COM/CRC/tcg Mailed 3/5/2007

Decision 07-03-014 March 1, 2007

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Rulemaking for Adoption of a General Order and Procedures to Implement the Digital Infrastructure and Video Competition Act of 2006.

Rulemaking 06-10-005 (Filed October 5, 2006)

DECISION ADOPTING A GENERAL ORDER AND PROCEDURES
TO IMPLEMENT THE DIGITAL INFRASTRUCTURE
AND VIDEO COMPETITION ACT OF 2006

DECISION ADOPTING A GENERAL ORDER AND PROCEDURES
TO IMPLEMENT THE DIGITAL INFRASTRUCTURE AND VIDEO
COMPETITION ACT OF 2006 2

I. Summary 2

II. Legislative Background and Procedural History 6

III. Scope of Commission Regulatory Authority for Video 9

A. Position of the Parties 10

B. Discussion 10

IV. When Applicants Can/Must Apply for a State Video Franchise 14

A. Applicants for New Franchises 14

1. Positions of the Parties 14

2. Discussion 15

B. Applicants with Existing Franchises 16

1. Positions of the Parties 17

2. Discussion 20

V. Eligibility to Operate Under a State Video Franchise 23

A. Position of the Parties 23

B. Discussion 33

1. Implementation Concerns 34

2. Narrowly Tailored Restrictions 38

VI. Information Required to Complete an Application 43

A. Service Area and Expected Deployment Information 44

1. Position of the Parties 44

2. Discussion 47

B. Socioeconomic Status Information 51

1. Position of the Parties 51

2. Discussion 55

C. Additions to the Application and the Affidavit 58

1. Proposed Changes to the Application 58

a) General Opposition to Expansion of the Application 58

b) Information on Corporate Parents 59

c) Proof of Legal and Technical Qualifications 59

d) Information Coordination with Local Entities 60

e) Discussion of Plans for Complying with Antidiscrimination
and Build-Out Requirements 61

f) Digital Divide and Workplace Diversity Reports 61

g) Services in Languages Other Than English 62

2. Proposed Changes to the Affidavit 63

a) Information on Labor Contracts 63

b) Authority of Affirming Individual 65

c) Other Requests for Affidavit Modification 66

VII. Bonding Requirements 67

A. Position of the Parties 67

B. Discussion 75

1. Purpose of the Bond 75

2. Amount of the Bond 77

3. Issuance and Notice of the Executed Bond 80

4. Alternative to Submit Financial Statement 81

VIII. Application Fee 82

A. Position of the Parties 83

B. Discussion 85

IX. Commission Review of the Application 87

A. Position of Parties 88

B. Discussion 93

X. Announcement of Application Review Results 98

A. Notification of Application Status 98

1. Position of the Parties 99

2. Discussion 100

B. Notification of Statutory Ineligibility 102

C. State Video Franchise Issuance by the Executive Director 103

XI. Notice of Imminent Market Entry 104

A. Positions of Parties 104

B. Discussion 105

XII. User Fee 106

A. Federal Cable Act Compliance 108

1. Position of the Parties 108

2. Discussion 110

B. Commission Budget 111

1. Position of the Parties 111

2. Discussion 114

C. Procedures for Calculating and Collecting User Fees 115

1. Position of the Parties 116

2. Discussion 121

a) Fees for Fiscal Year 2008-2009 and Subsequent Years 122

b) Fees for Fiscal Year 2007-2008 124

XIII. Reporting Requirements 127

A. Position of Parties 127

1. Consumer Organizations 128

2. Communications Companies 130

B. Discussion 137

1. Reports for Collection of the User Fee 137

2. Annual Employment Reports 139

3. Annual Reports on Broadband and Video Services 141

a) Approximation of Census Tract Data 141

b) Confidential Treatment of Data 144

c) Gradation of Submitted Data 145

d) Low-Income Data 147

e) Definition of "Telephone Service Area" 148

4. Information for Antidiscrimination and Build-Out
Assessments 149

a) Video Availability Data 149

b) Community Center Data 150

c) Confidential Treatment of Data 151

5. Additional Information 152

XIV. Antidiscrimination and Build-Out Requirements 154

A. Position of Parties 155

B. Discussion 160

1. Build-Out Requirements Imposed on State Video
Franchise Holders that Alone, or in Conjunction with
Their Affiliates, Have More than One Million California
Telephone Customers 161

2. Build-Out Requirements Imposed on State Video
Franchise Holders that Alone, or in Conjunction with
Their Affiliates, Have Fewer than One Million California
Telephone Customers 163

3. Rebuttable Presumption that Discrimination in Providing
Video Service Has Not Occurred 166

4. Extension of Time for Meeting Build-Out Requirements 168

XV. Enforcement of Statutory Provisions 169

A. Enforcement Actions Pursuant to Division 2.5 169

1. Position of Parties 170

2. Discussion 173

B. Enforcement of Statutory Provisions Subject to Commission
Regulation 176

1. Franchising 177

2. Antidiscrimination and Build-Out Requirements 178

a) Positions of Parties 179

b) Discussion 179

3. Reporting Requirements 181

4. Prohibition Against Financing Video Deployment with
Increases to Rates of Stand-Alone, Residential, Primary
Line, Basic Telephone Service 183

a) Position of Parties 184

b) Discussion 187

5. Submission of Regulatory Fees 191

C. Enforcement of Consumer Protection Requirements 191

1. Position of Parties 192

2. Discussion 193

D. Procedures for Conducting Investigations or Hearing Complaints 195

1. Comments of Parties 195

2. Discussion 196

E. The Role of DRA 197

1. Positions of Parties 198

2. Discussion 199

XVI. Intervenor Compensation Disallowed 202

A. Position of Parties 203

B. Discussion 208

XVII. Modifications to a State Video Franchise 210

A. Size of the Proposed Video Service Area 211

1. Position of Parties 211

2. Discussion 213

B. Process for Amending Video Service Areas 214

1. Position of the Parties 214

2. Discussion 216

XVIII. Renewal of a State Video Franchise 218

XIX. Comments on the Proposed Decision 219

XX. Assignment of Proceeding 239

Findings of Fact 239

Conclusions of Law 260

ORDER 280

LIST OF APPENDICES

Appendix A: The Digital Infrastructure and Video Competition Act

Appendix B: General Order 169 - Implementing the Digital Infrastructure and Video Competition Act of 2006 (DIVCA)

Attachment A: State Video Franchise Application

Appendix C: Entities Qualified to Become a State Video Franchise Holder

Appendix fD: "Census Tract Basis" Reporting of Broadband and Video Data

Appendix E: "Census Tract Basis" Reporting of Demographic Data

Appendix F: EEO-1 Form

Appendix G: Enforcement Actions Pursuant to DIVCA

DECISION ADOPTING A GENERAL ORDER AND PROCEDURES
TO IMPLEMENT THE DIGITAL INFRASTRUCTURE
AND VIDEO COMPETITION ACT OF 2006