DATE:	January 6, 2005
TO:	Director, Division of the Commission Clerk & Administrative Services (Bayó)
FROM:	Division of Competitive Markets & Enforcement (Buys) Office of the General Counsel (Fordham, Rojas, Teitzman) Office of Standards Control & Reporting (Lowery)
RE:	Docket No. 040062-TI – Compliance investigation of New Century Telecom, Inc. for apparent violation of Rule 25-4.118, F.A.C., Local, Local Toll, or Toll Provider Selection.
AGENDA:	01/18/05 – Regular Agenda – Proposed Agency Action – Interested Persons May Participate
CRITICAL DATES:		None
SPECIAL INSTRUCTIONS:		None
FILE NAME AND LOCATION:		S:\PSC\CMP\WP\040062.REV3.RCM.DOC

 

Discussion of Issues

Issue 1:  Should the Commission accept New Century Telecom, Inc.’s settlement offer, dated December 14, 2004, to resolve forty-two (42) apparent violations of Rule 25-4.118, Florida Administrative Code, Local, Local Toll, or Toll Provider Selection?

 

Recommendation: Yes.  (Buys, L. Fordham, Rojas, Teitzman)

 

Staff Analysis:  New Century Telecom, Inc. (New Century) is a switchless reseller of interexchange telecommunications services headquartered in McLean, Virginia.  New Century’s interexchange company (IXC) registration and tariff became effective on March 20, 1996.

 

            On January 21, 2004, staff opened this docket to address New Century’s apparent violations of Rule 25-4.118, Florida Administrative Code, Local, Local Toll, or Toll Provider Selection.  Staff filed its recommendation on April 21, 2004, for the Commission to impose a $420,000 penalty upon New Century for 42 apparent slamming violations.  The item was deferred from the May 3, 2004, Agenda Conference at New Century’s request. 

 

            On May 6, 2004, staff filed its recommendation (originally filed on April 21, 2004) for the May 18, 2004, Agenda Conference.  New Century submitted a settlement offer on May 12, 2004, to resolve the apparent slamming violations in this docket.  Consequently, staff’s recommendation was deferred from the May 18, 2004, Agenda Conference to facilitate review of the company’s settlement offer.

 

            On June 17, 2004, staff filed its recommendation for the Commission to reject New Century’s settlement offer, dated May 12, 2004.  At the June 29, 2004, Agenda Conference, the Commission deferred staff’s recommendation and directed staff and New Century to negotiate a possible settlement within 30 days.  The company submitted a revised settlement offer on July 20, 2004.  Staff and the company attempted to reach an acceptable agreement, but there were five (5) issues on which staff and the company could not agree.  Those issues were (1) the style of the company’s third party verification script, (2) whether the third party verification company was unaffiliated and independent from New Century, (3) whether the company should record telemarketing calls, (4) the posting of a bond to ensure compliance, and (5) providing staff with copies of any additional complaints received directly by the company from Florida consumers.

 

            On September 23, 2004, staff filed its recommendation to reject New Century’s settlement offer, dated July 20, 2004, and instead, penalize the company in the amount of $420,000.  During the October 5, 2004, Agenda Conference, the Commission set forth the minimum provisions to be included in a settlement offer that would be considered for acceptance by the Commission.

 

            On December 14, 2004; New Century submitted its latest settlement offer (Attachment A) incorporating the provisions discussed at the October 5, 2004, Agenda Conference.     In its settlement offer dated December 14, 2004, New Century is offering the following:

 

1.     Make a voluntary contribution to the Florida General Revenue Fund in the amount of $151,500.  The company is offering to pay $15,150 within ten days of the effective date of its settlement; fourteen days thereafter, the company will pay the amount of $5,000 each week, for twenty-seven (27) weeks, and a final payment in the amount of $1,350 in the final (28^th) week.

2.     Refund or credit the full amount of any charges incurred by each of the 42 customer complaints cited in the recommendation to the extent not already credited or refunded.

3.     Establish the telemarketing compliance program included in its settlement proposal submitted on July 20, 2004 (Document No. 08961-04).

4.     On a going forward basis, the company will promptly and in good faith address and resolve all complaints regarding its services in a reasonable manner consistent with its settlement offer and its compliance program.

5.     Within 60 days from the effective date of its settlement, the company will provide a formal report and additional reports every twelve (12) months, for a total of three reports, continuing for 26 months from the effective date.  The reports will include:

1)    The status of the company’s progress in implementing its settlement.

2)    A list of all infractions assigned to personnel related to its settlement.

3)    Copies of all customer complaints related to the company’s compliance with its settlement for the period since the previous report, including copies of the resolution of any such complaint.

6.     Use an unaffiliated and independent company for third party verifications (TPV) subject to staff’s approval.  The TPV shall not use prerecorded “yes” and “no” questions, and instead, will use live attendants to verify and record customers’ orders for service.  The company will use the script included in its settlement offer dated July 20, 2004 (Document No. 08961-04), and implement any changes necessary to comply with the Commission’s rules, if needed, within 60 days from the effective date of its settlement offer.

7.     Agree not to acquire or transfer any customer base in Florida except as provided in Rule 25-4.118, F.A.C.

8.     Work with Commission staff to establish a warm transfer line between the Commission and the company’s customer service department which shall be operational within 120 days of the effective date of the settlement.

9.     Deposit $15,000 into an escrow account with the Helein Law Firm, LLP as partial security for the payment of its voluntary contribution of $151,500.  The company agrees that upon any default in payment of the voluntary contribution, the remaining balance shall become immediately due and payable, and upon written demand by the Commission, the escrow agent shall pay to the Commission the $15,000 in the escrow account, and shall be applied by the Commission against the remaining balance due.

This is the first instance in which a third party, the Helein Law Firm, LLP, has held an escrow account for an interexchange telecommunications company that has agreed to make a voluntary contribution.  Typically, the Commission is the custodian of escrow accounts held for regulated utilities.

            In addition, New Century provided staff with copies of twenty-one (21) informal complaints received directly from Florida customers from August 18, 2003, through February 18, 2004.  The company reported that it received more complaints than the 21 represented but those additional complaints were received via telephone and were resolved during the phone call.  The company indicated that it does not keep records of telephone complaints and that the company’s policy is to ensure the calling customer’s complaint is handled to the customer’s satisfaction.

 

           

            New Century’s monetary offer of $151,500 is consistent with previous settlement amounts the Commission has approved for similar cases, and the company has revised its settlement offer to include the provisions set forth by the Commission.  Therefore, staff recommends that the Commission accept New Century Telecom, Inc.’s settlement offer, dated December 14, 2004, to resolve forty-two (42) apparent violations of Rule 25-4.118, Florida Administrative Code, Local, Local Toll, or Toll Provider Selection.  The Commission is vested with jurisdiction over this matter pursuant to Sections 364.02(13), 364.04, 364.285 and 364.603, Florida Statutes.

 

 

 

 

 

 

 

 

 

 

 

 

Issue 2:  Should this docket be closed?

 

Recommendation:  The Order issued from this recommendation will become final and effective upon issuance of a Consummating Order, unless a person whose substantial interests are affected by the Commission’s decision files a protest that identifies with specificity the issues in dispute, in the form provided by Rule 28-106.201, Florida Administrative Code, within 21 days of the issuance of the Proposed Agency Action Order.  As provided by Section 120.80(13)(b), Florida Statutes, any issues not in dispute should be deemed stipulated.  If New Century fails to pay the amount of the voluntary contribution in accordance with its settlement agreement, action will be taken pursuant to the provisions in paragraph 17 of that agreement.  If New Century’s tariff is cancelled and Registration No. TI427 is removed from the register as a result of such action, the company should be required to immediately cease and desist providing interexchange telecommunications services in Florida.  This docket should be closed administratively upon either receipt of the final payment of the voluntary contribution or upon the removal of the company’s registration number from the register and cancellation of the company’s tariff.  If New Century, or any of its principles, subsequently decide to reapply for registration as an intrastate interexchange company, it should be required to first pay any outstanding penalties assessed by the Commission.  Any action by the Commission , including but not limited to any settlement, should not preempt, preclude, or resolve any matters under review by any other Florida Agencies or Departments.  (L. Fordham, Rojas, Teitzman)

 

Staff Analysis:  Staff recommends that the Commission take action as set forth in its recommendation.