Part 2: Consumer Protection Rules
We begin with some overall observations on the input we received through parties' many rounds of comments and replies since the initial proposed consumer protection rules were distributed with the rulemaking order. First, we were gratified to see the thoroughness with which the parties approached the task. Not only did the parties tender their positive and negative reactions to each rule, but in most cases they then went on to explain those reactions and suggest changes we might make to conform each rule to their positions. Commenters were also imaginative in proposing additional rights and rules. A number of them on both sides of the service relationship will recognize their handiwork in the new general order. Second, while we could have anticipated that consumer representatives would in general be enthusiastic toward new rules and carrier representatives much less so, there was a remarkable degree of crossover. Even some of the more prominent carriers and consumer advocates were quick to acknowledge the strengths of positions opposed to theirs when that was appropriate. Third, there were many suggestions that were on the periphery of what was originally envisioned in the rulemaking order. Some of those, such as enhanced enforcement and consumer education programs, we will mention later in this order. Others advanced topics that are outside the scope of the proceeding but we may follow up on in new proceedings in the future. Service quality was perhaps the most prominent example. We draw a distinction in this proceeding, however, between consumer protection rules and service quality rules: the latter are much more likely to involve objective measures of performance. We recently issued Order Instituting Rulemaking (R.) 02-12-004 with the express purpose of establishing service quality measures and reporting requirements which complement our consumer protection rules.
Relationship to Existing Rules and Tariffs
Many parties in their comments urged us to make clear which of our earlier requirements we intend to supersede by these rules. The Commission has enacted other sets of carrier-class specific consumer protection rules in its proceedings over the years, and those rules were in fact the source for many of the rules staff proposed in its report. There are also consumer protections set forth in federal and state statutory requirements, FCC rules, Commission general orders, and Commission decisions, many of which we have drawn on in addition to the parties' comments in drafting this final set of rules applicable to all carriers. In defining the relationship of these new rules to existing rules and tariffs and which of our earlier requirements we intend be superseded, we here address each source of current consumer protection requirements: tariffs, carrier-class specific rules, Commission decisions and general orders, and state and federal statutes and FCC orders.
Tariffs
Tariffs have historically been the primary source of Commission-initiated consumer protection rules for all classes of carriers. Each tariffed carrier class generally has begun with a core set of rules10 which Commissions past then required and/or allowed to be modified and updated to reflect changes in technology, law and the marketplace over the years. With the advent of competition, the local exchange carriers (LECs), competitive local exchange carriers (CLCs), and incumbent LEC (ILEC) affiliated interexchange carriers (IECs) are still tariffed, while the non-ILEC affiliated IECs have a choice of being tariffed or non-tariffed. Commercial mobile radio service (CMRS) carriers were exempted by D.96-12-071 from having to file tariffs, but required to continue following their formerly-tariffed consumer protection rules under a transition procedure set up in D.96-12-071, as explained below. With today's rules, we establish updated standards for consumer protection to be applied across all carrier classes. It is perhaps inescapable in drafting a single set of rules for all carriers and carrier classes that some carriers will have in force individual tariff requirements that already exceed various requirements in the new rules. We do not intend by these rules to encourage or allow carriers to relax any current tariffed consumer protections. Where current tariffs fall short of our new standards, we will require carriers to modify their tariffs accordingly. Where the tariffs already provide an equivalent or greater level of protection, those higher levels remain in force.
CLC Rules
The current CLC-specific consumer protection rules were established in R.95-04-043 and Order Instituting Investigation (I.) 95-04-044, our rulemaking and investigation into competition for local exchange service, when CLCs first became eligible for certification. D.95-07-054, Appendix B, Consumer Protection and Consumer Information Rules for CLCs, served as an important source document for the rules in this proceeding. Those Appendix B rules have been considered and are superseded in their entirety by our new G.O. ___. Subsequently, D.95-12-056 in the same local exchange competition proceeding introduced additional requirements. Some of those relate to our new general order in the areas of, e.g., deposits, redlining, and end-user 911 service. Those requirements were not classified as consumer protection rules per se in D.95-12-056, but we have reviewed them in preparing G.O. ___. None are inconsistent with our new G.O. ___, so all of the requirements of D.95-12-056 will remain in effect.
Detariffed IEC Rules
IECs have been tariffed since they were first certificated as a separate carrier class in the 1980's. As we observed in D.98-08-031, "Our current consumer protection rules [for IECs] are reflected in our Decisions, General Orders and other rules, as well as in the utilities' tariffs." That decision in R.94-02-003 and I.94-02-004, our proceeding to establish a simplified registration process for non-dominant telecommunications firms, offered non-ILEC affiliated IECs an exemption from tariffing. Pursuant to Section 495.7(c), the Commission established in D.98-08-031 a set of consumer protection rules for the exempted services. Again, those rules have been considered and are superseded by our new G.O. ___.
CMRS Rules, and the CMRS Proceeding
CMRS carriers are a diverse group of sub-classes that followed different paths to reach today's state of regulation.11 In D.96-12-071 we exempted all regulated CMRS carriers from filing tariffs, and also allowed them to offer service through customer-specific contracts without Commission pre-approval. To replace the consumer protections formerly in tariffs, we stated our intent to develop and adopt one uniform set of consumer protection rules applicable to all CMRS providers, after which any previously filed CMRS tariff rules would be superseded by those newly adopted rules:
The purpose behind any tariff filing requirements would be to adjudicate any consumer complaints and protect consumer interests. In the event such information is needed to resolve a particular consumer complaint or dispute that falls within our current jurisdiction, we still have the authority to require carriers to promptly provide the Commission with the requisite rate and other information. Therefore, we shall continue to require each CMRS provider to maintain a record of its rates, other terms and conditions and revisions thereto, at its general office. While we have concluded that the filing of CMRS tariffs should no longer be required, we still remain concerned that the terms and conditions of service offered by each CMRS provider continue to provide adequate protection to consumers. We have traditionally relied upon the filing of tariffs to assure that the consumer protection provisions within those tariffs were adequate. We believe, however, that a more efficient alternative to requiring the separate filing of tariffs by every CMRS provider is to develop and adopt one uniform set of Consumer Protection Rules applicable to all CMRS providers.
* * *
In order to provide for regulatory continuity between now and the time we adopt a set of consumer protection rules applicable to CMRS providers, as an interim measure, we shall continue to enforce each CMRS provider's existing consumer protection rules. By existing consumer protection rules, we refer to those categories of rules summarized in G.O. 96-A, Section II.C(4). These rules as categorized in G.O. 96-A are set forth in the existing tariffs currently in effect for each CMRS provider, even though a copy of every CMRS provider's currently effective tariff may not be on file with the Commission. We shall apply these existing rule provisions in dealing with any CMRS consumer complaints or billing disputes that come before us during this interim period. If necessary to resolve a complaint, we shall direct the CMRS provider to supply a copy of its currently effective consumer protection rules to the Commission if a currently-effective copy was not previously filed. Once we adopt a generic set of consumer protection rules for CMRS providers, any previously filed G.O. 96-A CMRS tariff rules shall be superseded by those newly adopted rules. (D.96-12-071). (Emphasis added).
Accordingly, we intend the consumer protection rules we adopt today to fulfill the purpose anticipated in D.96-12-071 by superseding any previously-filed CMRS provider tariff rules.
General Orders
The new rules have been carefully coordinated with previously-enacted portions of our forthcoming General Order 96-B, Rules Governing Advice Letters and Information-only Filings.12 The primary areas of overlap are in Rule 1(a), which requires Internet tariff publication, and Rule 8, Tariff Changes, Contract Changes, Notices and Transfers. As described later below, those previously-enacted portions of G.O. 96-B have in fact already determined much or most of what is in our new Rule 8.
In addition to the G.O. 96 series, we also believe these rules to be consistent with all other Commission general orders, and thus no part of any Commission general order is superseded. We have, however, added clarification that carriers must continue to comply with the requirements set forth in General Order 153, Procedures for Administration of the Moore Universal Telephone Service Act, where they apply. That general order establishes differing requirements for, among other things, deposits to initiate Universal Lifeline Telephone Service. The requirements of General Order 153 take precedence over these rules whenever there is a conflict between them for a service offered under the Universal Lifeline Telephone Service program.
State and Federal Statutes, and FCC Orders
We have also drawn from state and federal statutes and FCC orders in assembling these consumer protection rules. We are acutely aware of the need to remain within bounds where those authorities constrain us, and we have been cautious to do so. In those areas where we have drawn rules more consumer-protective than those of other authorities might be, it is because we have authority to do so. We have provided cross-references to certain state and federal statutes and regulations in comments to the rules for the convenience of carriers and the public, and in some instances to clarify the relationship of our rules to those authorities. All carriers need to be aware that we have not attempted to echo in these rules every legal requirement that applies to them, and of their need to comply with all applicable legal requirements.
Applicability
To Carriers
First, we affirm that we intend these rules to be applicable to all Commission-regulated telecommunications utilities and, through them, to agents acting on their behalf. We have reworded the definition of "carrier" to clarify that it includes all entities, whether required to be certificated or registered, that provide telecommunications-related products or services and are subject to the Commission's jurisdiction pursuant to the Public Utilities Code.13 Carriers pointed to a number of areas where our staff qualified its initially proposed rules through reference to specific carrier classes, frequently local exchange or basic service providers. Some carriers would have us exempt them from these rules entirely, or from specific rules, or set up a separate set of rules for their classification. We have considered the carriers' comments as well as those of others and, as a result, have made many adjustments. The rules are now more situational than carrier-class specific; where a carrier class doesn't encounter a given situation, the rule remains effective but is applicable only where the specified circumstances exist.
To Consumers
Having decided to apply these rules to all carriers, the question arises, to whom should these protections be afforded on the consumer side? In making their case to be exempted entirely from the rules, the CMRS carriers point out that the historical LEC distinction between business and residential service doesn't generally apply to wireless carriers. A traditional wireline telephone number or instrument is almost always associated with a location, typically either a place of business or a residence. A wireless instrument and wireless number are more often thought of as associated with an individual, and that individual is far less likely to define personal wireless access as exclusively business or exclusively residential. It is also true that there are many small business customers14 who suffer the same problems as residential customers: slamming, cramming, the difficult process of gathering sufficient information to make informed service choices, billing problems, and so forth. In short, there is a strong case for applying the consumer protection rules to both individuals and businesses.
On the other hand, large businesses are much more capable than individuals and small businesses of reaping advantage from the competitive markets for communications services.15 Large businesses are more likely to have the sophistication and resources to evaluate their choices, to call into play the high volumes that give customers leverage with providers, and to participate in contractual arrangements through which they can negotiate for terms and non-standard service configurations that best suit their needs. Large businesses are less dependent on the kind of rules we are establishing here, and in some cases rules could even stand in the way of large businesses that desire to negotiate specific, non-conforming contract provisions. On balance, we agree with commenters who would have carriers be bound by the rules in their dealings with small businesses but leave carriers and large businesses the latitude to negotiate. One commenter representing small businesses suggested drawing the dividing line between large and small businesses at twenty lines, and that was the figure proposed in the June, 2002 draft decision. In subsequent comments, carriers suggested small businesses be defined as those having three or fewer lines. Carriers credit that definition to a 1999 FCC decision, but the FCC did not intend it as a threshold for applying consumer protection measures. We believe three lines is too low for that purpose; in fact, we commonly see advertisements nowadays for "family plans" offering more than three access lines in one account. Carriers, small business representatives and consumers did agree that the definition should also incorporate a maximum number of T-1 lines:16 some carriers would exclude from the definition of small businesses all businesses which subscribe to T-1 service, while consumer and small business representatives would exclude only those with more than two T-1 lines. We are adopting a one T-1 line limit, along with a suggestion that small businesses should be defined by a billed account, so that when a bill is aggregated among a number of locations, the criteria are applied cumulatively. Thus, except where noted, each carrier will be required to observe these rules when dealing with any customer having (or applicant seeking) the carrier's service on twenty or fewer access lines, provided that the customer or applicant also has no more than one T-1 line. That is not to say that larger customers will receive no benefit from these rules. Many of the improvements they generate will help all customers: straightforward carrier disclosure and marketing practices; customer notices of all types; and access to the regulatory process for disputes. And even the largest businesses that rely heavily on negotiated contracts for services will still have available the traditional protections of tariffs when they choose tariffed services.
Other
It has also been suggested we make clear that we do not intend by issuing these rules to foreclose consumers, district attorneys, the Attorney General, or other agencies from enforcing consumer protections through the courts. That clarification has been added.
The New Consumer Protection Rules
To begin our discussion of specific Part 2 rules, it is useful to distinguish generally among the coverages of Rules 1, 2 and 3. Rule 1 focuses on information the Commission requires carriers to provide consumers to enable them to make informed choices and enforce their rights. Rule 2 sets standards the Commission requires carriers to follow if they choose, as all active carriers do, to solicit consumers. Rule 3 sets standards the Commission requires carriers to follow in initiating service once a consumer has selected the provider. There is some overlap in that certain requirements could fall into more than one area, and that has engendered minor misunderstandings reflected in the comments. Service agreements are perhaps the best example because they may serve as tools to help consumers make choices and enforce their rights (Rule 1), offers to consumers and thus solicitations directed at them (Rule 2), and statements of terms and conditions to be implemented in initiating and providing service once the consumer has chosen (Rule 3). This iteration of the rules attempts to clarify what was intended through careful wording and explanatory comments set forth below each rule.
Rule 1: Carrier Disclosure
Disclosure is one of the fundamental telecommunications consumer rights in this proceeding, and is also key to safeguarding other rights. Rule 1 will help ensure that consumers are able to learn what products and services are available to them from regulated telecommunications carriers, and at what rates, terms and conditions of service (Right to Disclosure). With that information, they should be able to choose the providers, products and services that best suit their needs (Right to Choice). Having chosen their providers and services, they need to be able to verify their bills using the true rates, terms and conditions of services to which they subscribe, to know how to reach their providers for inquiries, disputes and complaints (Right to Accurate Bills and Redress), and to know how to reach the Commission's Consumer Affairs Branch (CAB) when they are unable to obtain satisfaction through the carrier (Right to Public Participation and Enforcement). Lastly, subscribers and potential subscribers need to know a carrier's customer information-handling practices so they can balance their need for privacy with their need for the carrier's products and services (Right to Privacy).
Reactions to Rule 1 as proposed in the staff report were mixed. While many carriers argue that no rules are needed, most don't oppose disclosure in the general sense but do suggest revisions to Rule 1. Consumer representatives overwhelmingly favor more disclosure, oftentimes in far more detail than earlier proposed. They maintain that there are currently few if any satisfactory sources of telecommunications consumer information. Tariffs are too complex and usually not readily available. Carrier marketing often features incomplete information focused on recruiting customers rather than educating them. And where carriers rely on oral disclosures, they put the alleged disclosure beyond any possibility of effective proof or disproof. Not unexpectedly, Internet web posting drew considerable attention, as described below.
In response to customer input through the public participation hearings and correspondence and the many rounds of party comments, we have made a number of changes in Rule 1 from the version staff first presented with the rulemaking order. First, it clarifies that utilities meeting certain size criteria are indeed required to establish World Wide Web sites on the Internet and to publish on those web sites the rates, terms and conditions of their services. The staff's proposed Rule 1(b) requirement to provide information on request has been differentiated into information to be provided to customers and information to be provided to the public. Rule 1 now pays more heed to timeliness in accepting customer and public telephone requests and in responding to them. We have added a provision defining the minimum level of customer disclosure information basic service providers must include in their alphabetical telephone directories, complemented by another requiring Commission approval before they may remove such information. Last, the restriction against incorporating formulae by reference has been modified to allow incorporation by reference when certain conditions are met.
As noted, consumer representatives overwhelmingly favor disclosure, and Internet disclosure in particular. In fact, among them they proposed a long list of detailed requirements for carriers' Internet sites. All carriers would be required to adopt standard language and a common format for displaying web-posted information. All would be required to post the Commission's and carrier's toll-free telephone numbers; to post carrier U-numbers and all California names under which they do business; to post carrier practices such as disconnection, deposit, refund and privacy policies; to post links to the Commission and to these consumer protection rules; to post information on fees and taxes, low-income programs and eligibility rules; etc. One commenter would facilitate rate comparisons by using this proceeding to require all carriers to bill in standard units; require a standard format for all carriers to send the Commission electronic disclosure and complaint information; and have the Commission become in effect a clearinghouse for all carriers' rate and service disclosure information.
Several carriers either endorsed posting disclosure information on the World Wide Web or would not oppose it with limitations. The most frequently expressed reservation was that carriers may have literally thousands of services, many of which are no longer offered to new customers but have a few remaining active subscribers. And even for those services they do offer, carriers would like to post only a representative sample. Some cite in their opposition the expense or the administrative burden involved. One picks up a consumer representative's observation that non-standardized web sites can become labyrinths to suggest that if the Commission were to require carriers to post as much detail as some would have them, the result would be confusing and overwhelming rather than helpful to consumers.
We favor the view that telecommunications carriers are among the more technically sophisticated players in the business world today. Comments made by a number of them indicate their concern lest the Commission's new rules inhibit delivering to their customers the very latest in communications and marketing technology. In an industry embracing greater Internet compatibility, it should not be too much to expect the larger participants to set up informative and consumer-friendly web sites. As one carrier put it, "In the Information Age, publication of a carrier's tariffed rates, terms and charges on a web site is a consumer-friendly and commercially feasible method of implementing full disclosure, and web site publication [is] appropriate for residential service offerings."
By D.01-07-026, an interim decision in our proceeding to revise G.O. 96-A, the Commission enacted the following provision applicable to the stationary utilities, including the regulated telecommunications carriers:
The Commission strongly encourages all utilities, and requires certain utilities as described below, to publish and keep up-to-date their respective tariffs, as currently in effect, at sites on the Internet freely accessible to the public.
A utility that serves California customers under tariffs, and whose gross intrastate revenues, as defined in Public Utilities Code Section 435(c) and reported to the Commission for purposes of the Utilities Reimbursement Account, exceed $10 million, shall publish, and shall thereafter keep up-to-date, its currently effective California tariffs at a site on the Internet. The Internet site shall be accessible, and the tariffs shall be downloadable, at no charge to the public. At all times, the utility shall identify at the site any tariffs that would change as the result of Commission approval of modifications the utility has proposed in a pending application or advice letter. The utility shall update the site within five business days of the effective date of any such approval. The utility shall also provide instructions at the site for getting copies of such pending application or advice letter, and of no longer effective tariffs. If it is difficult to publish at the site the maps or forms in the utility's tariffs, the utility shall provide a means of downloading the maps or forms, or shall provide instructions for getting copies in printed format.
A utility whose gross intrastate revenues, as last reported to the Commission, exceed $10 million, shall comply with this Internet publication requirement no later than January 1, 2002. Any other utility whose gross intrastate revenues, as reported in the utility's annual report to the Commission after January 1, 2002, exceed $10 million, shall comply with this Internet publication requirement no later than 180 days after the date of the annual report.
For telecommunications carriers that meet the $10 million threshold and file tariffs with the Commission, the new Rule 1(a) requirement here is consistent with that adopted in D.01-07-026. Telecommunications carriers that meet the $10 million criterion and provide Commission-regulated, non-tariffed services, e.g., the CMRS carriers and non-tariffed IECs, are covered under Rule 1(b) and will eventually post on the web the key rates, terms and conditions of each offering under which they provide or offer to provide California intrastate service to individual subscribers or small businesses.
Carriers would limit Rule 1(b) to listing information applicable to currently available plans. But, as the carriers themselves acknowledge, their non-tariffed offerings change frequently; deleting active plans from the electronic listings when they are no longer available to new subscribers would save very little while denying a significant proportion of all subscribers access to their most ready source of information. Consumer representatives opposed the carriers' changes, and instead suggested adding to Rule 1(b) additional language that would make it more detailed and prescriptive. We have condensed the wording of both Rules 1(a) and 1(b) by deleting the references to D.01-07-026 as unnecessary and incorporating the remaining requirements of Rules 1(a)(1) and 1(a)(2) into Rule 1(a), and 1(b)(3) and 1(b)(4) into Rule 1(b). The result is simple yet definitive.
This latest version of Rule 1(b) does make significant changes in reaction to the comments. Where the June 2002 draft decision required carriers to post all rates, terms and conditions for all active plans, this version only requires carriers to post the key (as defined) rates, terms and conditions for plans that are open to new subscribers. And, once a plan is no longer open to new subscribers, access to its key rates, terms and conditions may be narrowed to those subscribers to whom they still apply.
Since carriers' Rule 1(b) web postings are anticipated to be prime sources of information for consumers, it is critical that carriers' service descriptions, rates, terms and conditions be understood. To that end, and because they are in effect offers to provide service, Rule 1(b) defines these web postings as solicitations subject to all of the other requirements applicable to solicitations under these Part 2 rules. Carriers objected to defining them as them solicitations, but could not explain why we should establish lower standards of disclosure for their web postings than applying that term invokes.
Carriers have suggested that they be allowed at least 180 days to bring their web sites into compliance with Rule 1(b). We have adopted that guideline for carriers newly reaching the $10 million threshold; those exceeding the threshold today will have 120 days to bring all of their operations into compliance. Finally, consumer representatives suggest that we require carriers meeting the Rule 1(b) threshold to post on their web sites, or link from their web sites, the Commission's new consumer protection rules. That requirement was already included as Ordering Paragraph 9 in the Assigned Commissioner's June 2002 draft decision and has been retained in this decision.
Staff's proposed Rule 1(b) has now become Rules 1(c) and 1(d), the distinction being whether a request for information comes from a subscriber or from another member of the public. For the former, the emphasis here is on ensuring the subscriber can obtain responses to enable him or her to understand and deal with the bill (or any other aspect of the service) regardless of whether the charges on it originate with this carrier or another. For the latter, the emphasis is on providing information that consumers can use to evaluate the carrier and its services. We have also retained the June 2002 draft decision's proposed Rule 1(d)(1) requirement for a carrier to divulge its legal name upon request; the working group gave no reason for recommending it be deleted, and the information could prove necessary to a consumer in pursuing legal remedies.
The three special conditions applicable to Rules 1(c) and 1(d) introduced in the June 2002 draft have been redesignated as Rule 1(e), and the sections following it renumbered. One of the complaints most often heard in the Commission's many public participation hearings was the difficulty of reaching carriers by telephone and getting prompt, consistent answers and solutions the carrier would then follow through on. Many industry commenters advanced the notion here that no new rules were needed because their customers' increasing ability to vote with their feet gives carriers more than sufficient incentive to do right. Customers who spoke at the public participation hearings would clearly disagree. Carriers, and those entities to whom carriers refer requests, must arrange to accept all requests for customer service within a reasonable time and without excessive waiting intervals or rejections for lack of staffing or facilities. Rule 1(e)(1) requires that telephone lines used to take subscriber inquiry, complaint and dispute calls give access to a carrier representative as quickly and reliably as lines the carrier provides for receiving incoming sales calls. The Commission does have authority to set objective speed of answer standards for carriers' business offices, and it has done so. G.O.133-B, Rules Governing Telephone Service, includes a requirement that all telephone utilities providing service in California answer 80% of their business office calls within 20 seconds in offices serving 10,000 or more lines.17
Several industry commenters objected to the staff's proposal that carriers provide immediate responses to customer and public inquiries. An organized and efficient carrier should have available all of the non-customer-specific information set forth in Rules 1(c) and 1(d). With today's interactive customer databases, current customer-specific information should be available immediately to a service representative answering a call. The parties' comments indicate that some information is not immediately available, and some is not available at all. Third-party billing can be particularly problematic. We find it troubling that carriers have set up and allowed to persist a system under which they bill the public for services assertedly provided, while at the same time they cannot give a prompt answer to a subscriber who wants to know what entity originated the charge and why. At the behest of a billing aggregator, a LEC sells the power and intimidation of its bill without being able to give an honest answer to the most basic customer question of all, "Do I really owe this?" A major wireless carrier bills its subscriber for calls another carrier says were made, and then "would not expect the roaming carrier to answer questions about roaming charges," nor find it feasible to put the customer in touch with the roaming carrier.
Our draft rules made no mention of one of the most valuable sources of disclosure information telephone subscribers are likely to turn to: their local telephone directories. Under Section 728.2, the Commission no longer has jurisdiction or control over classified telephone directories or commercial advertising included in carriers' alphabetical directories, but it does retain jurisdiction over other aspects of alphabetical telephone directories. A casual inspection of the largest ILEC's San Francisco white pages introductory section shows a praiseworthy assortment of essential, telephone-related information ranging from how to place calls of every type, to an overview of rates and conditions for basic service, to how, when and where to pay a bill and how to reach the telephone company for billing and service problems. One can find the area code for Antigua or the country code for Zimbabwe. There is information on reaching 911 emergency centers, crisis hotlines, and a first aid and survival guide. Residential customers can find basic information on reaching the company in at least six different languages in addition to English.
Nonetheless, at our public participation hearings around the state and in public correspondence from those who were unable to attend, we learned of the public's great concern with the attrition of other essential information from the white pages over the years. After those hearings we saw several formal complaints charging that the lists of prefixes that could be reached as local calls had disappeared from the white pages.18 The problem became more acute with the advent of dial-up access to the Internet, requiring customers to know which of an Internet service provider's access numbers are local calls and which will generate local toll or long distance charges. The white pages told customers to call the operator for that information, but we heard discouraging reports that when they did, the operator might not be able to help. Local service providers pointed to Internet service providers who in turn pointed back at the carrier, and by the time their first bill arrived, customers who got it wrong were sometimes faced with horrendous local toll or long distance bills for calls they thought were local.
We have noted in the past that customers' white page directories are a substantial source of information regarding their telephone service, that the inability to know whether a call is a toll call is an important impediment to the functioning of a competitive market, and that adequate availability of customer information is a necessary component of the market structure.19 In our Universal Service Proceeding, we defined basic exchange residential service to include a free white pages telephone directory.20 We would not want to see this important source of customer disclosure continue to lose its effectiveness, but this is a relatively easy consumer protection problem to solve. Our Rule 1(f) defines a minimum level of customer disclosure information basic service providers must include in their alphabetical telephone directories. The first requirement is taken directly from Section 2889.6.21 The second is from Section 2894.10. Because most of the remaining requirements were derived from an ILEC directory, most of this information is currently included in at least some white pages editions. One notable exception at the time of the June 2002 draft was, of course, the local prefix information which had recently disappeared, as so many irate customers reminded us. Under D.02-08-069, it is now being restored for the largest ILEC's directories. It would be impractical to produce an exhaustive list of necessary white pages consumer information, but Rule 1(g), which requires prior Commission approval to remove customer disclosure information, makes that unnecessary. We have not adopted all of the changes to Rule 1(f) the working group suggests in its report, because the wording they suggest, when read literally, could be used to eviscerate the rule. The most important change from the June 2002 draft decision is that it now better accommodates basic service providers who do not publish the directories they distribute to their subscribers.
Staff's proposed Rule 1(c), which now has become Rule 1(h), originated in the Commission's Streamlining decision, D.98-08-031, and may have lost something in the translation. In the D.98-08-031 context it required non-tariffed IEC contracts to include all applicable rates, terms and conditions of service without incorporations by reference, although it did allow formulae to be used to calculate rates or charges where the components could be readily ascertained from a public source. To be meaningful and effective, carrier disclosure must be understandable to its audience. Carriers expressed concern with banning incorporation by reference to tariffs, and consumer representatives agreed that limited tariff references should be permissible provided carriers provide ready access to the tariff sections referenced; we have accommodated that change. As revised, the rule now also allows references to materials provided simultaneously with the service agreement or contract, and information that is used with formulae identified in the agreement or contract to calculate the applicable rate or charge where all necessary components are readily available from the carrier at no charge.
Rule 2: Marketing Practices
Rule 2 sets forth requirements to be followed in soliciting consumers to purchase products and services, and in the service agreements and contracts that bind customers to the rates, charges and conditions for those products and services. Rules governing marketing practices are important to safeguarding consumers' Right to Disclosure and Right to Choice.
The term "solicitation" as used in this Rule and elsewhere is now defined using the language of the Business and Professions Code.
The most significant changes in Rule 2 compared to the staff proposal issued with the rulemaking order are its stronger reliance on concepts such as clarity, conspicuousness and comprehensibility that are meaningful regardless of the medium; its explicit statement that solicitations must not be deceptive, untrue or misleading; and its deferral of in-language requirements to a subsequent phase of the proceeding. Former Rules 2(e) and 2(f) have been moved to Rule 3 because they relate more to service initiation and changes than to marketing practices. Former Rule 2(g) was included in the June 2002 draft to ensure that customers are not abused by misleading advertising or disingenuous use of the filed rate doctrine to deflect their legitimate claims. As revised, it now becomes part of Rule 2(d), which echoes the Federal Trade Commission remedy for false advertising. A customer may terminate any misrepresented service without penalty and receive a refund or credit for the loss up to the time they were informed of the true situation. We discuss the filed rate doctrine further below and in the Detariffing section later in this order.
With some exceptions, carrier commenters generally oppose any restrictions on their marketing, promotional, and contractual efforts, relying heavily on a belief that laissez-faire regulation will better serve to enforce the necessary standards. They see competition producing a race to the top in service quality and marketing behavior, a vision completely counter to the real-world observations related by most people who wrote, e-mailed and spoke in the public participation hearings. Comments filed by those not connected with the industry reflect positions closer to the public's: that consumers' experiences to date with competition-driven marketing practices have been less than satisfactory, and the Commission is to be commended for stepping up to its consumer protection responsibilities with these rules.
Rule 2(a) now prohibits any advertising or solicitation that is deceptive, untrue, or misleading, language used in the Business and Professions Code.
Several commenters cited the California Uniform Electronic Transactions Act and the federal Electronic Signatures Act22 in connection with provisions in the draft rules that required certain communications to be written or in writing. For purposes of these revised rules, we have been careful in defining those terms. Both "written" and "in writing" may describe material intended to be read in any medium, including through electronic media. Whenever anything is required to be provided in writing or in written form (e.g., a disclosure, a notice, or a confirmation), the requirement may be satisfied through the use of electronic media if both parties to the communication have agreed to do so, and if not, a tangible, hardcopy document is required. It is not possible in the context of this rulemaking proceeding to determine in advance which transactions will be governed by the federal act and which by the state's. We have reviewed both and conclude that neither precludes any of the protections in our rules. Carriers are responsible for determining which applies to their own transactions.
Rule 2(b) requires that any written authorization for service be a separate document from any solicitation materials, and written orders may not be used as entry forms for sweepstakes, contests, or any other program that offers prizes or gifts. This reflects the requirements in Section 2890(b). This requirement was also applied to IECs in D.98-08-031, which established rules applicable to non-tariffed IECs.
Rule 2(c) requires all terms of written orders, service agreements and contracts to be plainly stated in understandable language, and in at least the 10-point type required by Section 2890(b). Provisions in written orders, service agreements or contracts that are not easily comprehended, whether due to small or pale typography, confusing layout, insufficient space or margins, etc., or due to language that is too complex or inaccessible to an ordinary person (i.e., "legalistic"), that are the product of the soliciting party may be deemed inapplicable to the transaction, rendering the agreement voidable. A significant proportion of California's consumers to whom affordability matters most may not be sufficiently sophisticated, or may not read well enough, to decipher service agreements written in complex or legalistic language. It is both good public policy and good business to accommodate them. Our intent is to ensure those who would be bound by carriers' service agreements and contracts are able to read, understand, and make informed choices about them before making a commitment.
Section 2890(b) also requires, "Written or oral solicitation materials used to obtain an order for a product or service shall be in the same language as the written order." Rule 2(c) as proposed in the June 2002 draft carried a similar requirement that called for agreements, contracts, bills and notices to be available in each language employed by the carrier in solicitations directed at consumers. Carriers responded through the many rounds of comments and at the workshops by pointing out that the more in-language requirements carriers face, the more likely they (particularly the smaller carriers) were to pull back from directing information about their services and products at non-English speaking audiences. Although others suggested possible solutions, this remains a topic of particular concern to us. Rather than finalize a rule on in-language requirements now, we will address the topic further in the next phase of this proceeding. That is not to say that there will be no protections in place in the meantime, however: Section 2890(b) will continue to govern in this area while we decide whether enhancements in the form of additional rules are needed.
Former Rules 2(e) and 2(f) have become Rules 3(g) and 3(h).
The staff report pointed out in several places the difficulties consumers have in understanding the full scope of the tariff rules that may apply to a service they choose, and in attempting to resolve their disputes with utilities through the Commission or the courts. Section 532 provides, "[N]o public utility shall charge, or receive a different compensation for any product or commodity furnished or to be furnished, or for any service rendered or to be rendered, than the rates, tolls, rentals, and charges applicable thereto as specified in its schedules on file and in effect at the time...," but also allows the Commission to establish such exceptions as it may consider just and reasonable. A carrier that lures a consumer into purchasing a product or service by, e.g., advertising lower rates or more favorable terms and conditions than shown in its tariffs, may be protected from later court claims of unlawful charges and billing provided the carrier has billed the customer in accordance with its filed tariffs (the "filed rate doctrine"). Part of today's Rule 2(d) was first separated out to become proposed Rule 2(g) in the June 2002 draft and is now recombined into a new Rule 2(d). It now requires that when disclosure of qualifying information, including key rates, terms and conditions, is necessary to prevent an advertisement or solicitation from being deceptive, untrue or misleading, that information must be presented clearly and conspicuously. Carriers who misrepresent their rates, terms or conditions must be proactive and timely correct any error as soon as it is discovered (a requirement formerly in draft Rule 2(d)(2)), and must make whole a subscriber who was affected by the misrepresentation. Once the subscriber has been informed of the true rates, terms and conditions, he or she must be reimbursed through service credits or refunds for losses up to that time, be allowed to cancel without penalty any agreement or contract for the product or service and be reimbursed for any service initiation charges or fees, and be allowed to enroll in a different plan if he or she wishes to do so. Rule 2(d) applies to both tariffed and non-tariffed services; we discuss the implications of the filed rate doctrine as a defense against consumer claims in the Detariffing section later in this decision.
Rule 2(d)(1) from the draft decision has been superseded by the more general language of the Business and Professions code used in Rule 2(a).
Rule 3 (and Former Rule 4): Service Initiation and Changes
Rule 3 combines and modifies what were Rules 3 and 4 in the staff's proposal. The combined rule is important to safeguarding subscribers' Right to Disclosure and Right to Choice when they sign up for services, and later their Right to Accurate Bills and Redress. Each time a customer or prospective customer initiates service, Rule 3 requires they be fully and proactively informed of the options available to them so they can make timely and informed choices. Carriers are then required to follow up by confirming the rates, terms and conditions for each service ordered.
Together, these notifications are the essence of the Right to Disclosure. Requiring that orders be confirmed (electronically or otherwise), giving customers a penalty-free cancellation period, and prohibiting service initiation and changes without authorization ensures they did indeed intend to place an order with that carrier for that service and have thereby exercised their Right to Choice. And, with a record of the rates, terms and conditions in hand, customers can monitor their charges to enforce their Right to Accurate Bills and Redress. The remainder of Rule 3 will ensure that customers know what actions will result in charges; level the playing field by making it difficult for carriers to place unauthorized charges on subscribers' bills; help consumers protect their privacy and reduce identity theft; assist consumers to understand and remedy any problems that lead to service denials; and encourage carriers to recognize that their subscribers' time is valuable to them.
Consumer representatives commended the ideas behind staff's original Rule 3 and Rule 4 proposals. Several drafted revisions to clarify or tighten the wording. Rule 3 as presented in the June 2002 draft accepted in major part a consumer group coalition's suggested realignment of staff's proposal for confirming orders, and as now adopted incorporates additional changes suggested by consumers and carriers. Rules 3(d) and 3(e) recognize the importance of disclosure in order confirmations, and Rule 3(f) allows customers to cancel orders for services that they find, after reviewing the carrier's confirmation materials, don't match their expectations.
Many carriers requested their carrier class be explicitly exempted from draft Rule 4 because the description indicated "local exchange service." Others pointed to the distinction staff had drawn between local exchange rules and all other rules as a justification for scrapping altogether the idea of a single set of rules applicable to all carrier classes. In preparing the June 2002 draft, it became clear that none of the three former Rule 4 subsections needed to be limited in that way because the situations they address are not, or will not always be, confined to local exchange carriers. Beyond their overarching belief that no new rules are needed, or that any new rules shouldn't apply to their particular carrier class, carriers' greatest concerns were that staff's proposed rules would reduce their flexibility in taking service orders and delay them in initiating service.
Rule 3(a) originally proposed allowing service to be initiated based on written, electronic or oral agreements, and carriers applauded the idea even as they questioned the meaning of "electronic" and "oral" and expressed reservations about the remainder of the rule. New Rule 3(a) simplifies that statement to say that carriers may initiate or change service upon request in any form. The intent is to make it clear that carriers may implement new or changed service at a customer's request as quickly as their systems permit, regardless of how the order reaches them. There was little or no opposition to this condition per se, but considerable concern on consumer representatives' part with ensuring a good process is put in place to follow up. That has been done. As will be seen, consumers' rights are safeguarded by the way staff's proposed Rules 3(b) and 3(c) have been reframed in new Rules 3(d), 3(e) and 3(f). They now give the consumer and carrier an opportunity to correct any mistakes, misunderstandings or misrepresentations that survive the initial ordering process.
Several carriers interpreted Rule 3(c) (staff's Rule 4(a)) as obligating every carrier to offer each of the service options listed. We did not interpret that as being staff's intent, although one subsection as initially worded did impose such an obligation. The various subparts of Rule 3(c) apply only when the information is relevant to service options a carrier provides; any requirement to offer those options would arise from a separate statute, decision, rule or tariff.
Staff's proposed Rule 4(a)(5) would have required local exchange service providers to inform subscribers initiating service about the availability and effect of blocking non-telecommunications related services from being billed with their telephone bills. Our Rules Governing Billing for Non-communications-Related Charges (Part 4 of G.O. ___, discussed later in this order) establish an opt-in approach to this new service. Carriers may not place non-communications-related charges on a subscriber's bill unless and until the subscriber has been fully informed and has given express written authorization to do so.23 Thus, proposed Rule 4(a)(5) was superseded by the Part 4 rules and is no longer needed here.
Rule 3(c)(5) was first proposed in the June 2002 draft and reflects the Section 2889.4 requirement that local exchange providers inform new residential customers of pay per use features during the order process. Rule 3(c) extends that requirement beyond residential local exchange customers, to all individual and small business customers to whom pay per use features apply.
Rules 3(b) and 3(c)(8) were also added in the June 2002 draft. We have previously noted the Section 2896 provision that the Commission "require telephone corporations to provide customer service to telecommunication customers that includes... sufficient information upon which to make informed choices among telecommunications services and providers." Customers and would-be customers calling carriers to order service have expressed their frustration at trying to obtain information about the least expensive options available to them. Carriers are understandably eager to maximize their revenues, and increasing sales through aggressive marketing is unquestionably one way to do that. Where carriers are providing essential services, however, they also have a responsibility under Section 2896 to provide consumers with sufficient information to make informed choices among those services. Rule 3(c)(8) requires basic service providers to provide customers initiating service or adding additional lines with information about their least expensive service(s) that would meet those customers' needs. We know of no other reliable way to ensure consumers who need those services are not inappropriately misdirected away from them. Rewording the rule to require informing the customer of the plan with the lowest monthly charge, or the lowest unit charge, as some suggested in comments on the June 2002 draft, is susceptible to gaming by, e.g., a carrier describing a plan with no monthly charge but extremely high usage charges, or vice versa. Carriers commented that they cannot be expected to know which of their services might meet a given customer's needs, but that is in fact what they endeavor to determine each time they discuss new services with a prospective customer. Carriers making a good faith effort at disclosure as Section 2896 requires will have no problem complying with the rule.
Staff's proposed Rules 3(b) and 3(c) as initially presented were potentially overlapping, one calling for carriers to confirm service orders within seven days in writing, and the other to inform the customer of the service's rates, terms and conditions, also within seven days. Those provisions are now subsumed into new Rules 3(d) and 3(e) for tariffed and non-tariffed services respectively. Orders for both tariffed and non-tariffed services require written confirmation (which may be, e.g., mailed, e-mailed, faxed, or given to the subscriber at the point of sale) by the carrier within seven days after the order is accepted. 24
No commenters opposed the concept of making rates, terms and conditions available to subscribers, but there were considerable differences as to how, or whether, to write a rule ensuring that was done. In their comments on the June 2002 draft, most consumer-oriented commenters favored having the rules define the "important," "essential," or "key" rates terms and conditions, and in some cases differentiated among those terms. Some carrier representatives favored a less detailed variation of that model, while others rejected any attempt at prescription. Those who objected argued that it would be impossible to identify a set of rates, terms and conditions that are most important to subscribers across all possible services and static as the industry evolves, that confirmations could become unwieldy if carriers were not given complete flexibility to determine what rates, terms and conditions were likely to be important to subscribers, or that carriers should be allowed to disclose how the information might be obtained rather than delivering it proactively. We adopt here a middle approach that defines the characteristics of what we see as key rates, terms and conditions, gives examples, and leaves it to individual carriers to fill in where there may be others equally important.
For non-tariffed services, the subscriber will need a copy of the service contract with all of its rates, terms and conditions. Because the key rates, terms and conditions important to full disclosure may be difficult to discern in long, complex contracts (and customers are not being required to sign those contracts), Rule 3(e) requires they be highlighted in some way (perhaps, e.g., printed in larger or contrasting type, underlined, bolded, enclosed within text boxes, or some combination of those or other methods) so that the subscriber is less likely to overlook them.25 Alternatively, the carrier may send as part of the contract a document setting forth the key rates, terms and conditions in an easily understood summary. Corresponding Rule 3(d) for tariffed services does not require that the carrier include in its confirmation the entire set of applicable rates, terms and conditions because, as both carriers and consumer representatives pointed out in their comments on the June 2002 draft, those rates, terms and conditions are likely to be very extensive and potentially spread through multiple tariff schedules. Rather, Rule 3(d) only requires carriers to include the key rates, terms and conditions for each tariffed service ordered.
Several commenters suggested the rules include a right to cancel agreements or contracts for services that do not meet consumers' expectations, and the Assigned Commissioner proposed a rule to that effect in the June 2002 draft and refined it in his July 2003 draft. We have adopted a modified cancellation provision in today's Rule 3(f). Carriers have up to seven days to send service order confirmations; subscribers may receive those confirmations immediately if they are provided at the point of sale, or a week or more later if mailed. It may be from weeks to more than a month before a subscriber receives the first full billing statement for a new or changed service, and perhaps days additional before he or she examines it for unexpected or previously undisclosed charges. And in many cases it may take equally long or longer to learn whether the service itself matches what was represented. Rule 3(f) accommodates these lead times by allowing subscribers 30 days to cancel without penalties any new tariffed service or new contract for non-tariffed service. The rule does not relieve the subscriber from payment for any actual use made of the service before canceling, or reasonable charges for work done on the customer's premises (such as wiring or equipment installation) before the subscriber canceled. The carriers in making their arguments to be allowed to bind customers to electronic and telephonic orders imply that they and their customers are in harmony on the overwhelming majority of the orders they process. That being the case, very few customers will find anything so objectionable about the confirmations and contracts they receive or their telecommunications service as to renege or cancel. As one carrier representative put it, "California's millions of wireless consumers are accustomed to and demand immediate service changes and activations available through telephonic, Internet, and oral agreements, as well as the ability to conduct all kinds of business on a signatureless, often paperless basis." We agree this represents, if not reality, a worthy goal, and these rules accommodate it. To make service enrollment and changes without signatures work, carriers will have to communicate clearly with those seeking their services, be flexible when the inevitable miscommunication occurs, or both. We think they can and will, and the carriers' risks from customer cancellations will be minimal.
Rule 3(g) was formerly Rule 2(e) in the earlier drafts. It simply implements the current prohibition against slamming found in Section 2889.5. All carriers must comply with Section 2889.5 and all other applicable provisions of state and federal law when changing customers' service providers.
Rule 3(h), formerly Rule 2(f), incorporates into this general order the prohibition against re-establishing a customer's service without authorization, and against a carrier's relying on automatic renewal clauses in service agreements or contracts for that purpose. We previously established this requirement as Rule 3.b. in D.98-08-031 for detariffed IEC services.
Rule 3(i) establishes that charges for pay per use features are not considered authorized unless the user knowingly and affirmatively activates the service by dialing or some other affirmative means. Simply remaining on the line, or failing to remain on-hook for a sufficient time, or any other ambiguous action can not by itself be sufficient to incur a charge. The nomenclature has been changed to "pay per use features," the term used in Section 2889.4 and equivalent in this context, from "customer-activated services" in response to suggestions that customer-activated services be defined.
Rule 3(j) is similarly straightforward: All disputed charges are subject to a rebuttable presumption that the charges are unauthorized unless there is (i) a record of affirmative subscriber authorization; (ii) a demonstrated pattern of knowledgeable past use; or (iii) other persuasive evidence of authorization.
Rule 3(k) was added in the June 2002 draft and modified following comments on the July 2003 draft: A carrier may not deny service for failure to provide a social security number, and where a subscriber chooses not to provide a social security number, the carrier may request other identification information sufficient to enable the carrier to verify the subscriber's identity and run a credit check.26 The first part of this provision, which we previously established for CLCs in D.95-07-054, was suggested in comments by both a consumer organization and by a carrier, and the second recognizes the carrier's need to control its risk of loss.
Rule 3(l) requires a carrier to disclose its reasons when it denies an application for a regulated telecommunications service. The largest local exchange carrier supported this rule as proposed in the staff report, while another large LEC labeled it burdensome because of the labor and mailing expense involved. When consumers are denied utility service, they need to know why if they are to correct the problem, and we suspect there are very few carriers who would deny them that right. The rule will be adopted as proposed, except that the disclosure need not be in writing if the consumer concurs.
Rule 3(k) in the June 2002 draft (Rule 3(m) as revised here) proposed to require carriers to offer a four-hour appointment window when a subscriber must be present for an installation or repair. Not surprisingly, consumer representatives were generally supportive and carriers generally opposed. The staff-proposed initial version was ambiguous in that it could also be read to require the carrier to give the subscriber a $25 credit if the installation or repair were not completed within a four-hour window; that has been clarified here in Rule 3(m) to mean the carrier's representative must arrive and commence work within the promised interval. We have also accepted (with some modification) carriers' and consumer representatives' suggestions by not requiring the $25 credit 27 when the appointment is not kept because the carrier's representative was denied access to the premises, because of force majeure, or when the carrier has informed the subscriber by 5:00 p.m. two business days before that the appointment has been canceled or rescheduled. One consumer advocacy group suggested the credit be $25 per access line, but gave no support for that change. Another used this rule to suggest a new right to service guarantee under which carriers would grant not only a $25 credit for missing a residential service appointment, but also: a $100 credit for businesses; free installation plus a $25 credit per extra day for every installation taking more than five days; and increased monetary credits for prolonged outages. Our intent in adopting Rule 3(m) is somewhat more limited. Subscribers' time has value to them, carriers need to recognize that value, and this rule gives them an incentive to do so. Civil Code Section 1722(c) enables utility customers to bring an action for damages in small claims court against utilities that miss their four-hour windows. Our requirement parallels in part that in the Civil Code in that it requires the customer be offered the four-hour window when the appointment is made, and in that it makes some, albeit more limited, exceptions. At the same time, however, our $25 minimum credit is much lower than the $600 cap on damages allowed in the Civil Code. Nothing in these rules is intended to limit subscribers' right to proceed in court under Civil Code Section 1722(c).
Rule 4: Prepaid Calling Cards and Services
Rule 4, Prepaid Calling Cards and Services, was first proposed in the June 2002 draft and revised in the July 2003 draft.
In 1998, the Legislature passed and the governor signed Assembly Bill 1994, adding a section to the Unfair Competition Law (Bus. & Prof. Code § 17538.9) imposing for the first time specific disclosure and service requirements on all providers of prepaid calling cards (also known as prepaid telephone debit cards) and prepaid calling services. The accompanying legislative analysis described the problem:
Prepaid phone cards are a relatively new and very popular service in the long distance industry. Nationally, sales have grown from $12 million in 1992 to $1.5 billion in 1997. With the growth has come consumer harm. Consumers are falling victim to the fraud and unfair and deceptive business practices that often surface with any new industry. Consumer loss is very common in this industry because prepaid services such as this generally lend themselves to abuse and fraud. Specifically, consumers face the risk of sellers not meeting their obligations. Examples of consumer harm include outright fraud such as non-working access numbers and deceptive advertising where pricing structures, minimum charges and surcharges, and higher rates for the first minute of a call are not disclosed.
Our own experience confirms the Legislature's observations: Each year, our Consumer Affairs Branch receives hundreds of informal prepaid calling card complaints, and prepaid calling card abuse is becoming a significant focus of Consumer Protection and Safety Division's enforcement efforts.
In the same session, the Legislature also enacted Assembly Bill 1424, adding Article 9, Prepaid Telephone Debit Cards (Sections 885 and 886) to the Public Utilities Code. Under Section 885, entities offering prepaid telephone debit cards, and that are not already Commission-certificated carriers, are subject to the registration requirements in Section 1013 and are thus required to comply with those rules and regulations the Commission may establish for them. With the addition of Section 885, all prepaid calling card providers, whether certificated carriers or registrants, came under Commission jurisdiction for their prepaid calling card services.28 In 2002, AB2244 was enacted, making modest revisions to Bus. & Prof. Code § 17538.9.
Rule 4 is in most ways identical to the current provisions in the Unfair Competition Law, for several reasons. First, these are provisions we know the Legislature intended to be enforced. At the same time, we recognize that they constitute only the behavioral floor, the lowest legally permissible standard for calling card service providers, so as we build enforcement experience we will be considering how Rule 4 should be strengthened. Second, we are sensitive to the fact that prepaid calling cards and prepaid calling services are national products. We choose to avoid creating requirements today that potentially conflict with those in other jurisdictions. And third, retaining the Unfair Competition Law wording minimizes the possibility of conflicting interpretations that could arise from differently worded laws and rules covering the same topic. Again, however, none of these reasons will dissuade us from revising the rules as our enforcement experience exposes the gaps, loopholes and gaming opportunities unscrupulous providers may attempt to exploit.
As we noted previously, our Part 2 Consumer Protection Rules are intended to apply to all carrier classes, a given rule coming into play whenever any carrier of whatever type faces a particular situation. Bus. & Prof. Code § 17538.9(b)(6) makes a single exception to that principle by not requiring facilities-based CMRS carriers to establish and maintain toll-free customer service telephone numbers with live operators to answer incoming calls 24-hours a day, seven days a week if they chose to offer prepaid calling services. We have modified that exception in our corresponding Rule 4(f)(1) because to do otherwise could both harm consumers and grant a competitive advantage to some prepaid calling service providers over others. Many of the facilities-based CMRS carriers are owned by the largest telecommunications corporations in the nation. Neither CMRS resellers, which are typically much smaller than facilities-based CMRS carriers, nor carriers of other types, from the largest to the very smallest, are granted a similar preference under the Unfair Competition Law. We know of no reason that would justify our tilting the playing field by establishing lower performance standards for otherwise-identical products distributed to the public by facilities-based CMRS carriers, nor did the comments provide such a reason.
Because the initial staff report attached to the rulemaking order did not deal with prepaid calling cards and services, the parties' first opportunity to comment on them came in response to the Assigned Commissioner's June 2002 draft decision, and thereafter through our workshops, the working group and its report, and two subsequent rounds of comments. Consumer groups have been generally supportive of including Rule 4, and the industry less so. Both generally agree, however, that if there is to be a prepaid calling cards and services rule it should be closely modeled on the current version of Bus. & Prof. Code § 17538.9. Both have also suggested specific deviations, some of which we mention in the following paragraphs.
We have not adopted a joint wireline and wireless industry suggestion that we include in Rule 4 an introductory statement that would effectively convert the rule into an advisory reference to the Business and Professions Code section. To the contrary, we intend Rule 4 to be a Commission-enforced customer protection measure in its own right.
The wireline and wireless industries would have us echo the language of Bus. & Prof. Code § 17538.9(b)(3) in our Rule 4(c), thus applying that rule directly to vendors for their point of sale displays. Because the Commission lacks jurisdiction over non-carrier vendors, we have adopted the consumer groups' alternative wording that accomplishes the same measure of consumer protection by ensuring that carriers, over whom we do have jurisdiction, require their vendors to provide lawful point of sale display information.
Most of the parties' remaining comments have been accommodated by our conforming Rule 4 to the current version of Bus. & Prof. Code § 17538.9 enacted by AB2244.
We take this opportunity to make two more observations before moving on. Some parties in their comments have questioned whether the Commission has authority to enforce provisions of the Business and Professions Code, implying that some of the rules proposed in the rulemaking order would be doing just that. As we discuss in much greater depth in the Enforcement section later, the Commission clearly does not have such authority. Just as clearly, however, the Commission may consider parallel requirements of the applicable laws when it is fashioning its own rules, including in this case Bus. & Prof. Code § 17538.9. That is precisely what we have done with Rule 4. And, as we point out in our Enforcement section, remedies under the Unfair Competition Law are cumulative and in addition to remedies that may be imposed under other laws. The Commission's consumer protection rules, and any action it may take to enforce them, do not deprive the courts of jurisdiction to entertain actions against regulated utilities brought by law enforcement officers under the Unfair Competition Law.
Rule 5: Deposits to Establish or Re-establish Service
Rule 5, proposed as "Local Exchange Service Credit and Deposits" in the staff report has now become a deposit rule applicable to all carrier classes for all types of service, not just local exchange. By setting limits on what all carriers can require of consumers before initiating service, Rule 5 protects consumers' Right to Non-Discrimination.
As proposed in the staff report, Rule 5 did not engender as much controversy among commenters as some of the other proposed rules. The largest local exchange carrier supported it; the next largest expressed no objection but did suggest a modest revision. The CMRS carriers typically wanted it made explicit that the rule didn't apply to wireless, some giving reasons and others not. Consumer representatives offered numerous changes, some of them minor, some significant. The June 2002 draft decision included in revised Rule 5 several new provisions drawn from the comments of both consumer representatives and carriers.
The most significant change from the initial staff proposal is the distinction Rule 5 draws between deposits for basic exchange service and deposits for other services. This change arises from two considerations. First, our Part 1 Bill of Rights is intended to protect consumers' rights with respect to all regulated services, but the rule as originally drafted related only to local exchange service. There was nothing to keep providers from refusing to accept a deposit in lieu of establishing satisfactory credit for other services. Second, staff and commenters alike recognize a tension between the need to refund deposits quickly and the need to hold them long enough for all charges to clear. That tension can be seen in staff's Rule 5 recommendation to refund local exchange deposits within thirty days after service is discontinued, contrasted with its Rule 7 recommendation to allow four or five months for backbilling some other, non-basic service charges. Rule 5 now addresses deposits for all services, distinguishing them by allowing thirty days to refund basic service deposits and 120 days for other deposits.
Three other factors bear on our distinction between deposits for basic service and for other services. Carriers are highly motivated to sell optional, non-basic services and thus not likely to impose deposits so high as to price purchasers out of the market. The great variety of optional services and payment methods makes it more difficult to devise a cap on deposits for non-basic services that would be suitable across the board. And the potential for a single subscriber to run up substantial charges quickly is greater for non-basic than basic services. Thus, we have limited the amount of deposits for basic service, but not for non-basic services.
We have not attempted to devise objective criteria for what constitutes acceptable credit for basic service because Section 779.5 leaves that up to the carrier: "The decision of ... [a] telephone ...corporation to require a new residential applicant to deposit a sum of money with the corporation prior to establishing an account and furnishing service shall be based solely upon the credit worthiness of the applicant as determined by the corporation." Instead, we require carriers to accept deposits in lieu of credit for applicants who do not meet their standards, and we limit the size of those deposits they may collect to establish basic service, but not for other services.
Rule 5(b) limits deposits to establish or re-establish basic service to twice the estimated or typical monthly bill for that service. The staff report proposed allowing carriers to charge an additional deposit to establish basic service for applicants who owe an outstanding balance to another utility. We have dropped that provision. Our rules do not allow providers to disconnect basic exchange service for nonpayment of other services, and it would be inconsistent to deny would-be subscribers basic service under those same circumstances. In later comments, an ILEC objected that it would have to make major changes to its billing system if the deposit it could collect for basic service were limited and it had to begin requiring separate deposits for non-basic services. After considering the comments, we still believe that our limiting the deposit amount a carrier may demand as a condition of providing basic service is a fair and reasonable approach to balancing the interests of basic service providers and their would-be subscribers.
Some carriers objected that our 5% simple annual interest rate on deposits is excessive. It is true that carriers hold small sums for short periods when deposits are viewed at the customer level, but when aggregated at the corporate level they represent significant, relatively stable pools of capital available to carriers to use over long time periods. While we could establish a floating monthly interest rate to be applied to deposits, our 5% rate is fair to carriers and subscribers alike, and much simpler for subscribers to understand and carriers to administer.29
Rule 5 has other changes as well. The June 2002 draft decision introduced a provision in Rule 5(a) that a carrier may not require a deposit for services provided by others. First, this will protect subscribers and would-be subscribers against a carrier's buying the receivables of others and enforcing collection through its regulated billings. Second, it could invite anticompetitive mischief to allow an ILEC providing competitive services to charge high deposits for subscribers who choose its rivals' services while waiving them for its own. The carrier providing the service should be the one to decide what deposit to require for that service. Consumer representatives support the rule; carriers do not. Carriers argue that requiring one consolidated deposit is more convenient for customers, and that billing carriers do often purchase the receivables of others and would be unlikely to continue doing so if they were exposed to additional uncollectibles risks. We have now clarified the intent of the rule by adding to it the same wording that was used in the June 2002 draft decision text: "A carrier may not require for its own benefit a deposit for services provided by others." This wording addresses the carriers' concerns by allowing, e.g., an ILEC to collect a deposit on behalf of an IEC for which it bills, so long as the deposit is determined by and collected on behalf of the IEC.
Rule 6: Billing
Rule 6 is a series of requirements to ensure that subscribers' bills are complete, accurate and understandable. The underlying principle we intend to follow is that subscribers deserve sufficient information to confirm that their bills reflect only services they have ordered and received, at prices they have agreed to. Rule 6 is aimed at safeguarding consumers' Rights of Disclosure, Choice, Public Participation and Enforcement, and Accurate Bills and Redress.
Consumer groups and carriers alike had considerable constructive input on this topic. As a result, Rule 6 as adopted incorporates many revisions gleaned from the comments while still retaining all of the essential elements staff proposed to protect consumers' rights. Because the subsections were rewritten in major part in the June 2002 draft, our discussion of them will follow their new arrangement.
Several carrier representatives suggested that parts of Rule 6 as originally proposed should not apply to all carrier classes. We have a different view. As we have noted in earlier proceedings, the telecommunications industry is evolving and what were once clear boundaries between the various carrier classes are becoming less distinct. In D.00-03-020, our slamming and cramming rules, we noted that where only ILECs now provide third party billing, that may change in the future. The parties' comments in this proceeding indicate that they hold a similar expectation. We have previously expressed our anticipation that carriers other than ILECs would in the future become carriers of last resort as competition draws new participants into what were once the ILECs' exclusive province.30 And in our Universal Service Proceeding, we provided for periodic review of the definition of the most fundamental service level, basic exchange service, as the competitive industry evolves and matures. Our earlier rules established for ILECs, CLCs and non-tariffed IECs had considerable overlap, and most of what was in them can be seen in these consolidated rules for all carriers.
Many carriers say they are currently revising their national billing programs to conform to the FCC's recently issued Truth-in-Billing rules. One of their major concerns has been that we not impose on them new, California-specific requirements that would make those programs immediately obsolete. We have taken care here not to let that happen. The FCC has explicitly allowed the states to adopt and enforce their own truth-in-billing requirements so long as they are consistent with the FCC's.31 Drawing on the best of the parties' suggestions, we have done so.
Rule 6(a) states simply that bills must be clearly organized and include only subscriber-authorized charges. Where carriers choose to bill for non-communications-related products and services in the same billing envelope, they must comply with provisions in Part 4 of this general order, Rules Governing Billing for Non-communications-Related Charges. The working group report suggested deleting this provision from Rule 6(a), but gave no reason for doing so. Absent that provision, there would be nothing to keep carriers from, e.g., printing a subscriber's telephone bill and a Part 4-exempt run-on second bill for non-communications-related services immediately following using the same look and feel, and including both bills in the same envelope with a lead sheet indistinguishable from the telephone bill directing the subscriber to pay the total to the carrier. While we could devise yet more rules attempting to foreclose all possible abusive practices, this is not what we intended when we issued D.01-07-030 establishing the rules in Part 4.
Rule 6(b) melds an FCC Truth-in-Billing requirement with our recent slamming/cramming decisions which took an in-depth look at how carriers should be identified. Carriers must associate each service on the bill with the service provider responsible for placing that charge, and the providers' names must meet the identification requirements we set forth in D.00-03-020 as modified by D.00-11-015. In the initial comments, several carriers objected to the staff's proposal here, but no carrier explained how it was exempted from Section 2890 which also requires a billing telephone company to clearly identify each entity that generates a charge appearing on a subscriber's bill. CMRS carriers pointed out that their subscribers typically recognize them under trade names that differ from their FCC-certificated names, and ask the rule be modified accordingly. The naming requirements in Rule 6(b) were established by D.00-03-020 as modified by D.00-11-015 and we do not intend to relitigate that issue in this proceeding. We do recognize this as a legitimate concern, however, and have accommodated it by adding a comment which allows carriers to place a trade name on the bill in addition to, but not instead of, the name required under this rule. The FCC likewise allows carriers to use trade names.32 We have not accepted a consumer recommendation to mandate including any fictitious business names the carrier uses, and its U-number.
Rule 6(c) requires grouping charges by carrier, consistent with Truth-in-Billing and Section 2890(d).
Staff had suggested identifying as "new" any services appearing on the bill for the first time. Many commenters representing both carriers and consumers pointed out that the FCC had come out with a slightly different proposal after the staff's report was issued. New Rule 6(d) combines staff's suggested requirement with the FCC's Truth-in-Billing. In the FCC's words,
[O]ur rule requiring highlighting of new service providers will apply only to providers that have continuing arrangements with the subscriber that result in periodic charges on the subscriber's telephone bill. Thus, changes in a subscriber's presubscribed local and long-distance service providers clearly would be subject to the rule. Additionally, charges on telephone bills for such services as voice mail and internet access would also be subject to the rule because these services typically involve monthly or other periodic charges on an ongoing basis until the service is cancelled. On the other hand, our modified rule excludes services billed solely on a per transaction basis, such as dial-around interexchange access service, operator service, directory assistance, and non-recurring pay-per-call services. 33
This addresses commenters' concerns that, e.g., wireless carriers would have to list as new every roaming call, and billing LECs would have to note every dial-around or customer-activated charge. Carriers object to drawing their subscribers' attention to new recurring charges added to their bills, but this is as fully essential as calling their attention to new providers.
Several carriers initially objected to staff's proposal that carriers describe each service or product on the bill, and show the associated rate or charge. This, however, is in essence what Section 2890(d)(2)(A) already requires. The wording of Rule 6(e) as proposed in the June 2002 draft decision combined the requirements of Section 2890 and Truth-in-Billing. The working group report recommended rewording that reflects Section 2890 almost verbatim but deletes Truth-in-Billing's requirement that the description be sufficiently clear and specific that customers can assess whether they are being correctly charged. Other consumer representatives recommended slightly different wording. To eliminate any doubt about what is intended and whether it is consistent with state and federal law, Rule 6(e) now includes language from Section 2890(d)(2)(A), and verbatim the FCC's language from Truth-in-Billing for the second part of the rule.
In D.00-11-015, we refined our rule prohibiting disconnection of basic residential or single line business service for nonpayment of other services on the bill. Rule 6(f) reflects both the FCC's Truth-in-Billing and our specific non-disconnect criteria to ensure subscribers understand their rights. Carriers must now explain the distinction and clearly and conspicuously identify on the bill which charges must be paid to retain basic service. There was general consensus and little comment regarding this rule.
Staff's proposal that taxes and surcharges be separately identified on bills as "mandated charges" drew considerable fire from carriers, but was universally embraced in consumer groups' comments. It was sometimes difficult to tell from the carriers' initial comments whether they were confused or simply disingenuous. Among them were these: "[A]lthough carriers' costs increase because of the commission imposed charges, for those charges they are not required to recover directly from end-users, carriers are left effectively without a recovery mechanism"; "When a carrier has provided service to a customer at the customer's request, these fees are due and payable, without regard to whether the regulatory agency ordered the carrier to collect the fee directly from the customer, or whether the agency allows the carrier to collect the fee from the customer"; and, "[T]he Commission should not condone any rule that leads consumers to believe that they are not obligated to pay these charges." The first comment is wrong, the second is off-point, and the third misrepresents the proposal. The rule is intended to make clear to subscribers which of the charges carriers place on their bills are taxes, surcharges and fees carriers have been ordered to collect and remit to government, and which are aimed at recovering carriers' costs of doing business, including costs of meeting regulatory requirements. As restated in the June 2002 draft and again here, Rule 6(g) makes it abundantly clear that carriers are required to list only government-mandated taxes, surcharges and fees in a bill section entitled "Taxes," and are not to label or describe discretionary charges in any other bill section in a way that could mislead subscribers to believe they are government-mandated as well. In their comments on the June 2002 draft decision, carriers once again objected to this straightforward practice and suggested revised wording which would allow them to combine their own discretionary fees and surcharges in with true taxes. Carriers also wrongly characterize the rule as requiring them to include their discretionary surcharges in an entirely new section of their bills; it does not do that, nor does it have that practical effect. It merely requires they not be placed in the section reserved for true taxes.
Rule 6(h) gathers into one place the basic items most carriers already include in their bills. Several changes have been incorporated in response to the initial comments. "Mailing date" has been dropped because it is not critical to consumer protection, and mass-mailing practices can sometimes make it difficult to pinpoint the exact date. Likewise, including a separate mailing date is unnecessary for bills transmitted over the Internet (see Rule 6(i) following). Billing carrier names must be consistent with our requirements in Rule 6(b) above. And we agree that carriers who routinely grant their subscribers an additional grace period should be allowed to show the date after which a late-payment penalty is authorized rather than the date they actually intend to apply it. In response to comments on the June 2002 draft decision, we have further refined the rule to incorporate all of the changes suggested by the working group and endorsed by the carriers.
Some carriers offer services which they make available only with Internet billing, and others have made arrangements with subscribers to transmit bills by e-mail or make them accessible on web sites rather than send paper copies. Rule 6(i) responds to comments seeking clarification that carriers need not send duplicate, paper bills to these subscribers, and that carriers are required to meet the same billing disclosure requirements regardless of the medium.
Rule 6(j) is an extension of Section 2890(a) intended to allow consumers who choose to do so to block non-presubscribed carriers' charges from their bills. At carriers' suggestion, we have added wording to clarify that the rule applies only to carriers that do allow non-presubscribed carriers to place charges on the bills, and to exclude collect and third party billed calls. Part 4 of this general order, Rules Governing Billing for Non-communications-Related Charges, gives subscribers additional tools for controlling what charges may be included in their bills.
Lastly, a surprising number of carriers objected to the staff's initial proposal to include Commission and FCC contact information on their bills. Section 2890(d)(2)(B) already requires telephone bills to include the Commission's telephone number. The obvious purpose of including the Commission's contact information is to safeguard consumers' Rights to Public Participation and Enforcement (consumers have a right to be informed of their rights and what agency enforces those rights) and Accurate Bills and Redress (consumers have a right to fair, prompt and courteous redress for problems they encounter). Without this information, many or most consumers won't realize what their options are. Some of the carriers' reasons for wanting to withhold the information were strained, but we do sympathize with their concern lest the billing message undermine their opportunity to address customers' problems. The June 2002 draft decision revised Rule 6(k) to strengthen the message: contact the carrier first if there is a problem, and then contact the regulator if it hasn't been addressed fairly. Revised Rule 6(k) also requires notifying consumers that these rights and rules are available on the Commission's web site.
Rule 7: Late-Payment Penalties, Backbilling, and Prorating
Rule 7 establishes billing guidelines all carriers are to follow with respect to, e.g., time allowed to make payment, maximum permissible late payment penalties, limitations on backbilling by carriers, and prorating charges for a partial month's service. Carriers are free to adopt more consumer-favorable practices where they wish. By establishing standards carriers must follow in their billings, Rule 7 helps safeguard consumers' Right to Accurate Bills and Redress. Carriers and consumer representatives alike generally accepted the need for these practices, although the carriers offered a number of modest revisions, some adopted below.
The June 2002 draft decision revised proposed Rule 7(a) to conform it to the results of an earlier Commission investigation into telephone company late payment charges and to current practice, and made several changes for clarification. Staff's proposed Rule 7(a) had allowed 16 days from the bill mailing date before a carrier might impose a late payment penalty not to exceed 1.5% per month on the undisputed, overdue amount. This was approximately the same as the 15 days currently in effect for CLCs and IECs. It was suggested in initial comments that the 16 days be revised to match the ILECs' current 22 day period; no party addressed that suggestion in the initial reply comments. The Commission investigated telephone companies' late payment charges in I.85-01-024, finding that the large ILECs' bills were due and payable upon receipt and considered delinquent if not paid by 15 days after mailing, and that the 22 to 31 day periods then observed by the large ILECs before late payment charges were imposed were just and reasonable. The resulting decisions34 established the 22-day minimum interval for all ILECs, and ordered customer bills under $20 exempted from late payment charges. The June 2002 draft revised Rule 7(a) accordingly. Consumers subsequently endorsed, and the wireline carrier group accepted, the 22-day minimum35; wireless carriers sought to reduce it to 15 days; and at least one consumer representative argued that late penalties should never be allowed because carriers can instead disconnect service for untimely payment. Carriers also pointed out that draft Rule 7(a) used wording inconsistent with the fact and draft decision statement that bills are due and payable when they are presented. Also, if a subscriber were slow in disputing charges, draft Rule 7(a) could be misinterpreted to place the carrier in violation for too quickly imposing an otherwise timely late penalty. Today's Rule 7(a) has been reworded to address those concerns.36 Also in response to comments, the final version of Rule 7(a) no longer extends the $20 minimum balance requirement to all carriers.37
Consumer representatives were concerned that under staff's original Rule 7(a), a carrier might unfairly apply late penalties where payments were received on time but held for posting until after the due date; and carriers thought it unrealistic to expect them to post payments in all cases on the same day they are received. The June 2002 draft decision resolved the problem with a minor wording change to require carriers to credit payments with an effective date of the business day they are received, regardless of when they were actually posted. Payments arriving on a weekend or holiday would be credited the following business day. The wireline group accepted the change with some minor rewording; the wireless group's comments subsequently ignored that "effective date" language to insist that for late payment penalty purposes they be allowed to consider the payment received the business day after it is actually received, or, if the subscriber has not included the appropriate remittance materials with the payment, the tenth business day after the carrier has the payment and all of the information necessary to properly credit it. The wireless carriers would have us tip the balance too far against consumers. Under their proposal, a carrier could assess late payment penalties against a subscriber despite having constructive receipt of payment in full within days of mailing out the bill.
Rule 7(b) also follows the staff proposal, with one significant modification. Section 737 imposes a three-year statute of limitations for utility claims against a customer, and we have cited that section in the past where customer fraud was involved. We agree with the carriers who argued these rules should not shorten the limit on backbilling when that backbilling is necessitated by customer fraud. Here, we also continue our established practice38 of limiting other carrier backbilling to periods much shorter than the three years in Section 737 as the staff has proposed. 39
Staff's proposed Rule 7(b) also stated a three-year limitation on customers seeking reparations for utility over-billing, and the June 2002 draft decision cited Section 736 in proposing that limitation as new Rule 7(c). Carrier representatives correctly pointed out in comments that the proposed rule could run afoul of Sections 735 through 737, which establish a considerably more complex set of limitations for customer complaints that differ from the draft decision's proposal. The Commission has jurisdiction directly to enforce Sections 735 through 737 in its proceedings, so we have dropped the June 2002 draft's Rule 7(c) as unnecessary and unhelpful for consumer protection.
Many carriers questioned whether staff's proposed Rule 7(c) (renumbered as Rule 7(d) in the June 2002 draft) should apply broadly across all carrier classes and services. While our intent is to protect consumers of all regulated telecommunications services, our priority is ensuring the highest degree of protection goes to services considered essential and for which consumers have the fewest choices. Thus Rule 7(c) is modified here to apply to basic service. We anticipate providers will follow its spirit in applying its principle to other, more competitive offerings.
Rule 7(d) was new in the June 2002 draft decision (where it was numbered as Rule 7(e)). It is well established that a utility may not increase its rates retroactively; a customer must be able to know what the rate or charge will be at the time he or she chooses to use a utility service. Under Rule 7(d), neither may a utility benefit by delaying billing until after a rate increase has occurred, or use a delay or lag in billing to impose a higher rate or charge for a service than would have resulted without the delay or lag. The principle is one of "no surprises." Carriers will be required to base their bills on the rates in effect at the time the service was used; and any delays or lags in billing must not result in a higher total charge than if the usage had been posted to the account in the same billing cycle in which the service was used. This seems so simple and straightforward that one might wonder why it should be necessary to state it in a rule. At our public participation hearings and in the very great volume of public correspondence we received, we were surprised to hear that some carriers have adopted a practice of shifting some of the calls made in one billing period to bills for a subsequent billing period. Thus, a subscriber who, for example, has chosen a plan that advertises an allowance of 400 minutes of free calling per month and $0.35 per minute thereafter might be careful to stay within the 400-minute limit, only to find later that the carrier has unexpectedly shifted 150 minutes of actual usage from one month to the bill for one or more subsequent months. The customer's bill then shows 250 minutes one month and 550 the next, resulting in 150 minutes of excess usage at $0.35 per minute. A call that was to have been free at the time it was placed is instead billed at the overtime rate. 40 No subscriber should be subjected to such expensive unpredictability, nor have to accept it as a condition of receiving service. If carriers find it challenging to generate bills that meet the promises of the service plans they sell, they should either modernize their accounting and billing systems to eliminate what they say may be months-long delays in forwarding billing data, or revisit their marketing practices.
We have slightly modified Rule 7(d) to accommodate wireline carriers' observation that taxes typically must be based on current tax rates, not on tax rates in effect at the time the call was made. Thus, a charge in this month's bill for a service used in an earlier month may well carry with it a higher (or lower) associated tax amount than if it had been billed in that earlier period. We have not included a provision requested by the wireline carriers explicitly absolving billing carriers for violations that may have originated with other carriers or billing clearinghouses; instead, we would expect to examine the circumstances surrounding any such allegations at the time they come before us.
Rule 8: Tariff Changes, Contract Changes, Notices and Transfers
Rule 8 is intended to ensure that any changes to rates, terms or conditions of service are timely communicated to affected subscribers. Likewise, subscribers must be informed when carriers seek authority to transfer their subscribers to others, or to withdraw service. Where service is provided under tariff, notice of changes must be provided early enough for the subscriber's views to be made known to the Commission, and for the subscriber to choose whether to retain, change or cancel the revised tariffed service. Where service is non-tariffed and provided under contract, the carrier may not enforce unilateral changes which bind the subscriber to higher rates or more restrictive terms or conditions. Rule 8 helps safeguard consumers' Right to Disclosure, Right to Choice, and Right to Public Participation and Enforcement.
While consumer representatives supported the principles underlying Rule 8, carriers were typically opposed. The most commonly heard objection was that the rule was too restrictive in that it had the effect of denying carriers flexibility in determining how to deliver notices, applied the same notice standard for minor as major rate increases, and stifled carriers' ability to employ telephone and electronic commerce. Carriers overall maintained that Rule 8 was unnecessary.
Since the initial rulemaking order with staff's proposed rules in this proceeding, the Commission has issued two interim opinions, D.01-07-026 and D.02-01-038, in R.98-07-038, the rulemaking to revise G.O. 96-A, the general order governing informal filings at the Commission. Our task here has been simplified by the fact that D.02-01-038 (the provisions of which are intended to be included in G.O. 96-B when it is issued) conveys definitive guidelines for many or most of the issues related to proposed Rule 8. Rule 8 was drafted to be entirely consistent with D.02-01-038.
Initial commenters found Rules 8(a) and 8(b) (formerly 8(c)) to be mildly confusing in that they could be interpreted as covering the same ground: requiring notice before higher rates or more restrictive conditions could be imposed where there are existing carrier/subscriber agreements; and barring enforcement of any changed rates, terms or conditions in carrier/subscriber contracts unless signed in writing by the subscriber.
As redrawn for the June 2002 draft decision and retained here, Rule 8(a) reflects the notice requirements set forth in D.02-01-03841 for carrier-proposed changes to their tariffed services that may result in higher rates or charges or more restrictive terms or conditions. In addition, we have now extended the rule to cover changes in carriers' non-tariffed, non-term contracts. Customers using non-tariffed, non-term services should have the same notice and opportunity to seek alternatives as customers using tariffed services. Rule 8(a) requires only affected subscribers be noticed. And, to address comments several carriers made, this rule applies only to changes in the carrier's services, so it does not include, e.g., changes in taxes, or changes in charges incurred by the subscriber on another carrier's system and simply passed through by the carrier.
Staff's proposed Rule 8(c) appeared as Rule 8(b) in the June 2002 draft and applied to contracts for non-tariffed services: "No material change in any of the rates, terms or conditions of service specified in a written contract shall be enforceable unless the change is also set forth in writing and signed by the subscriber." As simple, straightforward and fair as that requirement might seem, it was roundly denounced by a number of carriers. If it achieved nothing else, it drew the one riposte that so clearly illustrates why these consumer protection rules are needed that it begs to be quoted: "[Our] Terms and Conditions allow a change in rates and terms that may adversely affect customers upon prior written notice of one bill cycle. If the customer has had service less than 90 days the customer may cancel without an early termination fee. Carriers should retain the flexibility to handle these types of changes as they see fit based on competitive market pressures." In case it isn't clear on first reading, this carrier is saying it should be permitted to change a contract unilaterally to the detriment of a subscriber, and once the contract has been in force for 90 days the subscriber's only recourse is to cancel and pay the termination fee. In effect, "They're our sheep and we'll shear `em any way we please."
Various carrier representatives introduced a host of additional reasons for gutting or eliminating proposed Rule 8(b), most of those based on either their misunderstanding or misconstrual of its requirement. Carriers, e.g., argued that any such rule would prevent them from lowering a rate or relaxing a restrictive condition without first getting written approval from every affected customer. At the same time, this comment on Rule 8(b) from a carrier group offered support for a basic principle underlying it:
In making decisions about service initiation and/or modification, consumers are entitled to be informed about the material terms of the services provided. To the extent that the terms are provided in a non-written format - for example, in a telephone call with a service representative - carriers should provide a means for confirming those terms.
Following suggestions from consumers and carriers alike, Rule 8(b) here has been narrowed in several ways. First, it covers only carrier-initiated, term contract changes (customer-initiated service changes are the subject of Rule 3). In response to the carriers' objection to the "enforceability" concept, the rule has been restated so that it now parallels Rule 8(a) by requiring notice and allowing the subscriber to cancel the contract or service agreement without penalty when the carrier proposes to make any material change that may result in higher rates or charges or more restrictive terms or conditions. To make absolutely clear that the carriers' darkest interpretations do not apply, this comment has been added:
Rule 8(b) does not apply to subscriber-initiated changes. It does not prohibit carriers from making unilateral changes to contracts where the changes result in lower rates or charges and/or less restrictive terms or conditions. It does not prohibit carriers from communicating notice of a change through electronic media -- See Definitions for "Written; In Writing.
And, consistent with our changes elsewhere, we have dropped the requirement for carriers to obtain a confirming signature from the subscriber or to continue providing service under the previous terms of the contract if the subscriber chooses to reject the change. Instead, the carrier must give 14-days' notice of the impending change and the subscriber's right to thereafter cancel the contract or service agreement without penalty. Rule 8(b) applies only to changes in rates, charges, terms or conditions of service specified in a term contract, so it also would not typically encompass, e.g., changes in taxes, or changes in roaming or other charges incurred by the subscriber on another carrier's system and simply passed through by the carrier without markup.
Rule 8(c) (formerly Rule 8(d) in staff's proposal) requires a carrier to notify each affected subscriber at least 30 days in advance whenever it requests approval for a transfer of subscribers. Edits have been made to the June 2002 draft version to accommodate non-controversial suggestions put forward by consumer and carrier representatives. A transfer of subscribers does not include a transfer at the corporate level that does not affect the underlying utility or subscribers. The notice must follow the requirements where applicable of General Order 96-Series and/or Section 2889.3; describe the proposed transfer in straightforward terms; explain that the transfer is subject to Commission approval; identify the transferee; describe any changes in rates, charges, terms, or conditions of service; state that subscribers have the right to select another utility; and provide a toll-free customer service telephone number for responding to subscribers' questions. Rule 8(c) is now completely consistent with the corresponding rule for transfers in D.02-01-038. Subscriber notices of transfers requested by application are also governed by the Rules of Practice and Procedure and by the presiding officer's rulings during the course of the formal Commission proceeding.
The Right to Choice states that consumers have a right to select their services and vendors and to have those choices respected. Inherent in the right to choose with whom to do business are the rights to know with whom one is doing business and to choose with whom not to do business. Rule 8(c) is aimed at ensuring those as well. Drawing guidance from our recent slamming/ cramming decision which took an in-depth look at how carriers should be identified, notices of transfers must show carriers' names as they appear on their certificates of public convenience and necessity. For carriers not certificated by the Commission, the notice must show the name under which the carrier is certificated by the FCC, if applicable, or the carrier's legal name as registered with the California Secretary of State. Carriers who market under other names are to inform subscribers of those business names (which must be registered pursuant to Bus. & Prof. Code Section 17900 et seq. and registered with the Commission's Telecommunications Division). Again, abbreviations may be used so long as there is sufficient information to make it abundantly clear to the subscriber who the carriers are.
Rule 8(d) is also consistent with the corresponding rule in D.02-01-038: A carrier shall notify each affected subscriber at least 25 days in advance of every request to withdraw service. The notice must describe the proposed withdrawal and proposed effective date, state that subscribers have the right to choose another utility, and provide the carrier's toll-free customer service telephone number for responding to subscribers' questions. If the service to be withdrawn is basic service, the carrier must also: explain in the notice that the withdrawal is contingent on Commission approval; arrange with the default carrier(s) for continuity of service to affected subscribers who fail to choose another utility; describe in the notice those arrangements and the subscribers' right to receive basic service from the underlying carrier or carrier of last resort; and provide the default carrier's name and toll-free number.
Rule 8(e) is the refinement of staff's proposed Rule 8(b), again made consistent with D.02-01-038. Subscriber notices under these rules must be in writing, and must be distributed by one or a combination of bill inserts, notices printed on bills, or separate notices sent by first class mail. Electronic written notices may be substituted where the subscriber has agreed to receive notice in that manner. Notice by first-class mail is complete when the document is deposited in the mail, and electronic notice is complete upon successful transmission. We have not accepted carrier-suggested changes that would weaken this rule by, e.g., allowing oral notice and eliminating the need for customers to have agreed to electronic notice, because these specific notice requirements have already been considered and adopted in D.02-01-038. The Rule 8(e) requirement that was not previously considered in D.02-01-038 is consistent with our other rules: notices must be legible and use the equivalent of 10-point type or larger, and must conform to the same comprehensibility standard used in Rule 2(c) for written orders, agreements and contracts.
Rule 9 (and Former Rule 10): Service Termination
Rule 9 sets forth procedures all carriers must follow when preparing to terminate a subscriber's service for nonpayment of a delinquent bill. These requirements help safeguard consumers' Right to Disclosure, Right to Public Participation and Enforcement, and Right to Accurate Bills and Redress.
Rule 9 as proposed in the rulemaking order related to termination for all services, while Rule 10 added additional rules to be applied to local service termination. In their initial comments and replies, carriers interpreted various subdivisions of each rule, or an entire rule, as not applying to their carrier class, sometimes correctly and sometimes not. Some asked that final Rules 9 and 10 be more explicit in that regard, while one suggested they be combined. After considering their suggestions and other parties' comments and replies, it became apparent that combining both into one rule, with distinctions for different types of service where appropriate, would make the requirements easier to understand and follow. The June 2002 draft decision did so.
The largest local exchange carrier accepted most of Rules 9 and 10 as staff had proposed them, while the next largest offered more changes; for the most part the June 2002 draft decision agreed with their suggestions and included them in the accompanying draft rules. The other carriers' comments primarily repeated views and arguments noted earlier in these rules and in other proceedings with mixed success. Some asked that the requirements for disconnecting basic service for nonpayment of other services be conformed with whatever result was to be reached in R.97-08-001 and I.97-08-002, rules to deter slamming and cramming, while others reargued positions we have since rejected. We subsequently issued D.00-03-020 and D.00-11-015 in that proceeding, and the results are reflected in revised Rule 9(d). Carriers asked that the final rules accommodate electronic notices where appropriate, and they now do so through the definition of "Written; In Writing." They asked that we allow disconnection on shortened or no notice where the subscriber's acts or omissions demonstrate an intention to defraud the carrier, or threaten the integrity or security of the carrier's operations or facilities, and we have done so. They objected to any implication in proposed Rule 10(d) that carriers are required to offer delinquent customers an alternative payment plan in lieu of disconnect. Our revised Rule 9(f) makes clear that there is no such requirement. We have also incorporated numerous refinements in response to their suggestions.
Consumer representatives generally favored the principles behind Rules 9 and 10. Their most significant suggestions were aimed at clarifying and strengthening provisions for shielding basic service from disconnection for nonpayment of other services. As requested in the initial comments, we have added a requirement that payments be applied first to amounts due on a customer's basic service unless the customer directs otherwise. We have also added language requiring disconnect notices to state the minimum amount that must be paid to retain basic service where applicable. We decline, however, to re-entertain arguments heard and rejected earlier as to which classes of carriers may leverage local service cutoffs to require payment of long distance and other non-basic service charges. That issue was decided in D.00-03-020 and D.00-11-015.
Proposed Rule 9(a) relating to deposit refunds covered the same topic as Rule 5(d) and has been deleted from this section.
New Rule 9(a) combines portions of former Rules 9(b), 9(d) and 10(a) to require notice not less than 7 calendar days prior to terminating service for nonpayment, and to list essential elements that must be in the notice. Consistent with their positions on many other customer communications, carriers asked to be allowed to give termination notices other than in writing. Loss of service is too serious a matter to compromise this protection. Rule 9(a) still requires notice in writing, although that format is now defined to include electronic writing where appropriate. If carriers find it helpful, convenient or necessary, they are also free to augment, but not replace, their notices in writing with e-mailed, telephoned, personally delivered or any other form of disconnect notices.
One carrier group's comments on the June 2002 draft proposed changes which would allow carriers to eliminate the termination notice and instead rely on standard language routinely distributed to all customers in their bills. Our intent is that termination notices be last-chance warnings given to subscribers whose accounts have gone delinquent and are at imminent risk of losing their service, and not the routine notice of payment due date already required in Rule 6(h)(3).
In response to information provided by the workshop participants and later commenters, we have added two exceptions to the Rule 9(a) termination notice requirement: This rule does not apply to termination of non-tariffed service for having reached either: (1) a usage or spending limit, prepaid or otherwise, that was arranged with the subscriber in advance; or (2) the end of a prepaid period of service known to and anticipated by the subscriber in advance. Those two exceptions allow for carriers' spending cap arrangements with credit-challenged subscribers; and for non-subscription marketing plans which rely on selling telephones or telephone cards with prepaid usage, perhaps rechargeable.
Rules 9(a)(1) through (6) list what must be included in each notice. We have made a number of refinements in response to the comments. Carriers' FCC numbers or Commission U-numbers are no longer required, but carriers must include names that conform to the guidelines we established in D.00-03-020 and D.00-11-015. The notice must now include the telephone number(s) associated with the delinquent account, the amount by which the account is delinquent, information sufficient for the customer to understand what service or services are to be terminated, and, if basic service is at risk, the minimum amount that must be paid to retain it. The carrier need no longer include notice of how to lodge an internal carrier complaint or request an internal carrier investigation concerning its service, rates or charges. Carriers are still required, however, to provide a toll-free telephone number to reach a carrier service representative who can provide assistance, and the telephone number of the Commission's Consumer Affairs Branch for information, appeals or complaints. As consumer representatives suggested in their comments on the June 2002 draft, carriers' toll-free lines to handle calls from subscribers being terminated must be adequately staffed.
Rule 9(b) ensures that basic exchange service is not disconnected on any day that carrier service representatives are not available to assist subscribers.
Rule 9(c) safeguards a carrier's right to disconnect a subscriber immediately for fraud. Several carriers pointed out the importance of prompt disconnection where a carrier's operations or facilities are at risk, and we have allowed for that as well now.
Rule 9(d) allows carriers of last resort to disconnect basic residential or single line business service only for nonpayment of those services. In the June 2002 draft decision, the rule had applied to basic service providers rather than carriers of last resort, a difference carriers subsequently commented on. Rule 9(d) is not intended to break new ground, but rather to reflect the guidelines we issued recently in D.00-03-020 and modified by D.00-11-015, so we have not expanded this rule to incorporate entirely new requirements as carriers and consumers propose. Part 4 of this general order, Rules Governing Billing for Non-communications-Related Charges, also prohibits disconnecting basic service for nonpayment of non-communications-related charges.
Rule 9(e) was new in the June 2002 draft: If a subscriber makes a payment that is less than the total amount due, it must be applied first against the balance due on that subscriber's basic service unless the subscriber directs otherwise. This provision goes hand in hand with the prohibition against cutting off basic service for nonpayment of other services. If the subscriber makes a partial payment to preserve basic service, the earlier rule would be meaningless if the carrier were permitted to divert the funds to other purposes. Since bills are due and payable when they are presented, "balance due on that subscriber's basic service" in Rule 9(e) includes amounts for the most recent period shown on the bill, and not just amounts overdue. A carrier group suggested rewording the rule to first apply the amount paid against past due basic service charges and remove the subscriber's discretion as how to apply any remaining amount. We reject that change because it would allow the carrier to divert to other, non-basic charges amounts the subscriber had intended to be applied against the current month's basic service, and leave the subscriber vulnerable to disconnection.
Through mis-communication or otherwise, subscribers sometimes find their service cut off even after they have made arrangements with a carrier's service representative to pay their overdue balances over time. Although there are obvious benefits, carriers are under no obligation to make alternate payment arrangements and we are not prepared to mandate them here as some consumer groups request. Once they do, however, it is important that both parties have the same understanding and adhere to their agreement until the account is once again current. Under Rule 9(f), if an alternative payment plan is arranged, the carrier must confirm its terms in writing, but only if the subscriber so requests. Written confirmation can be by e-mail or other electronic means if the subscriber agrees.
In D.91188, following California Supreme Court review, the Commission adopted a rule requiring every communications utility subject to its jurisdiction to refuse service to a new applicant and disconnect existing service to a customer when a magistrate has found probable cause to believe that the service was being or would be used in the commission or facilitation of illegal acts, and absent immediate action, significant dangers to public health, safety, or welfare would result. Rule 9(g) reflects the Commission's D.91188 rule, which is still in effect and binding on all carriers subject to its jurisdiction.
Rule 11: Billing Disputes
Rule 11 ensures subscribers have an opportunity to challenge questionable charges on their bills without fear of being disconnected for nonpayment. This helps secure their Right to Accurate Bills and Redress. As redrafted, it continues each of the essential elements of the staff's proposed Rule 11 and adds several provisions suggested in parties' comments.
When a customer questions charges on the bill, the carrier must investigate them to determine whether they were indeed authorized and correctly imposed, and must inform the subscriber of its determination within 30 days. Rule 11(a) in the June 6, 2002 draft followed staff's proposal, but added a 30-day time limit similar to that required by Public Utilities Code Section 2890(e)42 as suggested in a consumer group's comments, and edits to implement a carrier's suggestion to clarify that nonpayment alone is not sufficient to trigger the rule's dispute provision. Rule 11(a) now has added language protecting consumers from late penalties, adverse credit reports and/or referral to collection while the carrier's investigation is underway and a prohibition against imposing a late charge or penalty on the amount in dispute if the subscriber prevails. A carrier's initial comments suggested that the rule emphasize that carriers may employ agents to handle billing disputes, but that is not necessary because in every case these rules apply equally to carriers whether they act for themselves or through agents, and in some cases the agents who sold the service may not be the proper carrier representative to handle follow-up billing problems. In later comments, carriers requested that they be allowed 60 days to respond, or where the charges involved are older than 60 days, an open-ended "reasonable time," but they did not explain how that would meet the 30-day Section 2890(e) requirement for unauthorized charges. We have also not added a requirement sought by consumer representatives that responses must be provided in writing, or both in writing and verbally.
Staff's proposed Rule 11(b) allowed the utility to notify the customer when a bill is delinquent and warn that service may be terminated. Those provisions are now in Rules 7(a) and 9(a) and need not be repeated here.
Once the carrier has completed its investigation and informed the subscriber of the results, the subscriber needs time either to send payment of the disputed amount to the carrier, or to send it as a deposit to the Commission's Consumer Affairs Branch along with a request the charge be investigated. Rule 11(b) ensures the subscriber has at least 7 days to do that before service may be terminated, but now makes exceptions for prearranged terminations of the type described under the Rule 9(a) discussion above, and for fraud (Rule 9(c)).
When the subscriber has submitted a claim to CAB for informal review, deposited the disputed amount with the Commission, and either paid the undisputed amount to the carrier or deposited it with the Commission, the carrier may not disconnect the subscriber's service pending CAB's determination. Although we prefer to have the undisputed amount paid directly to the carrier, some complainants forward the entire bill payment to the Commission and CAB's practice is to accept it rather than allow the subscriber to be disconnected. Since the carrier is assured at this point of receiving the undisputed amount if CAB finds in its favor, it would serve little purpose to allow the subscriber to be disconnected for an inconsequential technical violation of the procedure, and former Rule 11(d), now Rule 11(c), has been revised accordingly. We have also incorporated into Rule 11(c) the Rule 11(a) protections against late penalties, adverse credit reports and/or referral to collection while CAB's review is underway. Carriers would have us extend Rule 11(c) to require CAB to forward any undisputed amounts to them, but that is more an issue of CAB's internal practices that should be determined by the Commission through its management staff rather than set forth in a general order applicable to carriers.
Staff's Rule 11(e), now Rule 11(d), proposed that a subscriber who brings a complaint to the Commission not be held liable for a carrier's legal costs. Carriers objected that they should be free to seek compensation for their costs in frivolous complaints. In their initial comments, consumer representatives sought to extend staff's rule to ensuring carriers may not abuse their leverage by contractually inhibiting consumers' ability to seek relief in California's courts or agencies; when residential and small business consumers seek do seek relief, it should be without the chilling effect that contractual, open-ended liability for carriers' costs would bring. Consumer representatives also provided a copy of a carrier standard contract that would require California consumers to agree to submit themselves to the jurisdiction of the courts of another state as a condition of obtaining California-jurisdictional regulated utility services, and would limit their rights to legal recourse in other ways.
As the carriers' subsequent comments pointed out, the resulting version of Rule 11(d) proposed in the June 2002 draft decision was overly broad in that it inadvertently foreclosed contractual limitations of liability in a way that was inconsistent with the discussion of that topic elsewhere in the draft decision. Consumer groups recognized that as well, and proposed revised wording that much better captures our intent. As the wireline carrier group acknowledges, the carriers' and consumers' post-June 2002 proposals now have more similarities than differences. Rule 11(d) reflects wording proposed jointly by most of the consumer groups, but with revisions to recognize the carriers' view that some subscribers may have billing addresses that do not match their areas of primary service use. We reject the wireline carriers' continuing arguments that they should be allowed to impose on their California customers contracts governed by other than California law.
Former Rule 12
Former Rule 12 from the staff report and Assigned Commissioner's drafts has been revised to become Part 3, Rules Governing Privacy, of the new general order. Former Parts 3 and 4 have been renumbered as Parts 4 and 5.
Rule 13: Consumer Affairs Branch Requests for Information
Rule 13 is intended to enable Consumer Affairs Branch to obtain information it needs to process informal consumer complaints and inquiries. This goes primarily to assuring consumers' Right to Accurate Bills and Redress, but may also help protect the other rights when consumers bring their questions or allegations to CAB. A very similar requirement is in effect today for non-tariffed interexchange carriers.43
The staff's initial proposal was a single rule requiring carriers to provide documents or information within 10 days of a request by the Commission or its staff. Most carriers objected to a firm 10-day requirement, arguing instead for a more flexible response period to accommodate those occasions when requested materials may be voluminous, in deep storage, or at a distant carrier location. This may indeed be a legitimate concern and the June 2002 draft revised the wording to recognize CAB's ability to make exceptions where warranted.
In the initial comments, one carrier apparently interpreted Rule 13 as requiring it to expand its use or retention of paper records. No such inference is to be drawn from either the proposed rule or the redrafted rule. At least three industry commenters claimed to be prevented by state and federal law from releasing some types of information to the Commission absent a subpoena or customer consent. As our advocacy division pointed out in its initial reply comments, Rule 13 is well within the authority already available to Commission staff. Among the Public Utilities Code sections the carriers cited, Sections 313, 314(a), 2891, 2891.1 and 2894, none bars carriers from providing information to CAB staff acting within the scope of their duties to examine the legitimacy of a consumer complaint.
New Rule 13(a) requires every carrier to designate one or more representatives CAB can contact in handling customer inquiries and complaints. This proposal in the June 2002 draft drew little response.
Rule 13(b) is essentially the staff's proposed Rule 13, but narrowed to encompass CAB requests only. The Commission and its staff have long since established their legal authority, methods and channels for obtaining records and information from the carriers and have no need of another rule for that purpose. To make that point, Rule 13(b) now refers only to CAB requests, and new Rule 13(c) emphasizes that these rules are not the Commission or its staff's exclusive authority for obtaining information or compliance. Carriers should understand that Rule 13(b) is intended to facilitate CAB's efforts on behalf of consumers, not to serve as grounds to resist Commission and staff data requests; carrier-proposed rewording to the contrary in comments on the June 2002 draft has been rejected.
Rule 14: Employee Identification
Rule 14 drew perhaps the least controversy of any in parties' comments. No party objected to it in the initial comments. Several suggested the first sentence regarding identification cards be harmonized with Section 708 which sets forth essentially the same requirement. As several commenters pointed out, this rule is important to safeguarding the public's Right to Safety.
The wording in Rule 14(a) now adheres much more closely to Section 708 than staff initially proposed. Two refinements were added in the June 2002 draft decision. First, "employee" was added to the Definitions section to include employees, contract employees, contractor employees, agents, and carrier representatives of any and all types. Wireless carriers were the only ones to object to this, describing the definition's breadth as confusing, unnecessary and inconsistent with the law. We have retained the broad definition in the belief that members of the public should feel confident of the identification of every person who attempts to enter their premises to conduct the carrier's business. Second, to "customers and subscribers" has been added "applicants for service," recognizing that the latter also may receive visits from carrier employees in the course of installing service.
The second sentence of staff's proposed Rule 14, a requirement that employees identify themselves in their telephone conversations with customers, became Rule 14(b) in the June 2002 draft. Carriers objected to any implication in the last part of the draft rule that they would be required to route repeat callers to a specific service representative. Notwithstanding the specific wording used, that was not the intent and we agree with the carriers that the rule is equally effective in identifying employees without it.
Finally, carrier comments and reply comments on the June 2002 draft decision suggested adding a third subsection to Rule 14 to reflect the Section 2889.9 prohibition against misrepresenting oneself as associated or affiliated with a carrier when soliciting a telephone subscriber's business. New Rule 14(c) adopts that Section 2889.9 wording, modified slightly to recognize that the Commission's enforcement extends to carriers as opposed to non-carrier "persons or corporations."
Rule 15: Emergency 911 Service
In suggesting the Commission add a Right to Safety to its Bill of Rights, several commenters gave the requirement for access to 911 service as a prime example. Rule 15 is modeled after Section 2883, which requires carriers provide residential telephone connections with access to 911 services, even if they have been disconnected for nonpayment. Section 2883 explicitly does not include wireless carriers. Section 2892, on the other hand, requires something very similar of wireless carriers. As drafted by staff, proposed Rule 15 covered both wireline and wireless and did not limit its applicability to residential telephones. About one-half of the initial industry commenters sought to have the rule more closely conformed to Section 2883. The June 2002 draft decision did that by restating it in words more similar to those of Section 2883, at the same time integrating into it requirements from Section 2892. As explained in this order and in the new general order, our intent is that these rules apply where feasible to both residential and small business services. Although this is academic for wireless carriers because, as they have been quick to point out, they do not typically distinguish between residential and business service, it is not academic for wireline. We have acceded to the wireline carriers' request that we not go beyond the residential connection requirement that Section 2883 places on them, and have revised Rule 15 accordingly. One other minor change was made to eliminate another possible source of ambiguity: Whether it is true or not that, as one commenter stated, wireless carriers don't provide "access services," we intend wireless carriers to be covered.44 That term has been changed here to make it clear that the rule applies to carriers who provide end-user access to the public switched telephone network.
Consumer representatives generally agreed with Rule 15 as proposed. One suggested that we tighten the rule by eliminating the qualifier, "to the extent permitted by facilities." No carrier, the reasoning went, should have been certificated in the first place if it couldn't provide ubiquitous 911 access. However, the rule as drafted conforms to Section 2883 in that respect and represents a very practical standard. We have retained the qualifier.
In the initial comments, a carrier asked that we clarify whether we intend Rule 15 to be consistent with the existing rules for reseller CLCs. We do. In D.95-07-054, Appendix B, our Consumer Protection and Consumer Information Rules for CLCs, Rule 10.C. required continued 911 access to residential services even after disconnection for nonpayment. In D.95-12-056, we further interpreted Section 2883's applicability to CLCs by requiring them to provide 911 service (which we referred to there as "warm line" service) to residential customers disconnected for nonpayment for as long as the CLC maintains an arrangement for resale service to the end user's premises. When the resale arrangement is terminated, the obligation to provide 911 access reverts to the underlying facilities-based carrier. We decline to revisit that earlier-decided issue here.
10 See, e.g., G.O. 96-A, Section II.C(4), which outlines a set of 19 subjects appropriate for the stationary utilities to include in their tariffs. 11 D.96-12-071 defined CMRS broadly as including cellular services, personal communication services (PCS), wide-area specialized mobile radio services (SMR), and radiotelephone utilities (RTU or paging) services. In D.95-10-032, we addressed in general which CMRS providers are subject to Commission jurisdiction, and what effect the federal Omnibus Budget Reconciliation Act of 1993 had on the CMRS regulatory program. We provided further clarification in D.96-12-071. The term `CMRS' in today's decision refers only to those sub-classes over which we have previously asserted continuing jurisdiction. 12 The Commission has a proceeding open, R.98-07-038, to adopt a new general order, G.O. 96-B, Rules Governing Advice Letters and Information-only Filings, to supersede G.O. 96-A. Pending G.O. 96-B's enactment, the Commission has issued D.01-07-026, Interim Opinion Adopting Certain Requirements for Publishing and Providing Service Under Tariffs, and D.02-01-038, Second Interim Opinion Adopting Certain Requirements for Notifying Telecommunications Customers of Proposed Transfer, Withdrawal of Service, or Higher Rates or Charges. The rules adopted in those two interim decisions will eventually be codified in G.O. 96-B. 13 § 885, e.g., makes prepaid telephone debit card providers, as specified, subject to the registration requirements of §1013 unless they are certificated to provide telephone service, and thus required to comply with rules the Commission may establish relating to them. See §1013(b) and §1013(g)(5). The Commission's current practice is to certificate such providers under §1001. 14 Protections have been extended to non-individual subscribers other than businesses (e.g., government and quasi-governmental agencies, associations, etc.) by treating them identically with businesses for purposes of these rules. 15 According to the FCC, as of June 2, 2000, CLCs served 17.5% of big businesses and institutions, but only 3.2% of homes and small businesses. 16 T-1 lines provide the capacity equivalent of 24 switched voice-grade access lines. 17 The Commission has also recently opened a proceeding, R.02-12-004, into the service quality standards for all telecommunications carriers and revisions to G.O.133-B. 18 See D.02-08-069 in Case 01-03-028 et al. 19 D.90-08-066. 20 D.96-10-066 in R.95-01-020 and I.95-01-021. 21 § 2889.6 directs the Commission to require local exchange carriers to include in their directories information concerning emergency situations which may affect the telephone network. That information must include the procedures which the carrier will follow during emergencies, how telephone subscribers can best use the telephone network in an emergency situation, and the emergency services available by dialing 911. 22 California Uniform Electronic Transactions Act, California Civil Code, Title 2.5, §§ 1633.1 - 1633.17; and federal Electronic Signatures Act, 15 USCA §§ 7001 et seq. (E-Sign Act). The California Uniform Electronic Transactions Act generally provides that: a record or signature may not be denied legal effect or enforceability solely because it is in electronic form; a contract may not be denied legal effect or enforceability solely because an electronic record was used in its formation; and, if a law requires a record to be in writing, or if a law requires a signature, an electronic record satisfies the law. It also authorizes the provision of written information by electronic record and sets forth provisions governing changes and errors, the effect of electronic signatures, and admissibility in evidence. These provisions are subject to numerous conditions and exceptions. Moreover, certain provisions of the California act may be preempted by the federal act, which contains additional safeguards to protect consumers. 23 See G.O. ___, Part 4, C(1)(a) attached. 24 Carriers making a change in a residential subscriber's service provider may wish to send the Rule 3(d) or 3(e) tariffed or non-tariffed order confirmation notice with the 14-day notice required by § 2889.5(a)(4), provided the seven-day requirement is met. 25 Proposed Rule 3(f) in the June 2002 draft required that a subscriber, in addition to signing the contract, separately sign or initial the contract in the immediate proximity of the notice of any early termination fees, charges or penalties to indicate awareness of and agreement to them. That requirement has been dropped in favor of the highlighting called for in Rule 3(e). 26 Concerns about the privacy and security risks stemming from the widespread use of social security numbers as personal identifiers have increased in recent years. See Testimony of John G. Huse, Jr., Inspector General of the Social Security Administration, Before the Subcommittee on Social Security of the House Ways and Means Committee Hearing on Protecting Privacy and Preventing Misuse of Social Security Numbers (May 22, 2001); see also Greidinger v. Davis, 988 F.3d 1344, 1353-1354 (9th Cir. 1993); State ex rel Beacon Journal Publishing Co. v. City of Akron, 640 N.E.2d 164 (Ohio 1994). 27 We have also clarified that $25 is the minimum credit amount. Carriers are not limited to offering that amount if they wish to do so, e.g., to dissuade customers from pressing a claim under Civil Code Section 1722(c). 28 Vendors that do not administer the actual service offered through these cards are not subject to Section 885 and Commission jurisdiction. Non-jurisdictional entities include those whose activities are limited to participating in the distribution chain, such as wholesalers and retailers that simply sell cards and do not buy blocks of calling time from certificated carriers and package it for resale as prepaid calling card services. 29 For comparison, note the 1.5% monthly interest rate Rule 7(a) allows (and many carriers charge) for late payments. 30 At least one CLC (Cox California Telcom II, LLC) is already a carrier of last resort, and another (MCI Metro Access Transmission Services, U-5253-C) is seeking that designation. One CMRS carrier (WWC License, LLC, U-3025-C) submitted a letter requesting the Commission designate it as a carrier of last resort for providing basic service, but was directed instead to file an application. 31 47 CFR 64.2400(c). 32 CC Docket No. 98-170, Order on Reconsideration, (released March 29, 2000), at Paragraph 10. 33 CC Docket No. 98-170, Order on Reconsideration, (released March 29, 2000), at Paragraph 5. 34 D.85-12-017 (large LECs) and D.86-04-046 (independent LECs). 35 Consumer groups, however, would also have the 22-day clock reset to zero on the date a carrier finds against a consumer in a bill dispute. 36 Note that these rules do not authorize carriers to impose late payment penalties if they were not previously so authorized. 37 The $20 minimum continues to apply to those carriers to whom it applied previously. 38 See D.86-12-025 in R.85-09-008 setting telephone corporation backbilling limits which we today reaffirm with minor exceptions in the interest of making them more consistent across carrier classes. 39 Both § 736 and § 737 may be read to apply only to tariffed rates, but since the Commission has jurisdiction to establish both broader requirements (i.e., applicable to both tariffed and non-tariffed utility services) and tighter requirements (backbilling limits shorter than three years) that do not conflict with those sections, they need not be examined further here. 40 Carriers point out the possibility that a subscriber may also benefit from a billing delay under certain circumstances. There is no benefit possible, however, for a customer who makes an effort to stay within his or her monthly calling allowance, as we suspect most do. 41 D.02-01-038 was adopted in anticipation of G.O. 96-B. Under G.O. 96-B as last proposed, changes implemented by Tier 1, Tier 2 and Tier 3 advice letters (Industry Rules 7.1, 7.2 and 7.3 respectively) would require customer notice in compliance with Industry Rules 3 and 3.3: not less than 25 days' advance notice; a statement of the current and proposed rates, charges, terms or conditions; for general rate case LECs (GRC-LECs), a statement of the reasons for the proposed change and its impact expressed in dollar and percentage terms; and for Tier 3 filings, specific wording which includes procedures to protest. 42 § 2890(f) was renumbered to § 2890(e) on July 1, 2001 and relates to unauthorized charges on telephone bills. 43 D.98-08-031, Appendix A, Rule 6. 44 As noted earlier, at least one CMRS carrier has sought carrier of last resort status from the Commission, characterizing its wireless service as "indistinguishable from the basic, required services provided by [California's two largest ILECs]."
