IV. Notices

The notice requirements for transfers of a carrier's customer base were developed in D.97-06-096 for advice letter filings. The requirements are useful as a guide in this proceeding. They are as follows:

1. The notice must be in writing;

2. The carrier must provide the notice to customers no later than 30 days before the proposed transfer;

3. The notice must contain a straightforward description of the transfer, any fees the customer will be expected to pay, a statement of the customer's right to switch to another carrier, and a toll-free number for questions; and

4. The notice and the carrier's description of service to customers must be included in the advice letter.

Applicant provided copies of the notices with the application, and in response to rulings by the assigned administrative law judge (ALJ). The first notice was provided, in writing, more than 30 days before service was to terminate. The notice told customers to take immediate steps to transfer to another carrier, and provided a toll free phone number for questions. The notice did not address any fees that the customer may be expected to pay.² However, since Applicant did not intend to charge a fee, Applicant argues that this requirement was satisfied. The fourth requirement does not apply to the notice itself. The second notice was almost identical, and was sent 30 days before the new date for service termination. Had Applicant been authorized to discontinue service, the first two notices may have been adequate. However, this was not the case.

GO 96-A, Section XIV, states that "No public utility of a class specified herein shall, unless authority has been obtained from the Commission, either withdraw entirely from public service or withdraw from public service in any portion of the area served." Therefore, Applicant is required to continue to provide service until its withdrawal from service is approved by the Commission.

Applicant's first notice, mailed on April 3, 2001 to customers in the selected rate centers, stated: "This letter is to inform you that due to certain economic and market conditions, effective May 15, 2001, FirstWorld Anaheim and FirstWorld SoCal (FirstWorld) will no longer be providing services in your area, including T-1, local exchange and/or toll services." Its notice further stated: "We request that you take immediate steps to make arrangements with another local exchange provider or your incumbent local exchange carriers, Pacific Bell or Verizon, as soon as possible to avoid any interruption in your service." The notice indicated that service would cease on May 15, 2001. Therefore, Applicant's April 3, 2001 notice was false, because it was not authorized to discontinue service on May 15, 2001. It was misleading because it led customers to believe that they would have to move to another carrier by the specified date, or face service interruption.

Applicant's second notice, mailed on May 15, 2001 to customers in the selected rate centers, was identical to the first notice except that it indicated that service would no longer be provided effective June 16, 2001, and included a different list of alternative carriers. Since Applicant was not authorized to discontinue service on June 16, 2001, this notice too was false and misleading.

Applicant's third notice, mailed to most of its remaining customers on August 31, 2001, stated the following:

"Pursuant to an application on file with the California Public Utilities Commission, this letter is to notify you that due to certain negative economic and market conditions, effective September 30, 2001, FirstWorld will no longer be providing services in your area, including local exchange and/or toll services. On August 28, 2001, FirstWorld filed an application requesting approval from the California Public Utilities Commission to discontinue providing basic services in your area. FirstWorld's application is still pending at the Commission."

This notice is consistent with its previous misleading notices in that it leads customers to believe that service will cease on the date specified regardless of when or whether the Commission's approval is obtained. Therefore, this notice was false and misleading. Given this series of false and misleading notices, we find that Applicant's customers were improperly coerced into moving. As a result, Applicant effectively withdrew from service without authorization in violation of GO 96-A, Section XIV.

By way of mitigation, Applicant says that once it determined that it needed to discontinue service, it contacted the Commission's staff to determine the proper form its request for service withdrawal should take, but it was not able to get clear direction. On April 3, 2001, it filed an advice letter to discontinue local exchange and interexchange service, and simultaneously sent the first notice to customers. Applicant learned a few days later that it would need to file an application to discontinue local exchange service. Applicant then filed a supplement to the advice letter eliminating the request to discontinue local exchange service. On May 9, 2001, Applicant filed this application.

Applicant sent its first customer notice on the same day it filed the advice letter. The fact that it filed the advice letter demonstrates that it knew, at the time of the first notice, that it needed the Commission's approval. Applicant was aware of GO 96-A, and should have known that the Commission's approval was needed before local exchange service could be discontinued. Since Applicant mailed its second notice after this application was filed, it knew that the Commission's advance approval was needed. The fact that it erroneously filed an advice letter, rather than an application, in no way excuses its actions.

In a ruling dated June 28, 2001, the ALJ quoted GO 96-A, Section XIV and said:

"Applicant's first notice informs its customers that it will withdraw from service effective May 5, 2001. The notice makes no mention of the fact that the Commission's approval must be obtained before withdrawal."

The ruling then required Applicant to provide, among other things, the following:

"A full and complete explanation of why Applicant should not be found to have effectively withdrawn from service, by sending incorrect and misleading notices to its customers, in violation of GO 96-A, Section XIV, and the notice requirements of Decision 97-06-096."

Although Applicant's August 31, 2001 notice mentions that this application was filed, it goes on to say that service will cease affective September 30, 2001. This notice is, therefore, consistent with Applicant's previous misleading notices in that it leads customers to believe that service will cease on the date specified. This demonstrates a pattern of false and misleading notices. Given the fact that the August notice was mailed a month after the ALJ's ruling, we conclude that Applicant intended to mislead its customers.

Applicant knew the Commission's approval was needed to withdraw from service, and yet it got rid of its customers by misleading them into transferring to other carriers. Therefore, we find that Applicant used the false and misleading notices to effectively withdraw from service in violation of GO 96-A, Section XIV.