10. Expiration Date for Letters of Agency

One way consumers may validly authorize their transfer to another carrier is by executing a Letter of Agency (LOA). These documents must comply with the requirements for valid authorization found in § 2889.5, which include:

· thoroughly informing the customer of the nature and extent of the service being offered,

· specifically establishing whether the customer intends to make any change in service provider, and explaining any associated charges,

· obtaining the customer's signature on a document which states the changes, and

· furnishing the customer with a copy of the document.

The statutory requirements do not, however, explicitly include a temporal requirement - that is, the duration of the validity of the signed document.

Pacific Bell stated that some interexchange carriers are presenting letters of agency that are months or even years old to transfer customers' local service. Many carriers obtained Commission authority to provide interexchange service well in advance of local service. Pacific Bell seems to be suggesting that some carriers obtain customer authorization to transfer their interexchange service and local service at the same time, despite the carrier not having obtained Commission authorization to provide local service. The carrier then immediately transfers the customer's interexchange service but holds off on transferring the local service. When local service is authorized, which may be several months later, the customer's local service is switched. In this way, a "stale LOA" is used to authorize a transfer of local service.

Pacific Bell proposed that the Commission adopt rules covering the duration of the validity of customer authorizations and the specificity with which the authorizations must be stated. Cox, GTE, ORA, AT&T, and CALTEL filed comments generally agreeing that this sounded like a problem but stating that not enough was known to support adopting new rules. CALTEL noted that any rules proposed by Pacific Bell limiting the effectiveness of transfers of local service should be carefully reviewed because as the incumbent local service provider, Pacific Bell is advantaged by declaring LOAs invalid.

The Commission has previously addressed the issue of the duration of an LOA. In D.97-05-089, the Commission scrutinized a program by which a long distance service provider, CTS, would obtain customers' consent to transfer them back to its service, should they ever be switched away by another carrier. The purpose of CTS' program was to thwart unauthorized transfers away from CTS. Once signed up for this program, a customer had to notify CTS prior to transferring. Many customers did not make this prior notification and authorized some other carrier to provide service. Not having received the required pre-notice from the customer, CTS would then switch the customer back to its service.

The Commission found that this sequence of events failed to meet the statutory requirements because CTS did not "specifically establish whether the customer intends to make a change." D.97-05-089 at 30-1. CTS argued that the authorization occurred when the customer signed up for the program but the Commission rejected that argument and found that CTS violated § 2889.5 with each transfer.

Although not explicitly stated, that decision suggests that the Commission has recognized an implicit requirement in the statute that the customer validly authorize the transfer at the time the transfer takes place. While some time lapse allowance is necessary to implement transfers, those transfers which are delayed for reasons other than administrative feasibility raise serious validity questions.

Pacific Bell recommends that the Commission adopt a rule stating that all LOAs dated more than 90 days previous to presentation to the local exchange carrier are invalid. The statute requires that the carrier specifically establish the customer's intention to switch. Although unstated, certainly the statute can be read to necessarily imply that the customer's intention must co-exist with the signing and submission of the LOA. Such intention can also be assumed to apply during an administratively direct route from the signing to the actual switch.

Now turning to the substance of Pacific Bell's proposal, because the statute appears to require that the customer evidence a present intention to transfer service, we note that 90 days is far removed from the customer's act in signing the document. Ninety days represents up to three billing cycles during which the customer may well have found another carrier or grown sufficiently impatient with the proposed carrier.

In recognition of this seemingly long duration to transfer service, the Draft Decision proposed to require carriers to present service provider change requests to the local exchange carrier within 30 days of execution. In addition to Pacific Bell, ORA, the California Small Business Association and the California Small Business Roundtable supported the 30-day limit set out in the Draft Decision.

Nevertheless, as the parties pointed out in their comments, the record is rather limited on this topic and the staff report does not address it. For this reason, we will adopt Pacific Bell's proposal and require competitive local exchange carriers to process all LOAs and present the resultant service provider change requests to the local exchange carrier within 90 days with one exception discussed below. If not, the carrier requesting the change should obtain the customer's authorization.

In comments on the second draft decision Nextlink and ICG states that 90 days is an unreasonably short period of time in circumstances where a facilities-based carrier must construct facilities. Such construction may require lengthy approval and construction processes. Nextlink and ICG suggested that the Commission allow carriers to enter into written contracts with customers that specify a time period longer than 90 days for transfer of local service.

We agree. Where a written contract between a facilities-based carrier and a customer clearly states that the actual transfer will occur more than 90 days in the future, the local exchange carrier shall honor the transfer request.

CALTEL has stated that the local exchange carriers have experienced difficulties in processing local switch orders. For this reason, presentation to the local exchange carrier, which we will assume will process it efficiently, must be made within 90 days. Competitive local exchange carriers are directed not to submit, and incumbent local exchange carriers are directed not to honor, a service provider change request that is submitted more than 90 days after the customer signed the LOA, with the one exception set out above.