Background

The decade of the 1990's has seen a rapid evolution in the telecommunications industry, not only in the technology it employs but as well in the industry's structure, the mix of services it provides, and in the ways it provides those services. A wide variety of what were once monopoly services is increasingly available from competing providers. Regulatory policies have likewise been evolving in ways aimed at enabling and promoting competition and all the benefits competition can provide. At the same time, legislators and regulators have not been blind to the potential for market abuse that exists in any market, regulated or fully competitive. This Commission has for some time recognized that the ongoing shift to a more competitive telecommunications marketplace challenges it to find new methods to protect consumers and has made great strides in meeting that challenge.

In March, 1998, the Commission initiated an evaluation of its role and responsibilities with respect to consumer protection in the utility and transportation industries. Commissioner Josiah Neeper, who at that time was the coordinating commissioner for consumer protection issues, created a staff interdivisional task force to offer recommendations to the Commission and, as part of an information gathering effort, hosted a consumer protection roundtable in April, 1998. Industry representatives were invited to discuss the agency's consumer protection role and responsibilities. Participants raised the following main points:

1. The Commission should foster a marketplace in which consumers are empowered and have confidence. This can be achieved through establishing rules, educating consumers, and helping consumers understand service pricing.

2. There are measures that are essential to consumer protection, including setting clearly defined and uniform standards for the competitive marketplace, aggressively ensuring adherence to those standards, removing violators from the marketplace, and promoting consumer choice.

3. Consumer choice itself will encourage utilities to set high standards in order to stay competitively viable.

On July 31, 1998, the Commission task force released its Staff Report on the California Public Utilities Commission's Consumer Protection Role and Responsibilities. That product of several months of discussion by the staff task force and extensive roundtable, interview, and written input from stakeholder groups discussed the Commission's consumer protection mission and objectives, and the Commission's organizational structure and resources employed to meet them. It identified four major challenges for the Commission:

1. Improve the public intake and informal complaint process.

2. Proactively identify consumer problems and take expeditious corrective actions.

3. Streamline consumer protection rules for competitive utility service providers.

4. Ensure that consumers are knowledgeable about their rights and that service providers are aware of market rules.

While individual commissioners and staff management have taken internal action to address the challenges and the task force's recommendations, there are some issues that are most properly put before the Commission and the public and other outside stakeholders for review. Specifically, recommendation 6(a) states, "The Commission should establish minimum and consistent consumer protection rules for the telecommunication industry." In their roundtable statements and in filed comments following the task force recommendations, most parties expressed support for the Commission to establish consumer protection rules for the competitive marketplace.

Our staff has been following up for much of the past year to lay a foundation for us to take the next step and has issued a comprehensive report, Telecommunications Division Staff Report and Recommendations: Consumer Protections for a Competitive Telecommunications Industry, in which it recommends the Commission take these actions:

1. Recognize a list of telecommunications consumer rights that it will enforce within the scope of its jurisdiction.

2. Establish telecommunications consumer protection rules consistent with those rights.

3. Apply those telecommunications consumer protection rules to wireless carriers.

4. Replace tariffs for competitive services with consumer protection rules.

5. Review the limitation of liability policy.

In this rulemaking, we seek stakeholder input on the topics and recommendations set forth in the Telecommunications Division's Report.