DE 98-102
                    Tel-Save, Inc.
 Complaint Against Bell Atlantic - New Hampshire and
                  Request For Relief
                Order Denying Request
               O R D E R  N O.  23,177
                    March 29, 1999
       On June 15, 1998, Tel-Save, Inc. (Tel-Save) filed with
     the New Hampshire Public Utilities Commission (Commission) a
     complaint and request for relief against New England Telegraph
     and Telephone Company (Bell Atlantic) for violation of sections
     201(b) and 202 of the Communications Act of 1934 as amended by
     the Telecommunications Act of 1996,(TAct) and for violation of
     RSA 374:1.  Tel-Save alleges that Bell Atlantic's refusal to
     permit end-user customers to lift PIC freezes by means of e-mail
     transmitted directly by the customer, or forwarded by Tel-Save,
     impedes customers' attempts to switch carriers.  Bell Atlantic
     filed a Response to the complaint on June 29, 1998. 
       On July 6, 1998, the Commission issued Order No.22,972,
     scheduling a prehearing conference and technical session for 
     July 27, 1998.  At the prehearing conference, Tel-Save, Bell
     Atlantic, the Office of the Consumer Advocate (OCA), and Staff
     agreed to a process involving technical sessions and written
     position papers.  By Order No. 23,028, the Commission approved a
     modified procedural schedule and made all New Hampshire
     independent telephone companies (ICOs) mandatory parties to the
     proceeding.  Pursuant to the Commission's order, on October 5,
     1998, Tel-Save filed testimony.  The Parties and Staff conducted
     lengthy technical sessions on October 15, 1998.  
       By agreement of the Parties and Staff, Tel-Save took
     time to examine the lifting of PIC freezes via a website.  By
     agreement of the Parties and Staff, when Tel-Save decided that a
     website would not substitute for direct e-mail, all parties
     including Tel-Save filed comments on Tel-Save's proposed e-mail
     methodology.  Comments were filed by Union Telephone Company
     (Union) on December 3, 1998; and by Bell Atlantic, Tel-Save, a
     number of ICOs collectively, the OCA, and Staff on December 10,
     1998.  Rebuttal comments were filed by Bell Atlantic on January
     6, 1999 and by Tel-Save on January 7, 1999.
          A.  Tel-Save
       Tel-Save argued that customers should be able to e-mail
     a request to Bell Atlantic to lift a PIC freeze.  Tel-Save
     asserts that the current process, which requires telephonic
     contact between the customer and Bell Atlantic during business
     hours, causes unnecessary delay of the customer's request and can
     cause customers to change their minds, thereby harming the onset
     of competition and thwarting customer choice.  The delay is
     produced, according to Tel-Save, because Bell Atlantic is in sole
     possession of freeze information; therefore, Tel-Save doesn't
     learn of the existence of a customer's PIC freeze until after it
     submits the PIC-change request to Bell Atlantic.  Tel-Save then
     notifies its prospective customer that a direct call from the
     customer to Bell Atlantic is necessary.  Because calls to Bell
     Atlantic must be made during business hours, Tel-Save contends
     that working customers are inconvenienced.  Even if the customer
     follows through and calls Bell Atlantic, Tel-Save asserts, and
     even if the customer is able to wait out the customer service
     queue and reach a customer service representative, Bell Atlantic
     then has an opportunity to dissuade the customer from changing.
       Tel-Save argues that e-mail is a safe, efficient means
     of communication used for business purposes by at least a third
     of computer users.  E-mail will obviate the need for
     orchestrating the simultaneous presence of the customer, the
     competitive carrier representative, and the Bell Atlantic
     representative.  Furthermore, customer privacy can be protected
     by including verifying, customer-specific information or a
     password in the e-mail.  
       According to Tel-Save, lifting a PIC freeze via e-mail
     is a streamlined process.  The use of uniform language in every
     e-mail request would simplify the interaction, making it more
     effective than an ordinary written letter from a customer.  Upon
     notification by Bell Atlantic that a PIC freeze exists, Tel-Save
     would contact the customer by e-mail, the customer could complete
     a request form and e-mail it directly to Bell Atlantic, or to
     Tel-Save who would then forward it to Bell Atlantic unaltered. 
       In support of its proposal, Tel-Save pointed out that
     the Federal Communications Commission (FCC) recently issued an
     order adopting baseline standards for lifting PIC freezes. Second
     Report and Order and Further Notice of Proposed Rulemaking,(In
     the Matter of Implementation of the Subscriber Carrier Selections
     Changes Provision of the Telecommunications Act of 1996, Policies
     and Rules Concerning Unauthorized Changes of Consumers Long
     Distance Carriers), CC Docket No. 94-129, released December 23,
     1998.  Tel-Save cited the FCC's conclusion in its Second Report
     and Order and Further Notice "that, although a state must accept
     the same verification procedures as prescribed by the Commission,
     a state may accept additional verification procedures for changes
     to intrastate service if such state concludes that such action is
     necessary based on its local experiences." Id. ¶ 87.  The
     additional verification procedures must be consistent with FCC
     orders and rules, as well as § 258 of the Telecommunications Act.
     Id. ¶ 89.  According to Tel-Save, the FCC order does not
     restrict the Commission's authority to grant Tel-Save's proposal,
     so long as security measures are implemented for authentication,
     such as those suggested by Tel-Save to require social security
     numbers or dates of birth.  Failure to grant its proposal, on the
     other hand, will stifle the emergence of competition in New
     Hampshire.  Furthermore, the FCC's order requests comments on
     sufficient security measures for implementing PIC changes, and
     the lifting of PIC freezes, over the Internet. Id. ¶ 171, 172. 
     Tel-Save believes that the FCC will ultimately endorse e-mailed
     requests to lift PIC freezes.
       Tel-Save claims that a web-page approach to its request
     is not workable for several reasons.  First, the web-page would
     be controlled solely by Bell Atlantic who could use the site for
     its own interests.  Second, Tel-Save would not know if and when
     customers experience difficulty implementing a PIC freeze on the
     web page.  Third, Tel-Save claims that a web-page is no more
     efficient than e-mail because e-mail, like a web-page, can be
     formatted to allow automatic processing by Bell Atlantic
          B.  Union and the ICOS
       Because of security concerns, Union objected to
     removing PIC freezes via e-mail.  However, Union would support
     efforts to design a web-page for that purpose.  Granite State
     Telephone, Inc., Merrimack County Telephone Company, Contoocook
     Valley Telephone Company, Inc., Dunbarton Telephone Company,
     Inc., Wilton Telephone Company, Inc., Hollis Telephone Company,
     Inc., Bretton Woods Telephone Company, Dixville Telephone Company
     and Northland Telephone Company of Maine, Inc., objected
     collectively to Tel-Save's request to require them to effect PIC
     changes for customers with PIC freezes on the basis of e-mail
     authorization.  These ICOs aver that customers are well served by
     the current process.  No customer complaints have been received
     regarding the process and, in fact, the extra steps required by
     the current process honor the customers' express choice.  These
     ICOs are concerned that Tel-Save's proposal lessens the security
     customers believe they have acquired through a PIC freeze.
     Therefore, if e-mailed PIC changes are approved, customers will
     react negatively. 
       While expressing support for the public policy of
     encouraging competition, these ICOs argue that customer
     protection is a competing public policy which is of greater
     weight in this instance.  Furthermore, these ICOs assert that
     they will incur costs to implement Tel-Save's proposal and that
     Tel-Save should bear that cost. 
          C.  Bell Atlantic
       Bell Atlantic argues that its policy of confirming
     requests to lift PIC freezes is intended to protect customers and
     has generated no customer complaints.  Bell Atlantic
     authenticates the customer's identity using a method which it
     claims is universally accessible and private.  E-mail on the
     other hand, according to Bell Atlantic, is not universal, does
     not reduce the processing time and does not protect the
     customer's privacy.  E-mail could also (1) produce a volume
     "bomb" if a competitive carrier's advertizing created enough
     e-mail traffic to snarl all of Bell Atlantic's electronics, and
     (2) negate Bell Atlantic's ability to authenticate the customer's
     identity.  Furthermore, according to Bell Atlantic, Tel-Save has
     access to information about a customer's PIC freeze status via
     the Direct Carrier Access System (DCAS) system.
       Bell Atlantic contends that the PIC change and PIC
     freeze measures it employs are identical to those outlined by the
     FCC in its Second Report and Order and Further Notice of Proposed
     Rulemaking and are designed to protect against slamming, the
     unauthorized change of a customer's PIC.  Bell Atlantic avers
     that Tel-Save itself has, in the past, initiated a kind of "fine
     print" practice by which customers agreed that future PIC changes
     could be reversed by Tel-Save automatically.  Bell Atlantic
     pointed out that e-mailed PIC freezes are not permitted by the
     FCC, although the Further Notice of Proposed Rulemaking invites
     comment on that subject. 
       Bell Atlantic also argues that parallel interstate and
     intrastate PIC processes are critical within the state of New
     Hampshire.  Different processes will prevent the achievement of
     economies of scale that result in lower rates and will complicate
     and perhaps abrogate good customer service, especially for
     multi-state business customers.
       Bell Atlantic disagrees with Tel-Save's assertion that
     e-mail requests would reduce processing time because e-mails,
     even when structured in uniform fields of information, do not
     have the capacity of a web-page approach.  Therefore, according
     to Bell Atlantic, the e-mail requires manual intervention rather
     than automatic transmittal to a computer system for processing.
          D.  OCA
       The OCA supports Tel-Save's request to require Bell
     Atlantic to accept e-mail correspondence as a basis for lifting
     PIC freezes, despite a concern for security.  According to the
     OCA, customers concerned about security can solve the problem by
     installing security software.  The OCA suggested that a
     standardized message format be used by all competing carriers,
     thus resolving Bell Atlantic's concern about the free-form
     content of e-mail messages.  The OCA asserted that a website
     solution could also resolve the problem and expressed regret that
     Tel-Save rejected that solution.
       The major issue raised by the OCA concerned what it
     views as the underlying problem: the process Bell Atlantic uses
     for PIC freeze releases (and PIC changes) received in written
     format.  Currently, according to the OCA and as confirmed by Bell
     Atlantic, Bell Atlantic requires telephonic verification of any
     written request to lift a PIC freeze.  This necessitates oral
     authentication of the customer's identity, and confirmation of
     the customer's request.  If the customer is not at home, Bell
     Atlantic leaves a voice message on an answering machine, if
     possible, requesting a return call from the customer.  If a voice
     message is impossible, Bell Atlantic will make one more attempt
     to obtain telephonic verification.  No further attempt is made if
     the second attempt is unsuccessful.  Without telephonic
     verification, Bell Atlantic will not carry out the customer's
     written request to lift the PIC freeze. 
       The OCA argues that Bell Atlantic's process is
     cumbersome and results in unreasonable failures to carry out 
     customers' valid requests.  According to the OCA, Bell Atlantic
     should act on the customer's request and send confirmation by
     regular mail, acknowledging receipt of the request and indicating
     the actions taken.    
          E.  Staff
       Staff indicated that the current PIC freeze process is
     working effectively, as demonstrated by the fact that no
     customers have complained of any difficulty in removing a PIC
     freeze.  Staff also argued that consistent procedures for both
     interstate and intrastate carrier PIC changes greatly simplifies
     the process for customers.  Staff recommends review of the
     intrastate process at such time that the interstate process
     changes.  Staff agreed with much of Bell Atlantic's, Union's, and
     the ICOs' objections to Tel-Save's proposal.
       We have reviewed all the written materials filed in
     this docket, as well as FCC orders and our own orders regarding
     intraLATA presubscription and dealing with safeguards against
     anti-competitive practices.  We are keenly aware of the
     importance and delicacy of the balance of competitive and
     customer security concerns.  We are not convinced by Tel-Save's
     arguments that competitive concerns outweigh security concerns in
     this case.  Moreover, we are persuaded that consistency between
     intra- and interstate processes for dealing with competitive
     choices will best serve New Hampshire customers.
       The FCC's Second Report and Order and Further Notice of
     Proposed Rulemaking, issued December 23, 1998, adopted rules
     first proposed by the FCC in 1997.  Thus, the FCC considered all
     aspects of this question for a period of over a year, with the
     benefit of comments from numerous CLECs, ILECs, and other
     interested parties.  The rules implement § 258 of the TAct; § 258
     makes it illegal for any telecommunications carrier to "submit or
     execute a change in a subscriber's selection of a provider of
     telephone exchange service or telephone toll service except in
     accordance with such verification procedures as the (Federal
     Communications) Commission shall prescribe."
       The FCC prescribed by rule § 64.1150, as amended, a
     range of verification options: written authorization in a form
     that meets the requirements of § 64.1160 (letter of agency or
     LOA), electronic authorization utilizing a voice response unit or
     similar mechanism that records the required information including
     the originating automatic numbering identification, and third
     party verification of the subscriber's oral authorization. 
       Tel-Save correctly points out that the FCC specifically
     declines to generally preempt state regulation of carrier
     changes, ¶ 87, and that we are free to provide further
     verification options for intrastate service, in addition to the
     FCC's three verification options.  At this time, we decline to
     adopt e-mail as an additional verification option.  Paragraph 88
     of the FCC's Second Report and Order and Further Notice of
     Proposed Rulemaking alludes to additional verification options
     which a state "feels would promote consumer protection and/or
     competition in the state's particular region."  The arguments
     adduced in this docket do not demonstrate either that consumers
     will be better protected by the use of e-mail or that competition
     is presently being harmed in New Hampshire by limiting
     verification procedures to the three adopted by the FCC.
     ¶ 169-175.  
       We note also that the FCC's Second Report and Order and
     Further Notice of Proposed Rulemaking seeks further comment on
     whether a carrier change or lifting of a PIC freeze submitted
     over the Internet could be considered a valid LOA and whether
     additional methods of verification might be appropriate for use
     by carriers who solicit subscribers, as Tel-Save does, over the
     Internet.  While Tel-Save argued that e-mail is just such an
     appropriate additional method of verification, we find that the
     arguments presented by Staff, the ICOs, and Bell Atlantic are
     more persuasive, particularly as long as e-mail is not an
     acceptable inter-state method of verification.  Security concerns
     and the benefits of intra- and inter-state consistency outweigh
     Tel-Save's arguments of inconvenience.
       We are persuaded, however, by the OCA's arguments, that
     Bell Atlantic's requirement of telephonic confirmation of written
     requests to change carrier or to lift a PIC freeze, constitutes
     more than an inconvenience.  Bell Atlantic must henceforth accept
     a customer's signed written request as a valid.  Although we live
     in an increasingly electronic and telecommunicating world, a
     person's signed written instruction to a commercial business,
     regarding that person's business dealings with the business,
     should be honored.  Nowhere in FCC orders is there intimation
     that a signed written instruction ought to be further verified. 
     The FCC defines a preferred carrier freeze as preventing a change
     in a subscriber's preferred carrier selection unless the
     subscriber gives the carrier from whom the freeze was requested
     his or her express written or oral consent (¶ 6, fn.25,
     emphasis added). The FCC's newly amended rules for verification
     of orders for telecommunications service lists the three
     verification method options and states that "[N]o
     telecommunications carrier shall submit a preferred carrier
     change order unless and until the order has first been confirmed
     in accordance with one of" the options. (Emphasis added.) 
     Written authorization is a separate and equal method by which a
     customer may obtain a PIC change, a PIC freeze, and the lifting
     of a PIC freeze.
       We appreciate Bell Atlantic's statement that its
     process and policy was put in place, beginning in 1992, to
     protect customers from slamming.  However, we find that the
     requirement for telephonic verification provides only de minimus
     additional slamming protection while it unnecessarily impedes
     customer choice.  
       Based upon the foregoing, it is hereby
       ORDERED, that Tel-Save's request to require Bell
     Atlantic to accept e-mail correspondence as a basis for lifting
     PIC freezes is hereby DENIED; and it is
       FURTHER ORDERED, Bell Atlantic shall cease to require
     telephonic verification of customers' written, signed requests to
     change carrier, institute a PIC freeze, or lift a PIC freeze.
       By order of the Public Utilities Commission of New
     Hampshire this twenty-ninth day of March, 1999.
            Douglas L. Patch       Susan S. Geiger        Nancy Brockway
                Chairman             Commissioner          Commissioner
     Attested by:
     Thomas B. Getz
     Executive Director and Secretary