DE 98-102
Tel-Save, Inc.
Complaint Against Bell Atlantic - New Hampshire and
Request For Relief
Order Denying Request
O R D E R N O. 23,177
March 29, 1999
I. PROCEDURAL HISTORY
On June 15, 1998, Tel-Save, Inc. (Tel-Save) filed with
the New Hampshire Public Utilities Commission (Commission) a
complaint and request for relief against New England Telegraph
and Telephone Company (Bell Atlantic) for violation of sections
201(b) and 202 of the Communications Act of 1934 as amended by
the Telecommunications Act of 1996,(TAct) and for violation of
RSA 374:1. Tel-Save alleges that Bell Atlantic's refusal to
permit end-user customers to lift PIC freezes by means of e-mail
transmitted directly by the customer, or forwarded by Tel-Save,
impedes customers' attempts to switch carriers. Bell Atlantic
filed a Response to the complaint on June 29, 1998.
On July 6, 1998, the Commission issued Order No.22,972,
scheduling a prehearing conference and technical session for
July 27, 1998. At the prehearing conference, Tel-Save, Bell
Atlantic, the Office of the Consumer Advocate (OCA), and Staff
agreed to a process involving technical sessions and written
position papers. By Order No. 23,028, the Commission approved a
modified procedural schedule and made all New Hampshire
independent telephone companies (ICOs) mandatory parties to the
proceeding. Pursuant to the Commission's order, on October 5,
1998, Tel-Save filed testimony. The Parties and Staff conducted
lengthy technical sessions on October 15, 1998.
By agreement of the Parties and Staff, Tel-Save took
time to examine the lifting of PIC freezes via a website. By
agreement of the Parties and Staff, when Tel-Save decided that a
website would not substitute for direct e-mail, all parties
including Tel-Save filed comments on Tel-Save's proposed e-mail
methodology. Comments were filed by Union Telephone Company
(Union) on December 3, 1998; and by Bell Atlantic, Tel-Save, a
number of ICOs collectively, the OCA, and Staff on December 10,
1998. Rebuttal comments were filed by Bell Atlantic on January
6, 1999 and by Tel-Save on January 7, 1999.
II. POSITIONS OF THE PARTIES AND STAFF
A. Tel-Save
Tel-Save argued that customers should be able to e-mail
a request to Bell Atlantic to lift a PIC freeze. Tel-Save
asserts that the current process, which requires telephonic
contact between the customer and Bell Atlantic during business
hours, causes unnecessary delay of the customer's request and can
cause customers to change their minds, thereby harming the onset
of competition and thwarting customer choice. The delay is
produced, according to Tel-Save, because Bell Atlantic is in sole
possession of freeze information; therefore, Tel-Save doesn't
learn of the existence of a customer's PIC freeze until after it
submits the PIC-change request to Bell Atlantic. Tel-Save then
notifies its prospective customer that a direct call from the
customer to Bell Atlantic is necessary. Because calls to Bell
Atlantic must be made during business hours, Tel-Save contends
that working customers are inconvenienced. Even if the customer
follows through and calls Bell Atlantic, Tel-Save asserts, and
even if the customer is able to wait out the customer service
queue and reach a customer service representative, Bell Atlantic
then has an opportunity to dissuade the customer from changing.
Tel-Save argues that e-mail is a safe, efficient means
of communication used for business purposes by at least a third
of computer users. E-mail will obviate the need for
orchestrating the simultaneous presence of the customer, the
competitive carrier representative, and the Bell Atlantic
representative. Furthermore, customer privacy can be protected
by including verifying, customer-specific information or a
password in the e-mail.
According to Tel-Save, lifting a PIC freeze via e-mail
is a streamlined process. The use of uniform language in every
e-mail request would simplify the interaction, making it more
effective than an ordinary written letter from a customer. Upon
notification by Bell Atlantic that a PIC freeze exists, Tel-Save
would contact the customer by e-mail, the customer could complete
a request form and e-mail it directly to Bell Atlantic, or to
Tel-Save who would then forward it to Bell Atlantic unaltered.
In support of its proposal, Tel-Save pointed out that
the Federal Communications Commission (FCC) recently issued an
order adopting baseline standards for lifting PIC freezes. Second
Report and Order and Further Notice of Proposed Rulemaking,(In
the Matter of Implementation of the Subscriber Carrier Selections
Changes Provision of the Telecommunications Act of 1996, Policies
and Rules Concerning Unauthorized Changes of Consumers Long
Distance Carriers), CC Docket No. 94-129, released December 23,
1998. Tel-Save cited the FCC's conclusion in its Second Report
and Order and Further Notice "that, although a state must accept
the same verification procedures as prescribed by the Commission,
a state may accept additional verification procedures for changes
to intrastate service if such state concludes that such action is
necessary based on its local experiences." Id. ¶ 87. The
additional verification procedures must be consistent with FCC
orders and rules, as well as § 258 of the Telecommunications Act.
Id. ¶ 89. According to Tel-Save, the FCC order does not
restrict the Commission's authority to grant Tel-Save's proposal,
so long as security measures are implemented for authentication,
such as those suggested by Tel-Save to require social security
numbers or dates of birth. Failure to grant its proposal, on the
other hand, will stifle the emergence of competition in New
Hampshire. Furthermore, the FCC's order requests comments on
sufficient security measures for implementing PIC changes, and
the lifting of PIC freezes, over the Internet. Id. ¶ 171, 172.
Tel-Save believes that the FCC will ultimately endorse e-mailed
requests to lift PIC freezes.
Tel-Save claims that a web-page approach to its request
is not workable for several reasons. First, the web-page would
be controlled solely by Bell Atlantic who could use the site for
its own interests. Second, Tel-Save would not know if and when
customers experience difficulty implementing a PIC freeze on the
web page. Third, Tel-Save claims that a web-page is no more
efficient than e-mail because e-mail, like a web-page, can be
formatted to allow automatic processing by Bell Atlantic
computers.
B. Union and the ICOS
Because of security concerns, Union objected to
removing PIC freezes via e-mail. However, Union would support
efforts to design a web-page for that purpose. Granite State
Telephone, Inc., Merrimack County Telephone Company, Contoocook
Valley Telephone Company, Inc., Dunbarton Telephone Company,
Inc., Wilton Telephone Company, Inc., Hollis Telephone Company,
Inc., Bretton Woods Telephone Company, Dixville Telephone Company
and Northland Telephone Company of Maine, Inc., objected
collectively to Tel-Save's request to require them to effect PIC
changes for customers with PIC freezes on the basis of e-mail
authorization. These ICOs aver that customers are well served by
the current process. No customer complaints have been received
regarding the process and, in fact, the extra steps required by
the current process honor the customers' express choice. These
ICOs are concerned that Tel-Save's proposal lessens the security
customers believe they have acquired through a PIC freeze.
Therefore, if e-mailed PIC changes are approved, customers will
react negatively.
While expressing support for the public policy of
encouraging competition, these ICOs argue that customer
protection is a competing public policy which is of greater
weight in this instance. Furthermore, these ICOs assert that
they will incur costs to implement Tel-Save's proposal and that
Tel-Save should bear that cost.
C. Bell Atlantic
Bell Atlantic argues that its policy of confirming
requests to lift PIC freezes is intended to protect customers and
has generated no customer complaints. Bell Atlantic
authenticates the customer's identity using a method which it
claims is universally accessible and private. E-mail on the
other hand, according to Bell Atlantic, is not universal, does
not reduce the processing time and does not protect the
customer's privacy. E-mail could also (1) produce a volume
"bomb" if a competitive carrier's advertizing created enough
e-mail traffic to snarl all of Bell Atlantic's electronics, and
(2) negate Bell Atlantic's ability to authenticate the customer's
identity. Furthermore, according to Bell Atlantic, Tel-Save has
access to information about a customer's PIC freeze status via
the Direct Carrier Access System (DCAS) system.
Bell Atlantic contends that the PIC change and PIC
freeze measures it employs are identical to those outlined by the
FCC in its Second Report and Order and Further Notice of Proposed
Rulemaking and are designed to protect against slamming, the
unauthorized change of a customer's PIC. Bell Atlantic avers
that Tel-Save itself has, in the past, initiated a kind of "fine
print" practice by which customers agreed that future PIC changes
could be reversed by Tel-Save automatically. Bell Atlantic
pointed out that e-mailed PIC freezes are not permitted by the
FCC, although the Further Notice of Proposed Rulemaking invites
comment on that subject.
Bell Atlantic also argues that parallel interstate and
intrastate PIC processes are critical within the state of New
Hampshire. Different processes will prevent the achievement of
economies of scale that result in lower rates and will complicate
and perhaps abrogate good customer service, especially for
multi-state business customers.
Bell Atlantic disagrees with Tel-Save's assertion that
e-mail requests would reduce processing time because e-mails,
even when structured in uniform fields of information, do not
have the capacity of a web-page approach. Therefore, according
to Bell Atlantic, the e-mail requires manual intervention rather
than automatic transmittal to a computer system for processing.
D. OCA
The OCA supports Tel-Save's request to require Bell
Atlantic to accept e-mail correspondence as a basis for lifting
PIC freezes, despite a concern for security. According to the
OCA, customers concerned about security can solve the problem by
installing security software. The OCA suggested that a
standardized message format be used by all competing carriers,
thus resolving Bell Atlantic's concern about the free-form
content of e-mail messages. The OCA asserted that a website
solution could also resolve the problem and expressed regret that
Tel-Save rejected that solution.
The major issue raised by the OCA concerned what it
views as the underlying problem: the process Bell Atlantic uses
for PIC freeze releases (and PIC changes) received in written
format. Currently, according to the OCA and as confirmed by Bell
Atlantic, Bell Atlantic requires telephonic verification of any
written request to lift a PIC freeze. This necessitates oral
authentication of the customer's identity, and confirmation of
the customer's request. If the customer is not at home, Bell
Atlantic leaves a voice message on an answering machine, if
possible, requesting a return call from the customer. If a voice
message is impossible, Bell Atlantic will make one more attempt
to obtain telephonic verification. No further attempt is made if
the second attempt is unsuccessful. Without telephonic
verification, Bell Atlantic will not carry out the customer's
written request to lift the PIC freeze.
The OCA argues that Bell Atlantic's process is
cumbersome and results in unreasonable failures to carry out
customers' valid requests. According to the OCA, Bell Atlantic
should act on the customer's request and send confirmation by
regular mail, acknowledging receipt of the request and indicating
the actions taken.
E. Staff
Staff indicated that the current PIC freeze process is
working effectively, as demonstrated by the fact that no
customers have complained of any difficulty in removing a PIC
freeze. Staff also argued that consistent procedures for both
interstate and intrastate carrier PIC changes greatly simplifies
the process for customers. Staff recommends review of the
intrastate process at such time that the interstate process
changes. Staff agreed with much of Bell Atlantic's, Union's, and
the ICOs' objections to Tel-Save's proposal.
III. COMMISSION ANALYSIS
We have reviewed all the written materials filed in
this docket, as well as FCC orders and our own orders regarding
intraLATA presubscription and dealing with safeguards against
anti-competitive practices. We are keenly aware of the
importance and delicacy of the balance of competitive and
customer security concerns. We are not convinced by Tel-Save's
arguments that competitive concerns outweigh security concerns in
this case. Moreover, we are persuaded that consistency between
intra- and interstate processes for dealing with competitive
choices will best serve New Hampshire customers.
The FCC's Second Report and Order and Further Notice of
Proposed Rulemaking, issued December 23, 1998, adopted rules
first proposed by the FCC in 1997. Thus, the FCC considered all
aspects of this question for a period of over a year, with the
benefit of comments from numerous CLECs, ILECs, and other
interested parties. The rules implement § 258 of the TAct; § 258
makes it illegal for any telecommunications carrier to "submit or
execute a change in a subscriber's selection of a provider of
telephone exchange service or telephone toll service except in
accordance with such verification procedures as the (Federal
Communications) Commission shall prescribe."
The FCC prescribed by rule § 64.1150, as amended, a
range of verification options: written authorization in a form
that meets the requirements of § 64.1160 (letter of agency or
LOA), electronic authorization utilizing a voice response unit or
similar mechanism that records the required information including
the originating automatic numbering identification, and third
party verification of the subscriber's oral authorization.
Tel-Save correctly points out that the FCC specifically
declines to generally preempt state regulation of carrier
changes, ¶ 87, and that we are free to provide further
verification options for intrastate service, in addition to the
FCC's three verification options. At this time, we decline to
adopt e-mail as an additional verification option. Paragraph 88
of the FCC's Second Report and Order and Further Notice of
Proposed Rulemaking alludes to additional verification options
which a state "feels would promote consumer protection and/or
competition in the state's particular region." The arguments
adduced in this docket do not demonstrate either that consumers
will be better protected by the use of e-mail or that competition
is presently being harmed in New Hampshire by limiting
verification procedures to the three adopted by the FCC.
¶ 169-175.
We note also that the FCC's Second Report and Order and
Further Notice of Proposed Rulemaking seeks further comment on
whether a carrier change or lifting of a PIC freeze submitted
over the Internet could be considered a valid LOA and whether
additional methods of verification might be appropriate for use
by carriers who solicit subscribers, as Tel-Save does, over the
Internet. While Tel-Save argued that e-mail is just such an
appropriate additional method of verification, we find that the
arguments presented by Staff, the ICOs, and Bell Atlantic are
more persuasive, particularly as long as e-mail is not an
acceptable inter-state method of verification. Security concerns
and the benefits of intra- and inter-state consistency outweigh
Tel-Save's arguments of inconvenience.
We are persuaded, however, by the OCA's arguments, that
Bell Atlantic's requirement of telephonic confirmation of written
requests to change carrier or to lift a PIC freeze, constitutes
more than an inconvenience. Bell Atlantic must henceforth accept
a customer's signed written request as a valid. Although we live
in an increasingly electronic and telecommunicating world, a
person's signed written instruction to a commercial business,
regarding that person's business dealings with the business,
should be honored. Nowhere in FCC orders is there intimation
that a signed written instruction ought to be further verified.
The FCC defines a preferred carrier freeze as preventing a change
in a subscriber's preferred carrier selection unless the
subscriber gives the carrier from whom the freeze was requested
his or her express written or oral consent (¶ 6, fn.25,
emphasis added). The FCC's newly amended rules for verification
of orders for telecommunications service lists the three
verification method options and states that "[N]o
telecommunications carrier shall submit a preferred carrier
change order unless and until the order has first been confirmed
in accordance with one of" the options. (Emphasis added.)
Written authorization is a separate and equal method by which a
customer may obtain a PIC change, a PIC freeze, and the lifting
of a PIC freeze.
We appreciate Bell Atlantic's statement that its
process and policy was put in place, beginning in 1992, to
protect customers from slamming. However, we find that the
requirement for telephonic verification provides only de minimus
additional slamming protection while it unnecessarily impedes
customer choice.
Based upon the foregoing, it is hereby
ORDERED, that Tel-Save's request to require Bell
Atlantic to accept e-mail correspondence as a basis for lifting
PIC freezes is hereby DENIED; and it is
FURTHER ORDERED, Bell Atlantic shall cease to require
telephonic verification of customers' written, signed requests to
change carrier, institute a PIC freeze, or lift a PIC freeze.
By order of the Public Utilities Commission of New
Hampshire this twenty-ninth day of March, 1999.
Douglas L. Patch Susan S. Geiger Nancy Brockway
Chairman Commissioner Commissioner
Attested by:
Thomas B. Getz
Executive Director and Secretary