BILL ANALYSIS 1
1
SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
DEBRA BOWEN, CHAIRWOMAN
AB 535 - Reyes Hearing
Date: July 13, 1999 A
As Amended: July 8, 1999 FISCAL B
5
3
5
DESCRIPTION
Current law subjects telecommunications corporations to the
oversight of the California Public Utilities Commission
(CPUC).
This bill requires providers of local telephone service who
offer and charge for pay-per-use features that don't
require an access code for activation to provide new
residential customers with information about those features
and blocking options.
This bill also requires those providers to notify all
existing residential customers about these features and
blocking options by May 1, 2000.
This bill provides that customers are entitled to a
one-time waiver of charges for the inadvertent or
unauthorized activation of those services.
KEY QUESTION
If the goal of this bill is to prevent consumers from
inadvertently activating a feature unilaterally placed on
their phone by the phone company, wouldn't it be more
effective to simply preclude companies from putting such
services on a phone without getting the consumer to "opt
in" to the service, either via a subscription or an access
code?
BACKGROUND
Double Your Calling Pleasure . Several of the local
telephone companies (i.e. Pacific Bell, GTE) have begun
offering a service known as 3-way calling. This service
permits a customer to conveniently establish a call between
him or herself and two other parties at different telephone
numbers for $0.75, plus the cost of the calls. Unlike all
other telephone services, activating the 3-way calling
service does not require a subscription (which is required
for services like call waiting) or require the user to dial
an access code (i.e. *89, or 10-10-789) to activate the
service. Instead, the 3-way calling service is activated
by briefly hanging up the telephone, dialing a second
number, and briefly hanging up the telephone again. The
fact that the service is so easy to inadvertently activate
has led to numerous consumer complaints about being charged
for a service they didn't use and never intended to
activate.
This bill attempts to deal with the problem of inadvertent
activation of the 3-way calling service by forcing
telephone companies to notify customers about the service
and waive the charge for the service the first time it's
inadvertently activated by a customer.
COMMENTS
1.Those $0.75 Charges Can Add Up . In an effort to make
3-way calling easy to use, and thereby earn $0.75 from
casual users, telephone companies deviated from their
normal practice of having pay-per-use services activated
only by entering an access code (e.g. to activate the
"call return" service, the caller must enter *69). The
service is so easy to inadvertently activate that
according to the Office of Ratepayer Advocates (ORA),
there have been hundreds of complaints.
The mistaken activation happens when people make a series
of calls back-to-back and don't hang up the phone for at
least five seconds between calls. (The swell of consumer
complaints may have had some effect - the advertising for
this service has been changed to tell callers about the
five-second hang-up requirement.) As it's difficult to
know if the service has been inadvertently activated, the
only way customers can protect themselves is to either a)
block the service entirely, or b) vigilantly examine
their telephone bill each month. By allowing phone
companies to offer 3-way calling in this manner,
customers are reminded that caveat emptor, let the buyer
beware, is the operative phrase for the telephone
industry.
2.Should The Shoe Be Moved To The Other Foot? This bill is
a modest attempt to let consumers know that the phone
company has the right to put a service onto their
telephone that the consumer never asked for, and can
charge them for the inadvertent use of the service. The
author and Committee may wish to consider whether the
consumer would be better protected if, instead of
allowing phone companies to install an optional per-use
service that forces the consumer to act in order to
remove it from their phone, the phone companies should be
precluded from installing any optional service on a
customer's phone unless the customer "opts in" to the
service, either via subscription or by punching in an
access code.
3.Technically Speaking . The author and Committee may wish
to consider clarifying that nothing in the bill precludes
a telephone company from waiving charges for the
inadvertent use of the service beyond the initial billing
cycle.
4.Related Legislation . SB 932 (Bowen), which was approved
by this Committee in April and was scheduled to be heard
in the Assembly Utilities & Commerce Committee on July
12, also contains provisions related to services placed
on a customer's phone without requiring a subscription or
an access code to activate them.
ASSEMBLY VOTES
Assembly U & C (9-3)
Assembly Appropriations (14-7)
Assembly Floor (43-28)
POSITIONS
Support:
California Alliance for Consumer Protection
Office of Ratepayer Advocates (ORA)
TURN
UCAN
Oppose:
None reported to Committee.
Randy Chinn
AB 535 Analysis
Hearing Date: July 13, 1999