8. Assignment of Proceeding

Rachelle B. Chong is the assigned Commissioner and Victor D. Ryerson is the assigned ALJ in this proceeding.

1. Birch Communications, Inc. is the applicant in this proceeding. The application was initially filed under the name of Access Integrated Networks, Inc., d/b/a Birch Communications, but the applicant acquired Birch Telecom, Inc., in February 2008 and subsequently changed its name to Birch Communications, Inc., (Birch hereinafter).

2. Birch is a Georgia corporation qualified to do business in California. It provides facilities-based and resold local and interexchange telecommunications services, directly and through its subsidiaries, to business and residential customers in 30 states.

3. The original application, which was filed on July 16, 2008, by an out-of-state consultant on applicant's behalf, contained a number of material inaccuracies and misrepresentations about the disciplinary and financial history of the applicant.  Specifically, a verification signed by Birch's CEO and President, Vincent Oddo, essentially disclaimed the existence of previous or current bankruptcy activity, civil or criminal liability under section 17000 et seq. of the California Business and Professions Code, or actions involving misrepresentations to consumers, as of July 2, 2008.

4. Certain of the representations in the verification were untrue, as is more specifically set forth in Paragraph 11 of the Attachment to the Order and incorporated by reference herein.

5. On August 22, 2008, CPSD filed a Protest to the Application on the grounds that the information in the verification was materially false and misleading, and might violate Rule 1.1 of the Commission's Rules of Practice and Procedure.

6. On September 23, 2008, applicant substituted California counsel for its out-of-state consultant as applicant's representative in this matter.

7. Applicant's new counsel cooperated with CPSD following the substitution, responding to requests from CPSD and providing documentation to correct the omissions and misrepresentations in the original application. On October 24, 2008, Birch filed an Amendment to its Application, expanding the scope of authority sought to include interexchange operating authority, noting the change in its name, and admitting that, due to alleged misunderstanding and inadvertence, the original application contained a number of omissions and misrepresentations relating to prior investigations, sanctions, and bankruptcies of Birch, its affiliates, or its officers.

8. After CPSD twice renewed its protest to the amended application to clarify its reasons for objecting to granting the CPCN, Birch and CPSD entered into a proposed written settlement agreement, dated April 9, 2009, (Settlement) under the terms of which CPSD would withdraw its protest in return for Birch's payment of a $10,000 fine and its agreement to notify CPSD before it engages in any telemarketing of its services to consumers in California.

9. The Settlement admits that the omissions and misrepresentations in the original application, even if inadvertent, constitute a violation of Rule 1.1.

10. Birch agrees under the Settlement to pay a fine of $10,000 for omitting and misrepresenting the facts as set forth in Paragraph 11 of the Settlement.

11. Birch agrees in the Settlement to notify CPSD before it engages in any telemarketing of its services to consumers in California as a safeguard against the occurrence of "slamming" and other market abuses that Birch disclosed in Paragraph 11 of the Settlement.

12. Birch has sufficient additional cash or cash equivalent on hand to satisfy the Commission's requirement for granting a CPCN to provide the services described in the application, as amended.

13. Birch's management possesses sufficient relevant industry experience and knowledge of the telecommunications business to provide the services it intends to provide, as described in the amended application.

14. As part of its application, Birch submitted a draft of the form of its anticipated initial tariff. Except for any deficiencies noted in Attachment A to this decision, the form of Birch's draft tariffs complies with the Commission's requirements.

1. The application, as amended, demonstrates that Birch is financially, managerially and technically fit for certification as a limited facilities-based local exchange and interexchange carrier in accordance with applicable requirements of the Commission.

2. Although the omissions and misrepresentations in the initial application were material and raised legitimate concerns about Birch's fitness to provide the service for which it seeks authorization, those concerns have been addressed by the subsequent disclosure of information in the Settlement and the remedial measures included in the Settlement, as set forth in Findings of Fact 9 through 11. The $10,000 fine and the requirement of giving CPSD advance notice of telemarketing activities are reasonable measures to respond to the initial nondisclosures, and to diminish the risks to consumers indicated by the past marketing behavior of Birch and its predecessors.

3. The Settlement is reasonable in light of the whole record, consistent with law, and in the public interest.

4. The Commission should adopt the Settlement

5. Public convenience and necessity require Birch's limited facilities-based local exchange and interexchange services, subject to the terms and conditions set forth in the Order.

6. Since Birch will not be constructing any outside facilities pursuant to the CPCN granted herein, it can be seen with certainty that granting the application subject to the terms and conditions set forth in the Order will have no significant effect on the environment.

7. The application should be granted to the extent set forth in the Order.

8. Because Birch's application, as amended, is uncontested under the terms of the Settlement, this decision should be effective immediately.

ORDER

IT IS ORDERED that:

1. A Certificate of Public Convenience and Necessity is granted to Birch Communications, Inc. to construct telecommunications facilities and provide local exchange services and interexchange services subject to the terms and conditions set forth below.

2. The Settlement Agreement entered into as of April 9, 2009, by and between Birch Communications, Inc. on behalf of itself, its affiliates, and its predecessors in interest, and the Consumer Protection and Safety Division of this Commission, a copy of which is attached as the Appendix to this Order and incorporated by reference as if fully set forth herein, is approved.

3. All terms and conditions of the Settlement Agreement shall be binding upon the parties as part of the Order. As expressly required under Paragraph 1 of Part II of the Settlement Agreement, Birch Communications, Inc. shall pay a fine in the amount of $10,000, payable to the California general fund, within 10 days of the issuance of this decision; and shall notify Consumer Protection and Safety Division, in writing, before it engages in any telemarketing of its services to consumers in California.

4. Birch Communications, Inc. is authorized to provide local exchange service and interexchange service in the service territories of service throughout the service territories of Pacific Bell Telephone Company, Verizon California Inc., SureWest Telephone, and Citizens Telecommunications Company of California, Inc., throughout the state of California.

5. Birch Communications, Inc. is authorized to file tariff schedules for the provision of competitive local exchange services in the form indicated by Attachment C to the Application. The final tariff schedules must be reviewed and approved by Commission staff as to form and content before they are permitted to be filed, and Birch Communications, Inc. may not offer services until tariffs are on file. Birch Communications, Inc.'s initial filing shall be made in accordance with General Order 96-B. Birch Communications, Inc. shall comply with its tariffs.

6. The certificate granted, and the authority to render service under the rates, charges, and rules authorized will expire if not exercised within 12 months after the effective date of this order.

7. The corporate identification number assigned to Birch Communications, Inc., U-7118-C, shall be included in the caption of all original filings with this Commission, and in the titles of other pleadings filed in existing cases.

8. Birch Communications, Inc. shall comply with all applicable rules adopted in the Local Exchange Competition proceeding (Rulemaking 95-04-043/Investigation 95-04-044), the Commission's rules and regulations for interexchange carriers set forth in Decision 93-05-010 and Decision 90-08-032, as well as other applicable Commission's rules, decisions, General Orders, and statutes that pertain to California public utilities, subject to the exemptions granted in this decision.

9. Birch Communications, Inc. shall comply with the requirements applicable to competitive local exchange carriers included in Attachment A to this decision.

10. Birch Communications, Inc. is not authorized to construct facilities, except for the installation of those in or on existing buildings or structures, until Birch Communications, Inc. undergoes any required environmental review and applies for and obtains full facilities-based authority, under the procedure adopted by the Commission in Decision 06-04-030 in Application for NewPath Networks, LLC for a Modification of its Certificate of Public Convenience and Necessity in Order to Provide Competitive Local Exchange, Access Integrated Networks, Inc., and Non-Dominant Interexchange Services (April 13, 2006).

11. Application 08-07-024 is closed.

This order is effective today.

Dated June 4, 2009, at San Francisco, California.

APPENDIX

ATTACHMENT A

List of deficiencies in form of tariff filed by Birch Communications, Inc, Inc. in Application 08-07-024 to be corrected in its tariff compliance filing:

Tariff Sheet Format: CPUC assigned utility ID number (U#) should be included on each sheet in the upper left header along with Company name and address. (General Order 96-B, Section 8.4.1).

(END OF ATTACHMENT A)

ATTACHMENT B

REQUIREMENTS APPLICABLE TO COMPETITIVE
LOCAL EXCHANGE CARRIERS

1. Applicant shall file, in this docket, a written acceptance of the certificate granted in this proceeding within 30 days of the effective date of this order.

2. Applicant is subject to the following fee and surcharges that must be regularly remitted per the instructions in Appendix E to D.00-10-028. The Combined California PUC Telephone Surcharge Transmittal Form must be submitted even if the amount due is zero.

3. Revenues collected for the California Advanced Services Fund (CASF) at the surcharge rate of 0.25% shall be held by the carrier in a memorandum account tracking system and the account will accrue monthly interest on the accumulated balance at the short-term commercial paper rate. Carriers shall continue to hold custody of all the collected CASF surcharge revenues and accumulated interest until the Commission provides further direction on the disposition of these revenues.

a. The current 1.15% surcharge applicable to all intrastate services except for those excluded by D.94-09-065, as modified by D.95-02-050, to fund the Universal Lifeline Telephone Service Trust Administrative Committee Fund (Pub. Util. Code § 879; Resolution T-17071, dated March 1, 2007, effective April 1, 2007);

b. The current 0.20% surcharge applicable to all intrastate services except for those excluded by D.94-09-065, as modified by D.95-02-050, to fund the California Relay Service and Communications Devices Fund (Pub. Util. Code § 2881; D.98-12-073 and Resolution T-17127, dated December 20, 2007, effective January 1, 2008);

c. The user fee provided in Pub. Util. Code §§ 431-435, which is 0.18% of gross intrastate revenue (Resolution M-4819), dated June 7, 2007, effective July 1, 2007;

d. The current 0.13% surcharge applicable to all intrastate services except for those excluded by D.94-09-065, as modified by D.95-02-050, to fund the California High Cost Fund-A (Pub. Util. Code § 739.3; D.96-10-066, pp. 3-4, App. B, Rule 1.C; Resolution T-17128, dated December 20, 2007, effective January 1, 2008);

e. The current 0.25% surcharge applicable to all intrastate services except for those excluded by D.94-09-065, as modified by D.95-02-050, to fund the California High Cost Fund-B (D.96-10-066, p. 191, App. B, Rule 6.F.; D.07-12-054);

f. The current 0.25% surcharge applicable to all intrastate services except for those excluded by D.94-09-065, as modified by D.95-02-050, to fund the California Advances Services Fund (D.07-12-054); and

g. The current 0.79% surcharge applicable to all intrastate services except for those excluded by D.94-09-065, as modified by D.95-02-050, to fund the California Teleconnect Fund (D.96-10-066, p. 88, App. B, Rule 8.G; Resolution T-17142, dated April 24, 2008, effective June 1, 2008).

Note: These fees change periodically. In compliance with Resolution T-16901, December 2, 2004, you should check the joint tariff for surcharges and fees filed by Pacific Bell (dba SBC California) and apply the current surcharge and fee amounts in that joint tariff on end-user bills until further revised.

4. Applicant is a competitive local exchange carrier (CLC). The effectiveness of its future tariffs is subject to the requirements of General Order (GO) 96-B and the Telecommunications Industry Rules (D.07-09-019).

5. Applicant is a non-dominant interexchange carrier (NDIEC). The effectiveness of its future NDIEC tariffs is subject to the requirements of GO 96-B and the Telecommunications Industry Rules (D.07-09-019).

6. Tariff filings shall reflect all fees and surcharges to which Applicant is subject, as reflected in 2 above.

7. Applicant shall file a service area map as part of its initial tariff.

8. Prior to initiating service, Applicant shall provide the Commission's Consumer Affairs Branch with the name and address of its designated contact person(s) for purposes of resolving consumer complaints. This information shall be updated if the name or telephone number changes, or at least annually.

9. Applicant shall notify the Director of the Communications Division in writing of the date that local exchange service is first rendered to the public, no later than five days after service first begins.

10. Applicant shall notify the Director of the Communications Division in writing of the date interLATA service is first rendered to the public within five days after service begins, and again within five days after intraLATA service begins.14

11. Applicant shall keep its books and records in accordance with the Generally Accepted Accounting Principles.

12. In the event Applicant's books and records are required for inspection by the Commission or its staff, it shall either produce such records at the Commission's offices or reimburse the Commission for the reasonable costs incurred in having Commission staff travel to its office.

13. Applicant shall file an annual report with the Director of the Communications Division, in compliance with GO 104-A, on a calendar-year basis with the information contained in Attachment C to this decision.

14. Applicant shall file an affiliate transaction report with the Director of the Communications Division, in compliance with D.93-02-019, on a calendar-year basis using the form contained in Attachment D.

15. Applicant shall ensure that its employees comply with the provisions of Pub. Util. Code § 2889.5 regarding solicitation of customers.

16. Within 60 days of the effective date of this order, Applicant shall comply with Pub. Util. Code § 708, Employee Identification Cards, and notify the Director of the Communications Division in writing of its compliance.

17. If Applicant is 90 days or more late in filing an annual report, or in remitting the surcharges and fee listed in 2 above, the Communications Division shall prepare for Commission consideration a resolution that revokes Applicant's CPCN unless it has received written permission from the Communications Division to file or remit late.

18. Applicant is exempt from Rule 3.1(b) of the Commission's Rules of Practice and Procedure.

19. Applicant is exempt from Pub. Util. Code §§ 816-830.

20. Applicant is exempt from the requirements of Pub. Util. Code § 851 for the transfer or encumbrance of property whenever such transfer or encumbrance serves to secure debt.

21. If Applicant decides to discontinue service or file for bankruptcy, it shall immediately notify the Communications Division's Bankruptcy Coordinator.

22. Applicant shall send a copy of this decision to concerned local permitting agencies no later than 30 days from the date of this order.

(END OF ATTACHMENT B)

ATTACHMENT C

ANNUAL REPORT

An original copy and a machine readable copy using Microsoft Word or compatible format shall be filed with the California Public Utilities Commission, 505 Van Ness Avenue, Room 3107, San Francisco, CA 94102-3298, no later than March 31st of the year following the calendar year for which the annual report is submitted.

Failure to file this information on time may result in a penalty as provided for in Sections 2107 and 2108 of the Public Utilities Code.

Required information:

For answers to any questions concerning this report, call (415) 703-2883.

(END OF ATTACHMENT C)

ATTACHMENT D

CALENDAR YEAR AFFILIATE TRANSACTION REPORT

1. Each utility shall list and provide the following information for each affiliated entity and regulated subsidiary that the utility had during the period covered by the annual Affiliate Transaction Report.

· Form of organization (e.g., corporation, partnership, joint venture, strategic alliance, etc.);

· Brief description of business activities engaged in;

· Relationship to the utility (e.g., controlling corporation, subsidiary, regulated subsidiary, affiliate);

· Ownership of the utility (including type and percent ownership);

· Voting rights held by the utility and percent; and

· Corporate officers.

2. The utility shall prepare and submit a corporate organization chart showing any and all corporate relationships between the utility and its affiliated entities and regulated subsidiaries in #1 above. The chart should have the controlling corporation (if any) at the top of the chart; the utility and any subsidiaries and/or affiliates of the controlling corporation in the middle levels of the chart and all secondary subsidiaries and affiliates (e.g., a subsidiary that in turn is owned by another subsidiary and/or affiliate) in the lower levels. Any regulated subsidiary should be clearly noted.

3. For a utility that has individuals who are classified as "controlling corporations" of the competitive utility, the utility must only report under the requirements of #1 and #2 above any affiliated entity that either (a) is a public utility or (b) transacts any business with the utility filing the annual report excluding the provision of tariff services.

4. Each annual report must be signed by a corporate officer of the utility stating under penalty of perjury under the laws of the State of California (CCP 2015.5) that the annual report is complete and accurate with no material omissions.

5. Any required material that a utility is unable to provide must be reasonably described and the reasons the data cannot be obtained, as well as the efforts expended to obtain the information, must be set forth in the utility's annual Affiliate Transaction Report and verified in accordance with Sections I-F of Decision 93-02-019.

6. Utilities that do no have affiliated entities must file, in lieu of the annual transaction report, an annual statement to the Commission stating that the utility had no affiliated entities during the report period. This statement must be signed by a corporate officer of the utility, stating under penalty of perjury under the laws of the State of California (CCP 2015.5) that the annual report is complete and accurate with no material omissions.

(END OF ATTACHMENT D)

14 California is divided into ten Local Access and Transport Areas (LATAs), each containing numerous local telephone exchanges. InterLATA describes services, revenues and functions relating to telecommunications originating within one LATA and terminating in another LATA. IntraLATA describes services, revenues and functions relating to telecommunications originating within a single LATA.

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