BEFORE THE PUBLIC UTILITIES COMMISSION OF

THE STATE OF CALIFORNIA

UTILITY CONSUMERS’ ACTION NETWORK )

(UCAN) )

Complainant, )

)

v. )

) Case No. 06-10-023

MCI Communications Services, Inc. (U-5378-C ) )

Defendant. )

__________________________________________ )

PREHEARING CONFERENCE STATEMENT OF THE UTILITY

CONSUMERS’ ACTION NETWORK (“UCAN”)

The Utility Consumers’ Action Network ("UCAN") hereby submits a Prehearing

Conference Statement in preparation for the Prehearing Conference scheduled for

December 14, 2006. This Pre-hearing Conference Statement includes comments on the

setting of the schedule to be considered in this proceeding. UCAN has received MCI’s

answer December 6 and has had brief discussions with MCI’s attorney, Robin Wofford,

regarding various options for resolution. None have advanced to any stage that offers

promise of an immediate resolution.

I. ISSUES RAISED

:

MCI’s answer only minimally addresses Administrative Law Judge Reed’s

request in the initial ALJ ruling that “MCI shall set forth the specifics of any

investigation it has performed on the unauthorized charges issue outlined in the

complaint.” (Page 2) Administrative Law Judge Reed went on in the next sentence to

request, among other things, “the detailed findings” of MCI’s investigations. UCAN

plans to pursue the details behind:

a) The cause of the billing problems conceded by MCI and the attendant repair

of the problem.

b) The propriety of the refunds and the handling of customer complaints about

the problem.

c) The steps that MCI has taken to ensure that similar billing errors are not

repeated.

Specifically, in its answer, MCI admits to an error, referred to as a “computer

coding error,” resulting in the erroneous billing of local service only customers such as

Mr. Duclo, of the “Basic Monthly Fee” and associated fees and surcharges (MCI’s

answer Paragraph 9). However, MCI provides little evidence of the root cause of this

billing system failure which was allegedly discovered in October and remedied by

November 2, 2006 under Senior Manager Amanda Childs (Page 12). MCI simply says

that “hard-coded logic was not applied to a new billing component implemented June 1,

2006 increasing the ‘Basic Monthly Fee’ to $5.95.”

MCI claims on page 13 that “on November 2, 2006, MCI implemented the

appropriate fix into the billing system, thus precluding this problem in the future.”

UCAN believes that the Commission deserves a more detailed explanation of the

investigation’s results as to the root cause of the billing error, as well as the “appropriate

fix” that was implemented. In addition, this explanation does not clearly address how the

initial erroneous charge of $4.95(May 3, 2006 to June 2 billing cycle) was caused by the

mentioned billing coding error and the reasons why it took so long for the problem to be

remedied.

A critical deficit in MCI’s answer includes ambiguity as to the size and nature of

the affected class and the overall process of crediting both the erroneous “Basic Monthly

Fee” and all associated “fees and surcharges.” MCI states that it “admits that customers

who have selected MCI only for local telephone service should not be charged a long

distance ‘Basic Monthly Fee’ and associated taxes, fees, and surcharges” (Paragraph 22).

However, on page 4 of MCI’s answer, MCI states that it is “without knowledge or

information as to whether customers not identified by Complainant have authorized the

billing of long distance charges and associated taxes, fees, and surcharges, and therefore

denies this allegation.”(page 4) This appears to be a direct contradiction, because if the

affected class includes only Local service only customers, then it is not clear why this

allegation is denied. If the customers truly are local-only customers, MCI has already

stated they should not be charged the erroneous charges, and therefore the page 4

statement that MCI doesn’t know if other local only customers might have authorized

long-distance charges conflicts with the basic notion that these are local-only customers.

This highlights the need for greater detail on the affected group of customers.

As to the size of the affected class and the process for crediting the admitted

erroneous charges, MCI states that “all customer accounts affected by the error were

identified and MCI is in the process of issuing auto credits to those customers.” (Pages

13-14) While UCAN applauds MCI’s efforts to credit customers, it is not specified

whether the “auto-credit” process includes refunds for associated fees and surcharges.

Moreover, the only tangible statistics provided are on page 14, where MCI stats that “the

systematic credit recovery process identified 1137 customers in California still deserving

credits totaling $8,156.51.” “Still deserving credits” suggests other credits were issued.

UCAN wants MCI to address specifically what MCI claims was the total number of

affected customers during the entire period of the erroneous charges, and the total amount

to be refunded to the entire affected class.

While MCI has admitted the erroneous charges and the time they were identified,

October 9, MCI has not addressed whether or not these erroneous charges were reported

to the CPUC. UCAN requests answers as to when, how, and if the CPUC was notified of

the erroneous charges.

There are also some very troubling factual disputes between UCAN and MCI that

are not resolved. For example, characterization of Mr. Duclo’s refunds as “far in excess”

(page 13) of what he was due is incorrect, as Mr. Duclo was simply issued modest

courtesy credits. These “courtesy” credits can be considered miniscule when placed in

the context of a nearly six month recurring billing which required Mr. Duclo to

repeatedly contact MCI to be credited for erroneous charges he never authorized. And

UCAN also plans to inquire into the reasons why Mr. Duclo was subjected to almost sixmonths

of effort to address what should have been a readily-diagnosed billing problem.

II.

PROPOSED SCHEDULE

In establishing a schedule for this proceeding, the Commission requested the parties to

consider the following matters.

1. Discovery. The discovery in this case should not be intense, focusing on the issues

discussed above, including root cause of MCI’s technological problems, as well as

MCI’s subsequent actions to fully credit all customers affected by the “computer

coding error,” as well as the nature and size of the total affected class and all credits.

UCAN plans to serve its First Set of Data Requests on MCI well before the end of the

year. Based on the limited information to be requested, discovery should take no

more than 90 days to complete assuming timely discovery responses.

2. Need for Hearings. While UCAN believes that the above issues can be resolved in

a settlement process, as UCAN has done with Cingular and Sprint this year, we

recognize that the factual and legal issues raised in the Complaint and the disputed

material facts that have been raised in the Answer filed by MCI could likely require

hearings These material issues of disputed facts include those identified above,

including the details surrounding the purported technological “computer coding

error” and its root cause, MCI’s subsequent actions to correct the error, the total

universe of affected customers. The Commission should schedule no less than one

week of evidentiary hearings. As set forth above, these hearings should be preceded

by 90 days for discovery.

3. Opportunities for Alternative Dispute Resolution. UCAN has utilized the

Commission’s ADR process with great success and is open to continuing to use this

service. After discovery has been completed.

Respectfully submitted, Dated: December 14, 2006

/s/

_________________

Michael Shames

Art Neill

Utility Consumers’ Action Network (UCAN)

3100 5

th

Ave. Suite B

San Diego, CA 92103

(619) 696-6966

Fax: 696-7477

mshames@ucan.org

art@ucan.org

ATTORNEYS for UCAN

PROOF OF SERVICE

I, Laura Impastato, declare: I am employed in the City and County of San Diego,

California. I am over the age of 18 years and am not a party to this action. In the absence

of an official service list in this proceeding, on December 14, 2006, I served the UCAN

PHC Statements upon the defendants in this case as well as the ALJ.

/s/

__________________________

Laura Impastato