7. Are Hearings Necessary in this Proceeding?

A. Position of Parties: Request for Hearings, Qwest Motion, and AT&T Response

Qwest argues that the proposed transaction raises "public interest concerns not addressed by the application."⁸⁰ Qwest recommends that the Commission require applicants to make an affirmative showing that the change of control is in the public interest. Qwest states that it would "submit evidence that the proposed change in control would adversely impact competition in cable telephony and would therefore harm consumers (footnote omitted)."⁸¹

Even after the filing of the Joint Supplement by the applicants, Qwest contends that the record remains "inadequate" and that the transaction will expand "AT&T's monopoly over cable telephony services."⁸² Qwest also argues that the "Joint Supplement fails to address the public interest from the perspective of Comcast."⁸³ Qwest also argues "there is still an inadequate record upon which to determine whether the proposed transaction will maintain or improve the financial condition of the utilities,"⁸⁴ or the "quality of management."⁸⁵ Qwest further argues that discovery is necessary.

Qwest, in its Motion for Leave and Supplemental Response of August 29, 2002, argues that the Commission "should investigate whether AT&T's deal with Time Warner will impact or shed light on the impact of, the proposed California transaction."⁸⁶ Further, Qwest cites a letter by Prime Communications to the Federal Communications Commission objecting to the proposed merger in which it alleges that AT&T "leverages its monopoly by providing millions of dollars of free advertising to promote Vehix [an AT&T service], thereby strengthening the competitive advantage of its bundling efforts."⁸⁷

In addition, CFA in its Reply, states that the applicants have failed to address issues relating to the change in corporate structure, the relationship between AT&T Broadband and AT&T Comcast, and its plans to provide telephony. CFA concludes that further discovery is needed.

Although our procedures did not permit the applicants to reply to the parties comments on its Joint Supplement, they did have an opportunity to respond to Qwest's Motion for Leave. The applicants argue that the new matters that Qwest wishes to place before this Commission "are completely irrelevant to the changes of control of the ultimate parents of two California non-dominant telephony providers."⁸⁸

Concerning the first point, the applicants argue that "AT&T has made a proposal to the FCC to insulate and divest AT&T's interest in Time Warner Entertainment (TWE) to comply with the ownership limitations in the FCC cable rules."⁸⁹ The applicants state that the efforts of AT&T to divest itself of interests in TWE have been publicly known for a long time. In addition, the applicants state that concerning the contract with AOL, the terms of access "are not properly before the Commission in connection with the proposed change in ownership of these telephony service providers."⁹⁰

Concerning the comments of Prime Communications, the applicants argue "a complaint concerning cable television advertising in New England could not possibly form either a basis to reopen the record in a proceeding involving an application for a change of ownership of a California telephony company or as a basis to allow a discovery `fishing expedition' by Qwest.″⁹¹

B. Discussion: Hearings Not Necessary; Motion Denied for Lack of Nexus with Issues in this Proceeding

We find that hearings are not necessary. In addition, we deny the Qwest Motion for Leave because it lacks a nexus with the issues before this Commission.

Concerning the arguments of Qwest and CFA that hearings are necessary, we note that the evidence contained in the applicants filings have enabled us to reach findings on all the issues that California statutes require the Commission to address. The structure of this decision, which addresses each provision of the guiding and controlling statutes, demonstrate that there is no need for hearings or further discovery.

Concerning Qwests Motion for Leave, we agree with applicants that the material is unrelated to the issues before this Commission. First, the relationship with TWE is a relationship between cable companies, not the telecommunications companies that hold CPCN's. Second, the proposed action has been publicly known for a long time and before the FCC. Third, it involves the divesture of TWE, not the acquisition of a new company. Fourth, it involves compliance with FCC cable ownership rules, not telecommunications regulation.

Similarly, we agree that the terms of access to AT&T Comcast's cable systems are not properly before the Commission in connection with the proposed change in ownership of telephony service providers.

Finally, the issues concerning Prime Communications concern advertising rates and access to cable TV commercials, not telecommunications or data matters. In conclusion, because Qwest's Motion for Leave lacks a nexus with the issues before this Commission, we deny it.