XVI. Assignment of Proceeding

Susan P. Kennedy is the Assigned Commissioner and Jeffrey P. O'Donnell is the assigned Administrative Law Judge in this proceeding.

Findings of Fact

1. In prior decisions, the Commission authorized competition in providing local exchange telecommunications services within the service territories of Pacific, Verizon, SureWest and CTC.

2. Applicant has a minimum of $100,000 of cash or cash equivalent that is reasonably liquid and readily available to meet its start-up expenses.

3. Applicant has paid all deposits to other telecommunications carriers that are necessary to provide the proposed services.

4. Applicant's management possesses sufficient experience and knowledge to provide local exchange and interexchange services to the public.

5. As part of its application, Applicant submitted a draft of its tariffs that contained the deficiencies identified in Attachment A to this decision. Except for these deficiencies, Applicant's draft tariffs complied with the Commission's requirements.

6. Applicant does not propose to construct any additional facilities, except for equipment to be installed in existing buildings or structures, in order to provide the proposed services.

7. By D.01-07-022, Altrio was granted a CPCN to provide limited facilities-based and resold local exchange and interexchange services.

8. By D.03-11-016, the Commission granted Altrio full facilities-based authority, within the boundaries of Pasadena, limited to the OVS facilities authorized by Pasadena.

9. By D.03-12-064, in C.02-11-053, the Commission found that Altrio had violated D.01-07-022 because it was required by that decision to have a full facilities-based CPCN before it could offer telephone service using its OVS facilities in Pasadena.

10. D.03-12-064 provided that Altrio may not provide telephone service over its OVS system, to customers who were not receiving service on the effective date of D.03-12-064, without first obtaining full facilities-based authority covering the area in which it intends to provide service.

11. In A.03-12-005, Altrio sought authority to provide facilities-based local exchange and interexchange telecommunications services in the cities of Arcadia, Sierra Madre and Monrovia, and in certain parts of Los Angeles County. Altrio had already constructed OVS facilities in these areas pursuant to agreements with the cities of Monrovia and Sierra Madre, and Los Angeles County, and a cable franchise in Arcadia. Subsequently, Altrio sold its assets to Applicant and went out of business.

12. By D.05-04-002, A.03-12-005 was dismissed for failure to prosecute.

13. The transaction did not result in a change in rates, terms or conditions of service to customers.

14. Applicant's prompt acquisition of Altrio's assets avoided discontinuance of service to Altrio's remaining customers, and preserved the jobs of approximately 25 employees.

15. The record demonstrates that there was not sufficient time for Applicant to obtain approval of the transaction before it was consummated.

16. Applicant made contact with the Commission within days of closing the transaction in order to find out how to obtain the necessary approvals, and subsequently filed this application.

17. Applicant's violation of § 854 was unintentional.

18. The fact that the transaction avoided termination of service to customers, and preserved employee jobs mitigates the violation.

19. No useful purpose would be served by denying Applicant full facilities-based authority to use the existing OVS facilities acquired from Altrio to provide telecommunications services for which Altrio sought, but did not receive, approval.

20. Since the OVS facilities were constructed pursuant to agreements with the cities of Monrovia and Sierra Madre, and Los Angeles County, and a cable franchise in Arcadia, and were used for services other than telecommunications, the facilities would continue in operation irrespective of how the Commission resolves the issue of full facilities-based authority.

21. Applicant had nothing to do with the construction of the existing OVS facilities by Altrio, or their initial use by Altrio in providing telecommunications services without authorization.

22. The only way Applicant could avoid use of the existing OVS facilities to provide telecommunications services would be to discontinue service to customers.

23. Altrio had not paid all of the applicable fees and surcharges it owed when the transaction occurred, and has paid none since.

24. Applicant stated its willingness to have approval of this application contingent upon its paying the fees and surcharges owed by Altrio.

25. A notice of the filing of the application appeared in the Daily Calendar on November 23, 2004. Notice of the amendment appeared in the Daily Calendar on February 14, 2005.

26. There were no protests to this application.

27. A hearing is not required.

Conclusions of Law

1. Applicant has the financial ability to provide the proposed service.

2. Applicant has made a reasonable showing of technical expertise in, or related to, telecommunications.

3. Public convenience and necessity require the competitive local exchange and interexchange services to be offered by Applicant, subject to the terms and conditions set forth herein.

4. The application should be granted to the extent set forth below.

5. Applicant, once granted a CPCN, should be subject to the applicable Commission rules, decisions, General Orders and statutes that pertain to California public utilities.

6. Applicant's initial tariff filing should correct the deficiencies noted in its draft tariffs as indicated in Attachment A to this decision.

7. Since Applicant does not propose to construct any additional facilities, except for equipment to be installed in existing buildings or structures, it can be seen with certainty that granting it authority to provide local exchange and interexchange services will not have a significant adverse effect upon the environment.

8. Altrio was not authorized to provide telecommunications services in Monrovia, Sierra Madre, Los Angeles County, and Arcadia using its OVS facilities, although it was doing so.

9. The Commission will apply the same requirements to a request for approval of an acquisition 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.

10. Applicant meets the Commission's requirements for the issuance of a CPCN to provide facilities-based and resold local exchange and interexchange telecommunications services.

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

12. The transaction should be approved.

13. Applicant should not be fined for its violation of § 854 because it would serve no useful purpose to do so.

14. The Commission should authorize Applicant to provide full facilities-based services using the existing OVS facilities it acquired from Altrio.

15. The Commission should not impose a penalty on Applicant for the provision of telecommunications services using the OVS facilities acquired from Altrio.

16. Applicant should be warned that if it expands its existing OVS facilities, it must obtain a facilities-based CPCN for such facilities before it can provide telecommunications using them.

17. In order to assure continued services to customers, approval of this application should be made effective immediately.

18. Granting of a CPCN, and approval of the transaction, should be contingent upon payment of the fees and surcharges owed by Altrio, payment of fees and surcharges owed by applicant for operations since its acquisition of Altrio's assets, and Applicant's filing of all reports required since its acquisition of Altrio.

ORDER

IT IS ORDERED that:

1. A certificate of public convenience and necessity (CPCN) is granted to Champion Broadband California, LLC (Applicant) to operate as a facilities-based and resale provider of competitive local exchange services, and interexchange services, subject to the terms and conditions set forth below.

2. Applicant is authorized to provide local exchange service in the service territories of Pacific Bell Telephone Company and Verizon California Inc.

3. Applicant is authorized to file tariff schedules for the provision of competitive local exchange and interexchange services with the deficiencies noted in Attachment A corrected. Applicant's initial filing shall be made in accordance with General Order (GO) 96-A, excluding Sections IV, V, and VI. The tariff shall be effective not less than one day after tariff approval by the Commission's Telecommunications Division. Applicant shall comply with its tariffs.

4. 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.

5. The corporate identification number assigned to Applicant, U-6944-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.

6. Applicant 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 nondominant interexchange carriers (NDIECs) set forth in Decision (D.) 93-05-010 and D.90-08-032, as well as all other applicable Commission rules, decisions, GOs, and statutes that pertain to California public utilities, subject to the exemptions granted in this decision.

7. Applicant shall comply with the requirements applicable to competitive local exchange carriers and NDIECs included in Attachment B to this decision.

8. Applicant is not authorized to construct facilities beyond those existing Open Video Systems (OVS) facilities acquired from Altrio Communications, Inc. (Altrio), other than equipment to be installed in existing buildings or structures.

9. Applicant is authorized to use the OVS facilities acquired from Altrio to provide telecommunications services.

10. If Applicant wishes to expand its existing OVS facilities, it must obtain a facilities-based CPCN for such facilities before it can provide telecommunications using them.

11. Pursuant to Pub. Util. Code § 854, Applicant's acquisition of Altrio is approved prospectively.

12. Applicant is at risk for any consequences that may arise from its acquisition of Altrio prior the effective date of this order.

13. Granting of the CPCN, and approval of the transaction, is contingent upon payment of the fees and surcharges owed by Altrio, payment of fees and surcharges owed by Applicant for operations since its acquisition of Altrio's assets, and Applicant's filing of all reports required since its acquisition of Altrio.

14. All of the fees, surcharges, and reports discussed in Ordering Paragraph 13 shall be paid or filed within 30 calendar days of the effective date of this order.

15. This proceeding is closed.

This order is effective today.

Dated June 30, 2005, at San Francisco, California.

ATTACHMENT A

List of deficiencies in tariff filed by Champion Broadband California, LLC in A.04-11-018 to be corrected in its tariff compliance filing.

1. Sheet 89: Revise the fee and surcharges per Resolution T-16901.

2. Sheet 91 and 92: Include the following Income Limitation and rate for ULTS:

Household Size Income Limitation

Each additional member 4,900

Measured Rate 2.85

(END OF ATTACHMENT A)

REQUIREMENTS APPLICABLE TO COMPETITIVE LOCAL EXCHANGE
CARRIERS AND NON-DOMINANT INTEREXCHANGE 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 Decision (D.) 00-10-028. The Combined California PUC Telephone Surcharge Transmittal Form must be submitted even if the amount due is zero.

a. The current 1.55% surcharge applicable to all intrastate services except or 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-16917, dated February 24, 2005, effective April 1, 2005);

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 (Pub. Util. Code § 2881; D.98-12-073 and Resolution T-16816, January 22, 2004, effective February 1, 2004);

c. The user fee provided in Pub. Util. Code §§ 431-435, which is 0.11% of gross intrastate revenue (Resolution M-4813);

d. The current 0.15% 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 California High Cost Fund-A (Pub. Util. Code § 739.3; D.96-10-066, pp. 3-4, App. B, Rule 1.C; Resolution T-16916, February 24, 2005, effective April 1, 2005);

e. The current 2.43% 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-16898, December 16, 2004, effective January 1, 2005; and

f. The current 0.16% 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-16833, dated July 8, 2004, effective August 1, 2004).

3. Applicant is a competitive local exchange carrier (CLC). The effectiveness of its future tariffs is subject to the schedules set forth in Appendix C, Section 4.E of D.95-12-056:

"E. CLCs shall be subject to the following tariff and contract filing, revision and service pricing standards:

"(1) Uniform rate reductions for existing tariff services shall become effective on five (5) working days' notice. Customer notification is not required for rate decreases.

"(2) Uniform major rate increases for existing tariff services shall become effective on thirty (30) days' notice to the Commission, and shall require bill inserts, or first class mail notice to customers at least 30 days in advance of the pending rate increase.

"(3) Uniform minor rate increases, as defined in D.90-11-029, shall become effective on not less than (5) working days' notice to the Commission. Customer notification is not required for such minor rate increases.

"(4) Advice letter filings for new services and for all other types of tariff revisions, except changes in text not affecting rates or relocations of text in the tariff schedules, shall become effective on forty (40) days' notice.

"(5) Advice letter filings revising the text or location of text material which do not result in an increase in any rate or charge shall become effective on not less than five (5) days' notice to the Commission."

"(6) Contracts shall be subject to GO 96-A rules for NDIECS, except interconnection contracts.

"(7) CLCs shall file tariffs in accordance with PU Code § 876."

4. Applicant is a nondominant interexchange carrier (NDIEC). The effectiveness of its future NDIEC tariffs is subject to the schedules set forth in 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):

    "5. All NDIECs are hereby placed on notice that their California tariff filings will be processed in accordance with the following effectiveness schedule:

      "a. Inclusion of FCC-approved rates for interstate services in California public utilities tariff schedules shall become effective on one (1) day's notice.

      "b. Uniform rate reductions for existing services shall become effective on five (5) days' notice.

      "c. Uniform rate increases, except for minor rate increases, for existing services shall become effective on thirty (30) days' notice, and shall require bill inserts, a message on the bill itself, or first class mail notice to customers of the pending increased rates.

      "d. Uniform minor rate increases, as defined in D.90-11-029, for existing services shall become effective on not less than five (5) working days' notice. Customer notification is not required for such minor rate increases. "

      "e. Advice letter filings for new services and for all other types of tariff revisions, except changes in text not affecting rates or relocations of text in the tariff schedules, shall become effective on forty (40) days' notice.

      "f. Advice letter filings merely revising the text or location of text material which do not cause an increase in any rate or charge shall become effective on not less than five (5) days' notice."

5. Applicant may deviate from the following provisions of GO 96-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 reflected in 2 above.

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

7. Prior to initiating service, Applicant shall provide the Commission's Consumer Affairs Branch with the name and phone number 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.

8. Applicant shall notify the Director of the Telecommunications 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.

9. Applicant shall notify the Director of the Telecommunications 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.3

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

11. 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.

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

13. Applicant shall file an 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 contained in Attachment D.

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

15. 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 Telecommunications Division in writing of its compliance.

16. 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 Telecommunications Division shall prepare for Commission consideration a resolution that revokes Applicant's CPCN unless it has received written permission from the Telecommunications Division to file or remit late.

17. Applicant is exempt from General Order 96-A, subsections III.G(1) and (2), and Commission Rule of Practice and Procedure 18(b).

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

19. 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.

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

21. Applicant shall send a copy of this decision to concerned local permitting agencies not later than 30 days from the date of this order.

(END OF ATTACHMENT B)

An original hard copy, and a machine-readable electronic copy, on a CD or floppy disk using Microsoft Word or a compatible format, shall be filed with the California Public Utilities Commission, 505 Van Ness Avenue, Room 3107, San Francisco, CA 94102-3298. The filing shall be made 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 §§ 2107 and 2108 of the Pub. Util. Code.

Required information:

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

(END OF ATTACHMENT 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 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 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 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)

3 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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