Procedural Matters

In Resolution ALJ 176-3082, dated February 21, 2002, the Commission preliminarily categorized this application as ratesetting, and preliminarily determined that hearings were not necessary. No protests have been received. Therefore, a public hearing is not necessary, and it is not necessary to alter the preliminary determinations.

This is an uncontested matter in which the decision grants the requested relief. Therefore, pursuant to Section 311(g)(2) of the Public Utilities Code, the otherwise applicable 30-day period for public review and comment is being waived.

Findings of Fact

1. By D.01-05-055, McLeod was granted a CPCN to operate in California as a limited facilities-based and resale provider of local exchange services, and as a limited facilities-based provider of interexchange services.

2. By D.96-12-021, McLeod was granted a CPCN to resell interexchange services.

3. On January 31, 2001, Parent filed for reorganization relief under Chapter 11 of Title 11 of the United States Code.

4. McLeod has not filed for bankruptcy, and is not part of Parent's bankruptcy proceeding.

5. As a result of the transaction, FL-V, FL-VII, FLDE-VI, FLDE-VII, and FLDE-VIII will collectively own approximately 57% of Parent's common stock and, therefore, a controlling interest in Parent and McLeod.

6. There will be no change in the name or management of McLeod as a result of the transaction.

7. Customers will continue to receive service under the same rates, terms, and conditions after the transaction.

8. FL-V, FL-VII, FLDE-VI, FLDE-VII, and FLDE-VIII have sufficient financial resources to meet the Commission's requirements to provide facilities-based and resold local exchange and interexchange services.

9. FL-V, FL-VII, FLDE-VI, FLDE-VII, and FLDE-VIII, through McLeod, possess the necessary technical expertise required by the Commission.

10. Notice of this application appeared on the Commission's Daily Calendar on February 20, 2002.

11. There were no protests to this application.

12. No hearings are necessary.

Conclusions of Law

1. The Commission will apply the same requirements to a request for approval of an agreement to acquire control of a facilities-based and resale provider of local exchange and interexchange telecommunications services within California as it does to an applicant for authority to provide such services.

2. FL-V, FL-VII, FLDE-VI, FLDE-VII, and FLDE-VIII meet the Commission's requirements for the issuance of a CPCN to provide facilities-based and resold local exchange and interexchange telecommunications services.

3. The transaction is not adverse to the public interest.

4. In order to avoid delaying this transaction, the approval of the application should be made effective immediately.

ORDER

IT IS ORDERED that:

1. Pursuant to Public Utilities Code Section 854, the joint application of McLeodUSA Telecommunications Services, Inc. (U-5712-C) (McLeod), and Forstmann Little & Co. Equity Partnership-V, L. P. (FL-V); Forstmann Little & Co. Equity Partnership-VII, L. P. (FL-VII); Forstmann Little & Co. Subordinated Debt & Equity Management Buyout Partnership-VI, L. P. (FLDE-VI); Forstmann Little & Co. Subordinated Debt & Equity Management Buyout Partnership-VII, L. P. (FLDE-VII); Forstmann Little & Co. Subordinated Debt & Equity Management Buyout Partnership-VIII, L. P. (FLDE-VIII); for approval of the indirect transfer of control of McLeod to FL-V, FL-VII, FLDE-VI, FLDE-VII, and FLDE-VIII is approved.

2. This application is closed.

This order is effective today.

Dated March 21, 2002, at San Francisco, California.

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