V. FURTHER FACTS REGARDING ALLEGED VIOLATIONS
A. Disclosure of the Nature of, and Charges for, Respondents' DA Service.
There are two opportunities for Respondents to disclose the full amount of the DA charges and the true nature of the DA service: when the customer calls the toll-free number, or when the customer makes (as Respondents allege) the subsequent call to the 1015158000 equal access number. Staff alleges that neither of the disclosures are adequate to inform consumers about the true nature and full amount of what Respondents are offering. As suggested below, if the toll-free and equal access calls are separate, it may be only the latter disclosure on the equal access number - i.e., where the pay-per-call service is provided - that matters from a legal point of view.
1. Disclosures of Charges and Nature of the DA Service -- on the 1-800 Marketing Intercept.
Respondents provided 27 alleged scripts for the marketing message on the 1-800 number, most apparently showing a disclosure of a [$]4.99 (or [$]5.49) charge for Respondents' DA service in the first sentence of the pre-recorded marketing intercept.45 However, Respondents were unable to verify the exact dates when any of those scripts were actually used.46 For example, Respondents changed their marketing message in response to concerns voiced by AT&T about Telseven's allegedly inadequate price disclosures (see below), but no reliable evidence has been adduced as to the extent, timing and sequence of these changes. As described in the Staff Report, the changes purportedly made around the beginning of 2007 had little effect on complaint rates, which remained high in 2007 and 2008.47
Staff has made test calls to some of the toll-free numbers, and verified that the messages currently played on at least some of these numbers states:
For a charge of 4, 99, please have a pen ready to write down our phone number. You can hang up and dial 10 15 15 8000. That number again is 10 15 15 8000. The number you have dialed has a new national directory assistance service. Please dial 10 15 15 8000. That number again is 10 15 15 8000 -- to get information on the number you have just dialed and be connected to a new national directory assistance service, brought to you by Calling 10. Rates exclude federal universal service fee and administrative recovery fee. You can also dial 10 15 15 8000 702 555 1212, to be connected to a new national directory assistance service. Subject to terms and condition of service available at www.Calling10.com. For trouble reporting, you can email service@calling10.com.48
Staff believes this intercept or network message is likely to mislead consumers for various reasons:
a) This price disclosure is part of an inherent non-sequitur: "For a charge of 4, 99, please have a pen ready to write down our phone number";49
b) The price disclosure is made in the first sentence, before the consumer understands (if she ever does) the context of the intercept;
c) There is no disclosure of the total charge to the consumer, which is, in fact, typically about $7.14, not $4.99. The extra $2.15 is undisclosed, although the suggestion is made that rates "exclude" such additional charges;
d) The use of and possible charges for the 800 number mentioned in the second sentence remain vague. At what point in the process of dialing the access number and connecting to the Nevada DA Platform will the $4.99 (plus fees) be levied?
e) The customer is not told that the called number is now out of service, that the original owner of the 800 number no longer uses it,50 and that the original owner (intended called party) is in no way connected with this marketing intercept;
f) The sentence "Rates exclude federal universal service fee and administrative recovery fee" can be understood to mean that no universal service fee or administrative recovery fee applies;
g) The 10 15 15 800[0], with its echoes of a toll-free 800 number (some of the marketing intercepts use the 800 variant), is repeated three times in the next five sentences, but the "4, 99" in the first sentence is not repeated; and
h) The consumer hears further inducements, that she can "get information on the number you have just dialed and be connected to a new national directory assistance service," without further mention of the four-ninety-nine base charge (let alone the entire $7.14).
Some (apparently earlier) versions of the scripts provided by Respondents show that the $4.99 (or $5.49) base cost for the DA service is buried near the middle of the message, after consumers are told several times to dial Respondents' "10-10" or
"10-15" numbers "to get information on the number dialed."51 Both may mislead customers.
None of Respondents' scripts adequately disclose the amount of the $1.65 "Carrier Administrative Fee" or the $.60 "Universal Service Fund Fee" Respondents typically add to the $4.99 or higher "DIR ASSIST" base fee.52 The Carrier Administrative Fee, presumably for administration of the USF Fee, is almost three times as much as the USF Fee itself.
2. Disclosure of Charges and Nature of the Service at the DA Platform.
If a consumer does call the 10 15 15 800[0] dial-around number, as directed by the network intercept, the first menu she or he hears is the following:53
Start Time |
Message |
Stop Time |
Elapse Time (seconds) |
0.00 |
Thank you for calling the national directory assistance service with number assistance brought to you by Calling 10. |
0.06 |
6 secs |
0.07 |
To get a status and history on a number you are trying to reach on Calling 10, press "1" now. |
0.12 |
6 secs |
0.13 |
Press "0" or please hold to speak with a directory assistance service operator. |
0.17 |
5 secs |
0.18 |
For customer service and rate information, press "5". |
0.21 |
4 secs |
21 seconds |
Staff has not been able to ascertain at precisely what point the customer incurs a charge, but some CAB complainants received charges on their bill even though call detail records indicate a call duration of less than 10 seconds, and others less than 20 seconds - insufficient in either case to obtain either number information or a rate quote, as shown above. Call durations varied as follows:54
Duration of Calls from Switch Records |
Number of Switch Records |
Under 10 seconds |
5 |
Between 11 to 20 seconds |
8 |
Between 21 to 30 seconds |
2 |
Between 31 to 40 seconds |
4 |
Between 41 to 50 seconds |
1 |
Greater than 40 seconds |
7 |
Staff also reports that the value of the service is questionable, even were it to be offered for free. The number history and information relates only to 800 numbers "on [the] Calling 10 [system]," as shown by the following sub-menu encountered when the customer presses "1" for "a status and history on a number you are trying to reach":55
Start Time |
Message |
Stop Time |
Elapse Time (seconds) |
.00 |
Please enter the 10 digit number you wish to check now. |
.03 |
3 secs |
.04 |
Do not enter "1" before the 10 digit number. |
:06 |
3 secs |
.07 |
For example 800 123-4567. |
.11 |
5 secs |
11 secs |
Staff then spent an additional 10 seconds entering the Commission's toll-free number, 800-848-5580, and received the following message:56
Message |
Stop Time |
Elapse Time (seconds) | |
.21 |
This number is not operating on Calling 10. |
.23 |
2 secs |
.24 |
Press "1" to check another telephone number. |
.26 |
3 secs |
.27 |
Press "0" or please hold to be connected with a directory assistance service operator. |
.11 |
5 secs |
.32 |
Press"*" to return to the main menu. |
.14 |
3 secs |
13 secs |
Thus, if the 800 number of the party the consumer was originally trying to reach is not "operating on Calling 10," the customer has not received any useful information. Even if the 800 number is "on" the system, the customer hears the following information, of no apparent utility to most consumers:
This number is operating on California Calling 10. The Responsible Organization for this number is Signal One. This number was made active from the spare pool of disconnected phone numbers, and its last record change was in the second quarter of 2007.57
The best that a customer can do on Respondents' DA platform is to dial "0" or wait (through one or more intervening menus) "to speak to a [live] directory assistance service operator," who appears to offer nothing more than traditional DA service.58
The charges for Respondents' DA service typically appear on a separate page of the consumer's telephone bill devoted to third-party billing.59 On that third-party page, however, and elsewhere on the ILECs' bills, it is the name of the billing agent - and not Telseven or Calling 10 - that predominates. Indeed, on none of the bills submitted by complaining customers to CAB was staff able to find a disclosure of the legal name of the entity responsible for the charge, i.e., Respondents Telseven and Calling 10.60 Thus, many consumers are under the mistaken impression that the billing agents, and not Respondents, were responsible for the charges.61
Respondents were on notice that their marketing representations were likely to be misleading to consumers. Based on consumer complaints and "an alarming number of credits issued to our end users in the amount of $7.17 - the exact amount of the charge for a dial-around directory assistance call to Telseven,"62 AT&T complained to aggregator ILD (but never directly to Telseven) about the apparently deceptive marketing practices that had resulted in high complaint and refund numbers associated with Telseven's service.63 The thrust of AT&T's concern was that "the caller did not dial that toll-free number with the intent of reaching Telseven," yet they are directed to Telseven's service with the suggestion that Telseven's service will allow the caller to reach the number originally intended.64 Telseven responded that "advertising to such callers is an effective, legitimate method of informing such customers of [Telseven's] directory assistance services."65
AT&T made a number of specific observations about the potentially misleading nature of Telseven's services: (a) the rate for Telseven's DA service was not disclosed early enough "in the Telseven advertisement" played on the toll-free 800 number;66 (b) the rate for Telseven's DA service was not adequately disclosed "after the customer dials the equal access number";67 (c) the use of an equal access number that contained "800" in the number sequence gave the false impression that this was a free call;68 (d) the continued assessment of a universal service fund (USF) fee even though Respondents' own contributions to the USF were "not current" (if indeed it was contributing at all);69 (e) Respondents' "outsourced DA vendor" may have "refer[red] customers to the local exchange carrier when responding to customer inquiries about the price of the ENADA service";70 and (f) Respondents' billing message on AT&T's bills originally identified the equal access number called by customers as a Nevada number with 702 area code (702-555-1212) rather than the 101515800 dial-around equal access number actually called by the customers.71
Beginning on October 12, 2006, Telseven began asserting that it had "moved up the placement of the rate" disclosure in the Telseven advertisements, and made other changes.72 AT&T apparently continued to insist that Telseven's marketing intercept was misleading, and that "the cost of the call [should] be stated before the 10-15-15-8000 number is provided."73 As noted in the Staff Report, complaints against Telseven and Calling 10 continued unabated from 2007 through 2010, even after Respondents moved up the putative disclosure of the $4.99 (or $5.49) base rate.74
B. Facts Relating to Other Possible Violations
In the course of researching the initial cramming complaints against Telseven, staff discovered that Telseven had never registered with or obtained a CPCN from the Commission. Staff then directed Respondents to cease the unlicensed provision of a telecommunications service in California. On December 11, 2006, the Commission granted Calling 10's Application for a CPCN (#U-7015). Respondents informed staff that all service in California would be operated by Calling 10 as soon as its registration was effective, but complaints against Telseven continued to occur until CPSD finally directed Telseven to cease all operations by October 1, 2007. It appears, then, that Telseven has operated an unlicensed telephone company in California from its inception in 2003 through October 2007.
In Application 06-10-008, Calling 10 LLC represented under oath that its "full legal name" was "California Calling 10, LLC," which is the fictional business name for the true name of Telseven's affiliate, Calling 10, LLC. Calling 10 claims this representation was based on the fact that it registered under the fictitious business name of California Calling 10, LLC with the California Secretary of State, but that is irrelevant to the question of the Applicant's full legal name. Staff points to a pattern of Respondents' cloaking their true identity, most notably in their billing representations.75
3. Telseven's Failure to Pay Public Purpose Surcharges on California Telecommunications Revenue.
It appears that Telseven failed to pay public purpose surcharges on the revenue it collected from California consumers from December 2003 through September 2007. Telseven initially excused its nonpayment by claiming that the DA service was completely interstate, by virtue of the fact that its DA platform is in Nevada.76 Notwithstanding this claim, Calling 10 has paid these surcharges from December 2007 to date.77 Staff points out that Telseven provided DA services to California consumers, calling from California telephone numbers, and billed on California bills, during the 2003-07 period.78
45 Staff Report at section III(B)(1).
46 Respondents could only provide an actual recording of the current script, although staff had sought recordings of the marketing message dating back to 2006. See Staff Report at section III(B)(1).
47 Staff Report section IV(A)(3) and Tables 2 - 5.
48 Staff Report section III(B)(1) and the test call transcript Attachment 52.
49 The recording does not use the words "dollars" or "cents" in conjunction with the "4, 99." For this reason, dollar signs are either omitted or bracketed in the scripts reproduced in this OII.
50 We do not mean to suggest that a company ever obtains unqualified "ownership" of a toll-free number.
51 Staff Report section III(B)(1) and Staff Report Attachment 22C.
52 See example of telephone bill in Staff Report Attachments 27.1. The Universal Service Fund Fee may also be in excess of any amounts actually paid by Respondents into the USF, as discussed below.
53 Staff Report at Section III(B)(4). Staff added a [bracket] to the last [0] on the 10-15-15-8000 DA dial around number because Respondents' have referred to this number as both "800" or "8000," and the final zero apparently has no efficacy other than muting the resemblance to an 800 number.
54 Id.
55 Id.
56 Id.
57 November 12, 2010 test call by staff to the 888 958 2800 number identified by AT&T in its
August 15, 2007 letter.
58 Id.
59 In the customer complaints collected in Attachment 27 to the Staff Report, one can see bills generated by both large ILECs, Verizon and AT&T. Both use a third-party page format, where the charges are listed as DIR ASST, accompanied by substantial further charges for "administrative fee" and universal service surcharge.
60 Staff Report section III.C, and Attachment 55.
61 This is made clear by the consumer complaints assembled in Staff Report Attachment 27. Most of the complaints identify ILD or BSG as the party responsible for the charge. See also Staff Report section III.C. and Attachment 47.
62 Staff Report Attachment 26.2, at p. 1, defining "dial-around" as "to dial the '10-15-15-800' number to dial around the numbers `4-1-1' or `(Area Code) 555-1212,' to reach Telseven, instead of the end user's regular directory assistance provider."
63 Staff Report section III(B)(3) and Staff Report Attachment 26C. Staff obtained correspondence from Respondents and AT&T to the billing aggregators/agents from two sources: AT&T and Respondents.
64 Staff Report section III.B.3 and Staff Report Attachment 26.3C (pg.2, paragraph 3 of letter).
65 Id., and Attachment 26.4C (pg.4, paragraph 2 of letter).
66 Id., Attachment 26.1C (p.2, paragraph 5 of letter).
67 Id. (p.3, paragraph 2 of letter).
68 Id. (p.3, paragraph 4 of letter).
69 Id., at Attachment 26.4C (p.3, paragraph 4 of letter) (AT&T's allegation that the FCC listed Telseven as a "non contributor" because its contributions were "not current").
70 Id., Attachment 26.3C (p.2, paragraph 7 of letter).
71 Id,. Attachment 26.1C (pp.1-2 of letter).
72 Id. (p.2, paragraph 5).
73 Staff Report section III(B)(3) and Attachment 26.3 (p.2, paragraph 4 of letter).
74 Staff Report section IV(A)(1), (2) and (3).
75 See section V(A)(3) supra, and VI(E) infra;see also Staff Report at sections III(C).
76 Id.
77 Staff Report section VII.
78 Id and II(C)(1).
