RECEIVED Bruce L. Wilson SECRETARY'S OFFICE Attorney at Law '88 SEP 9 PM 3 47 677 - 61st Street UTILITIES BOARD Des Moines, Iowa 50312 (515) 277-4904 (voice) (515) 280-9107 (data) September 9, 1988 Mr. Gerald W. Winter Supervisor, Consumer Services Iowa State Utilities Board Lucas State Office Building Des Moines, IA 50319 Re: Complaint No. C-88-161, Schmickley v. Teleconnect. Dear Mr. Winter: For a period of ten (10) months until it was discovered by a Te- leconnect customer (although the duration is really not materi- al), Teleconnect, arbitrarily and without any notice whatsoever to anyone, willfully, wantonly, and deliberately refused to pro- vide indial telephone service between a number in Waterloo used to access a computer bulletin board system and any Teleconnect customer who sought to call it through Teleconnect's facilities, irrespective of the status of its customers' accounts. The num- ber being "blocked" was not assigned to a Teleconnect customer; and there was no relationship whatsoever between the person to whom the number was assigned and Teleconnect. Without offering a smidgen of proof, Teleconnect has claimed that the number was blocked because some unidentified third party used a hacked/stolen Teleconnect access code to call it. It has even gone so far as to libel Mr. Kyhl, the operator of the computer bulletin board system involved in this matter, by implying that his system was "being used to effect thefts" of its service and that he was an active participant in such activities. (July 29 letter of Casey D. Mahon, page 2.) Teleconnect has sought to justify its illegal act by its own in- competence. In fact, it doesn't even know the proper term is "computer bulletin board" and has instead referred to "computer billboards," whatever those might be. (July 29 letter of Casey D. Mahon, page 2.) It has cited irrelevant sections of Federal law to its customer, irrelevant case law to the Staff, and has cluttered the record with irrelevancies. The logical conclusion is that this is a smokescreen designed to hide the fact that there is no legal basis for its actions, which it insists be shrouded in the strictest secrecy, offering only to whisper the details in the Staff's ear. Teleconnect's most ludicrous attempt to justify its actions can be summarized as "Gee, nobody complained for ten months and if they had, we would've just told them to use AT&T (something which I'm sure AT&T would've appreciated, had it known), so 'no harm, no foul'." How was anyone to complain? The person whose number was being blocked was not himself a Teleconnect customer, so he surely wouldn't know. The recording which Teleconnect used in conjunction with its blocking was deliberately false and mislea- ding to those who heard it. In fact, it's questionable how many people who tried to use Teleconnect to make the call would have heard it. Some modems can be set to recognize a "voice" connec- tion as a failure to connect and hang up immediately on doing so. The person trying to make the call may then try it with a regular phone, as Mr. Schmickley may have done, to try to find out what the problem is, or they may just assume they had a wrong number in the first place and not try it again at all. As you know, I was on the Commission's Staff as an auditor for well over four years before leaving to enter law school. You should also know that I'm quite familiar with telephone toll fraud, familiar with its effects on a company's paying customers, and not unsympathetic to attempts to curb it. The actions taken to do so must nevertheless be within the bounds of the law. For more than a year, I've been an extensive user of computer bulletin board systems all over the United States and assist in the operation of one such system here in Des Moines. Although they've received all the attention, very few of the thousands of such systems can be characterized as "hacker boards." Many are operated by attorneys. The American Bar Association's ABA/Net is nothing but a computer bulletin board system. The State of Iowa Department of General Services operates one from its offices in the Hoover Building. The system operators are Mr. Jim Borchard (5316) and Mr. Dirk Bliss (6125). Since its relocation to Des Moines, I've become familiar with the particular system to which access was illegally blocked by Teleconnect. Neither the opera- tor of that system, Mr. Borchard, Mr. Bliss nor I would permit our systems to be used as part of a scheme to illegally use the facilities of Teleconnect or any other carrier. To the extent permitted by law, we would cooperate in any investigation of il- legal activities being conducted on or through our systems. How- ever, just like Teleconnect, operators of computer bulletin board systems are subject to the provisions of the Electronic Communi- cations Privacy Act amendments to the Omnibus Crime Control and Safe Streets Act, codified in Title 18 of the United States Code at Sections 2510 and following. Teleconnect has repeatedly offered in defense of its illegal act that it was unable to identify the operator of the system. This is a further admission of the incompetence of its own personnel. All it had to do, once it determined data carrier was present on the line, was dial the number with a personal computer and modem. The information would have been displayed to it immediately on a connection's being established, as shown by a printout submitted by Mr. Schmickley. It could have then used the Waterloo phone book and/or city directory to ascertain Mr. Kyhl's voice number, place of employment, residence address, and confronted him di- rectly to make an accusation or enlist his assistance. In fact, if it had any real evidence, it should have given it to law en- forcement agencies which do have the power to obtain a court or- der that service be disconnected. (Palermo v. Bell Telephone Co. of Pennsylvania, 415 F.2d 198 [3rd Cir., 1969]; Tollin v. Diamond State Telephone Co., 286 F.Supp. 86 [D.Del., 1968]; Hamilton v. Western Union Telegraph Co., 34 F.Supp. 928 [D.Ohio, 1940].) As Mr. Stephens' memorandum to you pointed out, the situation presented by this complaint does not fall squarely within the Commission's Rules or Teleconnect's tariffs. Both deal with re- fusal or disconnection of service to the company's customer when there's something about the company's relationship with its cus- tomer that justifies it. There's nothing about refusing to pro- vide service to a third party or refusing to allow a customer with whom the company has no problem to use the service to call a particular number. However, the policy of the State has been expressed since the 1800's (Code of 1873, Sec. 1328) in what is now Code Section 477.6, which provides, in pertinent part, that any person employed in transmitting messages by telegraph or te- lephone who willfully refuses to do so shall be guilty of a sim- ple misdemeanor. The Board is not charged with enforcement of Chapter 477, but I believe Chapter 476 and the Board's Rules must be interpreted in pari materia with Section 477.6. Bearing in mind that the expressed policy of the State is that telephone messages will be transmitted, the Rules of the Board with respect to denial of service have to be treated as excep- tions to that policy and construed narrowly. The Board's Rule at 199 IAC 22.4(5) states the permitted reasons for refusing or dis- connecting service. Because of the policy set forth at Code Sec- tion 477.6, the "insufficient reasons" set forth at 199 IAC 22.4(7), must be treated as being illustrative and without limi- tation, so that anything which is not expressly sufficient under 199 IAC 22.4(5) is automatically insufficient and the company's justification must come within the ambit of those reasons which are expressly sufficient. The company's own tariffs must be si- milarly construed. Copies of Teleconnect's pertinent tariff provisions are in the file. They are sections 22.a.05, 22.b.07, and 22.d.. Section 22.a.05 requires notice be given to the affected customer, as does section 22.b.07, which deals with a disconnection to prevent unlawful use, and section 22.d. authorizes disconnection before expiration of five days' notice when there are unusual credit circumstances with respect to the affected customer. These pro- visions are inapplicable because (1) the blocked number did not belong to a Teleconnect customer at all and (2) the company wa- sn't having a problem with Mr. Schmickley nor apparently any o- ther of its customers who might have tried to use its facilities to call the number, leaving the company without justification in its own tariffs for its action and in direct violation of Code Section 477.6. Although this matter deals with Teleconnect's intrastate service, it appears that all access to the number in question was blocked, both intrastate and interstate. Unfortunately for it, Telecon- nect can't find support for its actions in Federal law either. (Federal law would not be binding on the Board, but the Board might look to it for guidance when there are similarities between State and Federal provisions.) Sections 201 and 202 of Title 47, U.S. Code, the Communications Act of 1934, as amended, not only prohibit the arbitrary denial of service and discrimination, but Section 206 authorizes the affected party to seek damages and attorney fees in Federal Court or before the Federal Communica- tions Commission for their violation. The only Federal statute which comes close to sanctioning Teleconnect's behavior is that found at Section 1084(d) of Title 18, U.S. Code, which is a spe- cial provision relating to gambling activities and not even it authorizes a carrier to act on its own without notice to anybody. For the foregoing reasons, I ask that Mr. Schmickley's complaint be upheld and that Teleconnect be ordered to forthwith cease "blocking" or otherwise interfering with service to any Iowa te- lephone number unless ordered to do so by a court of competent jurisdiction or by a law enforcement agent or agency acting pur- suant to authority to make such an order. Because Teleconnect has admitted that it is presently blocking two other Iowa numbers, presumably also entirely on its own voli- tion, and we simply don't know how many other interexchange car- riers are doing the same, I further ask that a rulemaking procee- ding be begun to amend Chapter 22 of the Board's Rules to expli- citly state that doing so is strictly prohibited. I'm prepared to submit the necessary petition, or the proceeding can be begun on the Staff's motion or the Board's own motion as provided by the Code and Board's Rules. Sincerely, Bruce L. Wilson cc: Casey D. Mahon Sr. V.P. & General Counsel Teleconnect Company 500 Second Ave., S.E. Cedar Rapids, IA 52401 James Schmickley 7441 Commune Court, N.E. Cedar Rapids, Iowa 52402