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Decision 04-02-032

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

In the Matter of the Application of MG LLC, dba MBDG LLC and Sears Connect, a Delaware Limited Liability Company, for a Certificate of Public Convenience and Necessity to Provide InterLATA and IntraLATA Telecommunications Service in California as a Facilities-Based Carrier.

Application 03-10-026

(Filed October 8, 2003)

OPINION

MG LLC, dba MBDG LLC and Sears Connect, a Delaware limited liability company, filed an application on October 8, 2003, for a certificate of public convenience and necessity to provide inter- and intra- local access and transport area services in California as a non-dominant interexchange carrier. This application was filed pursuant to the registration process adopted in Decision (D.) 97-06-107 and related decisions.

The applicant was qualified to use the registration process and complied with the filing requirements for a registration application; there were no protests to the application; and the draft tariffs submitted were not rejected by the Commission's Telecommunications Division. Therefore, pursuant to the authority granted to the Executive Director by D.97-08-050, the applicant should be granted a certificate of public convenience and necessity to provide this service.

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

Findings of Fact

1. The application was filed on October 8, 2003, and appeared in the Commission's Daily Calendar on October 14, 2003.

2. There were no timely protests to the application.

3. The draft tariffs were not rejected by the Commission's Telecommunications Division.

Conclusion of Law

1. Applicant should be granted the requested certificate of public convenience and necessity subject to the conditions in the attached appendix.

ORDER

IT IS ORDERED that:

1. A certificate of public convenience and necessity is granted to MG LLC, dba MBDG LLC and Sears Connect, to operate as a facilities-based carrier of inter-Local Access and Transport Area (LATA) and, to the extent authorized by Decision 94-09-065, intra-LATA telecommunications services offered by communication common carriers in California subject to the conditions set forth in the attached appendix. Applicant is assigned corporate identification number U-6852-C, which shall be included in the caption of all filings made with this Commission.

2. Application 03-10-026 is closed.

This order is effective today.

Dated February 13, 2004, at San Francisco, California.

APPENDIX A

NON-DOMINANT INTEREXCHANGE CARRIER REGISTRATION

1. If you requested confidential treatment of the financial portions of your application, it was granted and those materials will remain under seal for one year from the date of the decision. If you wish to continue the seal on those materials beyond the one year period, you must make a formal request no later than thirty days prior to the expiration of the year explaining the reasons why you believe such extension is necessary.

2. You are subject to the following fees, and you must remit them regularly. Per the instructions in Decision (D.) 00-10-028, the Combined California PUC Telephone Surcharge Transmittal Form must be submitted, even if the amount due is $0.

a. The current 1.10% surcharge applicable to all intrastate services except for those excluded by Decision (D.) 94-09-065, as modified by D.95-02-050, to fund the Universal Lifeline Telephone Service (Public Utilities (PU) Code § 879; Resolution T-16795, December 18, 2003);

b. The current 0.30% 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 (PU Code § 2881; Resolution T-16816, dated January 22, 2004);

c. The user fee provided in PU Code §§ 431-435, which is 0.11% of gross intrastate revenue for the 2000-2001 fiscal year (Resolution M-4800);

d. The current 0.170% 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 (PU Code § 739.30; D.96-10-066, pp. 3-4, App. B, Rule 1.C; set by Resolution T-16793, dated December 18, 2003);

e. The current 2.7% 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.; Resolution T-16794, dated December 18, 2003); and

f. The current 0.00% 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 (set by Resolution T-16748, dated May 22, 2003).

APPENDIX A

These fees change periodically. You should access the Commission web site (WWW.CPUC.CA.GOV) at least semiannually for current values, use these as of the effective date in your customer bills, and update your tariff when you submit an advice letter for other changes.

3. You are exempt from Rule 18(b) of the Commission's Rules of Practice and Procedure.

4. You are exempt from PU Code §§ 816-830.

5. You are exempt from PU Code § 851 when the transfer or encumbrance serves to secure debt.

6. You shall file a written acceptance with the Director of the Telecommunications Division of the certificate granted in this proceeding.

7. a. You are authorized to file with this Commission tariff schedules for the provision of the services granted in your certificate of public convenience and necessity. You may not offer these services until tariffs are on file. Your initial filing shall be made in accordance with General Order 96-A, as modified and specified in 7b and 8 below, and shall be effective not less than one day after filing. You shall comply with the provisions in your tariffs.

Ordering Paragraph 5 of D.90-08-032 (37 CPUC2d 130 at 158), as modified by D.91-12-013 (42 CPUC2d 220 at 231) and D.92-06-034 (44 CPUC2d 617 at 618):

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APPENDIX A

(a) paragraph II.C.(1)(b), which requires consecutive sheet numbering and prohibits the reuse of sheet numbers, and (b) paragraph II.C.(4), which requires that "a separate sheet or series of sheets should be used for each rule." Tariff filings incorporating these deviations shall be subject to the approval of the Commission's Telecommunications Division. Tariff filings shall reflect all fees and surcharges to which applicant is subject, as noted above. You are also exempt from GO 96-A, paragraph III.G. (1) and (2) which requires service of advice letters on competing and adjacent utilities, unless such utilities have specifically requested such service.

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

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APPENDIX A

10. Prior to initiating service, you shall provide the Manager of the Commission's Consumer Affairs Branch with the name and phone number of your 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.

11. You shall notify the Director of the Telecommunications Division in writing of the date interLATA service and/or local exchange service is first rendered to the public within five days after interLATA service begins and again within five days of when intraLATA service begins.

12. You shall keep your books and records in accordance with the Uniform System of Accounts specified in Title 47, Code of Federal Regulations, Part 32.

13. In the event your books and records are required for inspection by the Commission or its staff, you 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 your office.

14. You shall file an annual report with the Director of the Telecommunications Division, in compliance with GO 104-A, on a calendar-year basis using the information request form developed by the Commission Staff and contained in Appendix B. You shall file an annual affiliate transaction report with the Director of the Telecommunications Division, in compliance with D.93-02-019, on a calendar year basis, using the form developed by the Commission staff and contained in Appendix C.

15. You shall ensure that your employees comply with the provisions of Public Utilities (PU) Code § 2889.5 regarding solicitation of customers.

16. 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.

17. PU Code 708 requires public utilities to provide ID badges to all employees with

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APPENDIX A

a format specified in that Section, and employees to present that badge when they request entry to customer or subscriber premises. You shall send a letter to the Director of the Telecommunications Division within 60 days of the effective date of this order declaring that you have issued the required badges.

18. If you are 90 days or more late in filing an annual report or in remitting the fees listed above, Telecommunications Division shall prepare for Commission consideration a resolution that revokes your CPCN, unless you have received the written permission of Telecommunications Division to file or remit late.

are required to contact the Bankruptcy Coordinator in the Telecommunications Division immediately. Please ask us for instructions in your particular circumstances; our rules are designed to ensure that your telecommunications customers receive adequate notice and are minimally inconvenienced. Your compliance is necessary so that you are not penalized for failure to follow Commission rules.

existing building, the purchase or lease of existing facilities, and blowing fiber into existing conduit. Generally, if you construct any new facilities (e.g., lay fiber cable), you must file a formal application tat includes a Proponent's Environmental Assessment (PEA). Please contact the Energy Division's Environmental Section with any questions about your particular plans.

(END OF APPENDIX A)

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APPENDIX B

TO: ALL INTEREXCHANGE TELEPHONE UTILITIES

Article 5 of the Public Utilities Code grants authority to the California Public Utilities Commission to require all public utilities doing business in California to file reports as specified by the Commission on the utilities' California operations.

A specific annual report form has not yet been prescribed for the California interexchange telephone utilities. However, you are hereby directed to submit an original and two copies of the information requested in Attachment A no later than March 31st of the year following the calendar year for which the annual report is submitted.

Address your report to:

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

If you have any question concerning this matter, please call (415) 703-2883.

Information Requested of California Interexchange Telephone Utilities and Local Exchange Carriers.

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APPENDIX B

To be filed with the Director, Telecommunications Division, California Public Utilities Commission, 505 Van Ness Avenue, Room 3107,Teleommunications Division, San Francisco, CA 94102-3298, no later than March 31st of the year following the calendar year for which the annual report is submitted.

11. Income statement for California operations for the calendar year for which

information is submitted.

(END OF APPENDIX B)

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APPENDIX C

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.

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 listed 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., subsidiary that in turn owned by another subsidiary or 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 utility that either (a) is a public utility or (b) transacts any business with the utility filing the annual report excluding the provision of tariffed 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 Section 1-F of D.93-02-019.

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APPENDIX C

6. Utilities that do not have affiliated entities must file, in lieu of the annual transaction report, an annual statement to the Commission 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

(END OF APPENDIX C)

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