COM/CXW/mnt Mailed 10/28/02

Decision 02-10-059 October 24, 2002

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Investigation on the Commission's own motion into the operations, practices, and conduct of Qwest Communications Corporation (Qwest), U-5335-C and its wholly owned subsidiary, LCI International Telecommunications Corporation, doing business as Qwest Communications Services (LCIT), U-5270-C to determine whether Qwest and LCIT have violated the laws, rules and regulations governing the manner in which California consumers are switched from one long distance carrier to another and billed for long distance telephone services.

Investigation 00-11-052 (Filed November 21, 2000)

(See Appendix A for Appearances)

OPINION FINDING VIOLATIONS AND IMPOSING SANCTIONS

TABLE OF CONTENTS

Title Page

OPINION FINDING VIOLATIONS AND IMPOSING SANCTIONS 11

I. Summary 22

II. Background 22

III. CSD's Slamming and Cramming Allegations 55

IV. Greenlining/LIF's Allegations 66

V. Qwest's Response to the Allegations 77

A. Slamming Allegations 77

B. Cramming Allegations 88

VI. Other Investigations 88

VII. Conclusions Regarding Slamming 99

A. Summary 99

B. The PIC Dispute Data Indicate Widespread Slamming 1010

1. Commission Precedent on Evidence of Slamming 1010

2. Qwest Challenges the PIC Dispute Numbers 1111

3. Qwest's Credibility and Burden of Proof Defenses 1515

C. Qwest's Admissions 2121

D. Falsified Verification Tapes, Forged Letters of Authorization 2222

E. Failure to Retain Verification Tapes and Make Them Available 2525

F. Disproportionate Impact on Ethnic Communities 2727

G. Independence of Qwest's Third-party Verification Agents 3030

H. Qwest's Historic vs. Ongoing Practices 3131

VIII. Conclusions Regarding Cramming 3434

IX. Qwest's Lack of Compliance With D.00-06-079 3838

X. Remedies 4242

A. CSD's and Greenlining/LIF's Recommendations 4343

B. Qwest's Response 4444

C. Discussion 4545

1. Refunds 4545

2. Fines 4646

3. Additional Conditions 5050

a. CSD's Recommended Conditions 5050

b. Other Conditions 5151

XI. Appeal of Presiding Officer's Decision 5353

A. CalTel's Motion 5353

B. Qwest's Appeal 5555

C. Greenlining/LIF's Appeal 5959

XII Comments on Commissioner Wood's Alternate Draft Order 6060

Findings of Fact 6060

Conclusions of Law 6363

ORDER 6767

Appendix A - APPEARANCES 11

Appendix B - Additional Adopted Conditions

Appendix C - Conclusions Regarding Qwest's Summary of Slamming

Complaints For Which Qwest Alleges That CSD Did Not Meet Its Burden Of Proof

(END OF APPENDIX C) 1515

I. Summary

This decision finds that Qwest Communications Corporation and its wholly-owned subsidiary, LCI International Telecommunications Corporation (collectively Qwest) violated Pub. Util. Code § 2889.5 and § 2890, as well as other statutes, in the course of their marketing activities, and that sanctions are warranted for these violations.¹ Primarily in 1999 and 2000, Qwest failed to adequately supervise its sales agents so that the agents switched thousands of customers' long distance telephone service without their permission in violation of § 2889.5. In some cases, the third-party verification tapes or letters of authorization confirming the switches were falsified, and Qwest failed to retain third-party verification tapes and make them available to the customer and the Commission. Qwest also violated § 2890 by placing unauthorized charges on thousands of customers' telephone bills. For these acts, we conclude that a $20,340,500 fine is warranted. We also order reparations and require Qwest to comply with additional conditions to ensure compliance with § 2889.5 and § 2890.