2. Description of Applicants and Nature of Transaction

We authorized SCI to provide resold local exchange service in California in Decision (D.) 98-11-047, and switchless interexchange service in D.99-03-069. The Commission's database reflects a name change from SCI to TVCI effective in August 2000.³ Applicants furnished with the application a copy of SCI's articles of incorporation and corresponding amendment to reflect the name change from SCI to TVCI. TVCI's (formerly SCI's) Commission identification number is U-6079-C. TVCI is a South Carolina corporation authorized by the California Secretary of State to transact business in California. For clarity, hereafter we refer to TVCI and SCI interchangeably as TVCI/SCI, since the TVCI entity operating in California is the same as SCI, but with a name change.

The merger is complicated on paper, but according to Applicants should have no adverse effect on customers. Applicants describe the transaction as follows⁴:

Step One: Gabriel will form a new wholly-owned subsidiary, Triangle. SCI will transfer all of its telecommunications authorizations to TVCI or another subsidiary. (SCI has already done so in California, and TVCI is now the holder of SCI's certificate.⁵)

Step Two: SCI will merge into Triangle; Triangle will be the surviving entity and SCI will cease to have any separate existence. By virtue of the merger, TVCI and any other subsidiaries of SCI will become wholly-owned subsidiaries of Triangle, which will function as a holding company.

Step Three: The present shareholders of SCI will exchange their shares of stock in SCI for shares of Gabriel. These SCI shareholders will then own approximately 46% of Gabriel. Their SCI shares will be cancelled.

Step Four: Triangle will change its name to TVCI.

Upon completion of the merger, Gabriel will be the ultimate parent of two groups of telecommunications companies: 1) the original Gabriel entities and 2) the TVCI entities. TVCI/SCI will be the only entity providing telecommunications services in California, and is the only corporation among Applicants authorized to do business in California. Gabriel and Triangle are both Delaware Corporations; neither is authorized by the California Secretary of State to transact business in California. Applicants allege that Gabriel and Triangle need not be so authorized since they will serve only as holding companies. We discuss Applicants' request that Gabriel and Triangle be excused from Commission Rule 16(a)'s requirement that they supply a copy of their certificates of qualification to do business in this state in Section 4C below.

SCI/TVCI currently offer business customers a bundled product package that includes high-speed Internet access, such as digital subscriber line (DSL), and local and long distance telecommunications service, as well as web design and web hosting. SCI/TVCI have raised $137 million in private equity and preferred financing, $120 million from a senior secured credit facility, and $45 million under a credit facility with Nortel. SCI/TVCI provide local and long distance services primarily to certain markets in the Southeast (Florida, Georgia and the Carolinas), but plan to expand to other markets. SCI/TVCI are authorized to provide telecommunications services in 13 states, and also have Federal Communications Commission (FCC) authorization to provide interstate and international long distance services.

Gabriel is a facilities-based provider. It packages dedicated high speed Internet access and traditional local and long distance telephone service with voice, e-mail and fax messaging and other advanced data services. Gabriel has broadband telecommunications networks in operation or under development in Arkansas, Illinois, Kansas, Kentucky, Missouri, Ohio, Oklahoma, and Tennessee. Gabriel also has FCC authorization to provide interstate and international long distance services.