3. Applicants' Request

In 2000, the owners of San Carlos granted Wave eXchange an option to purchase voting control of San Carlos.¹

Applicants propose to transfer the voting control of San Carlos's stock to Wave eXchange an entity that already owns a significant although non-controlling interest in the company. According to Applicants, the transaction will not change the services that San Carlos provides to its California customers, the day to day management of San Carlos's operations will continue to be led by the same team of well-qualified telecommunications professionals, and California customers will not be affected.

¹ A copy of this agreement and a subsequent amendment to extend the date by which the option must be exercised is attached as Exhibit 1 to the Application. With the Application is a motion requesting confidential treatment of this agreement and the amendment. The motion was granted by an Administrative Law Judge's (ALJ) ruling dated October 3, 2005.