ALJ/SRT/jva DRAFT Agenda ID #3390

Ratesetting

5/27/04 Item 5

Decision DRAFT DECISION OF ALJ THOMAS (Mailed 3/26/2004)

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

In Touch Communications, Inc. and Inflexion California Communications Corp., for the sale and purchase, respectively of the customer base, operating authorities and other assets.

Application 03-11-011 (Filed November 10, 2003)

Inflexion California Communications Corp., for a certificate of public convenience and necessity to provide resold and limited facilities-based competitive local exchange service throughout the service territories of SBC California, Inc., Verizon California Inc., Roseville Telephone Company, and Citizens Telecommunications Company of California, Inc.; and resold and facilities-based interexchange service.

Application 03-11-013 (Filed November 19, 2003)

OPINION

I. Summary

This decision denies the applications of Inflexion California Communications Corp. (Inflexion) (1) for approval of the acquisition of the assets of In Touch Communications Inc. (In Touch) pursuant to Pub. Util. Code § 851, and (2) for a Certificate of Public Convenience and Necessity (CPCN) to provide resold and limited facilities-based competitive local exchange service and resold and facilities-based interexchange service.

We find that Inflexion has failed to establish that its management team is qualified to serve California residential customers, in part because a company run by key Inflexion managers was recently fined in excess of $400,000 for misconduct in Pennsylvania. The circumstances surrounding the fine, and the prior company's failure to pay the fine, make it impossible for us to satisfy ourselves that we would have sufficient ability to control Inflexion's behavior in California through our own ability to levy fines or otherwise require compliance with our rules.