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On Thursday, March 15, 2007, the Commission held its regularly-scheduled agenda meeting. With respect to telecommunications, the main item under consideration was the approval of the settlement directing Cingular’s restitution and reparation efforts in connection with the Commission’s previous finding that the company had engaged in unfair business practices in its use of early termination fees. That and other telecommunications-related items on the March 15th agenda are discussed in further detail below.


REGULAR AND CONSENT AGENDA ITEMS

  • Commission Approves Settlement Regarding Cingular Restitution Plan in Connection with Illegal Early Termination Fee Practices (Item 46, adopted 5-0) – After several years of litigation and negotiation on the subject, the Commission approved a settlement with Cingular regarding how to structure the reparations and restitution associated with the Commission’s finding that Cingular had engaged in unfair business practices. In D.04-09-062, the Commission concluded an investigation into Cingular’s early termination fee policy by finding that “Cingular’s advertising and coverage maps misled consumers into signing up for wireless service in areas where the cell phone did not work, and then imposed ETFs when the customer tried to cancel, allowing for no grace period to return the phone.” These practices were found to be a violation of Public Utilities Code Sections 451, 702, and 2896, among others.

    As a result of the decision against Cingular, the Commission ordered Cingular to pay a $12.4 million fine, and required the company to refund all ETFs collected from January 2000 to April 2004. Cingular paid the fine, which was placed in escrow pending Cingular’s appeal of the decision. Cingular then unsuccessfully appealed to the Court of Appeal and to the California Supreme Court. On March 9, 2007, Cingular filed a petition for writ of certiorari with the United States Supreme Court. Meanwhile, Cingular had issued a plan to the Commission for how to refund the ETF monies. Cingular’s plan was challenged by UCAN and CPSD as being “vague,” “unsubstantiated,” and inconsistent with the Commission’s decision.

    This decision resolves the dispute regarding return of the ETFs and the penalties by creating a “specific and equitable refund plan,” as follows. First, the $12.14 million penalty will go to the State’s General Fund. Second, the interest on the penalty amount, incurred while in escrow, will go to pay refunds to customers who have paid improper ETFs to Cingular’s agents. Third, Cingular will refund $18.5 million in early termination fees paid during the relevant time period. Fourth, all customers who entered into contracts with Cingular during the affected timeframe will receive a refund.

    General Counsel Wu introduced this item by providing the background and procedural history that led up to this decision. He explained that the settlement would be a reasonable way to resolve the longstanding issues related to the Cingular ETFs. He responded to Commissioner Chong’s inquiry regarding the amount of the penalty-related interest by indicating that it was approximately one million dollars. Commissioner Chong offered a brief commentary in favor of the decision, emphasizing that it is consistent with the approach to consumer protection articulated in D.06-08-030. The Commission has made the choice to rely on consumer education and enforcement of existing law, and this matter represents a fulfillment of the Commission’s commitment to the latter goal. Commissioner Chong described how the industry has responded to the need for more detailed coverage maps and less onerous ETF policies. Chong expressed her hope that this decision would convey to carriers that “delighting the customer” should be the number one priority.

    Commissioner Grueneich also supported the decision, but noted that it highlights a difference of opinion amongst the Commissioners regarding the approach to consumer protection. While Commissioner Chong believes in a light-handed approach based on consumer choice, Grueneich stated her preference that there be additional rules so that the Commission could step in more readily to protect the consumer. Commissioner Simon seemed concerned about the ETFs in general. He questioned the Commission’s general counsel as to whether there has been improvement regarding carriers’ ETF practices. Mr. Woo responded that there is not really a record on that question, but that Cingular had made some changes to bring its practices more reasonable. Ultimately, the matter was decided by a 5-0 vote.

  • TRRO Implementation Decisions Clarified in Response to CALTEL Motion (Item 9, adopted on consent agenda) – This decision clarifies the Commission’s earlier decisions implementing the changes to the FCC’s unbundling rules articulated in the Triennial Review Remand Order. In D.06-01-043 and D.06-05-040, the Commission orchestrated amendments to interconnection agreements between AT&T and various CLECs, as called for by the TRRO. In November 2006, CALTEL brought a motion to clarify various aspects of the TRRO implementation decisions, and enforce AT&T’s compliance with the rules established therein.

    This decision responds to CALTEL’s motion with a series of clarifications of its previous orders. First, CLECs may opt into the consolidated amendments to AT&T’s interconnection agreements except to the extent that they previous negotiated contrary terms for particular elements in advance of the decisions reflecting the consolidated amendments. Second, the decision clarifies that AT&T may not charge non-recurring charges for conversion of UNE-P lines that do not involve physical work, even if those conversions occurred after March 11, 2006. AT&T had argued that it would be entitled to charge market-based rates for such conversions if CLECs had not made arrangements for transitions by March 11, 2006. Third, the Commission rejected CALTEL’s claim that the Commission should require AT&T to pay CALTEL’s legal fees incurred in seeking this clarification. This decision was adopted unanimously, on the consent agenda.

  • Statutory Deadline Extended in AT&T / CLEC Dispute Over List of Impaired Exchanges (Item 11, adopted on consent agenda) – In March 2006, AT&T filed a complaint case against Cbeyond, Covad, and Arrival seeking a declaration that its list of “impaired” and “non-impaired” exchanges is appropriate under the TRRO. This complaint case has been progressing throughout the past year, but a resolution of the dispute is not imminent. This decision extends the statutory deadline for resolution of the complaint until September 24, 2007, and notes in passing that “[t]his is a substantial matter involving industry-wide issues related to the implementation of open access under section 251.”

  • Interconnection Agreement Between TDS and ALLTEL Approved, Res. T-17074 (Item 15, adopted on consent agenda) – This item approves an interconnection agreement between the TDS companies (Happy Valley, Hornitos, and Winterhaven) and ALLTEL. The agreement will govern the parties’ exchange of traffic until March 15, 2008, and the agreement will be automatically renewed thereafter for successive six-month terms, absent notice of intent to terminate by either party.

  • 2-1-1 Dialing Providers Assigned for Solano County (Item 16, adopted on consent agenda) – By this order, the Commission approves HELPLINK’s request to operate as the 2-1-1 dialing provider for Solano County.

  • UCAN and TURN Granted Intervenor Compensation in Connection with Cingular Complaint Case and CLEC Migration Proceeding (Items 25, 26, adopted on consent agenda) – These items approve intervenor compensation awards for two consumer groups based on their contributions to two recent telecommunications-related decisions. UCAN is awarded $74,913.50 in compensation in connection with its prosecution of a complaint case against Cingular Wireless to address allegations of cramming and other misconduct. TURN is awarded $33,180.35 in connection with its participation in the Commission’s CLEC migration proceeding, which resulted in the passage of rules governing transitions of customers from exiting CLECs to other carriers.

  • Statutory Deadline Extended in UCAN / AT&T Warmline Complaint Case (Item 35, adopted on consent agenda) – This decision extends the deadline for completion of this case until June 2006. This case involves allegations by UCAN that AT&T is not complying with its warmline obligations under Public Utilities Code Section 2883.

  • Interconnection Agreement Adopted Between Time Warner Telecom and North County Communications, Res. T-17075 (Item 18, adopted on consent agenda) — This decision approves an interconnection agreement between Time Warner Telecom of California and North County Communications Corporation. The agreement will govern the parties’ exchange of traffic until March 15, 2008, and the agreement will be automatically renewed thereafter for successive six-month terms, absent notice of intent to terminate by either party.


SIGNIFICANT HELD ITEMS

  • Rulemaking to Evaluate Reliability Standards for Telecommunications Backup Power (Item 44, held by Chong until 4/12 for further consideration) – This item would initiate a rulemaking to address the standards governing backup power systems and emergency notification systems for telecommunications providers. The impetus for this rulemaking is the 2006 Assembly Bill AB 2393. All certificated providers of telephone service would be respondents to this proposed rulemaking. As currently framed, the rulemaking would involve a pair of technical workshops and a series of data requests to carriers. Ultimately, a staff report would be prepared, which would contain recommendations for further procedures regarding backup power and emergency notification systems.

  • Proposed Decision Permitting Verizon to Restructure Rates for Switching, Multiplexing, and Dark Fiber (Item 8, held by Peevey until 4/12 for further consideration) – This proposed decision would grant Verizon’s request to restructure its rates for switching, multiplexing and dark fiber to reflect how Verizon currently provisions and bills for those elements.

  • Pac-West Restructuring Approved (Item 38, held by staff until 4/12 consent agenda) – This proposed decision would permit a requested transfer of control whereby 95% of the interest in Pac-West Telecomm, Inc. would be transferred to Pac-West Acquisition Company, LLC. The latter company is a Washington entity that was formed for the sole purpose of effectuating this transfer.

  • Proposed Decision to Assign 2-1-1 Dialing Provider for Napa County (Item 21, held by staff until 4/12) – This proposed decision would approve HELPLINK as the 2-1-1 dialing provider in Napa County.

  • Proposed Decision Denying Telecom House CPCN Application (Item 4, held by staff until 4/12) – This proposed decision would reject Telecom House’s application to expand its resold interexchange CPCN to also include resold local exchange service, based on findings that the carrier failed to timely submit required reports under the terms of its existing CPCN. This decision would also direct the Commission to revoke Telecom House’s existing CPCN if the carrier cannot resolve discrepancies regarding its income and user fee submissions for prior periods.


NOTES AND COMMISSIONER REPORTS

  • Grueneich Report on Lifeline Problems — Commissioner Grueneich gave a brief report on the problems that have been occurring with respect to the ULTS program. She described the recent workshops to address allegations that AT&T and Verizon has been misinforming customers about the program and charging inappropriate conversion fees. Grueneich views the workshop as a success, and warned carriers that the Commission would be watching them closely, and that the Commission would not be afraid to pursue enforcement actions where necessary.

  • Commissioner Simon Praises the California Utilities Diversity Council — Commissioner Simon described that he had an opportunity to attend the most recent meeting of the California Utilities Diversity Council. He praised the efforts of the council, and noted that he will be “looking for more and more ways for the utilities to empower WMDVBEs to participate in the marketplace.”

  • Director Serizawa Describes Successful Oakland Bill Fair — CSID Director Linda Serizawa reported on the most recent “bill fair” held by the Commission in Oakland, California on March 7, 2007. The fair was held near the Fairfield BART station, and several carrier and Commission staff representatives were in attendance. Approximately 60 people attended the bill fair to discuss a wide variety of issues, ranging from complicated questions regarding the taxes and surcharges on their bills to relatively simple issues like how to complete calls using a wireless phone. The next bill fair is planned for April 4, 2007, in San Francisco’s Chinatown, and several others are planned for other locations throughout the state later in the year.

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