Walter Steimel, Jr. File No.: 51860.020002 E-Mail: wsteimel@hunton.com Direct Dial: (202) 955-1526 August 14, 1998 VIA FACSIMILE 360/586-1150 VIA UPS (Original & 10 Copies & WP 5.1 diskette) The Secretary of Washington Utilities & Transportation Commission P.O. Box 47250 Olympia, Washington 98504-7250 Re: Possible Rules on the Subject of “Cramming” Billing for Unwanted Services Docket Number UT-980675 Comments Filed by Pilgrim Telephone, Inc. Dear Secretary: By this letter Pilgrim Telephone, Inc. ("Pilgrim"), a certificated interstate interexchange carrier, comments in the proceeding concerning the adoption of rules defining and prohibiting the practice of inclusion of unauthorized charges on local exchange carrier ("LEC") bills, commonly known as "cramming." Pilgrim Telephone, Inc. (“Pilgrim”) is an interstate communications services company providing common carrier services pursuant to tariffs on file with the Federal Communications Commission (“FCC”), and on file with the Washington Utilities and Transportation Commission ("Washington Commission"). Pilgrim also provides a variety of voice mail and telemessaging services, and enhanced services on a variety of platforms including 900 dialing patterns. Pilgrim has been in operation since 1989 and has participated extensively in rule making proceedings before the FCC, the Federal Trade Commission (“FTC”) and various other state and federal regulatory agencies. Pilgrim will be affected by any rules adopted by the Washington Commission, and requests it be allowed an opportunity to participate in this and all future proceedings regarding cramming and other telecommunications related regulatory issues. Pilgrim agrees that cramming is a serious industry-wide problem, and notes the recent letter of the Chairman of the FCC to the industry asking for a unified solution to the problem. In adopting any rules, however, the Washington Commission must proceed cautiously to ensure that cramming is properly narrowly defined so that it disallows only the conduct intended to be prohibited. Pilgrim suggests that the tools needed to diminish cramming are available to LECs. The Washington Commission should require that complete information is provided to all providers of communication services so that all providers are properly equipped to observe and follow the direction of consumers regarding the provision of services and billing for services provided, while not exposing themselves to fraudulent conduct. Any regulations adopted, of course, must be competitively neutral and should not inadvertently provide a competitive advantage to any competitor, especially the incumbent LEC. Pilgrim wishes to comment on three issues raised by the Commission’s notice: the definition of cramming, the use and provision of blocking information and the possible anti-competitive application of any rules. Definition of Cramming We understand cramming to encompass those instances where calls are fraudulently charged to a subscriber, but which calls were never actually made. These phantom calls can be detected by the absence of actual call records. We also understand cramming to encompass instances where a deception is used to cause a calling party to initiate an event which results in a charge being levied during a call, which charge is not specifically and clearly disclosed to the caller. Cramming does not encompass calls which are the subject of bill inquiries where callers simply do not remember the call. Cramming also should not be defined to involve bill disputes which result from fraud perpetrated by the caller or third-parties when the calls actually are made and detailed call records support the existence of those calls. In situations where there are call records which support the call charge, or charges are incurred with the clear knowledge or clear consent of the calling party purchasing the service, there should be no allegation of cramming. The Commission should also consider adopting a process for validating cramming complaints to ensure that carriers, service providers and consumers are adequately protected by the Commissions’s rules. Pilgrim is aware of the fact, as confirmed in conversations with AT&T, that there are substantial problems in the enhanced, information and telemessaging services industries with consumers claiming a higher than usual level of denying knowledge of calls in order to avoid payment. Even on AT&T 900 calls Pilgrim has observed a significant denial rate for calls in instances where call records demonstrate that the calls were placed and properly billed. Pilgrim wants to ensure that there is a process which does not penalize service providers for attempted consumer fraud, but it provides protection to consumers from the fraudulent activities of a few bad actors in the industry. Any definition regarding cramming should specifically exclude those instances of disputes or inquiries where a service provider determines through its investigation that call records support the charges, that the caller was clearly informed of the charges and initiated the purchases, or that caller fraud was the cause of the dispute. Bill Blocking of Call Blocking Services The Commission has proposed permitting customers a “bill block” service which would allow customers to choose to be billed only for services provided directly by their LEC or by the preferred interexchange carrier ("PIC"), but not by others. While this proposal is superficially appealing, it will chill competition and inhibit consumer choice in the telecommunications marketplace. The Commission should adopt regulations which maintain the competitive neutrality between competitive providers of telecommunications services, including the incumbent LECs, and which create a system of advanced notification to service providers so that they know in advance that they may not be able to bill for a service requested by a consumer. Currently, a customer may request that certain call services be blocked from its line. Notice of these currently-available blocks, however, is not generally available to all carriers which may provide service to customers. To diminish the instances in which services are provided to consumers who have requested blocking, either the currently-available blocking or a new type of blocking like that proposed by the Washington Commission could be adopted. Any regulations adopted by the Washington Commission to address cramming issues should require all LECs to include all service block information in the line information database ("LIDB"). Once blocking information is available in LIDB, all carriers providing service, including LECs, should be required to respect the customer-placed blocks for all enhanced services, regardless of the identity of the provider. Any calls places in contravention of a noted block should be rejected and not billed to the customer. Regardless of whether the Washington Commission order new types of blocks, service blocks will be effective only when all blocking information is made available to all service providers. Any implementation of required blocking should be delayed until the blocks are available to all service providers. Recently, a number of LECs outside the state of Washington, but not USWest, have begun providing 900 service blocks in LIDB. Inclusion of this information in LIDB creates a partnership between the LECs and other service providers designed to ensure that all consumer requests are honored on a competitively neutral basis. The intransigence of USWest, the largest LEC in Washington, in its denial of this information to competitive service providers demonstrates USWest's anti-competitive bent to the detriment of consumers in Washington. Anticompetitive Application of Any Rules As the Washington Commission undertakes the proposed rule making, it should be mindful of the market progression of the incumbent LECs. Increasingly, LECS are moving into the provision of a variety of enhanced services in direct competition with unrelated service providers which must rely on the LEC network for call completion and billing and collection. Recently, USWest announced its intention to bill for Internet and wireless services on consumers’ local telephone bills. Any regulations adopted by the Washington Commission must be mindful of the natural competitive advantage incumbent LECs have over third-party service providers. More importantly, the Commission should carefully weigh the authority it grants LECs to review and terminate billing contracts with service providers, and to define cramming to their own liking. Currently, the LECs have carte blanche authority to terminate billing and collection billing service to competitors. Each LEC, in its sole discretion, determines that cramming has occurred and sanctions the competitor it determines has transgressed without recourse for the affected carrier. The LEC's ability to terminate billing for various service providers should be strictly circumscribed and certainly not expanded. If any LEC terminates billing and collection service to any carrier, the carrier should be given the opportunity to appeal the termination to the Commission before its billing and collection service is terminated. Pilgrim supports the investigation of the Washington Commission into cramming issues. Pilgrim looks forward to participating in any further proceedings designed to consider rule changes necessary to better protect consumers against unwanted charges. Pilgrim remains mindful of the need to foster a competitively neutral environment for the development and delivery of enhanced services to consumers. Thank you for the opportunity to comment in this matter. If you have any questions or comments, please do not hesitate to contact us. Very truly yours, Walter Steimel, Jr cc: Pilgrim Telephone, Inc. t:\tc\51860\020002\2-wautil.fil