2. Procedural Background and Chronology

NOS and ANI share common ownership and management. Each company has its own certificate of public convenience and necessity to provide resold intrastate telephone service in California.

In May 2002, the Commission issued Order Instituting Investigation (I.) 02-05-001 to investigate allegations that NOS and ANI (collectively, NOS/ANI) had engaged in slamming in violation of Calif. Pub. Util. Code § 2889.5.¹ The parties settled the matter, and the settlement was approved with modifications in D.04-06-017. Because NOS and ANI objected to some of the required modifications, the settlement agreement approved in D.04-06-017 was rescinded pursuant to its terms. After further proceedings, NOS, ANI, and the Consumer Protection and Safety Division (CPSD) then entered into a revised settlement agreement that was approved in D.05-06-032. This agreement required NOS/ANI, among other things, to make a $2.9 million settlement payment to the Commission over a 24-month period (as well as provide $50,000 for restitution payments to affected customers), and to disclose, in any application filed pursuant to §§ 851-854, 1001, or 1013, the facts that (a) I.02-05-001 had been issued and settled pursuant to the settlement agreement, and (b) the relationship between the applicant and I.02-05-001.²

In December 2005, NOS and ANI filed A.05-12-007 and A.05-12-008, respectively, to expand their authority to include facilities-based carriage. NOS and ANI filed their applications using the Commission's short-form registration procedures. However, NOS and ANI did not disclose in their applications the fact that I.02-05-001 had been issued and settled, as required by D.05-06-032. Further, in response to short-form registration question no. 8, NOS and ANI did not disclose that their certification in the State of Wisconsin had been revoked in May 2001 owing to noncompliance with certain rules in the Wisconsin Administrative Code.³

CPSD filed protests in A.05-12-007 and A.05-12-008, asserting that NOS/ANI had failed to make the disclosures described above. On January 20, 2006, NOS/ANI filed responses to the protests stating that their failure to make the disclosures required by the settlement agreement approved in D.05-06-032 had been inadvertent, and that this failure had been rectified in a letter to the Executive Director dated January 5, 2006. In their responses, NOS/ANI also stated that they had not disclosed the Wisconsin proceeding against them in response to question no. 8 because they believed this matter had been investigated by the Commission in I.02-05-001 and resolved by the settlement agreement adopted in D.05-06-032.

NOS/ANI also contended that the issues raised by CPSD were moot because, after further review, NOS/ANI realized that they did not need to file A.05-12-007 and A.05-12-008 in order to provide facilities-based service. On February 10, 2006, NOS and ANI filed notices that they were withdrawing their Applications. On February 22, 2006, CPSD filed a response objecting to the withdrawals, arguing that the Commission should authorize the withdrawals only after finding that NOS/ANI had violated Rule 1 by failing to disclose the facts described above.

On May 3, 2006, CPSD and NOS/ANI jointly filed in A.05-12-007 and A.05-12-008 a Settlement Agreement and Motion to adopt the Settlement Agreement. A copy of this Settlement Agreement is set forth in Appendix B to today's Opinion.

Because CPSD and NOS/ANI (collectively, the Settling Parties) are the only parties in the two proceedings, they did not hold a settlement conference under Rule 12.1(b).⁴ For the same reason, there were no comments submitted on the Settlement Agreement pursuant to Rule 12.2. Thus, the Settlement is unopposed.

¹ All statutory references are to the Public Utilities Code unless otherwise indicated.

² D.04-06-017, Ordering Paragraph 8.

³ Question no. 8 requires applicants to answer the following statement as true or false: "To the best of applicant's knowledge, neither applicant, any affiliate, officer, director, partner, nor owner of more than 10% of applicant... has been sanctioned by the Federal Communications Commission or any state regulatory agency for failure to comply with an regulatory statute, rule or order."

⁴ Because the Settlement Agreement is an all-party settlement, we hereby waive, as we have in other cases, the usual requirement in our Rules that there be notice of the settlement agreement and a settlement conference. See D.07-03-048, n. 1.