7. Assignment of Proceeding

Rachelle B. Chong is the assigned Commissioner and Karl J. Bemesderfer is the assigned ALJ in this proceeding.

1. In D.01-09-058, the Commission imposed marketing restrictions on AT&T, which required it to make certain disclosures to customers. AT&T implemented these marketing requirements in its Tariff Rule 12.

2. By AT&T's AL 28800, AT&T removed most of the marketing restrictions previously imposed on AT&T by D.01-09-058. AT&T relied on Ordering Paragraph 21 of D.06-08-030's elimination of "asymmetric" marketing or disclosure requirements in eliminating its marketing requirements in its Tariff Rule 12.

3. DRA and TURN and other parties protested AT&T's AL 28800. AT&T's AL 28982 restored some of the marketing restrictions removed by AL 28800. The protests argued that the advice letter was procedurally improper to modify D.01-09-058 and that the elimination of the marketing restrictions were adverse to the public interest.

4. AL 28982 did not restore the following requirements of AT&T's Tariff Rule 12 restrictions imposed by D.01-09-058: (i) requirement to resolve customer's request or reason for calling before marketing other services; (ii) requirement to offer the customer the "lowest price option and price for the service requested, prior to gaining the customer's agreement to market further services and bundles of services; (iii) requirement that the utility indicate to the customer that the requested order/request is complete; and (iv) requirement that the customer agree to listen to marketing offers on other services.

5. Protests were filed to AT&T AL 28982 again raising procedural and substantive objections.

6. The Commission decided to permit AT&T's AL 28800, as modified further by AL 28982, to stay in effect until it could consider the issues raised by the protests in a later phase of this proceeding.

7. In URF Phase 1, the Commission found that the market for voice communications in California is competitive and that there are various options for consumers, including wireline, wireless, cable, and VOIP services.

8. The competition findings from URF Phase 1 and the recognition by the Commission in D.01-09-058 that AT&T should have the ability to market competitive services on a level playing field, supports considering whether to modify D.01-09-058.

9. We do not need to find that AT&T has met the 60% benchmark requirement (to remove Rule 12 restrictions) contained in Ordering Paragraph 7 of D.01-09-058, because we are not eliminating AT&T's Tariff Rule 12 in this decision.

10. The competition findings of URF Phase 1 provide support for modifying the 60% benchmark requirement for the marketing restrictions in the Rule 12 Decision.

11. We modify here the relevant sections of D.01-09-058 and Ordering Paragraph 7 with regard to the strict 60% benchmark.

12. AT&T's customer service representatives are trained to resolve customer service requests before attempting to sell additional products or services.

13. AT&T's customer service representatives are trained to offer a bundle of services as a first recommendation to a customer interested in new telephone service.

14. AT&T's customer service representatives determine the components of the bundle offered to each customer based on a computerized analysis of the customer's personal circumstances and the customer's responses to "discovery questions."

15. AT&T supervisors monitor the performance of customer service representatives to ensure compliance with company guidelines and legal requirements.

16. Pub. Util. Code § 2896(a) requires AT&T to provide each customer with sufficient information on which to make informed choices among telecommunications services.

17. AT&T has developed customer relationship management tools that provide it with the ability to respond to customer inquiries and market to customers in non-abusive ways.

18. AT&T's model script requires customer service representatives to respond to a customer's request or problem prior to marketing services. In practice, AT&T customer service representatives appear to be resolving the customer's inquiry or reason for calling prior to making sales offers.

19. AT&T does not appear to be engaging in a pattern of marketing services/offers to customers before first responding to and resolving the reason for a customer's call.

20. AT&T's marketing script does not provide customers seeking new service with information explaining the difference between flat and measured rate service and the prices for those services, unless the customer specifically asks for this information.

21. AT&T should modify its Tariff Rule 12 to require customer service representatives to explain the difference between flat rate and measured rate basic service, and state the price for each before offering or recommending a bundle to a customer requesting new service. The only exception to this requirement is when a customer calls specifically to inquire about bundled services and/or AT&T's affiliate services.

22. AT&T should further modify its Tariff Rule 12 to publish the prices for flat and measured rate basic service on the same webpage as information regarding the cost and composition of bundles and such information shall be no less prominently displayed.

23. Other than adopting DRA and TURN's recommendation to require AT&T to incorporate prices for flat and measured rate basic service on its webpage, we reject DRA and TURN's other recommended suggestions for new requirements. Those suggestions are beyond the scope of this proceeding.

24. AT&T's other modifications to its Tariff Rule 12 (as implemented by AL 28982) are approved. There is insufficient evidence that the removal of the following requirements have resulted in substantial confusion to customers: i) resolve a customer's problem or call prior to marketing; (ii) indicate to the customer that the requested order/request is complete; and (iii) obtain the customer's permission prior to making marketing offers on other services.

1. AT&T's standard of proof to modify D.01-09-058 is preponderance of the evidence.

2. AT&T has met its burden of proof to modify some of its Rule 12 marketing restrictions made in AL 28982.

3. AT&T has not met its burden of proof to modify Tariff Rule 12 with regard to the failure to provide the least-cost options for basic service prior to making offers on bundled services.

4. AT&T's marketing script disclosures regarding its stand-alone basic services and its flat and measured basic service rates do not demonstrate that it provides consumers with sufficient information on which to make informed choices, as required by Pub. Util. Code § 2896.

5. AT&T's Tariff Rule 12 should be further amended to require customer service representatives to explain the difference between flat rate service and measured rate service and quote the prices of stand-alone service before offering service bundles except in response to customers who call only to inquire about bundles or affiliate services. AT&T's customer service training materials should be modified to include a clear explanation of the limited nature of this exception.

6. AT&T's Tariff Rule 12 should be modified to require it to publish the rates for basic flat rate and measured rate service on its web site. The rate disclosures shall be posted on the same web page as information regarding the cost and composition of bundles and shall be no less prominently displayed.

7. The remaining modifications made by AT&T's ALs 28800 and 28982 are supported by the evidence.

8. As modified by this decision, AT&T's ALs 28800 and 28982 may be allowed to remain in effect.

9. We affirm the assigned Commissioner and Administrative Law Judge's Ruling dated September 11, 2007 and maintain an ex parte ban on the issues addressed in this decision.

ORDER

IT IS ORDERED that:

1. Within 120 days of the date hereof, AT&T California (AT&T) shall file an advice letter amending its Tariff Rule 12 to provide that before a customer service representative offers a bundle to a customer requesting new service, the customer service representative shall explain to the customer the difference between flat rate service and measured rate service and shall disclose to the customer the monthly charges for flat-rate and measured rate stand-alone telephone service, except where the customer specifically calls to inquire only about bundles or affiliate services.

2. AT&T shall post on its web site an explanation of the difference between flat rate service and measured service and the monthly charges for flat-rate and measured rate stand-alone service. Such explanation and price disclosures shall be on the same web page as the descriptions of AT&T's bundled service offering and shall be displayed no less prominently than bundled service offering descriptions.

3. AT&T shall modify its training materials, including its model scripts, to comply with this decision.

4. As modified by this decision, AT&T's Advice Letters 28800 and 28982 are approved.

5. We modify Ordering Paragraph 7 of Decision (D.) 01-09-058 and page 82 of D.01-09-058 so that the relevant sentence now reads: This rule shall remain in effect so long as [AT&T] serves 60% or more of residential access lines, or demonstrates through other relevant facts or law that the requirements are no longer necessary.

6. The ex parte ban on the issues addressed in this decision remains in effect until either: (1) the date when the Commission serves the decision finally resolving any application for rehearing, or (2) where the period to apply for rehearing has expired and no application for rehearing has been filed.

This order is effective today.

Dated April 24, 2008, at San Francisco, California.

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