BEFORE THE LOUISIANA PUBLIC SERVICE COMMISSION DOCKET NO. U-20784 IN RE: GLOBAL TELCOIN, INC./GLOBAL TEL~LINKCORPORATION’S BILLING PROCEDURES AND NON-COMPLIANCE WITH COMMISSION ORDERS U-17957-B AND U-17957-C AND INVESTIGATION INTO THE RATES CHARGED AND SERVICE PROVIDED BY GLOBAL TELCOIN, INC./GLOBAL TEL~LINKCORPORATION ORDER NO. U-20784-B

I.

INTRODUCTION This matter is before the Louisiana Public Service Commission (“Commission”)

in order to address a variety of practices engaged in by Global Tel*Link (“Global”), a provider of telecommunication services in the State of LOUisiana. Global is a customer-owned coin operated telephone (“COCOT”) company.

Global’s principal business is the provision of

telephone service to inmates in the State’s sixteen correctional institutions as well as various parish and municipal detention facilities. As wifi be explained in detail below, Global engaged in a series of practices which violated existing Commission Orders and various provisions of its contract to provide service at the State’s prisons. These practices resulted in Global charging rates in excess of those authorized, which caused customers to be overcharged. While our investigation of Global’s activities is not yet complete, we will, at this time, order Global to begin issuing credits or refunds to customers for those overcharges that have been identified and verified. Global has indicated its willingness to issue these credits and refunds, with appropriate interest, for the damages identified in this Order. II.

FACTUAL BACKGROUND In late 1992, the Louisiana Division ofAdministration, on behalf ofthe Louisiana

Department of Public Safety and Corrections (“Department of Corrections”) issued a “Notice to Proposal” soliciting bids from companies to provide telecommunication services to inmates at the State’s sixteen correctional institutions. Up until that time, South Central Bell Telephone Company provided those services. The provision of service to correctional facilities is unique in a number of respects. Although the telephone stations look like traditional pay phones, all calls made by inmates are collect calls which are charged to the receiving parties. The recipients of the calls who pay the bills are typically the family and friends of the inmates. In addition, because of the possibilities of fraud, inmstes are not free to choose the operator service and long distance carriers of their choice. Rather, a single carrier is utilized. Due to this restriction, this Commission placed caps on the charges that could be assessed for long distance calls from such

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facilities.’ Global was the successful bidder on the Department of Corrections contract and, on June 8, 1993, Global entered into a contract to provide telephone service for the inmates in the State’s sixteen correctional facilities. Prior to April 1, 1993, Global had been owned by three individuals, Dan Wiley, Robert Fergusson and Donald Bahouth. These individuals were also the principal officers of Global.

On April 1, 1993, Global was acquired by Schiumberger Technologies, Inc.

(“Schiumberger”). After the acquisition, Messrs. Wiley, Fergusson and Bahouth continued on as the three principal officers of Global although without ownership shares in the company. After Global entered into the contract with the Department of Corrections, it began installing its own telephones in the State’s correctional facilities. Global began offering telephone service to inmates on June 20, 1993.

Almost immediately after Global began

operating the telephones in the State’s prisons, the Commission’s main office in Baton Rouge as well as the district offices of the five Commissioners began receiving complaints about the level of charges being assessed by Global. The initial complaints concerned the fact that although Global’s rates were supposed to be capped at the applicable South Central Bell and AT&T rates, the families of prisoners were receiving bills which exceeded those rate caps. These complaints continued through 1993 and persisted until at least the end of May, 1994. Sometime in the second half of 1993, Schlumberger received information indicating that Global may have been involved in certain practices which unlawfully increased the charges that Global was assessing for the use of its telephone services at the Louisiana correctional facifities. In addition, Schlumberger received information that the clocks used for timing the telephone calls may have been unlawfully advanced and, further, that Global was

charging rates which did not conform to the Louisiana Commission’s requirements. Therefore, Schlumberger undertook an investigation ofGlobal’sbilling practices and regulatory compliance. As a result of its investigation, Schlumberger concluded that Global was in fact engaging in unauthorized practices in order to unlawfully increase charges to its customers. These unauthorized practices included clock advancements by which the time of the call would

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In addition, in its contract with the Department of Corrections, the permissible rates to be charged by Global could not exceed those charged by South Central Bell Telephone Company for intra-LATA calls and those ofAT&T for inter-LATA calls (along with all appropriate time of day and mileage based discounts). -

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not start at “0” seconds buteither 15 or 36 seconds, rates exceeding authorized levels and adding additional time and money to each call. In February, 1994, Schiumberger removed Messrs. Wiley, Fergusson and Bahouth from their positions and simultaneously ified suit against them in the United States District Court for the Southern District of Alabama in Mobile alleging fraud. Schiumberger Technologies, Inc. v. G. Dan Wiley, Robert A. Fergusson and Donald Bahouth, C.A. No. 94-118-AH-M(U.S.D.C., S.D. Ala. S.D. 1994). Amoredetailedanalysis reflecting the Commission’s investigation of Global’s unauthorized practices is contained in Section N below. ifi.

PROCEDURAL HISTORY As previously mentioned, almost immediately after Global began providing

telephone service to the State’s correctional institutions, the Commission began receiving complaints about Global’s bifis to ultimate customers. In late 1993, in response to the mounting complaints, the Commission Staff called ameeting with representatives of Global to address the issue of overcharges. At that time, Global admitted it had been overcharging customers and estimated that the overcharges ranged between $180,000 and $190,000. Global committed to refund those overcharges and indicated that all refunds could be completed by the end. of 1993. In November and December of 1993, the complaints continued to mount and it soon became obvious first, that Global’s refund liability would substantially exceed $190,000 and second, that the overcharging of customers was continuing. Therefore, on February 2, 1994, the Commission instituted a formal investigation into the billing practices of Global and established this Docket No. U-20784.2 This action was undertaken by the Commission without any knowledge of the investigation by Schlumberger. Approximately one week later, also in February, 1993, representatives of Global’s parent company, Schiumberger, approached the Commission Staff and counsel to inform them of the results of their investigation, the firing of the former owners of Global from their positions as officers of the company, and the filing of suit against those individuals. The Schlumberger representatives pledged to work with the Commission to remedy Global’s problems, cease having Global engage in any unauthorized

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Subsequent to the opening ofthis Louisiana Docket, a class action suit was filed against Global in Alabama State District Court in Mobile. James H. Brat v. Global Tei*Link, C.A. No. 94-001101, (Cir. Ct., Mobile County, Ala. 1994). That class action suit is still pending. .

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actions, and to return to Louisiana ratepayers any and all overcharges assessed by Global for telecommunication services inLouisiana. Schiumberger was represented by independentoutside counsel and, in addition, engaged the services of the nationally recognized consulting and auditing firm, Price Waterhouse. Schlumberger requested that the Commission refrain from immediately instituting hearings to permit Price Waterhouse to make an initial analysis ofall of Global’s billing practices and, further, to present to the Commission a plan to make ratepayers whole. Although Schlumberger was successful in correcting many of Global’s problems soon after they came on the scene in February of 1994, a number ofunauthorized practices continued through at least May of 1994. In addition, some practices which violate Commission Orders continue today. From time to time, since the initiation of this Docket in February of 1994, the Commission has received status reports from its Staff and Special Counsel regarding the progress of the investigation and the calculation of the refunds and/or credits to be applied to Global’s customers. In August of 1994, Price Waterhouse submitted its first comprehensive analysis to the Commission Staff. In that analysis, Price Waterhouse attempted to identify what charges were assessed by Global, what the appropriate charges should have been and then computed the difference as the potential credits/refunds to customers.

The Commission Staff identified

numerous problems with the initial filing. For example, Price Waterhouse incorrectly rated a number oflocal calls as long distance calls. In addition, incorrect benchnisrk rates were utilized against which to judge Global’s charges. As a result of the Staff’s input, Price Waterhouse performed further studies and reran its analyses. At the December, 1994 business meeting, we received an update from Special Counsel on the progress of the case and negotiations to begin credits/refunds for certain elements of dnnrnge on which there was no dispute. The discussion at the December meeting indicated that for four of Global’s practices for the time period ending May 31, 1994, all parties were in basic agreement. The Hearing Examiner in this matter was directed to hold a hearing on those issues on which the Commission Staff and Global had no fundamental disagreement. In that manner, we would be able to begin the refund process as expeditiously as possible. Consistent

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with our directive, a bearing was held on Janusry 5, 1995 to address those matters on which little or no dispute existed. On December 27, Price Waterhouse submitted an updated and revised analysis. The results of that analysis indicate that for the categories of overcharges described below, the total amount of principal to be refunded to Louisiana ratepayers of Global is $1,243,000. Interest calculated at 10% through December 31, 1994 adds an additional $158,000. Interest is currently running slightly in excess of $10,000 per month. Therefore, by the time refunds begin (projected to be sometime in March, 1995) the total amount of credits and/or refunds to be returned to Louisiana ratepayers will be approximately $1 ,450,000.~ A discussion of Global’s unauthorized activities and the specific damage calculations is set forth below. The Commission Staff has done independent sample verification of the analyses performed by Price Waterhouse. When errors were discovered by the Commission Staff, Price Waterhouse made the appropriate adjustment to account for and correct those errors.

In

addition, underlying virtually all of the damage calculations is the rerating of the calls that had to be performed. By rerating, Price Waterhouse was essentially able to determine what the charges would have been for the telephone calls had Global utilized the Commission’s authorized rates without any clock adjustments or add-ons. The Commission Staff requested copies of the rerating performed for Price Waterhouse and subsequently had that information delivered to the State of Louisiana’s Office of Telecommunication Management (“OTM”). OTh1 personnel analyzed Price Waterhouse’s rerating and verified that it was done correctly. Therefore, the Commission Staff has an extremely high degree of confidence in these damage calculations regarding the four categories of overcharges identified in Section IV below for the period ending May 31, 1994. lv.

ANALYSIS OF THE ISSUES In the course of the investigation by the Commission Staff, four areas in which

Global’s activities lead to overcharges to ultimate consumers were identified. The analyses. performed by the Commission Staff and Price Waterhouse ends on May 31, 1994. Therefore, 3

When the Docket was opened, at the request of the Commission, Global posted a Letter of Credit in the amount of $750,000 to secure any liability to ratepayers. As the damage calculations increased, the amount of the letter of credit was increased. Currently, the letter of credit in favor of the Commission and Louisiana ratepayers stands at $1,500,000. -

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additional refunds and/or credits will in all likelihood result from activities after May 31, 1994. In addition, the analysis set forth below does not take into account calls which were billed by Global more than 60 days after the calls were completed. That issue is subject to further analysis and is not a matter on which Global and the Commission Staff have agreed. Therefore, we direct that the Commission Staff and Special Counsel continue their investigation of this issue. For all of the matters set forth below, Global has agreed to issue the appropriate credits and/or make refunds and both Commission Staff and Global are in agreement on the amount of the overcharges and therefore the credits and refunds to be issued. For these reasons, we direct that credits and/or refunds be issued as to these items of damage as expeditiously as possible. A.

Clock Advancements The analyses performed by the Commission Staff as well as Price Waterhouse

reveals that Global programmed clocks in their telephones at the correctional institutions to time calls in a man~rthat would add either 15 or 36 seconds to the duration of each call. When a customer makes a call, the timing of the call should begin to run when the connection is made and should start at “0” seconds. The clocks inthe Global telephones (or telephones programmed by Global) did not start at “0” seconds but rather at 15 or 36 seconds. This is significant because telephone companies, when timing the call for the purpose ofbilling, “round up” to the next minute. To illustrate the overcharges that may result from advancing a clock by 15 seconds consider the following example: A customer makes a call lasting 1 minute and 48 seconds and the clock in the telephone is properly set. As a result of “rounding up” the customer would be billed for a 2 minute call. If that call was made on a Global telephone with a 15 second clock advancement, the 1 minute and 48 second call would be clocked at 2 minutes and 3 seconds and for purposes of billing, the customer would be “rounded up” and charged for a 3 minute call. Global included this clock advancement mechanism in all ofthe Global-manufacturedtelephones as well as those which it programmed. Excluding interest, the overcharges associated with the time clock advancements is approximately $60,000. Global’s practice ofadvancing the clocks is unauthorized by any Commission rule or order and is unauthorized and unlawful. It could have been designed for no reasonother than to artificially and unlawfully inflate charges to its customers.

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Global is held liable for a

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complete refund of the entire amount of the overcharges plus interest calculated at 10% per annum. B.

Rates Exceeding Authorized Levels From the time that Global began providing service in Louisiana until June, 1994,

Global programmed its telephones to rate calls on the basis ofhigher rates than those permitted either under its tariffs or the rate caps established by the Commission in Order No. U-17957-C. In addition, until June of 1994, Global’s tariffs were inconsistentwith the rates it was authorized to charge pursuant to the Commission’s rate caps and its contract with the Department of Corrections. Therefore, not only did Global’s charges exceed those authorized, but its tariffs were inconsistent with authorized rates and Global’s charges were inconsistent with its tariffs. In order to determine the amount by which Global customers were overcharged, it was necessary to rerate all of Global’s calls according to the tariffs (i.e., rates) that would have been ineffect had Global priced its calls consistent with the Commission’s rate caps and the Department of Corrections contract. Price Waterhouse had all ofGlobal’s calls rerated. The Commission Staff independently verified a sampling of those calls and the State’s Office of Telecommunications Management (“OTM”) also checked Global’s rerating. Based on the Commission Staff and OTM’s analysis, we are satisfied that the rerating has been done correctly. From the time that Global began providing service in Louisiana through May 31, 1994, the total amount of overcharges associated with Global billing at higher than authorized rates is approximately $906,000. This figure is exclusive of interest. Global’s practice of charging rates higher than those authorized, violated the company’s own tariffs as well as Commission orders.

This

practice was wholly unauthorized and we direct that Global be required to refund the entire $906,000 plus interest computed at 10% per annum from the time that each ofthe unauthorized overcharges occurred. One further matter must be addressed.

From time to time, since the

Commission’s investigation began, Global has made various allegations that its failure to have correct tariffs on file, has resulted in “undercharges” to many of its customers. At various times, Global has estimated that the total amount of such undercharges exceeded $900,000. In fact, atthe hearing held on January 5, 1995, Mr. Mike Gagnon, the Schlumberger representative in charge of the Global analysis, testified that the total amount of undercharges resulting from -7-

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Global having incorrect tariffs on file was only $242,000. Global has agreed that it would not seek recovery of these undercharges, and, therefore, no adjustment is necessary for these undercharges.4 C.

Add-Ons A third practice engaged in by Global in order to artificially inflate charges to its

customers resulted from the addition ofvarious amounts ofmoney to its calls after the calls were rated. It also added time to the duration of many of the calls reflected on the customer bills. The “add-on” mechanism operated as follows: Global does not bill its own calls. Billing companies require Global to process call records into a specified format. Therefore, when Global retrieved the call records from its telephones, it ran what it called “add-on” programs. The add-on programs added either 25C, 50Q, 85C (or multiples of) to those amounts to the charges that Global would otherwise have billed.5 The amounts that were added depended on the identity of Global’s customer, the location of the telephone, the type of call (i.e., local, intrastate, interstate), and the duration of the call. From time to time, Global may have used as many as 25 different add-on programs. Apparently, in order to mask or hide the extra charges, Global would also add additional time to the call to make it appear that the customer had spoken for a longer period of time therefore warranting the higher rate. This add-on program was sometimes referred to as a “plus plus” program. Global began using one or more versions of the add-on program as far back as November, 1991. Global’s call records indicate that as of October 12, 1993, it ceased using add-on programs for calls made from Louisiana State prisons. However, it continued to utilize the program for calls made from other locations in Louisiana until January 18, 1994 when it discontinued the program for all of the telephones it operated within the State of Louisiana.

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Early on in the negotiations between representatives of Schlumberger/Global and the Commission Staff, Global indicated that although it believed that some undercharges may have occurred, it would not seek recovery of those undercharges. Therefore, the Commission Staff has not attempted on its own nor has it requested any other party to verify the appropriate level of undercharges. We accept the Staff’s recommendation to disregard these undercharges, and, therefore, no further verification is required.

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It should be noted that the amounts that Global otherwise would have bified in many cases were already artificially inflated by the clock advancement and incorrect rates problems discussed in paragraphs “A” and “B” above. -

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The use ofadd-on programs is perhaps the most insidious and problematic of all of Global’s activities. It could be designed for no other purpose than to unlawfully overcharge customers and the practice of adding time to cover-up the additional dollar amounts which were added to the calls is evidence ofthe intentional and purposefulnature ofthis activity. No excuse could possibly exist for such action.

The total amount of overcharges resulting from the

utilization of add-on programs through May 31, 1994 is approximately $256,000. Global is directed to credit and/or refund all customers with the full amount of these overcharges in addition to 10% interest from the date that each of the overcharges was bified. D.

Duplicate Billings For a period of time, Global engaged in the practice of billing a single call more

than once. For example, a call might appear on the April, 1994 bill and that same call would appear once again on the June, 1994 bifi. It seems that this practice lasted only a brief time during the danisge period ending May 31, 1994.6 No authorization exists for such double billing and Global will be required to refund all duplicate bified amounts plus 10% interest to the affected customers. The total amount associated with such duplicate billing is approximately $16,000. The four overbilhing methodologies described above result in a gross overbilling of approximately $1,243,000.

Through December 31, 1994, $158,000 of interest had

accumulated bringing the total, as ofyear end 1994, to $1,401,000. As mentioned previously, interest continues to run at a rate of approximately $10,000 per month. V.

REFUND PLAN In the cover letter to Price Waterhouse’s December, 1994 analysis, counsel for

Global/Schiumberger set forth a proposed refund mechanism to return to Louisiana ratepayers the overcharges (plus interest) resulting from Global’s unauthorized activities. While we agree with many of the suggestions made by Global, we find that certain refinements to the refund plan are necessary. Global is in agreement with the plan set forth below. However, because there are always uncertainties and unforeseen events that may arise, it will be necessary to

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Unfortunately, Global has recently brought to the Commission’s attention that on Monday, January 9, 1995, $49,875 in duplicate bills were issued. Global has ensured the Commission Staff that it is working to prevent this recurrence of this problem and will immediately credit customers for that double billing. -

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maintain some flexibility both on behalf of the Commission and Global. The proposed refund plan is as follows: 1.

Global will credit/refund 100% of all overcharges incurred by customers

for the categories of activities described in Section IV above. In addition, Global will add to that refund, simple interest at the rate of 10% per annum from the time each of the overcharges was incurred. 2.

No administrative costs incurred by Global in connection with the refund

shall be charged to ratepayers. 3.

Although the interest described in this Report runs only through

December 31, 1994, interest will continue to accrue at the rate of 10% per annum until such time as the refunds are in fact made. 4.

In the class action suit pending in Alabama State Court, Global has been

ordered to employ an independent third party consultant to prepare a list ofnames and telephone numbers of Global customers. The purpose of the preparation of the list is to identify the identity of all potential refund recipients and to determine whether the telephone number of the account to which any credit will be issued is currently the telephone number of the individual to whom the refund is payable. Global will make a copy of this list and of the methodology used in developing the list available to the Commission Staff. The Louisiana Public Service Commission Staff will indicate whether it is satisfied with the methodology used and the result of the development of the list. 5.

Global will provide total repayment ofovercharges plus interestinthe form

of credits on the telephone bills of customers where it is able to determine, to the satisfaction of the Commission Staff, that the telephone number of the account to which the credit will be given, is currently the telephone number of the individual to whom the credit is payable. At least in situations where the customer who is overbilled still has the same phone number, the most expeditious manner is to credit the customer’s phone bifi. (Even if the customer no longer is a Global customer, that credit can be used to offset other charges for local or long distance service.) 6.

Where Global cannot verify that the telephone number of an account to

which a credit is due is the telephone number of the individual to whom a refund is payable, -

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Global will mail refund checks to customers that can be identified and located. The checks will state that they are negotiable for 90 days from the date ofissue. However, those customers who do not cash the check within 90 days do not lose their right to a refund. 7.

Global shall, at least twice, publish a notice of the credits/refunds in the

major newspaper in each of the following cities: New Orleans, Baton Rouge, Lafayette, New Iberia, Lake Charles, Alexandria, Shreveport, and Monroe, informing customers of Global’s refund plan. In addition, a “coupon” that can be sent in by customers, shall also be included in the publication. These publications are intended both to notify customers who are still Global ratepayers that refunds are coming as well as those customers who have changed the number that they utilized while they were Global customers that they are eligible for refunds. Global shall consult with the Commission Staff concerning the specific language to be used in the notice. The cost of publication shall be borne solely by Global. 8.

On the bills on which credits are indicated, Global shall include a message

in substantially the following form in the Global section of the customer’s LEC bill: “Refund ordered through May 31, 1994 by the Louisiana Public Service Commission for unlawful overcharges and practices by Global Tel~Link,plus interest. Investigation of Global Tel*Link rates and practices is ongoing.” The expense of this notice shall be borne by Global. 9.

Global will engage the services of Price Waterhouse (or another

independent accounting/consulting firm acceptable to the Louisiana Public Service Commission Staff) to monitor and verify customer account balances to ensure that the credit/refund process is being accomplished accurately. In that regard, this independent auditor shall provide to the Commission records indicating by account number (i.e., telephone number), the amount originally bified by Global for eachcall placed during the refund period and the amount refunded for each call. 10.

Refunds for the period ending May 31, 1994 for the categories ofactivities

described in any order issued by the Commission are unconditional. That is, if additional unlawful practices and/or procedures are discovered, either prior to or after the May 31, 1994 cut-off period, the Commission is not precluded from ordering refunds for those activities.

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11.

Global will immediately notify the Commission Staff when it receives a

copy of the list being prepared by the independent consultant employed in the Alabama state court proceeding and shall submit such list to the CommissionStaff for review and verification. 12.

Global shall extend the existing letter ofcredit through June 30, 1995, and,

at the request of the Commission Staff, shall extend that letter of credit an additional 90 days if refunds are not complete by June 30, 1995. 13.

After the expiration ofthe 90 days following the issuance ofrefundchecks,

customers shall be given an additional 90 days to apply for refunds from Global. Global shall designate one or more representatives at Global, reachable via a toll free number, to which inquiries concerning refunds can be made. 14.

After Global has completed its efforts to provide refunds to consumers and

the expiration of this additional 90 days, Price Waterhouse or the designated auditor approved by the Commission, will calculate the total dollar amount ofrefunds that Global has been unable to provide. With respect to any remaining balance, Global will prospectively reduce its rates

to provide equivalent restitution to all ofits remaining customers in Louisiana. This prospective reduction in rates shall be accomplished and approved after review by the Commission Staff. Global has indicated that it intends to wait 45 days before initiating credits/refunds. Forty-five days is the time that any affected party has to appeal from the Commission’s order and Global does not want to start the refund process only to have it interrupted by an appeal. Therefore, the earliest that refunds could begin wouldbe early March, 1995. We are hopeful that the list being prepared for the plaintiffs in the Alabama litigation will be finished shortly. During the 45 day waiting period, Global is instructed to begin the verification process on the list and get the appropriate information to South Central Bell and the other local exchange companies so that they may make their test runs to effectuate the refunds beginning in March. VI.

OUTSTANDING ISSUES This Order addresses certain of Global’s practices occurring prior to May 31,

1994 described above as well as the basic format ofthe refund mechanism described in Section V. However, there are a number of issues which are still outstanding. A listing and brief discussion of those issues follows: -

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1.

Post-May 31. 1994 Overcharges a.

While it appears that a majority of Global’s practices which lead

to overcharges ceased as of May 31, 1994, it appears that some overcharges were assessed after

that date. Neither Price Waterhouse, the Commission Staff nor 0Th! has performed any analysis of post-May 31, 1994 potential refunds/credit liability. By this Order, we take no action and make no determination regarding Global’s activities after May 31, 1994. We leave open the question of post-May 31, 1994 overcharges and direct the Staff to further investigate those matters. b.

Global has, for some time been billing customers for calls made

more than 60 days prior to the billing date in violation of Commission Order No. U-16462-E. At the November and December business meetings, we specifically instructed Global to cease and desist from this practice (Order Nos. U-20784 and U-20784-A). While Global has appealed from Order No. U-20784-A, it has not obtained a stay of that Order and that Order is in full force and effect. Notwithstanding that fact, Global has continued to bill for calls more than 60 days old. While we know that this practice has been going on for at least five months, it may also have been occurring prior to May 31, 1994. The Price Waterhouse witness testified that they performed no analysis of 60 plus day old calls and Staff has not been able to quantify the amount of money paid by customers for such calls. In addition, this matter is on appeal to the 19th Judicial District Court. For these reasons, this Order makes no determination regarding the billing of 60 plus day old calls (occurring either before or after May 31, 1994). The Commission Staff and Special Counsel are instructed to further investigate this issue and report back to us at the earliest possible date. 2.

Compliance The Commission believes that it is important to ensure that the refund

process for these pre-May 31, 1994 overcharges run as smoothly and expeditiously as possible. We therefore fmd that it is appropriate to set forth certain guidelines for Global to follow in making these refunds in addition to the ones set forth in Section V above. Those guidelines are as follows:

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a.

Within 60 days of receipt ofCommission Staff approval of the list

of customers to whom credits/refunds must be made, the refund process must begin. Global be fmed no less than $1,000 per day for each day the refund process is delayed after that date. b.

If Global fails or refuses to initiate refunds two weeks after the 60

day delay period, the Commissionmay issue an Order directing Global to cease and desist from engaging in and soliciting new business and/or installing new equipment or expanding service at a current facility under contract or at other places of business. c.

The Commission may rescind Global’s authority to operate in

Louisiana if the refund process is delayed more than 30 days after the 60 day delay period. Prior to assessing any of these sanctions, the Commission will consider whether any delays were caused by orders of a court of competent jurisdiction in any state. 3.

Other Settlements It is possible that Global will either reach negotiated settlements or be

subject to orders by other state public service commissions for overcharges suffered by ratepayers in those jurisdictions. Global is instructed to report to the Commission when such settlements or orders issue and provide us with copies of those agreements and/or orders. The Commission Staff shall review these orders and/or settlements to analyze whether ratepayers in other jurisdictions receive any greater compensation from Global than that received by Louisiana ratepayers. For all of the reasons set forth above, H’ IS ORDERED THAT: (1)

We conclude that Global unlawfully charged its customers excessive rates in violation of Commission Orders, its own tariffs and its contract with the Department of Corrections through the practices of clock advancements, charging rates in excess of its authorized levels, adding additional phantom time and money to calls and billing customers more than once for the same calls. In many instances, these unlawful practices were engaged in deliberately and with no other intent than to unlawfully overcharge customers, all as more fully described in the body of this Order.

(2)

We find that as a result of the four practices described above, for the period ending May 31, 1994, Louisiana ratepayers were overcharged by Global in the amount of $1,243,000 exclusive of interest.

(3)

Global be required to credit or refund to Louisiana ratepayers, the full amount of $1,243,000 plus simple interest at the rate of 10% per annum from the time the overcharges occurred until the credits/refunds are actually accomplished. -

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(4)

No administrative or other charges incurred by Global shall be deducted from the credit/refund amount or in any other way be borne by ratepayers.

(5)

Immediately upon receipt of the list of credit/refund recipients described inparagraph 4 above, Global shall begin the verification process and forward the appropriate information to South Central Bell Telephone Company and the other local exchange companies so that the LECs may conduct test runs to accomplish the credits/refunds as expeditiously as possible.

(6)

As soon as Global receives a copy of the list of customers to whom credits/refunds are due, which list is being prepared in connection with the class action suit pending in state district court in Alabama, Global will make a copy of the list available to the Commission Staff. The Commission Staff will advise Global as to whether it is satisfied with the methodology used in preparing the list and the list itself and will advise Global of any necessary modifications required in order to accomplish appropriate credits/refunds to Louisiana ratepayers.

(7)

Global provide total repayment ofthe overcharges described in this

Order plus interest in the form of credits on the telephone bills of customers where it is able to determine, to the satisfaction of the Commission Staff, that the telephone number of the account to which the credit will be given, is currently the telephone number of the individual to whom the credit is payable. (8)

Where Global cannot verify that the telephone number of an account to which a credit is due is the telephone number of the individual to whom a refund is payable, Global will mail refund checks to customers that can be identified and located. The checks will state that they are negotiable for 90 days from the date of issue. However, those customers who do not cash the check within 90 days do not lose their right to a refund.

(9)

Global shall, at least twice, publish a notice ofthe credits/refunds in the major newspaper in each of the following cities: New Orleans, Baton Rouge, Lafayette, New Iberia, Lake Charles, Alexandria, Shreveport, and Monroe, informing customers of Global’s refund plan. In addition, a “coupon” that can be sent in by customers, shall also be included in the publication. These publications are intended both to notify customers who are still Global ratepayers that refunds are coming as well as those customers who have changed the number that they utilized while they were Global customers that they are eligible for refunds. Global shall consult with the Commission Staff concerning the specific language to be used in the notice as well as the contents and format of the coupon. The cost of publications shall be borne solely by Global.

(10)

On the bills on which credits are indicated, Global shall include a message in substantially the following form in the Global section of the customer’s LEC bill: “Refund ordered through May 31, 1994 by the Louisiana Public Service Commission for unlawful overcharges and practices by Global Tel~Link,plus interest. Investigation of Global Tel*Link rates and practices is ongoing.” The expense of this notice shall be borne solely by Global.

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(11)

Global will engage the services of Price Waterhouse (or another independentaccounting/consultingfirm acceptable to the Louisiana Public Service Commission Staff) to monitor and verify customer account balances to ensure that the credit/refund process is being accomplished accurately. The independent auditor shall provide to the Commission records indicating by account number (i.e., telephone number), the amount originally billedby Global for each call placed during the refund period and the amount refunded for each call.

(12)

Refunds for the period ending May 31, 1994 for the categories of activities described in any order issued by the Commission are unconditional. That is, if additional unlawful practices and/or procedures are discovered, either prior to or after the May 31, 1994 cut-off period, the Commission is not precluded from ordering refunds for those activities.

(13)

Global shall extend the existing letter of credit through June 30, 1995, and, at the request of the Commission Staff, shall extend that letter of credit an additional 90 days if refunds are not complete by June 30, 1995.

(14)

After the expiration of the 90 days following the issuance of refund checks, customers shall be given an additional 90 days to apply for refunds from Global. Global shall designate one or more representatives at Global, reachable via a toll free number, to which inquiries concerning refunds can be made.

(15)

After Global has completed its efforts to provide refunds to consumers and the expiration of this additional 90 days, Price Waterhouse or the designated auditor approved by the Commission, will calculate the total dollar amount of refunds that Global has been unable to provide. With respect to any remsining balance, Global will prospectively reduce its rates to provide equivalent restitution to all of its remaining customers in Louisiana. This prospective reduction in rates shall be accomplished and approved after review by the Commission Staff.

(16)

This Order makes no determination regarding Global’s activities after May 31, 1994. Issues regarding overcharges after May 31, 1994 remain unresolved and the Commission Staff and Special Counsel are directed to further investigate those matters and report back to the Commission at the earliest possible date.

(17)

This Order makes no determination regarding Global’s practice of billing customers for calls made more than 60 days prior to the billing date, either before or afterMay 31, 1994. Issues regarding billing of calls more than 60 days old remain unresolved. The Commission Staff and Special Counsel are directed to further investigate these matters and report back to the Commission at the earliest possible date.

(18)

Within 60 days of receipt of Commission Staff approval of the list of customers to whom credits/refunds must be made, the refund process must begin. Global may be fined no less than $1,000 per day for each day the refund process is delayed after that date.

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(19)

If Global fails or refuses to initiate refunds within two weeks after the 60 day delay period, the Commission may issue an Order directing Global to cease and desist from engaging in and soliciting new business and/or installing new equipment or expanding service at current facilities under contract or at other places of business.

(20)

The Commission may rescind Global’s authority to operate in Louisiana ifthe refund process is delayed more than 30 days after the 60 day delay period.

(21)

Prior to assessing any of these sanctions, the Commission will consider whether any delays were caused by orders of a court of competent jurisdiction in any state. Global may reach negotiated settlements or be subject to orders by other state public service commissions for overcharges suffered by

(22)

ratepayers in those jurisdictions. Global is instructed to report to the Commission when such settlements or orders issue and provide us with copies of those agreements and/or orders. The Commission Staff shall review these orders and/or settlements to analyze whether ratepayers in other jurisdictions receive any greater compensation from Global than that received by Louisiana ratepayers. .

(23)

Global and the Commission Staff are directed to take all other action required by this Order.

This Order is effective January 17, 1995. .c. —

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RY ORI~EROF TILE COMMISSION: .

BATOH~ROUGE,LOUISIANA JANUARY17,1995

17, 1995

÷

VICE-CHAIRMAN IRMA MUSE DIXON

DISTRIC IV COMMISSIONER THOMAS E. POWELL

DISTRICT V COMMISSIONER DON OWEN

COMMISSIONER KATHLEEN B. BLANCO

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