PUC Bows to FCC on Phone Allocation Plan

The California Public Utilities Commission reluctantly acquiesced Wednesday to a federal ruling that telephone customers must be randomly assigned to a long-distance carrier if they fail to choose one when so-called equal-access service starts in their communities.

This “random allocation” plan will apply to about 8 million telephone customers in the state. The fewer than 1 million California customers whose lines have already been converted to equal access are not affected by the ruling.

Until last May 31, customers who failed to designate a carrier to be reached by dialing 1 were left by default with AT&T; Communications, the long-distance unit of American Telephone & Telegraph. On that date, however, the Federal Communications Commission changed its policy in a move that the state PUC called “a mistake” and “an unfortunate exercise of federal regulatory power.”

The FCC ruling technically applied only to long-distance calls between states. But Pacific Bell and General Telephone of California, which must provide the local connections making equal-access service possible, asked the California commission to apply the same rule to calls within the state.

The commissioners, in granting that request, said they really had no choice. Otherwise, they reasoned, Pacific Bell and General Telephone would have had an impossible task dealing with two systems--one for intrastate and one for interstate.

Last January, the PUC had rejected random allocation, contending that confusion would be minimized if customers who failed to designate a carrier were simply left with AT&T.; The commissioners said they wanted to ensure that equal-access service would be presented to the public “as an opportunity for choice, not as a threat of compulsion.”

However, the FCC was persuaded to change its policy after complaints from AT&T;’s competitors--including MCI, GTE Sprint and Allnet--that the “default” policy unfairly favored AT&T; and inhibited competition in the $40-billion long-distance market.

The FCC action will “ram competition down the public’s throat,” PUC President Donald Vial predicted Wednesday.

“I still believe the FCC order is incorrect,” said Commissioner Victor Calvo in presenting the PUC’s decision. “However, we must make the best of this situation.”

“We have no real alternative,” agreed Commissioner William T. Bagley.

The clearest indication of the commission’s unhappiness with the FCC ruling came in Wednesday’s meeting agenda. Before it was amended, it said the PUC “capitulates to the exercise of arbitrary, raw, over-weaning power” by the FCC. That language, drafted by Administrative Law Judge Martin Mattes, was later toned down, but Bagley commented that “I liked the original. I object to the new agenda.”

Information With Bills

Under the order, any customers with complaints about the allocation system will be invited to contact the FCC, not the PUC. (In one draft, Mattes acknowledged, customers would have been provided with the personal telephone number of FCC Chairman Mark Fowler.)

Under the FCC and PUC rulings, Pacific Bell and General Telephone will insert equal-access information in their customers’ billing envelopes when the conversion process begins, 90 days before the start of service. A special notice, in English, Spanish and Chinese, will be printed on the envelope alerting them that it contains “information that may affect your long-distance service.”

Customers will continue to receive a ballot listing all of the long-distance carriers offering “dial 1” service in their community. If they fail to return the ballot, a second mailing will repeat that message and indicate the long-distance carrier to which they will be assigned if they fail to make a choice.

The allocations will be made randomly among the competitors based on the percentage of subscribers who chose them in the first mailing.

Even after equal-access service begins, however, telephone customers will be able to make one choice without paying a $5.26 hookup charge to their local phone company, the PUC noted. Current customers of AT&T;’s competitors are not automatically signed up with them for dial-1 service and could be assigned to another carrier if they fail to make a choice.