IV. The Telecommunications Consumer Protection Program
The Program we adopt today contains four elements -- a revised Consumer Bill of Rights (Rights), a set of associated rules (Rules), Education and Enforcement. This Program provides the foundation for the Commission and carriers to assure consumers of fair practices while permitting and encouraging innovation and competition. The Rules are an evolved and streamlined set of rules developed from the stayed rules in D.04-05-057. We considered the concerns of the involved parties and address many of those concerns in the revisions. We direct staff to continue to closely monitor implementation of our new rules and to alert us of changes needed, either to provide additional protection or to avoid unintended restrictions on innovation or competition.
The Rights and Rules work hand-in-hand with existing statutes to provide clarity and direction to both carriers and consumers. However, the Rights and Rules are only half of our Program. This Decision also includes Education and Enforcement.
This Decision directs the Commission's Executive Director and the Directors of the Telecommunications Division (TD), the Consumer Services and Information Division (CSID) and the Consumer Protection and Safety Division (CPSD) to work together to create an extensive consumer education program. The first element will be the development of two documents-one for carriers and one for consumers-that will summarize our Rights and Rules and will be available in English and non-English versions. We discuss below other critical elements of the extensive Commission education program we order today.
The final piece of our Program is Enforcement. This Decision orders the Directors of CPSD, CSID (using our Consumer Affairs Branch (CAB)), and TD to create a database to track and analyze consumer complaints. Beginning July 2006, the CPSD and CAB shall provide quarterly reports to the Commission on the status of consumer complaints. Lastly, given the high level of activity at the FCC, we direct the Commission's General Counsel, working with the TD, to develop a specific advocacy plan to guide this Commission's consumer protection filings at the FCC to promote consumer protection.
In tackling the development of a set of rights and rules, we looked at three approaches. One, we could keep in place pre-existing rules for ILECs and CLECs and create new and different rules for wireless carriers.77 Second, we could keep in place the pre-existing rules for ILECS and CLECS and not create any new rules for wireless carriers. Third, we could create a single place for consistent rules applicable to all carriers that would set a minimum set of requirements.78
We determine that the best approach is the third one - to create one set of consistent rules for all carriers. Our authority to regulate the terms and conditions of wireless service allows us to develop rules that apply to all carriers providing service to California consumers. Furthermore, both the wireless and wireline industries have been calling for neutrality in telecommunications rules, i.e., treating all carriers alike.
While consistency is an important goal of our consumer protection program, another goal is to create a program that is feasible to implement and understand. We have eliminated rules that we found could be incorporated into the education or enforcement portions of the Program. We also have eliminated duplicative rules and rules that could be overly burdensome. In the end, we have significantly simplified the rules from the 2004 stayed decision.
Appendix A contains the Consumer Bill of Rights and revised rules we adopt today.
Our adopted Consumer Bill of Rights sets forth the principles for telecommunications consumer protections in California and provides a policy directive to carriers and consumers from the Commission. Our goal is to provide a clear and concise list of rights that are comprehensible to telecommunications consumers and carriers.
We have reviewed the original Bill of Rights adopted in D.04-05-057 and the proposed Bill of Rights included in the May 2, 2005 ACR. These two sets of rights have many similarities. Both sets of rights cover the issues of disclosure, choice, privacy, public participation, accurate bills, non-discrimination, and safety. We include these areas in today's decision. However, we find that inclusion of some of the new areas proposed in the May 2005 ACR is problematic.
First, we agree in principle with the right to access lawful content over the Internet and the right to purchase broadband services. However, these two rights pertain to "information services" that are under the authority of the FCC and not within the purview of this Commission. The Wireline Group also argued that these rights are not within Commission's jurisdiction.79 Because we have no authority over information services and we cannot control FCC rules on this matter, we decline to adopt these rights in order to avoid consumer confusion.
The FCC currently requires carriers to provide local number portability (LNP) within a local calling area. While we agree that without LNP, consumers do not have as much freedom to change providers, we find the proposed right to LNP to be a function of the right to choose and not a right within itself. Furthermore, we find it confusing to include a "rule" in our set of rights and decline to adopt it as such.
Certain carriers claim that the use of the term "right to personal and financial security" is vague, standing alone. We agree. However, we recognize security to be a privacy issue, and therefore, we have subsumed the right regarding security into the right to privacy. The Wireline Group recommended that the two rights on disclosure be combined for clarity.80 As it is our goal to create a concise set of rights, we have created one right to disclosure that combines the disclosure of clear and complete information with the right to be charged according to agreed upon rates, terms and conditions.
ORA noted that limiting a right of privacy to financial records and personal information appears contradictory to P.U. Code § 2891, which provides consumers with very broad privacy protections extending beyond financial records.81 Section 2891 prohibits carriers from sharing, without written authorization, information including but not limited to calling patterns, personal information, and purchases. We agree and adopt ORA's proposal. In addition, we made language revisions for the purposes of clarity and streamlining.
We adopt the following Consumer Bill of Rights:
Choice: Every consumer has a right to select their services and vendors, and to have those choices respected by the industry.
Non-Discrimination: Every consumer has the right to receive products and services free of prejudice or disadvantage.
Safety: Every consumer has a right to safety and security of their persons and property, including the ability to receive clear and complete information about access to 911 emergency services.
Privacy: Every consumer has a right to personal privacy, to have protection from unauthorized use of their records and personal information, and to reject intrusive communications and technology.
Disclosure: Every consumer has the right to receive clear and complete information about rates, terms and conditions for available products and services, and to be charged only according to the rates, terms and conditions they have agreed to.
Accurate Bills: Every consumer has the right to accurate and understandable bills for products and services they authorized.
Public Participation: Every consumer has the right to participate in public policy proceedings and to be informed of their rights and protections.
We adopt a streamlined Part 2, Consumer Protection Rules and add important protections for non-English speaking consumers.
Our goal in adopting these revised Rules is to ensure the viability of the rules, by having rules that are legal; clear, simple and non- duplicative; and provide adequate implementation time. We discuss each of these aspects below. We also address the carrier concerns regarding in-language documentation.
¬ Legality
We address the question of overall jurisdiction in section III.A. above. In addition we have reviewed the legal arguments raised by the carriers regarding specific rules. For example, we find that stayed Rule 6(g) regarding separate line items on government mandated charges violates the TIB Order.82 However, the TIB Order states that it is misleading for carriers to state or imply that a charge is required by the government when it is the carriers' business decision as to whether and how much of such costs they choose to recover directly from consumers through a separate line item charge. In light of that holding we have revised this Rule to state, "Carriers shall not label or describe non government fees or charges in a way that could mislead consumers to believe those charges are remitted to the government." We have also consolidated this rule with Rule 5(a).
Similarly, we find that the restriction on the amount of late payment charges in stayed Rule 7(a) is rate regulation, as the Commission itself has determined that late payment charges are "part and parcel" of rates charged83. We therefore revise this Rule to delete the sentence, "Any authorized late payment penalty may not exceed 1.5% per month on the balance overdue." We have also consolidated stayed Rule 7 to other more appropriate areas.
Some parties expressed the concern that some of the stayed rules were unconstitutionally vague. We do not agree with the legal analysis, but have as one of our primary goals the creation of rules that members of the general public understand. We reviewed the language of the stayed rules including the definitions, and have revised vague language while still giving carriers the flexibility to conduct business. While we cannot anticipate every possible quibble with wording, we have aimed to use plain English and to establish clear standards that are understandable by the public as well as the carriers.
We eliminated several potential conflicts with state or federal laws by revising the rules. For example, we eliminated the requirement in stayed Rules 1(f), 2(c), 3(d) that a contract "shall be in a minimum of 10 point font." Instead, we now require a contract to be "clear and conspicuous and otherwise in compliance with existing law." We also eliminated most requirements of exact phrasing, which we considered prescriptive and unnecessary. Instead we require that certain information be provided.
None of the rules adopted today constitutes impermissible rate regulation of wireless carriers. The rules do nothing more than require carriers to make meaningful disclosures of information to their customers; adhere to conscionable contracting practices; adopt fair billing and collection techniques; offer refunds if carriers secure advance payment for services they do not provide (i.e., prepaid calling cards); and provide customers who sign long-term contracts a reasonable rescission period - at any rate the carriers may choose.84 None of these rules is preempted by federal law.
In order to ensure meaningful disclosure of information to customers, and in accordance with conscionable contracting practices, Rule 1 requires carriers that promote their services in languages other than English to disclose basic terms and conditions of these services to subscribers whose language is other than English. To enable customers to make informed choices among services, Rules 2 and 3(a-e) require carriers to provide a clear and conspicuous disclosure of information about the nature and scope of the service, including a short summary of the key terms and conditions of service. Rule 9 requires the carriers' employees to properly identify themselves to customers. None of these disclosure rules constitutes impermissible rate regulation.
Rules 4(e) and 3(f) enforce for the basic proposition that customers should receive services promised. Under Rule 4(e), a carrier must refund prepaid charges when the carrier does not provide the service at the price or quality represented to customer - a requirement that is an exercise of permissible state regulation to ensure fairness and to prevent fraud.85
Rule 3(f) allows customers to cancel a new service or contract within 30 days without incurring termination fees or penalties with 30 days. This Rule ensures fairness with respect to enforcement of contractual provisions; it does not dictate rates. While it may be argued that early termination of service might cost carriers money that they may want to recover through an early termination penalty, courts have rejected the claim that such penalty constitutes a rate.86 As stated in Phillips, "'rate' must be narrowly defined or there is no ability to draw a line between economic elements of the rate structure and normal costs of operating a telecommunications business that have no greater significance than as factors to be considered in determining what will ultimately be required of rates to provide a reasonable return on the business investment."87
Other rules set forth notice requirements. Rules 3(d) and 6(a) do not constitute rate regulation; they require carriers to notify customers of any change that carriers may unilaterally make.88 Rules 6(b) and (c) and 8 set forth customer notice requirements before a carrier may withdraw service or terminate it for nonpayment. These basic rules of consumer protection do not tell the carriers what rate to charge.
Rules 5, 6, 7 and 8 adopt fair billing and collection techniques, ensuring, among other things, that customers are billed only for the services they have authorized; that they are provided clear information about payment due dates; and that they are informed about bill dispute resolution procedures. These rules all relate to billing and do not regulate rates. For example, Rule 5(a) requires that bills be based on the rates in effect at the time the service was used. Carriers cannot raise their rates and then apply the new rate retroactively to services already used. Rule 5(h) in turn requires carriers to credit payments effective the business day that payments are received. This type of regulation - of billing practices -- is not preempted by federal law.
¬ Clarity, Simplification, Duplication
We have reviewed the rules to determine where they could be streamlined and simplified. For example, we deleted several subparts of the stayed rules that we found to be duplicative, overly intrusive, and otherwise unnecessary. In reviewing the language in stayed Rule 1(h), we were concerned that the word, "legibly" had not been defined in this proceeding. Because the term "clear and concise" has been defined in case law, we have substituted that term where applicable. Several carriers submitted comments asserting that the information required in stayed Rule 6(k) was lengthy and thus contributed to a cluttered phone bill for customers.89 We have therefore simplified the required statement.
In order to provide consumers with clear information on the services to be received, we add a rule that requires carriers to provide subscribers with a short summary of key rates, terms and conditions at the time of sale. We consider this new rule to be a key element of our consumer protection program that gives consumers the information they need while giving carriers the flexibility to determine the format of their contracts, bills and marketing materials.
¬ Implementation
Stayed G.O. 168 required carriers to implement 142 separate items by December 6, 2004 (approximately 6 months following adoption.) As we previously stated, 177 companies -- approximately 75% of all carriers -- submitted a Certificate with the Commission complying fully or in part with G.O. 168 by the required 180 days.90 The remaining 25% who complied in part requested extensions of time. Many of the requests addressed the same rules and the bulk of the requests focused on stayed Rules 3, 6, and 8.
Thus, most carriers were able to comply with the Rules in a timely manner. Those carriers unable to comply within the initial six month time period rarely requested more than an additional six months.91
In order to address past problems with timely implementation and provide additional time to implement these revised (and streamlined) rules, we require the carriers to implement these revised rules by January 1, 2007.
¬ In Language Documentation
As addressed in our prior discussion on in language issues, there are many problems surrounding telecommunication services to non-English speaking consumers, and those who are not English literate readers or writers. Currently, Public Utilities Code § 2890 (b) provides that "[w]ritten or oral solicitation materials used to obtain an order for a product or service shall be in the same language as the written order." We have built upon this statute and added the requirement that if a language other than English is used in the advertising or promotion of a carrier's services, the information disclosed in service agreements or contracts must be provided in that language. We consider this provision to be central to our obligation to protect consumers in California, given the state's rapidly changing demographics.
4. Part 3 - Rules Governing Non-Communications-Related Billings ("Cramming")
In July 2001, the Commission issued D.01-07-030 adopting rules governing the inclusion of non-communications-related charges on telephone bills. In doing so, the decision explained that cramming -- the submission or the inclusion of unauthorized, misleading, or deceptive charges for products or services on the subscriber's telephone bills -- has become a serious and widespread problem in California, draining time and money from California consumers and businesses.92
The Commission approved the addition of the non-communications related billing rules in D.04-05-057. The purpose of the so-called Cramming rules in Part 4 of G.O. 168 is:
to protect consumers from unauthorized charges on their telephone bills, specifically, charges for non-communications-related products and services. Effective July 1, 2001, such charges are no longer barred by statute. These rules are intended to give consumers control over whether to use their telephone bills to pay for non-communications-related products and services; to ensure that consumers have sufficient information to make informed choices about this service and, if they use it, to verify charges on their bills; and to provide for prompt and effective recourse if they find unauthorized charges or other billing errors related to non-communications charges on their telephone bills; and to protect the confidentiality of information they provide to telephone companies.93
In our stay of the Rules, we specifically left D.01-07-030 in effect stating,
In no way does this extension of time impact the Commission's enforcement of the existing interim "Cramming Rules" (Rules Governing Billing for Non-Communications-Related Charges) set forth in D.01-07-030, nor the existing "Slamming Rules" (Final Opinion on Rules Designed to Deter Slamming, Cramming and Sliding) set forth in D.00-03-020. We are committed to continuing our ongoing efforts of enforcing the Cramming and Slamming rules previously adopted by this Commission.94
The May ACR also proposed to retain Part 4 without major revision. We have found no reasonable basis in the record to eliminate Part 4.
The wireless carriers have proposed the repeal of Part 4 arguing that no rules of any kind are needed until significant harm has been shown to have occurred.95 As discussed above, the record shows that significant harm has occurred. Having settled the need for strong, proactive measures to prevent cramming, we turn next to the carriers' arguments against the non-communications-related billing rules specifically.
The carriers base their arguments on excessively narrow readings of the rules. The carriers in particular have argued that the requirement for a PIN (personal identification number) to provide security at the point of sale impedes technological development, "Moreover, as described in the Joint Wireless Carriers' Opening Brief, the requirement that each transaction involve a PIN is unduly burdensome and in certain instances would make the use of a wireless phone for the transaction infeasible."96 In fact, our rules provide that, "The billing telephone company must use a PIN number or other equally reliable security procedure designed to prevent anyone other than the subscriber and individuals authorized by the subscriber from placing charges on the subscriber's account."97 This point is made clear in both the rules and the decision. Thus our rules do not bar technological development and are not unduly burdensome.
No party has opined that PINs would or should be the only acceptable method, or that the ESN (electronic serial number) resident in every wireless instrument is not "an equally reliable security procedure." Carriers, in fact, argued that ESN is reliable.98 Moreover, the carriers themselves recognize the need for reliable security procedures: "[C]arriers and vendors on whose behalf they bill have a strong incentive to establish security procedures that prevent the unauthorized billing of non-communications related service."99 But while they cite numerous examples of credit and debit billing practices in other industries that use less secure methods than PINs,100 nowhere have they cited an example where the magnitude of the purchases is as great as in the telecommunications industry. Nor are we aware of any.
Our last point may prove to be the most important. Most arguments against cramming rules focus on the idea that non-communications charges are initiated only through the use of handsets. While that may be the way most such charges originate, it is by no means the only way. As the FCC has observed, "[A]ll that is often required to get a charge billed on a local telephone number is the consumer's telephone number."101 Consumer phone numbers are readily available and thus could be used for non-communications charges without consumer authorization absent our rules. Thus, the heart of the issue is not the use of telephone handsets, but the potential for fraud, cramming and privacy violations through the non-authorized use of the consumer's telephone number.
As an example, carriers could contract with billing aggregators to place non-communications-related charges on customers' bills.102 Those customers could have identified themselves by entering their telephone numbers on keypads, or by swiping or scanning vendor-issued cards at the register. Vendors could submit those charges to billing aggregators who process and submit them to carriers for inclusion in the customers' telephone bills. Carriers could buy receivables at a discount from a wide variety of sources including aggregators, with the intent of including them in customers' telephone bills, and have no knowledge of the originating vendors and no method for determining whether the charges are legitimate.103 None of these possibilities need involve charges placed through the use of a handset, only a working telephone number that is in most cases freely available through directories and other public sources. Absent an effective set of non-communications-related billing rules, customers have no way to control the charges in their billing envelopes.
Carriers contend that allowing consumers to choose for themselves whether to give or withhold authorization for non-communications billing is burdensome.104 Specifically, carriers argue that the cost of keeping track of which customers have consented and which have not would make it prohibitive to offer their billing services to vendors. But carriers already track when their customers add or drop any of the thousands of services they offer. No carrier has explained how tracking a consumer's choice to prohibit or allow non-communications charges is different or more difficult than tracking the consumers' telecommunications choices.
After considering all of the evidence on the record, we conclude the non-telecommunications-related billing rules should remain in force and unchanged. We have renumbered these rules as Part 3 in the attached G.O. 168.
D.05-01-058 did not stay our Part 5 Rules governing slamming. We find nothing in the record that compels us to revise the Part 5 rules that were adopted in D.04-05-057. We retain these rules and renumber them to Part 4.
We consider the education of consumers to be a responsibility shared by the Commission, carriers and consumers. With that in mind, we adopt a four phase education program. Full implementation of this consumer education program is dependent upon the Legislature providing additional staffing and funding for the Commission both immediately and over a continuing period of time.
The four elements of our program are as follows:
¬ Phase I: Preparation of consumer protection pamphlets for carriers and for consumers
We order the Directors of the Consumers Services and Information Division (CSID), the Consumer Protection and Safety Division (CPSD), and the Telecommunications Division (TD) to work together to develop two pamphlets: one for consumers and the other for carriers. The pamphlets will detail the consumer protection program we adopt today. The consumer pamphlet will include clear information on our rules protecting consumers and information on who to contact for any questions or complaints. The carrier pamphlet will include information on implementation timelines and will help new entrants to understand our consumer protection regulatory framework.
The pamphlets shall be initially produced in English, Spanish, and Chinese. If need warrants, they shall be made available in other languages.
¬ Phase II: Statewide Distribution of the Pamphlets and Commission Website
Statewide distribution of the pamphlets will be a cooperative effort among carriers, consumer groups, and the Commission, particularly our Public Advisor's office. We direct our Public Adviser to work with CSID, CPSD, TD, carriers, and external groups to develop a distribution plan. The Commission will provide the pamphlets to consumer groups who have participated in the consumer protection proceeding. In addition, the Commission will call upon other community groups and government agencies to assist us in getting the information to consumers. Pamphlets will also be disseminated through the efforts of the California Universal Service public purpose programs.
In addition, the Commission will highlight the new consumer protection program on the Commission website in English, Spanish, and Chinese. All carriers shall include a prominent link on their web sites to the Commission web page within 20 days of the launch of the Commission webpage.
¬ Phase III: Public Outreach Campaign
This phase will include a series of press releases first launching the new consumer protection program, then providing details on the program. In addition, all California carriers will be required to send current customers a one-page bill insert announcing the program and how to obtain more information. The outreach campaign will include a number of public awareness events sponsored by the Commission. The events will highlight the specific rights and rules of our program as well as general information on such topics as how to understand a wireless contract, what one needs to know when selecting a telephone provider, or who to contact when one has a problem with a carrier. We will coordinate this effort with the FCC's existing program. The Commission will focus on outreach to non-English speaking and low income communities.
¬ Phase IV: Continuing Education
The Commission will maintain a dynamic consumer protection web page that not only provides information on the Rules and Rights, but educates consumers on current practices by carriers. The Commission will continue its public awareness events across the state.
We recognize that a viable continuing education program is dependent upon additional staff resources and funding. The Governor's recent budget includes additional resources for the consumer education and enforcement portion of the Program. We will work with the Governor's Office and the Legislature in obtaining the staffing and funding needed for this effort.
Lastly, we establish an ongoing funding source for the Communities for Telecommunications Rights (CTR) program. Originally established with funding as a result of penalties imposed in two complaint proceedings, CTR educates consumers that the Commission has been unable to reach. CTR works as an unofficial extension of the Commission to educate low-income and non-English speaking consumers. CTR educates these consumers about their telecommunications rights, and in their own language. We will continue to use CTR to reach out to those populations that the Commission otherwise would not reach. CTR shall continue its educational responsibilities as well as assist the Commission in taking complaints. CTR shall provide quarterly complaint reports to CAB and CPSD.
Twenty-five percent of all consumer-related telecommunications complaint penalties shall be devoted to CTR funding. In those cases where CPSD and carriers are able to resolve their disputes through settlement, 25% of any resulting penalties shall be provided to CTR.
Two Commission divisions, CSID and CPSD, share the responsibility for consumer protection and enforcement. Under CSID, the Consumer Affairs Branch (CAB) is responsible for the resolution of telecommunications inquiries and complaints. CPSD's mission is to ensure that California consumers enjoy a high quality of service and are protected from fraudulent, unfair and anticompetitive business practices. While providing two separate functions, CPSD and CAB work together to protect consumers.
With the adoption today of our consumer protection program, we must be prepared to enforce our rules. We will require additional staff resources and improved analytical tools.
Currently, CAB has a limited number of Consumer Affairs Representatives that take calls, log the calls in a database, answer questions, analyze complaints, track the complaints, and attempt to resolve the complaints. These representatives take complaints on all industries that the Commission regulates, not just telecommunications. In order to ensure that the calls are taken in an efficient manner, we will seek additional staffing for CAB to log and track telecommunications complaints and assist in analysis of the more complicated telecommunications issues.
CPSD also has a limited number of staff to research complaints and assist Legal Division in any formal proceedings. As with CAB, CPSD is responsible for enforcement across all industries under the Commission's jurisdiction. We recognize that increased education campaigns may lead to a need for increased investigations of carriers. So as to provide timely investigations, we will also seek funding for additional staff devoted to CPSD telecommunications investigations.
To address the need for improved analytical tools, we direct the Directors of CPSD, CAB and TD to develop, within 180 days, a detailed database to track and analyze all consumer complaints. The database shall be dynamic and flexible and able to adapt to the ever changing telecommunications industry. Beginning in October 2006, CAB and CPSD will provide quarterly reports to the Commission on the status of consumer complaints.
The Commission will firmly, but fairly, use fines and penalties to punish a carrier for inappropriate behavior. If the analysis of the previously mentioned complaint report should show negative trends in compliance, the Commission shall invoke any penalties. Further, the CPSD has the Commission-preferred option of a negotiated settlement for the purpose of not only punishing inappropriate carrier behavior, but also for creating a positive change in company practices.
Given the FCC's prominent role in consumer protection, we direct the Commission's General Counsel and TD to form a Federal Consumer Protection Team within 45 days of adoption of this Decision to advocate at the FCC regarding consumer protection. The team will be responsible for informing the Commission of FCC activities, developing comments, and developing proposals on complying with current and future FCC rules and regulations.
D.05-01-058 discussed several concerns regarding the implementation schedule of those rules. D.05-01-058 noted that 45 carriers had requested compliance extensions for the consumer protection rules. Most of the extension requests stemmed from the lengthy time needed to make substantial and complex changes to carrier billing systems, computer systems or contracts for vendor services. Although the Commission's Executive Director had granted 21 requests, some carriers indicated that, without a lengthy extension or permanent waiver, they could be forced to leave the California market.
We agree that the implementation schedule in D.05-01-058 was not realistic for all of the carriers. As we discussed earlier, most carriers were able to comply with the original implementation schedule. However, we acknowledge that there were several rules that certain carriers needed additional time to implement. Hence, we provide until January 1, 2007 for carriers to implement the revised G.O. 168.
77 See, D.95-07-054 (approving rules for Competitive Local Exchange Carriers); D.98-08-031 (approving rules for Non-Dominant Interexchange Carriers).
78 These rules supersede the CLEC and NDIEC rules we have previously approved.
79 Wireline Group Comments (May 31, 2005), p. 7.
80 Id., p. 18.
81 ORA Comments (May 31, 2005), p. 3.
82 FCC TIB Order, ¶ 30.
83 See, D.93-05-062 (late payment charges are part and parcel of the rates charged for telephone services).
84 Many of the rules adopted herein simply consolidate into a general order those rules currently in place. Compare Rule 8(a) specifying 7-day grace period prior to termination of service for nonpayment with Order Instituting Rulemaking re Competition, 60 CPUC 2d 611, 649 (1995) (Notices to discontinue service for nonpayment of bills shall be provided in writing .... not less than 7 calendar days prior to termination.)
85 See, In re Wireless Consumers Alliance, 15 FCCR 17,201, ¶¶ 25-27 (2000); Spielholz, 86 Cal.App. 4th at 1370.
86 Early termination fees are not rates, but are akin to a liquidated damages provision and thus constitute "other terms and conditions." See, e.g., Esquival v. Southwestern States Cellular Corp., 2000 WL 33915909, at *3-6 (S.D. Iowa 2000); Phillips, 2004 U.S. Dist. LEXIS 14544, at *25, 32 (court rejected claim that early termination fee part of AT&T's wireless rate structure when customer attempted to cancel contract because dissatisfied with service); see also, Brown, 109 F.Supp. 2d at 423 (state consumer protection rules are preempted only when they challenge the "reasonableness or the lawfulness of the rates themselves.")
87 Phillips, 2004 U.S. Dist. LEXIS 14544, at *25, *36.
88 Unlike the statute at issue in Cellco v. Hatch, 2005 U.S. App. LEXIS 26887 (8th Cir. 2005), Rule 3(c) does not require a subscriber to "opt-in" to the changes that affect rates proposed by the carrier before they become effective. Hatch, however, makes clear that a subscriber has the right to "opt-out" of such changes.
89 SBC California and Sprint Communications Company LP on Behalf of the Wireline Group Consolidated Comments (March 23, 2004), pp. 21-22.
90 According to the Telecommunications Division, many of the 177 companies hold several Certificates of Public Convenience and Necessity (CPCN) due to mergers and acquisitions.
91 Of the 172 individual extension requests, only 32 requested more than a six-month extension.
92 The FCC has commented on the problem as well, noting that " . . . it is significantly easier to bill fraudulent charges on telephone bills than on credit card bills. While credit card charges require access to a customer account number that consumers understand should be treated as confidential, all that is often required to get a charge billed on a local telephone number is the consumer's telephone number. This number is not only expected to be widely distributed, but can easily be captured by an entity even when the consumer has not authorized charges or made a purchase. FCC TIB Order, ¶ 7, fn. 18.
93 D.01-07-030, Appendix A.
94 D.05-01-058, p. 4.
95 Until their reply brief of November 2005, even the Wireline Group, although not in favor, had not opposed the continued application of the non-communications-related billing rules. They had, in their words, "acceded to the permanent adoption of the Non-Com Rules in the stayed GO168."
96 The Wireless Group Reply Brief, (November 7, 2005), p. 21.
97 D.01-07-030, Appendix A, § C(1).
98 Wireless Group Opening Brief (October 24, 2005), p. 44 ([O]nce a customer has agreed to purchase a service or product, the mobile device passes a unique identifier to the carrier's billing system so that the carrier can identify the phone and place the charge on the appropriate bill. Because this identifier is generated by the network, it is not possible to place a charge on another phone bill.)
99 Id., p. 47.
100 See, e.g., Katz Testimony (August 5, 2005), ¶55.
101 FCC TIB Order, ¶ 7, fn 18.
102 This occurs today for communications charges.
103 Consider the possibilities. Carriers could, for example, become fearsome competitors in the debt collection industry by virtue of their exceptional collection leverage and access to billing information for nearly every American. When faced with a crammed bill, how many customers will succumb to the very credible threat of losing every wireless line in the account and the associated instruments (which, as the record shows, carriers have typically locked to prevent customers carrying them to their competitors' otherwise-compatible systems); suffering hundreds of dollars in early-termination fees charged to the credit card accounts they used to establish service; and having their credit ratings trashed?
104 Verizon Wireless Opening Brief (October 25, 2005) p. 46.
