6. Comments on Proposed Decision

The proposed decision of Commissioner Bohn in this matter was mailed to the parties in accordance with Section 311 of the Public Utilities Code and comments were allowed under Rule 14.3 of the Commission's Rules of Practice and Procedure.

Parties filed and served comments on the PD on October 4, 2010. DRA generally supported the PD but argued that providing subscribers with the ability to block third-party charges is a practical and cost-effective solution to cramming. UCAN supported the PD's efforts to clarify and remind Billing Telephone Corporations, Billing Agents, and Service Providers of their duties to prohibit, prevent, and investigate unauthorized charges, but UCAN also identified potential legal and factual errors with the PD that required correction. TURN stated that the PD struck a reasonable balance between competing interests by providing significant protections for consumers but not being overly burdensome on service providers, and TURN offered suggestions for enhancing some of the protections.

AT&T, Verizon, and most wireless carriers opposed the PD on procedural and substantive grounds. AT&T argued that carriers have implemented significant anti-cramming measures and that the PD fails to discuss these measures. The PD also adopts onerous investigation and monitoring requirements that may threaten currently liberal refund policies. AT&T recommended that the Commission instead adopt improved customer education measures rather than burdensome operational regulations. Verizon stated that PD proposes dramatic changes to existing rules that could, counterproductively, harm the very customers that all parties seek to protect while imposing enormous and unnecessary costs upon those actively engaged in preventing cramming. Verizon suggested workshops to develop concrete, targeted approaches that balance mutual objectives in combating cramming.

SureWest and the small local exchange carriers opposed the PD and argued that the billing rules would burdensome and unfair to regulated telephone companies, difficult to implement, and intrusive to customers.

CALTEL supported important modifications to the rules initially proposed, and advocated for additional improvements. Specifically, the exemption for carriers that provide service only to business or wholesale customers should be extended to the record-keeping requirements and apply to business services, even if provided by a company that also provides residential services. Modify the definition of "unauthorized charge" to exclude "slamming" complaints, revise Proposed Rule 3 to acknowledge that customers bear some responsibility for ensuring that their computers and other customer premise equipment and related circuits are adequately protected from unauthorized access.

Cox argued that the PD reversed prior Commission decision and policies in a closed docket without evidentiary support.

Verizon Wireless argued that the proposed changes to the cramming rules would harm carriers and customers, and deter innovation. Specifically, the definition of subscriber is unworkable with current practices, approving and monitoring Service Providers is burdensome to Billing Telephone Corporations, and the record keeping requirements amount to complaint tracking.

CTIA opposed the PD and identified several "unwarranted and impractical" expansions of definitions. First, CTIA objected to defining "subscriber" as an adult person responsible for the bill because that would prevent a child from incurring valid third-party charges. Second, by deeming all unauthorized charges unlawful, the proposed rules would "unravel" carriers' current policies on lost or stolen phones. Third, the PD proposes to expand the definition of unauthorized charges to include any charge that resulted from false, misleading or deceptive representations, and would require an in depth investigation to make the subjective determination. CTIA also substantively opposed rules that dictated carrier business practices as "difficult to operationalize" and leading to severe unintended consequences. Finally, CTIA argued that GO 168 was adopted after hearings, and Pul. Util. Code § 1708.5(f) requires that the Commission hold hearings to change GO 168.⁹³

The MMA⁹⁴ stated that the subscriber authorization requirement found in proposed Rule 3 and the definition of subscriber would prohibit purchases by anyone other than the subscriber. Denying customers the ability to purchase mobile content on their wireless phone in the same manner as content can be purchased on home media devices, will dramatically curtail customers' choices and undermine California's median, information technology, and equipment industries. The MMA pointed out that when the Florida Attorney General and regulators recently considered the same question, they concluded that: "carriers and content providers must require that only users authorized by the subscriber be permitted to make mobile-billed content purchases."⁹⁵ The Florida agreement was attached to the comments and showed that all mobile carriers were required to disclose to new subscribers that third-party charges may be placed on the bill and allow the subscribers to block such access to the account. The carriers were required to give written notice to existing customers and offer the blocking option.

tw Telecom supported the exemption for carriers that provide service only to business or wholesale customers, and suggested that the rule be clarified to state that it applies to non-communications related charges on the bill.

Cricket and MetroPCS California also supported the exemption for carriers that provide pre-paid service, but sought additional streamlining to the proposed rule. These carriers recommended removing the requirements that the pre-paid carrier be in "full" compliance with the rules and not require the carrier to tally "numbers of complaints" of unauthorized charges.

T-Mobile advised the Commission to focus on adopting rules for the efficient production of usable data, and not on an unnecessary revision of the existing cramming rules.

Valley Yellow Pages recommended minor changes to the PD to indicate that Billing Telephone Corporations and Billing Agents must give prior notice to Service Providers before resolving a customer dispute.

BSG Corporation contended that the proposed decision placed a heavy burden on the Billing Telephone Corporations for determining authorization of records, resolving any billing disputes, and submitting reports. BSG worried that should the Billing Telephone Corporations feel this burden is too much to comply with, then they may decide to not allow third-party billing on their telephone bills altogether, a great disservice to California consumers.

The Ad Hoc Coalition for Billing Services stated that prohibiting the Billing Telephone Corporation from deflecting a complaining customer to the Service Provider violated federal rules, and that the rules on referring a charge to collection or refunding charges that have been mistakenly paid are beyond the Commission's jurisdiction.

PaymentOne focused on proposed Rule 7 and argued that there was no support in the record and no justification for basing consumer notification and remedial action on complaints and refund levels, as opposed to documented instances of unconfirmed charges. This commenter concluded that basing Proposed Rule 7 on increases in "complaints" and "refund rates" was unworkable and would be harmful to consumers.

The small resellers explained that they have few cost-effective options other than using the billing services of the local exchange carriers, with which they compete for the long-distance business of California consumers. These Billing Telephone Corporations have every incentive not only to reverse and refund small resellers' customers' long-distance charges, but to market their own services at the same time, and the draft rules do not protect these resellers by requiring Billing Telephone Corporations to apply the same standard for refunding third-party charges as with their own end-users.

Reply comments were filed and served on October 11, 2010, by: DRA, TURN, AT&T, Verizon California, SureWest, Frontier Companies,⁹⁶ Small Local Exchange Carriers, CALTEL, Small Resellers, Cox California, tw telecom, Valley Yellow Pages, Cricket and MetroPCS, CTIA, Verizon Wireless, and T-Mobile.

In response to comments and reply comments, the proposed decision has been modified to expand the customer information to be made available via the CalPhoneInfo web site and the carriers' tariffs, web sites, and other customer information. The decision also directs CPSD and the Communications Division to convene workshops to ensure on-going availability to consumers of information on third-party billing, disputing charges, and Billing Telephone Corporations' obligations.

Several rules have been revised. The definition of Service Provider in Rule 2 has been limited to exclude products and services provided by the Billing Telephone Corporation. As noted by several parties, the Commission has comprehensive, existing authority over California Telephone Corporations. Rule 5 has been modified to remove the Billing Telephone Corporation's obligation to contact other subscribers to confirm authorizations. Rule 7 has been condensed to the essential monitoring requirements, and Rule 6 has been combined with Rule 5. Several components of Rules have moved to enhance clarity. The reporting rules have been separated into rules for wireless carriers and wireline, with the objective to retain the existing reporting rules for wireline.

Two procedural issues were raised. Certain parties have argued that the Commission must hold an evidentiary hearing as required by Pub. Util. Code § 1708.5(f). As noted above, however, the Commission held legislative, not evidentiary hearings when adopting GO 168. The requirements of Pub. Util. Code § 1708.5(f) are applicable only when rules are adopted after evidentiary hearing. Since no evidentiary hearings were held at the time GO 168 Part 4 was adopted, we are not required to hold evidentiary hearings to revise Part 4 to GO 168. The other procedural issue, that parties did not have adequate notice that the assigned Commissioner had determined that GO 168, Part 4, was within the scope of this proceeding, is fundamentally at odds with the Assigned Commissioner Ruling of February 12, 2010. That ruling set forth specific proposed revisions to Part 4. Thus, all parties of record to this proceeding received notice that revisions to Part 4 were within the scope of this proceeding with the issuance of the Assigned Commissioner Ruling. Such parties and additional parties were able to participate in this quasi-legislative proceeding and present their views and proposals to the Commission.

⁹³ The Commission held legislative hearings prior to adopting GO 168, see Assigned Commissioner's Ruling Establishing Hearing Procedures, September 19, 2005. Pub. Util. Code § 1708.5(f) requires evidentiary hearings to change regulations adopted after evidentiary hearings, not legislative hearing, as was the case with GO 168. Consequently, Pub. Util. Code § 1708.5(f) does not require an evidentiary hearing to adopt changes to GO 168. Counsel for CTIA should have been aware of the nature of the 2005 hearings, having participated as a panelist, see R.00-02-004 transcripts at 1388, September 29, 2005.

⁹⁴ The MMA states that it is "a trade association comprised of major global and regional participants in the mobile media industry, including publishers, major studios and media outlets, content providers, agencies, brands, retailers, advertisers, service providers, mobile carriers and related marketing and market research firms."

⁹⁵ MMA Opening comments at 10.

⁹⁶ Citizens Telecommunications Company of California Inc. d/b/a Frontier

Communications of California, Frontier Communications West Coast Inc., and Frontier Communications of the Southwest Inc.