2. Procedural History
In March 1998, the Commission initiated an evaluation of its role and responsibilities regarding consumer protection in the utility and transportation industries. Commissioner Josiah Neeper, the coordinating Commissioner for consumer protection issues at that time, created a staff interdivisional task force to offer recommendations for improvement of our consumer protection efforts.
The Commissioner hosted a consumer protection roundtable in April 1998 as a part of the information gathering. At this roundtable, participants were invited to discuss the agency's consumer protection role and responsibilities.
In July 1998, the Commission task force released its staff Report on the California Public Utilities Commission's Consumer Protection Role and Responsibilities ("1998 staff Report"). The 1998 staff Report - the product of several months of discussion by the task force and extensive roundtable, interview, and written input from stakeholder groups - discussed the Commission's consumer protection mission and objectives, and our organizational structure and resources employed to meet them.
As a foundation for the next step, the staff issued a follow-up report in February 2000,4 in which it recommended the Commission establish a list of telecommunications rights and related rules that would apply in a technology-neutral manner to all regulated carriers ("2000 staff Report"). The Commission cited that 2000 staff Report in opening this rulemaking, and in seeking stakeholder input on the staff recommendations and the Commission's proper telecommunications consumer protection role.
One of the 2000 staff Report's recommendations was that we apply whatever consumer protection rules that might come from this proceeding to wireless providers. In support of this suggestion, the report noted an increase in recorded complaints by customers against Commercial Mobile Radio Service (CMRS) carriers. The report indicated that the Commission received 2,404 informal complaints regarding the 158 registered CMRS providers operating in California in 1998 and 3,356 such complaints in 1999. staff reviewed 81 of the 5,760 complaints received in 1998 and 1999 before recommending that we adopt a set of rules for the entire telecommunications industry.
In hindsight, we see that those informal complaints were recorded during a time when carriers of all classes were engaging in aggressive marketing tactics that reflected increased competition both in the wireless industry and the newly competitive local wireline service. Carriers during that same period also were in the process of deploying new technologies and services, such as digital wireless, and there may have been coverage problems during the transition.
In opening the rulemaking based on the 2000 staff Report's findings, the Commission invited respondent utilities and interested parties to submit comments on the 2000 Staff Report's proposed rules,5 and a full spectrum of stakeholders did so. Regulated utilities were well represented, individually and in groups and associations expressing shared views. Local, state, and federal governments commented. Individuals and organized groups made presentations on behalf of residential and small business consumers. In all the Commission received seventy-one submittals from thirty-nine groups consisting of sixty-seven named entities, some of which were in turn associations of many members.
Commenters representing the telecommunications utilities were generally opposed to the 2000 staff Report's proposed rights and rules and other measures, while consumer representatives were generally supportive. There were exceptions in each camp, both as to individual commenters and specific proposed measures.
After the earliest rounds of comments, the Commission invited input directly from the public through twenty public participation-hearing sessions held in thirteen locations throughout the state between mid-June and September 2000. Those unable to attend were urged to express their views in writing.
By fall 2000, some 1,200 people had attended one of the public sessions, and more than 300 made public statements. Those individuals who spoke represented a cross section of the affected public: residential customers, large and small business customers, senior citizens, union members and representatives, public officials, minority business associations, low income groups, community-based organizations of every kind, and many others. Another 2,000 responded and made their views known by letter or e-mail.
In January 2001, then-Assigned Commissioner Carl Wood issued two rulings that sought comments on two additional sets of proposed rules falling within the scope of the rulemaking proceeding. The first set was Proposed Rules on the Inclusion of Non-Communications-Related Charges on Telephone Bills. The Commission considered thirty-one sets of related comments and replies, and on July 30, 2001, it issued D.01-07-030. This decision adopted a set of interim rules governing the inclusion of non-communications-related charges on telephone bills (the "Interim Non-Com Rules"). Commissioner Wood's second set of proposed rules dealt with "slamming," the unauthorized switching of carriers. Twenty-four sets of comments and replies were received on those proposed rules.
On June 6, 2002, Assigned Commissioner Wood issued a draft decision and a proposed General Order, "Rules Governing Telecommunications Consumer Protection," for public comment. The draft decision incorporated the Interim Non-Com Rules and new FCC-inspired slamming rules in the proposed General Order. Thirty-two sets of comments were filed, followed by four days of workshops.
Assigned Commissioner Wood suspended the proceeding schedule to allow carrier and consumer representatives to convene an informal working group to consider rule changes that both could support. The working group submitted its report with agreement on some issues and disagreement on others. Commissioner Wood sought two additional rounds of comments and replies and, pursuant to P.U. Code § 311(g)(1), mailed a revised draft decision and General Order for public comment on July 24, 2003.
On November 17, 2003, newly-elected Governor Arnold Schwarzenegger issued Executive Order S-2-03. This order directed all State agencies and departments to suspend action on and withdraw all proposed regulations not yet enacted for a period of 180 days. The purpose of this suspension was to give the new administration time to assess their impact on California businesses.
On December 22, 2003, Governor Schwarzenegger formally requested that the Commission voluntarily abide by this Order. This request for voluntary compliance recognized the Commission's independent status under the California Constitution. 6 In response to the Governor's request, Assigned Commissioner Wood postponed Commission action on his draft decision.
On March 2, 2004, Assigned Commissioner Wood issued a revised draft decision for public comment and invited parties to submit comments on both the proposed new General Order and, as separate submissions, its economic effects.7 Many parties, including carriers and California businesses, protested that the four weeks initially provided for the comment cycle (14 days for comments and 14 days for replies to comments) did not provide sufficient time to permit meaningful consideration of the economic impacts of the proposed rules.8 Wireless Carriers 9 and the Wireline Group 10 moved for extensions in the proposed schedule and all parties were granted a one-week extension for each set of comments (on economic effects and on non-economic issues) and on each set of replies to comments.
Carriers also objected to the level of consideration that the comments on economic impacts would receive, as outlined in the initial Notice of Availability. The Notice provided that "[b]ecause this is a quasi-legislative proceeding, new information will not be evaluated as to its factual accuracy but may be considered by the Commission, in its discretion, as it makes policy determinations."11 Carriers argued that the Commission would not be making a reasoned decision if it relied on unverified data to reach policy determinations.
The Commission held neither formal nor evidentiary hearings in this proceeding up through its issuance of D.04-05-057. 12 Consequently the record on which original G.O. 168 was based consisted of the 2000 staff Report and the customer complaint data from 1998-1999 within it; statements made at public participation hearings; three economic papers and studies filed by carriers; one study submitted by a consumer group; and various sets of comments and replies to comments filed by the parties during the course of the proceeding.13
Assigned Commissioner Wood made additional changes to his draft decision in response to the parties' comments. He posted a finalized agenda version on the Commission's website on March 24, 2004.
On May 27, 2004, the Commission adopted D.04-05-057, Interim Decision Issuing General Order 168, Rules Governing Telecommunications Consumer Protection, an alternate decision proposed by Commissioner Geoffrey Brown.14 The decision created the original G.O. 168, which included a somewhat-reduced but still expansive set of regulations.
AT&T Wireless, et al., Nextel of California, Incorporated, and the Wireline Group thereupon each filed timely applications for rehearing of D.04-05-057. The carriers asserted numerous claims of error.15 The Wireline Group filed an additional application for rehearing that addressed solely issues concerning the timeline for implementation. In D.04-10-013, we concluded that the carriers' applications for rehearing had not demonstrated legal error in D.04-05-057, made minor modifications to the decision and G.O. 168 to clarify the decision and address certain oversights, and denied the carriers' appeals.
In September 2004, two separate complaints seeking to overturn D.04-05-057 were filed in federal court.16 TURN, Utility Consumers Action Network, and National Consumer Law Center, three consumer groups that had made substantial contributions to D.04-05-057, joined together to intervene in the federal litigation, and on December 9, 2004, they filed their motions to intervene in both cases. On January 7, 2005, the plaintiff carriers filed first amended complaints in response to the defendants' motions to dismiss the court cases.
In January 2005, following the expiration of Commissioner Wood's term, this proceeding was reassigned to Commissioner Susan P. Kennedy. On January 27, 2005, the Commission issued D.05-01-058 staying D.04-05-057 pending further examination of whether - given the effects of changes in the telecommunications industry since the inception of the proceeding - G.O. 168 provided a consumer protection structure that could be reasonably implemented, adequately enforced, and viable in the longer term. The following day, the plaintiffs in each of the federal court cases filed Notices of Voluntary Dismissal, which brought the cases to a close.
On May 2, 2005, Assigned Commissioner Kennedy issued a ruling taking four actions. First, it proposed issuing a revised bill of rights for telecommunications consumers that restated and amended the original bill of rights17 and adding principles of consumer choice related to the use of the Internet as a telecommunications medium. 18 Second, the ruling proposed to continue the stay of Rules 1 through 12 of Part 2. 19 Third, it proposed re-adopting, with alterations, Parts 4 and 5 of G.O. 168, together with somewhat revised Rules 13, 14, and 15 of Part 2. 20 Fourth, the ruling directed parties to address three specific questions:
1. Are the consumer rights...sufficiently comprehensive to protect and empower consumers or are there additional rights or issues that should be addressed?
2. Are current laws and regulations, federal or state, including those conferring enforcement authority on the CPUC and/or other government agencies but not including the stayed portions of G.O. 168, sufficient to enforce these rights? In responding to this question, parties should be specific as to each of the enumerated rights and support their responses with reference to applicable facts and law.
3. If current laws and regulations are not sufficient to enforce these rights and principles, what are the most cost-effective changes to law or regulation necessary for effective enforcement?
The Assigned Commissioner then issued a series of rulings establishing the proceeding schedule going forward, along with dates for opening and reply testimony, formal hearings, briefs, and a proposed decision. 21
A further Assigned Commissioner Ruling on September 19, 2005 set the ground rules for the formal hearings and defined six topics to be the subject of panels over two days of hearings: marketing and advertising of telecommunications services; billing issues; meeting the needs of non-English speaking consumers; cramming, with specific reference to placement of non-communications charges on phone bills; consumer freedom of choice among Internet service and content providers; and so-called "naked DSL." Parties were directed to address the following questions with respect to each topic:
1. What are the problems confronted by consumers in the topic area?
2. Are existing laws, regulations and enforcement mechanisms sufficient to address those problems?
3. If not, what solutions are proposed?
4. What are the costs and benefits of the proposed solutions to consumers and carriers?
Two days of formal hearings were held on September 29 and 30, 2005. Twenty-five representatives of industry and consumer groups, organized into five panels, addressed these topics and questions. After these presentations the prepared opening and reply testimony served earlier were admitted into the record. Opening briefs were filed on October 24, 2005; reply briefs were filed on November 7, 2005.
4 Consumer Protections for a Competitive Telecommunications Industry: Telecommunications Division staff Report and Recommendations (Feb. 3, 2000) ("2000 staff Report").
5 The report also recommended modifying the limitation on liability of carriers and changing tariff, marketing and billing practices.
6 See CAL. CONST., art. XII, § 5 (establishing "additional authority and jurisdiction" of the Commission).
7 Notice of Availability (Mar. 2, 2004).
8 See, e.g., Objections and Opening Comments of SBC California (U 1001 C) on Economic Impacts of Proposed Consumer Protection Rules (March 23, 2004), p. 2.
9 Cingular Wireless, Nextel of California, Inc., T-Mobile, Sprint Telephony PCS, L.P., Sprint Spectrum, L.P., as agent for Wireless Co., L.P. dba Sprint PCS, Verizon Wireless and CTIA-The Wireless Association, collectively referred to herein as "Wireless Carriers."
10 AT&T Communications of California, Inc. (U 5002 C); Calaveras Telephone Company (U 1004 C); Cal-Ore Telephone Co. (U 1006 C); Citizens Telecommunications Company of California, Inc. (dba Frontier Telecommunications Company of California) (U 1024 C); Citizens Telecommunications Company of the Golden State (dba Frontier Telecommunications Company of the Golden State) (U 1025 C); Citizens Telecommunications Company of Tuolumne (dba Frontier Telecommunications Company of Tuolumne) (U 1023 C); Comcast Phone of California LLC (U 5698 C); Cox California Telcom, LLC (dba Cox Communications) (U 5684 C); Ducor Telephone Company (U 1007 C); Electric Lightwave, Inc. (U 5429 C); Foresthill Telephone Co. (U 1009 C); Global Valley Networks, Inc. (f/n/a Evans Telephone Company) (U 1008 C); Happy Valley Telephone Company (U 1010 C); Hornitos Telephone Company (U 1011 C); Kerman Telephone Co. (U 1012 C); MCI, Inc.; Pinnacles Telephone Co. (U 1013 C); The Ponderosa Telephone Co. (U 1014 C); Qwest Communications Corporation (U 5335 C); SBC California (U 1001 C); Sierra Telephone Company, Inc. (U 1016 C); The Siskiyou Telephone Company (U 1017 C); SureWest Telephone (U 1015 C); Verizon California, Inc. (U 1002 C); Volcano Telephone Company (U 1019 C); Winterhaven Telephone Company (U 1021 C); and XO Communications Services (U 5553 C), collectively referred to herein as the "Wireline Group."
11 Notice of Availability (Mar. 2, 2004), p. 2.
12 In a quasi-legislative proceeding, "formal hearing" includes a hearing at which testimony is offered on legislative facts, but does not include a hearing at which testimony is offered on adjudicative facts. (Rules of Practice and Procedure, Rule 7.1(f)(2)).
13 See D.04-05-057, pages 129-134, and Ordering Paragraph 10.
14 D.04-05-057 became effective on the date it was mailed, June 7, 2004.
15 In addition, all three filed separate motions to stay the decision that were denied in D.04-08-056 (August 19, 2004).
16 Cellco Partnership v. Peevey, No. SACV 04-1139; and Nextel of California, Inc. v. Brown, No. SACV 04-1229.
17 See Appendix B for text of the original bill of rights.
18 See Appendix C for text of the bill of rights accompanying the May 2 ACR.
19 Primary topics covered in the suspended rules were point of sale disclosures, marketing practices, billing and billing disputes.
20 Part 4 governs the placement of non-communications charges on telephone bills. Part 5 contains anti-slamming rules. Rules 13, 14 and 15 of Part 2 cover CAB data requests, employee identification and 911 service.
21 Assigned Commissioner's Rulings of June 30, July 7, and July 13, 2005.
