A. DISCUSSION OF ECONOMIC STUDIES AND RECORD LIMITATIONS AND DISPOSITION OF PENDING MOTIONS

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 representatives³¹ filed a motion to have two studies ("the LECG studies") accepted into the proceeding record.³² Those studies, they maintain, "provide an in-depth economic analysis of the impact that the Proposed Rules [of Assigned Commissioner Wood] will have on the welfare of wireless customers in California, as well as on jobs, investment and economic activity in the state."³³ 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 (ORA/AG), and the second by the National Consumer Law Center (NCLC), the Utility Consumers' Action Network (UCAN), The Utility Reform Network (TURN), and Consumers Union (CU).

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 paper³⁴ ("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.³⁵ CCAC expressly did not move to strike the Navarro paper portion of UCAN's comments with which it disagreed.

The Motions and Studies

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 that compare unfavorably with the rules' benefits. The 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 the compliance costs for the wireless industry with the rules then under consideration. In addition, they criticize the July 2003 draft decision for failing to include a cost-benefit analysis, and argue against adoption of the proposed rules.

Aron and Palmer find that the initial rules proposed in this proceeding would add 10% on average to the bills of wireless customers, would result in a loss to the California consumers of $2.3 billion per year, would drive out investment in the wireless infrastructure, and generate a loss of 12,300 jobs.

The AG and ORA (filing jointly), and the NCLC , UCAN, TURN, and CU (filing jointly) opposed 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.

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, 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 characterizes the Hazlett paper as responding to the assertions made in UCAN's paper more fully than CCAC's initial comments.

The Assigned Commissioner circulated a revised draft decision on March 3, 2004 that responded to earlier comments and proposed to grant the wireless representatives' motions. In addition, for the first time in over four years of this proceeding, the parties were explicitly invited to comment on the wireless representatives' studies, and to submit relevant studies of their own if they desired. Parties, however, were initially allowed only two weeks to perform and submit relevant studies. Subsequently, this deadline was extended by a week.

Despite this truncated timetable, TURN-UCAN-NCLC-CU, AT&T, AT&T Wireless, Nextel, Cingular, Omnipoint, Sprint, Verizon Wireless and the CCAC (the Wireless Group), theAG/ORA, and Sprint submitted comments on the economic consequences of these rules.

This decision accepts the two LECG studies, the Navarro paper, and the Hazlett paper into the record.³⁶ We note, however, that the Wireless Group, in its March 23 Comments, submitted new reports -- by Dr. Michael Katz, by Dr. Debra Aron, by Mr. Palmer, and by Mr. Lowenstein that respond to earlier criticisms and directly address issues raised in the March 3 Draft Decision of Commissioner Wood and by the extremely short period for preparing economic analyses.

AT&T, SBC, Sprint, and the Wireless Group, who have submitted economic comments, argue that the procedural timetable for preparing and submitting economic analyses denies parties their due process rights and commits procedural error. In particular, the report of Palmer (in the Wireless Group's filing), who conducted the most extensive analysis of primary cost data, stated that despite this prior experience, the vagueness of the rules and the adopted timetable for implementing the changes made it impossible to venture a cost estimate for the revised rules.

³¹ 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"). ³² 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. ³³ September 15, 2003 wireless representatives' Motion at page 2. ³⁴ 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). ³⁵ 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. ³⁶ UCAN's Navarro paper is already in the record, being part of UCAN's timely filed comments.