider. Old Winstar had a customer base for the two types of services that was inadequate for viable operation.²

According to the application,

Individual written notice was provided to each customer impacted by the proposed discontinuance of Facilities-Based Wireline Services via first class mail on March 15, 2002. The notice identifie[d] the services that Winstar is seeking to discontinue and the date on which the discontinuance [was] expected to occur. The notice also clearly state[d] that discontinuance is "subject to regulatory approval." In addition, the notice provide[d] a toll-free customer service number and website reference for information and questions relating to the discontinuance or for assistance in selecting a new service provider. The notice letter also explain[ed] that Winstar will assist customers to ensure continuity of their service.

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Individual written notice was initially provided to each customer impacted by the proposed discontinuance of Facilities-Based Wireline Services and Fixed Wireless Services in San Diego and San Jose via first class mail on February 14, 2002. Affected customers were again notified of the discontinuance on March 20, 2002, with an extended proposed date of April 29, 2002, subject to regulatory approval. . . . Both notices identifie[d] the services that Winstar is seeking to discontinue, and the date on which the discontinuance [was] expected to occur, subject to regulatory approval. The notices also provide[d] customers with a toll-free customer service number and website reference for information and questions relating to the discontinuance or for assistance in selecting a new service provider. The March 20, 2002 notice letter also explain[ed] that Winstar will assist customers to ensure continuity of their service.

The applicants' customer service personnel assisted, and continue to assist, with this transition. Recent information furnished by the applicants indicate that all affected customers where Verizon is the underlying carrier have already migrated, and only a few remain where Pacific is the underlying carrier.

Verizon of California, Inc. (Verizon) filed a protest based principally on its concerns that the change would cause customer confusion and create a burden for Verizon as default carrier. Those concerns have now been entirely alleviated, and by letter dated July 17, 2002, to the administrative law judge Verizon advised that it was withdrawing its protest. SBC Pacific Bell (Pacific) intervened on the basis of its concern that the application did not request any Local Exchange Carrier to be designated as a default carrier for customers who do not voluntarily discontinue or transfer their service with the applicants. Pacific's intervention was contingent upon the existence of the default carrier issue raised by Verizon, but because that issue no longer exists, we will treat this application as an ex parte matter.