IN RE:

Docket No. 22071-U: Encartele, Inc.’s Application for Certificate of
Authority to Provide Institutional Telecommunication Services.
Docket No. 22120-U Complaint of Pay Tel Communications, Inc.
against Encartele, Inc.

BRIEF OF COMMISSION STAFF
On December 19, 2005, Encartele, Inc. (“Encartele”) filed with the Georgia
Public Service Commission (“Commission”) an Application for a Certificate of Authority
to Provide Institutional Telecommunication Services (“ITS”). On January 3, 2006, Pay
Tel Communications, Inc. (“Pay Tel”) filed a Complaint Seeking an Initiation of an
Investigation to Determine Whether Encartele is Unlawfully Providing Institutional
Telecommunications Services Without a Certificate. Encartele filed an Answer in
Response to this Complaint on January 26, 2006. The matters were assigned to Hearing
Officer Jeffrey Stair on April 11, 2006 and then reassigned to Hearing Officer John
Tucker on May 18, 2006.
On June 6, 2006, the Commission consolidated the two dockets. A hearing on
both these dockets took place before the Hearing Officer on July 21, 2006. Encartele
sponsored the testimony of Mr. Scott Moreland. Mr. Vince Townsend testified on behalf
of Pay Tel. The Commission Staff and the Consumers Utility Counsel of the Governor’s
Office of Consumer Affairs participated through cross-examination.

I.

Certificate of Authority
The party applying for a certificate of authority has the burden to demonstrate that

it possesses the technical and financial capability to provide the services for which the
party seeks certification. In the instant case, Encartele has applied to provide ITS.

Commission Rule 515-12-1-.30 sets forth the obligations of an ITS provider. The burden
is on Encartele to demonstrate that it is capable of complying with the terms and
conditions of this rule.
Encartele has demonstrated that it has the technical and financial capability to
provide ITS. However, two issues have arisen in the context of the application process.
First, the record reflects that Encartele provided ITS prior to receiving certification from
the Commission. The Hearing Officer has asked the parties to brief the issue of whether
the provisioning of ITS prior to certification should bear upon Encartele’s application.
The provisioning of ITS prior to certification is a violation of state law and Commission
rules and must be considered in determining whether to certify an applicant.
Encartele’s witness testified that under agreements with Consolidated Telecom,
Inc. (“CTI”), Encartele owned the ITS equipment, Encartele was responsible for paying
the commissions to the institutions and Encartele was entitled to all of the revenues from
the provisioning of ITS to the institutions. (Tr. 59-62). Although CTI held itself out as
the ITS provider, it was Encartele that was providing the service.
The testimony of Pay Tel witness, Mr. Townsend, further supported the
conclusion that Encartele provided ITS prior to certification. Mr. Townsend testified that
Captain Faulk of the Twiggs County Sheriff’s Department informed Pay Tel that
Encartele was providing ITS to the Jeff Davis County Jail and the Crawford County Jail.
(Prefiled testimony, p. 6). Mr. Townsend also testified that in response to open records
requests Pay Tel learned that it acquired commission statements on Encartele letterhead
for June through August, 2005, evidencing commission payments from Encartele to

Cherokee County. (Pay Tel Exhibit 4). The commission payments were based on
revenues that Encartele received from providing ITS. (Prefiled Testimony, p. 10).
In addition, Crawford County provided a commission statement on Encartele
letterhead for August, 2005. (Pay Tel Exhibit 5). Pay Tel also moved into evidence a
commission check from Encartele, dated November 21, 2005. (Pay Tel Exhibit 6). The
commission check evidenced payment from Encartele based on ITS revenues. (Prefiled
Testimony, p. 10). For Jeff Davis County, Pay Tel moved into evidence the assignment
contract from CTI to Encartele as well as commission statements and checks from
Encartele to Jeff Davis County Jail/Detention Center. (Pay Tel Exhibits, 7 and 8).
Pay Tel notified the Commission Staff on or about November 13, 2005 that it
believed Encartele was providing ITS without certification. (Prefiled Testimony, p. 8).
Encartele applied for certification on December 19, 2005.
It is apparent from the evidence discussed above that Encartele was providing ITS
prior to seeking certification. Georgia law prohibits telecommunications companies from
providing telecommunications services without a certificate of authority. O.C.G.A. § 465-163(a). Because Encartele violated state law, a certificate of authority should not be
issued to Encartele unless it agrees to pay a penalty of five thousand dollars ($5,000.00).
It is reasonable to condition certification upon the payment of a penalty to address
that Encartele violated a Georgia law administered by the Commission. It would
undermine the integrity of the Telecommunications and Competition Development Act
(the “Act”) to certify companies without any consequence for violating the express terms
of the Act.

Under O.C.G.A. § 46-2-91(a), a company subject to the Commission’s
jurisdiction of the Commission that willfully violates any law administered by the
Commission is subject to a penalty not to exceed fifteen thousand dollars ($15, 000.00)
for such violation and an additional penalty not to exceed ten thousand dollars
($10,000.00) for each day during which such violation continues. A payment of
$5,000.00 is considerably less than the penalty the Commission could impose in response
to Encartele’s violations. As Encartele’s witness, Mr. Moreland, testified, Encartele
worked with the Staff prior to the hearings in an effort to address its violations. (Tr. 43).
Because of this cooperation, it is appropriate to condition the certificate upon a payment
that is less than the full penalty amount that the law permits the Commission to impose
for violations.
The second issue that arose is whether Encartele should be allowed to offer ITS
using a Voice over Internet Protocol (“VoIP”) technology. Commission Rule 515-12-1.30(19) requires each provider to “adhere to each of the certified local exchange service
companies’ Public Access Line for Institutional Service Providers Tariffs of rates and
conditions in whose area service is provided.” The provisioning of ITS using VoIP
would not comply with the terms of this rule. In response to a rulemaking petition filed
by Pay Tel in Docket No. 23330-U, the Commission has issued a Notice of Inquiry to
investigate whether a modification to this rule is appropriate. Unless and until the
Commission modifies the rule, Encartele should be required to comply with existing
Commission Rule 515-12-1-.30(19). It would provide Encartele with an unfair
competitive advantage over other ITS providers to allow it to offer service via a
technology that other ITS providers are prohibited from using.

II.

Free broadband
The provisioning of free broadband service to a customer constitutes a “bonus.”

Bonuses are expressly prohibited by Commission Rule. Commission Rule 515-3-1.02(2). Therefore, providers should not be permitted to offer free broadband service in
exchange for being selected as the ITS provider.

III.

Jurisdiction over ITS provided using broadband or VoIP
Through the Notice of Inquiry issued in Docket No. 23330-U, the Commission is

investigating the issue of providing ITS through different technologies. The Staff will
consider all pertinent issues pertaining to such service in the context of that docket. As
stated above, it is not appropriate to certify Encartele to provide ITS using VoIP at this
time because such service does not comply with the existing Commission rules.
IV.

Conclusion
For the foregoing reasons, Staff recommends that the Commission grant

Encartele’s application subject to the conditions that Encartele agrees to pay a $5,000.00
penalty related to its violation of Georgia law, and that it complies with all of the
Commission’s Rules, including Commission Rule 515-12-1-.30(19).
Respectfully submitted, this 19th day of September 2006.

___________________________________
Daniel Walsh
Assistant Attorney General

PLEASE DIRECT ALL
COMMUNICATIONS TO:
Daniel S. Walsh
Assistant Attorney General
40 Capitol Square, S.W.
Atlanta, Georgia 30334
(404)657-2204 (o)
dan.walsh@law.state.ga.us

CERTIFICATE OF SERVICE
I do hereby certify that I have this day served the within and foregoing BRIEF
prior to filing the same, by depositing a copy thereof, postage prepaid, in the United
States Mail, properly addressed upon:
Kelli Leaf
Jeanette Mellinger
Consumers’ Utility Counsel Division
Governor’s Office of Consumer Affairs
2 Martin Luther King, Jr. Drive
Suite 356, East Tower
Atlanta, Georgia 30334
Reece McAlister
Executive Secretary
Georgia Public Service Commission
244 Washington Street, SW
Atlanta, Georgia 30334
Newton M. Galloway
GALLOWAY & LYNDALL, LLP
The Lewis-Mills House
406 North Hill Street
Griffin, Georgia 30223
Alan Jenkins
McKenna Long & Aldridge LLP
303 Peachtree Street
Suite 5300
Atlanta, GA 30308
John Tucker, Hearing Examiner
Georgia Public Service Commission
244 Washington Street, SW
Atlanta, Georgia 30334

This ____ day of September, 2006

_____________________________
Daniel S. Walsh
Assistant Attorney