In order to protect the privacy of the complainant, their names and addresses are not included.
1 Other Commission proceedings address rules that ensure a competitive marketplace. Those rules protect the integrity of the competitive marketplace, which benefits consumers. Those rules are not broached here.
2 For example, Rulemaking 98-07-038 is currently pending, which would revise General Order 96-A tariff review procedures to include competitive service tariff changes effective one day after filing. Further, staff has no basis for review of much of the contents of a tariff because the Commission does not approve rates or "micro-manage" the service offerings of competitive service providers. Staff does review the consumer protection provisions contained in tariff filings.
3 The Commission no longer sets rates for competitive services and Staff review is limited to non-rate matters. Given the existence of nearly a thousand competitive carriers, the number of tariffs for Staff to review requires Staff to be selective in which tariff proposals receive evaluation - and institutionally jeopardizes consumer protection.
4 Recommendation 3 removes the tariff filing requirement for competitive services only. The following services should remain subject to tariff - basic exchange telephone service, services provided by local exchange companies operating under general rate case regulation (GRC-LECs), and Category I and II services of New Regulatory Framework Local Exchange Companies (NRF-LECs).
5 The FCC has similarly proposed this requirement in its Second Order on Reconsideration in CC Docket No. 96-61, In the Matter of Policy and Rules Concerning the Interstate, Interexchange Marketplace. The FCC proceeding deals with issues concerning the de-tariffing of interexchange services, and orders inter-exchange carriers to publicly disclose their "rates, terms, and conditions for their interstate, domestic, interexchange services," and requires those carriers with Internet websites to post such information online. Second Order, at p.1; see also pp. 4, 13-15, 18. The FCC's orders in this proceeding are now on appeal at the D.C. Circuit of the United States Court of Appeals.
6 Over 30 thousand California consumers subscribe to competitively provided facilities-based local exchange service.
7 Enforcement against unauthorized transfers of service and unauthorized charges has been given the bulk of attention recently by the Commission and parties relative to other consumer protection issues, which are described later in the report.
8 Bird, Supershuttle; Blase, Pacific Bell; Conran, California Small Business Association; Ferraro, California Water Service Company; Julien, GeM; Hill, California Moving and Storage Association; Meyer, San Jose Water Company; Rodriguez, Latino Issues Forum; Schmid, Office of Ratepayer Advocates. Transcripts of the Roundtable Discussion on Consumer Protection Issues and the Role of the California Public Utilities Commission, April 2, 1998.
9 Ibid., Dasovich, Enron, p.16.
10 Ibid. Shames, p.80.
11 These peculiarities exist in part because of policies designed to promote competition, such as rules that permit the ease with which long-distance carriers may solicit new customers and bill through an established local carrier.
12 FCC, Truth-in-Billing Proposed Rulemaking, CC Docket No 98-170, and CPUC, Slamming and Cramming proceeding, R.97-08-001 / I.97-08-002. Neither of these proceedings comprehensively addresses consumer protections.
13 The California Commission preceded the "1996 Telecommunications Act" requirements to open the telecommunications market to competition (1993-1995), and FCC rules to address slamming (1995). These actions not only benefit California consumers, but also provide a context for other regulatory agencies and parties to debate similar actions.
14 See statutes contained in P.U. Code Sections 885, 2889.5, 2889.9, 2890, and 2894.1.
15 Competition is the best means to ensure the availability and affordability of advanced telecommunications services and consumers must be empowered with information adequate to make informed choices. Enhancing California's Competitive Strength: A Strategy for Telecommunications Infrastructure, A Report to the Governor, CPUC, November 1993.
17 The "filed rate doctrine" is a legal doctrine established in federal law. The doctrine states that where a federal agency has lawfully determined or approved a rate, a purchaser has a right to that rate, with the purpose of preventing discriminatory rates.
18 In AT&T v Central Office Telephone, 1998, The Supreme Court upheld the filed rate doctrine when it ruled in favor of a utility, whose contract simply referenced tariff governance, even though the complainant clearly showed that the utility violated the contract terms. The assumption is that reference to a tariff, (a published, legal document) is tantamount to having conveyed the tariff contents. The Supreme Court held that "even if a carrier intentionally misrepresents its rate and (the customer) relies on the misrepresentation, the carrier cannot be held to the promised rate if it conflicts with the published tariff."
19 Though few, the Commission has received informal complaints requesting contract terms to be honored by the utility. See Informal Complaint (IC) 97-13-2172 and IC.97-13-2065, and Formal Complaint (C) 99-01-040, Rodney George v. Sprint PCS.
20 See IC.98-01-2108 and IC.97-13-8020. Additionally, Pacific Bell raised the Filed Rate Doctrine in C.99-01-039 (Greenlining Institute and Latino Issues Forum v. Pacific Bell Information Services) as the basis for it to be able to incorporate tariff contents when its marketing materials simply refer to the tariff service. (See Reply Comments of Pacific Bell to Late-Filed Comments of Greenlining Institute and Latino Issues Forum in R.98-07-038.) Complaint Case C.99-01-039 is pending. Similarly, MCI did not disclose on its marketing materials that it would charge its airline mileage program customers to recoup the "franchise excise tax" it paid for acceptance of airline miles. Only the MCI tariffs on file with the FCC disclose that such a charge is applicable.
21 See Case No. B C207636 Los Angeles Superior Court. The complaint alleges, among other things, "suppression of material fact", (Civil Code Section 1750) that the company has "an obligation to make disclosure of material terms related to acceptance of the `promotional offer.'" p.21. Also see IC.98-01-2108, IC.97-13-8020, IC.97-13-2236, and IC.97-13-2166.
22 In its report to the Governor, the Commission stated: "To protect consumers, interagency cooperation should have as its principal focus: 1) to develop disclosure rules necessary for consumers to make intelligent choices among an expanding range of technology and service options; 2) to ferret out unacceptable sales practices; and, 3) to assure that aggrieved consumers have avenues available to seek relief". (Enhancing California's Competitive Strength: A Strategy for Telecommunications Infrastructure, p.15.)
23 In lieu of detariffing, the Commission may consider requiring carrier tariffs to be available via the internet. However, this option does not resolve the major problems with tariffs as noted above. Thus, consumer protections may be necessary to ensure that service agreements comport fully with filed tariffs, and that marketing materials provide adequate disclosure.
24 Roundtable Transcripts, Stan Ferraro, p.102.
25 As an incidental benefit, these proposed streamlined consumer protections address the need to establish CMRS terms and conditions as required in Decision 96-12-071, and to separately streamline or update CLEC and NDIEC consumer protection rules within their respective proceedings.
26 The subject consumer protection rules were discussed in several meetings between Telecommunications Division Staff and interested parties, both before and after issuance of R.98-07-038. The Commission's GO 96-B proposal contained in R.98-07-038, excluded the "staff proposed consumer protections" based on the existence of the Telecommunications "Streamlining" proceeding R.94-02-003. The "Streamlining" proceeding was limited to developing consumer protections applicable to detariffed IECs, which were eventually adopted in D.98-08-031. Today's effort is intended to formulate a comprehensive approach to consumer protection.
27 Federal 1993 Budget Act, August 10, 1993, 47 USC Section 332(c)(3)(A) Communications Act.
28 Ibid., as set forth in House Report No. 103-111.
29 GO96-A, Part II.C. (4), requires carriers to include appropriate general rules that cover the application of all rates, charges and service when such applicability is not fully set forth in and as a part of the specific rate schedules themselves. Such general terms include: definitions, description of service, application for service, contracts, special information required on forms, establishment and re-establishment of credit, deposits, notices, rendering and payment of bills, disputed bills, discontinuance and restoration of service, information on services and promotional offerings, temporary service, continuity of service, and extensions of lines or mains. Note: The Commission's proposed revisions to GO96-A, in R.98-07-038 do not substantially change these particular elements. (See R.98-07-038, Appendix A, General Rule 8.5.7.)
30 Bay Area Cellular Telephone Company Tariff, 1st Rev. Cal. PUC Sheet No. 4-2.2, effective on December 21, 1994.
31 Informal Complaint (IC)98-01-2108.
32 Two examples: LA Cellular stated in a letter to a complainant in IC.97-13-8020, "by... remitting payments, you have in fact, agreed to the terms and conditions of that promotion as filed in our tariff with the Public Utilities Commission." The Commission's informal response from CAB recognized the "implied agreement" as an enforceable utility rule. Similarly, in IC 97-13-2485, the complainant claimed no knowledge of early termination fees following establishment of service in response to a telemarketing call. The Commission's CAB informal response to the complainant recognized implied knowledge of terms and conditions in accordance with utility rules. In both cases early termination fees were sustained.
33 Cal. P.U.C. Schedule 2-T, sheet No. 12, canceling sheets filed prior to December 1, 1998.
34 IC.97-13-2236, Letter to LA Cellular, October 13, 1997.
35 IC.98-03-7467, Letter to CPUC, August 15, 1998.
36 Letter, dated August 31, 1998 to PUC in IC.98-01-2846.
37 The Commission G.O. 96-A proceeding to reform Informal Advice Letter processes has as a subject matter, the clarity of tariffs. Under consideration is a rule requiring utility marketing materials to factually represent utility tariffs. However, currently this rule could not apply to non-tariffed IECs and CMRS providers.
38 The Commission could change its review procedures if market conditions warranted. Though the interexchange market is unlikely to become monopolistic, it is possible to become duopolistic or oligopolistic, and hence would likely require some additional form of regulatory intervention to prevent discriminatory practices. The appropriate form of rate or service oversight given such conditions should be subject to further public comment and review.
39 Such differentiation of rules between CLECs and IECs is appropriate. Staff's proposal makes such a distinction by identifying specific consumer protection rules applicable to local exchange service.
40 See P.U. Code Section 453 for non-discrimination provision. Tracking of discriminatory rates becomes more difficult if the tariff filing requirement is removed.
41 See Business and Professions Code 17509. For example, it is unlawful to advertise the price of one product or service whose purchase or lease also requires the purchase or lease of a different product or service, unless the prices of all of the products or services are advertised. Regardless of Commission jurisdiction, a District Attorney or Attorney General can prosecute any utility violation of the Business and Professions Code.
42 Commission authority to replace CMRS tariffs with carrier-maintained schedules of rates, terms and conditions was provided in AB 1121 (Ch.574, 1996).
43 Section 495.7 of the Public Utilities (PU) Code.
44 Currently, some NRF-LEC Category III services are subject to price floors and ceilings. Further, D.92-07-072 conditioned spin-off approval of PBIS with Pacific and PBIS consent to tariff enhanced services that PBIS offers (45 CPUC2d at 139-140 Ordering Paragraphs 6, 13-14). Because anti-competitive concerns may still exist, price floors and ceilings should continue to be applicable. Though tariffs would not be required for Category III services, Staff proposes that NRF-LECs would provide a list of its Category III services, of which some may be subject to a price floor if anti-competitive concerns are justified by competing service providers.
45 The current negligence liability cap is $10,000 for the two largest California LECs. See Pacific Bell Tariff A.2, Rule 11 and GTE of California Tariff D&R, Rule 26.
46 For example, PG&E Tariff Rule 14 excludes liability for "acts of God"... "except that arising from its failure to exercise reasonable diligence." Under the exception, no liability limit is provided.
47 Department of Transportation (DOT), Federal Aviation Regulations require carriers to obtain liability insurance, per FAR, Part 198. The DOT, Federal Railway Administration does not confer any limitation of liability upon the rail industry. Any current limitation of liability would be contained within carrier agreements.
48 There are approximately 156 registered IECs that are not required to file tariffs with the Commission. It is presumed that these carriers serve few customers.
49 P.U. Code Section 495.7 does not preclude the establishment of a limitation of liability applicable to non-tariffed carriers when such limitation is separate from that contained in utility tariffs, such as in a contract (See D.98-08-031, p.5).
50 The tariff limitation of liability is not the only incentive for carriers to continue to file tariffs. Decision 98-08-031 requires all contracts with detariffed IECs to be written and signed, which would be prohibitively costly for carriers to implement retroactively.
51 CMRS carriers have successfully argued before civil courts that the Commission has the exclusive jurisdiction over terms and conditions, which include the limitation of liability. The applicability of the Commission's sanctioned limitation of liability is questionable when carriers do not file tariffs with the Commission, and thus, the CMRS industry has promoted state and federal legislation that limits their liability. Wireless carriers have been granted protection from liability on 911 calls to the same extent as wireline carriers. See FCC Docket No. 94-102; FCC 99-352, and "Wireless Communications and Public Safety Act of 1999, Page 113 STAT. 1286, Public Law 106-81, 106th Congress.
52 PG&E Tariff Rule 14 - Shortage of Supply and Interruption of Delivery.
53 The Commission regulates 19 small California LECs via General Rate Cases (GRCs).
54 See Waters v. Pacific Telephone Co., 12 C.3d (1974). The California Supreme Court stated that a Commission-approved limitation of liability provision contained in public utility tariffs barred a damage suit, based on ordinary negligence, in civil court. The court reasoned that the Commission had authorized the Telephone Company to include a limitation of liability provision in its tariffs, which the Commission took into account in setting rates for the company. The court thus concluded that to allow a suit for damages against the Telephone Company would impermissibly interfere with the Commission's ratemaking functions and its policies limiting liability, and thus conflicted with Section 1759 of the PU Code.
55 See LA Cellular v. Superior Court, 65 Cal. App. 4th 1013. The Superior Court notes in footnote 3 of that decision, that the injury suffered by the plaintiff occurred before the preemptive rules went into effect, so that LA Cellular's tariff, filed in 1989 with the limitation of liability provision, still applied. The implication is that once the preemptive rules took effect, which the court indicates happened in 1995, the tariff provision would no longer have applied. Note: The reason for the delay in the preemption provisions from 1993 until 1995 was that California had filed a petition with the FCC to continue to regulate cellular rates, and that petition was denied in 1995. The plaintiff in LA Cellular suffered her injury before the preemptive effect of the 1993 law was in place, so her claim was subject to the limitation of liability provision in the cellular carrier's tariff.
56 See the Medical Insurance Compensation Reform Act.
