20040428Response to OCMCs Motion to Terminate.pdf

JOHN HAMMOND
DEPUTY A ITO RNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
[phone]
BAR NO. 5470
RECEIVED
I I ~
2001; APR 28 PM 4: 40
: r ! IC
UT!L ITIES- COr-\r1JSSION
Street Address for Express Mail:
472 W. WASHINGTON
BOISE, IDAHO 83702-5983
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE COMMISSION'
INVESTIGATION TO DETERMINE IF OCMC,
INc. VIOLATED THE TERMS OF ITS PRICE
LIST AND THE COMMISSION'S OPERATOR
SERVICES AND PAY TELEPHONE RULE
104.04.
CASE NO. GNR-04-
COMMISSION STAFF'
RESPONSE TO OCMC'
MOTION TO TERMINATE
INVESTIGATION
COMES NOW the attorney for the Commission Staff ("Staff'), John R. Hammond
Deputy Attorney General, and files this Response to OCMC , Inc.'s Motion to Tenninate the
Commission s investigation into whether the Company violated the tenns of its Price List and
the Commission s Operator Services and Pay Telephone Rules, IDAPA 31.51.01.001 et seq.
set out in greater detail below, OCMC's Motion to Tenninate should be denied.
BACKGROUND
On March 15 , 2004, pursuant to Idaho Code 99 62-616 and 62-620, Staff filed a
Petition requesting that the Commission initiate an investigation to: 1) resolve subscriber
complaints; 2) detennine if OCMC is providing service in compliance with its Price List; and 3)
to decide if OCMC, Inc. has violated the Commission s Operator Services and Pay Telephone
Rules, IDAPA 31.51.01.001 et seq. Staff alleged that OCMC, Inc. is an operator services
provider ("OSP"), operating in the State of Idaho as itself or under the assumed business names
COMMISSION STAFF'S RESPONSE TO
OCMC'S MOTION TO TERMINATE
INVESTIGATION
of OPTICOM, Inc., One Call Communications, Inc., AdvantTel, LiveTel, SuperTel, RegionTel
or 1-800-MAX-SA VE (hereinafter "OCMC"). Staff further alleged that OCMC violated the
Commission s Operator Services and Pay Telephone Rule 104.04 and the tenns of its own Price
List between the dates of March 15 2002 and July 29 2003. OCMC provided operator services
to 12 893 intrastate collect phone calls by its own admission during this time frame. Staff
maintains that each of these calls processed by OCMC violated ~SP Rule 104.04. Rule 104.
requires that every ~SP disclose to the called party on all collect calls how to obtain the total
cost of the call. IDAPA 31.51.01.104.04. In addition, Staff contends that 9 021 of these calls
were processed by OCMC's automated operator system and for collect calls the called party was
not provided a means to obtain rates upon request as provided for in the Company s Price List.
OCMC'S MOTION
OCMC contends that this investigation should be tenninated because: 1) the
Commission did not have authority to adopt Rule 104.04 and therefore cannot enforce its
requirements through Idaho Code 9 62-620; and 2) there are no outstanding consumer
complaints about OCMC's failure to comply with its Price List. The Staff asserts that the
Commission has jurisdiction over this matter and that there are consumer complaints that have
not been resolved.
JURISDICTION
Although the Commission is a tribunal of limited jurisdiction once jurisdiction is
established it is allowed all power necessary to effectuate its purpose. United States v. Utah
Power Light Co.98 Idaho 665, 667, 570 P.2d 1353, 1355 (1977). "Every power expressly
granted, or fairly to be implied from the language used, where necessary to enable the
commission to exercise the powers expressly granted should be afforded. Id. at 1355-56 quoting
64 AmJur.2d, Public Utilities, 9 232.
Idaho Code 9 62-604 provides that any telephone corporation that "did not, on
January 1 , 1988, hold a certificate of public convenience and necessity issued by the commission
and, which does not provide basic local exchange service, shall, on and after the effective date of
this act, be subject to the provisions of (Chapter 6, Title 62.
)"
OCMC did not hold a CPCN on
January 1 , 1988, and provides telecommunication services in Idaho for compensation. See Idaho
COMMISSION STAFF'S RESPONSE TO
OCMC'S MOTION TO TERMINATE
INVESTIGATION
Code 9 62-603(13). See also OCMC Price List at Original Sheets No.6 and 12. OCMC is a
Title 62 telephone corporation.
Staff asserts that there are two reasons why the Commission has jurisdiction over this
matter. First, the Commission is authorized to administer the Idaho Telecommunications Act of
1988 (Idaho Code 99 62-601 et seq.by a balanced program of regulation and competition.
Idaho Code 9 62-602(1) and (5). Second Idaho Code 9 62-606 requires that Title 62 companies
file price lists with the Commission that "reflect the availability, price, and tenns and conditions
for those services.Idaho Code 9 62-616 states that the Commission "shall have the authority to
investigate and resolve (consumer) complaints made by subscribers to telecommunication
services which are subject to the provisions of this chapter which concern. . . whether price and
conditions of service are in confonnance with filed tariffs or price lists (emphasis added).
Staff asserts that there are still many unresolved consumer complaints for the Commission to
investigate and resolve.
1. Title 62
As stated correctly by OCMC the Idaho Telecommunications Act of 1988 created a
new framework for the regulation of telecommunication carriers in Idaho. However, contrary to
OCMC's argument, the Act's primary thrust is to generally remove the Commission s ratesetting
authority over incumbent telephone corporations Title 62 services upon their election. See Idaho
Code 9 62-605. It did not remove the Commission s authority to review the quality of such
service, its general availability or the tenns and conditions under which Title 62 services are
offered. The intent of Title 62 is codified in Idaho Code 9 62-602 and provides the Act was
intended to "protect and maintain high-quality universal telecommunications at just and
reasonable rates for all classes of customer and to encourage innovation within the industry
balanced program of regulation and competition Idaho Code 9 62-602(1) (emphasis added).
Moreover, the Commission was authorized to administer the statutes under Title 62 "with respect
to telecommunications rates and services in accordance with these policies and applicable federal
law.Idaho Code 9 62-602(5).
Although Title 62 companies are not rate regulated they are still subject to the
Commission s jurisdiction and must comply with certain requirements. They must provide to the
Commission for infonnational purposes a price list or tariff filing of the services offered in
COMMISSION STAFF'S RESPONSE TO
OCMC'S MOTION TO TERMINATE
INVESTIGATION
Idaho. Idaho Code 9 62-606. This price list must reflect "the availability, price and tenns and
conditions for those services.Id. They must also pay a regulatory fee and theoretically
contribute to the State s Universal Service Fund. Idaho Code 99 62-610A-F and 62-611. In
addition, the Commission retained jurisdiction to resolve complaints and to establish certain
customer relations rules Idaho Code 99 62-616, 62-602(1), (4) and (5), and 62-615(3). See also
Commission Report to the Legislature on the Telecommunications Act of 1988 (January 1991).
To ensure that the Title 62 telecommunications services provided to consumers were of high
quality and provided at just and reasonable rates the Commission promulgated non-economic
regulation and rules for Title 62 companies and Operator Service Providers. These Rules are
intended to provide the consumer with infonnation about service providers and their services that
fall under this chapter so that infonned consumers can make choices in the competitive
telecommunications marketplace. Commission Report at 27. This is consistent with the intent of
the Act as stated in Idaho Code 9 62-602.
2. The Commission s Ouerator Services Rules
Contemporaneous with the enactment of Title 62 in 1988, the Commission received
several inquiries from alternate operator service ("AOS") providers regarding the status of
regulatory oversight for these telecommunications providers.l Order No. 21855 (Case No. GNR-
88-3).2 The Commission had also received complaints from consumers concerning AOS
provider charges. Id. at 2. These consumers reported that they were unaware that their call was
being processed by the AOS rather than by the long distance company they thought they were
using. Id. In addition, the Commission noted that the Federal Communications Commission
FCC") and several states had issued warnings to telephone customers regarding the practices
and rates of AOS providers. Id. In addition, the FCC had noted it had seen a surge in complaints
about AOS providers since January 1988. Id.
In response to these complaints the Commission found the public safety and
convenience required that the perfonnance of operator services in Idaho be governed by certain
I At the time of this rulemaking the Bell Companies were largely providing these services until new entities began
competing for this segment of the market. They were defined as Alternate Operator Services Providers. Today they
are simply known as asPs.
2 Order No. 21855 and subsequent General Orders No. 178 and l78A adopting the AOS or ~SP Rules were issued
by Dean 1. Miller, President of the Commission at the time and Commissioners Swisher and Nelson.
COMMISSION STAFF'S RESPONSE TO
OCMC'S MOTION TO TERMINATE
INVESTIGATION
rules. Id. Among the proposed rules was the requirement that
, "
(aJll operator assisted calls must
be preceded by a disclosure of the name of the Company handling the call and the charge for
making the connection.Order No. 21855 at 4. The proposed rule also provided that "(tJhe
AOS provider or its agent is responsible for confonnance with all rules and regulations that
apply to the provision of this service.Id. After conducting a rulemaking proceeding, the
Commission issued General Order Nos. 178 and 178A that adopted AOS rules. Specifically, at
that time, Rule 9.4 of these AOS Rules required:
(aJll calls routed to an AOS provider must be preceded by disclosure of the
AOS company s name prior to completing the connection. The notification
must clearly identify the AOS provider. Upon the caller s request, the
company handling the call must also quote the charge for making the
connection and all other related operator-service charges.
General Order No. 178A, Appendix at 3. The Commission ordered AOS providers to not
conduct intrastate business in Idaho except in confonnance with these rules. Id.
3. The Federal Ouerator Services Act
In 1990 Congress responded to widespread consumer dissatisfaction over high
charges and certain practices of many asPs arising from calls made from payphones when it
enacted the Telephone Operator Consumer Services Improvement Act of 1990 (TOCSIA),
codified at 47 U.C. 9226.3 Under TOCSIA and FCC rules enacted at its direction, asPs were
required to "brand" calls , allow consumers to tenninate calls without incurring a charge before
connection, and to disclose immediately to the consumer certain infonnation regarding rates and
charges.4 47 C.R. 9 64.703(a) (1991).Section 64.703(3)(i) (1991) required the ~SP to
disclose immediately to the consumer, upon request and at no charge to the consumer - (i) A
quotation of its rates or charges for the call.
4. The 1991 Idaho OSP Rules
Following the enactment of TOCSIA the Commission initiated a new rulemaking.
Order No. 23278. On July 30, 1991 , the Commission issued General Order No. 181A that
3 The FCC noted in TaCSIA that competition was developing in the telecommunications market as a result of asps
however, it also noted that asps were only effective in making the market effective when consumers were able to
make informed choices from among those service providers. Congressional Findings PL 101-435, 104 Stat 986
(1990).
4 "Brand" is a term used for an asp identifying itself to a caller.
COMMISSION STAFF'S RESPONSE TO
OCMC'S MOTION TO TERMINATE
INVESTIGATION
adopted amendments to its Operator Services Rules.5 These new rules generally adopted the
wording of the FCC's TOCSIA rules in order to minimize instances of dual regulatory schemes.
The Commission s new Rule 9.4iii(A) required asPs to:
(dJisclose immediately to the telephone caller, upon request and at no charge
to the telephone caller: (A) a quote of the total rates and charges (including
surcharges) to be billed by asPs and MTS companies for the call.
5. The Federal Telecommunications Act of 1996.
In 1996 Congress enacted the federal Telecommunications Act of 1996 and
fundamentally changed telecommunication regulation by creating a "pro competitive
deregulatory national framework designed to accelerate rapid private sector deployment of
advanced telecommunications and infonnation technologies and services to all Americans by
opening all markets to competition." S. Conf. Rep. No. 104-230, 104th Cong., 2d Sess. 1 (1996).
Included in the Act was 47 U.C. 9 276 that addressed pay telephone service. This section
advanced the twin goals of promoting competition among payphone service providers and
promoting the widespread deployment of payphone services to the benefit of the general public.
47 US.C. 9 276(b)(1). In the proceeding to implement the goals of this provision, the FCC
recognized that in the absence of minimal regulatory oversight, competition could be impaired
by certain practices. 6 Specifically, the FCC stated:
(IJn some locations, because of the size of the location with an exclusive PSP
contract or the caller s lack of time to identify potential substitute payphones
the PSP may be able to charge an inflated rate for local calls based on its
monopoly, pursuant to an exclusive contract with the location provider, on all
payphones at the location. We conclude that such monopoly arrangements, in
the absence of regulatory oversight, could impair competition.
Thus, the FCC found that 9 276 of the 1996 Act did not prevent states from enacting certain
competitively neutral regulations. In particular, the FCC observed:
5 On August 17, 1990, the Commission issued Order No. 23278, in Case No. 31.D-89-1 establishing a proceeding
to amend its Operator Services Rules. All Orders in this proceeding were issued by Dean J. Miller, President of the
Commission and Commissioners Ralph Nelson and Marsha H. Smith.
In the Matter of the Implementation of the Pay Telephone Reclassification and Compensation Provisions of the
Telecommunications Act of 1996 Notice of Proposed Rulemaking, CC Docket 96-128, DCC 96-254 at ~~ 16 49,
and 60 (1996).
Id. at 35, ~ 60.
COMMISSION STAFF'S RESPONSE TO
OCMC'S MOTION TO TERMINATE
INVESTIGATION
(FJor purposes of ensuring fair compensation through competitive
marketplace, the states should remove only those regulations that affect
payphone competition; the states remain free at all times to impose
regulations, on a competitively neutral basis, to provide consumers with
infonnation and price disclosure.
On June 6, 1996, the FCC released the ~SP Refonn Notice seeking comment on
whether, consistent with the requirements of the 1996 Act, it should require all asPs to disclose
their rates to consumers on all 0 + calls.9 On January 29, 1998 the FCC issued its decision and
stated it was addressing the problem of widespread consumer dissatisfaction concerning high
charges by many asPs for calls from payphones. 10 The FCC noted that:
Consumer education initiatives by the industry, government, and the media
appear to have helped produce a favorable downward trend over recent years
in the number of complaints received by the Commission about high ~SP
rates. Nevertheless, more than five years after enactment of TOCSIA, the
high rates of many asPs and surcharges imposed by aggregators continue to
be a concern. In 1995, the second largest category of complaints processed
by the Commission s Common Carrier Bureau consisted of complaints
directed against asPs, and the vast majority of these concerned rates and
charges that consumers thought were excessive. In 1996; the Commission
processed 132 written complaints about the level of interstate rates and
services of asPs. Accordingly, we examine in the next sections what
additional steps we can and should take to foster greater competition by
OSPS.
To foster competition consistent with the 1996 Act and provide consumers with rate infonnation
the FCC added language to 47 C.R. 9 64.703 requiring asPs, like OCMC, to provide price
disclosures on interstate calls orally to the away-from home caller. This was intended to ensure
consumers receive sufficient infonnation about the rates they will pay for operator services at
public payphones and other locations. 47 C.R. 64.703(a)(3) and (4). In refining and clarifying
!d. at p. 36, ~ 60 (emphasis added).
Billed Party Preference for InterLATA 0 Calls CC Docket No. 92-, Second Further Notice of Proposed
Rulemaking, 11 FCC Rcd 7274 (1996).
10 Second Report and Order and Order on Reconsideration, In the Matter of Billed Party Preference for
InterLATA 0+ Calls CC Docket No. 92-, FCC 98-, 13 F.c.c.R. 6122, 13 FCC Rcd. 6122 (1998).
11 Id. at 13 F.R. 6122 at ~ 9 (emphasis added).
COMMISSION STAFF'S RESPONSE TO
OCMC'S MOTION TO TERMINATE
INVESTIGATION
the requirements of 9 64.703 the FCC ruled that the "consumer" for the purposes of collect calls
meant the caller and the called party and that rate disclosures had to be made available to both.
6. Idaho s Current OSP Rule 104.
In this historical context, the Commission amended its ~SP Rules by adopting Rule
104.04 on March 15, 2002.13 Rule 104.04 requires asPs like OCMC to:
Disclose, audibly and distinctly to the consumer (caller for non-collect calls,
called party for collect calls), at no charge, and before connecting any
instrastate operator service call, how to obtain the total cost of the call,
including any aggregator surcharge, or the maximum possible total cost of the
call, including any aggregator surcharge, before providing further advice to
the consumer on how to proceed to make the call.The oral disclosure
required in Rule 104.04 shall instruct consumers that they may obtain
applicable rate and surcharge quotations either, at the option of the provider
of operator services, by dialing no more than (2) digits or by remaining on the
line.
IDAPA 31.51.01.104.04 (emphasis added).
Rule 104.04 was created in a rulemaking for the purpose of adopting recent federal
law particularly in the area of rate disclosure to consumers/customers. See Notice of Proposed
Rulemaking, Case No. 31-5101-0101 ("The proposed substantive changes to these Rules are
made so that the Rules are consistent with recent changes in federal law.See generally, In the
Matter of Implementation of the Pay Telephone Reclassification and Compensation Provisions of
the Telecommunications Act of 1996, CC Docket No. 96-128, Order No. 96-388 (September 20
1996)). These changes are consistent and authorized by the federal Telecommunications Act of
1996, the Telephone Operator Consumer Improvement Act of 1990 and FCC Rules. See
u.S.c. 99 276, 253 and 226; 47 c.F.R. 99 64.703(a)(3)(i) and (4) and 64.708(f). OCMC was
served with the proposed changes as the notices demonstrate.14 The Company neither
12 In the Matter of Billed Party Preference for InterLATA 0+ Calls, Second Order on Reconsideration CC Docket
No. 92-, FCC 01-355 16 FCC Rcd. 22 314 (2001).
13 It could be argued that Rule 104.04 is consistent with the intent of Idaho Code 9 62-606 because it similarly
requires the Company to disclose the rates and conditions of service. However, Rule 104.04 requires direct
disclosure to the consumer unlike a price list filed with the Commission. One important reason for this is many
times the ~sp customer is captive (i., has only the pay telephone available) and has no contract with the asp
providing services at that location.
14 Notice of Public Workshop and Negotiated Rulemaking, Order No. 28746, Service List. See also Notice of
Proposed Rulemaking Service List Case No. 31-5101-0101.
COMMISSION STAFF'S RESPONSE TO
OCMC'S MOTION TO TERMINATE
INVESTIGATION
commented nor challenged the Commission s jurisdiction to promulgate these rules in that
proceeding. Finally, Rule 104.04 was enacted properly under the authority granted to the
Commission by Idaho Code 9 62-615(3) ("The Commission may promulgate rules and/or
procedures necessary to carry out the duties authorized or required by the federal
telecommunications act of 1996.See also Idaho Code 962-602(1)(4) and (5).
OCMC argues that the Commission may only adopt administrative rules that are
authorized by the state legislature. OCMC relies on Idaho Power v. Idaho Public Utilities
Commission 102 Idaho 744, 639 P.2d 442 (1981) the Court found that the Commission did not
have statutory authority to adopt rules for intervenor funding to provide for the recovery of
attorney fees. In Idaho Power the Court reasoned that the general rule was that attorneys fees
cannot recovered in an action unless authorized by statute or by express agreement of the parties.
102 Idaho at 750 639 P.2d at 448. However, this case is not applicable here as the Commission
has explicit statutory authority to promulgate and enforce Rule 104.04. Idaho Code 99 62-
615(3),62-620, and 62-602(4) and (5).
Based on the foregoing, it is clear that OCMC's argument that the Commission is
without authority to promulgate and enforce Rule 104.04 is without merit and should be denied.
7. The Commission Authority to Investigate and Resolve Consumer Complaints
The second basis for the Commission s jurisdiction flows from Idaho Code 99 62-
606 and 62-616. As stated previously Idaho Code 9 62-606 requires Title 62 companies to file
price lists that "reflect the availability, price, and tenns and conditions for those services.Idaho
Code 9 62-616 provides the Commission with "authority to investigate and resolve complaints
made by subscribers to telecommunication services which are subject to the provisions of this
chapter which concern. . . whether price and conditions of service are in confonnance with filed
tariffs or price lists(.(emphasis added). Section 62-616 also provides that "the commission
may, by order, render its decision granting or denying in whole or in part the subscribers
complaint or providing such other relief as is reasonable based on the evidence presented to the
commission at hearing.These two statutes vest the Commission with the authority and
jurisdiction to detennine whether OCMC's conduct is in compliance with its price lists. This
reason alone is sufficient for the Commission to conduct its investigation.
COMMISSION STAFF'S RESPONSE TO
OCMC'S MOTION TO TERMINATE
INVESTIGATION
OCMC's Price List states that "(rJates will be disclosed upon request" Original
Sheet No. 42. Staff alleges that based on infonnation obtained from OCMC the Company was
not able to meet this condition of service stated in its Price List for at least 9 021 intrastate
collect phone calls that were processed by OCMC's automated system. The Company admitted
in correspondence with Staff that the Company did not makes changes to its system July 2003
that would allow the called party to obtain rate infonnation from its automated operator system.
This assertion clearly warrants and investigation.
Contrary to OCMC's assertions there are numerous unresolved consumer complaints
regarding the operator services OCMC's provided between March 15 , 2002 until July 29, 2003.
In filing this Petition Staff reviewed the consumer complaints it had received. This review
revealed that many complaining consumers did not and have not received a full or partial credit
from the Company despite the fact that OCMC's services violated its Price List and the
Commission s Rule 104.04. Furthennore, through discovery Staff learned that OCMC received
over 600 consumer complaints about its services. Half of these complainants did not receive any
credit from the Company despite its failure to meet the tenns of its Price List or the
Commission s Rules. Staff contends that these complaints represent the unresolved consumer
complaints discussed in Staff s Petition.
Finally, it should be noted that in 1995 One Call Communications, OCMC'
predecessor in Idaho, entered into a Consent Agreement with Staff resolving the Company
alleged violations of the Commission s Operator Services and Pay Telephone Rules. In this
Agreement the Company agreed "that it will not engage in any future acts, practices or omission
which would constitute violations ofldaho Code, Title 62 or the Commission s rules.
CONCLUSION
Staff asserts that there are two reasons why the Commission has jurisdiction over this
matter. First, the Commission is authorized to administer the Idaho Telecommunications Act of
1988 (Idaho Code 99 62-601 et seq.by a balanced program of regulation and competition and
had authority to enact Rule 104.04. Idaho Code 99 62-602(1) and (5),62-615(3). Second Idaho
Code 9 62-616 states that the Commission "shall have the authority to investigate and resolve
(consumerJ complaints made by subscribers to telecommunication services which are subject to
the provisions of this chapter which concern. . . whether price and conditions of service are in
COMMISSION STAFF'S RESPONSE TO
OCMC'S MOTION TO TERMINATE
INVESTIGATION
confonnance with filed tariffs or price lists " (emphasis added). Staff asserts that there are still
many unresolved consumer complaints for the Commission to investigate and resolve. Based on
the foregoing Staff requests that the Commission deny OCMC's Motion to Tenninate this
Investigation.
Respectfully submitted this 28th day of April 2004.
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COMMISSION STAFF'S RESPONSE TO
OCMC'S MOTION TO TERMINATE
INVESTIGATION
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 28TH DAY OF APRIL 2004
SERVED THE FOREGOING STAFF'S RESPONSE TO OCMC'S MOTION TO
TERMINATE INVESTIGATION IN CASE NO. GNR-04-, BY MAILING A COpy
THEREOF, POSTAGE PREPAID, TO THE FOLLOWING:
ANN C. BERNARD
OCMC, INC.
801 CONGRESSIONAL BLVD.
CARMEL, IN 46032
E-mail: ann.bernard~ocld.com
DEAN 1. MILLER
McDEVITT & MILLER, LLP
420 W. BANNOCK STREET
PO BOX 2564 - 83701
BOISE, ID 83702
E-mail: ioe~mcdevitt-miller.com
CT CORPORATION
300 N. 6TH STREET
BOISE, ID 83702
~d~
SECRETARY
CERTIFICATE OF SERVICE