California Requires Most Carriers to Post a Performance Bond

A May 2013 California Public Utilities Commission decision requires most companies holding a California CPCN or wireless registration (“WIR”) to submit a $25,000 continuous performance bond. The decision also revises application/registration requirements, increases filing fees and sets a minimum annual User Fee. In addition, the CPUC will convene a workshop to consider whether to require VoIP providers to register with the Commission.

The primary impact of this decision for most providers in California will be the new performance bond requirement. The CPUC’s bond requirement takes effect on August 21, 2013. Thereafter, entities failing to obtain a performance bond may be subject to revocation proceedings.

Bond requirement

The new bond requirement applies to every company holding a telecommunications CPCN or WIR in California except incumbent local exchange carriers that are Carriers of Last Resort (“COLR”), their wholly or majority-owned affiliates, and Cox Communications where it serves as a COLR. Currently authorized carriers must submit their bonds as Tier 1 advice letters by August 21, 2013 unless granted an extension. Action will be taken to revoke the CPCN or WIR authority of any company that fails to comply with the requirement. Beginning in 2014, each carrier must submit a copy of its performance bond annually by March 31st.

New licensees and registrants will be required to submit their bonds within five days after their authority is effective.

Note: A request for rehearing, filed by T-Mobile, Cricket and Sprint Nextel, specifically addressing the application of the bond requirement to wireless carriers is pending.

Other Changes
• A minimum $100 payment is established for the annual User Fee.
• The information required for CPCN applications and WIR registrations has been expanded to require more details concerning key management and owners and a more rigorous regulatory history submission.
• Fees for CPCN applications and WIR registrations are being increased.