Adopted Conditions

The authority granted by this decision is contingent upon the following conditions:

1. Citizens Communications Company (CCC) shall provide Citizens Telecommunications Company of California, Inc. (CTCC) with sufficient equity capital to enable CTCC to (i) maintain a reasonable and balanced capital structure, and (ii) provide service to the public that is safe, reliable, and in compliance with all applicable statutes and Commission orders.

2. CCC shall provide Citizens Telecommunications Company of the Golden State (CTCGS) with sufficient equity capital to enable CTCGS to (i) maintain a reasonable and balanced capital structure, and (ii) provide service to the public that is safe, reliable, and in compliance with all applicable statutes and Commission orders.

3. CTCC and CTCGS shall each establish and maintain a policy for managing the company's finances on a stand-alone basis (i.e., independent of CCC and other affiliates).

4. Within 90 days from the date the sale is closed, CTCC, CTCGS, and GTE California Incorporated (GTEC) shall each file revised tariffs to reflect changes to its various billing bases caused by the sale/acquisition of the GTE exchanges.

5. For ratemaking purposes, CTCC shall record the cost of the exchanges acquired from GTEC at GTEC's net book value for the exchanges (i.e., GTEC's historical cost less depreciation, amortization, and remaining deferred income taxes). GTEC shall provide Citizens with access to all books and records necessary to determine the net book value of exchanges.

6. For ratemaking purposes, CTCGS shall record the cost of the exchanges acquired from GTE West Coast Incorporated (GTEWC) at GTEWC's net book value for the exchanges (i.e., GTEWC's historical cost less depreciation, amortization, and remaining deferred income taxes). GTEWC shall provide Citizens with access to all books and records necessary to determine the net book value of exchanges.

7. For ratemaking purposes, CTCC and CTCGS shall record the premium (i.e., the excess of purchase price over book value) "below-the-line."

8. CTCC and CTCGS shall not recover in their rates, charges, and fees for intrastate services ("rates") any costs associated the premium.

9. CTCC, CTCGS, GTEC, and GTEWC shall not recover in their rates any transactions costs associated with the sale/purchase of the GTE exchanges.

10. CTCC, CTCGS, and GTEC shall not recover in their rates any costs caused by diseconomies of scale or negative synergies associated with the sale/purchase of the GTE exchanges.

11. For the three-year period beginning on January 1, 2002, CTCC shall spend an amount of money for capital expenditures that equals or exceeds the sum of the average of such expenditures by CTCC and the acquired GTEC exchanges during the three-year period ending December 31, 2000. The minimum level of capital expenditures required by this decision is in addition to the capital expenditures that this decision requires for the provision of service to the Hoopa Valley Indian Reservation and the Yurok Indian Reservation. Capital expenditures are defined as gross additions to USOA Nos. 2110, 2210, 2220, 2230, 2310, 2410, 2680, and 2690. CTCC may spend less on capital expenditures one year and more the next, so long as the cumulative expenditures for the three-year period equals or exceeds 100% of the three-year period ending December 31, 2000.

12. For the three-year period beginning on January 1, 2002, CTCGS shall spend an amount of money for capital expenditures that equals or exceeds the average of such expenditures by CTCGS and the acquired GTEWC exchanges during the three-year period ending December 31, 2000. The minimum level of capital expenditures required by this decision is in addition to the capital expenditures that this decision requires for the provision of upgraded service to the Bar-O Boys Ranch. CTCGS may spend less on capital expenditures one year and more the next, so long as the cumulative expenditures for the three-year period equals or exceeds 100% of the three-year period ending December 31, 2000.

13. Within 150 days from the date the sale is closed, the Applicants shall file and serve a compliance report that shows annual capital expenditures for each year during the three-year period ending December 31, 2000. The report shall be broken down by capital expenditures made by (1) CTCC, (2) the 26 GTEC exchanges being acquired by CTCC, (3) CTCGS, and (4) the six GTEWC exchanges being acquired by CTCGS. The report shall identify and describe all assumptions used to prepare the report. In addition, the report shall be examined by Certified Public Accountants (CPAs) who shall attest to the accuracy and fairness of the report. The CPA's written attestation shall be appended to the report. CTCC, CTCGS, GTEC, and GTEWC shall each have an officer examine those portions of the report that pertain to his or her company. The officer shall sign a verification under penalty of perjury that complies with Rule 2.4. A copy of the signed verification shall be appended to the report.

a. The CPA(s) shall conduct the examination in conformance with the Statements on Standards for Attestation Engagements issued under the auspices of the American Institute of Certified Public Accounts.

b. The CPA(s) shall express an opinion as to whether the report accurately states, in conformance with generally accepted accounting standards, each Applicant's historical outlays for capital expenditures.

14. CTCC and CTCGS shall each submit monitoring reports that contain the following information pertaining to service quality:

a. All information reported to the Commission pursuant to General Order 133-B.

b. The number of formal complaints filed with the Commission. This information shall be broken down by Citizen exchanges and the acquired GTE exchanges.

c. The number of informal complaints filed with the Commission. This information shall be broken down by Citizen exchanges and the acquired GTE exchanges.

d. All information reported to the FCC in the ARMIS 43-05 Service Quality Report.

e. The monitoring reports shall be submitted to the Director of the Commission's Consumer Services Division. The first report shall cover calendar year 2000, and be submitted no later than 60 days after the sale is closed. Thereafter, CTCC and CTCGS shall submit their monitoring reports on a calendar year basis no later than four months after the close of the calendar year for which the reports are submitted.

i. So that Citizens may prepare the required monitoring reports, GTE shall provide Citizens with data regarding customer complaints for the 32 GTE exchanges during the years 2000 and 2001.

f. The requirement to submit monitoring reports shall end with the reports submitted for calendar year 2005.

15. For a five-year period beginning on the date the sale is closed, CTCC and CTCGS shall not increase rates for customers in their existing exchanges due to any increase in costs brought about by the acquisition of the GTE exchanges. To demonstrate their compliance with this condition, CTCC and CTCGS shall establish a system of books and records to allocate revenues and costs between their existing exchanges and the acquired GTE exchanges.

a. For CTCC, this condition applies to Category I and II services.

b. For CTCGS, this condition applies to above the line services.

16. For a five-year period beginning on the date the sale is closed, CTCC and CTCGS shall maintain quality of service at present levels or better for all customers in both their existing exchanges as well as the exchanges acquired from GTE.

17. CTCC and CTCGS shall retain for six months from the date that the sale is closed the GTE tariffs in effect for the 32 GTE exchanges at the time the sale is closed.

a. The frozen rates may be adjusted up or down, if necessary, to reflect new legislation, Commission decisions, and force majeure events.

18. At the end of the six-month period, CTCC and CTCGS shall cap all rates in the 32 GTE exchanges for an additional 12 months. During the 12-month across-the-board rate cap, Citizens shall decrease the rates in the 32 GTE exchanges to the same extent that rate decreases are passed through to Citizens' other customers.

a. The 12-month across-the-board rate cap does not apply to rate increases or decreases that result from new legislation, Commission decisions, or force majeure events.

19. At the conclusion of the 12-month across-the-board rate cap for customers in the 32 acquired GTE exchanges, CTCC and CTCGS shall maintain the rate cap for any service shown in Appendix A of this decision if the corresponding Citizen rate in effect at the time is higher. The rate cap shall remain in effect on a service-by-service basis for a period of 18 months (i.e., until 36 months after the date the sale is closed), or until the corresponding Citizens rate drops below the GTE rate, whichever comes first.

a. The 18-month service-by-service rate cap does not apply to rate increases or decreases that result from new legislation, Commission decisions, or force majeure events.

b. During the 18-month service-by-service rate cap, the capped rates do not need to be adjusted downward to reflect rate decreases passed through to Citizens' other customers, so long as the rate paid by Citizens' customers remains higher than the corresponding capped GTE rate.

20. CTCC, CTCGS, and Citizens of the Tuolumne shall adopt GTE's Service Guarantee Rules (SGRs) for all new and existing customers. Each of these companies shall file an advice letter to implement the SGRs no later than 90 days after the date the sale is closed.

21. CTCGS shall station a qualified microwave technician in Del Norte County. This requirement shall end when the six exchanges that CTCGS acquires from GTEWC no longer rely on a microwave link for communications with the outside world.

22. For a five-year period beginning on the date the sale is closed, CTCGS shall maintain a customer service office in Crescent City where customers can pay bills, ask questions regarding service, and view (and order) telephone service and equipment.

23. CTCGS shall offer DSL throughout the Crescent City urban area no later than two years from the date the sale is closed.

24. CTCGS shall (i) maintain current ISDN services to those already receiving the service (including renewal of contracts), and (ii) offer new service until existing facilities are exhausted or an alternative service is available.

25. CTCGS shall construct, at its own expense, an improved telephone system to replace the BETRS system that is currently used to provide service to the Bar-O Boys Ranch and other customers in the Idlewild area.

a. The new system shall be sufficient to support: (i) dial-up Internet access, (ii) installation of additional lines for existing customers served by the BETRS system, and (iii) projected growth in that area.

b. The new system shall include a state-of-the-art Spread Spectrum microwave radio system, digital loop carrier equipment near Patricks Creek Lodge, and copper cable from Patricks Creek Lodge to the Bar-O Boys Ranch, the CalTrans Idlewild Station, and the residential customers in the area.

c. CTCGS shall provide service to all existing customers in the Idlewild area using the new system no later than 18 months from the date the sale is closed.

d. CTCGS shall offer service with the new system at the same rates and charges found in GTEWC's current tariff for the Idlewild Radio Service Area. Once service is provided to customers in the Idlewild area using the new system, CTCGS shall cap the existing rates and charges for a period of 18 months, and may only change the existing rates and charges after obtaining authorization from the Commission to do so.

e. CTCGS shall not increase its ratebase or rates to reflect the cost of the new telephone system. CTCGS may include in its ratebase and rates applicable to customers in the Idlewild area the cost of future additions to, and replacements of, the new telephone system.

26. Within 24 months from the date the sale is closed, the Applicants shall construct, at their own expense, the following infrastructure for the provision of telephone service to portions of the Hoopa and Yurok Reservations:

a. A fiber optic line from the Hoopa Central Office to the village of Weitchpec.

b. Terminating equipment and distribution plant in Weitchpec to provide telephone service to the following customers and community facilities:

i. The public school in Weitchpec.

ii. The Weitchpec Community Center (WCC).

iii. Pearson's local store.

iv. All residences located within one mile (5,280 feet) of the WCC, including residences on the Hoopa Reservation located within one mile of the WCC.

v. Two residences located on the Hoopa Reservation. One home may be less than a mile from the WCC, and the other is between a 1 ½ miles and 2 miles from the WCC.

vi. T-1 data line at the WCC and the Yurok Telecommunications Project microwave site located near Pearson's store.

1. In lieu of the T-1 line, the Applicants may install a spread spectrum microwave radio system with the capacity of a T-1 line.

2. Customers in Weitchpec receiving T-1 service shall not pay any non-recurring installation changes, but shall pay tariffed monthly rates and any other recurring charges.

vii. A spread spectrum microwave radio system to provide telephone service to the Jack Norton Public School in Pecwan and the Head Start Center in Ke'pel. The microwave system will have capacity to accommodate growth in the service load over the next 10 years.

viii. Payphones at the following locations: two payphones each at the Community Center and Pearson's store in Weitchpec; one payphone at the CalTrans site located outside Weitchpec on State Route 169; one payphone at the entrance to the Tish Tang Campsite located on the Hoopa Reservation; one payphone at the Jack Norton School in the village of Pecwan; and one payphone at the Judson-Brown Community Center in the village of Ke'pel. Each payphone shall provide free access to E911.

27. CTCC shall exclude from its ratebase and rates the cost of the previously identified facilities that the Applicants install to serve the Hoopa Reservation and the Yurok Reservation. The cost of future additions to, and replacements of, these facilities may be included in ratebase and rates.

28. To the extent that CTCC does not recover its reasonable operating costs to provide basic exchange service to the newly served areas of Hoopa and Yurok Reservations in the rates paid by the customers in these areas, CTCC should seek to recover the shortfall from federal universal service programs. CTCC may seek to recover any remaining shortfall from the California High Cost Fund-B (CHCF-B).

a. Reasonable operating costs include costs to operate, maintain, and repair the new facilities required by this decision, but excludes depreciation and cost of capital associated with the cost of the new facilities.

b. CTCC may recover its recorded operating costs only to the extent these costs exceed the "benchmark" cost of $20.30/month per line established by D.96-10-066.

c. To recover its recorded operating costs, CTCC shall file an advice letter that breaks down recorded operating costs by Census Block Group. The Commission will address CTCC's advice letter in a resolution.

29. CTCC shall program the switch serving the Hoopa Reservation to allow customers on the Reservation to receive CLASS features offered in conjunction with basic service.

30. CTCC shall deploy new service offerings in the Hoopa exchange within 60 days of the time the new service offerings are made available in the Weaverville exchange.

31. Citizens shall provide DSL service to customers on the Yurok Reservation served by the Klamath exchange within 60 days of the time that DSL is provided to areas contiguous to the Reservation.

32. Citizens shall investigate the possibility of establishing payment agents in Weitchpec and Hoopa. The payment agents would provide limited customer service and access to an 800 number for further customer service.

33. Citizens shall work with the Hoopa Tribe and the Yurok Tribe to develop a procedure for regular communication between CTCC's local manager and each Tribe.

34. Citizens shall provide limited engineering and technical assistance to help the Hoopa Tribe and the Yurok Tribe in applying for public and private grant programs.

35. CTCC shall (i) work with the Hoopa Tribe to develop a plan to provide advanced services to the Reservation, and (ii) help the Hoopa Tribe develop and distribute a survey to determine the demand and economic support for such services.

36. GTE, GTEC, GTEWC, CTCC, and CTCGS shall adhere to all terms and conditions in the sales agreements appended to A.99-09-027 and A.99-09-031, including all provisions in the sales agreements that protect GTE employees in the 32 GTE exchanges from negative changes to their current positions, income, or benefits.

37. CTCC and CTCGS shall comply with all applicable environmental laws and regulations when planning and constructing the telecommunications infrastructure required by this decision.

38. Once CTCGS has completed a detailed engineering design and environmental assessment for the construction of new telecommunications facilities to serve the Bar-O Boys Ranch and surrounding areas, CTCGS shall file an application with the Commission for review and approval of the proposed construction under CEQA. If appropriate, the environmental assessment may be coordinated with any environment review conducted under NEPA.

39. Once CTCC has completed a detailed engineering design and environmental assessment for the construction of telecommunications infrastructure to serve the Hoopa and Yurok Reservations, CTCC shall file an application with the Commission for review and approval of the proposed construction under CEQA. If appropriate, the environmental assessment may be coordinated with any environment review conducted under NEPA.

40. If the Commission concludes as a result of an environmental assessment that the construction required by this decision should not be approved due to adverse environmental impacts that cannot be adequately mitigated on a cost-effective basis, the Applicants shall file within one year from the Commission's finding a new application that proposes alternate means to provide the public with the same level of benefits that would have been provided by the canceled construction project(s). The application should be served on all the parties to this proceeding.

41. CTCC and CTCGS shall comply with all federal, state, and local environmental laws, rules, and regulations applicable to the operation of the 32 exchanges acquired from GTE exchanges.

42. CTCC shall comply with any environmental regulations that may be adopted by the Commission in R.00-02-003 as these regulations pertain to the 26 exchanges acquired from GTEC.

43. CTCGS shall comply with any environmental regulations that may be adopted in R.00-02-003 as these regulations pertain to the six exchanges acquired from GTEWC.