5. Comments on the Workshop Report

Comments on the workshop report were filed by the American Teleservices Association (Teleservices Association); AT&T; the Direct Marketing Association (DMA); MBNA America Bank, N.A. (MBNA Bank); TURN and the Utility Consumers' Action Network (UCAN); SBC; Sytel; and WorldCom.

While praising what they described as the balanced approach taken by the Telecommunications Division in its workshop report, most commentators suggested changes in some of the recommendations. We have carefully considered these suggestions and have incorporated some of them in our final order.

WorldCom, AT&T and SBC raised the concern that the Commission could be inundated with data if the records of predictive dialer calls were to be delivered monthly to Telecommunications Division staff. We agree. Our order requires that the monthly data will be retained by telemarketers and made available to the Commission upon staff request. We contemplate that our staff will gauge compliance with the 3% error rate by selectively requesting and sampling these monthly reports.

MBNA Bank urges that we make the 3% error rate permanent, rather than leaving the door open to a possible further reduction later if warranted. It notes the recent FTC rules establishing a 3% error rate for certain interstate marketing calls. The Telecommunications Division recommends that we revisit the error rate standard if necessary as additional data becomes available through our record-keeping requirements. We agree with our staff that the latter approach is a prudent one.

WorldCom suggests that the educational message we require be restricted only to local exchange carriers and that the message should be included through an annual informational mailing or by printing the message on consumers' bills where and when space permits. While we decline to limit the educational effort to local exchange carriers, our order adopts WorldCom's suggestion on the frequency of the education notice, and permits that notice to be included in the local exchange carriers' annual mailing.

TURN and UCAN argue vigorously that the error rate should be reduced to 1% to reflect the intent of the Legislature in AB 870 to eliminate abandoned calls. However, there is little more than speculation at this point that a further reduction in the error rate will significantly reduce abandoned calls, and there is substantial agreement by the industry that such a reduction would send telemarketing firms to other states where they would be subject only to the FTC's 3% standard. TURN and UCAN also urge expanded record-keeping requirements, and a retention period of two years instead of one. We believe that our requirements are sufficient for us to identify and take action against those who exceed a 3% error rate, and we believe that a one-year retention period is reasonable, since staff is able to direct a telemarketer to retain records for a longer period if that is deemed necessary. We agree with TURN and UCAN that the 3% error rate is currently in effect, and has been since July 1, 2002, and that a lengthy deferral of record-keeping requirements is not justified.

Finally, the Teleservices Association argues that users of predictive dialer equipment are subject only to federal jurisdiction, and that the Commission lacks jurisdiction to enforce a 3% error rate. We note that the Commission's order is required by the Legislature's adoption of Pub. Util. Code § 2875.5, and we are aware of no federal preemption that would nullify state law in this matter.

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