Appendix F

Proposed Consumer Education Topics

1. Your Rights

2. Making an Informed Choice

3. The Purchase

4. Your Service

5. The Bill

6. Solving Problems: Whom to contact for help

7. Stopping Your Service

8. Glossary, Terms, Helpful Links, and FAQs

Commissioner Geoffrey F. Brown, dissenting:

On January 27, 2005, this Commission suspended General Order 168, the telephone consumer "Bill of Rights." It did so at the urging of then-Commissioner Susan Kennedy391, who alleged that the volume of requests for suspensions of specific rules by telecommunications carriers compelled a suspension of all of the rules, not just those affecting computer billing systems. She stated "all we do is stop the clock." She pledged that any re-examination of the rules would be "open and deliberative."

At that time, President Michael Peevey spoke of his support for consumer protection, saying that he continued "to support the goals of the Bill of Rights." He stated that "some of the rules may need some fine tuning" and a "few may need substantive change." He addressed his earlier concerns about private rights of action, advertising and the length of time for implementation, concluding that what was being done was merely a "time out." President Peevey emphasized, "This is not an underhanded way to delay the implementation of the rules and put this proceeding on the back burner. I expect this to be actively dealt with by the assigned office and have that commitment."

Former Commissioner Kennedy was the assigned commissioner in this matter, after her predecessor's term expired.394 She had been a strong opponent of the rules when they were enacted on May 27, 2004. She had proposed an alternate decision395 that had virtually no consumer protections, repealed the non-communications rules396 that prohibit using one's phone number as a credit card without actual consent, took up to 720 days to take effect, expired after three years, precluded private (and, apparently, Attorney General or District Attorney prosecutions) actions even brought under different statutes,397 and, apparently, permitted waiver of the rules by the contracts of adhesion that are routine in the cell phone industry. President Peevey could not support her alternate.

The cell phone carriers' adamant opposition398 to even the most limited and rudimentary consumer protections has been consistent. I believe that today's decision, written by President Peevey and former Commissioner Kennedy gives them virtually everything they have sought. I fear that it augurs for our increasing impotence and capture by the entities we are charged with regulating.

Former Commissioner Kennedy had strong feelings about telecommunications.399 In quickly addressing this matter, the assigned commissioner refused to permit effective discovery, thereby assuring evidence of overwhelming customer dissatisfaction with cell carriers' dispute resolution procedures was not adduced. She refused to permit effective cross-examination. She changed schedules in order to make sure that advocates were not prepared. She refused to permit parties to present witnesses of their own choosing. She failed to assure that prominent consumer experts appeared.

The decision cavalierly dismisses the surveys in evidence as old or methodologically flawed. One suspects that it does so because to do otherwise is to concede what common knowledge tells us, that many cell phone users are dissatisfied with billing and service and do not know where to obtain recourse. Surveys commonly known in the industry were not considered. Mention of four that were omitted follows.

Consumers' ignorance of whom they should most productively complain to is of no small concern. A 2004 Federal Trade Commission study of 2,500 randomly selected Americans concluded that fully 29.3% of those defrauded did not complain at all and only 5.4% complained to a government agency (local, state or federal).400 Interestingly, more than twice as many people complained to the largely ineffectual Better Business Bureau (3.5%) than to the state attorney general or state consumer agency (1.6%).

Knowing where to complain is a serious and on-going problem. A Princeton Survey Research/AARP survey of 3,037 adults in December, 2002, concluded that fully 46% of respondents didn't know where to resolve a cell phone billing or service problem. Only 1% named the state attorney general; 2% named the state public service commission (e.g., PUC); and 14% named the Better Business Bureau. The survey also found that of those with cell phone bills in the $51-$100 range, only 43% were "very satisfied."401

Not mentioned in the decision was the 2003 a study of 19,000 users funded by the National Association of Regulatory Utility Commissioners (NARUC) which found that over half (55.7%) of cell phone users had complained to their provider about billing issues in the preceding 12 months. Fully 28.1% of respondents were dissatisfied with their cell carrier.402 This figure was twice the proportion who complained about not understanding the phone's features (28.3%), dropped calls (23.2%), static/line noise (20.5%), or sales practices (15.0%). In addition, the survey showed that a significant minority had difficulties requiring repeated contact with the cell provider: 8.3% of respondents reported five or more contacts with the cell provider in the preceding 12 months.403

In spite of the tremendous increase in the number of cell towers (up 20.5%, from 147,719 to 174,368 from June, 2003, to June 2004)404, complaints to the FCC were up 38%, according to a Consumers' Union survey of FCC data in 2004 over 2003.405 Similarly, the industry-friendly marketing information firm, J.D. Power & Associates found that overall satisfaction with wireless service providers dropped 10% during 2004, the biggest year-over-year change since it began studying such performance in 1995.406

At no point does the proposed decision raise the issue that is central to the complaints of consumers and at the essence of the California Public Utilities Commission's charge of authority, unequal bargaining power. As consumer consultant Alexander Barbara testified,

...the purpose of well-designed consumer protection policies and regulations is to correct the imbalance between the individual consumer and the larger corporate entity that has the ability to impose a "contract of adhesion" on residential customers in particular. In addition, consumer protection regulations often reflect a desire to impose a basic set of practices or requirements on industry participants so that "bottom feeders" cannot take advantage of unsuspecting consumers or those without the ability to bargain for their service options. In other words, the co-existence of competitive markets and consumer protection regulations that reflect the particular nature of the market or service in question is common.407

Instead, the majority's decision repeats ad nauseam a competition mantra, as if fraud were unknown in competitive markets and as if the tight margins characteristic of rigorous competition were an inducement to integrity. By this metric, "A" students never cheat.

If actual and apparent ability to prosecute and punish wrongdoing is the sine qua non of deterrence, the new rules virtually guarantee carte blanche to fraudulent telecommunication enterprises. The best estimate from the Consumer Protection and Safety Division is that 2004 slamming cases were in the 200,000-300,000 range, down from perhaps 1.7 million in 2002.409 To an already anemic PUC that brought only one slamming/cramming investigation last year, and only a handful in the past few years, the message of this decision's passage is manifest. It will be understood by staff. One needn't be an econometrician to know that such numbers do not create deterrence.

In the FCC's Truth-in- Billing Order last year, Commissioner Kopps and Addlestein observed that the FCC had received 29,000 non-slamming billing complaints in 2004 alone and had pursued not one enforcement liability action in the preceding six years.410 It is not for no reason that cell carriers seek to convince us that our enforcement powers should be deemed preempted by the FCC.

Public Utilities Code §2896(a) orders the PUC to tell carriers to provide sufficient information to customers to make informed choices among telecommunications services and providers. Without an explanatory rule as to what is required of carriers, it is not unenforceable. Today's decision makes no such rule, rendering the statute a nullity.

Public Utilities Code §2896(d) requires that this Commission require telephone corporations to provide information regarding complaints and their resolution. Rule 1(d) in the suspended rules did just that, requiring that, on request, carriers give their legal name and the PUC's Consumer Affairs Branch telephone number, etc. Today's decision omits this requirement.

Public Utilities Code §2889.6 requires that local exchange carriers (LECs) provide emergency information in directories. Suspended Rule 1(f)(1) did that. It has been omitted.

Public Utilities Code §2894.10(a) required LECs to inform customers of privacy rights. Suspended Rule 1(f)(2) complied with that law. In today's decision, it has been omitted. A whole series of statute and decision-mandated disclosures is omitted. For example, emergency information, privacy, carrier contact information, basic rate information, Universal Lifeline Telephone Service, prefix boundaries, Local Access and Transport Area (LATAs) maps, area code maps, international calling codes and instructions, accessibility information for the deaf and non-English speakers, caller ID blocking information, and PUC information were required in Rule 1(f). All are omitted.

Civil Code §1799.200 et seq. requires that customers be provided with copies of contracts. Suspended Rule 1(h) so required. The Kennedy-Peevey decision eliminates the requirement. Consumers complained that their contracts, containing calling plans and terms, were often unavailable or misplaced. Their complaints were not heard.

Public Utilities Code §2890 prohibits cramming. Cramming is the unauthorized inclusion of charges on a telephone bill. This has been, and remains, a serious problem, particularly for the majority of people who do not review their bills with care.411 A unanimous interim decision412 established an "opt-in" rule so that one's telephone number could not be used as the equivalent of a credit card without one's affirmative consent for such a procedure. Making people "opt-out" of normal protections virtually guarantees that 97% of customers will not do so.413 Yet the majority doesn't even afford the extremely limited protection afforded by "opt-out." The Kennedy-Peevey proposed decision blithely eliminates all of the protections of this carefully-crafted decision

The now-repealed interim decision analyzed the potential for billing abuse, in part because people instinctively protect their credit card numbers in a way they do not their telephone numbers. Even though there is a $50 limit on the amount of unauthorized charges they may be compelled to pay under the federal Truth in Lending Act,414 people conceal their credit card numbers. A similar level of precaution is not extended to their telephone numbers, which are included in a myriad of forms, checks, directories, and correspondence. Caller ID spoofing415 and various and sundry Automatic Number Identification devices with the capacity for fraudulent use are readily and widely available on the internet. This provision alone will in time demonstrate to the public that the PUC is not protecting its interest. When the extensive fraud begins, as it inevitably will, the PUC will be blamed. All of the representations of Cellular Telephone Industry Association's attorney in the hearings in this matter about how Japanese cell phones permit their owners to enter subway stations and buy soda from vending machines cannot explain away the fraud that is to come. Parenthetically, it should be noted that Japanese cell phones are akin to debit cards, so that there is a clear, discrete limitation on the extent of liability that accrues if one's phone is stolen. Here, the lack of $50 limitation on liability for fraud (as is the case with credit cards) coupled with no reasonable recourse against recalcitrant telephone carriers or third-party billing companies is a prescription for disaster. How the majority decision squares the extensive checklist of verification required by Public Utilities Code §2889.5 (for slamming) with a complete absence of such precautions for its sibling, cramming, is a mystery.

Public Utilities Code §532 prohibits discriminatory tariffs. Now suspended Rule 2(d) required that when qualifying information (such as key rates, terms and conditions) is necessary to prevent an offer from being deceptive, untrue or misleading, that that information shall be clear and conspicuous. The Kennedy-Peevey decision eliminates this rule. Those who euchre the public take refuge in flyspeck type. Today we encourage and countenance such behavior. The term "clear and conspicuous" is not new to our jurisprudence. Its elimination is particularly upsetting to the Attorney General.

Public Utilities Code §2889.5 prohibits slamming and establishes a rigorous and detailed checklist of requirements (including third party verification) when service is changed. The statute expresses exasperation by the legislature over the extent and brazenness of slamming at the time of the enactment in 1999. Now suspended Rule 3 sought to make clear to carriers and the public the import of the law's requirement. The majority's decision today eliminates it.

Public Utilities Code §2896 orders the commission to require telephone companies to provide sufficient information (identity, service, pricing, options, etc.) to make informed choices among services and providers. Suspended Rule 3 did so. Today's decision eliminates this requirement, presumably on the theory that the 1994 law has not been enforced by this commission, except for one month,416 without any commissioner being impeached.

Public Utilities Code §2890(b) requires unambiguous, legible, written materials in 10-point type for orders and solicitations. Rule 3, now suspended, was in conformance. The Kennedy-Peevey draft, in a brilliant exposition of appalling disingenuousness, disparages the common-sense rule that contracts should be readable. It does so with a series of digressions about how serifs enhance readability and how, as a consequence, smaller type sometimes can be more easily read than larger type. It eliminates any rule, presumably on the theory that people love reading 8-point type.417

Public Utilities Code §2890 also requires that written orders and written or oral solicitation materials used to obtain an order for a product or service "shall be" in the same language as the written order. California Civil Code §1632(b) has for 32 years required that contracts solicited in major foreign languages shall be provided to the consumer in the same language.418 The Kennedy-Peevey decision ignores both our own Public Utilities Code and the Civil Code and, instead, calls for a staff study on in-language practices.419 Today's decision orders a study and workshops,420 as though failure to comply with law can be excused by contrived ignorance and ostensible good intentions.

The list of consumer protections included in our decisional law and in our suspended rules that the Kennedy-Peevey decision omits goes on and on. Without better analysis than was contained in this decision, I would retain them. For the foregoing reasons, I respectfully dissent.

391 D. 05-01-058, decided January 27, 2005 (3-1), was a draft decision included as an appendix to an assigned commissioner's ruling (ACR) issued on January 5 , 2005 ( http://www.cpuc.ca.gov/PUBLISHED/RULINGS/42806.htm).  The draft decision was not filed as required with the docket office on January 5, 2005 as appears in our computerized docket ( http://www.cpuc.ca.gov/PUBLISHED/RULINGS/42806.htm).  When one opens this docket entitled "draft decision" no document appears.  The decision's document information number 050110470 differs by about 407 items from that of the ostensibly contemporaneous ACR (document information number 050110063). The actual appendix decision contains an anomalous handwritten entry "Rec'd January 5, 2005 Filed as of January 5, 2205."  The ACR contains a photocopy of Commissioner Kennedy's signature, not an actual one, nor a subordinate's signature in her stead, nor a stamp.  This leads to the conclusion that the decision was actually filed on or about January 23 or 24, not January 5, as is represented.

392 Dissent at http://www.cpuc.ca.gov/Published/Final_decision/43673.htm

393 The entire debate on the rules' suspension is quite interesting. It is available at: http://cpuc.granicus.com/ViewPublisher.php?view_id=2 January 27, 2005, at 1:23:33.

394 She was assigned this matter on January 3, 2005.

395 May 13 , 2004, Kennedy alternate to Bill of Rights, http://www.cpuc.ca.gov/word_pdf/COMMENT_DECISION/36615.doc

396 Interim Opinion Adopting Interim Rules Governing the Inclusion of Non-Communications-Related Charges in Telephone Bills, D.01-07-030.

397 http://www.cpuc.ca.gov/word_pdf/COMMENT_DECISION/36615.doc, Conclusions of Law No. 11.

398 Telecommunications industry campaign contributions in California in 2003-04 at $3.329,274 were higher than in any other state; lobbying expenses, 2003-04, at $14,437,790 were second, behind New York. Center for Public Integrity, http://www.publicintegrity.org/telecom/iys.aspx?st=CA.

399 "If you are a company that offers traditional phone service like SBC or Verizon, you love me - because I strongly believe that the 130-year-old web of legacy regulations attached to voice telephony should be dismantled in favor of competition. Not tinkered with; not updated - taken out and burned. If you are a traditional consumer advocate you hate me for the same reason - because I strongly believe that the power of choice is a much more effective way to protect consumers than regulation. I believe most traditional regulation today actually hurts innovative competitors and hurts consumers." Susan Kennedy statement at the Internet Telephony Conference & Expo, Los Angeles, October 24, 2005 ( http://voip-blog.tmcnet.com/blog/rich-tehrani/ixpos/susan-kennedy-transcript.html)

400 Consumer Fraud in the United states: An FTC Survey, Staff Report to the Bureaus of Economics and Consumer Protection of the Federal Trade Commission, August 2004, p. 80.

401 "Understanding Consumer Concerns about the Quality of Wireless Telephone Service," Data Digest Number 89, AARP Public Policy Institute, p. 1-4.

402 Consumer Utility Benchmark Survey: Consumer Satisfaction and Effective Choice for Cellular Customers, Vivian Witkind Davis, Ph.D., The National Regulatory Research Institute, Ohio State University, November 2003, p. 8.

403 Ibid., p. 5.

404 Cell Sites, table, Cellular Telecommunication Industry Association's Semi-Annual Wireless Industry Survey, © 2005 CTIA, p. 9

405 "How Cellular Service Rank on Complaints: Cingular Tops FCC List With Most Gripes Per Customer; Dropped Calls, Billing Errors", Wall Street Journal, March 29, 2005, p. D1.

406 Cellphone Firms Responding to Signals of Dissatisfaction: With ratings poor and competition fierce, providers are striving to give friendlier service. After years of touting their networks, mobile phone companies are trying a new tack to keep customers: being nice. Los Angeles Times, James S. Granelli, December 6, 2005, Business Section, p. 1.

407 Direct Testimony of Barbara R. Alexander on Behalf of The Utility Reform Network, R.00-02-004, August 5, 2005, p.7

408 Regulatory Scorecard: Report on the relative effectiveness of the regulatory frameworks for electronic communications in Belgium, Denmark, France, Germany, Ireland, the Netherlands, Spain, Sweden and the United Kingdom, USA addendum, June 2, 2005, Jones Day/SPC Network, CompTel /ALTS, p. 1-4.

409 Consumer Fraud in the United states: An FTC Survey, Staff Report to the Bureaus of Economics and Consumer Protection of the Federal Trade Commission, August 2004, p. ES-3. The survey "Consumer Fraud in the United States: An FTC Survey" concluded that 13.90 million Americans had been slammed in 2002 (17.60 million incidents). The Census Bureau estimates that the U.S. population in 2004 was 293,655,404, of which 12.22%, or 35,893,799 were in California. On this basis, approximately 12.22% of the 13.90 million U.S. slamming victims, or approximately 1,698,580 Californians were slamming victims in 2002. Because of the elimination of many competitive local exchange carriers (CLECs) and the merger of the two major CLECs, AT&T and MCI into SBC and Verizon, slamming is a decreasing but hardly insignificant problem.

410 In the Matter of Truth-in-Billing and Billing Format, Second Report and Order, Declaratory Ruling, and Second Further Notice of Proposed Rulemaking, FCC 05-55, Federal Communications Commission, CC 98-170, CG Docket No. 04-208, March 18, 2005, p. 55, 57.

411 The elderly, already the subject of deceptive contests and myriad boiler room frauds, will be particularly abused by the repeal of this decision's opt-in provision.

412 D. 01-07-030. It should be noted that conservative Republicans Duque and Bilas were part of the 5-0 majority.

413 The ULTS program's mail response rate ranged from 1.35% in 2002 (bill insert), to 1.76% in 2003 (direct mail), and 2.76% in 2004 (direct mail). February 6, 2006, e-mail from SBC representative Fassil T. Fenikile to Brown office. By inference, this means that 97% of telephone consumers are going to be in for a rude surprise when they discover that non-communications charges can be placed on their bills and their recourse is not with the telephone company.

414 15 U.S.C. §1601

415 "Spoofing" is the use of software to make it appear on a caller ID screen that another's number is making the connection. It is marketed for privacy and practical joke purposes, but its primary use, until this decision, seems to have been for credit card fraud.

416 The Telephone Consumer Bill of Rights was in effect for slightly over one month in late 2004.

417 D. 95-07-054, decided a decade ago, applied the 10-point type rule to CLECs; D.96-09-098 made a similar requirement to Non-dominant Inter-exchange Carriers. Presumably, giving an exemption from the statute to cell carriers creates an un-level competitive playing field that is acceptable to the draft's authors.

418 Cal Civil Code § 1632 (2006), Trade or business negotiating primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean, provides, in relevant part:
    
   (b) Any person engaged in a trade or business who negotiates primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean, orally or in writing, in the course of entering into any of the following, shall deliver to the other party to the contract or agreement and prior to the execution thereof, a translation of the contract or agreement in the language in which the contract or agreement was negotiated, which includes a translation of every term and condition in that contract or agreement:
 

419 Kennedy-Peevey proposed decision, p. 79.

420 Ordering Paragraph No. 31, p. 156

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