STATE OF CALIFORNIA GRAY DAVIS, Governor

PUBLIC UTILITIES COMMISSION

505 VAN NESS AVENUE

SAN FRANCISCO, CA 94102-3298

June 1, 2001

TO: PARTIES OF RECORD IN RULEMAKING 00-02-004

This is the draft interim decision of assigned Commissioner Carl Wood, the presiding officer in this proceeding. It will be on the Commission's agenda at the meeting on June 28, 2001. The Commission may act then, or it may postpone action until later.

When the Commission acts on the draft decision, it may adopt all or part of it as written, amend or modify it, or set it aside and prepare its own decision. Only when the Commission acts does the decision become binding on the parties.

Pursuant to Rule 77.7(f)(9), comments on the draft decision must be filed by June 20, 2001, and no reply comments will be accepted.

Comments must be served separately on Commissioner Wood and assigned Administrative Law Judge James McVicar, and for that purpose I suggest hand delivery, overnight mail, or other expeditious methods of service.

In addition to service by mail, parties should send comments in electronic form to those appearances and the state service list that provided an electronic mail address to the Commission, and to Commissioner Wood at kpp@cpuc.ca.gov, and Administrative Law Judge McVicar at jcm@cpuc.ca.gov.

/s/ LYNN T. CAREW

Lynn T. Carew, Chief

Administrative Law Judge

LTC:sid

Attachments

COM/CXW/KPP/sid DRAFT Item 5

6/28/2001

Decision DRAFT INTERIM DECISION OF COMMISSIONER WOOD

(Mailed 6/1/2001)

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Order Instituting Rulemaking on the Commission's Own Motion to Establish Consumer Rights and Consumer Protection Rules Applicable to All Telecommunications Utilities.

Rulemaking 00-02-004 (Filed February 3, 2000)

TABLE OF CONTENTS

Title Page

INTERIM OPINION ADOPTING INTERIM RULES GOVERNING THE INCLUSION OF NONCOMMUNICATIONS-RELATED CHARGES

IN TELEPHONE BILLS 2

I. Summary 2

II. Background 3

III. Authority for Rules 4

A. Billing Agents and Vendors that are not Public Utilities 5

B. Wireless Telephone Service Providers 6

IV. Applicability of Truth in Lending Act 6

V. Basic Approach: Deterrence Through Accountability 9

VI. Key Issues 11

A. Protection for Consumers and Businesses 11

B. Role of Billing Telephone Company 11

C. Authorization of Charges 11

1. Billing Telephone Companies Must Obtain Affirmative Consent from a Subscriber before Opening Up that Subscriber's Telephone Bill to Non-Communications Charges (the "Opt-in" Requirement) 11

2. Charges Must Be Authorized By Subscriber at Point of Sale 12

3. Subscribers May Revoke Their Authorization 13

D. No Disconnection Rule 13

VII. Complaint Procedures 13

VIII. Conclusion 15

IX. Need for Hearings 15

X. Comments on Draft Decision 15

Findings of Fact 16

Conclusions of Law 18

INTERIM ORDER 19

APPENDIX A: Interim Rules Governing Non-Communications-Related
Charges on Telephone Bills

INTERIM OPINION

ADOPTING INTERIM RULES GOVERNING THE INCLUSION OF NONCOMMUNICATIONS-RELATED CHARGES

IN TELEPHONE BILLS

I. Summary

This decision adopts interim rules governing the inclusion of non-communications-related charges on telephone bills. Effective July 1, 2001, billing telephone companies will be permitted to include non-communications charges on subscribers' telephone bills, subject to consumer protection rules adopted by the Commission. (Public Utilities Code Section 2890, version effective July 1, 2001.) ¹ Although recent anti-cramming legislation codified at Sections 2889.9 and 2890 contains many applicable consumer protection provisions, the Legislature has directed the Commission to adopt by July 1, 2001, "any additional rules it determines to be necessary to implement the billing safeguards of Section 2890, for the inclusion of non-communications-related products and services in telephone bills." (Section 2890.1) The interim rules set forth in Appendix A to this decision contain safeguards the Commission deems necessary, at this time, to ensure that subscribers are billed only for charges they have authorized.

The Commission is preparing new, comprehensive consumer protection rules that it will issue in the form of a General Order later in this proceeding. Today's interim rules, possibly with some modifications, will be incorporated into and superseded by that General Order.