BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | | | | AB 535 | | | | |----------------------------------+-------------------------| | | | ------------------------------------------------------------ THIRD READING Bill No: AB 535 Author: Reyes (D) Amended: 8/17/99 in Senate Vote: 21 SENATE ENERGY, U.&C. COMMITTEE : 9-0, 7/13/99 AYES: Bowen, Alarcon, Baca, Brulte, Kelley, Peace, Solis, Speier, Vasconcellos NOT VOTING: Hughes, Mountjoy SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8 ASSEMBLY FLOOR : 43-28, 5/20/99 - See last page for vote SUBJECT : Telecommunications: services SOURCE : Author DIGEST : This bill requires telephone service providers to provide customers with information about pay-per-use features and blocking options. The bill provides that customers are entitled to a one-time waiver of charges for the inadvertent or unauthorized activation of such services. ANALYSIS : 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 CONTINUED AB 535 Page 2 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. Background 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 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 AB 535 Page 3 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. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: No SUPPORT : (Verified 8/23/99) California Alliance for Consumer Protection Office of Ratepayer Advocates (ORA) TURN UCAN ASSEMBLY FLOOR : AYES: Alquist, Aroner, Bock, Calderon, Cardenas, Cardoza, Corbett, Correa, Davis, Ducheny, Dutra, Florez, Gallegos, Havice, Hertzberg, Honda, Jackson, Keeley, Knox, Kuehl, Lempert, Lowenthal, Machado, Migden, Nakano, Papan, Pescetti, Reyes, Romero, Scott, Shelley, Soto, Steinberg, Strom-Martin, Thomson, Torlakson, Washington, Wayne, Wesson, Wiggins, Wildman, Wright, Villaraigosa NOES: Ackerman, Ashburn, Baldwin, Battin, Baugh, Brewer, Briggs, Cox, Cunneen, Floyd, Frusetta, Granlund, House, Kaloogian, Leach, Leonard, Maddox, Maldonado, Margett, McClintock, Olberg, Oller, Robert Pacheco, Rod Pacheco, Runner, Strickland, Thompson, Zettel NOT VOTING: Aanestad, Bates, Campbell, Cedillo, Dickerson, AB 535 Page 4 Firebaugh, Longville, Mazzoni, Vincent NC:sl 8/24/99 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END ****