Pending Motions

More than two dozen written motions were filed during the proceeding. Most of those were addressed through Assigned Commissioner and/or assigned ALJ rulings shortly after they were filed. We decide here those that remain pending.

The Greenlining Institute and Latino Issues Forum (Greenlining/LIF) motion proposed to establish a two-part pilot program for funding participation by individuals and organizations representing low-income and/or minority customers. Under the first part, up to fourteen eligible non-profits could receive up to $5,000 each for their participation time and expenses without regard to whether they made a substantial contribution to the proceeding. Under the second, up to 100 low-income individuals would receive travel expenses and $50 per diem to testify in the proceeding. In addition, Greenlining/LIF would have the Commission's Public Advisor develop a low-income participation training program for these participants and, if necessary, hire outside experts to assist. Greenlining/LIF estimates its pilot program would cost less than $95,000 and suggests the Commission seek funding through outside grants or an assessment in generic proceedings. The Utility Reform Network filed a generally supportive response describing the proposal as "an innovative approach which deserves consideration." San Diego Gas & Electric Company's response opposed the motion as being unwise and a procedurally inappropriate vehicle. According to San Diego Gas & Electric, the proposal is in reality a petition to modify all of the Commission's prior decisions on intervenor compensation. As such, it would have been better suited for Commission consideration in the Intervenor Compensation Rulemaking proceeding,96 or perhaps as a petition to modify the decisions already issued in that proceeding.

We do not adopt Greenlining/LIF's proposal here. This rulemaking proceeding addresses only consumer rights and consumer protection rules applicable to telecommunications utilities. Greenlining/LIF's proposal, in contrast, goes to the heart of how intervenors are compensated, and if implemented could represent the first step toward a significant policy shift the merits of which would be better considered outside of this proceeding. Although we deny Greenlining/LIF's motion, we do not reject its ideas out of hand. If it wishes to pursue them further, we suggest it either choose a more appropriate forum or explore them first with our staff and with others whose interests could be affected if they were adopted.

In initiating this rulemaking, our intent was to seek input from the widest variety of stakeholders. That is still our intent. No party opposed either of these motions. The City and County of San Francisco's motion to intervene is granted and its comments accepted. The California Foundation for Independent Living Centers' late-filed comments are accepted.

Comments on the July 24, 2003 draft decision of Commissioner Wood were due to be filed with the Commission and served on parties by August 25, 2003. On that day, AT&T Communications of California, Inc. and WorldCom, Inc. each served their comments on parties by mail in hardcopy, and electronically as e-mail attachments to those with known e-mail addresses. A representative attempted to make their formal filings with the Commission's Docket Office shortly after the close of business on August 25, but was turned away, so the carriers tendered their comments for filing with a motion on August 26. No party will be disadvantaged by accepting AT&T's and WorldCom's late-filed comments. Their motion is granted.

We address here three wireless carrier motions concerning the economic effects of the proposed new general order. Those motions are granted to the extent described below.

On September 15, 2003, seven wireless carrier representatives97 filed a motion to have two studies ("the LECG studies") accepted into the proceeding record.98 Those studies, they maintain, "provide an in-depth economic analysis of the impact that the Proposed Rules will have on the welfare of wireless customers in California, as well as on jobs, investment and economic activity in the state." 99 The carriers also requested the time for filing responses to their joint motion be reduced, but that request was not granted and is now moot. Two replies were filed in opposition, one by the Commission's Office of Ratepayer Advocates and the California Attorney General's Office, and the second by the National Consumer Law Center, the Utility Consumers' Action Network (UCAN), The Utility Reform Network, and Consumers Union.

On October 7, 2003, the wireless carrier representatives filed a motion seeking leave to file a reply to the consumer groups' responses, and tendered with it their reply.

On November 4, 2003 the Cellular Carriers Association of California (CCAC) filed a motion to admit into the record a 38-page paper100 ("the Hazlett paper") in rebuttal to a study ("the Navarro paper") UCAN had included as part of its comments on the July 2003 draft decision.101 CCAC expressly did not move to strike the Navarro paper portion of UCAN's comments with which it disagreed.

The Motions and Studies and their Timing

The wireless representatives' September 15, 2003 motion claims that cost issues have not been analyzed in this proceeding, and further, that the proposed rules issued for comment on July 24, 2003 would have specific costs attached to them which compare unfavorably with the rules' benefits because those benefits cannot be quantified. That motion seeks permission to enter into the record the two LECG studies prepared for a wireless industry group. In these reports, consultants Debra J. Aron and William Palmer estimate what they represent as compliance costs for the wireless industry, but do not provide a similar analysis of the proposed rules' benefits. Nevertheless, the consultants criticize the July 2003 draft decision for failing to include a cost-benefit analysis, and argue against adoption of the proposed rules.

The Attorney General, ORA, and consumer groups the National Consumer Law Center, UCAN, The Utility Reform Network, and Consumers Union oppose the motion on the grounds that (1) it is untimely, (2) the Commission has already considered costs and benefits of the rules, and (3) the Aron and Palmer statements do not offer competent evidence about the economic impact of the rules on the California economy.

Stakeholders have now been afforded numerous opportunities to submit comments and/or replies to comments on the proposed new consumer protection rules overall or various subsets of them during the more than four-year course of this proceeding. The Assigned Commissioner issued his first draft decision in June 2002 following nine opportunities for parties to submit comments and/or replies to comments. There followed comments on that draft, four days of workshops involving the entire industry, further comments and recommendations by a joint industry-consumer working group, and consolidated reply comments on the first draft decision and the working group's recommendations. With that extensive and fully developed record in hand, the Assigned Commissioner issued for comments a revised draft decision with proposed rules in July 2003, and the final round of comments and replies on it were to have been received by September 4, 2003. All of the wireless representatives' motions were filed after the deadlines and after they and all of the other parties had completed their comments and replies to comments.

The wireless representatives' motion to accept the Hazlett paper is particularly troublesome. UCAN's August 25, 2003 comments on the Assigned Commissioner's July 2003 draft decision included the Navarro paper that UCAN characterized as addressing the need for and justification for the new rules. UCAN's filing was timely and, including the Navarro paper, well within the 25-page limit established for comments. On September 4, 2003 CCAC filed a timely reply to parties' comments addressing, among other topics, some aspects of those UCAN comments that were included in the Navarro paper. CCAC now characterizes the Hazlett paper it would have late-admitted as responding to the assertions made in UCAN's paper. CCAC had in fact already had an opportunity to reply to UCAN's comments and the Navarro paper. CCAC's Hazlett paper rebuttal is 38 pages long, packed with new factual assertions, and submitted two months after replies to comments, including comments on the Navarro paper, were due. As such, it should not qualify as a reply to comments for its length, its content or its timing.

Thus, the wireless representatives' motions, both to admit the LECG studies and the Hazlett paper, were untimely, and the arguments raised by parties opposing the September 2003 motion have considerable merit. However, the Assigned Commissioner concluded that the Commission's ultimate decision on this issue should include a more explicit discussion of the issues raised in the motion. An explicit discussion would make clear that the considerations raised by the wireless representatives have, in fact, been present throughout this proceeding and have been taken into account in crafting the proposed rules. The Assigned Commissioner circulated a revised draft decision on March 3, 2004 that responded to all of the earlier comments and proposed to grant the wireless representatives' motions. That revised draft contained language that made the treatment of the economic issues more explicit, and addressed the studies prepared by the wireless representatives' consultants. Provisions of Rule 77.3 that would have limited the scope of comments on the proposed treatment of economic issues in the draft decision were waived, and parties were explicitly invited to comment on the wireless representatives' studies, and to submit relevant studies of their own if they desired. To ensure the parties were not unduly constrained, these comments and replies to comments on the draft decisions' treatment of the economic issue were in addition to the parties' comments and reply comments on the remainder of the decision, and no page limit was put on any studies the parties wished to attach to their comments. The Assigned Commissioner anticipated taking those comments, studies, and replies to comments into consideration as the final decision was prepared for the Commission's consideration.

Taking this approach provided two benefits. By distributing the proposed decision text for parties to review and comment on, the Assigned Commissioner sought to bring the issue directly to the parties and to focus their review, while at the same time allowing the parties' comments to be incorporated into the Commission's final decision. In addition, by addressing the issue in a revised draft decision and then considering the comments, further time was not lost on this issue.

This decision confirms the Assigned Commissioner's approach. The two LECG studies, the Navarro paper, and the Hazlett paper are accepted into the record.102

Economic Considerations in the Proceeding

In the many rounds of comments already made in this proceeding, various parties have addressed the costs of implementation and made suggestions for minimizing those costs, many of which were adopted. Some suggestions were rejected because they would have resulted in rules that did not achieve our objective of protecting consumers. As a result, the rules adopted in this decision represent a balancing of the need to protect consumers with the various interests presented by the industry, including issues of cost and economic effects.

Much of the record in this proceeding demonstrates the great need for the rules we adopt today. These rules will provide numerous benefits to telecommunications customers in California. The parties' comments point out that some of those benefits will be economic. The benefits to individual consumers and to California businesses have been described by parties.103 As we note earlier in the Background section of this decision, these rules incorporate or supersede numerous earlier rules set forth in various Commission orders. Consolidation into a single new general order will generate economic benefits through reduced complexity and regulatory uncertainty.

Throughout the course of this proceeding, the wireless industry had ample opportunity to present information on the cost and economic effects of the rules on the record. Other parties did bring economic issues before the Commission. The revised rules are the product of an enormous investment of time and effort by a substantial number of active parties in this proceeding, and thousands of consumers and representatives of nonprofit groups who participated through our public participation hearings and sent e-mail messages and letters overwhelmingly supporting the adoption of consumer protection rules. As discussed below, the wireless representatives' main claim in their September 2003 motion-that the Commission ignored economic issues and ignored relevant law-is wrong, and we decline to reject the rules on that basis, or to limit their application to certain industry segments as the wireless industry would have us do. However, this decision now contains an further discussion of economic issues to make it abundantly clear that the wireless representatives have mischaracterized our decision-making process and its results.

The Wireless Studies' Unhelpful Information

The wireless representatives' motion is wrong when it claims that the Commission proposes to adopt rules "without any idea" of the economic effects those rules will have. Economic issues were considered throughout the course of this proceeding, as discussed above. What the motion appears to contend is that the specific cost information contained in the LECG studies should be dispositive of the issues here. That claim is incorrect.

Three major flaws significantly reduce the value of the LECG studies. First, they rely on implementation cost estimates of dubious accuracy and value. Palmer engages in calculations that produce a seemingly concrete estimate that the implementation costs of the proposed rules is approximately $3.86 per subscriber line per month. However, this estimate is in fact produced by aggregating cost estimates provided by the five largest wireless representatives in California. The carriers' estimates were in no way analyzed or verified. It is unclear what weight, if any, these cost estimates should be given as a result. Because there is no independent analysis of the accuracy of the carriers' estimates, it may be that the LECG studies simply represent a numerical version of the claim that the wireless representatives are unhappy with the proposed rules.

In addition, as the Attorney General and ORA point out, the reports assign costs to rules that reflect current law, such as Public Utilities Code § 2891 (confidentiality of subscriber information), § 2890 (governing solicitations) and Business and Professions Code §§ 17200 and 17500 (prohibiting misleading advertising and other unfair business practices). Palmer makes no attempt to distinguish requirements in the rules that are already required by existing law, so there is no way to tell what portion of the "quantified" $3.86 per subscriber line per month will actually be produced by the adoption of the proposed rules.

Second, the LECG studies rely on a great deal of unsupported speculation, even though they claim to provide a quantitative analysis. For example, Aron's estimate that an average customer's bill will increase by a specific percentage both adopts an unverified cost estimate from the wireless industry and assumes that 100% of those costs will be passed on to the consumer. Aron also argues that the rules may not be necessary because carriers have a profit motive to initiate consumer protections on their own. The record of this proceeding, which unlike Aron's statement is based on actual information gathered by the Commission, overwhelmingly demonstrates that there is a need for the consumer protection rules we adopt today. Aron also opines that the proposed rules "may induce significant nuisance litigation costs."104 No substantiation is provided for this statement. As the Attorney General and ORA point out in their opposition to the motion, there is no reason to believe that Aron is qualified to offer a legal opinion. This opinion also fails to take into account that a single set of clear rules offers many benefits to litigants and could actually reduce litigation costs.

Third, neither Palmer nor Aron addresses potential cost savings that could partially offset implementation costs. For example, according to a study cited by Aron, "churning" (customers switching carriers) cost the wireless industry $10 billion in 2001 (presumably, nationwide).105 Yet neither Aron nor Palmer considers whether the consumer protection rules could reduce churn stemming from, e.g. customer dissatisfaction with quality of service, misunderstandings generated by inadequate initial disclosure, or other, abusive practices these rules are intended to cure.

The unsubstantiated and speculative nature of the LECG studies makes the estimates contained in them of little help in deciding whether to adopt or limit the proposed consumer protection rules. We are particularly concerned with the wireless representatives' claim that the consultants' cost estimates are worthy of more serious consideration than are the benefits the rules will produce because those cost estimates have, allegedly, been quantified. The LECG studies reveal, in fact, that the costs of the rules may not be subject to documentation, since Aron and Palmer were unable to document or to verify their accuracy. As a result, the conclusion that the consumer protection rules we adopt today will be harmful, "particularly given the absence of documentation of genuine potential benefits," is simply not supported.

The Motion's Misstatement of the Law

The wireless representatives further argue that the Commission has not met legal requirements to "assess the potential adverse economic impact on California business enterprises of proposed rules and regulations." This argument ignores the analysis of these issues the Commission has provided, and misstates the law.

The Wireless Industry relies upon Government Code § 11346.3 to support its claims. That statute is inapplicable here. It is Public Utilities Code § 311 read in conjunction with §§ 1701.1, 1701.2, 1701.3, and 1701.4 that specifies the procedures that the Commission must use to adopt a general order. Section 311(h) specifically exempts the Commission's general orders from the requirements of Government Code § 11346.3. Public Utilities Code § 321.1 in fact directs the Commission to consider economic issues "as part of" its normal consideration of a proceeding and not to create any special office for that purpose. That is what we have done here, as explained above. Section 321.1 specifically prohibits us from going outside our "existing resources and existing structures," yet the wireless representatives, by asking for us to disregard procedural rules regarding the development of the record, or to include the efforts of the Office of Administrative Law, are asking us to do exactly that.

The Record's Support for Adopting The Rules

Consumer groups the National Consumer Law Center, UCAN, The Utility Reform Network, and Consumers Union state in their reply to the wireless representatives' September 2003 motion:

    It is often the case that regulations that protect the public health, safety and welfare impose significant costs on the regulated industry that can be estimated, even if imprecisely, while providing benefits that cannot easily be reduced to dollar terms. Examples include virtually all pollution control regulations, where the regulated industries can incur substantial engineering, design, construction and equipment purchase costs while the public receives much harder-to-quantify reductions in illness and intangible increases in enjoyment of air, water and land resources; consumer protection and disclosure rules that address fraudulent and deceptive practices, where regulated parties may face increased printing, marketing, advertising, or call center costs while the public avoids an unquantifiable number of deceptive practices; and the Federal Communications Commission's ("FCC") number portability rules, where the industry must invest millions of dollars in the technology that allows for number portability while consumers gain the hard-to-quantify benefit of being able to switch carriers more easily.106

We agree with these comments. Benefits of the proposed consumer protection rules include:

Earlier in this decision we explained our belief that a comprehensive set of telecommunications consumer protection rules is needed. We were particularly drawn to a consumer group's comment that reflects our own view and bears repeating:

    In a perfect world, all telecommunications carriers would operate honorably and never seek unfair advantage at the expense of their residential and business customers. Unfortunately, perfection in competition and conduct remains only an ideal. In the meantime, it is the Commission's responsibility to enact clear and concise rules to guide industry conduct. In the long run, such rules will benefit consumers, carriers and the general public alike.

Many of the rules we adopt today are not simply policy decisions, but statutory requirements binding on both the carriers and the Commission. We have taken care to cite those statutes in the sections on rules above, and to explain how they led us to the specific rule.

The record of this proceeding shows that there is ample reason to adopt the proposed consumer protection rules. The wireless representatives' criticism of this Commission's approach is not founded in law, or in good policy. The LECG studies offered by the wireless representatives are significantly flawed and we will accord them little weight. These studies reveal that the alleged costs of consumer protection rules cannot be quantified in a way that does not simply reflect the policy positions of the wireless representatives or their consultants. We reject the claim that we should give less weight to the record where it demonstrates the benefits these rules will confer. We similarly reject the claim that we should give more weight to the wireless representatives' late-filed motion and LECG studies than we give to the complete, well developed record in this proceeding.

Greenlining/LIF's motion asks that we take official notice "of the United States Census data on language preference, the Commission's own data on wireless and other complaints, the Commission's authority to create and enforce rules that apply to wireless carriers, and the `no disconnect' policies of other states." Wireless representatives filed a reply objecting to the second and third of those requests and expressly not objecting to the first and fourth.

In a rulemaking proceeding such as this one, we may consider publicly available reports such as United States Census reports without taking official notice of them, assuming they are relevant.107 We may also consider publicly available decisions and reports issued by this Commission and by other state and federal agencies without taking official notice. Thus, we will deny as unnecessary the request to take official notice of data regarding language preference in the census report, wireless complaint data in this Commission's 2002 report on "The Status of Telecommunications Competition in California," and "the `no-disconnect policies of other states.'"

It would be inappropriate for us to take official notice of this Commission's authority to create rules that apply to wireless carriers. Where we discuss this issue, we cite to the relevant provisions of the state Constitution, state and federal laws, and court decisions.108 The existence of these authorities is not in dispute, and there is no need to take official notice of them. To the extent we offer our interpretation of the law, that would not be an appropriate matter for official notice.109

For these reasons, Greenlining/LIF's motion to take official notice is denied.

96 R.97-01-009, Order Instituting Rulemaking on the Commission's Intervenor Compensation Program, and I.97-01-010, Order Instituting Investigation on the Commission's Intervenor Compensation Program. 97 AT&T Wireless Services, Inc.; Nextel of California, Inc.; Omnipoint Communications, Inc. dba T-Mobile; Pacific Bell Wireless LLC dba Cingular Wireless, LLC; Sprint Spectrum, L.P.; Verizon Wireless; and the Cellular Carriers Association of California (jointly, "wireless representatives"). 98 The Financial and Public Policy Implications of Key Proposed Telecommunications Consumer Protection Rules on California Wireless Carriers and Customers: Economic Analysis (September 2003); and, The Financial Implications of Key Proposed Telecommunications Consumer Protection Rules on California Wireless Carriers and Customers: Cost Study Report (September 2003). These are jointly referred to here as the LECG studies. 99 September 15, 2003 wireless representatives' Motion at page 2. 100 Thomas W. Hazlett, Cellular Telephone Regulation in California - A Critique of Peter Navarro's Paper Submitted to the California Public Utilities Commission (November 3, 2003). 101 Peter Navarro, An Economic Justification for Consumer Protection Laws and Disclosure Regulations in the Telecommunications Industry (August 25, 2003), submitted as Attachment A to the Comments to the Draft Decision filed by UCAN on August 25, 2003. 102 UCAN's Navarro paper is already in the record, being part of UCAN's timely filed comments. 103 The California Small Business Roundtable and the California Small Business Association's reply to comments filed September 4, 2003 is particularly telling. In urging the Commission to adopt the Assigned Commissioner's draft decision, it stresses small businesses' importance to the California and national economy and states, "Some industry commenters noted how important their particular industry segment was to the California economy, bemoaning the Bill of Rights as possibly driving their industry into ruins. CSBRT/CSBA refuses to use similar scare tactics about the state of small business should it not be afforded the protections of the Bill of Rights." 104 Aron, page 34. 105 Aron, page 13, footnote 24. 106 Reply of NCLC, TURN, UCAN and CU to Wireless Industry Motion for Leave to File Economic Analysis, pages 8 and 9. 107 See Rivera v. Division of Industrial Welfare (1968) 265 Cal. App. 2d 576, 589-91. 108 See, e.g., discussion above in Part I, Bill of Rights (re: §§ 2896 and 2897); and Part 2, Consumer Protection Rules, Applicability to Carriers (re: carriers generally) and Relationship to Existing Rules and Tariffs, CMRS Rules and the CMRS Proceeding (re: wireless carriers specifically). For the Commission's authority to apply the Part 4 rules to wireless providers specifically, see the Interim Opinion in this proceeding, D.01-07-030, at Section III.B. and Conclusion of Law No. 4. 109 See Evid. Code § 451(h).

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