16. Changes to the Presiding Officer's Decision
Pursuant to § 17.1.2 the Commission must provide a statement explaining changes from a proposed decision. In this case our Decision substantially revises the Proposed Decision and reverses some of its conclusions. After review of the record and Complainants' appeal, we have a fundamentally different view of the Complainants' allegations and the relevant law from that of the ALJ. We will summarize the principal changes we have made to the Proposed Decision noting that our reasoning is fully explained in the body of this decision.
1. Although we find that Pacific's sequential offering of packaged services is not a violation of existing standards, we find Pacific in violation of §2896 for failing to inform customers of the availability of other options in marketing the packages. We impose a fine of $913,000 on Pacific.
2. We find that Pacific has violated the disclosure standards of the Commission in its marketing of Caller ID Services. We impose a fine of $1,146,000 on Pacific, which brings the total fine against Pacific to $2,373,000.
3. We find that no law or decision prohibits Pacific Bell from requiring all service representatives to offer optional services on every call, so long as the call answering standards of General Order (GO) 133-B are met.
4. Based on the record in this case, we find that complainants have failed to meet their burden of proof to counter Pacific's explanation with significant showing of customers who were actually confused by the name The Basics Saver Pack and The Essentials.
5. We deny complainants' request that the Commission order Pacific Bell to cease and desist from offering any individual monetary incentives to service representatives.
6. We do not find Pacific's actions in this complaint case warranting any further action in the form of a pervasive customer education effort as requested by complainants.
1. The parties engaged in a collaborative process in an attempt to create a set of stipulated facts.
2. On October 30, 1998, the parties filed a statement of undisputed facts that addressed some, but not all, facts in issue.
3. Neither Roberts nor TIU presented sufficient justification to set aside submission and reopen the record in this proceeding.
4. Pacific Bell sells the Caller ID service as a tariffed service. This service provides the name and telephone number on a special box, screen phone, or audio box, that announces the caller. Offered in California since July 1996, this service costs $6.50/month for residences and $7.50/month for businesses when purchased separately. Approximately 1 million residential and 51,000 business customers subscribe to the Caller ID service.
5. The Commission required Pacific Bell to enable callers to block the display of their name and telephone number. Pacific Bell has two Caller ID blocking options: Complete Blocking and Selective Blocking. Complete Blocking prevents a caller's name and number from appearing on the receiving party's Caller ID display unless the caller chooses to unblock the number on a per call basis by dialing *82. Selective Blocking displays the caller's name and number to the receiving party unless the caller chooses to block the number on a per call basis by dialing *67. Every telephone line has either Complete Blocking or Selective Blocking, and both options are free of charge. If a customer does not choose Complete Blocking, the default is Selective Blocking. If a customer has elected Complete Blocking, it is so indicated on the monthly telephone bill. The default, Selective Blocking, is not indicated on the customer's bill.
6. In D.92-06-065, the Commission ordered all California local exchange carriers to implement a ratepayer-funded Customer Notification and Education Plan to ensure that all Californians were aware of the Caller ID services and their implications, including understanding their options for maintaining their privacy as a calling party. The plan included individual letters to each customer; TV, newspaper, and radio advertisements; and community outreach to over 500 organizations. Pacific Bell's campaign cost over $30 million and concluded in mid-1998.
7. Pacific Bell contracted with BRI to do outbound telemarketing to "downgrade nearly 2 million customers from Complete Call Blocking to Selective Call Blocking," and BRI stated that it "understands the urgency involved in removing Complete Call Blocking from as many lines as possible during the fourth quarter of 1998 and the first quarter of 1999."
8. A Pacific Bell manager trained BRI's agents and observed live calls in St. Louis on the first day of calling during which all observed agents used the approved scripts. BRI conducted its own subsequent monitoring.
9. In response to customer complaints, Pacific Bell suspended its contract with BRI, initiated an investigation, and determined that BRI had used unapproved scripts in its calls which used the word "upgrade" several times and included other unapproved information as well.
10. Pacific Bell determined that BRI had contacted 278,010 customers and that approximately 107,000 customers had been switched from Complete to Select Blocking as a result of those calls. Pacific Bell contacted each switched customer to confirm the choice.
11. Pacific Bell took prompt action to terminate BRI's contract when it became clear that BRI was not adhering to the approved scripts, and subsequently contacted consumers to confirm their blocking choice.
12. Pacific Bell corrected the lack of disclosures and misstatements of fact by BRI.
13. Anonymous Call Rejection allows called parties to refuse to receive calls from telephones that have the number blocked by terminating such calls at the central office so that no toll charge is assessed. The rejected caller instead hears a recording stating that the called party does not accept anonymous calls, and if the caller wishes to complete the call, the caller's line must first be unblocked by using the *82 code, and then redialing the number.
14. Greenlining's witness testified that the purpose of this product was to "punish consumers who have chosen to keep their numbers private - whether they use Selective or Complete Blocking," and that it invades rather than protects the caller's privacy.
15. Greenlining contends that Anonymous Call Rejection violates § 2893, which requires that no charge be imposed for withholding a number. To complete a call where the called party subscribes to Anonymous Call Rejection, the caller must incur the cost of calling from a pay phone to withhold the telephone number, thus incurring a charge to withhold the number.
16. Intervenor Roberts states that he has found Anonymous Call Rejection to be invaluable in protecting and enhancing his and his family's privacy.
17. Pacific Bell offers two types of inside wire maintenance plans. For 60 cents/month, Wire Pro covers the repair of phone wiring and jacks on the customer's side of the demarcation point. For $2.25/month, Wire Pro Plus adds a 60-day use of a loaner telephone to the services covered by Wire Pro.
18. Pacific Bell instructs its service representatives to offer Wire Pro Plus, and to explain Wire Pro only if the customer is not interested Wire Pro Plus.
19. Pacific Bell does not proactively inform apartment dwellers of the landlord's statutory duty to maintain inside wire and one jack.
20. The fact that some other entity may be responsible for providing a service that a customer is considering purchasing from Pacific Bell is necessary to make an informed decision on a Pacific Bell offer.
21. The Commission has approved Pacific Bell's tariff for Saver Packs of optional services. The names of the different Saver Packs are: Classic, Caller ID, Essentials, the Basics, and the Works.
22. Pacific Bell service representatives first offer customers the Works Saver Pack or Works Plus and, if rejected, offer the Basics Saver Pack.
23. Pacific Bell served copies of its tariff filings on complainants UCAN and Greenlining. No complainant, nor any other entity, protested the filings.
24. Pacific Bell offered customers a package of services named "The Basics Plus Saver Pack" which included The Basics Saver Pack and The Message Center. The Message Center is a voice mail service provided by Pacific Bell Information Services (PBIS), a Pacific Bell affiliate, but the service is tariffed with the Commission by Pacific Bell.
25. The parties did not raise the issue of whether customers might be misled into believing that The Message Center was being provided at a discount by a combination of The Message Center, at regular price, with a "saver pack."
26. In 1997, Pacific Bell instituted a policy of offering optional services, such as Call Waiting, Saver Packs, and Caller ID, on all customer contacts other than when a customer is disconnecting service or is temporarily disconnected for non-payment.
27. When offering optional services, Pacific Bell's sales representatives are trained to offer first The Works Saver Pack, with nine custom calling features at a cost of $16.95/month, or The Works Plus Saver Pack at $24.95/month. If the customer is not interested in these packages, the service representative is trained to offer the Basics Saver Pack, which costs $14.95/month with four custom calling features or $12.95 with three custom calling features.
28. In 1998, Pacific Bell began paying service representatives up to $150/month for meeting their sales revenue targets, and a 25% commission on all sales above the target, with no upper bound to the amount of the commission.
29. Pacific Bell's 1992 Business Office Sales Policy and Guidelines stated that service representatives are to engage in "consultative selling" by responding to verbal cues from the customer and to cues from the customer records in order to make personalized product and service recommendations in all appropriate contacts.
30. Customers are familiar with sales personnel compensated by sales-volume-based commissions.
31. Pacific Bell hires outside vendors and uses its corporate affiliates to perform both inbound and outbound customer contacts. Pacific Bell provides the vendors and/or affiliates access to customer information, including services purchases and financial information.
32. Complainants have not alleged that the information disclosed to agents or corporate affiliates was used for any purpose other than marketing Pacific Bell's products, or that the agents or affiliates failed to keep the information secure.
33. Over 20% of Pacific Bell's service representatives handle calls at its foreign language centers. These representatives speak Spanish, Cantonese, Mandarin, Japanese, Korean, Vietnamese and Tagalog.
34. Pacific Bell engages in marketing efforts to build awareness of its products and services by using print advertising, newsletters, other media, and telemarketing, in addition to customer initiated contacts with service representatives, to explain the benefits of its products and services to these markets. Pacific Bell retains experts in each of the languages to translate and review marketing and service representative scripts, and it also works closely with groups that represent these customers.
35. Complainant Greenlining contends that immigrant and language minority groups are particularly vulnerable to high-pressure sales tactics and are less likely than other consumers to report abuse.
36. Field Research Corporation market research shows the following percentage interest levels for Caller ID: White, 23%; Hispanic, 39%; African-Americans, 37%; Asians, 42%.
37. All local exchange carriers charge ULTS qualified residential low-income customers a discounted installation charge of $10, and a monthly fee of $5.62 for flat rate service or $3.00 for measured service.
38. For each ULTS customer served, the local exchange carriers are reimbursed from the ULTS Fund for the difference between the ULTS rate and the respective local exchange carrier's usual rate for residential basic service. The ULTS program is currently funded by a 3.2% charge on all end users' bills.
39. ULTS customers are best able to determine which Pacific Bell services meet their needs.
1. The petitions to set aside submission of Roberts and TIU should be denied.
2. Section 451 requires that all charges imposed by a public utility be just and reasonable and that all rules that pertain to or affect a utility's charges or service to the public be just and reasonable.
3. Section 2896 prohibits the sales techniques utilized by Pacific Bell's representatives in marketing Saver Packages.
4. Complainants have met their burden of proving a violation of § 2896 with respect to Pacific's sequential marketing of Saver Packages.
5. Pacific Bell's Tariff Rule 12 governs the offering of optional services to a customer. It states that Pacific Bell may call a customer's attention to the fact that optional services are available, that the customer may designate which services are desired, and that Pacific Bell must disclose all applicable recurring rates and nonrecurring charges for the designated services.
6. Tariff Rule 12 does not require Pacific Bell to quote rates and charges for optional services that the customer has not designated.
7. Tariff Rule 12 is required by the Commission's GO 96-A, which requires that each utility provide customers with up-to-date information regarding their service, and allow customers to choose from among any service options available to them.
8. Pacific did not make customers aware that Package components can be purchased separately.
9. Pacific should be directed to clarify Tariff Rule 12 to provide a quotation of applicable rates and charges for each individual component of a package as well as the package as a whole and inform the customer that each of the components can be purchased separately if the customers agree to hear the information.
10. Section 2893 requires that every telephone corporation that provides Caller ID comply with the Commission's rules on blocking services which include providing each caller the capability to withhold display of the caller's telephone number, on an individual basis, from the telephone instrument of the called party.
11. The Commission has determined that, to the greatest extent possible, the decision to allow a calling party's number to be displayed must be the result of informed consent and a knowing and intelligent waiver of the right to privacy.
12. Pacific Bell is required to provide customers with sufficient information about its two Caller ID blocking options.
13. We conclude that Pacific's marketing scripts do not provide the customer with sufficient information on the full range of blocking options available.
14. Pacific's marketing efforts for Caller ID are not a part of the customer education requirements as defined by D.92-06-065 or a subsequent resolution that adopted the CNEP.
15. The public interest requires that Pacific Bell inform customers of the two blocking options, with a description of each, when a customer initiates service and before changing the blocking option.
16. The Commission has previously determined that the called party has every right not to answer the phone, and to secure services from Pacific Bell to prevent certain calls from being presented to the phone.
17. Section 2893 places no burden on called parties to receive anonymous calls; it only requires that telephone corporations provide a blocking service at no charge to the caller.
18. A customer's decision to switch from Complete Blocking to Selective Blocking based on the marketing script Pacific provides to its customer services representatives do not constitute a fully informed waiver of a customer's privacy rights.
19. Pacific has violated §2896 and D.92-06-065 in its marketing of Caller ID Services.
20. The public interest requires that Pacific Bell confirm that all customers who have switched from Complete Blocking to Selective Blocking since January 1, 1998, understood the privacy consequences of the switch and intended to make the change.
21. In D.99-06-053, we noted that Pacific Bell's service representatives only present customers with the option of Wire Pro as a fallback when the customer rejects Wire Pro Plus, found that this sequence "may be misleading to residential customers," and ordered Pacific Bell to clearly explain both options to residential customers.
22. The Commission previously required Pacific Bell to disclose the landlord's responsibility for inside wire, by stating in bold and underlined (when in writing) "You should be aware that, under state law, landlords, and not tenants, are responsible for repairs to and maintenance of inside telephone wire." This disclosure requirement expired on September 1, 1994.
23. In D.99-09-036, we ordered Pacific Bell's service representatives to clearly explain to its residential customers that they have four options for the repair and maintenance of inside wire: (1) Pacific's Wire Pro plan which covers repair of the customer's inside wire and jacks, (2) Pacific's Wire Pro Plus plan that covers the use of a loaner telephone instrument for up to 60 days, (3) outside vendors to perform inside wire repair maintenance, and (4) making the repairs themselves.
24. D.99-09-036 fully addressed the issue that complainants have raised regarding disclosure of alternative vendors for inside wire repair and the record shows no reason to disturb our previous decision.
25. On the record before us, we find that complainants have failed to meet their burden of proof to counter Pacific's explanation with significant showing of customers who were actually confused by the name The Basics Saver Pack and the Essentials.
26. Pacific Bell's offer on every call strategy does not violate § 2896 because it does not deprive customers of information; if anything, customers are receiving excess information in the form of undesired sales pitches.
27. Proving a violation of Tariff Rule 12, under which Pacific must quote all recurring rates and nonrecurring charges for all services designated by the customer, requires the opposite of what UCAN has shown: customers may be receiving unwanted information, but they are not being deprived of information.
28. UCAN has failed to meet its burden of proving that Pacific Bell's offer on every call policy violates a provision of law or any order or rule of the Commission.
29. The public interest requires that Pacific Bell modify the text of Tariff Rule 12 to require that Pacific Bell offer each customer additional information on service options available.
30. The manner in which Pacific offered sequential offering in the absence of the customers' awareness of their ability to buy individual services on a standalone basis or the availability of other options violates §2896.
31. The sequencing strategy that Pacific Bell has chosen and has mandated that service representatives use to market Saver Packages fails to properly inform customers that optional services can be purchased separately and that packages exist which contain fewer number of services and at lower prices.
32. Pacific should be directed to clarify Tariff Rule 12 to provide a quotation of applicable rates and charges for each individual component of a package as well as the package as a whole and inform the customer that each of the components can be purchased separately if the customers agree to hear the information.
33. Section 2891 prohibits all California telephone corporations from making available to "any other person or corporation" various types of customer information, including customer calling patterns and financial information.
34. As used in § 2891, "any other person or corporation" does not include the telephone corporation's employees or agents (including affiliates acting in that capacity). Such sharing of information must be within the scope of the employment or agency relationship, subject to the supervision of the telephone corporation, and for the purpose of conducting the telephone corporation's business.
35. UCAN has failed to adequately state a claim under either 47 U.S.C. § 222 or § 2891.
36. Complainants have presented us with no sound rationale for prohibiting Pacific Bell from using incentive-based compensation mechanism for their service representatives in the increasingly competitive telephone market.
37. The statutory standards applicable to Pacific Bell's marketing to ethnic minority customers are the same standards applicable to its other customers.
38. ULTS is designed to promote the use of affordable, statewide, basic telephone service among low income households by providing a subsidy to low income customers funded by a surcharge on all end-users' bills.
39. ULTS customers should have the opportunity to purchase optional services.
40. As with all customers, ULTS customers are best able to make their own purchasing decisions when presented with complete information.
41. The public interest requires that Pacific Bell pay a fine of $2,373,000 to the General Fund of the State of California.
IT IS ORDERED that:
1. No later than 120 days after the effective date of this order, Pacific Bell shall file and serve an advice letter proposing modifications to Tariff Rule 12 consistent with this decision.
2. No later than 60 days after the effective date of this order, Pacific Bell shall begin including on every bill the Caller ID blocking status of each telephone line. The bill shall also contain (either on the front or back) a brief description of the two options and code required to block or unblock the number.
3. Pacific shall contact all customers that have switched from Complete Blocking to Selective Blocking since January 1, 1998. Pacific Bell shall follow the same process that it followed when contacting the customers contacted by Business Response Inc.. Within 180 days from the effective date of this decision, Pacific shall complete the customer notification process and notify the Director of the Commission's Telecommunications Division on the results of its compliance with this order.
4. Pacific Bell shall confirm that all customers who have switched from Complete Caller ID Blocking to Selective Blocking since January 1, 1998, understood the privacy consequences of the switch and intended to make the change.
5. Complainant challenge to Pacific Bell's offer on every call policy is denied.
6. Greenlining's request that Anonymous Call Rejection be prohibited is denied.
7. Greenlining's request for special disclosure requirements for ethnic minorities, recent immigrants, and customers that prefer to use a language other than English is denied.
8. Complainants have failed top meet the burden of proof that Pacific Bell has violated state or federal laws covering the use of Customer Proprietary Network Information.
9. Pacific Bell shall resume disclosing to its customers who are tenants that the landlord is legally responsible for inside wire maintenance and usable jack.
10. Within 120 days from the effective date of this decision Pacific Bell shall pay a fine of $2,373,000 to the General Fund of the State of California.
11. Case (C.) 98-04-004, C.98-06-003, C.98-06-027, and C.98-06-049 are closed.
This order is effective today.
Dated , at San Francisco, California.
