BILL ANALYSIS                                                                                                                                                                                                    



                                                          AB 535
                                                          Page  1

Date of Hearing:   April 12, 1999

          ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE 
                     Roderick Wright, Chair
           AB 535 (Reyes) - As Amended:  April 7, 1999
  
SUBJECT  :   Custom calling and enhances calling telephone  
services.  

  SUMMARY  :   Prohibits local exchange carriers that automatically  
provide custom calling services on a pay per use basis from  
providing such service to a subscriber unless the subscriber  
agreed to sign up for the service by returning a prepaid  
postcard to the carrier.  Specifically,  this bill  :  

1)Requires all local exchange carriers (LEC) to provide  
  information to all subscribers about per use custom calling  
  features;

2)Defines a current subscriber as a residential subscribing of a  
  local exchange carrier (LEC) as of December 31, 1999;

3)Defines a new subscriber as a residential customer initiating  
  service or ordering additional service lines that become  
  operational on or after January 1, 2000;

4)Requires customer notification to be in the form of a  
  postage-paid postcard included in the regular bill;

5)Prohibits the local exchange carrier from providing any per  
  use custom calling features without the subscriber's  
  authorization;

6)Specifies that the California Public Utilities Commission  
  (CPUC) must approve the content of the postcard;

7)Requires the LEC to provide new telephone subscribers with  
  information relating to per use custom calling features during  
  the verbal initiation of a service request;

8)Requires that new customers and customers ordering additional  
  services be informed that they may block any or all of the per  
  use custom calling features;

9)Requires that the service confirmation letter identify the per  








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  use custom calling features and specify whether the customer  
  has blacked any or all of those features;

10)Exempts customers from liability for charges unless the LEC  
  has received the postcard authorizing the provision of per use  
  custom calling features;

11)Specifies that a current customer may be liable for charges  
  incurred up to 14 days from the date the LEC sends the  
  notification in the regular billing envelope;

12)Specifies that a current subscriber may not be liable for  
  charges incurred after the notification has been mailed unless  
  the LEC received authorization for the provision of per use  
  custom calling features; and 

13)Authorizes a subscriber to seek a bill adjustment for the  
  inadvertent or unauthorized use of the per use custom calling  
  features.  

  EXISTING LAW  authorizes CPUC to investigate the billing  
practices of every telephone corporation in billing its  
subscribers.  

Requires every telephone corporation to annually issue to its  
customers a listing of the residential telephone services it  
provides, the rates or charges for those services and the state  
or federal regulatory agency responsible for regulation of those  
services.  

 FISCAL EFFECT  :   Unknown.  

  COMMENTS  :   

1.The author has introduced this bill to address a number of  
  complaints filed with the Office of Ratepayer Advocates (ORA).  
   Customers have complained that they have been billed in error  
  for using per use custom calling features that they  
  inadvertently activated.  Many of the complainants were  
  unaware that per use custom calling features were available as  
  part of their telephone service until the charges appeared on  
  their bills.  This bill would require the LECs to obtain  
  written authorization from current subscribers prior to making  
  per use custom calling features available on a subscribers'  
  telephone.  The written authorization would be in the form of  








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  a postcard that is mailed to every subscriber in their regular  
  bill. The author has suggested use of a postcard in a regular  
  bill for service in an effort to reduce the costs associated  
  with informing all subscribers of the services the LEC offers.  
   Unless the subscriber returns the postcard specifically  
  agreeing to sign up for specified services, the LEC must  
  discontinue providing said custom calling services on a per  
  use basis.  Based on the amount of information contained in  
  the monthly customer bill, the Utilities and Commerce  
  Committee members should consider whether customers will  
  actually see, read, and act on the postcard.

2.At present at least three custom calling features are  
  available on a per use basis through the LECs operating in  
  California -- Call Return, Repeat Dialing and Three-Way  
  Calling.  Per use custom calling features are reasonable  
  alternatives for customers who do not chose to subscribe to  
  those services on a monthly basis.  

3.Pacific Bell indicates that in order to activate call return  
  or repeat dialing, customers must first dial a code.  Three  
  way-calling, on the other hand, does not require a code, but  
  is activated by depressing the flash or switch hook while on a  
  call with one person, dialing another number, and then  
  depressing the flash or switch hook again to connect all three  
  parties.  Pacific Bell attests that the billing does not begin  
  until all three parties have been on the line for 18 seconds.   
  In order to continue to allow an LEC to make these services  
  available to customers on a per use basis, customers must  
  return the above-described postcard.  

4.MCI WorldCom has suggested that the author amend the bill to  
  exclude services that require an access code to trigger the  
  service.  Call Return and Repeat Dialing would be exempt if  
  the author were to accept that proposed amendment.  If a  
  customer dials an access code prior to utilizing a service,  
  the customer is not likely to inadvertently access the  
  service. The ORA also asserts that per use Three-Way calling  
  has generated the bulk of the customer complaints in this  
  area.  The LECs should seek to modify the manner in which the  
  Three-Way Calling is activiated on a per use basis to require  
  an access code to prevent the inadvertent use of the service.   
  In preliminary discussions, the LECs have suggested that it  
  may be cost prohibitive to make such a modification.  Further  
  study should be given to this proposal.  








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5.Some of these custom-calling features have been available for  
  over three years.  Three-way calling, which appears to be  
  causing the greatest concern to the author, has been available  
  for only one year.  As presently drafted, this bill would  
  require the LECs to block access to per use custom calling  
  features unless the postcard is returned and authorizes a  
  continued desire to receive the services.  At present,  
  thousands of customers access the per use features on a daily  
  basis.  The author might want to consider requiring the return  
  of the postcard solely for those customers seeking to block  
  their service, rather than requiring customers to return the  
  postcard to continue the service.  Additionally, the author  
  should consider requiring the LECs to advise consumers, in all  
  marketing materials, of the ability to block access to the per  
  use custom calling features. 

6.GTE California indicates that "the current CPUC process  
  requires that customers be educated on the price, accessing,  
  terms and conditions" in using per use custom calling  
  features.  The author should also consider requiring CPUC to  
  include a review of these services and determine whether new  
  consumer protection rules should be developed as part of an  
  Order Instituting Rulemaking that will commence soon at the  
  CPUC.  

7.The bill also requires LECs to adjust a subscriber's bill for  
  the inadvertent or unauthorized use of per use custom calling  
  features.  So that this provision is not abused, the author  
  should require the LECs to advise customers of the ability to  
  block the service at the time of the bill adjustment.  Once  
  the customer has been advised of the service availability of  
  per use custom calling features and the ability to block, the  
  burden for responsible use of the services should be shifted  
  to the subscriber. 

  REGISTERED SUPPORT / OPPOSITION  :   

  Support  

Office of Ratepayer Advocates (ORA)
The Utility Reforn Network (TURN)
Utility Consumers Action Network (UCAN)
California Alliance for Consumer Protection









                                                          AB 535
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  Opposition  

Pacific Telesis
GTE California
  
Analysis Prepared by  :    Carolyn Veal-Hunter / U. & C. / (916)  
319-2083