COM/CXW/esp |
DRAFT |
H-5c |
12/21/00 |
Decision ON APPEAL OF COMMISSIONER WOOD
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
The Utility Consumers' Action Network, Complainant, vs. Pacific Bell (U 1001 C), Defendant. |
Case 98-04-004 (Filed April 6, 1998) |
|
And Related Matters. |
Case 98-06-003 (Filed June 1, 1998) Case 98-06-027 (Filed June 8, 1998) Case 98-06-049 (Filed June 24, 1998) Investigation 90-02-047 (Filed February 23, 1990) |
FINAL OPINION ON PACIFIC BELL'S
MARKETING PRACTICES AND STRATEGIES
(Appearances are listed in Attachment B.)
TABLE OF CONTENTS
Title Page
1. Summary 2
2. Procedural History 3
2.1. Requests To Reopen the Record 6
2.2. Changes from the Presiding Officer's Modified Decision 7
2.2.1. Business and Professions Code 8
3. Disputed Material Facts 11
4. Witnesses Presented 12
4.1. UCAN 12
4.2. Greenlining 12
4.3. ORA 13
4.4. TIU 13
4.5. Pacific Bell 14
4.6. Wallace Roberts 14
5. Statutory and Decisional Standards Applicable to Pacific Bell's Duty to Inform Customers 15
5.1. General Standard 15
5.2. Sufficient Information To Make Informed Choices 16
5.3. Tariff Rule 12 and Information Regarding "Packages" 19
5.4. Information Regarding Caller ID Blocking 23
6. Marketing Specific Services 24
6.1. Caller ID and Blocking Service 24
6.1.1. Pacific Bell's Contract With BRI 29
6.2. Anonymous Call Rejection 32
6.3. Inside Wire Maintenance Plans 33
6.3.1. Disclosure of Different Maintenance Plans 34
6.3.2. Landlord's Responsibility 36
6.3.3. Disclosure of Competing Maintenance Providers 38
6.4. The Basics and The Essentials Packages of Optional Services 39
6.4.1. Background 39
6.4.2. State Law on Basic Service 42
6.4.3. The Basics Saver Pack and Commission Precedent 43
6.5. The Basics Plus Saver Pack 47
7. Marketing Programs and Tactics 49
7.1. "Offer on Every Call" 49
7.2. Sequential Offerings 55
7.3. Incentives and Sales Quotas 60
7.4. Providing Customer Information 67
8. Marketing to Customer Groups 70
9. Remedies 75
9.1. Caller ID Blocking 75
9.2. Inside Wire, Packages Offered Sequentially, The Basics, and ULTS 77
9.3. Sales Incentives to Service Representatives 78
9.4. Fine 79
ATTACHMENT A
ATTACHMENT B
1. Summary
In this decision we address a number of Pacific Bell's techniques for marketing its optional services to residential customers. We find that some of these techniques violate statutory and decisional standards and that some do not. We find that Pacific Bell failed to inform customers adequately regarding (1) the number blocking options to prevent a caller's number from being displayed on a Caller ID device, and (2) the two inside wire maintenance plans it offers. We also find that Pacific Bell's marketing policy of sequentially offering packages of services in descending order of price fails to sufficiently inform customers because they are not told of the less expensive package unless they refuse the more expensive option. We find that Pacific Bell's practice of requiring its service representatives to try to make a sale every time a customer calls - its "Offer On Every Call" program-unacceptably interferes with Pacific Bell's duty to provide customer service of reasonable quality. We determine that unlimited potential sales commissions for service representatives also interferes with providing quality customer service, and is inconsistent with the incentive compensation guidelines we have previously established for Pacific Bell. We hold that Pacific Bell improperly used the Universal Lifeline Telephone Service subsidy program as a link to market other optional services, and that its marketing of a package of optional services under the name "The Basics" is misleading because it inaccurately suggests that the package offered constitutes basic telephone service.
We find in favor of Pacific Bell on several issues raised by complainants. First, no law or decision precludes customers who do not wish to receive calls from lines with numbers blocked from Caller ID from rejecting such calls and purchasing services from Pacific Bell to prevent such calls from being presented to their telephone. This service is called Anonymous Call Rejection.
Second, we find that Pacific Bell's marketing practices failed to meet statutory and decisional standards for all customers. Hence, we do not need to reach the question of marketing practices that are misleading to only certain customer groups but not others.
Third, although Pacific Bell is subject to stringent federal and state regulations regarding the privacy of customers' information, those standards do not prevent Pacific Bell from providing customer information, subject to appropriate security measures, to its agents and affiliates for Pacific Bell marketing purposes.
Remedying these violations and preventing their recurrence will require a major effort by Pacific Bell. Unfortunately, the record does not contain detailed remedial proposals, so we direct the parties to prepare such proposals for our further consideration. These proposals should address customer notification and refunds, including customer outreach plans to ensure that Pacific Bell reaches as many customers as possible. We direct Pacific Bell to make all necessary refunds directly to customers and to provide sufficient funds for the customer outreach effort.
Many of the marketing abuses complained of in this proceeding closely resemble the marketing tactics the Commission found violated statutes and regulations in Pacific Bell's 1986 marketing abuse proceeding. In light of the recidivist nature of Pacific Bell's actions, we also impose a fine of $43.8 million.
