2. Background

Pinnacles is a local exchange carrier serving portions of San Benito County. It has telecommunications plant in service valued at $2.4 million, and its operating revenues for the year ended December 31, 1999, totaled $882,000. Rex Bryan was president of the company and held voting control until his death in December of last year.

Steven R. Bryan, eldest son of Rex Bryan, succeeded to voting control of the company under his father's trust, established pursuant to the Probate Code, and has been elected president and general manager of the company. Steven R. Bryan had been responsible for maintaining and upgrading the company's network under his father's direction since 1992. He is an engineering graduate of San Jose State College and served three years in the U.S. Army Signal Corps.

The application states that the involuntary change of control of the company will not adversely affect any member of the public or have any adverse effect upon the operations of the company or upon its subscribers.

In addition to seeking approval of the involuntary transfer of control to Steven R. Bryan, the application also seeks prospective approval of the transfer of control from Steven R. Bryan to a newly organized holding company, Bryan Family, Inc., a California corporation. Upon approval of this application, the shareholders of Pinnacles will exchange their stock for stock in the newly formed holding company.

According to the application, the purpose of forming a holding company is to streamline ownership of the utility. The officers and directors of Bryan Family, Inc. are the same as the officers and directors of Pinnacles.