COM/GFB/naz		Mailed 10/5/2001

Decision 01-09-058 September 20, 2001

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

TABLE OF CONTENTS

Title Page

1. Summary 3

2. Procedural History 3

2.1. Requests To Reopen the Record 3

2.1.1. Wallace Roberts 3

2.1.2. TIU 3

2.2. Changes from the Presiding Officer's Modified Decision 3

2.2.1. Business and Professions Code 3

2.2.2. Customer Complaints 3

3. Disputed Material Facts 3

4. Witnesses Presented 3

4.1. UCAN 3

4.2. Greenlining 3

4.3. ORA 3

4.4. TIU 3

4.5. Pacific Bell 3

4.6. Wallace Roberts 3

5. Statutory and Decisional Standards Applicable to Pacific Bell's Duty to Inform Customers 3

5.1. General Standard 3

5.2. Sufficient Information To Make Informed Choices 3

5.3. Tariff Rule 12 and Information Regarding "Packages" 3

5.3.1. Basis of Tariff Rule 12 3

5.3.2. Application of Tariff Rule 12 to Service "Packages" 3

5.4. Information Regarding Caller ID Blocking 3

6. Marketing Specific Services 3

6.1. Caller ID and Blocking Service 3

6.1.1. Pacific Bell's Contract With BRI 3

6.2. Anonymous Call Rejection 3

6.3. Inside Wire Maintenance Plans 3

6.3.1. Disclosure of Different Maintenance Plans 3

6.3.2. Landlord's Responsibility 3

6.3.3. Disclosure of Competing Maintenance Providers 3

6.4. "The Basics" and "The Essentials" Packages of Optional Services 3

6.4.1. Background 3

6.4.2. State Law on Basic Service 3

6.4.3. The Basics Saver Pack and Commission Precedent 3

6.5. The Basics Plus Saver Pack 3

7. Marketing Programs and Tactics 3

7.1. "Offer on Every Call" 3

7.2. Sequential Offerings 3

7.3. Incentives and Sales Quotas 3

7.4. Improper Release of Customer Information 3

8. Marketing to Customer Groups 3

8.1. Marketing Targeted at Minorities or Recent Immigrants 3

8.2. Marketing to ULTS Customers 3

9. Remedies 3

9.1. Caller ID Blocking 3

9.2. Inside Wire, Packages Offered Sequentially, The Basics, and ULTS 3

9.3. Separation of Customer Service and Marketing 3

9.4. Fine 3

Findings of Fact 3

Conclusions of Law 3

FINAL OPINION

1. Summary

In this decision we address a number of Pacific Bell's practices for marketing its optional services to residential customers. We find that some violate statutory and decisional law and some do not. Additionally, we find several practices, while not violating existing statutory or decisional standards, should be curbed in future marketing by the utility.

We find that Pacific Bell failed to inform customers adequately and thereby deprived them of meaningful choices in these areas:

1. The option relating to number blocking to prevent caller numbers from being displayed on a caller ID device.

2. The two inside wire maintenance plans it offers ("Wire Pro") in one case offering their most expensive plan first and in the other offering it to tenants without advising them that the landlord has the responsibility to maintain and repair inside wires.

3. The marketing of service packages through sequential offering in descending order of price without fully disclosing customer options.

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 where Pacific Bell's marketing practices failed to meet statutory and decisional standards, it did so for all customers. Therefore, we do not need to reach the question whether these were misleading to only certain customer groups (e.g. non-English speakers). We are unable to find on the evidence presented that Pacific Bell unfairly targeted minorities.

Third, although Pacific Bell is subject to federal and state regulations regarding the privacy of customers' information, currently federal standards do not prohibit Pacific Bell from providing customer information, subject to appropriate security measures and other restrictions to its agents and affiliates for Pacific Bell marketing purposes. In this decision, however, we do not reach the question whether state law requires a carrier to obtain the consent of individual subscribers before such disclosures. We intend to address this important question on an industry-wide basis in a rulemaking proceeding.

Remedying the violations in marketing Caller ID, packages of optional services and inside wire maintenance services, and preventing their recurrence, will require a major effort by Pacific Bell. We direct Pacific Bell to notify customers who were affected by Pacific Bell's violations and to take steps to ensure that customers are receiving the services they desire. Finally, to deter future violations, we impose a fine of $25.55 million for Pacific Bell's violations of the Caller ID regulations and incomplete disclosure of price information in violation of §§ 451, 2896, and Tariff Rule 12. Further, we direct Pacific Bell to rewrite Tariff Rule 12 to ensure customer service requests are fulfilled prior to subjecting customers to marketing pitches.