VIII. Assignment of Proceeding
Michael R. Peevey is the Assigned Commissioner and Jeffrey P. O'Donnell is the assigned administrative law judge in this proceeding.
1. By D.97-10-077, FreedomStarr, a California Corporation, was granted a CPCN to resell interexchange services.
2. By D.03-08-026, FreedomStarr was authorized to provide limited facilities-based and resold local exchange telecommunications services.
3. There were no changes in FreedomStarr's rates, terms or conditions of service as a result of the transfer of the ownership.
4. The transfer will enhance FreedomStarr's access to capital.
5. AmericanFone satisfies the Commission's financial and technical requirements.
6. The public may benefit from FreedomStarr's acquisition by AmericanFone to the extent the transaction enhances its ability to compete due to increased access to capital.
7. There were no protests to the application.
8. The imposition of a fine will help to deter future violations of § 854(a) by the Applicants and others.
9. Applicants' violation of § 854(a) did not cause any physical or economic harm to others, and there is no evidence that Applicants significantly benefited from their unlawful conduct or that their actions adversely affected consumers.
10. Applicants did not file the application before the transaction took place.
11. In both D.00-12-053 and D.03-05-033, the Commission fined telecommunications carriers $5,000 for failure to obtain advance approval under § 854(a) for transfers of control.
12. Applicants' balance sheets and profit and loss statements show that their combined revenues, assets and equities are far below those of the applicants fined in D.00-12-053 and D.03-05-033.
13. Public disclosure of the information filed under seal would place Applicants at an unfair business disadvantage or reveal information about specific customers.
14. Notice of this application appeared on the Commission's Daily Calendar on October 27, 2003.
15. There were no protests to this application.
16. No hearings are necessary.
1. Section 854(a) states that no person or corporation shall acquire control of any public utility organized and doing business in this state without first securing authorization to do so from the Commission, and any such acquisition without that prior authorization shall be void and of no effect.
2. The Commission has broad discretion to determine if it is in the public interest to authorize a transaction pursuant to § 854(a).
3. The primary standard used by the Commission to determine if a transaction should be authorized under § 854(a) is whether the transaction will adversely affect the public interest.
4. In a situation where a company that does not possess a CPCN desires to acquire control of a company that does possess a CPCN, the Commission applies the same requirements as in the case of an applicant seeking a CPCN to exercise the type of authority held by the company being acquired.
5. The certificate of public convenience and necessity granted to FreedomStarr in Decision 03-08-026 should be revoked, at the Applicants' request, only to the extent that it includes limited facilities-based authority.
6. An applicant who desires to provide resold local exchange services must demonstrate that it has a minimum of $25,000 in cash or cash equivalent, reasonably liquid and readily available to meet the firm's start-up costs.
7. An applicant who desires to provide resold local exchange services is required to make a reasonable showing of technical expertise in telecommunications or a related business.
8. FreedomStarr's acquisition by AmericanFone is not adverse to the public interest.
9. It is reasonable to grant the application to the extent it requests prospective authority under § 854(a) for the transfer of control.
10. The purpose of § 854(a) is to enable the Commission to review a proposed acquisition before it takes place in order to take such action as the public interest may require.
11. Granting the application on a retroactive basis would thwart the purpose of § 854(a).
12. The application should be denied to the extent it requests retroactive authority under § 854(a) for FreedomStarr's acquisition by AmericanFone.
13. Since the Commission's approval of the application is prospective only, FreedomStarr's acquisition by AmericanFone is void under § 854(a) for the period of time prior to the effective date of this decision, and FreedomStarr and AmericanFone are at risk for any adverse consequences that may result from having implemented the transfer of control without Commission authority.
14. Applicants failed to comply with § 854(a) by effectuating the transfer of control without Commission authorization.
15. Violations of § 854(a) are subject to monetary penalties under § 2107 of not less than five hundred dollars, nor more than twenty thousand dollars for each offense.
16. Any violation of § 854(a), regardless of the circumstances, is a serious offense that should be subject to fines.
17. In D.98-12-075, the Commission held that the size of a fine should be proportionate to the severity of the offense.
18. In D.98-12-075, the Commission held that the size of a fine should reflect the conduct of the utility.
19. Since Applicants' violation of § 854(a) was inadvertent, and the application was ultimately filed, the violation is not an especially egregious offense.
20. In D.98-12-075, the Commission held that the size of a fine should reflect the financial resources of the utility.
21. In D.98-12-075, the Commission held that a fine should be tailored to the unique facts of each case.
22. The public interest was not significantly harmed by Applicants' violation of § 854(a).
23. In D.98-12-075, the Commission held that any decision which imposes a fine should (1) address previous decisions that involve reasonably comparable factual circumstances, and (2) explain any substantial differences in outcome.
24. Applicants' should be fined $500 for violating § 854(a).
25. The application should be granted to the extent set forth herein.
26. Applicants' request to file information under seal should be granted for two years from the effective date of this order.
27. The following order should be effective immediately.
IT IS ORDERED that:
1. Application 03-10-048, filed by FreedomStarr Communications, Inc. (FreedomStarr) and AmericanFone, LLC (AmericanFone) for authority under Pub. Util. Code § 854 for a transfer control of FreedomStarr to AmericanFone is granted to the extent it requests authority effective as of the date of this order.
2. Application 03-10-048 is denied to the extent that it requests retroactive authority for the transfer of control.
3. FreedomStarr shall pay a fine in the amount of $500 for violating Pub. Util. Code § 854(a). FreedomStarr shall pay the fine within 20 days from the effective date of this order by tendering to the Fiscal Office of the California Public Utilities Commission a check in the amount of $500 made payable to the State of California General Fund.
4. The certificate of public convenience and necessity granted to FreedomStarr in Decision 03-08-026 is revoked only to the extent that it included limited facilities-based authority. The resale authority granted therein is unchanged.
5. Applicants' request to have the information filed with the application, and on February 10, 2004, November 18, 2004, and March 14, 2005, kept under seal is granted for two years from the effective date of this decision. During that period the information shall not be made accessible or disclosed to anyone other than the Commission staff except on the further order or ruling of the Commission, the Assigned Commissioner, the assigned Administrative Law Judge (ALJ), or the ALJ then designated as Law and Motion Judge.
6. If Applicants believe that further protection of the information kept under seal is needed, they may file a motion stating the justification for further withholding of the information from public inspection, or for such other relief as the Commission's rules may then provide. This motion shall be filed no later than one month before the expiration date.
7. Application 03-10-048 is closed.
This order is effective today.
Dated January 12, 2006, at San Francisco, California.
MICHAEL R. PEEVEY
President
GEOFFREY F. BROWN
DIAN M. GRUENEICH
JOHN A. BOHN
RACHELLE B. CHONG
Commissioners
