Background

On June 2, 1998, UCAN filed a complaint against MCI Metro Access Transmission Services (MCI). The complaint alleged that MCI had made billing errors and engaged in unlawful practices, including slamming.

A prehearing conference (PHC) was held on September 28, 1998, at which UCAN stated that MCI had conceded several of the billing problems and was making restitution to customers.

On November 23, 1998, the Assigned Law Judge (ALJ) issued a ruling which assigned Commission CSD staff to work with the parties to verify MCI's statements that it had corrected all notice and billing errors, had identified all affected customers, and had refunded or credited affected customers.

A second PHC was held on February 23, 1999. The ALJ directed the parties to continue to work with CSD to resolve all billing problems and to complete the identification of affected customers and the payment of restitution within the next nine months. UCAN withdrew its causes of action related to slamming and privacy violations as moot, in view of MCI's representation that it was no longer offering local telephone service in California.

On April 22, 1999, the Commission issued Decision (D.) 99-04-053.² In that decision, the Commission found that MCI Metro had acknowledged billing errors and was committed to correcting the errors and making full restitution to

all affected customers. That decision directed MCI Metro and UCAN, with the assistance of the Commission's Consumer Services Division (CSD), to work cooperatively to resolve all restitution issues, as well as issues regarding any sanctions.

On February 4, 2000, the parties filed a Stipulation of Facts that addressed the status of the restitution efforts. The Stipulation stated that MCI Metro had returned a total of $9,411,791 to customers for billing errors relating to four different issues.³ The four issues are (1) one-minute overcharge, (2) lack of rate notification, (3) inaccurate coding of accounts, and (4) billing after disconnect.⁴

1. One-Minute Overcharge

The "one-minute overcharge" occurred as a result of MCI Metro passing the call billing data through three different billing systems, to allow all local and long distance charges to be included on one bill. When local calls were processed through the first billing system, the call duration was rounded up to the next minute. This is consistent with MCI Metro's tariff. After rounding up, however, the system software mistakenly did not delete the seconds from the call duration. For example, a call of 2 minutes 36 seconds would be properly rounded up to 3 minutes, 0 seconds. The software, however, did not delete the seconds, and instead reported a call of 3 minutes, 36 seconds duration to the next billing system. The second billing system then rounded up the 3 minute,

36 second call to 4 minutes, 0 seconds. The second software system did delete the seconds after rounding before passing the data along for final billing. The customer was then improperly charged for a 4-minute call, rather than a 3-minute call.

MCI Metro undertook an extensive review of the billing process to discover and correct this problem. MCI Metro also identified each customer that had been overbilled and credited the account for one minute of time. MCI Metro expended 1,400 work hours to accomplish this refund. The total refund to customers was $617,227. The total number of customers affected was 30,046.

2. Lack of Rate Notification

MCI Metro notified 14,790 customers in their December 1997 invoices that their rates for intraLATA toll calls would be changed from a $.04 per minute flat rate to a peak/off-peak rate structure of $.04 per minute for off-peak calls, from 7:00 p.m. to 6:59 a.m., and $.10 per minute for peak toll calls, from 7:00 a.m. to 6:59 p.m. The notice, however, was not sent to 15,931 additional local service customers due to "human error." The rate change went into effect on February 1, 1998. Customers were subsequently notified of the increase between April and June, 1998. MCI Metro gave all customers that did not receive the first notice credits that totaled $179,818.

3. Inaccurate Coding of Accounts

On June 1, 1997, MCI Metro introduced a new intraLATA toll calling plan. This plan featured lower rates. When signing a customer up for this lower-priced plan, however, the customer service representative was required to manually enter a special code into the customers' records. If the special code was not entered, the customer's account defaulted to a higher-priced plan.

To correct this problem, MCI Metro engaged in several training sessions with its service representatives. MCI Metro also made refunds to customers of $49,744.

4. Billing After Disconnect

As a result of difficulties with MCI Metro's billing systems and the operations and support systems made available by Pacific Bell, some MCI Metro local customers continued to be billed for local service plans after they had disconnected from MCI Metro's local service. MCI Metro stated that despite having devoted substantial corporate resources and making several computer programming modifications, it has been unable to eliminate this billing problem. MCI Metro has issued $5,279,273 in credits to customers for all known historic occurrences of this phenomenon. MCI Metro further stated that it is actively seeking and implementing measures designed to eliminate this problem.

On January 27, 2000, the Assigned Administrative Law Judge issued a ruling finding that the billing after disconnect issue was unresolved, and that MCI Metro and CSD should continue to work towards resolution. Consequently, this issue is not adjudicated in this proceeding.

5. Other Refunds

In making the refunds discussed above, MCI Metro and UCAN encountered several additional issues. First, MCI Metro could not issue a credit to customers that had left its system. Thus, some credits became "stranded." MCI Metro has implemented a system of sending checks to these customers, which has resulted in refunds to most, but not all, of the customers entitled to refunds.

Second, MCI Metro was not able to credit refunds (at least those due to lack of rate notification and inaccurate coding of accounts) against accounts that were no longer active due to non-payment, fraud, or cancellation.

Third, MCI Metro could not calculate the interest, taxes, and surcharges due to each customer for all of these refunds.

To resolve these further issues, MCI Metro decided to credit all outstanding balances for all customers impacted by the one-minute overcharge, lack of rate notification, and inaccurate coding of accounts billing issues discussed above. This refund amounted to $3,515,291. MCI Metro stated that this amount is extremely generous and is well in excess of the amount actually due to customers.