Agenda: July 8, 1998 Item: Docket: UT-970301 Rulemaking for Pay Phone and Operator Services Providers Staff: Suzanne Stillwell, Consumer Program Specialist Vicki Elliott, Consumer Affairs Manager Paul Curl, Deputy Director, Regulatory Services Bob Wallis, Review Judge Tim Zawislak, Policy Research Specialist Recommendation: Direct the Secretary to file the attached Notice of Proposed Rulemaking (CR-102) and Small Business Economic Impact Statement (SBEIS) with the Code Reviser to begin the process of amending provisions in WAC 480-120 regarding Pay Phones and Operator Services Providers. Discussion: On March 26, 1997, the Commission filed a preproposal statement of inquiry (CR-101) with the Office of the Code Reviser to explore the need to update its rules for pay phone service providers and operator service providers. This rulemaking came as a result of federal action to deregulate many aspects of pay phone service in the Federal Telecom Act of 1996 and subsequent FCC orders. The orders issued by the FCC essentially deregulated local coin rates at pay phones, and gave states explicit authority to implement consumer protections regarding pay phone use. Since that time, staff has worked with the industry, consumer interests and independently to define how current rules should be changed to reflect the federal action, while ensuring that Washington state consumers are adequately protected when using pay phone services. Our process included a stakeholders meeting, three rounds of written comments, and a number of individual discussions. Staff wishes to thank those who participated in the process. Their participation, thoughtful comments and considered suggestions allowed open and honest communications with all parties. The discussions enabled the development of rules that appropriately protect consumers without undue regulatory burden on the companies involved. The process also allowed staff to explore the industry's concerns about different possible approaches to pay phone consumer protections. Briefly, the proposed Docket UT-970301 July 8, 1998 Page 1 rules (attached) would require pay phone service providers and/or operator service providers to do the following: •Provide appropriate consumer disclosure at the pay phone site. These disclosures include posting of the local coin rate; charges for presubscribed directory assistance calls; emergency number(s); the WUTC toll-free number for dispute resolution; the name, address and phone number of the pay phone service provider and operator service provider; and notice of restrictions (i.e., the phone does not give change; limited to outgoing calls only; or it only accepts coins during specific hours). •Provide access at no cost to the caller to specific services (i.e., dialtone, emergency calling, telecommunications relay services for the hearing-disabled, access to preferred long distance carriers) as required by the federal order. Additionally, the proposed rules make a number of general housekeeping changes, such as updating terminology within the rules to be consistent with industry and federal practices. Information contained in related existing rules (WAC 480-120-137, 142, and 143) are now included in either the pay phone service provider rule WAC 480-120-138, the operator service provider rule WAC 480-120-141, or has been deleted if the information is no longer applicable. The CR-101 suggested that staff would explore the need to establish criteria for public interest pay phones. Staff determined that public interest pay phones were better addressed in the Universal Service study. Preliminary findings during 1997 concluded that the Commission need not take any direct action regarding public interest pay phones. Staff recognizes that the information leading to this conclusion was gathered early in the deregulation process. We intend to collect up-to-date data from a larger audience to ensure the results are consistent with our earlier findings. A summary of the findings on public interest pay phones was published as an appendix to the Commission’s universal service report to the 1998 legislature (Preserving and Advancing Universal Service in a Competitive Environment). Staff believes the proposed rules represent a good balance between consumer protection and regulatory requirements. There are several areas, however, where participants and staff did not reach complete agreement. A summary of the more substantive disagreements follows. The additional comment period afforded by the CR-102 process will allow stakeholders and staff to continue to work on the issues before final adoption of the rules. •Jurisdictional issues regarding pay phone regulation. Several commentors assert that the Commission does not have jurisdiction over pay phones at all because they believe the Telecom Act of 1996 removed all regulation from the state. Staff does not agree. We believe that while the regulation of the local coin rate was removed by federal legislation, the obligation to regulate other aspects of the pay phone industry, especially in the area of consumer protection, was left to the states to manage. •Disclosure required at the pay phone site. Some commentors were concerned with the amount of disclosure required by the new rules, and some objected to specific disclosures as unnecessary. Staff strongly believes that adequate disclosure at the pay phone site is necessary to promote competition and to appropriately inform and protect users of pay phone services. Staff does not agree that less disclosure is appropriate. •Compensation for incoming calls. GTE, US WEST and the Northwest Payphone Association (NWPA) believe that companies should be allowed to charge customers for calls made to pay phones (in addition to those made from pay phones). U S WEST and NWPA believe that staff’s position is inconsistent with the federal law. Staff believes that the federal statute and resulting orders were ambiguous about compensation for incoming calls. This issue is mentioned only in passing at one point within one FCC order. Staff believes the federal language is not sufficient to require compensation for incoming calls within WUTC rules. •Restrictions on length of local calls. Some PSPs may want to restrict the length of local calls due to complaints that customers were blocked from a phone because of unusually long calls or repeated, perhaps long, calls. The site owner wants everyone to have reasonable access to the phone and not have a few people hogging it. The NWPA believes that the industry needs the flexibility itself to deal with this issue. They have said that in Washington, few, if any, PSPs time local calls. Since the average call is short and public access lines are flat rated in Washington, and because consumers do from time to time require longer periods to complete the purpose of a call, there is no need to put short time limits on calls. The proposed rules would define a local call at a minimum of 15 minutes in length. Staff notes that the rate for local calls is not regulated. Staff recommends that the Commission direct the Secretary to file a Notice of Proposed Rulemaking (CR-102) and Small Business Economic Impact Statement with the Office of the Code Reviser, pursuant to RCW 34.05.320 and RCW 19.85.030, to revise portions of WAC 480-120 regarding Pay Phone and Operator Services Providers. Attachments