ALJ/TIM/tcg DRAFT Agenda ID #5484

Ratesetting

Decision DRAFT DECISION OF ALJ KENNEY (Mailed 3/23/2006)

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Application of New Century Telecom, Inc. (U-5912-C) for Approval of Stock Purchase Agreement and Related Transfer of Control.

Application 02-10-007 (Filed October 8, 2002)

OPINION DENYING THE APPLICATION
AND IMPOSING A FINE

TABLE OF CONTENTS

Title Page

OPINION DENYING THE APPLICATION AND IMPOSING A FINE..............1

1. Summary 2

2. Background 3

A. Initial Issues 3

B. Evidence Submitted by CPSD 7

C. Revocation of CPCN and Unauthorized Provision of Service 9

D. NCT's Violations in Other Jurisdictions 9

3. Discussion 10

A. Denial of the Application 10

B. Orderly Termination of Service 10

C. Collection of Regulatory Fees 11

D. Fines for Violating Statutes, Commission Decisions, and Rule 1 11

i. Summary of the Violations 11

a. Failure to Remit Regulatory Fees 11

b. Violation of § 702 12

c. Violation of § 854(a) 13

d. Violation of § 1013(a) 13

e. Violation of Rule 1 14

f. Alleged Violations of § 2889.5(a) and § 2890(a) 14

ii. Imposition of Fines 15

4. Additional Measures to Protect the Public 19

5. Categorization and Need for Hearing 19

6. Comments on the Proposed Decision 20

7. Assignment of Proceeding 20

Findings of Fact 20

Conclusions of Law 21

ORDER 23

Attachment 1

Attachment 2

Attachment 3

1. Summary

Application (A.) 02-10-007 requests authority under Pub. Util. Code § 854(a)¹ to transfer ownership of New Century Telecom, LLC (NCT) from Kathleen Helein to Karyn Bartel. The transaction was consummated without Commission authorization in March 2003. NCT's authority to operate in California was revoked by Resolution T-16962, issued on October 27, 2005, for failure to file an annual report and to remit regulatory surcharges and fees.

Today's Decision denies A.02-10-007 because NCT is no longer a public utility and, therefore, § 854(a) does not apply. Even if § 854(a) did apply, the Application would be denied because Bartel is unfit to own a public utility. Specifically, since Bartel's unauthorized acquisition of NCT, the company has violated Rule 1 of the Commission's Rules of Practice and Procedure (Rule 1), several decisions, and parts of the Public Utilities Code.

Today's Decision orders NCT to pay a fine of $55,000 for these violations. To protect the public interest, Bartel is barred from owning, operating, or managing a public utility in California until the fine imposed by this Decision is paid and past due surcharges and fees are remitted.

This Decision also finds that the Helein Law Group violated Rule 1 by providing false information to the Commission. In lieu of a fine, today's Decision requires the Helein Law Group to provide notice in all documents filed at the Commission that the Helein Law Group was found by today's Decision to have violated Rule 1. This requirement shall end after three years.

The record in this proceeding indicates that NCT continues to provide interexchange telephone service, despite having no authority to do so. This Decision directs Pacific Bell Telephone Company d/b/a/ AT&T California (formerly SBC California)² and Verizon California, Inc. (Verizon) to stop routing calls to NCT and to notify NCT's customers about the termination of service by NCT.

The participation of the Consumer Protection and Safety Division (CPSD) in this proceeding is appreciated. Without their participation, certain relevant facts might not have come to light.

This proceeding is closed.

¹ All section references are to the Public Utilities Code.

² Today's Decision used AT&T California and SBC California interchangeably.