5. Discussion

A purported transfer of control or transfer of stock of a California public utility without prior authorization from the Commission is void under Sections 852 and 854 of the Code. However, under Section 853, when the public interest so requires, the Commission has discretion to exempt a transfer that would otherwise be void under Sections 852 and 854. (See Application of Bianca Gambi (1981) 7 CPUC2d 52, 56.)

Similarly, the Commission in exercising its judicial function has inherent power to approve, retroactively, a transfer of public utility control to reflect actual facts, provided such approval is found to serve the public interest. (See, generally, 16 Cal. Jur. 3d (Rev) § 214; see also Pub. Util. Code § 701 (Commission may do all things designated or not which are necessary and convenient in the exercise of its power and jurisdiction).)

As applicants note, we have granted nunc pro tunc approval to transfers of control in situations where we found that such approval was in the public interest. (HTC Communications, Decision (D.) 00-04-014, 2000 Cal. PUC LEXIS 192; Winstar Communications (1995) 59 CPUC2d 635.)

The transfer here promises improved service for California consumers. Applicants have not sought a transfer of CRL's certificates of public convenience and necessity, nor have they sought a change in the rates, terms and conditions under which CRL service is offered to consumers. Applicants moved promptly to seek approval of the transaction. Exhibits attached to the application show that ATC has the financial, managerial and technical ability to direct CRL's telecommunications services in California. We conclude that after-the-fact approval under Sections 852 and 854 is appropriate, based on the record before us.

In Resolution ALJ 176-3037, dated April 17, 2000, the Commission preliminarily categorized this proceeding as ratesetting, and preliminarily determined that hearings were not necessary. Based on the record, we conclude that a public hearing is not necessary, nor is it necessary to alter the preliminary determinations in Resolution ALJ 176-3037.

This is an uncontested matter in which the decision grants the relief requested. Accordingly, pursuant to Pub. Util. Code Section 311(g)(2), the otherwise applicable 30-day period for public review and comment is being waived.

Findings of Fact

1. Notice of this application appeared in the Commission's Daily Calendar of April 17, 2000.

2. The parties seek after-the-fact approval pursuant to Pub. Util. Code § 852 and § 854 of a stock purchase transaction by which ATC would acquire control of CRL, a non-dominant telecommunications carrier.

3. CRL is authorized to provide intrastate telecommunications services, including local and interexchange services.

4. ATC provides Internet technology products and services to mid-sized businesses and entities.

5. There will be no change in current services or rates provided by CRL as a result of the transfer of control.

6. The parties seek retroactive approval of the merger transactions.

Conclusions of Law

1. The proposed transfer of control is not adverse to the public interest.

2. This proceeding is designated a ratesetting proceeding; no protests have been received; no hearing is necessary.

3. This Commission has discretion to exempt a transfer that would otherwise be void under Sections 852 and 854.

4. The Commission has inherent power to approve, retroactively, a transfer of public utility control to reflect actual facts, provided such approval is found to serve the public interest.

5. The application should be approved, with approval retroactive to the date of consummation of the transfer, or January 5, 2000.

ORDER

IT IS ORDERED that:

1. CRL Network Services, Inc. (CRL) and AppliedTheory Corporation (ATC) are authorized pursuant to Sections 852 and 854 of the Public Utilities Code to enter into the transaction, as more fully described in the application and its exhibits, by which ATC will acquire control of CRL.

2. CRL and ATC shall notify the Director of the Commission's Telecommunications Division in writing of the transfer of authority, as authorized herein, within 10 days of the date of this order. A true copy of the instruments of transfer shall be attached to the notification.

3. CRL and ATC shall file new tariffs incorporating any changes in name, rates, services and management authorized in the transfer transaction.

4. CRL and ATC shall make all books and records available for review and inspection upon Commission staff request.

5. The authority granted herein is made effective nunc pro tunc to the date of January 5, 2000.

6. Application 00-04-015 is closed.

This order is effective today.

Dated , at San Francisco, California.

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