PSC Lets Another One Slip By: Long Distance Provider Changes Hands Without Notifying Commission

According to the Syracuse Post-Standard, Yak America purchased the long distance customers of now-bankrupt USA Datanet without ever seeking approval from (or even notifying) the New York State Public Service Commission. In the December 17th article, the paper reports that the Commission only learned of the transaction when a reporter for the Post-Standard contacted them. Now that they know about the deal, the agency has given Yak until December 23rd to submit the required paperwork for approval. It is too soon to know what penalties (if any) will arise from Yak’s inaction.

The paper reported that Miami-based Yak bought the residential long-distance service of Syracuse-based USA Datanet in July for $4.3 million. The deal was not announced until earlier this month when Yak, which does business as Spot Talk, began sending letters to customers. About 150,000 customers of USA Datanet were affected by the sale. USA Datanet filed for Chapter 11 bankruptcy reorganization in October.

While the PSC does not have jurisdiction over interstate communications, it does regulate intrastate long distance calling. To one extent or another, every state regulates intrastate communications and Yak should have sought authority in every state in which USA Datanet conducted business. How this vital step was missed in New York when the company changed hands is difficult to fathom, especially with USA Datanet formerly holding and Yak currently holding a Certificate of Public Convenience and Necessity issued by the Commission. Yak had not only requested and received a Certificate from the PSC, they went to the agency in 2007 seeking approval of a different ownership change.

Is it possible that Yak’s decision not to notify the agency this time was because of a perceived lack of enforcement or consequences?

As PULP reported in November, the Commission cancelled 271 Certificates of competitive telephone companies for not following the rules and submitting tariffs. While that might sounds like an action by a powerful Commission on top of the entities it regulates, many of these companies had actually been out of compliance for over a decade before the axe (or more aptly, the butter knife) fell. See CLECs Lose Certificates to Offer Service for Not Submitting Tariffs, Why Not ESCOs?

On the electric side, scores of multi-dwelling buildings around the state have been approved for submetering, but there is no real PSC follow-up or compliance requirement for the building owners. As a result, thousands of tenants have no idea that the landlord providing the submetered electric service is not permitted to charge more than the utility would and that the consumer protections in the Home Energy Fair Practices Act apply to them. See Lax PSC Enforcement of Submetering Orders Allows Landlords to Overcharge for Electricity Sold to Tenants and to Circumvent HEFPA Protections. On top of that, the Commission has recently announced a new proceeding to address submetering and, instead of focusing on compliance, the Commission intends to look at ways to streamline the process by eliminating longstanding Commission review and utility tariff requirements. In other words, the failure to follow the rules and protect tenants may be permitted to continue unabated. See PSC to Hold Technical Conference on Electricity Submetering Issues.

Maybe Yak decided to roll the dice, thinking what’s the worst that could happen at a PSC with a laissez faire attitude and a penchant for deregulating utilities? We should find out in the next several weeks whether the Commission will make an example of Yak or whether it will be the next in a long (and growing) list of lax enforcement efforts by a state agency entrusted with protecting the public interest.

Lou Manuta