ALJ/MCK/eap Mailed 12/3/2004
Decision 04-12-021 December 2, 2004
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
In the Matter of the Application of Blue Ridge Telecom Systems, LLC, For a Certificate of Public Convenience and Necessity to Provide Facilities-Based and Resold Local Exchange Services Within California. |
Application 01-12-013 (Filed December 10, 2001) |
Thomas J. MacBride, Jr., Attorney at Law,
Goodin, MacBride, Squeri, Ritchie & Day, LLP
for Blue Ridge Telecom Systems, LLC, applicant.
Gregory Heiden, Attorney at Law, for Consumer Protection
and Safety Division.
OPINION GRANTING CERTIFICATE OF PUBLIC CONVENIENCE
AND NECESSITY TO PROVIDE LIMITED FACILITIES-BASED AND RESOLD
LOCAL EXCHANGE TELECOMMUNICATION SERVICES
In this decision we grant the application of Blue Ridge Telecom Systems, LLC (Blue Ridge), a Delaware limited liability company, for a certificate of public convenience and necessity (CPCN) to provide limited facilities-based and resold local exchange telecommunications services within California.
As explained below, Blue Ridge is an affiliate of NOS Communications, Inc. (NOS), a Maryland corporation qualified to do business in California that holds CPCNs from this Commission authorizing it to offer resold inter-LATA
and local exchange services.1 In the recently-issued D.04-06-017, the Commission gave conditional approval to a settlement between NOS (and certain of its affiliates) and the Consumer Protection and Safety Division (CPSD) arising out of Investigation (I.) 02-05-001. In that investigation, CPSD alleged that NOS and its affiliates had engaged in misleading marketing practices and cramming with respect to the sale of "Total Call Unit" (TCU) pricing plans for long distance service. As part of the settlement, the parties agreed that CPSD would withdraw the protest it had filed with respect to this matter, Application (A.) 01-12-013, so that the Commission could "resolve A.01-12-013 as an unopposed application." (D.04-06-017, Attachment A, page 1.)
While conditionally approving the settlement, the Commission noted in D.04-06-017 that it could not "accept the term in the settlement agreement that explicitly ties the settlement of I.02-05-001 to the Commission's agreement . . . to grant A.01-12-013 on an unopposed basis." (Id. at 24.) Instead, we directed Blue Ridge to file a supplement to its application within 30 days that would certify, if such a certification could be given, that "no investigation, administrative proceeding, or litigation has been commenced against, or directed at, Blue Ridge, NOS, ANI, or any of their respective affiliates in connection with the provision or marketing of local exchange service." (Id.) We also stated that if the assigned Administrative Law Judge (ALJ) was dissatisfied with the supplement in any respect, "he or she shall have full discretion to require that the supplement be corrected or amended, or that a hearing be held to take evidence on the fitness of the applicants in A.01-12-013 to receive a CPCN" of the kind they had requested. (Id. at 24-25.)
Although NOS and the other respondents in I.02-05-001 filed an application for rehearing of D.04-06-017, Blue Ridge (which is controlled by the same individuals) did file the required supplement on June 21, 2004. At the direction of the assigned ALJ, a hearing was held on the application on July 19, 2004, at which testimony was received from Joseph Koppy, the president of NOS and also one of the key people who will be managing Blue Ridge.
Based on the June 21 supplement and Mr. Koppy's testimony, we are satisfied that it is reasonable to grant Blue Ridge the requested CPCN to provide limited facilities-based and resold local exchange services. Despite the two proceedings brought by the Federal Communications Commission (FCC) against NOS and its affiliates (due first to their marketing of TCU plans, and then to the "Winback Campaign"),2 it seems clear that there have been no allegations of impropriety with respect to the provision or marketing of local exchange service by NOS or any of its affiliates in the 35 states where they currently offer such service. In view of this situation - as well as the requirements in the two FCC consent decrees and the substantial penalties this Commission could impose if Blue Ridge were to engage in improprieties with respect to local exchange service - we have decided to grant Blue Ridge the requested authority. Our decision today may, as a practical matter, moot the application for rehearing of D.04-06-017 and enable the settlement in I.02-05-001 to go forward.
A. Background
As the caption indicates, this application was filed in December 2001, and requested that the CPCN be granted on an ex parte basis. On February 20, 2002, the Consumer Services Division (CSD), predecessor of CPSD, filed a protest.3 The protest noted that Blue Ridge was under the same management as NOS, and that NOS had been named as a respondent or defendant in a number of regulatory proceedings and civil lawsuits due to allegedly misleading marketing practices. In view of this litigation, and the hundreds of complaints the Commission had received about NOS since 1999, CSD urged that ex parte relief should be denied, and that a hearing should be held on the Blue Ridge application. CSD did not suggest, however, that there were any reasons other than the fitness issues raised by the allegations of misleading marketing that might justify a denial of Blue Ridge's application.4
On May 2, 2002, the Commission issued the Order Instituting Investigation (OII) in I.02-05-001. With the commencement of that proceeding, the attention of Blue Ridge's management shifted to the investigation, and the instant application was put on the back burner, as a practical matter. Indeed, in D.02-07-045, which denied rehearing of the OII but modified some of its provisions, we directed that Ordering Paragraph (OP) 4 of the OII be amended to state that the Blue Ridge application was consolidated with the NOS investigation and that Blue Ridge was a party to the investigation, inasmuch as there were "common issues of fact and law in the two dockets, and because the outcome of [I.02-05-001] will determine the fitness of the applicant in A.01-12-013." (Mimeo. at 7.)
With the issuance of D.04-06-017, the decision conditionally approving the NOS settlement, the Blue Ridge application came back to life. As noted above, the first step in that process occurred on June 21, 2004, when Blue Ridge submitted the supplement required by D.04-06-017. The supplement consisted of an affidavit from Michael W. Arnau, the Chief Executive Officer (CEO) of NOS and the other settling companies in I.02-05-001, in which Mr. Arnau stated:
1 The CPCN authorizing NOS to offer resold inter-LATA services was granted in Decision (D.) 92-02-007. "LATA" stands for Local Access and Transport Area, and interLATA services are those that relate to telecommunications originating in one LATA and terminating in another. California is divided into 10 LATAs. NOS was also granted a CPCN to offer resold local exchange service as a competitive local carrier (CLC) in D.98-11-043. 2 The allegations in the FCC proceedings, and the terms of the consent decrees settling these proceedings, are described at pages 13-17 of D.04-06-017. 3 The protest was accompanied by a motion for leave to file it late, since the due date for protests was January 10, 2002. In a ruling dated March 19, 2002, the assigned ALJ granted CSD's motion. 4 On March 11, 2002, Blue Ridge filed a reply to CSD's protest. In it, Blue Ridge purported to correct what it said were errors in the protest, and argued that "there simply is no good reason for reviewing and granting this application other than in accordance with the Commission's usual ex parte process." (Reply, p. 4.) Blue Ridge therefore requested that the protest be dismissed. 5 Mr. Arnau's declaration also stated that he had reviewed the status report on pending litigation attached to the respondents' April 26, 2004 comments on the draft decision in I.02-05-001, and that "to the best of my knowledge, the contents of the Status Report are true and correct.""To the best of my knowledge, I hereby independently confirm that no litigation, investigation or administrative proceeding has been brought, or is pending, against or related to Blue Ridge; NOS Communications, Inc.; Affinity Network, Inc.; Nosva Limited Partnership; or any affiliate or dba of any of them in connection with the marketing and/or provision of local exchange services."5
