Discussion

Under § 852, no public utility, and no subsidiary, affiliate of, or corporation holding a controlling interest in, a public utility, shall purchase or acquire, take or hold, any part of the capital stock of any other public utility, organized or existing under the laws of this state, without prior Commission authorization. Section 854 further requires Commission authorization before a company may "merge, acquire, or control . . . any public utility organized and doing business in this state . . . ." The purpose of these and related sections is to enable the Commission, before any transfer of a public utility is consummated, to review the situation and to take such action, as a condition of the transfer, as the public interest may require. (San Jose Water Co. (1916) 10 CRC 56.)

In a situation where a company that does not possess a CPCN desires to acquire control of a company that does possess a CPCN, we will apply 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. Although Corvis does not directly hold a CPCN, Focal has a CPCN to operate as a local exchange and interexchange carrier. We therefore apply the requirements for such authority to Corvis.

The Commission has established two major criteria for determining whether a CPCN should be granted. An applicant who desires to operate as a facilities-based and resale provider of local exchange and interexchange service must demonstrate that it has a minimum of $100,000 in cash or cash equivalent, reasonably liquid and readily available to meet the firm's start-up costs. In addition, the applicant is required to make a reasonable showing of technical expertise in telecommunications or a related business.

Corvis has provided financial statements and other evidence that demonstrates that it has sufficient resources to meet our financial requirements. Since Focal CA is expected to continue to operate under the same management, and Corvis has significant experience in the telecommunications field, we find that our requirement for technical expertise is satisfied. The transaction will improve Focal CA's access to capital, which should improve Focal CA's financial
position and ability to serve customers.³ In addition, it will be transparent to customers. Therefore, the proposed transaction is in the public interest.

Therefore, we will grant the application pursuant to §§ 852 and 854.