BILL ANALYSIS
SB 932
Page 1
Date of Hearing: July 12, 1999
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Roderick Wright, Chair
SB 932 (Bowen) - As Amended: July 8, 1999
SENATE VOTE : 24-13
SUBJECT : Telecommunications: service: notice.
SUMMARY : Establishes several new consumer protection provisions
for telephone customers. Specifically, this bill :
1)Requires telephone corporations that provide a new telephone
service or feature to mail a written notice to each subscriber
of that new service or feature within three business days of
service activation describing the price, terms, and conditions
of the service or feature.
2)Requires telephone corporations to:
a) Provide adequate notice to consumers prior to offering a
new service or feature.
b) Provide customers with a ten-day right of recission on
new telephone services and features, except as specified.
c) Reimburse customers for any charge resulting from the
inadvertent use of the service, except as specified.
d) Provide complete pricing information in any
advertisements for telephone service.
e) Provide customers with complete and neutral information
about Caller ID blocking options whenever such options are
offered to the subscriber.
3)Requires telecommunications providers offering local telephone
service to allow subscribers the ability to block access to
non-essential services.
4)Requires telephone corporations that provide local telephone
service to provide subscribers with a printed alphabetical
telephone directory.
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5)Prohibits telephone corporations from:
a) Imposing any charge for a telephone service or feature
that a subscriber has not used and has rescinded. These
provisions would not apply if the subscriber orders a
change in service provider, or a change in service that
requires the telephone corporation to perform work at the
premises of the subscriber, or if there is a contract
between the telephone corporation and the subscriber.
b) Requiring service deposits for local telephone service
that exceed an amount equal to an average of two months'
local telephone service bills, unless the subscriber has a
poor credit history. If the subscriber has a poor credit
history, they would have the option of submitting a
deposit, as specified, provided the subscriber accepts
restricted toll service.
c) Disconnecting local telephone service for nonpayment of
charges imposed by a third party, including long-distance
telephone providers.
d) Declining to provide service if the subscriber declines
to provide their social security number.
6)Permits telecommunications providers to request the social
security number of a provider only after disclosing to the
subscriber that providing a social security number is optional
and not required as a condition of receiving service.
7)Requires local and long-distance telephone companies to submit
to CPUC information on their residential phone services and
prices, and requires CPUC to provide this information on the
Internet, in a standardized format, after July 1, 2001.
8)Requires CPUC to establish rules to require telephone
corporations to provide CPUC with reports of customer
complaints regarding telephone service, for the purpose of
providing CPUC and the public with timely information
regarding the extent and nature of customer dissatisfaction.
EXISTING LAW :
1)Requires telephone service to be provided in a just and
reasonable manner.
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2)Requires telephone corporations to provide specified customer
specified customer and subscriber services, including
information regarding the provider's identity, service
options, pricing, and terms and conditions of service.
3)Permits a subscriber's local telephone service to be
disconnected for nonpayment of charges relating to the
subscriber's long-distance telephone service.
FISCAL EFFECT : Unknown.
COMMENTS :
1)The author has introduced this bill to address marketing
abuses in the telecommunications industry.
2)This bill is supported by the Office of Ratepayer Advocates
(ORA), The Utility Reform Network (TURN), and the Utility
Consumers' Action Network, all of whom assert that existing
law provides inadequate consumer protection. According to
ORA, today's telecommunications marketplace "is not consumer
friendly, and consumers are barraged with services they did
not order, products they do not want, charges they were
unaware of, and a dearth of clear information."
3)This bill would provide customers with a ten-day right of
recission on new telephone services and features. Under this
bill, the telephone corporation would be prohibited from
imposing any charges for services that the customer has
rescinded if the customer has not used the services or
features. The Committee may wish to consider amending the
bill to restrict the "no charge if not used" provisions to
pay-per-use features only. The current version of the bill
would force telephone corporations to absorb costs for
non-pay-per-use features and services where it is impossible
to verify whether the customer has utilized them.
4)The provisions contained in this bill would prohibit telephone
corporations, when a customer exercises the right to rescind
within ten days, from imposing charges for costs incurred up
to the actual physical installation at the customer's
premises, except as specified. In these instances, telephone
corporations would not be compensated for various
non-recurring, one-time administrative costs, including the
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cost of processing work orders and mechanical functions at the
central office, if the customers opts to rescind service
within the ten-day period. GTE California, which opposes this
bill, asserts that cost recovery should extend to the many
steps involved in making a telecommunications service or
product available to a customer. GTE asserts that requiring
telephone corporation to absorb these costs could have the
effect of potentially raising the price of the service.
5)The provision contained in this bill requiring reimbursement
for any charge resulting from the inadvertent use of a
telephone service is aimed at preventing customers from being
inadvertently charged for three-way calling. Because
three-way calling is easily activated, it is not uncommon for
a charge to be mistakenly incurred for this special feature.
These provisions may conflict with some provisions in AB 535
(Reyes), which deal with the same subject matter.
6)This bill requires telecommunications providers to provide
complete pricing information in any advertisements for
telephone service that refer to per-minute rates or free
services, including all underlying charges and restrictions.
These provisions are similar to existing requirements for
calling cards (Bowen, Chapter 802, Statutes of 1998) which are
aimed at addressing the issue of hidden charges.
7)This bill codifies existing CPUC regulations relating to
social security numbers by prohibiting a telephone corporation
from declining to provide service if a customer declines to
provide a social security number. Telecommunications
providers would be permitted to request the social security
number of a provider only after disclosing to the subscriber
that providing a social security number is optional and not
required as a condition of providing service. The Cellular
Carriers Association of California, which opposes this
measure, is particularly concerned about the effect of these
provisions on the cellular industry, where a social security
number is used not only to check credit but to lessen the
possibility of fraud. Subscription or identity fraud
continues to be a significant problem for the wireless
industry, in which applicants provide a fake identification
and address and the victim gets the bill. A social security
number is the best way to prevent identity fraud. Most credit
firms use the social security number as the record access
mechanism. When a customer declines to provide a social
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security number, most telecommunications providers, including
wireless, provide alternative means of getting service,
including service deposits.
8)This bill would limit service deposits to an average of two
months worth of bills, similar to current law which limits
deposits for the establishment of electric service. This
provision is aimed at ensuring that high deposit requirements
don't prevent consumers from obtaining basic local telephone
service. GTE has expressed concern that the deposit ceiling
is too low, especially for customers with a poor credit
history.
9)This bill additionally prohibits providers from disconnecting
local telephone service for nonpayment of third-party charges,
including long-distance charges. These provisions are aimed
at preventing providers from using the threat of losing local
telephone service as leverage to obtain payments owed to third
parties, including long-distance providers. Twenty-one states
across the nation ban the disconnection of local service for
non-payment of long-distance and third-party charges.
10)The combination of these two provisions, both the ceiling on
deposits and the prohibition on cutting off local telephone
service for non-payment of long-distance charges, would
severely limit the ability of long-distance providers to
recoup unpaid customer bills. The Committee may wish to
consider amending the bill to prohibit customers from
obtaining service from another long-distance provider until
they have paid their outstanding long-distance bill.
11)This bill requires local and long-distance telephone
companies to submit to CPUC information on their residential
phone services and prices, and requires CPUC to provide this
information on the Internet, in a standardized format. This
would help consumers make informed decisions about
telecommunications prices and services. As competition
increases, so does the confusion surrounding various offerings
by telecommunications providers. A CPUC website containing
local and long-distance pricing and service information would
help reduce confusion and provide "one-stop shopping" for
consumers utilizing the Internet.
REGISTERED SUPPORT / OPPOSITION :
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Support
Office of Ratepayer Advocates (ORA)
The Utility Reform Network (TURN)
Utility Consumers' Action Network (UCAN)
Opposition
Cellular Carriers Association of California
Pacific Bell
GTE California
MCI
Analysis Prepared by : Joseph Lyons / U. & C. / (916) 319-2083