5. The Proposed Settlement is Reasonable in Light of the Record, Consistent with Law and Precedent, and in the Public Interest

Pursuant to Rule 12.1(d) of the Commission's Rules of Practice and Procedure, settlements must be reasonable in light of the record, consistent with law, and in the public interest. The parties believe that this Settlement Agreement satisfies each of those criteria.

5.1. The Proposed Settlement is Reasonable in Light of the Record

The parties have developed a factual record, contained in the application, the transcript of the PHC, applicant's amendment to its application, and the joint statement of facts agreed to in the Settlement Agreement. The parties believe that 88 Telecom has fully responded to CPSD's concerns raised in its protest. 88 Telecom has acknowledged its failure to obtain a valid CPCN, and that as a prepaid calling card vendor it is subject to the Commission's jurisdiction.

As a consequence, 88 Telecom has sought Commission authority to operate and has divested Wong of any ownership of the company. In addition, 88 Telecom has agreed to pay $8,000 to the State's General Fund. This settlement was negotiated by the Settling Parties in good faith, and the parties believe that the remedial measures are supported by the record.

The Settlement Agreement is based on the record developed by the parties, and is reasonable because it effectively resolves the specific issues raised on the record.

5.2. The Proposed Settlement is Consistent with Law and Precedent

The parties assert that the Settlement Agreement is consistent with existing law. The parties are unaware of any conflict with any provisions of law, other than those rectified by the Settlement Agreement.

The terms of the Settlement Agreement are consistent with precedent established by the Commission. In Decision (D.) 04-01-039, the Commission fined Telecom Consultants, Inc. for operating approximately three months without a CPCN. Given the relatively modest size of the company's resources and the inadvertent nature of the offense, we assessed a penalty of $500 for the three months of unauthorized operation. Similarly, in D.04-05-049, we fined Evercom Systems Inc. for selling prepaid phone cards for more than five years without a valid CPCN. We imposed a fine of $2,000 per year (totaling $11,000) for operating five and a half years without a CPCN.

5.3. The Proposed Settlement is in the Public Interest

The Settlement Agreement is in the public interest because 88 Telecom is acknowledging its failure to obtain prior operating authority and has taken remedial steps. 88 Telecom has eliminated Wong from its operations, agreed that it is subject to the Commission's jurisdiction, and agreed to make a payment to the State's General Fund. These measures should serve to protect California consumers, to assure the integrity of the Commission's jurisdiction and processes, and to rectify a violation of law. 88 Telecom is acting affirmatively to ensure it will meet its regulatory obligations and its responsibilities to its customers and members of the public.

5.4. Settlement Conference

Rule 12.1(b) requires the parties to hold a public settlement conference providing all parties to the proceeding an opportunity to review and discuss the settlement. The only two parties to this proceeding are CPSD and 88 Telecom, who have had sufficient opportunity to review and discuss the settlement.