BILL ANALYSIS                                                                                                                                                                                                    



                                                             

  
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                       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  
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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  







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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,  







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  Firebaugh, Longville, Mazzoni, Vincent


NC:sl  8/24/99   Senate Floor Analyses 

               SUPPORT/OPPOSITION:  SEE ABOVE

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