2. Background

On February 27, 2002, the Commission issued this Order Instituting Rulemaking (OIR) with two goals in mind: (1) establish an acceptable error rate for connections made by automatic dialing devices for which no agent or telemarketer is available for the person called, and (2) establish record-keeping procedures applicable to those who use automatic dialing devices. These objectives are mandated by Assembly Bill (AB) 870 (Ch. 696, Stats. 2001), which added § 2875.5 to the Public Utilities Code. Section 2875.5 states:

a. On and after July 1, 2002, no person operating any automatic equipment that incorporates a storage capability of telephone numbers to be called or a random or sequential number generator capable of producing numbers to be called may make a telephone connection for which no person, acting as an agent or telemarketer, is available for the person called.

b. Notwithstanding subdivision (a), the commission shall establish an acceptable error rate for telephone connections made in violation of subdivision (a). The commission shall determine the error rate, if any, before July 1, 2002.

c. The commission may require any person operating equipment as described in subdivision (a) to maintain records of telephone connections made for which no person, acting as an agent or telemarketer, is available for the person called. The commission may require copies of those records to be submitted to the commission.

The type of dialing equipment at issue is that which "incorporates a storage capability of telephone numbers to be called or a random or sequential number generator capable of producing numbers to be called." This equipment is also known as "predictive dialing equipment," or "a predictive dialer," because it may be programmed in a way that allows the operator to predict the number of calls that must be dialed before an actual person is contacted.

The OIR noted that AB 870 was intended to address the problem of hang-up calls that are the product of predictive dialers. When a number is automatically dialed but answered before an agent or telemarketer is available to respond, the predictive dialing equipment typically, after a few moments of dead air, will disconnect the call. The called party then does not know if the source of the hang-up was an automatic dialer, a wrongly dialed number, or someone with criminal intent dialing to find homes where the telephone is not answered.

Pursuant to § 2875.5, the Commission in Interim Decision (D.) 02-06-072 defined and established the 3% acceptable error rate effective July 1, 2002, along with record-keeping and other requirements, and proposed that the error rate be further reduced to 1% by January 1, 2003 (later extended to April 1, 2003¹). The Commission also directed its Telecommunications Division to determine through a workshop and written comments (1) the feasibility of a further reduction in the error rate; (2) methods for informing consumers about ways to discourage unwanted marketing calls, and (3) further record-keeping requirements.