III. Review of the Proposed Application

VAD's application has been reviewed for compliance with the certification-and-entry rules (Certification Rules) adopted in Appendices A and B of D.95-07-054 and subsequent decisions in R.95-04-043/I.95-04-044. The Certification Rules are intended to protect the public against unqualified or unscrupulous carriers, while also encouraging and easing the entry of CLC providers to promote the rapid growth of competition.

Applicant proposes to provide interLATA, intraLATA and competitive local exchange telecommunications services throughout the state of California, both as a non-facilities based reseller and as a facilities-based carrier. Applicant seeks authority from the Commission to provide a full range of private line, data, and other telecommunications services within the State of California. The initial intrastate services that Applicant will offer will include Frame Relay and ATM cell relay services. Applicant will provide these services by obtaining UNEs and reselling services obtained from ILECs located in California pursuant to interconnection agreement(s) that Applicant has filed or will file with the Commission in accordance with 47 U.S.C. § 252 and applicable rules. Applicant may also acquire services and facilities from other carriers operating in California.

The Applicant, VAD, has been established pursuant to the merger of Bell Atlantic Corporation and GTE Corporation. Under the merger conditions required by the Federal Communications Commission (FCC), Bell Atlantic must provide advanced services in California through a structurally separate affiliate.² Bell Atlantic has established Applicant as this affiliate. In its Order, the FCC concluded that a separate data affiliate "will provide a structural mechanism to ensure that competing providers of advanced services receive effective, nondiscriminatory access to the facilities and services . . . that are necessary to provide advanced services."³ According to the FCC, "[b]ecause the merged firm's own separate advanced services affiliate will use the same processes as competitors, wait in line for collocation space, buy the same inputs used to provide advanced services, and pay an equivalent price for facilities and services," establishing a separate affiliate "ensure[s] a level playing field between Bell Atlantic/GTC and its advanced services competitiors."⁴

VAD seeks authority to provide facilities-based and resold local exchange voice and data telecommunications services in the service territories of Pacific, Verizon, RTC and CTC as well as facilities-based and resold non-dominant interexchange telecommunications services throughout the State of California. VAD proposes to provide these services through a combination of its own facilities and facilities to be leased from a variety of existing carriers. VAD is currently seeking only the limited facilities-based authority described in D.99-10-025 and D.99-12-050. Under this limited authority, VAD will not construct any new or extend any existing outside plant in California to provide the services for which it seeks authority.

In this order, we will grant VAD's request for limited facilities-based authority to provide local exchange services utilizing resale of other carriers' services and/or utilizing UNEs and/or equipment installed solely on or within existing buildings and structures.

VAD demonstrated that it possesses the requisite managerial qualifications, technical competence, and financial resources to provide facilities-based local exchange service as set forth in its Exhibits D and E.

Applicant attached Exhibit D, an irrevocable loan guarantee from Bell Atlantic Financial Services, Inc., its parent company, together with the most recent 10Q of Bell Atlantic Corporation. This information demonstrates the financial capability of Applicant to provide the services described in this Application, showing unencumbered cash in excess of $100,000 readily available to meet the expenses of the proposed operations. Applicant does not expect that any local exchange companies or interexchange carriers will require any deposits.

Exhibit E lists Applicant's officers and the resumes of the specific individuals actively involved in Applicant's telecommunications business. This information demonstrates that these individuals have the requisite knowledge and capabilities to supervise Applicant's provision of proposed telecommunications services.

VAD was also required to submit proposed tariffs which conform to the consumer protection rules set forth in Appendix B of D.95-07-054. Upon review of the draft tariff, we have identified certain deficiencies as listed in Appendix B of this order. All outstanding tariff deficiencies identified as Appendix B must be corrected before VAD may otherwise begin to offer service.

Information concerning Applicant's estimates of the number of customers after one year and after five years was provided in Exhibit H. Applicant has filed a separate motion to provide this information under seal.

Based upon our review, we conclude VAD has satisfactorily complied with our certification requirements for limited facilities-based authority, subject to correcting any tariff deficiencies to be identified in Appendix B, and satisfying the additional conditions set forth in the ordering paragraphs below. Accordingly, we grant VAD authority to offer local exchange service utilizing resale of other carriers' services or UNEs and equipment located solely within existing buildings and structures within the territories of Pacific, Verizon, CTC, and RTC territories.⁵