COM/DGX/khy/epg ALTERNATE DRAFT Agenda ID #5312

Alternate to Agenda ID# 5211

Quasi-Legislative

Item 56a 2/16/06

Decision ALTERNATE PROPOSED DECISION OF COMMISSIONER DIAN M. GRUENEICH

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Order Instituting Rulemaking on the Commission's Own Motion to Establish Consumer Rights and Protection Rules Applicable to All Telecommunications Utilities

Rulemaking 00-02-004 (Filed February 3, 2000)

DECISION ADOPTING A COMPREHENSIVE TELECOMMUNICATIONS CONSUMER PROTECTION PROGRAM

TABLE OF CONTENTS

DECISION ADOPTING A COMPREHENSIVE TELECOMMUNICATIONS CONSUMER PROTECTION PROGRAM 11

I. Summary 22

II. Procedural Background 44

III. Discussion 77

A. Legal Authority 77

1. Federal Preemption 77

2. The FCC's Truth In-Billing Order 99

3. Rates versus Terms and Conditions 1111

B. A Comprehensive Consumer Protection Program is Necessary 1414

1. The Evidentiary Record Demonstrates the Need for Consumer Protection Rules 1414

2. Even with a Competitive Market, Existing Consumer Protection
Laws Are Not Adequate 2121

3. Rights Without Enforceable Rules Are Meaningless 2424

4. The Evidence On The Cost Of Compliance Is Not Persuasive 2626

IV. The Telecommunications Consumer Protection Program 3030

A. The Revised Consumer Bill of Rights and Rules 3131

1. Approach 3131

2. Part I - The Bill of Rights 3232

3. Part II - Consumer Protection Rules 3535

4. Part 3 - Rules Governing Non-Communications-Related Billings ("Cramming") 4343

5. Part 4 - Rules Governing Slamming Complaints 4848

6. Consumer Education 4848

7. Enforcement 5252

8. Implementation Schedule 5353

V. Other Procedural Matters 5454

A. Petitions for Modification of D.04-05-057 5454

B. Petitions for Rehearing of D.05-01-058 5454

C. Other Motions 5454

VI. Assignment of Proceeding 5555

VII. Comments on Draft Decision 5555

Findings of Fact 5555

Conclusions of Law 5858

ORDER 5959

DECISION ADOPTING A COMPREHENSIVE TELECOMMUNICATIONS CONSUMER PROTECTION PROGRAM

I. Summary

This Decision adopts a comprehensive consumer protection program for California telecommunications consumers. The integrated program addresses all four parts of consumer protection: Rights, Rules, Education, and Enforcement. This program responds to the rapid pace of change in the telecommunications industry, supports competition, and empowers consumers.

When we began our review of the Consumer Bill of Rights adopted in Decision (D.) 04-05-057 and codified in General Order (G.O.) 168 we asked ourselves three questions:

1. Do we need consumer protection rules given that we already have regulatory statutes and Commission Decisions in place addressing the issue of consumer protection?

2. Do the rules we create present a balance between consumer protection and an appropriate economic burden on carriers?

3. Does the Commission have the legal right to put these rules in place and is it appropriate to have the rules apply to all telecommunications carriers?

We answer each of these questions in the affirmative.

The record is clear: consumer protection rules are necessary. In 2004, the number of complaints related to wireless service increased by 63% as compared to a national average increase of 43%. The overall wireless subscriber rate increase was the same nationally and in California -- 15%.¹ Complaints skyrocketed despite vigorous competition in the wireless industry, a voluntary Consumer Rights program by industry, and the implementation of a consumer education program on wireless service by the Federal Communications Commission (FCC).

This Commission is obligated to act on these complaints and other problems existing in the telecommunications industry. At the same time, we recognize that a traditional approach, which seeks to limit carriers to a narrow set of services and/or marketing practices and requires prior Commission review, is neither practicable nor desirable in the fast-changing world of telecommunication services. Likewise, we are extremely mindful of the need to avoid unnecessary regulations that will harm consumers by delaying the introduction of new services or limiting the deployment of new technologies.

The Commission has an affirmative obligation as set forth in the state constitution and statutes to act in the best interests of the consumers of California by setting clear and reasonable guidelines for consumer information, education and enforcement. Public Utilities (P.U.) Code § 2896 and § 2897 direct this Commission to require telephone corporations (including wireless carriers) to furnish their customers with sufficient information to make informed choices and to understand how to participate in the regulatory process and resolve complaints. The Rules we adopt here are the Commission's response to that legislative directive and our constitutional obligation to safeguard consumers. These Rules ensure that consumers:

· have accurate information about the terms and conditions of service that they are purchasing;

· are provided with contracts and confirmations that are in the same language as the solicitations offering service;

· are protected against misleading and deceptive solicitations;

· are provided accurate and understandable bills;

· retain existing protections against unauthorized non-telecommunication charges ("cramming");

· have a clear avenue for efficient and effective resolution of complaints;

· are educated about their rights and responsibilities with regard to telecommunications service; and

· are assured the Commission will vigorously enforce its rules, statutes, and decisions protecting consumers.

Some carriers argue that additional state regulation will harm competition by driving businesses out of California. To address such concerns and our own goal of promoting telecommunication competition and innovation, we have deleted and streamlined numerous provisions of the original 2004 Rules. Moreover, 75 percent of the carriers had fully complied with the original G.O. 168 by December 2004 and there is no record evidence of carriers leaving the California market as the result of the previous Rules, or of the Rules affirmatively harming the carriers or consumers or measurably increasing rates.

This decision looks beyond the reflexive refrains that regulation is the enemy of competition or that carriers will defraud consumers if government does not act. There is a wide middle ground between overly prescriptive rules and doing nothing. Our approach is practical, reflecting what needs to be done, what should be done, and what can be done.

¹ TURN Opening Brief (October 24, 2005), pp. 9, 13. ORA testimony (August 5, 2005), pp. 2-3