08292001.doc

DECISION MEMORANDUM

TO: COMMISSIONER KJELLANDER
COMMISSIONER SMITH
COMMISSIONER HANSEN
JEAN JEWELL
RANDY LOBB
DON HOWELL
LOU ANN WESTERFIELD
LYNN ANDERSON
JOE CUSICK
WAYNE HART
BEVERLY BARKER
RON LAW
TONYA CLARK
GENE FADNESS
WORKING FILE

FROM: WELDON STUTZMAN

DATE: AUGUST 29, 2001

RE: QWEST’S VIOLATION OF COMMISSION ORDER NO. 27785
CASE NO. USW-S-96-5

BACKGROUND

Marge Maxwell of the Consumer Division received a customer complaint in December 2000 about the high cost of initiating “basic” telephone service with Qwest when the customer excludes long distance service. Toll restriction is available to customers to prevent use of the telephone for long distance calls, enabling the customer to avoid toll call charges. Qwest has been charging customers a $13.50 set-up fee for toll restriction service when they initiate service.
Qwest’s toll restriction set-up fee charged to new customers violates Commission Order No. 27785 issued October 27, 1998 in Case No. USW-S-96-5. The Order approved a Stipulation between Qwest (formerly U S WEST) and the Commission Staff. A contested issue in that case was whether toll restriction should remain a Title 62 service, as Qwest advocated, or whether it should be a regulated Title 61 service, as Staff advocated. The parties eventually entered into a Stipulation and Settlement Agreement on September 2, 1998, which was approved by the Commission in Order No. 27785.
The Commission approved the Stipulation in part because, although it “allows toll restriction to remain a Title 62 service, it imposes strict conditions on the rates and terms under which the service was offered.” Order No. 27785 p. 6. For example, the Stipulation provides that “residential customers requesting Toll Restriction service [when] they initiate local service for the first time would not be charged the $13.50 non-recurring fee on a single residential line.” Order No. 27785 p.3.
The Stipulation also provides for a $.25 monthly charge (reduced from $2.00) to remind customers they are subscribing to toll restriction service. The Stipulation also, however, exempted certain customers from the recurring charge: “Customers eligible for Idaho Telephone Service Assistance Program (ITSAP) shall receive toll restriction without recurring or non-recurring charges.” Order No. 27785 p. 3.
The Commission in Order No. 27785 accepted the Stipulation, saying it represented a reasonable compromise of the contested issues without an admission by either party that its position was not correct or factually unsupported. The Commission, anticipating that competition would emerge in the local exchange market and the telephone industry would need less regulation, set the expiration date of the Order at the end of three years. Order No. 27785 p. 6.
Qwest acknowledges that it inappropriately charged customers a $13.50 set-up fee when toll restriction was ordered when telephone service was initiated, but maintains that its failure to implement the terms of the Order was unintentional. Qwest initially reported that approximately 98,000 customers were charged the set-up fee after Order No. 27785 was issued, but after eliminating duplicate numbers in its records, Qwest determined approximately 90,000 customers were affected.
Staff also asked for verification that ITSAP customers have not been charged the recurring toll restriction charge of $.25. Staff requested twenty random bill statements of ITSAP customers who are toll restricted. On April 19, 2001, Qwest provided twenty randomly selected bill statements for ITSAP customers under an attorney’s certificate pursuant to Rule 233 of the Commission’s Rules of Procedure. The certificate avers that the bill statements “confirm that the customers in question are ITSAP customers and that toll restriction service is being provided at no charge.” Staff nonetheless reviewed the bills and found four of the twenty were charged the monthly fee. Qwest’s counsel subsequently provided a Revised Attorney Certificate to remove the erroneous representation.
As a result of Staff’s informal investigation, Qwest took corrective action, which is set forth in a Stipulation to Correct Toll Restriction Charges dated August 22, 2001. On August 23, 2001, Staff filed a Motion to Reopen Case to Approve a Stipulation and Extend the Terms of an Order in Case No. USW-S-96-5. After filing its Motion, Staff learned from Qwest that the number of affected customers is greater than stated in the Stipulation. A new Stipulation with revised figures was signed by the parties on September 14, 2001.
The Stipulation dated September 14, 2001 describes the corrective action agreed to by Qwest. First, Qwest corrected its service procedures as of February 12, 2001, to prevent further collection of improper toll restriction charges. Second, during June, July and August, Qwest refunded the toll restriction fee to 42,396 customers, totaling $572,346. Third, Qwest will deposit to an account identified by the Commission the amount of fees it improperly collected but cannot refund to customers because the affected customer line has been disconnected or reassigned. That amount is $643,639, representing fees on 47,677 lines. Fourth, Qwest provided refunds to 32 ITSAP customers for the improperly collected 25-cent monthly charges. Finally, Qwest stipulated to extend the terms of Order No. 27785 through calendar year 2002.
By its Motion Staff asks the Commission to issue an Order to re-open Case No. USW-S-96-5, approve the Stipulation to Correct Toll Restriction Charges dated September 14, 2001, and extend the terms of Order No. 27785 through calendar year 2002.

COMMISSION DECISION:

Should the Commission issue an Order to re-open Case No. USW-S-96-5, approve the Stipulation to Correct Toll Restriction Charges dated September 14, 2001, and extend the terms of Order No. 27785 through calendar year 2002?

Weldon B. Stutzman

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