IV. Technical and Managerial Qualifications
Applicants for IEC and CLC authority are required to make a reasonable showing of technical expertise in telecommunications or a related business. Applicant submitted biographical information on its management which demonstrates their technical qualifications to operate as a telecommunications provider.
The Commission may also deny a CPCN application in order to protect the public interest if the applicant fails to demonstrate that its management is qualified to operate a telecommunications provider in a manner that complies with applicable laws and adequately serves the public.4
Applicant represents that no one associated with or employed by Applicant as an affiliate, officer, director, partner, or owner of more than 10% of Applicant was previously associated with any telecommunications carrier that filed for bankruptcy or went out of business.
However, Applicant and its parent company, North Central Equity LLC, previously acquired the assets, including the customer base, of Acceris Communications, Inc., Acceris Communications Corp., and Counsel Corporation, their Canadian parent corporation, through an asset purchase agreement dated May 18, 2005. The FCC has found that Acceris Communications, Acceris Communications Corp. and a related company, Acceris Communications Partners, violated regulations that prohibit the "slamming" of customers on 11 occasions between 2003 and 2005.5 6 All of these FCC complaints resulted from slamming violations or errors by the Company's third party verifier.
None of the FCC decisions found Applicant in violation of slamming laws or regulations. Further, according to a declaration of Applicant's Chief Executive Officer under penalty of perjury, Applicant has no relationship to Acceris Communications, Inc., Acceris Communications Corp., or Counsel Corporation, except for the purchase of the assets and customer base of these companies, and neither Applicant nor its parent company, North Central Equity LLC has any shareholders, directors, officers, or managers in common with Acceris Communications Inc. or Acceris Communications Corp.
Applicant discloses that several of its directors, including its Chief Executive Officer, were previously involved with the management of New Access Communications, LLC (New Access), another subsidiary of North Central Equity, LLC. New Access holds a CPCN authorizing the provision of limited facilities-based local exchange services in this state,7 but was the subject of several FCC consumer complaints and state regulatory actions which arose before its acquisition by North Central Equity. In granting New Access' application in D.03-07-015, the Commission noted that the consumer complaints to the FCC and the state regulatory actions had occurred several years earlier, in 2000 and 2001; that New Access had taken steps to avoid repetition of the violations; and that the Commission had not received complaints from California customers regarding New Access.
Applicant also discloses that after Commission granted the application of New Access for a CPCN in D.03-07-015, in 2004, New Access reached a
settlement in a multistate proceeding initiated by the Minnesota Attorney General in 2002. The terms of this settlement required New Access to pay $750,000 to the states in civil penalties, investigative costs, attorney's fees, and costs related to consumer education and restitution. In addition, the FCC issued orders on several additional consumer complaints which arose from incidents occurring during the same time period as the other violations.
According to Applicant, the following persons associated with the management or ownership of Applicant or North Central Equity LLC were previously involved with the management of New Access:
· Jessica Newman, Chief Executive Officer of Applicant - Ms. Newman previously worked for New Access in operations, but was not an officer or director of the company at the time that the enforcement actions were initiated. However, she later became Chief Executive Officer of New Access after North Central Equity LLC acquired the company.
· Elam Baer, Chief Executive Officer and majority owner of North Central Equity, LLC - Mr. Baer previously served on the board of governors of New Access from late 2001 until December 31, 2003.
· Gregory Wilmes, Vice President, Portfolio Management, North Central Equity, LLC - Mr. Wilmes is currently a director of New Access and previously served as Chief Executive Officer of New Access.
Although we are concerned with Acceris Communications Inc.'s and Acceris Communications Corp.'s record of slamming violations, we are satisfied that Applicant is a separate company, which is governed by separate shareholders, officers, directors, and management. We note that there have been no FCC decisions finding Applicant or its parent company in violation of slamming regulations or other legal or regulatory requirements. Applicant's CPCN authorizing the provision of resold interexchange services in California is also in good standing. Further, the previous violations by New Access occurred before North Central Equity LLC acquired the company in 2005 and according to Applicant, no regulatory actions or consumer complaints have been filed against New Access since the settlement of the multistate proceeding in 2004 or are pending. Applicant's CEO was not involved with the management of New Access during the time in which the violations were committed. Under these circumstances, we find that Applicant has demonstrated that its management is qualified to operate the company in a manner consistent with legal and regulatory requirements and to serve the public.
However, as a condition of retaining its CPCN, Applicant must comply with all applicable legal and regulatory requirements, particularly those designed to protect consumers. If Applicant is found to have engaged in additional slamming or violations of laws that protect consumers, we shall initiate proceedings to revoke Applicant's CPCN.
4 See D.04-05-033.
5 See 2003 FCC LEXIS 3035 (May 23, 2003), 2004 FCC LEXIS 2140 (April 28, 2004), 2004 FCC LEXIS 3464 (June 22, 2004), 2004 FCC LEXIS 3457 (June 22, 2004), 2004 FCC LEXIS 4046 (July 21, 2004), 2005 FCC LEXIS 2010 (March 29, 2005), 2005 FCC LEXIS 2004 (March 29, 2005), 2005 FCC LEXIS 2055 (March 30, 2005), 2005 FCC LEXIS 2503 (April 27, 2005), 2005 FCC LEXIS 2934 (May 18, 2005), 2005 FCC LEXIS 3649 (June 23, 2005), 2005 FCC LEXIS 5405 (September 29, 2005).
6 "Slamming" is generally defined as an unauthorized change in a customer's selection of a provider of telephone exchange service or toll service.
7 See D.03-07-015.
