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Consumer Advocates Seek Ban

Companies Urge California to Back Off Reviewing Their Fees

The telecom industry recoiled at the new direction for a California Public Utilities Commission rulemaking that previously focused on state USF charges. The CPUC has no business investigating provider-imposed charges, said phone, cable and wireless companies in comments Wednesday. Consumer advocates welcomed the review into discretionary charges they said aren’t always expected by customers.

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The commission switched to a connections-based state USF contribution method in phase one of docket R.21-03-002. For phase two, the CPUC sought comment March 6 on “provider-imposed charges” on customer bills (see 2303060063). President Joe Biden said he wanted to investigate junk fees in this year’s State of the Union.

Phase two was supposed to focus on the reasonableness of CPUC public purpose program surcharges that telecom providers are required to impose on customers, plus additional taxes and fees assessed by local, state and federal governments, complained T-Mobile: The CPUC's ruling last month "seems to redirect this Rulemaking completely." The carrier is fighting the phase-one USF order at the 9th U.S. Circuit Court of Appeals (see 2304030058). There’s no need for the CPUC to look at provider fees, added T-Mobile. “Existing law and general carrier practices already ensure that charges are appropriately disclosed to customers … T-Mobile simply has no 'hidden fees.'"

"Focusing on the impact of federal and state broadband funds on the CPUC’s public purpose programs and the reasonableness of PPP surcharges would be more productive than spending time and resources reviewing matters that are either preempted by federal law or already addressed proactively by the industry and by existing regulations,” commented Verizon. Federal law preempts regulating wireless rates, including fees, and California deregulated wireline services, except for small rural telcos, years ago. There’s no policy reason to regulate fee transparency since wireless carriers give "ample disclosure" per a CTIA code, the carrier added.

The Utility Reform Network welcomed this "critical public policy discussion" on how the CPUC "should address the proliferation of discretionary provider-imposed fees and charges.” Such fees “may reflect deceptive practices, or at the very least are opaque and unfair to consumers,” said TURN. Many consumers learn about such fees on their first bill, and the "true price for a service may be significantly higher than the advertised prices,” it said. The consumer group found discretionary fees in bills from ILEC, CLEC, cable, VoIP and wireless companies. "Some fees that appear on customer bills have no identifiable connection to any service provider cost or governmental requirement that a service provider might face," it said. TURN specifically questioned AT&T Mobility's $1.99 "administrative fee" and $1.50 "regulatory cost recovery charge," and Altice's $3.50 "network enhancement fee."

The Public Advocates Office wants a ban. “Provider-imposed fees and charges that are unrelated to the cost of providing service are unjust and unreasonable,” commented the CPUC's independent office. “Providers hide these fees in customer bills to garner billions of dollars in profits. Customers must receive fair and transparent bills." Ban additional surcharges that aren't government-mandated, including those that aren't "required for service provision or authorized by customers,” said PAO. “To the extent the fees are related to a service provision, the providers must clearly identify the additional charges to customers through clear disclosures and notifications.”

Industry sees no problem. AT&T ensures non-government surcharges on bills "are clearly disclosed throughout the customer lifecycle" and easily understood by end users, said the carrier: Competition ensures AT&T can only levy charges “that customers are willing to pay.”

"The Commission should not expand this proceeding into an unnecessary and time-consuming investigation of 'provider-imposed fees,’” said Frontier, reminding the agency it lacks authority over internet and interstate services. The ruling doesn’t define provider-imposed charges, it added.

Consolidated Communications “disputes the underlying premise of this information request that implies the charges that appear on its customers’ bills are intended to recover anything other than the cost of service that Consolidated provides,” the telco said.

Don't step in "when there has been no showing of pervasive issues in California, and any issues related to telephone corporation fees and charges can already be addressed through existing Commission mechanisms,” agreed Charter Communications: Wait to review federal proceedings on the same subject and “avoid premature actions that may create unnecessary confusion to the detriment of consumers.” Regulating could lead to higher rates, warned Cox Communications.

The vigorously competitive wireless marketplace effectively disciplines wireless pricing, including provider-imposed charges,” said CTIA. The California Broadband and Video Association said its cable members try to be transparent. Regardless, the CPUC lacks authority to regulate non-telephone services including video, broadband and VoIP services, CalBroadband said.

"This expansion of this proceeding would impose unnecessary burdens on the Small LECs, who have limited resources and who do not impose any 'provider-imposed charges,’” said CalTel and other rural telcos. To the extent they "relate to unregulated Internet or other interstate services, the Commission does not have jurisdiction to regulate these fees.”