BEFORE THE WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION ) Re: Notice of Preproposal Rulemaking Inquiry ) Regarding Prepaid Telephone Services and ) Docket No. UT-971469 Notice of Comments Due March 18, 1998 ) ______________ ) Comments of PT-1 Communications, Inc. Introduction PT-1 (“PT-1”), by undersigned counsel, hereby respectfully submits these Comments in response to the Washington Utilities and Transportation Commission’ s (“Commission”) Notice in the above captioned docket proposing a rulemaking governing prepaid telephone service (“Notice”). As a preliminary matter, PT-1 applauds the Commission for its efforts to protect the interests of Washington prepaid telephone service consumers and to clearly define the scope of prepaid telephone services. PT-1 herein examines a number of issues applicable to the Notice that it believes will facilitate the offering of reliable, high quality, cost efficient prepaid services to Washington consumers. Background PT-1, a telecommunications company in operation since July of 1995, is one of the nation’s leading providers of prepaid calling cards. PT-1 currently operates in several states. 1. Disclosure to Customers at Time of Purchase The Commission is considering requiring that carriers disclose, at the time of purchase, the underlying carrier’s name and toll-free number, description of the calling area capabilities, an explanation of the rate structure, and expiration and recharge policy and call timing and rounding policy. PT-1 absolutely agrees that consumers must be given this information to make an intelligent choice about which card to purchase, with the exception of the name and toll-free number of the underlying carrier (as discussed below). PT-1’s concern, however, is that, given the very fluid nature of rates in the telecommunications industry today, consumers relying on such information printed on their cards or the packaging may, soon after the date of purchase, unknowingly find themselves in possession of stale or obsolete information which could, itself, be the basis of consumer complaints. PT-1 cannot, after all, control how quickly its cards are sold at any particular location or when a consumer will use the card. PT-1 therefore urges the Commission to encourage the dissemination of rate information at the point of sale and, indeed, to discourage the printing of such information on cards and packaging. Moreover, a legible, complete and accurate listing of rates could not possibly fit on a card or its packaging unless the packaging were manufactured so as to be substantially larger than the card itself, at an added cost to consumers. PT-1 suggests that the Commission consider requiring companies to do what PT-1 is already doing; to print on the cards and/or packaging that service is being provided in accordance with the company’s tariff and specify the location of the tariff. For many companies, rate information displays at the point of sale are a primary means of marketing. Accordingly, they have a crucial incentive to try to ensure that such information is provided to the customer. PT-1 respectfully submits that the name and toll-free number of the underlying carrier need not be disclosed to consumers at the time of purchase. Providing such information furnishes nothing useful to the customer. If the customer has questions, comments or concerns regarding the card, the only entity that can and should respond is the issuer of the card. A customer who calls the underlying carrier will only be frustrated, because the underlying carrier cannot intelligently address any concerns or questions. Further, such a requirement necessarily limits carriers’ ability to switch underlying carrier(s) based on economic and business practicalities and/or to use multiple underlying carriers. 2. Disclosure of Time Remaining on the Card PT-1 supports the Commission’s desire to ensure that customers are able to determine the time remaining on the card and urges the Commission to adopt a rule that allows customers to call a toll-free or local number prior to, or after using a card or other prepaid service to determine the value remaining. Further, PT-1 agrees that customers should be notified when the card approaches depletion. 3. Access to the Carrier PT-1 agrees that a toll-free or local number for consumer access to the carrier should be provided on the card and/or associated materials. PT-1 respectfully urges the Commission not to require that a Commission Staff contact name and number be provided on the card and/or associated materials. Unlike virtually all other telecommunications products, debit cards are completely portable and location indifferent. Indeed, this convenience is one of the primary pubic interest benefits for debit card customers. Requiring that Commission or state specific information be provided creates numerous operational difficulties for carriers. In order to comply, cards and/or associated materials would have to be specially prepared for Washington. Further, although PT-1 could (at substantial cost) specially produce state-specific cards and deliver them to the appropriate jurisdiction, it cannot control where those cards go once entering the stream of commerce. Of course, if every state were to impose such a requirement, the cost to specially produce cards for each state would be prohibitive. Ultimately, these costs are necessarily borne by customers. Accordingly, due to their transitory nature, cards are not appropriate vehicles for state specific information. PT-1 recommends that the Commission require carriers to provide to customers appropriate Commission contact information via customer service, if so requested. 4. Protection of Advance Payments PT-1 support the Commission’s initiative to ensure that providers of prepaid service be adequately financed or be required to post surety bonds. PT-1 respectfully urges to create a straightforward exception to any bonding requirement for companies that can meet a reasonable threshold financial showing, are publicly traded, or have been in business for a minimum number of years. 5. Limit of Debit Card Denominations PT-1 respectfully urges the Commission not to limit denominations of cards sold in Washington. As discussed above, the cost of creating state-specific cards is ultimately borne by consumers, while there is no appreciable public interest benefit -- cards of unlimited denomination will continue to be available throughout the country, except in Washington. Additionally, there are strong marketing advantages to allowing unlimited denominations: carriers can respond to consumer demand; lower rates are often available at higher denominations; consumer preference (i.e., in preparation for travel) -- to mention but a few. 6. The Commission’s Rules Should Be “Grandfathered” To Accommodate Companies with Cards Already in the Stream of Commerce. If and when rules are adopted, the Commission should “grandfather” companies with cards already in the stream of commerce. The new rules should apply to cards issued as of three months (or ninety days, whichever is longer) after the rules’ date of adoption. As previously stated herein, PT-1 concurs fully with the Commission’s goal of increasing consumer protection. Nonetheless, a failure to allow continued distribution of already-issued cards would work a very great hardship on companies with cards already in the stream of commerce that cannot be retrieved. Such a burden may well be expected to affect the cost at which such companies can provide their service to the very consumers that the Commission seeks to protect. Conclusion PT-1 believes that rules, when adopted, will go a long way towards ensuring increased consumer protection -- an extremely important goal. The benefits to consumers of a highly competitive market in telecommunications services are well documented. PT-1 respectfully urges the Commission to adopt rules in accordance with the above recommendations. Respectfully Submitted, PT-1 Communications, Inc. By: ___________________ Russell M. Blau Marcy Greene Swidler & Berlin, Chartered 3000 K Street, Suite 300 Washington, DC 20007 Tel: (202) 424-7500 Fax: (202) 424-7643 Its Counsel Dated: March 17, 1998