Petition for Modification

Overview of the Issues Presented

Ordering Paragraph 10 of the OII states:

Staff's investigative Report contains Cingular's responses to Staff data requests, which Cingular has identified as confidential and/or proprietary pursuant to Public Utility Code section 583. The Commission finds that none of the information contained in the report is so trade sensitive as to outweigh the public interest in disclosure, and such disclosure is herby authorized. (I.02-06-003, mimeo at p. 19.)

Cingular's petition challenges the conclusion in Ordering Paragraph 10 and asserts that, in fact, the information (Attachment E to the Staff Report and references in the Staff Report to specific data contained in Attachment E) is highly proprietary and commercially sensitive and that no public interest is served by its disclosure.¹ The petition asks the Commission to modify the OII to require that the information (including all of Attachment E) remain under seal. The petition describes this information, generally, as consisting of (1) identification of Cingular's total California subscriber base; (2) data on the growth of Cingular's California subscriber base for specific periods; and (3) Cingular's entire indirect distribution program. The supplement identifies, by page, exactly which data Cingular deems confidential and states that redaction of this data from the public versions of the Staff Report and Attachment E will resolve Cingular's concerns.

Discussion

Rule 47 of the Commission's Rules of Practice and Procedure² governs petitions for modification of Commission decisions. As relevant here, Rule 47 provides: "A petition for modification must concisely state the justification for the requested relief and must propose specific wording to carry out all requested modifications to the decision ..." (Rule 47(b).) Taken together, Cingular's petition and supplement comply with the procedural requirements of Rule 47(b). We turn, next, to the merits of this matter.

Whether by statute, rule, or order, all regulated entities are obliged to provide the Commission with certain kinds of information that is open to public inspection.³ However, the Commission historically has recognized the need to protect verifiably confidential information from public disclosure, at least for a period of time. The Commission's General Order 66-C identifies the kinds of confidential information that may be protected in this way, citing both § 583 (which prohibits public disclosure of confidential information obtained from a regulated entity except by Commission order, etc.) and Evid. Code § 1040 (which defines the "official information" privilege and describes the balancing test applicable to nondisclosure of information obtained from businesses the Commission does not regulate).⁴

Cingular asserts that public disclosure of the information will place Cingular at an unfair business disadvantage. It articulates three primary reasons for protecting data on its California subscriber base and the growth of that subscriber base:

(i) state or locality specific data is highly useful to determine the business plans of competitors upon which financing depends. A competitor gaining access to another provider's subscriber growth data could then target that provider's chosen markets, undercutting the initial provider's business efforts and its financing; (ii) if other carriers obtain California customer base numbers, such carriers inappropriately obtain a better sense of overall market penetration and then determine whether their business plan should focus on new activations or customers who would "switch" providers; and (iii) by having access to Cingular's customer growth information, and cross-checking this against Cingular's promotion and advertisements during the same period, competitors can also unfairly determine which of Cingular's initiatives were more or less successful and act accordingly. For these and other reasons, subscriber base and subscriber growth data are highly sought after in the wireless industry yet never released on an individual company basis other than aggregated at the national level. (Petition at p. 7.)

With respect to the indirect distribution program, Cingular states that the chart it has provided to CPSD, if disclosed, "essentially provides a `road map' to a competitor to `cherry pick' Cingular's distribution system". (Petition at p. 8.) All of these concerns underscore a competitive aspect of wireless service, where the development and maintenance of market share are issues of large economic interest to carriers.

Though CPSD's response purports to take no position on whether disclosure should be ordered, it focuses on the public interest in releasing subscriber base data and suggests, with respect to the other information, that the harm of public disclosure is negligible. With respect to the former, CPSD argues that consumers need to know what the subscriber base is in order to interpret reports on the complaint rates of major carriers. With respect to growth rates and distribution network data, CPSD states that part of the information is publicly available or can be inferred from information that is publicly available. CPSD points out that the public Local Exchange Routing Guide (LERG) publishes telephone numbers assigned to individual carriers and that by reviewing the LERG, a wireless carrier may determine in which rate centers a competitor is focusing its efforts. Likewise, information can be gleaned about Cingular's indirect distribution network by walking into a distributor's office (such as the "Good Guys" or "Parrot Cellular") and ascertaining if it carries Cingular's products. CPSD concedes that this information is unavailable publicly in the chart's aggregate format.

CPSD's arguments fail to consider the competitive impacts or potential consequences of making previously undisclosed, specific or aggregated information about one wireless carrier available to its competitors. This is what public release of the information would do. Cingular has made a reasonable case that unilateral disclosure of this information would cause it unfair business disadvantage. We do not find that the public need for this particular data is so great as to outweigh the public interest in preventing that harm. On this record we cannot determine whether we would reach a different conclusion if the issue before us were the concurrent release of the same information, or some subset of it, about all other wireless carriers. While such a situation might or might not raise other competitive concerns, it would not raise the specter of economic harm for one and economic advantage for others through different regulatory treatment of industry competitors.

Competitive concerns are not unique to this proceeding and the Commission has considered similar issues before. In other areas of the telecommunications industry the Commission has confirmed the need to preserve the confidentiality of proprietary and competitively sensitive information, such as the financial and customer base information of individual competitive local exchange carriers and the number of lines those carriers were serving.⁵

Because we find that the three categories of information Cingular seeks to protect should not be publicly disclosed, we therefore modify Ordering Paragraph 10 to require that select portions of the Staff Report and Attachment E

to the Staff Report remain under seal.⁶ The Commission's Central Files shall continue to hold under seal the Staff Report and Attachment E to the Staff Report previously provided to it. CSPD shall provide the service list for this proceeding and the Commission's Central Files with public versions of the Staff Report and Attachment E to the Staff Report in which the confidential information has been redacted, consistent with Ordering Paragraph 2 of today's decision.

Avoiding This Problem in Future

The petition and related pleadings are the "fall out" of discovery conducted prior to the issuance of the OII. Post-OII discovery has led to a number of contentious disputes over very similar confidentiality concerns.⁷ The litigation preferences of parties on both sides of this proceeding clearly have escalated this problem, and the solution (or at least a partial solution) is equally clear.

First, Cingular should carefully review its confidentiality concerns before claiming § 583 protection for any documents responsive to discovery requests. Cingular should exercise care to avoid nominating for protection, however inadvertently, information that does not reasonably warrant nondisclosure. Second, if CPSD disputes Cingular's assertion that § 583 protection must be afforded specific information, CPSD and Cingular should meet and confer in good faith regarding the matter, as Commission Resolution ALJ-164 requires, before either brings it to the Commission's law and motion calendar. Selectively redacting confidential information from a document obtained in discovery should allow public use of the document while preserving realistic expectations of confidentiality, in most cases. Third, the same practice should be followed with respect to disputes between Cingular and a private party who has executed a nondisclosure agreement with Cingular.

We intend to monitor carefully further claims and challenges to confidentiality over the course of this proceeding. Neither this Commission nor any hearing officer assigned to this proceeding will order the public release of allegedly confidential information except upon careful consideration, after notice and opportunity to be heard on the matter. Having reached this determination for this proceeding, we have no need to reach Cingular's argument that § 583 prohibits public disclosure except upon such notice and we decline to do so.

Reports, records, and information requested or required by the Commission, which, if revealed, would place the regulated company at an unfair business disadvantage.

Disclosure of the information is against the public interest because there is a necessity for preserving the confidentiality of the information that outweighs the necessity for disclosure in the interest of justice. ... In determining whether disclosure of the information is against the public interest, the interest of the public entity as a party in the outcome of the proceeding may not be considered.

1. Staff Report: page 5, prior to footnote 23 (the number of Cingular customers in California). 2. Attachment E to the Staff Report:
(a) Page bearing Bates Stamp 00138 (specifically, data on the number of Cingular customers in California in the Response to Data Request No. 10, page 2, which is part of the October 11, 2001 letter from Jimenez to Alderson). (b) Page bearing Bates Stamp 00151 (specifically, data Cingular's California subscriber base and growth in the Response to Data Request No. 10, page 7, which is part of the October 26, 2001 letter from Jimenez to Alderson). (c) Page bearing Bates Stamp 00154 (specifically, a chart detailing Cingular's indirect distribution network in California attached to the October 26, 2001 letter from Jimenez to Alderson).