Regulators Answer Protests of Huge 976 Phone Charges

Clester Jones’ 15-year-old son hid the December phone bill when it arrived, so Jones did not see it until the phone was shut off--for non-payment of $5,312 for calls to a 976 number that offered sexually explicit conversation.

“The boy didn’t realize it was going to cost that much. He got hooked, he said. He just got so that he couldn’t keep from calling,” said Jones’ sister, May, an Oakland retiree.

Jones himself, a chef at San Jose Airport, took two extra jobs and managed to make a $300 payment on the bill, then another $1,000. But when his third payment check bounced, the phone company went to May Jones, who had co-signed for her brother’s service, and disconnected her phone as well.

She wouldn’t want anybody to go through what her family went through with the 976 number, said May Jones, who finally got a refund after she enlisted the assistance of a newspaper, a television station, the district attorney and the state Public Utilities Commission.

‘They Wanted Blood’

“He was 15, and he didn’t have permission,” she said. “And we told them that. . . . But let me tell you, they wanted blood, and my brother tried to give it.”

Complaints like the Joneses’ have drawn the attention of regulators to the nation’s booming dial-a-message industry, which is expected to expand by 80% this year. At last count there were 394 message lines in Los Angeles alone, 80 of them launched in the last six months, putting everything from horoscopes to sports scores to hard-core pornography within range of a $2 phone call.

Federal regulators say they are only now coming to grips with a technology that many now acknowledge was available in living rooms across America before anyone knew quite what it was.

“I think it got out of control for a while,” said Susan West, a Federal Communications Commission analyst who has worked to develop regulations for the dial-a-message industry.

“I really can’t believe that there’s . . . a kid in this country who hasn’t called one of these lines by now, and I think we’ve heard from every one of their parents. We just have gotten hundreds of thousands of letters and phone calls about it. People are upset,” she said.

Dial-a-message services were heralded as an important entree into the information age and a potentially significant source of revenue too that would keep regular phone bills down when Pacific Bell made the first 976 lines available to private operators in California four years ago.

Calls now are flowing in at the rate of 4.5 million a month to the more than 875 message lines available in California. Billings this year are expected to top $85 million.

But critics say earnings have fallen short of original expectations, and the biggest moneymakers have been precisely those services that Pacific Bell has sought to eliminate: dial-a-porn and teen-age “gab” lines.

In recent hearings before the Public Utilities Commission that concluded last week, Pacific Bell reported that more than 60% of the revenue generated by 976 came from sexually oriented lines aimed at adults.

An additional 15% was generated by teen party lines. The kind of information services Pacific Bell had most hoped to attract, such as those providing data on acquired immune deficiency syndrome and immigration issues, accounted for less than 5% of all calls.

“The main problem the telephone companies have had is that they have become the major instrument for the dissemination of pornography in California,” said Bob Gnaizda, a lawyer with a San Francisco-based organization, Public Advocates Inc., which has pushed for more consumer protection in the 976 industry.

“You look at those figures and you recognize that 976 has been a total failure in terms of an information-age device,” he said.

Even more disturbing for telephone company officials and private 976 line operators has been the soaring number of refunds demanded under a PUC regulation that requires customers to be given a one-time rebate on their telephone bills when they believe the 976 calls on their bills were unauthorized or made without knowledge of the costs.

Millions in Refunds

Data supplied for the first time to the PUC showed 976 refunds are now averaging $1.3 million a month--over 10% of all billings. Pacific Bell alone returned $3.01 million to unhappy customers between June and August.

Moreover, more than 3,300 of the refunds that Pacific Bell has made so far this year have been for phone bills of over $100. More than 180 have been for bills of $1,000 or more.

“The adjustment rate has been amazing. It’s really increased dramatically,” said Kathleen Kiernan-Harrington, staff attorney for the PUC, noting that refunds last year were running at only about 0.5% of all billings.

Telephone company officials say the problem of youngsters calling dial-a-porn, live “party” lines or children’s story services could be eliminated if the PUC allows Pacific Bell to implement central office “blocking.” Customers could have all 976 numbers blocked from their phones or limit the number of 976 numbers that could be dialed on their phones.

“The whole notion is to give people a way to solve what has become a problem in their home without making it a burden on them,” Kiernan-Harrington said.

A Mervin Field survey presented to the commission last week showed that at least 776,000, and perhaps as many as 1.1 million households in California would elect to block all 976 calls from their telephones if given the opportunity.

Mired in Legal Protests

The state Legislature has already ordered some form of 976 blocking to take effect at the beginning of next year, but the implementation has become mired in legal protests by 976 providers and questions about who would pay.

The state has specified that customers should be charged no more than $5 for blocking equipment, and the lowest estimates for completing the job--which hover at about $15 million statewide--to be paid by 976 providers.

Now, the PUC must decide whether all providers should be charged equally, or whether “problem” services, such as dial-a-porn or dial-a-Santa, should bear a greater share of the cost.

“What we have here is a publisher of information being required to pay for something that diminishes their own audience,” said Charles Ryan, who heads a newly formed organization of 976 operators known as the Information Providers Assn.

“Certainly, the economic impact would put another whole group of information providers out of business, and they’re likely to be the smaller, non-controversial-type providers. We just can’t let that happen,” Ryan said.

Pornography Controversy

Equally controversial have been efforts to control pornography over the telephone lines, particularly children’s ability to call up an imaginative menu of passion by simply dialing a telephone.

State regulators are skeptical about the 976 industry’s reluctance to require access codes or other devices, which in effect ask callers to subscribe to their services before calling them. The option could solve the problem of minors calling dial-a-porn services, but the industry says it would put many small companies out of business.

“The industry and the phone company have been very opposed to this on the grounds that it would kill the industry,” Kiernan-Harrington said. “I interpret that as meaning that this industry can only survive on casual use and a lot of impulse calls.”

First Amendment issues have made it difficult--until recently, nearly impossible--to regulate the content of what is broadcast over 976 phone lines.

Pacific Bell dropped a lawsuit seeking to shut down dial-a-porn operations in California when the PUC determined that the company was required to remain “content neutral.”

Ruling Being Studied

However, the U.S. 9th Circuit Court of Appeals, ruling two weeks ago in an Arizona case, determined that while the government cannot shut down dial-a-porn operations that are not outright obscene, phone companies may have that latitude.

Pacific Bell officials said they are studying the ruling to determine if it can be applied in California.

But David A. Henderson, the lawyer who represented Carlin Communications Inc. in the Arizona case, said he might appeal.

“We never looked on it as an issue of pornography or not pornography. It really is a First Amendment issue. It’s to what extent should the telephone company be involved in the censorship business,” Henderson said.

“Whatever principles the court adopts are the same, with respect to whether it’s Carlin, who transmits smut, or the NAACP, who may be trying to transmit messages about equal protection of the laws. It’s just bad policy to have the manager of the public forum where communications take place charged with the responsibility for controlling the content of the messages,” he said.

Teen ‘Gab’ Lines

Also still pending in California and elsewhere is the issue of whether, and how, to regulate the live teen “gab” lines that have become in recent months the fastest growing segment of the dial-a-message industry.

Total billings for the gab lines, which allow customers to call in and talk at random with other callers or listen in on “party line” conversations, grew from $992,000 a month last fall to $2.7 million in May of this year.

“People just enjoy either participating or eavesdropping in these kind of random conversations. It’s something about human nature that just intrigues people to want to call these lines,” said Ryan of the information providers association.

But Pacific Bell has asked the PUC to shut down the live conversation lines, contending that they violate state regulations that the utility says limit 976 calls to recorded three-minute messages.

“There’s nothing wrong with a talk line or a chat line, but you need proper safeguards,” said Pacific Bell spokeswoman Jean Green. “In particular, you need live monitors to prevent illicit dealings and prevent people from giving out their full name and phone number, which could have disastrous results.”

The commission has yet to rule on either the blocking or the gab line issues, though commission staffers say they expect some form of blocking to be in effect by the first of next year.