HomeMy WebLinkAbout20001117_jh.docDECISION MEMORANDUM
TO: COMMISSIONER HANSEN
COMMISSIONER SMITH
COMMISSIONER KJELLANDER
JEAN JEWELL
RON LAW
LOU ANN WESTERFIELD
TONYA CLARK
LYNN ANDERSON
DON HOWELL
RANDY LOBB
DAVE SCHUNKE
JOE CUSICK
WAYNE HART
BEVERLY BARKER
WORKING FILE
FROM: JOHN R. HAMMOND
DATE: NOVEMBER 17, 2000
RE: IN THE MATTER OF THE APPLICATION OF TSUNAMI COMMUNICATIONS, INC. FOR A CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY TO PROVIDE LOCAL EXCHANGE TELECOMMUNICATIONS SERVICES. CASE NO. GNR-T-00-31.
On September 6, 2000, Tsunami Communications, Inc. (“Tsunami”) filed an Application for a Certificate of Public Convenience and Necessity to provide local exchange services within the state of Idaho. To accomplish this Tsunami intends to resell dial tone services to multiple dwelling units, commercial office buildings and the hospitality industry.
Staff reviewed the Application submitted by Tsunami and found that it included all of the items identified by the Commission in Order No. 26665. Tsunami Communications, Inc. is a relatively new company, having incorporated in Washington in May 2000. Tsunami primarily provides competitive telecommunications services via resale to multi-tenant facilities. This type of operation is sometimes referred to as a shared tenant service provider.
The Application indicated the Company intended to provide telecommunications services, as well as cable TV and high speed Internet access to both residential and business multi-tenant buildings, but would initially focus on residential customers. Telecommunications services include local exchange service, long distance services, and vertical and advanced features. The Company would provide service in the Qwest and Verizon service areas. Services would primarily be provided through resale of the incumbent's facilities, but the Company indicated it intended to use some leased facilities for trunking, and Company owned PBX's in each multi-tenant complex.
The Company provided brief summaries of the technical qualifications of its management team. The team has extensive marketing and business management experience, as well as solid experience in electrical contracting, computer networking and radio communications. While actual telecommunications experience is weak, Staff believes this expertise to be sufficient for the range and type of services the Company proposes to offer.
The Application included unaudited financial information, a Balance Sheet for September 1, 2000, reflecting only five months of operation. As is common for start-up companies, net income at this time is negative. The Company did have significant investor equity as an asset.
STAFF RECOMMENDATION
Based upon the information in the Application, Staff maintains that the Company has failed to demonstrate it has the financial resources that may be necessary, even for the limited scope of the operations it proposes. Staff recommends the Company be required to post a bond or other form of financial security that is of a sufficient size that it would protect Idaho customers in the event of the cessation of Idaho operations by the Company. Staff recommends an initial bond or other financial security amount of no less than $40,000, based upon an estimated average exposure of $40 per customer (based upon the rates contained in the proposed price list), and a maximum of 1,000 customers recruited in the first year. Staff recommends the Company be required to maintain the bond or other financial security at a level equivalent to no less than $40 per customer, and provide the Commission with quarterly reports identifying the number of customers. If the number of customers increases to a level that would bring the bond amount to less than $40 per customer, the Company would be required to provide the Commission with evidence that the bond or financial security amount had been increased to exceed the $40 per customer level.
Staff recommends the Commission approve the Application of Tsunami for a Certificate of Public Convenience and Necessity, subject to Tsunami providing the Commission with a bond or other form of financial security in accordance with the terms described above.
Commission Decision:
Should Tsunami’s Application for a Certificate be approved subject to the posting of a bond?
John R. Hammond
Deputy Attorney General
Staff: Wayne Hart
M:grnt0031_jh
DECISION MEMORANDUM 3