BILL ANALYSIS
SB 932
Page 1
Date of Hearing: August 23, 1999
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Roderick Wright, Chair
SB 932 (Bowen) - As Amended: August 16, 1999
SENATE VOTE : 24-13
SUBJECT : Telecommunications: service: notice.
SUMMARY : Establishes several new consumer protection provisions
for telephone customers, and prohibits the disconnection of
local telephone service for non-payment of long-distance
charges. Specifically, this bill :
1)Requires telephone corporations that provide a new telephone
service or feature to mail a written notice to each subscriber
within three business days of service activation describing
the price, terms, and conditions of the new 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 pay per use services, 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
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service to provide subscribers with a printed alphabetical
telephone directory, unless the subscriber waives this
requirement via a written declaration.
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that a subscriber has not used and has rescinded.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.
Additionally, these provisions do not apply to telephone
calls.
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. These customers would have the option
of submitting a deposit, provided they accept 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 subscriber only after disclosing to them
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 the California Public Utilities Commission (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
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regarding the extent and nature of customer dissatisfaction.
9)Applies only to residential subscribers.
EXISTING LAW :
1)Requires telephone service to be provided in a just and
reasonable manner.
2)Requires telephone corporations to provide 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 emerging competitive telecommunications market provides
residential customers with an array of choices and offerings.
In order to reap the benefits of a competitive marketplace,
consumers need to make intelligent and informed choices
regarding the use and purchase of such services. The author
has introduced this bill to provide consumer protections and
address marketing abuses in the telecommunications industry.
It has the support of the Office of Ratepayer Advocates (ORA),
The Utility Reform Network (TURN), and the Utility Consumers'
Action Network (UCAN), all of whom assert that existing law
provides inadequate consumer protection. According to ORA, in
today's telecommunications marketplace, "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."
2)Described by the author as the "Telephone Consumers Bill of
Rights," this measure imposes a number of requirements on
telephone corporations. Among the areas covered by this bill
are telephone corporations' credit and disconnection policies,
marketing practices, advertising, distribution of telephone
directories, and subscriber complaint reporting.
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3)The most contentious provision of this is a prohibition on
telecommunications 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. An additional
provision limits the amount of deposit that can be collected
to the average of two months local service (approximately $35)
in an effort to ensure that all customers can obtain local
services. The industry expresses concern that the deposit
ceiling is too low, especially for customers with a poor
credit history.
4)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. If the threat of losing local
telephone service for non-payment of local charges is removed,
there is less of an incentive for customers to pay the charges
owed to the long-distance provider. This would enable a
customer who is currently served by a local exchange carrier
to incur costs for toll service and long-distance providers
without fear of having their local telephone service cut off.
This problem would be exacerbated by the proliferation of
pre-paid calling cards in which the customers can place
long-distance calls without a long distance provider. This
provision is universally opposed both the incumbent local
exchange carriers (ILECs) and long distance providers. They
assert that this policy "would result in increased billing and
collection services, high rates of uncollectibles, and
ultimately, higher rates as increased bad debt costs would be
passed on to bill-paying customers."
5)One component of this bill provides residential customers with
a ten-day right of recission on new telephone services and
features. This provision does not apply in those instances
where a subscriber has ordered services that require the
telephone corporation to perform work at the subscriber's
premises, or if there is a contract between the telephone
corporation and the subscriber. The telephone corporation
would be prohibited from imposing any charges for services, of
administrative costs incurred as a result of processing, if
the customer has not used the services or features. Opponents
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of this bill indicate that prohibiting telephone corporations
from recovering processing costs could have the effect of
raising the price of the service, since the costs will have to
be absorbed by other customers using those services.
6)The provision contained in this measure 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.
7)In a competitive telecommunications market, the mass media is
often the means by which telecommunications providers
disseminate information about their various offerings and
promotions. 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, 1998) which are aimed at
addressing the issue of hidden charges.
8)Customers are often unaware they do not have to provide their
social security number in order to get service. 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.
9)As competition increases, so does the confusion surrounding
various offerings by telecommunications providers. 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. 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
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Internet.
REGISTERED SUPPORT / OPPOSITION :
Support
Office of Ratepayer Advocates (ORA)
The Utility Reform Network (TURN)
Utility Consumers' Action Network (UCAN)
Opposition
Pacific Bell
GTE California
MCI
Sprint
Analysis Prepared by : Joseph Lyons / U. & C. / (916) 319-2083