BILL ANALYSIS 1
1
SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
MARTHA M. ESCUTIA, CHAIRWOMAN
SB 1068 - Escutia/Bowen Hearing Date:
April 5, 2005 S
As Amended: March 30, 2005 FISCAL B
1
0
6
8
DESCRIPTION
Current law provides the California Public Utilities Commission
(CPUC) with regulatory authority over public utilities,
including telephone companies.
This bill states the intent of the Legislature to establish
telephone consumer protections that are at least as protective
as those established by the CPUC in its May 2004 decision.
This bill requires the CPUC to establish and enforce telephone
consumer protection rules by July 1, 2006 that achieve the
following policies:
A consumer has a right to receive clear and complete
information about rates, terms, and conditions for service;
A consumer has a right to select services and vendors,
and to have those choices respected by telephone service
providers;
A consumer has a right to personal privacy;
A consumer has a right to participate in public policy
proceedings, to be informed of her rights, and to have
effective recourse if those rights are violated;
A consumer has a right to accurate and understandable
bills;
A consumer has a right to be treated equally with all
other similarly situated consumers;
A consumer has a right to safety and security of person
and property;
This bill requires the rules adopted by the CPUC to include all
of the following:
A telephone corporation shall disclose its rates, terms
and conditions of service.
A telephone corporation shall make no deceptive or
misleading statement about its rates and services.
A telephone corporation shall provide a customer with
written confirmation of every order for service and a
written copy of each contract. A customer may cancel any
new service within 30 days without termination fees or
penalties.
Telephone corporations shall provide customer contracts
and make required disclosures in the language used to
advertise the product or service upon the customer's
request.
For prepaid calling cards, every advertisement of price
shall include disclosure of any limitations, minimum
charges, and any other relevant fees or surcharges.
Bills must be clearly organized and contain only charges
which have been authorized by the customer. Only
government imposed fees and taxes may be identified as
government fees and taxes.
For charges for non-communications services:
? the telephone bill can contain those charges
only if the customer has authorized the charge;
? the telephone corporation must take reasonable
precautions to screen out unscrupulous vendors;
? the charges must be separately identified and
clearly labeled;
? basic telephone service cannot be disconnected
for non-payment;
BACKGROUND
On February 3, 2000 the CPUC commenced what has so far been a
more than five year effort to establish telephone consumer
protection rules. After numerous opportunities for written
comment, over 20 public meetings in 13 locations throughout the
state, additional opportunities for written comment, creation of
consumer and industry working groups to attempt to settle
differences, and more public comment, the CPUC on May 27, 2004
approved telephone consumer protection rules that apply to all
telephone companies, including cellular companies. Telephone
companies were given at least 180 days to implement the rules.
Toward the end of 2004 most of the telephone companies had
implemented most of the rules. However, many companies
requested a time extension to implement certain rules, and
pursuant to CPUC procedures those extensions were granted first
for 30 days, then for an additional 30 days, and then for an
additional period of up to a year. On January 5, 2005 a CPUC
Commissioner proposed staying the CPUC's May 2004 decision, with
the intent to vote on staying the rules the following week.
During this time the CPUC had only 3 members as 2 members' terms
had expired at the end of 2004 and new commissioners had not
been sworn in. Rather than attempt to stay the rules with a
procedurally suspect 2-1 majority the Commission waited until a
fourth commissioner was sworn in. Shortly thereafter, on
January 27, 2005, the CPUC voted to indefinitely stay their June
7 decision. On March 10, 2005 the CPUC issued a ruling to
follow up on the stay. That ruling asked parties to comment on
several questions including:
Which of the stayed rules cause little or no hardship to
telephone companies?
To what extent have voluntary actions by telephone
companies eliminated the need for any of the stayed rules?
Are there equally effective but less restrictive
alternative approaches to providing consumer protection?
COMMENTS
1) Looks Familiar - The intent of this bill is to enact
telephone consumer protection rules that are at least as
stringent as the rules adopted by the CPUC in May 2004.
The bill provisions reflect the policies contained in those
rules but lack some of the specificity. There is one
provision that is much stronger than was contained in the
CPUC's rules. That provision requires that if a service is
marketed in a given language then the contract and
disclosures must be in that same language if requested by
the customer.
Supporters express exasperation at the CPUC. They note the
difficulty in dealing with telecommunications companies and
the need for enforceable consumer protections.
2) Standing Aside -- Opponents are concerned that this bill
is duplicative of the CPUC's process, and that the CPUC
should be permitted to complete its process. If the CPUC's
March 10 ruling is any indication of the CPUC's
inclination, it's little wonder that opponents prefer the
CPUC process.
3) Unnecessary? -- Opponents argue that adequate consumer
protections already exist, both in the form of a Wireless
Code of Conduct and through existing laws of general
applicability. But the Code of Conduct is voluntary,
created by the cellular carriers in response of consumer
complaints. And the laws of general applicability require
enforcement. Is it reasonable to rely on the Attorney
General or District Attorneys to make enforcement of those
laws with regard to telecommunications service a priority,
given the other law enforcement matters they face? The
author argues that better enforcement of telephone consumer
protection rules will occur if that job is given to the
CPUC where it has historically resided and made a priority.
4) Losing Scale Economies -- Opponents are concerned about
state by state regulations which they believe will impair
the economies of scale that some of the wireless carriers
enjoy. They point to a March 18, 2005 order by the Federal
Communications Commission (FCC) which bars states from
requiring or prohibiting discretely identified charges on a
cellular bill. That order also includes several proposed
rules on which the FCC seeks comment. Certain of those
rules could preempt California's ability to establish and
enforce consumer protection rules. In its proposal the FCC
noted that it believes that limiting state regulation of
billing practices in favor of a uniform federal regime
"will eliminate the inconsistent state regulation that is
spreading across the country, making nationwide service
more expensive for carriers to provide and raising the cost
of service to consumers."<1>
While it is true that the FCC narrowly preempted the states
with regard to discretely identified charges, the broader
FCC preemptions are proposed, not adopted. Comments from
parties have yet to be considered. Importantly, two of the
five commissioners expressed strong concerns over state
preemption and one of the remaining three commissioners has
resigned. It is not certain whether the states will be
more broadly preempted.
5) What the FCC Says -- The FCC order does have a lot to
say about telephone consumer protection, particularly with
respect to cellular companies. Specifically, the FCC
concluded that cellular companies should no longer be
exempt from the requirement that billing descriptions be
brief, clear, non-misleading, and in plain language. The
FCC reached this conclusion because "recent data indicates
that complaints regarding wireless 'billing & rates' and
'marketing & advertising' have increased significantly"
since 1999."<2> The FCC is "concerned that some (cellular)
carriers may be disguising rate increases in the form of
separate line item charges and implying that such charges
are necessitated by governmental action."<3> And the FCC
noted that "the record reflects that consumers still
experience a tremendous amount of confusion regarding their
bills, which inhibits their ability to compare (cellular)
carriers' service and price offerings, in contravention of
the pro-competitive framework of the 1996 (Federal
Telecommunications) Act."<4> It would seem to appear that
the FCC supports the need for stronger consumer
protections, recognizing that voluntary measures and market
forces have been inadequate.
POSITIONS
Sponsor:
---------------------------
<1> Federal Communications Commission, Second Report and Order,
Declaratory Ruling, and Second Further Notice of Proposed
Rulemaking , para. 52, FCC 05-55, Released March 18, 2005.
<2> Id. at para. 16.
<3> Id. at para 24.
<4> Id. at para 39.
Author
Support:
AARP California
California Alliance For Consumer Protection
California Small Business Association
Consumer Federation of California
Latino Issues Forum
Office of the Attorney General
The Utility Reform Network
Utility Consumers' Action Network
Oppose:
CTIA - The Wireless Association
California Broadcasters Association
California Chamber of Commerce
California Manufacturers & Technology Association
California Retailers Association
Cingular Wireless
Cricket Communications
Los Angeles Economic Development Corporation
Nextel Communications
San Diego Telecom Council
Sprint Communications Company
T-Mobile
Verizon Wireless
Randy Chinn
SB 1068 Analysis
Hearing Date: April 5, 2005