STATE OF CALIFORNIA GRAY DAVIS, Governor
PUBLIC UTILITIES COMMISSION
505 VAN NESS AVENUE
SAN FRANCISCO, CA 94102-3298
September 9, 2003
TO: PARTIES OF RECORD IN INVESTIGATION 02-06-003
This proceeding was filed on June 6, 2002, and is assigned to Commissioner Wood and Administrative Law Judge (ALJ) Vieth. This is the decision of the Presiding Officer, ALJ Vieth.
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
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AttachmentALJ/POD-XJV/tcg
PRESIDING OFFICER'S DECISION (Mailed 9/9/2003)
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
Investigation on the Commission's own motion into the operations, practices, and conduct of Pacific Bell Wireless LLC dba Cingular Wireless, U-3060, U-4135 and U-4314, and related entities (collectively "Cingular") to determine whether Cingular has violated the laws, rules and regulations of this State in its sale of cellular telephone equipment and service and its collection of an Early Termination Fee and other penalties from consumers. |
Investigation 02-06-003 (Filed June 6, 2002) |
Christopher P. Witteman, for the Consumer Protection and Safety Division of the California Public Utilities Commission.
James W. McTarnaghan, Kathryn A. Fugere and Sarah E. Leeper, Steefel, Levit & Weiss, for Cingular Wireless, respondent.
Michael Shames and Lee Biddle, for Utility Consumer Action Network, intervenor.
TABLE OF CONTENTS
Title Page
PRESIDING OFFICER'S DECISION ORDERING 1
PENALTIES AND REPARATIONS 1
1. Summary 2
2. Overview 3
2.1 The OII 3
2.2 Cingular's Business Organization and California Presence 5
2.3 Brief Description of Cingular's Wireless Service 6
3. Procedural Background 7
4. Jurisdiction and Burden of Proof 7
4.1 Subject Matter Jurisdiction 7
4.1.1 Federal Preemption 7
4.1.2 State Law Theories 8
4.1.3 Agency 11
4.2 Burden of Proof 12
5. Summary of the Evidentiary Record 12
5.1 Customer Growth and Network Development 13
5.2 Marketing and Sales Practices 19
5.2.1 Store Design, Marketing Materials and Sales Disclosures 19
5.2.2 Agent Contracts 26
5.2.3 Wireless Handsets and Other Equipment 27
5.3 Advertising 28
5.4 Customers' Complaints 34
5.4.1 Customer Witnesses 34
5.4.2 Informal Complaints to CAB 40
5.4.3 UCAN Complaint Database 42
5.4.4 UCAN's Deadzone Project 43
5.4.5 Complaints to the Attorney General's Office 43
5.4.6 Cingular's Cross Streets Records 44
5.4.7 Internet Petition Signatories 46
6. Discussion 47
6.1 Violation of the Public Utilities Code and D.95-04-028 47
6.1.1 Section 451 -- Just and Reasonable Service Mandate 47
6.1.2 Section 451/Section 2896 - Required Disclosure 53
6.1.3 Section 451/D.95-04-028 - Bundling Decision Compliance 57
6.1.4 Other Issues 59
TABLE OF CONTENTS
Title Page
6.2 Remedies 60
6.2.1 Penalties 60
6.2.2 Reparations 65
6.2.3 Useful Service Disclosures 66
6.2.4 Other Remedies 69
7. Assignment of Proceeding 70
Findings of Fact 70
Conclusions of Law 73
O R D E R 75
Appendix 1: I.02-06-003, Ordering Paragraph 1, as Modified by D.02-10-061
Appendix 2: Matrix of CPSD and UCAN Declarants
Appendix 3: Customer Witnesses' Service Quality Problems by Month and Year
PRESIDING OFFICER'S DECISION ORDERING
PENALTIES AND REPARATIONS
1. Summary
The evidence establishes that at least as early as January 1, 2000 and continuing until May 1, 2002, when Cingular Wireless (Cingular) implemented a new, 15-day refund/return policy, its corporate policy and practice in California did not allow any "grace period" or trial of its wireless service. Furthermore, Cingular's corporate policy prohibited early termination of wireless service contracts unless the customer paid an early termination fee (ETF) of $150. Some Cingular agents imposed an additional ETF of as much as $400, which increased the total ETF to as much as $550. Given Cingular's own testimony that testing wireless service by using the phone is the best way for a customer to ascertain whether the service meets his or her needs, binding that customer in advance to a one or two-year contract constituted an unjust and unreasonable rule and resulted in inadequate, unjust, and unreasonable service in violation of Pub. Util. Code § 451.1 This policy and practice also violated Decision (D.)95-04-028, a prior Commission decision.
Cingular's corporate practice became even more egregious during 2001, when Cingular concedes it experienced significant network development growing pains. During 2001, Cingular's engineering department struggled to add coverage and capacity to keep pace with significant increases in customers and monthly usage, largely attributable to Cingular's successful advertising and marketing efforts. Cingular made no effort to disclose its network problems to customers by any means and, in spite of these problems, continued to prohibit returns/refunds and required ETFs for early cancellation of wireless service contracts. This disclosure failure violated §§ 451, 702 and 2896 and Decision (D.)95-04-028.
We find that the totality of the evidence presented by Cingular, the Commission's Consumer Protection and Safety Division (CPSD) and intervenor Utility Consumers Action Network (UCAN) establishes that these violations were continuing ones, for which we fine Cingular $10,000 per day. The total penalty is $12,140,000.
We also order Cingular to reimburse customers who paid part or all of the ETF to Cingular or to one of Cingular's agents during this period. Because other proposed remedies are the subject of two pending, industry-wide rulemakings that concern (1) consumer rights and protections for telecommunication customers, and (2) telecommunications service quality standards, we defer consideration and adoption of such remedies to those proceedings.
This proceeding is closed.
1 Unless otherwise indicated, all subsequent citations to sections refer to the Public Utilities Code, and all subsequent citations to rules refer to the Rules of Practice and Procedure, which are codified at Chapter 1, Division 1 of Title 20 of the California Code of Regulations.
