ALJ/TJS/avs DRAFT Agenda ID #1118

Decision DRAFT DECISION OF ALJ SULLIVAN (Mailed 9/20/2002)

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

In the Matter of the Application of Comcast Business Communications, Inc. (U-5380-C) for Approval of the Change of Control of Comcast Business Communications, Inc., That Will Occur Indirectly as a Result of the Placement of AT&T Broadband and Comcast Corporation Under a New Parent, AT&T Comcast Corporation.	Application 02-05-010 (Filed May 2, 2002)
In the Matter of the Application of AT&T Broadband Phone of California, LLC (U-5698-C) for Approval of the Change of Control of AT&T Broadband Phone of California, LLC That Will Occur Indirectly as a Result of the Placement of AT&T Broadband and Comcast Corporation Under a New Parent, AT&T Comcast Corporation.	Application 02-05-011 (Filed May 2, 2002)

DECISION AUTHORIZING CHANGE IN CONTROL

TABLE OF CONTENTS

Title Page

DECISION AUTHORIZING CHANGE IN CONTROL 22

1. Summary 22

2. Background 22

3. The Corporate Entities and The Financial Transaction 55

A. AT&T Broadband Phone 55

B. Comcast Business Communications, Inc. Comcast Corporation 77

C. AT&T Comcast Corporation 88

D. Description of Financial Transaction Transferring Control 88

4. Jurisdiction and Scope of Proceeding 1111

5. Do the Proposed Transactions Meet the Public
Interest Tests Contained in § 854(c)? 1414

A. Will the Change of Control Maintain or
Improve the Financial Condition of the Resulting
Utilities Doing Business in California? 1515

1. Position of Parties 1515

2. Discussion: Transaction Will Create an Important
California Operator with Strong Finances 1616

B. Will the Merger of the Parent Companies and
the Change of Control Maintain or Improve
the Quality of Service to California Ratepayers? 1818

1. Position of Parties 1818

2. Discussion: Merger Will Have Positive
Effects on Service Quality, if Any 1919

C. Will the Merger of the Parent Companies and Changes
of Control Maintain or Improve the Quality of the
Management of the Resulting Utility Doing
Business in California? 2020

1. Position of Parties 2020

2. Discussion: Proposed Transaction will
Maintain or Improve Management Quality 2121

D. Will the Merger of the Parent Companies and
Change of Control Be Fair and Reasonable to
the Affected Employees? 2222

1. Position of Parties 2222

2. Discussion: Changes will be Fair to Employees 2323

Title Page

E. Will the Merger of the Parent Companies and Change
of Control Be Fair and Reasonable to a Majority of
the Utility Shareholders? 2424

1. Positions of Parties 2424

2. Discussion: Transaction in the Interest of Shareholders 2525

F. Will the Proposed Merger of the Parent Companies
and Change of Control Be Beneficial on an Overall
Basis to State and Local Economies 2525

1. Position of Parties 2525

2. Discussion: Transaction Will Benefit Californians 2727

G. Will the Proposed Merger of the Parent Companies
and Change of Control Preserve the Jurisdiction of the
Commission and its Capacity to Effectively Regulate and
Audit Public Utility Operations in California? 2828

1. Positions of Parties 2828

2. Discussion: Transaction will not Diminish
Jurisdiction of Commission and its Capacity to Regulate
and Audit Utility Operations in California. 2828

6. Other Issues 2929

A. Does the Proposed Merger of the Parent Companies
and Change in Control Create Environmental
Issues of Concern? 2929

B. Does the Proposed Merger of the Parent Companies
and Change in Control Create Anti-Trust Issues of Concern? 3030

1. Position of Parties 3030

2. Discussion: Merger of Parents Raises no Anti-Trust Issues 3232

7. Are Hearings Necessary in this Proceeding? 3333

A. Position of Parties: Request for Hearings,
Qwest Motion, and AT&T Response 3333

B. Discussion: Hearings Not Necessary; Motion
Denied for Lack of Nexus with Issues in this Proceeding 3535

8. The Commission Should Approve this Application
for a Proposed Merger of the Parent Companies and
Change in Control at this Time 3636

9. Comments 3636

10. Oral Argument 3737

Title Page

11. Assignment of Proceeding 3737

Findings of Fact 3737

Conclusions of Law 4444

ATTACHMENT A

DECISION AUTHORIZING CHANGE IN CONTROL

1. Summary

We grant the applications of Comcast Business Communications (CBC) and AT&T Broadband Phone Company of California (AT&T Broadband Phone) for the changes in control that will result in the placement of both these companies under a new parent, AT&T Comcast Corporation (AT&T Comcast). We find that this transaction raises no concerns adverse to the public interest when examined against the public interest criteria enumerated in Pub. Util. Code § 854.¹ Further, the transaction raises no anti-trust or environmental issues. This merger will improve the financial fitness of AT&T Broadband Phone and that the executives of this company have attested to a continuing commitment to California telephony. Thus, the merger and change of control serve the public interest.