Decision MODIFIED DRAFT DECISION OF ALJ BUSHEY
(Mailed 7/13/2000)
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 C.)
TABLE OF CONTENTS
Title Page
1. Summary 2
2. Procedural History 4
3. Disputed Material Facts 12
4. Witnesses Presented 13
4.1. UCAN 13
4.2. Greenlining 13
4.3. ORA 14
4.4. TIU 14
4.5. Pacific Bell 15
4.6. Wallace Roberts 15
5. Statutory and Decisional Standards Applicable to Pacific Bell's
Duty to Inform Customers 15
5.1. General Standard 16
5.2. Sufficient Information to Make Informed Choices 16
5.3. Tariff Rule 12 and Information Regarding "Packages" 18
5.4. Information Regarding Caller ID Blocking 22
6. Marketing Specific Services 23
6.1. Caller ID and Blocking Service 23
6.1.1. Pacific Bell's Contract With BRI 28
6.2. Anonymous Call Rejection 31
6.3. Inside Wire Maintenance Plans 32
6.3.1. Disclosure of Different Maintenance Plans 33
6.3.2. Landlord's Responsibility 35
6.3.3. Disclosure of Competing Maintenance Providers 37
6.4. The Basics and The Essentials Packages of Optional Services 38
6.4.1. Background 38
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 46
7. Marketing Programs and Tactics 48
7.1. Offer on Every Call 49
7.2. Sequential Offerings 50
7.3. Incentives and Sales Quotas 56
7.4. Providing Customer Information 62
8. Marketing to Customer Groups 66
9. Remedies 71
9.1. Caller ID Blocking 71
9.2. Inside Wire, Packages Offered Sequentially, The Basics, and ULTS 73
9.3. Sales Incentives to Service Representatives 74
9.4. Educating Customers 75
9.5. Fine 77
ATTACHMENT A
ATTACHMENT B
ATTACHMENT C
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. Although marketing is the overarching theme, each individual issue is fact intensive and we address each separately and in the context of the applicable standards. It is not our purpose in this decision to limit the means Pacific Bell chooses to market its products and services. Our only purpose is to apply the Public Utilities Code and Commission decisions to Pacific Bell's actions.
In this decision we find that Pacific Bell failed to sufficiently inform customers 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 lesser priced package unless they refuse the more expensive option. We determine that unlimited potential sales commissions for service representatives is not consistent with the incentive compensation guidelines we have previously stated with regard to Pacific Bell. We hold that Pacific Bell may not use the Universal Lifeline Telephone Service subsidy program as a link to market other optional services. In its marketing of "The Basics," a package of optional services, we conclude that the name inaccurately suggests a relationship with 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, no law or decision prohibits Pacific Bell from requiring all service representatives to offer optional services on every call, so long as the call answering standards of General Order (GO) 133-B are met.
Third, we find that Pacific Bell's marketing efforts failed to meet statutory and decisional standards for all customers. Hence, we do not reach the question of marketing practices that are misleading to certain customer groups but not others.
Finally, 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.
Wide-ranging efforts by Pacific Bell are required to remedy the violations we find. 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.
In addition to these actions directed at customer refunds, we order Pacific Bell to undertake a broad customer education effort, similar to that ordered in response to Pacific Bell's 1986 marketing policies and our more recent decision approving a settlement with GTE California Incorporated. The funding level of this effort shall be $29 million.
Finally, we find that 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 $20 million, half of which shall be immediately payable to the State General Fund. The nature and scope of Pacific Bell's marketing abuses would justify an even larger fine, but we recognize in mitigation that Pacific Bell has generally shown candor and cooperation in this proceeding, and has already taken steps to correct some of the abuses. We also stay $10 million, and may ultimately rescind that amount, depending on Pacific Bell's cooperation with the remedial steps ordered in this decision.
