F. Categorization and Need for Hearings
By Resolution ALJ 176-3079 dated January 19, 2002, the Commission preliminarily designated this application to be ratesetting and determined that a hearing was not necessary. However, as noted in the text, the assigned ALJ determined, pursuant to the discretion granted him by Conclusion of Law 11 in D.04-06-017, that a hearing was necessary.
1. A notice of the filing of the instant application appeared in the Daily Calendar on December 14, 2001.
2. On March 19, 2002, the assigned ALJ granted CSD's motion to submit a late-filed protest to the application.
3. In D.02-07-045, the Commission consolidated this application with I.02-05-001 and made Blue Ridge a party to I.02-05-001.
4. In D.04-06-017, the Commission conditionally approved a settlement concerning I.02-05-001 between CPSD, on the one hand, and NOS, ANI and NOSVA Limited Partnership, on the other. As a condition of approving the settlement, Conclusion of Law (COL) 9 of D.04-06-017 required that Blue Ridge agree to submit a supplement to this application within 30 days.
5. Blue Ridge filed the supplement required by D.04-06-017 on June 21, 2004. The supplement took for the form of a declaration by Michael W. Arnau, CEO of NOS and one of the principal managers of Blue Ridge.
6. In the June 21, 2004 declaration, Arnau stated that to the best of his knowledge, no litigation, investigation or administrative proceeding has been brought, or is pending, against or related to Blue Ridge, NOS, ANI, NOSVA Limited Partnership or any affiliate or dba of any of them, in connection with the marketing and/or provision of local exchange services.
7. Pursuant to section 7.3 of the settlement agreement described in Finding of Fact (FOF) 4, NOS and the other respondents named in I.02-05-001 filed a written objection on June 29, 2004 to the modifications of the settlement agreement required by D.04-06-017. Since this written objection was not withdrawn within 10 days, respondents consider the settlement agreement to have been rescinded pursuant to its terms.
8. A hearing on this application was held on July 19, 2004, at which the sole witness was Joseph Koppy, the president of NOS and one of the principal managers of Blue Ridge.
9. At the hearing, Koppy testified that to the best of his knowledge, no litigation, investigation or administrative proceeding has been brought, or is pending, against or related to Blue Ridge, NOS, ANI, NOSVA Limited Partnership or any affiliate or dba of any of them, in connection with the marketing and/or provision of local exchange services.
10. According to Koppy, NOS and/or its affiliates offer local exchange services in 35 states. In all of these states except California and Alaska, local exchange service is provided using a combination of resold and facilities-based arrangements, the latter employing the UNE-P.
11. NOS and its affiliates now have about 6000 local exchange customers nationwide.
12. Since early 2004, all of the marketing of the long-distance service offered by the NOS companies (marketing that is known as "cold calling") has been conducted by a contractor located in Cairo, Egypt.
13. All of the marketing of local exchange service to the customers of NOS and its affiliates is done by a single person, who operates out of NOS's headquarters in Las Vegas, Nevada.
14. Koppy testified that because of the complexities of local exchange service as a product, it is unlikely that in the foreseeable future, the marketing of local exchange service by Blue Ridge or any other NOS affiliate will be conducted from outside the United States.
15. Fifty percent (50%) of NOS's stock is owned by Robert Lichtenstein, 25% by Samuel Delug, and 25% by Delug's former wife, Rosette Delug. Neither Koppy nor Arnau own any NOS stock.
16. So far as Koppy is aware, no civil litigation has been commenced against either Robert Lichtenstein or Samuel Delug in connection with either NOS's use of TCU calling plans, or the Winback Campaign that is the subject of the Winback Order to Show Cause described in D.04-06-017.
17. On July 22, 2004, counsel for Blue Ridge sent to the assigned ALJ copies of the status reports to the FCC that are required by the TCU Consent Decree and the Winback Consent Decree, as described in D.04-06-017.
18. In prior decisions, this Commission has authorized competition in providing local exchange telecommunications services within the service territories of Pacific Bell Telephone Company (Pacific), Verizon California Inc. (Verizon), Citizens Telecommunications Company of California, Inc. (CTC), and SureWest Telephone (SureWest).
19. Blue Ridge has a minimum of $100,000 in cash or cash equivalents that are reasonably liquid and readily available to meet applicant's start-up expenses.
20. Blue Ridge has sufficient additional cash or cash equivalents to cover any deposits that may be required by other telecommunications carriers in order to provide the proposed local exchange service.
21. Blue Ridge's management possesses sufficient experience and knowledge to provide local exchange services to the public.
22. The absence of litigation, investigations or administrative proceedings concerning the local exchange service furnished by the NOS companies, coupled with the apparent absence of complaints about the NOS companies' marketing of long distance service since approval by the FCC of the Winback Consent Decree, indicates that the management of Blue Ridge, which will be the same as that of the NOS companies, has sufficient integrity so as to be fit to render the services proposed here.
23. As part of its application, Blue Ridge submitted a draft of its initial tariff that contained the deficiencies identified in Attachment A to this decision. Except for these deficiencies and any language necessary to cover the "Every Fourth Invoice Free" program (as well as similar promotional programs), Applicant's draft tariffs comply with the Commission's requirements.
24. In order to provide the proposed services, Blue Ridge does not plan to construct any facilities except for equipment to be installed within existing buildings or structures.
25. Public disclosure of the financial information filed under seal would place Blue Ridge at an unfair business disadvantage.
1. Blue Ridge has the financial ability to provide the proposed service.
2. Blue Ridge has made a reasonable showing of technical expertise in telecommunications.
3. Public convenience and necessity require the competitive local exchange services to be offered by Blue Ridge, subject to the terms and conditions set forth herein.
4. The application should be granted to the extent set forth below.
5. Blue Ridge, once granted a CPCN, should be subject to the applicable Commission rules, decisions, General Orders, and statutes that pertain to California public utilities.
6. Blue Ridge's initial tariff filing should correct the deficiencies noted in the draft tariffs submitted with the application (as set forth in Attachment A to this decision), and should add language necessary to cover the "Every Fourth Invoice Free" program, as well as any similar promotional programs.
7. Since Blue Ridge does not propose to construct any facilities except for equipment to be installed within existing buildings or structures, it can be seen with certainty that granting Blue Ridge authority to offer the proposed services will not have a significant adverse effect upon the environment.
8. Blue Ridge's request to file its financial information under seal should be granted for a period of two years.
9. Because of the public interest in competitive local exchange services, the following order should be effective immediately.
IT IS ORDERED that:
1. On the same date, if any, that the Commission issues a decision approving a settlement agreement in Investigation (I.) 02-05-001 that supersedes the settlement agreement submitted by the parties therein on December 9, 2003, a certificate of public convenience and necessity (CPCN) shall be granted to Blue Ridge Telecom Systems, LLC (Applicant) to provide limited facilities-based and resold local exchange services in the service territories of Pacific Bell Telephone Company, Verizon California Inc., Citizens Telecommunications Company of California, Inc., and SureWest Telephone, subject to the terms and conditions set forth below.
2. Upon the granting of a CPCN as described in Ordering Paragraph (OP) 1, Applicant shall be authorized to file tariff schedules for the provision of competitive local exchange services. Applicant may not offer competitive local exchange services until tariffs are on file. Applicant's initial filing shall be made in accordance with General Order (GO) 96-A, excluding Sections IV, V, and VI, and shall correct the deficiencies noted in Attachment A. The tariff shall be effective not less than one day after approval by the Commission's Telecommunications Division. Applicant shall comply with its tariffs.
3. The certificate granted and the authority to render service under the rates, charges, and rules authorized herein will expire if not exercised within 12 months after the effective date of this order.
4. The corporate identification number assigned to Applicant, U-6925-C, shall be included in the caption of all original filings with this Commission, and in the titles of other pleadings filed in existing cases.
5. Applicant shall comply with all applicable rules adopted in the Local Exchange Competition proceeding (Rulemaking 95-04-043/Investigation 95-04-044), as well as all other applicable Commission rules, decisions, GOs and statutes that pertain to California public utilities, subject to the exemptions granted in this decision.
6. Applicant shall comply with the requirements applicable to competitive local exchange carriers included in Attachment B to this decision.
7. Except for equipment to be installed within existing buildings or structures, Applicant is not authorized to construct facilities.
8. Applicant's request to have the financial information filed with this application kept under seal is granted for a period of two years from the effective date of this decision. During that period, the information shall not be made accessible or disclosed to anyone other than the Commission staff except on the further order or ruling of the Commission, the Assigned Commissioner, the assigned Administrative Law Judge (ALJ), or the ALJ then designated as Law and Motion Judge.
9. If Applicant believes that further protection of the information kept under seal is needed, it may file a motion stating the justification for further withholding of the information from public inspection, or for such other relief as the Commission's rules may then provide. This motion shall be filed no later than one month before the expiration date of the two-year period referred in OP 10.
10. The Commission preliminary determined that hearings would not be required in this proceeding. Hearings were held and the preliminary determination has been changed from no to yes.
11. This proceeding is closed.
This order is effective today.
Dated December 2, 2004, at San Francisco, California.
MICHAEL R. PEEVEY
President
GEOFFREY F. BROWN
SUSAN P. KENNEDY
Commissioners
I reserve the right to file a dissent.
/s/ CARL W. WOOD
Commissioner
I reserve the right to file a dissent.
/s/ LORETTA M. LYNCH
Commissioner
ATTACHMENT A
List of deficiencies in tariff filed by Blue Ridge Telecom Systems, LLC in Application 01-12-013 to be corrected in its tariff compliance filing.
1. Sheet 25, Rule 13: State in the tariff that CLC shall concur with Pacific Bell's Limitation of Liability tariffs regarding credit for interruptions. Refer to Decision 95-12-057.
2. Sheet 45: Include the fee and surcharges shown in Attachment B to this decision.
(END OF ATTACHMENT A)
ATTACHMENT B
REQUIREMENTS APPLICABLE TO COMPETITIVE
LOCAL EXCHANGE CARRIERS
1. Applicant shall file, in this docket, a written acceptance of the certificate granted in this proceeding within 30 days of the effective date of this order.
2. Applicant is subject to the following fee and surcharges that must be regularly remitted per the instructions in Appendix E to Decision (D.) 00-10-028. The Combined California PUC Telephone Surcharge Transmittal Form must be submitted even if the amount due is zero.
a. The current 1.10% surcharge applicable to all intrastate services except for those excluded by D.94-09-065, as modified by D.95-02-050, to fund the Universal Lifeline Telephone Service Trust Administrative Committee Fund (Pub. Util. Code § 879; Resolution T-16795, dated December 18, 2003, effective January 1, 2004);
b. The current 0.30% surcharge applicable to all intrastate services except for those excluded by D.94-09-065, as modified by D.95-02-050, to fund the California Relay Service and Communications Devices Fund (Pub. Util. Code § 2881; D.98-12-073 and Resolution T-16816, dated January 22, 2004, effective February 1, 2004);
c. The user fee provided in Pub. Util. Code §§ 431-435, which is 0.11% of gross intrastate revenue (Resolution M-4810);
d. The current 0.17% surcharge applicable to all intrastate services except for those excluded by D.94-09-065, as modified by D.95-02-050, to fund the California High Cost Fund-A (Pub. Util. Code § 739.3; D.96-10-066, pp. 3-4, App. B, Rule 1.C; Resolution T-16793, dated December 18, 2003, effective January 1, 2004);
e. The current 2.20% surcharge applicable to all intrastate services except for those excluded by D.94-09-065, as modified by D.95-02-050, to fund the California High Cost Fund-B (D.96-10-066, p. 191, App. B, Rule 6.F., Resolution T-16794, dated December 18, 2003, effective January 1, 2004); and
f. The current 0.16% surcharge applicable to all intrastate services except for those excluded by D.94-09-065, as modified by D.95-02-050, to fund the California Teleconnect Fund (D.96-10-066, p. 88, App. B, Rule 8.G, Resolution T-6833, dated July 8, 2004, effective August 1, 2004.)
3. Applicant is a competitive local exchange carrier (CLC). The effectiveness of its future tariffs is subject to the schedules set forth in Appendix C, Section 4.E of D.95-12-056:
"E. CLCs shall be subject to the following tariff and contract filing, revision and service pricing standards:
"(1) Uniform rate reductions for existing tariff services shall become effective on five (5) working days' notice. Customer notification is not required for rate decreases.
"(2) Uniform major rate increases for existing tariff services shall become effective on thirty (30) days' notice to the Commission, and shall require bill inserts, or first class mail notice to customers at least 30 days in advance of the pending rate increase.
"(3) Uniform minor rate increases, as defined in D.90-11-029, shall become effective on not less than (5) working days' notice to the Commission. Customer notification is not required for such minor rate increases.
"(4) Advice letter filings for new services and for all other types of tariff revisions, except changes in text not affecting rates or relocations of text in the tariff schedules, shall become effective on forty (40) days' notice.
"(5) Advice letter filings revising the text or location of text material which do not result in an increase in any rate or charge shall become effective on not less than five (5) days' notice to the Commission."
"(6) Contracts shall be subject to GO 96-A rules for NDIECS, except interconnection contracts.
"(7) CLCs shall file tariffs in accordance with PU Code § 876."
4. Applicant may deviate from the following provisions of GO 96-A: (a) paragraph II.C.(1)(b), which requires consecutive sheet numbering and prohibits the reuse of sheet numbers; and (b) paragraph II.C.(4), which requires that "a separate sheet or series of sheets should be used for each rule." Tariff filings incorporating these deviations shall be subject to the approval of the Commission's Telecommunications Division. Tariff filings shall reflect all fees and surcharges to which Applicant is subject, as reflected in 2 above.
5. Applicant shall file a service area map as part of its initial tariff.
6. Prior to initiating service, Applicant shall provide the Commission's Consumer Affairs Branch with the name and address of its designated contact person(s) for purposes of resolving consumer complaints. This information shall be updated if the name or telephone number changes, or at least annually.
7. Applicant shall notify the Director of the Telecommunications Division in writing of the date that local exchange service is first rendered to the public, no later than five days after service first begins.
8. Applicant shall keep its books and records in accordance with the Generally Accepted Accounting Principles.
9. In the event Applicant's books and records are required for inspection by the Commission or its staff, it shall either produce such records at the Commission's offices or reimburse the Commission for the reasonable costs incurred in having Commission staff travel to its office.
10. Applicant shall file an annual report with the Director of the Telecommunications Division, in compliance with GO 104-A, on a calendar-year basis with the information contained in Attachment C to this decision.
11. Applicant shall file an affiliate transaction report with the Director of the Telecommunications Division, in compliance with D.93-02-019, on a calendar year basis using the form contained in Attachment D.
12. Applicant shall ensure that its employees comply with the provisions of Public Utilities (Pub. Util.) Code § 2889.5 regarding solicitation of customers.
13. Within 60 days of the effective date of this order, Applicant shall comply with Pub. Util. Code § 708, Employee Identification Cards, and notify the Director of the Telecommunications Division in writing of its compliance.
14. If Applicant is 90 days or more late in filing an annual report, or in remitting the surcharges and fee listed in 2 above, the Telecommunications Division shall prepare for Commission consideration a resolution that revokes Applicant's CPCN unless it has received written permission from the Telecommunications Division to file or remit late.
15. Applicant is exempt from General Order 96-A, subsections III.G(1) and (2), and Commission Rule of Practice and Procedure 18(b).
16. Applicant is exempt from Pub. Util. Code §§ 816-830.
17. Applicant is exempt from the requirements of Pub. Util. Code § 851 for the transfer or encumbrance of property whenever such transfer or encumbrance serves to secure debt.
18. If Applicant decides to discontinue service or file for bankruptcy, it shall immediately notify the Telecommunications Division's Bankruptcy Coordinator.
19. Applicant shall send a copy of this decision to concerned local permitting agencies not later than 30 days from the date of this order.
(END OF ATTACHMENT B)
ATTACHMENT C
ANNUAL REPORT
An original hard copy, and a machine-readable electronic copy, on a CD or floppy disk using Microsoft Word or a compatible format, shall be filed with the California Public Utilities Commission, 505 Van Ness Avenue, Room 3107, San Francisco, CA 94102-3298. The filing shall be made no later than March 31st of the year following the calendar year for which the annual report is submitted.
Failure to file this information on time may result in a penalty as provided for in §§ 2107 and 2108 of the Public Utilities Code.
Required information:
1. Exact legal name and U # of the reporting utility.
2. Address.
3. Name, title, address, and telephone number of the person to be contacted concerning the reported information.
4. Name and title of the officer having custody of the general books of account and the address of the office where such books are kept.
5. Type of organization (e.g., corporation, partnership, sole proprietorship, etc.).
If incorporated, specify:
a. Date of filing articles of incorporation with the Secretary of State.
b. State in which incorporated.
6. Number and date of the Commission decision granting the CPCN.
7. Date operations were begun.
8. Description of other business activities in which the utility is engaged.
9. List of all affiliated companies and their relationship to the utility. State if affiliate is a:
a. Regulated public utility.
b. Publicly held corporation.
10. Balance sheet as of December 31st of the year for which information is submitted.
11. Income statement for California operations for the calendar year for which information is submitted.
For answers to any questions concerning this report, call (415) 703-2883.
(END OF ATTACHMENT C)
ATTACHMENT D
CALENDAR YEAR AFFILIATE TRANSACTION REPORT
1. Each utility shall list and provide the following information for each affiliated entity and regulated subsidiary that the utility had during the period covered by the annual Affiliate Transaction report.
· Form of organization (e.g., corporation, partnership, joint venture, strategic alliance, etc.);
· Brief description of business activities engaged in;
· Relationship to the utility (e.g., controlling corporation, subsidiary, regulated subsidiary, affiliate);
· Ownership of the utility (including type and percent ownership)'
· Voting rights held by the utility and percent;
· Corporate officers.
2. The utility shall prepare and submit a corporate organization chart showing any and all corporate relationships between the utility and its affiliated entities and regulated subsidiaries in #1 above. The chart should have the controlling corporation (if any) at the top of the chart; the utility and any subsidiaries and/or affiliates of the controlling corporation in the middle levels of the chart and all secondary subsidiaries and affiliates (e.g. a subsidiary that in turn is owned by another subsidiary and/or affiliate) in the lower levels Any regulated subsidiary should be clearly noted.
3. For a utility that has individuals who are classified as "controlling corporations" of the competitive utility, the utility must only report under the requirements of #1 and #2 above any affiliated entity that either a) is a public utility or b) transacts any business with the utility filing the annual report excluding the provision of tariffed services.
4. Each annual report must be signed by a corporate officer of the utility stating under penalty of perjury under the laws of the State of California (CCP 2015.5) that the annual report is complete and accurate with no material omissions.
5. Any required material that a utility is unable to provide must be reasonably described and the reasons the data cannot be obtained, as well as the efforts expended to obtain the information, must be set forth in the utility's annual Affiliate Transaction Report and verified in accordance with Section I-F of Decision 93-02-019.
6. Utilities that do no have affiliated entities must file, in lieu of the annual transaction report, an annual statement to the commission stating that the utility had no affiliated entities during the report period. This statement must be signed by a corporate officer of the utility, stating under penalty of perjury under the laws of the State of California (CCP 2015.5) that the annual report is complete and accurate with no material omissions.
(END OF ATTACHMENT D)
