9. Assignment of Proceeding
Rochelle B. Chong is the assigned Commissioner and Melanie M. Darling is the assigned administrative law judge in this proceeding.
1. By D.02-06-001, Telenational was granted a CPCN to resell inter- and intra-local access and transport area services.
2. There were no changes in Telenational's terms or conditions of service as a result of the transfer of the ownership.
3. The transfer will enhance Telenational's ability to provide a wider range of communications services to its customers.
4. Rapid Link satisfies the Commission's minimum financial and technical requirements.
5. The public may benefit from Telenational's acquisition by Rapid Link to the extent the transaction enhances its ability to compete due to increased customer options.
6. The financial integrity of Telenational should be protected to ensure that Telenational remains capable of serving its customers in compliance with California law and Commission policy.
7. The Applicants did not file the application before the transaction took place.
8. There were no protests to the application.
9. Applicants' violation of § 854(a) did not cause any physical or economic harm to others, and there is no evidence that Applicants significantly benefited from their unlawful conduct or that their actions adversely affected consumers.
10. In both D.04-01-039 and D.06-01-003, the Commission fined telecommunications carriers $500 for failure to obtain advance approval under § 854(a) for transfers of control.
11. Applicants' balance sheets and profit and loss statements show that their combined revenues, assets and equities are in the range of those of the applicants fined in D.04-01-039 and D.06-01-003.
12. Public disclosure of the information filed under seal would place Applicants at an unfair business disadvantage or reveal information about specific customers.
13. Notice of this application appeared on the Commission's Daily Calendar on March 4, 2009.
14. No hearings are necessary.
1. Section 854(a) states that no person or corporation shall acquire control of any public utility organized and doing business in this state without first securing authorization to do so from the Commission, and any such acquisition without that prior authorization shall be void and of no effect.
2. The Commission has broad discretion to determine if it is in the public interest to authorize a transaction pursuant to § 854(a) including placement of reasonable conditions on the transferor or transferee should the need for conditions arise.
3. The primary standard used by the Commission to determine if a transaction should be authorized under § 854(a) is whether the transaction will adversely affect the public interest.
4. In a situation where a company that does not possess a CPCN desires to acquire control of a company that does possess a CPCN, the Commission applies the same requirements as in the case of an applicant seeking a CPCN to exercise the type of authority held by the company being acquired.
5. An applicant who desires to provide resold local exchange services must demonstrate that it has a minimum of $25,000 in cash or cash equivalent, reasonably liquid and readily available to meet the firm's initial costs.
6. An applicant who desires to provide resold local exchange services is required to make a reasonable showing of technical expertise in telecommunications or a related business.
7. The Commission has broad authority to inspect Telenational's books and records.
8. The Commission may require Rapid Link to submit information about inter-affiliate transactions between Telenational and companies within the Rapid Link group.
9. Telenational's acquisition by Rapid Link is not adverse to the public interest.
10. It is reasonable to grant the application to the extent it requests prospective authority under § 854(a) for the transfer of control.
11. The purpose of § 854(a) is to enable the Commission to review a proposed acquisition before it takes place in order to take such action as the public interest may require.
12. Granting the application on a retroactive basis would thwart the purpose of § 854(a).
13. The application should be denied to the extent it requests retroactive authority under § 854(a) for Telenational's acquisition by Rapid Link.
14. Since the Commission's approval of the application is prospective only, Telenational's acquisition by Rapid Link is void under § 854(a) for the period of time prior to the effective date of this decision, and Telenational and Rapid Link are at risk for any adverse consequences that may result from having implemented the transfer of control without Commission authority.
15. Applicants failed to comply with § 854(a) by effectuating the transfer of control without Commission authorization.
16. Violations of § 854(a) are subject to monetary penalties under § 2107 of not less than five hundred dollars, nor more than twenty thousand dollars for each offense.
17. Any violation of § 854(a), regardless of the circumstances, is a serious offense that should be subject to fines.
18. In D.98-12-075, the Commission held that the size of a fine should be proportionate to the severity of the offense.
19. In D.98-12-075, the Commission held that the size of a fine should reflect the conduct of the utility.
20. Since Applicants' violation of § 854(a) was not wholly inadvertent, but the application was ultimately filed, the violation is not an especially egregious offense.
21. In D.98-12-075, the Commission held that the size of a fine should reflect the financial resources of the utility.
22. In D.98-12-075, the Commission held that a fine should be tailored to the unique facts of each case.
23. The public interest was not significantly harmed by Applicants' violation of § 854(a).
24. Applicants should be fined $1000 for violating § 854(a).
25. The application should be granted to the extent set forth herein and subject to the affiliate transaction rules and conditions set forth in Appendix A and incorporated herein.
26. Applicants' request to file information under seal should be granted for two years from the effective date of this order.
27. The following order should be effective immediately.
IT IS ORDERED that:
1. Application 09-02-021, filed by Telenational Communications, Inc., Rapid Link, Inc., and Apex Acquisitions, Inc. for authority under Pub. Util. Code § 854 for a transfer control of Telenational Communications, Inc. to Rapid Link, Incorporated is granted to the extent it requests authority effective as of the date of this order.
2. Application 09-02-021 is denied to the extent that it requests retroactive authority for the transfer of control.
3. At the time it files its 2009 and 2010 Annual Report with the Commission, Telenational Communications, Inc. shall submit a summary of all inter-affiliate transactions, including loans and cash transfers, between Telenational Communications, Inc. and Rapid Link, Incorporated, and/or any of the affiliated companies in the group for the time period covered by the Annual Report.
4. Telenational Communications, Inc. shall pay a fine in the amount of $1,000 for violating Pub. Util. Code § 854(a). Telenational Communications, Inc. shall pay the fine within 20 days from the effective date of this order by tendering to the Fiscal Office of the Commission a check in the amount of $1,000 made payable to the State of California General Fund.
5. Applicants' request to have the information filed with the application kept under seal is granted for two years from the effective date of this decision. During that period the information shall not be made accessible or disclosed to anyone other than the Commission staff except on the further order or ruling of the Commission, the assigned Commissioner, the assigned Administrative Law Judge, or the Administrative Law Judge then designated as Law and Motion Judge.
6. If Applicants believe that further protection of the information kept under seal is needed, they may file a motion stating the justification for further withholding of the information from public inspection, or for such other relief as the Commission's rules may then provide. This motion shall be filed no later than one month before the expiration date.
7. Application 09-02-021 is closed.
This order is effective today.
Dated June 18, 2009, at San Francisco, California.
MICHAEL R. PEEVEY
President
DIAN M. GRUENEICH
JOHN A. BOHN
RACHELLE B. CHONG
TIMOTHY ALAN SIMON
Commissioners
