Discussion

Under Section 852, no public utility, and no subsidiary, affiliate of, or corporation holding a controlling interest in, a public utility, shall purchase or acquire, take or hold, any part of the capital stock of any other public utility, organized or existing under the laws of this state, without prior Commission authorization. Section 854 further requires Commission authorization before a company may "merge, acquire, or control . . . any public utility organized and doing business in this state . . . ". The purpose of these and related sections is to enable the Commission, before any transfer of a public utility is consummated, to review the situation and to take such action, as a condition of the transfer, as the public interest may require. (San Jose Water Co. (1916) 10 CRC 56.)

In a situation in which a company that does not possess a CPCN desires to acquire control of a company that does possess a CPCN, we will apply 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. Therefore, although Zayo does not hold a CPCN authorizing it to provide telecommunications services in California, Zayo must meet the requirements for issuance of a CPCN because it is acquiring control of NTI, a certificated carrier.

The Commission has established two major criteria for determining whether a CPCN should be granted. An applicant who desires to operate as a facilities-based and resale provider of local exchange and interexchange service must demonstrate that it has a minimum of $100,000 in cash or cash equivalent, reasonably liquid and readily available to meet the firm's start-up costs. In addition, the applicant is required to make a reasonable showing of technical expertise in telecommunications or a related business.

The application includes financial statements and other evidence that demonstrates that Zayo has sufficient resources to meet our financial requirements. Also, since Applicants have indicated that Zayo will retain NTI's current management, we find that Zayo has sufficient experience and expertise in the telecommunications field to capably manage NTI, for the purpose of this transaction only. This transaction will enhance NTI's access to financial resources and, by joining with Zayo's network, NTI will have the opportunity to become a stronger competitor in the telecommunications marketplace in this state. In addition, except for a future change to NTI's company name, this transaction will be transparent to customers. Therefore, the proposed transaction is in the public interest.

Therefore, we will grant the application pursuant to Sections 852 and 854.