BILL ANALYSIS
SB 1068
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Date of Hearing: June 19, 2006
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Lloyd E. Levine, Chair
SB 1068 (Escutia) - As Amended: June 8, 2006
SENATE VOTE : Senate vote not relevant.
SUBJECT : Telecommunications: customer protection.
SUMMARY : Requires telephone corporations to disclose to
customers key rates, terms, and conditions of a service
contract. Specifically, this bill :
1)Requires a non-tariffed telephone corporation to clearly and
conspicuously disclose to a customer the key rates, terms, and
conditions of the contact orally and in a written document. If
the agreement is negotiated by means of written or electronic
communications, no oral disclosure is required.
2)Requires a telephone service provider to provide a customer
with written confirmation of every order and a copy of the
contract upon completion of the transaction or within 10 days
thereafter if the transaction occurs by a means in which the
written contract cannot be immediately provided to the
customer.
3)Provides that a telephone service provider that negotiates in
a specified foreign language shall provide the customer a
translation of the documents required under this bill in the
language in which the contract or agreement was negotiated.
4)Requires telephone service providers to separately group
taxes, fees, and other charges that are required to be
collected from the customer on the customer's bill.
EXISTING LAW :
1)Requires the California Public Utilities Commission (PUC)
to require telephone corporations, including cellular
companies, to provide all customers with sufficient
information upon which to make informed choices, which
includes service options, pricing, and terms and
conditions of service.
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2)Requires that written or oral solicitation materials
shall be in the same language as the written order.
FISCAL EFFECT : Unknown.
COMMENTS : According to the author, the intent of this bill is to
address the problem that many cellular telephone customers have
with billing and service from their providers. The author states
that "various surveys, including a 2003 study of 19,000 users
funded by the National Association of Regulatory Utility
Commissioners, found that 55.7% of cellular phone users had
complained to their provider about billing issues in the
preceding 12 months, and that 28.1% were dissatisfied with their
carrier. A Consumers' Union survey of FCC data noted that
complaints to the FCC were up 38% from 2003 to 2004. A J.D.
Power study found that overall satisfaction with cellular
carriers dropped 10% during 2004. In a March 2005 order, the
FCC noted that their records reflect that 'consumers still
experience a tremendous amount of confusion regarding their
bills, which inhibits their ability to compare carriers' service
and price offerings.' That FCC order also notes that since
1999, complaints regarding wireless billing, rates, and
marketing have increased significantly."
The author believes that building customer satisfaction from the
beginning by ensuring that customers know exactly what they're
buying and how much it's costing before they commit to the
purchase. This can be done by requiring that the telephone
companies fully inform customers of the key rates, terms, and
conditions of service before they buy the service, and provide a
record of the purchase agreement in the language used to
negotiate the purchase.
1) History : On February 3, 2000, the PUC commenced an 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, in May 2004 the PUC 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.
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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. In January 2005, the PUC
voted to indefinitely stay their June decision while they
opened a new investigation to reconsider the rules.
Finally, in March of this year the PUC approved a decision that
instead of implementing the rules established under the May 2004
Bill of Rights decision, :1) enumerates rights and freedom of
choice principles that should be enjoyed by all
telecommunications consumers in California; 2) extends the reach
of rules addressing investigatory efforts of PUC staff, worker
identification, and Emergency 911 access; 3) combines the
newly-expanded rules with a set of updated slamming rules; 4)
repeals the Commission's prescriptive interim rules that
governed the placement of non-communications charges on
telephone bills; 4) adopts cramming rules that protect consumers
by defining a carrier's responsibility for unauthorized charges
placed on its customers' phone bills and establishing related
complaint resolution procedures; and 5) initiates a proceeding
designed to address in-language issues, on an as-needed basis.
Additionally, the PUC created a special Fraud Unit to act as the
consumer watchdog, monitor fraud and complaint hotline trends,
and investigate alleged violations of laws and regulations. The
PUC also moved to make its consumer complaint process more
"user-friendly." California consumers who are victims of fraud
can report their claims to dedicated personnel via the PUC's
existing toll-free hotline. The PUC has requested 29.5
additional staff positions for these two efforts.
This new bill of rights contained significantly less specific
consumer protection rules than the original decision. The PUC
believed that the reduction in consumer protection rules was
justified due to the fact that a more restrictive regulatory
approach is not necessary in a competitive market place; might
limit the introduction of innovative services, beneficial rate
plans, and deployment of new technology; and may hinder advances
in communications by imposing "a patchwork quilt" of fifty
different state regulatory regimes on carriers who provide
service in more than one state.
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SB 1068 implements a portion of the Bill of Rights that was not
approved by the PUC but was in the original PUC decision.
2) What are "key rates, terms, and conditions"? : The bill
requires that telephone service providers disclose "key rates,
terms, and conditions" but does not define these terms or
require anyone else to define these terms. Presumptively, it
would be left to each carrier to determine what are key rates,
terms, and conditions. This would result in each carrier making
a different determination and make it impossible for customers
to make real comparisons among providers. To avoid this
confusion the committee may wish to amend the bill to include a
specific list of what is a key rate, term, or condition or
require the PUC to make that determination.
3) An analog solution for a digital world : SB 1068 requires a
telephone service provider to provide a customer with a written
confirmation of the key rates, terms, and conditions upon the
completion of the transaction or within 10 days of the
transaction. The bill has no definition as to what is written
and may not allow for using email or other electronic means to
provide the confirmation. Today, many customer sign up for
cellular service on the internet and may receive no paper bill,
instead receiving communication over email. These electronic
services can help the cellular providers keep their costs down.
The committee may wish to consider amending the bill to allow a
telephone company to meet the disclosure requirement through the
use of email of other electronic means.
4) Why only some languages?: SB 1068 requires telephone service
providers that negotiate in Spanish, Chinese, Tagalog,
Vietnamese, or Korean to provide the consumer a copy of contract
and disclosure documents in the same language. Given the fact
that there are a number of other languages that are spoken by
large segments of the population this inclusive list of
languages may be too limited. The committee may wish to consider
amending the bill to allow the PUC to add to the specified list
of languages if the PUC finds that there is a significant
population that would benefit from the disclosure in those
languages.
5) Opponents arguments : The cellular telephone industry believes
that this bill would impose unnecessary and costly
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state-specific requirements. Some of the carriers believe that
the disclosure requirements would force them to bury the
consumers in paperwork to ensure that they had disclosed all key
rates, terms, and conditions. Others believe they already
disclose the key rates and terms at the point of sale, and thus,
these provisions are unnecessary. The carriers also believe that
the bill may be premature since the PUC is scheduled to open a
workshop to further discuss some of the issues contained in the
bill and the FCC has an open proceeding on the matter.
The carriers have also expressed concern that the requirement
that they provide copies of the documents required under this
bill in the same language that the agreement was negotiated in
(which is an expansion of the current law that requires them to
provide the documents in the same language they advertise in)
would actually force them to stop marketing to non-English
speakers to avoid the risk of violating this provision.
REGISTERED SUPPORT / OPPOSITION :
Support
Asian Americans for Civil Rights & Equality (AACRE)
Opposition
American Electronics Association (AEA)
California Business Roundtable
California Chamber of Commerce
California Manufacturers and Technology Association (CMTA)
California Retailers Association
California Taxpayers' Association Technet
Cricket Communications
CTIA - The Wireless Association
Sprint Nextel
T-Mobile USA
Verizon Wireless
Analysis Prepared by : Edward Randolph / U. & C. / (916)
319-2083