BILL ANALYSIS
SB 1068
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Date of Hearing: July 6, 2005
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Lloyd E. Levine, Chair
SB 1068 (Escutia) - As Amended: June 30, 2005
SENATE VOTE : 22-13
SUBJECT : Telecommunications: consumer protection.
SUMMARY : Requires the Public Utilities Commission (PUC) to
develop and enforce specified telephone consumer protection
rules for landline telecommunications and mobile telephone
services by July 1, 2006. Specifically, this bill :
1)Requires the PUC to establish and enforce telephone consumer
protection rules by July 1, 2006 that achieve the following
policies:
a) A consumer has a right to receive clear and complete
information about rates, terms, and conditions for service.
b) A consumer has a right to select services and vendors,
and to have those choices respected by telephone service
providers.
c) A consumer has a right to personal privacy.
d) A consumer has a right to participate in public policy
proceedings, to be informed of his or her rights, and to
have effective recourse if those rights are violated.
e) A consumer has a right to accurate and understandable
bills.
f) A consumer has a right to be treated equally with all
other similarly situated consumers.
g) A consumer has a right to safety and security of person
and property.
2) Requires the rules adopted by the PUC to include all of the
following:
a) A telephone corporation shall clearly disclose its
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rates, terms and conditions of service at the time of sale
and upon the request of the consumer.
b) A telephone corporation shall make no deceptive or
misleading statement about its rates and services.
c) A telephone corporation shall not bind a consumer to a
contract, unless the contract allows the consumer at least
30 days from initiation of the service to cancel without
being assessed a penalty.
d) A telephone corporation shall provide a customer with a
confirmation of every order for service and a written copy
of each contract.
e) 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.
f) A telephone corporation may not require a deposit to
establish service unless the consumer cannot show he or she
has acceptable credit.
g) 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.
h) A telephone corporation may not change a consumer's
contract in a way that results in higher rates without the
consumer's consent.
i) A telephone corporation shall provide written notice to
a consumer whose payments are past due at least seven days
prior to terminating service.
j) A telephone company shall complete an investigation of a
consumers billing dispute within 30 days of when the
dispute was communicated to the telephone corporation.
aa) A telephone corporation must provide all residential
customers with 911 emergency dialing services.
bb) A telephone corporation billing cannot contain
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non-communications related charges unless:
1. The customer has authorized the charge.
2. The telephone Corporation takes reasonable
precautions to screen out unscrupulous vendors.
3. The charges are separately identified and
clearly labeled.
4. Basic telephone service will not be
disconnected for non-payment of the non-communications
related charges.
3) If the PUC fails to adopt the rules by July 1, 2006, the
rights and protections spelled out in this bill will become
effective and the PUC will be prohibited from adopting its own
rules under the provision of this bill.
EXISTING LAW provides then PUC with regulatory authority over
public utilities, including telephone companies.
FISCAL EFFECT : Unknown.
COMMENTS : According to the author, the intent of this bill is to
enact telephone consumer protection rules that are at least as
stringent as the rules adopted by the PUC in May 2004. The bill
provision's 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 PUC'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.
1) History : On February 3, 2000, the PUC commenced what has so
far been a more than five year effort to establish telephone
consumer protection rules. These rules would have applied to
all companies providing telephone service, including both
wireline and wireless telephone services. 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 PUC on May 27, 2004 approved telephone consumer
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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 PUC 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 PUC
Commissioner proposed staying the PUC's May 2004 decision. On
January 27, 2005, the PUC voted to indefinitely stay their June
7 decision while they opened a new investigation to reconsider
the rules. On March 10, 2005 the PUC issued a ruling to follow
up on the stay. That ruling asked parties to comment on several
questions including:
a)Which of the stayed rules cause little or no hardship to
telephone companies?
b)To what extent have voluntary actions by telephone companies
eliminated the need for any of the stayed rules?
c)Are there equally effective but less restrictive alternative
approaches to providing consumer protection?
On May, the presiding Commissioner on the proceeding to
reexamine the rules issued a Assigned Commissioner's Ruling
re-implementing a number of non-controversial rules and
establishing a timeline to finish developing all the rules by
December 2005.
2) Position of the parties : Supporters express exasperation at
the current process at the PUC. They believe that the five year
process to develop the rules created a fair and open process
that allowed all parties to participate. They believe that the
current process that allows companies that are having difficulty
in complying with specific rules the opportunity to petition the
PUC Executive Director for a delay in implementing specific
rules addresses any individual problems companies may have
meeting requirements of the Bill of Rights. They believe
decision to stay the entire Bill of Rights was not based on a
need to delay implementation but a desire of some Commissioners
to weaken consumer protection rules.
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Opponents are concerned that this bill is duplicative of the
PUC's process, and that the PUC should be permitted to complete
its process. Opponents also believe that adequate consumer
protections already exist, both in the form of a Wireless Code
of Conduct and through existing laws of general applicability.
The author's office argues that better enforcement of telephone
consumer protection rules will occur if that job is given to the
PUC where it has historically resided and made a priority.
Opponents are also 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."
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.
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." 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." The FCC noted that "the
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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." It seems that the
FCC supports the need for stronger consumer protections,
recognizing that voluntary measures and market forces have been
inadequate.
3) Other Rights : A telecommunications Bill of Rights would not
be complete without also considering the impact telephone
companies have on consumer's access to the internet.
Increasingly, consumers are relying on the internet as a primary
means of communication and are even using the internet to place
voice calls and view video. Many customers rely on the
telephone companies for internet access. This reliance puts the
telephone company in a position to control consumer access to
other services. To assure that telephone companies do not limit
consumer access to the internet or do not use their position to
block internet content, the committee may wish to consider
amending the bill to add consumer rights that provide that the
phone companies may not make the provision of broadband internet
access contingent on receiving other unrelated services and
cannot block access to content without the consumer's consent .
REGISTERED SUPPORT / OPPOSITION :
Support
Asian Americans for Civil Rights and Equality (AACRE) (Support)
California Community Technology Policy Group (CCTPG) (Support)
Communities for Telecom Rights (CTR) (Support)
Consumer Federation of California (CFC) (Support)
East Bay Municipal Utility District (EBMUD) (Support)
Latino Issues Forum (LIF) (Support)
Office of Ratepayer Advocates (ORA) (Support)
Individuals and Small Businesses (27) (Support)
Opposition
American Communication Technology (Oppose)
Boyle Heights Chamber of Commerce (Oppose)
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California Black Chamber of Commerce (Oppose)
California Business Roundtable (Oppose)
California Chamber of Commerce (Oppose)
California Hispanic Chambers of Commerce (Oppose)
California Public Utilities Commission (CPUC) (Oppose)
California Taxpayers Association (Cal-Tax) (Oppose)
Cricket Communications (Oppose)
CTIA - The Wireless Association (Oppose)
MCI, Inc. (Oppose)
National Narcotics Officers' Associations' Coalition (NNOAC)
(Oppose)
Nextel Communications (Oppose)
Orange County Taxpayers Association (OCTAX) (Oppose)
Southern California Broadcasters Association (SCBA) (Oppose)
T-Mobile Inc. (Oppose)
Individuals and Small Businesses (65) (Oppose)
Analysis Prepared by : Edward Randolph / U. & C. / (916)
319-2083