ALJ/GEW/avs DRAFT Agenda ID #3848

Adjudicatory

9/2/2004 Item 39

Decision ___________________

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

The Utility Consumer's Action Network, Complainant, vs. AOL-Time Warner and Pacific Bell Telephone Company (U 1001 C), Defendants.

Case 02-07-044 (Filed July 24, 2002)

OPINION AWARDING INTERVENOR COMPENSATION

This decision grants The Utility Consumers' Action Network (UCAN) an award of $79,090.95 in compensation for substantial contributions to Decision (D.) 04-07-052. The Commission in D.04-07-052 approved two settlement agreements negotiated by UCAN with SBC California (SBC) and with America Online, Inc. (AOL). The settlement agreements provide early warning to AOL subscribers when their Internet dial-up access number incurs $50 in toll charges, and the agreements implement a process by which AOL will provide access numbers to subscribers that should in virtually all cases be toll-free. AOL has approximately 3 million subscribers in California.

1. Background

UCAN brought this action in July 2002 alleging that through their actions and inactions, SBC and AOL were causing California subscribers to pay millions of dollars in unintended telephone toll charges when they used AOL dial-up service to connect to the Internet.

The record showed that more than 3,000 customers per month, the vast majority of them AOL customers, were being billed for calls to the Internet because their computers used a dial-up number outside the local calling area. Most of these calls involved new Internet subscribers who inadvertently programmed a dial-up number or back-up numbers outside their free calling areas.

For customers affected, toll charges ranged from $60 or $70 dollars to several hundreds of dollars. In several cases, toll charges mounted to $1,000 or more. UCAN estimated that California customers were being charged more than $14 million annually for calls to access phone numbers that they thought were toll-free calls.

The case involved spirited motion practice and continuing negotiations as the parties sought to resolve what all acknowledged was an unfortunate byproduct of the computer age. To determine how many subscribers were affected, SBC conducted a trial program in which it offered a one-time credit up to $500 to a customer who experienced unintended toll charges as a result of getting on the Internet. SBC discontinued the trial after six weeks when it had heard from 2,200 customers and made toll call adjustments of $325,000.

On March 26, 2004, UCAN and SBC filed their proposed settlement agreement and jointly moved for Commission approval. AOL did not oppose settlement by the two other parties. Assigned Commissioner Geoffrey F. Brown and assigned Administrative Law Judge (ALJ) Glen Walker stayed a scheduled evidentiary hearing and conducted a settlement hearing on April 27, 2004. At the close of the settlement hearing, UCAN and AOL announced that they too had reached settlement. The executed settlement agreements were delivered to the Commission on May 13, 2004, at which time the case was deemed submitted for Commission decision.

Under the settlements, SBC has agreed to monitor the 500 AOL access numbers in California and immediately notify customers whose toll charges to an AOL number exceed $50. In this way, customers can change their dial-up number while their toll charges are still relatively modest. In the first month of the program, SBC sent 4,700 letters to customers notifying them that their access charges had exceeded $50.

As part of its settlement, AOL agreed to reprogram its service so that new subscribers will submit both their area code and first 3 digits of their telephone number instead of just the area code. In this way, AOL access numbers offered to a subscriber are more likely to be within the subscriber's local calling area.

AOL has agreed to implement this program before the end of next year. Meanwhile, it is immediately revising its messages to new subscribers to more explicitly urge them to call their local telephone company to be sure their access numbers are toll free. AOL is making quarterly reports to this Commission on the progress of these efforts.

In commenting on D.04-07-052 at the Commission's meeting on August 19, 2004, Commissioner Brown stated:

I want to commend the parties, and particularly UCAN, for devising a way to protect tens of thousands of Californians from excessive charges when they connect to the Internet. In my mind, UCAN's role here has been in the highest tradition of public service.

I should also point out that this decision concludes that we have limited jurisdiction over AOL under the circumstances of this case. This is the first time that we have claimed jurisdiction over an internet service provider. Because AOL's reprogramming will be systemwide, this is likely to extend the benefits of this decision to tens of millions of AOL customers nationwide.

D.04-07-052 became a final Commission decision on July 28, 2004. Consistent with the requirement of Pub. Util. Code § 1804(c), UCAN filed this request for compensation within 60 days of the date of issuance of D.04-07-052. No party has opposed UCAN's request for compensation.