BILL ANALYSIS


                                                        S.B. 1644
                                                    By: Henderson
                                                    Jurisprudence
                                                          4-20-95
                                       Committee Report (Amended)
BACKGROUND

Current regulations by the Federal Communications Commission's for
the changing of a consumer's long-distance carrier by an
interexchange carrier apply only to changes generated by
telemarketing and do not apply to written solicitations.  

Despite current safeguards, consumers continue to have their long-distance carriers changed without their permission.  The techniques
for changing the carriers include deceptive marketing in which
consumers are induced to sign a form document that does not clearly
advise the consumers that they are authorizing a change in their
long-distance carrier.  Letter of authorization forms may be
disguised as contest entry forms, prize claim forms, solicitations
for charitable contributions, or checks made payable to the
consumer.  

All these marketing practices combine the inducement with the
letter of authorization and the inducement language is prominently
displayed on the inducement/letter of authorization form, while the
long-distance carrier change language may not be.  For example,
inducement checks, which consumers must sign in order to cash,
typically contain a statement near the signature line purporting to
authorize a long-distance carrier.  In addition, interexchange
carriers are also using "negative option letter of authorization"
forms.  These forms offer prizes to consumers if they return the
forms and may "require" consumers to check a box at the end of the
form if they do not want to change their long-distance carrier.

PURPOSE

As proposed, S.B. 1644 prohibits an interexchange carrier from
initiating a primary long distance carrier change without a letter
of agency from the subscriber; provides criminal penalties.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not grant any
additional rulemaking authority to a state officer, institution, or
agency.

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Title IIIG, Public Utility Regulatory Act of
1995, as enacted by S.B. 319, 74th Legislature, 1995 (PURA 1995),
by adding Section 3.308, as follows:

     Sec. 3.308.  CHANGE OF LONG DISTANCE CARRIER.  (a) Requires a
     telecommunications provider to obtain from the subscriber a
     letter of agency that conforms to this section if the provider
     is required by the rules and regulations of the Federal
     Communications Commission to obtain a written authorization
     from a subscriber to initiate a primary long distance carrier
     change.  Provides that a letter of agency that does not
     conform to this section is invalid.
     
     (b) Provides that a letter of agency is a document
       authorizing an interexchange carrier (carrier) to initiate
       a primary long distance carrier change.  Requires the
       subscriber requesting the change to sign and date the
       letter.
       
       (c) Sets forth requirements for the form and content of the
       letter of agency.
       
       (d) Prohibits a letter of agency from purporting to instruct
       the subscriber to take an action to retain the subscriber's
       current carrier.
       
       (e) Provides that a carrier is liable for any act in
       violation of this section that is committed by an employee
       or independent contractor acting on behalf of the carrier.
       
       (f) Provides that a person commits a third degree felony if
       the person knowingly violates this section.  Provides that
       the offense is a first degree felony if it is shown that the
       person was previously convicted of an offense under this
       subsection within five years preceding the offense for which
       the person is being tried. 
SECTION 2. Effective date: September 1, 1995.
           Makes application of this Act prospective.

SECTION 3. Emergency clause.