STATE OF CALIFORNIA ARNOLD SCHWARZENEGGER, Governor

PUBLIC UTILITIES COMMISSION

505 VAN NESS AVENUE

SAN FRANCISCO, CA 94102-3298

June 4, 2004

TO: PARTIES OF RECORD IN CASE 02-07-044

This proceeding was filed on July 24, 2002, and is assigned to Commissioner Brown and Administrative Law Judge (ALJ) Walker. This is the decision of the Presiding Officer, ALJ Walker.

Any party to this adjudicatory proceeding may file and serve an Appeal of the Presiding Officer's Decision within 30 days of the date of issuance (i.e., the date of mailing) of this decision. In addition, any Commissioner may request review of the Presiding Officer's Decision by filing and serving a Request for Review within 30 days of the date of issuance.

Appeals and Requests for Review must set forth specifically the grounds on which the appellant or requestor believes the Presiding Officer's Decision to be unlawful or erroneous. The purpose of an Appeal or Request for Review is to alert the Commission to a potential error, so that the error may be corrected expeditiously by the Commission. Vague assertions as to the record or the law, without citation, may be accorded little weight.

Appeals and Requests for Review must be served on all parties and accompanied by a certificate of service. Any party may file and serve a Response to an Appeal or Request for Review no later than 15 days after the date the Appeal or Request for Review was filed. In cases of multiple Appeals or Requests for Review, the Response may be to all such filings and may be filed 15 days after the last such Appeal or Request for Review was filed. Replies to Responses are not permitted. (See, generally, Rule 8.2 of the Commission's Rules of Practice and Procedure.)

If no Appeal or Request for Review is filed within 30 days of the date of issuance of the Presiding Officer's Decision, the decision shall become the decision of the Commission. In this event, the Commission will designate a decision number and advise the parties by letter that the Presiding Officer's Decision has become the Commission's decision.

/s/ ANGELA K. MINKIN

Angela K. Minkin, Chief

Administrative Law Judge

ANG:avs

Attachment

ALJ/GEW-POD/avs

PRESIDING OFFICERS DECISION OF ALJ WALKER (Mailed 6/4/2004)

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

The Utility Consumers' Action Network, Complainant, vs. Pacific Bell Telephone Company and AOL-Time Warner, Inc., Defendants.

Case 02-07-044 (Filed July 24, 2002)

Michael Shames and Lee Biddle, Attorneys at Law,

for Utility Consumers' Action Network,

complainant.

Paul P. Strange, James B. Drimmer and Erinn

R. W. Putzi, Attorneys at Law, for
SBC California, defendant.

Steven P. Burke, Thomas W. Mitchell and John E.

Villafranco, Attorneys at Law, for America

Online, Inc., defendant.

OPINION APPROVING SETTLEMENTS INTENDED TO
REDUCE DIAL-UP INTERNET TOLL CHARGES

TABLE OF CONTENTS

TITLE PAGE

1. Summary 22

2. Procedural History 33

3. Nature of the Complaint 44

4. SBC's Trial Refund Program 55

5. Jurisdictional Challenge by AOL 77

6. Proposed Settlement Between UCAN and SBC 99

7. Settlement Agreement Between AOL and UCAN 1111

8. Prior Commission Cases 1313

9. Discussion 1717

10. Assignment of Proceeding 1919

ORDER 2222

EXHIBIT 1 Settlement Agreement

EXHIBIT 2 Advisory Notice

EXHIBIT 3 Settlement Agreement

OPINION APPROVING SETTLEMENTS INTENDED TO
REDUCE DIAL-UP INTERNET TOLL CHARGES

1. Summary

We approve two settlement agreements that promise to dramatically reduce unintended telephone toll charges for thousands of Californians who use the America Online (AOL¹) dial-up service to connect to the Internet. The charges occur when subscribers' computers dial an AOL access number that is a toll call instead of a toll-free call. In the first settlement, between the Utility Consumers' Action Network (UCAN) and SBC California (SBC or Pacific Bell²), SBC agrees to notify consumers when charges exceed $50 in dialing an AOL access number so that subscribers may correct the dial-up number. In the second settlement agreement, between UCAN and AOL, AOL intends to provide new subscribers with access numbers that match the area code and first 3 digits of their telephone number instead of the area code alone, thus reducing the risk that subscribers will select an access number outside of their local exchange area. In the first month of SBC's early warning program in April 2004, SBC notified 4,748 customers that their calls to an AOL access number exceeded $50 and urged those customers to change the access number if they intended the calls to be toll-free. This proceeding is closed, without prejudice to refiling if AOL is unable to implement its 6-digit access number requirement by the end of 2005.