IV. Technical Qualifications

To be granted a CPCN for authority to provide local exchange service, an applicant must make a reasonable showing of technical expertise in telecommunications or a related business. Applicant supplied biographical information on its management that demonstrates that it has sufficient expertise and training to operate as a telecommunications provider.

Applicant represents that no one associated with or employed by Applicant as an affiliate, officer, director, partner, or owner of more than 10% of Applicant was previously associated with a telecommunications carrier that filed for bankruptcy or went out of business, or was sanctioned by the Federal Communications Commission (FCC) or any state regulatory agency for failure to comply with any regulatory statute, rule, or order, except as follows.

On July 3, 2002, November 1, 2002, and November 26, 2002, the FCC issued orders finding that Applicant had slammed a total of three customers. Applicant's third party verifier had not obtained separate verification for all services affected by the change. Pursuant to the orders, Applicant has issued refunds to the affected customers. Applicant represents that all of its verifications now meet FCC standards.

On May 16, 2002, the Minnesota Office of the Attorney General (OAG) served Applicant with a Civil Investigative Demand (CID). The CID stated that OAG believed Applicant had committed false advertising, deceptive trade practices, and consumer fraud in connection with local and long distance service. The CID also alleged that Applicant had billed customers for services after they had switched to another carrier. The CID requested information on Applicant's business practices. Applicant has supplied the requested information, and is in settlement discussions with the OAG. Applicant represents that its marketing and disclosure of fees and charges conformed to all applicable regulations. It also represents that any billing issues are due to its underlying carrier and, therefore, beyond its control.

On August 3, 2001, the Washington Utilities and Transportation Commission (WUTC) notified Applicant that its staff had completed an investigation regarding slamming, responses to informal complaints, record keeping, discontinuance of service, and price lists. The WUTC staff recommended a penalty of $212,600. Applicant subsequently settled the matter. It admitted liability for negligence and negligent supervision of third party marketers and verifiers, and 19 instances of slamming. Applicant paid a fine and costs totaling $72,806. Applicant represents that there have been no complaints in Washington since Applicant resumed marketing.

On June 15, 2001, the Oregon Department of Justice issued a Notice of Assurance and Voluntary Compliance alleging that Applicant had slammed customers. Applicant entered into a settlement agreement calling for a voluntary contribution of $35,000 to the Oregon Consumer Education Revolving Account, and agreeing to prospective remedies to its conduct. Applicant did not admit any wrongdoing or liability. Applicant represents that it has not received any complaints in Oregon since it resumed marketing in Oregon.

On January 7, 2002, the Indiana Office of Utility Consumer Counselor filed a complaint with the Indiana Utility Regulatory Commission alleging Applicant had slammed customers. Applicant entered into a settlement that calls for a payment of $20,000 to the Indiana Utility Ratepayer Trust Fund, and credits of approximately $87,000 to certain customers. The settlement also contains forward-looking conduct remedies. Applicant did not admit any wrongdoing or liability.

On April 18, 2002, the Iowa Office of Consumer Advocate filed a request for a formal proceeding with the Iowa Utilities Board (IUB). The request alleged that Applicant had slammed a single customer. On April 21, 2003, the IUB approved a settlement that calls for a $500 penalty. Applicant did not admit any liability.

On January 21, 2003, the Alabama Public Service Commission issued an order against Applicant to show cause why its certificate of authority should not be revoked for failure to pay certain fees. Applicant represents that since it did not have any Alabama operations or customers, it was not aware that fees were owed. Applicant submitted the necessary report, and paid a $100 fine. It was then dismissed from the proceeding.

Applicant represents that it has not received complaints from any of its approximately 45 California customers.

Applicant represents that the above complaints regarding marketing are for late 2000 through 2001. The majority of the complaints related to a single outside telemarketer. Applicant discontinued relations with the telemarketer in early 2002. Applicant also says that many of the problems resulted from incomplete or erroneous information from the underlying carrier.

Applicant says that it has taken the following actions to prevent recurrences of the complaints:

· Terminated relations with the marketer responsible for the majority of the telemarketing related complaints.

· Modified sales and verification scripts to comply with all applicable regulations.

· Instituted a practice of mailing new customers an information packet after the sale has been verified. The packet confirms the customers decision to switch to Applicant, and contains terms and conditions of service, pricing information, and contact information for Applicant.

· Retained a third party firm to randomly monitor Applicants telemarketing contractors.

· Instituted tighter information and reporting systems to track marketing complaints, and deal with problem marketers.

· Instituted regular loss date audits to ensure that it ceases billing customers who have discontinued service, and issues credits to customers who have been mistakenly billed.

Since Applicant appears to have taken steps to avoid repetition of the above types of violations, and we have received no complaints from its California customers, we will not deny it the requested expansion of its existing authority. However, we remind Applicant that we expect its full compliance with all applicable state and federal requirements regarding the provision of telecommunications services. In addition, Applicant is responsible for the provision of service to its customers. Any problems it encounters with its underlying carrier are Applicant's responsibility, not the responsibility of its customers.