Consumer Protection Rules

Telecommunications Division staff recommends replacing consumer protection rules specific to each class of telecommunications carrier with generic rules applicable to the entire regulated telecommunications market. This, staff believes, would be efficient and would help ensure that no provider has a cost advantage from not honoring fundamental consumer rights, that service disclosures are adequate to promote informed consumer choice, and that consumers are treated fairly. Staff's recommended rules are set forth in Appendix A to the Report.

As the Report notes, we already have in place or are in the process of establishing consumer protection rules for several telecommunications utility classes. In our 1995 local exchange service competition investigation and rulemaking, we adopted consumer protection and consumer information rules for CLCs, which remain in effect today.² The Legislature in enacting Pub. Util. Code § 495.7 required the Commission to establish consumer protection rules before allowing telephone corporations to apply for exemption from tariffing requirements for their competitive services. We did so in D.96-09-098. Subsequently, we reexamined those rules as part of our Streamlining investigation and rulemaking and crafted revised rules applicable to competitive, non-tariffed services offered by non-dominant IECs.³ Through our current Slamming investigation and rulemaking, we are in the process of establishing rules applicable to billing telephone companies, typically ILECs, to protect consumers against slamming and cramming abuses.⁴ Our rulemaking to revise General Order 96-A⁵ is considering changes that include disclosure requirements, one of the proposed consumer protection rights the Report recommends, and may touch less directly on other consumer protection aspects. And the Report's recommendations would have us apply the consumer protection rules flowing from this proceeding to wireless providers, thus resolving the sole remaining issue in our investigation into mobile telephone service and wireless communications.⁶ ⁷

The potential for overlaps with consumer protection requirements from completed and current proceedings need not argue for rejecting the broad approach Telecommunications Division recommends. Rather, it signals a need to be cautious and consider carefully the possible interactions. According to the Telecommunications Division Report, its proposals are generally consistent with current policies but do revise some previously adopted rules and correct current rule deficiencies. Report Appendix B identifies those proposed rules which would change current consumer protection policies.

The Report's last two recommendations are reflected in its proposed new consumer protection rules. First, staff proposes to replace tariffs for those competitive services for which the Commission does not regulate rates with the consumer protections set forth in its recommended rules. Individualized tariffs in a competitive market are a burden on the industry to file, staff to screen and the public to view, and can be used to the detriment of consumers when carriers are permitted to revise rules with little or no Commission scrutiny. The Commission and the industry would more efficiently utilize resources by disposing of the trappings of traditional regulation such as individualized tariff rules, in favor of explicit consumer protection rules that the public could understand and the Commission would enforce. The proposed consumer protection rules would also revise current non-tariff policy and allow oral service agreements, although the accompanying terms and conditions would have to be conveyed in writing to the customer.

Second, the Report recommends the Commission reexamine its longstanding limitation of liability protections. The Commission-sanctioned limitation of liability permitted in utility tariffs has historically served to protect carriers and ratepayers from increased rates due to excessive liability costs. The advantage to consumers is less clear when the limitation is applied to competitive services for which the Commission no longer sets rates based on cost of service. Further, carriers foregoing tariffs are not afforded a tariff limitation of liability, although their non-tariffed service contracts may include corresponding clauses not enforced by the Commission. This policy encourages some carriers to file tariffs in order to maintain Commission-enforced liability protection. Staff questions the public benefit of policies that encourage an outdated tariff filing practice and which result in unequal liability protection. If the Commission does choose to continue a limitation of liability, staff recommends that the underlying standard be revised to one of negligence rather than gross negligence, and that liability limits be raised to better reflect inflation and the damage claims small businesses or residential consumers may incur.

This brings us to our second set of requests for stakeholder input. Should the Commission promulgate new consumer protection rules? Should any such rules be broadly applicable to services offered by all classes of telecommunications utilities, including wireless? Should these rules replace tariffs for those competitive services for which the Commission does not regulate rates? Do the rules proposed in Telecommunications Division's Report cover all of the consumers' Commission-enforceable rights, and is each rule appropriate? Should a higher level of protection apply to basic exchange access services? What accommodations should be made for the Commission's existing telecommunications consumer protection rules and those being considered in current proceedings? What changes, if any, should the Commission make to its limitation of liability rules? Lastly, we invite any input commenters wish to provide on legal issues that may be raised by changes contemplated in this rulemaking.

The Telecommunications Division's proposals have much to recommend them. Stakeholders to whom we are directing this rulemaking have among them a wealth of valuable experience and, no doubt, wide-ranging viewpoints on whether and how the Commission should implement additional consumer protection measures. We value their expertise and seek their input. And, while we specifically invite comments directed at the Telecommunications Division's proposals, we will not foreclose comments suggesting alternative approaches.

² Appendix B of Decision (D.) 95-07-054 in Rulemaking (R.) 95-04-043 and Investigation (I.) 95-04-044. ³ Appendix A of D.98-08-031 in R.94-02-003 and I.94-02-004. ⁴ R.97-08-001 and I.97-08-002. ⁵ R.98-07-038. ⁶ See D.96-12-071, Ordering Paragraph 2, in I.93-12-007: "The assigned ALJ is directed to issue a procedural ruling addressing the development of consumer protection rules for CMRS providers." ⁷ We note that the courts also have a role in protecting consumers, particularly in the absence of the Commission's having asserted itself with rules in this area. We do not intend by this rulemaking order to pre-empt that role.