E. Discussion

CALTEL states that it does not seek a precise determination of which transactions are subject to §§ 851 through 854. Further, it does not seek to eliminate or reduce the consumer safeguards established by D.94-05-051 and modified by D.97-06-096. It seeks to enlarge the universe of transactions for which competitive telecommunications carriers can obtain expedited approval through the advice letter procedure.

CALTEL provides two examples of transactions for which carriers are now using the application process and which CALTEL seeks to be subject to the advice letter process. First, CALTEL requests clarity that the advice letter process may be used for mergers of nondominant, certificated entities.⁴ Second, CALTEL requests clarity that the advice letter process may be used for internal corporate reorganizations of certificated entities, including the transfer of a certificate of public convenience and necessity to a wholly owned subsidiary. CALTEL notes that many carriers have filed applications "out of an abundance of caution" because of questions about whether the advice letter process applies to these types of transactions.

We find CALTEL's request to be consistent with our intent of providing expedited regulatory review of nondominant telecommunications carriers' matters that generally do not raise concerns regarding the protection of consumer interests or the interests of other market participants. As to the particular issues discussed in CALTEL's application-mergers and internal corporate reorganizations-we agree that the advice letter process should apply and will modify our rules accordingly. Hence, we modify the rules adopted by D.94-05-051 and modified by D.97-06-096 to incorporate the changes being adopted by this decision. We also update our rules to clarify that the advice letter process is available in instances where California Environmental Quality Act (CEQA) review by the Commission is not required, either because the transaction has no potential for resulting in either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment or because CEQA provides a categorical exemption for the type of transaction involved. We will further require that carriers seeking to use the advice letter process make an attestation that CEQA review is not required for one of the above reasons. These updated rules are set forth in Appendix A of this decision.

We also accept CALTEL's proposed amendment of our rules to authorize the advice letter process for "all" transactions pursuant to §§ 851 through 854, other than those described in § 854 (b) and (c). In recent years our review of applications filed under §§ 851 and 854 has become almost automatic. We approve nearly all such applications without modification, usually by consent. Only rarely does a transaction raise a significant business, financial or environmental concern. Yet we hold up applications for months or even years for an internal review that almost invariably leads to approval. This process is a waste of time and money for us and the applicants. These resources could be better employed preparing and reviewing the handful of applications that actually do raise serious business, financial or environmental issues.

The instant application is a dramatic example of the sometimes maddeningly slow pace of our internal processes. It was filed on December 1, 2000, nearly four years ago. As this application holds the promise of expediting the processing of routine applications, it is regrettable that we have not acted sooner.

The only comments on CALTEL's application were from the Citizens Companies.⁵ Citizens Companies seek to extend the competitive carriers' advice letter procedure for transactions subject to §§ 851 through 854 to the incumbent local exchange carriers (ILECs) and their affiliates. Absent such approval, Citizens Companies contend that there would be more disparity among the Commission's regulatory and procedural rules between competitive carriers and ILECs.

In many areas we subject ILECs to more stringent regulation than CLECs. This practice is largely a holdover from the days when ILECs had actual monopolies and their rates were set by traditional cost-of-service regulation. But for years the telecommunications industry has been operating as a competitive industry under the New Regulatory Framework. ILECs that once enjoyed state-provided monopolies now compete on a playing field that is, if anything, tilted toward the CLECs. There is nothing in the fact of being an incumbent carrier that, in and of itself, makes the case for using advice letters for § 851 transactions any less compelling than it is for the NDIECs and CLECs. Indeed, because the great majority of §851 applications in the telecommunications area are filed by the ILECs, failing to permit them to use the advice letter mechanism will render today's decision grossly deficient in its purpose of preventing the unnecessary expenditure of time and resources on routine transactions.

The situation with § 854 applications is somewhat different. Changes of control and corporate reorganizations are relatively frequent among the hundreds of small CLECs and NDIECs certificated by us. The four ILECs, on the other hand, rarely merge or change control and when they do, the transactions almost certainly trigger the extensive showings required by §§ 854 (b) and (c). Accordingly, extending the use of the advice letter procedure to ILECs is likely to have little or no effect on the showings they have to make in connection with mergers or changes in control.

⁴ CALTEL continues to support the unavailability of the advice letter process for mergers subject to Pub. Util. Code §§ 854(b) and (c). ⁵ Citizens Companies consist of Citizens Telecommunications Company of California, Inc., Citizens Telecommunications Company of the Golden State, and Citizens Telecommunications Company of Tuolumne.