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Bell overcharging for party-line rental phone sets

Ms. Diane Rheaume
Secretary-General
Canadian Radio-Television and
Telecommunications Commission
Ottawa, ON
K1A 0N2

BY FAX AND EMAIL

Dear Ms. Rheaume:

Re: Bell Canada – unauthorized rate increases to party line rental sets;
Part VII Application by PIAC for enforcement and relief

1. The following is an application made pursuant to sections 25, 48, 51, 55, 56, 57 and 60 of the Telecommunications Act, and filed under Part VII of the CRTC Telecommunications Rules of Procedure on behalf of Bell Canada’s residential party-line customers. The application is for enforcement of Bell Canada’s tariffed rate for party-line rental sets, compensation to overcharged subscribers, further enforcement measures designed to ensure compliance with CRTC tariffs in the future, and payment of costs to PIAC for its investigation and pursuit of this matter.
2. Specifically, we are requesting that the CRTC:

  1. confirm that Bell Canada increased the monthly charge for party-line rental sets above the tariffed rate without CRTC approval, and did so on more than one occasion;
  2. order Bell Canada to rebate affected customers all amounts improperly charged, with interest;
  3. order Bell Canada to pay PIAC’s costs of investigating and pursuing this matter
  4. grant any further relief as the Commission considers reasonable.

3. PIAC also requests that the CRTC determine whether any other telephone companies have been overcharging for party-line rental sets, and if it is found that they have, make an order similar to that for Bell Canada, designed to ensure ongoing compliance in the future.

The Facts

4. In March 2002, PIAC was contacted by a Bell Canada two-party-line subscriber complaining about new and increased charges on her March 2002 telephone bill. One of the charges in question was $5.30 for “equipment rentals”. Upon investigation, it was confirmed that this charge related to an old 500-type rotary dial telephone set, and that the customer had no choice but to rent her telephone set from Bell Canada because she was a party-line subscriber. In response to an inquiry about the validity of the $5.30 charge for set rental, Bell Canada’s customer service representative confirmed that $5.30 was the correct charge for the rental set in question, and that the charge had recently been increased.
5. In June 2002, PIAC began researching Bell Canada’s telephone service options and prices as part of a study into how residential customers have been affected by competition and deregulation over the past ten years. One of the services examined was rental set prices. The Bell Canada tariff for rental sets, Item 2300 in Bell’s General Tariff, gives a rate of $2.95 for 500-type telephone sets provided to party-line subscribers. This tariff has an effective date of 1996 02 01, and there is no indication that it has been changed since that date.
6. Noticing the discrepancy between the confirmed $5.30 charge and the $2.95 tariffed rate, PIAC staff began investigating. Over the course of several weeks from June to August 2002, PIAC made numerous inquiries to Bell Canada’s regulatory department, customer service line (310-BELL), and Executive Office (1-800-267-7734) in an attempt to resolve this issue. As set out in the attached Affidavit of Michael Nesbitt, Bell representatives gave conflicting responses to the question of what is the applicable rate for party-line rental sets.
7. Finally, on August 7th, Bell confirmed that the approved rate is $2.95 and that the specific account-holder noted above had been improperly charged. A Bell service representative further confirmed that the improper rate increases had been applied across the board, such that this particular account holder was not unique in being overcharged.
8. Bell indicated that the specific account-holder would be credited with the improperly billed amounts, but did not confirm that all other similarly affected customers would be rebated.

The Law

9. Under sub-section 25(a) of the Telecommunications Act,

No Canadian carrier shall provide a telecommunications service except in accordance with a tariff filed with an approved by the Commission that specifies the rate or the maximum or minimum rate, or both, to be charged for the service.
10. While the price of terminal sets is generally no longer regulated, an exception exists for terminal sets rented by party-line subscribers. This is because party-line subscribers have no choice but to rent telephone sets from their service provider. As stated by the Commission in Telecom Decision CRTC 94-19,

The above findings and determinations [deregulating the sale, lease and maintenance of terminal equipment] do not apply to terminal equipment supplied on a monopoly basis, specifically, to equipment required by tariff to be supplied by the telephone company in conjunction with the provision of two-party, four-party or multi-party primary exchange services.
11. The approved tariffed rate for 500-type terminal sets rented by Bell’s party-line customers is $2.95. Bell Canada is not permitted to charge higher than this amount for rental telephone sets on party-lines. By doing so, Bell is in violation of s.25 of the Telecommunications Act.
12. A contravention of section 25 is considered an offence under s.73(2)(a) of the Telecommunications Act and is punishable upon summary conviction with fines of up to $100,000 per day on which the offence is committed, for a first offence.
13. Article 19 of Bell’s Terms of Service addresses Bell’s liability for charges that should not have been billed and those that were overbilled. It states:

19.1 In the case of a recurring charge that should not

have been billed or that was overbilled, a customer must be credited with the excess back to the date of the error, subject to applicable limitation periods provided by law. However, a customer who does not dispute the charge within one year of the date of an itemized statement which shows that charge correctly, loses the right to have the excess credited for the period prior to that statement.

19.2 Non-recurring charges that should not have been

billed or that were overbilled must be credited, provided that the customer disputes them within 150 days of the date of the bill.

19.3 A customer who is credited with any amount that

should not have been billed or that was overbilled must also be credited with interest on that amount at the rate payable for interest on deposits that applied during the period in question.

14. The CRTC has the powers of a superior court with respect to the enforcement of its decisions.
15. The CRTC also has the power to order “by whom and to whom any costs are to be paid and by whom they are to be taxed….”.

Argument

16. It is clear that Bell Canada has been charging higher than the approved rate for party-line rental sets for some time, in contravention of s.25 of the Telecommunications Act. Indeed, Bell appears to have increased its rate for this tariffed service without CRTC approval on at least two occasions.
17. Moreover, consumer advocates and at least one affected customer challenging the validity of the $5.30 rate were wrongly assured by Bell, as early as March 2002, that the $5.30 rate was valid.
18. This is not simply a case of human error resulting in overcharging, where the overcharging is rectified as soon as it is brought to the attention of the Company. On the contrary, Company representatives continued to defend the invalid charges when queried about them. Only after persistent investigation by the Public Interest Advocacy Centre did the Company finally admit its error and offer to refund the customer who had complained to PIAC.
19. It is unreasonable to expect ordinary customers to challenge Bell Canada’s assurance that a given rate increase has been approved. It is furthermore unreasonable to expect ordinary customers to research CRTC tariffs (that even Bell service representatives cannot find) in order to second-guess the company on its own ground. When a company is first questioned about an improper charge, the error should be immediately identified and rectified, by way of refunding all affected customers forthwith.
20. However, there is no indication that Bell Canada intends to refund all affected customers. Indeed, Article 19 of Bell’s Terms of Service puts the onus on customers to dispute overbilled charges; Bell need not refund overbilled amounts unless they are disputed by the customer. Article 19 furthermore removes the customer’s right to a refund one year after a statement on which the correct billed amount appears.
21. Such limits on Bell liability for overcharged amounts are clearly inappropriate when there is no reasonable way for a customer to determine that he or she has been overcharged, and when the company itself asserts that the charge is legitimate.
22. This instance of overcharging was only uncovered by a serendipitous confluence of events: the fact that the same person supervising research on telephone rates had received a few months earlier an inquiry about an account on which the impugned charge appeared. In other words, the ongoing overcharging would likely have never been appreciated by Bell customers or consumer advocates in the absence of this unusual confluence of information flowing to PIAC.
23. It is important that such persistent violation of CRTC regulations be effectively deterred. Mere reimbursement of the amounts improperly billed to those customers who complain, as required by Article 19 of Bell’s Terms of Service, will provide no incentive for Bell Canada and other regulated companies to comply with CRTC tariffs. Indeed, it would send the opposite message: that regulated companies can violate their tariffs with impunity.
24. In many instances, tariff violations may never be caught, especially where the company’s customer service representatives are not provided with the tools or training to accurately confirm tariffed rates (as was the case here).
25. If a company is caught violating a tariff, the opportunity to reimburse affected customers can be used to the company’s advantage, as the company contacts affected customers, apologizes, takes credit for noticing the error, and offers to reimburse and otherwise satisfy the customer. Mere reimbursement is clearly an insufficient incentive for ongoing compliance with tariffed rates.
26. Using its powers of enforcement (those of a superior court), the Commission should therefore require Bell Canada to take further measures, above and beyond reimbursement of the overcharged amounts, so as to effectively deter such violations in the future.
27. The only effective deterrence measure is one that more than offsets any financial advantage from non-compliance (i.e., makes compliance less expensive than non-compliance).
28. Clearly, Bell Canada needs to take more effective measures (a) to ensure ongoing compliance with CRTC tariffs, and (b) to ensure that its customer service representatives can quickly and accurately answer straightforward questions about current tariffed services.
29. While Article 19 of Bell’s Terms of Service requires a refund, with interest, of amounts overcharged, it does not limit Bell’s liability in the case of negligence. Article 16 does limit Bell’s liability for negligence, to “the greater of $20 or three times the amounts refunded or cancelled in accordance with Articles 13.1 and 15.1, as applicable”. However, Article 1.2 state that Bell’s liability is not limited “in cases of deliberate fault or gross negligence”.
30. Nor do the Terms of Service limit the CRTC’s powers of enforcement, which are those of a superior court. In past cases of regulatory breaches, the Commission has exercised this power in a variety of ways, including requirements for companies to undergo independent audits, to file reports with the CRTC, to revise procedures, and to further compensate affected customers.
31. Given the facts of this case, which show not an isolated incident involving only one Bell staff member, but rather a general lack of awareness by Bell personnel of basic tariffs, as well as a failure to distinguish between regulated and unregulated services, remedial orders above and beyond mere reimbursement are warranted. The Commission should therefore order Bell to:

  1. further compensate affected customers for the improper charges by way of an additional credit to their accounts of an amount equal to the rebate;
  2. post security for use in any future instances of non-compliance with CRTC tariffs;
  3. undergo an audit of its regulatory compliance by an independent third party, the results of which are to be made public; and/or
  4. file a semi-annual compliance report, including a personal declaration from its Chief Executive Officer confirming that the company is in compliance with all CRTC orders, tariffs and other regulations relating to residential telephone service, and documenting any instances of non-compliance.

Costs Argument

32. As indicated above, and in Exhibit A, this tariff violation would not have been uncovered and acted upon but for PIAC’s persistent investigation. It is only fair that Bell Canada reimburse PIAC for the costs of its investigation and pursuit of this matter.

Order Requested

33. For all these reasons, PIAC requests that the Commission make an Order:
a) requiring that Bell Canada rebate affected customers all amounts improperly charged, with interest;

b) requiring that Bell Canada take further remedial action such as:
i). further compensating affected customers for the improper charges by way of an additional credit to their accounts of an amount at least equal to the rebate;
ii) posting security for use in any future instances of non-compliance with CRTC tariffs;
iii)undergoing an audit of its regulatory compliance by an independent third party, the results of which should be provided to interested parties; and/or
iv) filing a semi-annual compliance report, including a personal declaration from its Chief Executive Officer confirming that the company is in compliance with all CRTC orders, tariffs and other regulations relating to residential telephone service, and documenting any instances of non-compliance; and

c) requiring that Bell Canada pay PIAC’s costs of investigating and pursuing this issue.

All of which is respectfully submitted,

original signed

Philippa Lawson
Senior Counsel
Public Interest Advocacy Centre
Attach.

cc: Bell Canada – Legal Department
CRTC – Legal Department

NOTICE

TAKE NOTICE that pursuant to subsections 8(1) and 59(1) of the CRTC Telecommunications Rules of Procedure, the respondents are required to mail or deliver their answers to this application to the Secretary General of the Canadian Radio-television and Telecommunications Commission, Ottawa, Ontario, K1A 0N2, and to serve a copy of the answer on the above by 16 September 2002.

Service of the respondent’s answers on the applicant may be effected by personal delivery, e-mail or by facsimile, at the address set out above.

If the respondent does not file or serve its answer within the time limit prescribed, this application may be disposed of without further notice to it.

END OF DOCUMENT

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