[Federal Register Volume 63, Number 154 (Tuesday, August 11, 1998)]
[Rules and Regulations]
[Pages 43033-43041]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-21257]
Federal Register / Vol. 63, No. 154 / Tuesday, August 11, 1998 /
Rules and Regulations
[[Page 43033]]
FEDERAL COMMUNICATIONS COMMISSION
47 CFR Parts 20 and 64
[WT Docket No. 98-100, GN Docket No. 94-33; FCC 98-134]
Commercial Mobile Radio Services and Miscellaneous Rules Relating
to Common Carriers
AGENCY: Federal Communications Commission.
ACTION: Final rule.
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SUMMARY: In this Memorandum Opinion and Order, the Commission grants in
part and denies in part the Personal Communications Industry
Association's (PCIA) Petition for Forbearance For Broadband Personal
Communications Services. Simultaneously with this Order, the Commission
is issuing a Notice of Proposed Rulemaking seeking new comments
regarding forbearance from regulation in wireless telecommunications
markets that is responsive to current statutory standards and market
conditions. The Notice of Proposed Rulemaking is summarized elsewhere
in this edition of the Federal Register.
EFFECTIVE DATE: September 10, 1998.
FOR FURTHER INFORMATION CONTACT: Jeffrey Steinberg at (202) 418-0620 or
Kimberly Parker at (202) 418-7240 (Wireless Telecommunications Bureau/
Commercial Wireless Division).
SUPPLEMENTARY INFORMATION: This is a summary of the Memorandum Opinion
and Order, FCC 98-134, adopted June 23, 1998 and released July 2, 1998.
The complete text of the Memorandum Opinion and Order is available for
inspection and copying during normal business hours in the FCC
Reference Center (Room 239), 1919 M Street, N.W., Washington, D.C. and
also may be purchased from the Commission's copy contractor,
International Transcription Services, (202) 857-3800, 1231 20th St.,
N.W., Washington, D.C. 20037.
Synopsis of the Memorandum Opinion and Order
I. Introduction
1. On May 22, 1997, the Broadband Personal Communications Services
Alliance of the Personal Communications Industry Association (PCIA)
filed a petition requesting forbearance from the continued application
of sections 201, 202, 214, 226, and 310(d) of the Communications Act of
1934, as amended (the Act), to broadband Personal Communications
Services (broadband PCS) carriers. PCIA also requests forbearance from
continued application of the resale obligations of 47 CFR 20.12(b) to
broadband PCS carriers. For the reasons discussed below, the Commission
grants partial forbearance from the requirement that Commercial Mobile
Radio Service (CMRS) providers file tariffs for their international
services. The Commission also grants partial forbearance from section
226 of the Act (the Telephone Operator Consumer Services Improvement
Act or TOCSIA) for CMRS providers of operator services and aggregators.
The Commission decline to forbear from applying sections 201 and 202 of
the Act, the international authorization requirement of section 214 of
the Act, and the resale rule of 47 CFR 20.12(b) to broadband PCS
providers because the record does not satisfy the three-prong
forbearance test set forth in section 10 of the Act. In addition, the
Commission denies the Petition of GTE Service Corporation (GTE) for
Reconsideration or Waiver of a Declaratory Ruling and affirms the
Common Carrier Bureau's decision that TOCSIA applies to certain
activities of GTE's mobile affiliates, but grants limited forbearance
from certain provisions of TOCSIA as explained herein.
II. Background
1. The Commission derives its authority to forbear from applying
regulations or provisions of the Communications Act of 1934 (Act) from
sections 332(c)(1)(A) and 10 of the Act. Section 332(c)(1)(A) provides
the Commission with the authority to forbear from enforcing most Title
II obligations, but only as to commercial mobile radio service (CMRS)
providers. Section 10 provides the Commission with authority to forbear
from the application of virtually any regulation or any provision of
the Act to a telecommunications carrier or telecommunications service,
or a class of carriers or services.
2. Under section 10, the Commission must forbear from applying any
regulation or provision of the Act to a telecommunications carrier or
service, or class of telecommunications carriers or services, in any or
some of its geographic markets if a three-pronged test is met.
Specifically, section 10 requires forbearance, notwithstanding section
332(c)(1)(A), if the Commission determines that:
(1) enforcement of such regulation or provision is not necessary to
ensure that the charges, practices, classifications, or regulations by,
for, or in connection with that telecommunications carrier or
telecommunications service are just and reasonable and are not unjustly
or unreasonably discriminatory;
(2) enforcement of such regulation or provision is not necessary
for the protection of consumers; and
(3) forbearance from applying such provision or regulation is
consistent with the public interest.
3. On June 2, 1997, the Wireless Telecommunications Bureau issued a
public notice seeking comment on the Petition. Twenty-two parties filed
comments on the Petition and thirteen parties filed reply comments. On
May 21, 1998, the Commission extended until June 8, 1998, the date on
which the Petition would be deemed granted in the absence of a decision
that it failed to meet the standards for forbearance under section
10(a). On June 5, 1998, the Commission further extended this deadline
until June 23, 1998.
III. Discussion
A. Sections 201 and 202
4. Background. Section 201 of the Act mandates that carriers
engaged in the provision of interstate or foreign communication service
provide service upon reasonable request, and that all charges,
practices, classifications, and regulations for such service be just
and reasonable. Section 201 also empowers the Commission to require
physical connections with other carriers, to establish through routes,
and to determine appropriate charges for such actions. Section 202
states that it is unlawful for any common carrier to make any unjust or
unreasonable discrimination in charges, practices, classifications,
regulations, facilities, or services, or to make or give any undue or
unreasonable preference or advantage to any person or class of persons.
Section 332 of the Act requires that the Commission treat all CMRS
providers as common carriers for purposes of the Communications Act,
except to the extent the Commission determines to forbear from applying
certain provisions of Title II. Although section 10 forbearance
contains no such restriction, it is notable that, for purposes of
forbearance under section 332, the Commission ``may not specify any
provision of section 201, 202, or 208.'' PCIA requests section 10
forbearance from the application of sections 201 and 202 of the Act to
broadband PCS providers on the ground that market forces, including the
competitive presence of other CMRS providers, are sufficient to ensure
that rates are just, reasonable and not unjustly discriminatory. PCIA
states that forbearance will promote the public interest by enhancing
competition,
[[Page 43034]]
providing consumers with increased choices, driving prices downward,
and eliminating compliance costs.
5. Discussion. Sections 201 and 202, codifying the bedrock consumer
protection obligations of a common carrier, have represented the core
concepts of federal common carrier regulation dating back over a
hundred years. Although these provisions were enacted in a context in
which virtually all telecommunications services were provided by
monopolists, they have remained in the law over two decades during
which numerous common carriers have provided service on a competitive
basis. These sections set out broad standards of conduct, requiring the
provision of interstate service upon reasonable request, pursuant to
charges and practices which are just and reasonable and not unjustly
discriminatory. At bottom, these provisions prohibit unreasonable
discrimination by common carriers by guaranteeing consumers the basic
ability to obtain telecommunications service on no less favorable terms
than other similarly situated customers. The Commission gives the
standards meaning by defining practices that run afoul of carriers'
obligations, either by rulemaking or by case-by-case adjudication. The
existence of the broad obligations, however, is what gives the
Commission the power to protect consumers by defining forbidden
practices and enforcing compliance. Thus, sections 201 and 202 lie at
the heart of consumer protection under the Act. Congress recognized the
core nature of sections 201 and 202 when it excluded them from the
scope of the Commission's forbearance authority under section
332(c)(1)(A). Although section 10 now gives the Commission the
authority to forbear from enforcing sections 201 and 202 if certain
conditions are satisfied, the history of the forbearance provisions
confirms that this would be a particularly momentous step. Consistent
with the centrality of sections 201 and 202 to consumer protection, the
Commission has never previously refrained from enforcing sections 201
and 202 against common carriers, even when competition exists in a
market.
6. Based on the record, the Commission declines to forbear from
enforcing the core common carrier obligations of sections 201 and 202
at this time. The record does not show, as required for forbearance
under section 10, that the current market conditions ensure that the
charges, practices, classifications and regulations of broadband PCS
carriers are just and reasonable and are not unjustly or unreasonably
discriminatory, that market forces are sufficient to protect consumers
from discriminatory charges and practices of broadband PCS providers,
and that forbearance is in the public interest.
7. The first prong of the section 10 forbearance standard is not
satisfied unless enforcement of a statutory provision is shown not to
be necessary to ensure that charges, practices, classifications, and
regulations are just and reasonable, and are not unjustly or
unreasonably discriminatory. This standard essentially tracks the
central requirements of sections 201 and 202. Thus, in arguing for
forbearance from applying sections 201 and 202, PCIA necessarily
contends that in order to ensure that broadband PCS providers' charges,
practices, classifications, and regulations are just, reasonable, and
not unjustly or unreasonably discriminatory, the Commission need not
require that those charges, practices, classifications, and regulations
be just, reasonable, and not unjustly or unreasonably discriminatory.
8. PCIA argues that the broadband PCS market is competitive within
the context of the total CMRS market, that broadband PCS providers lack
individual market power, and that, therefore, enforcement of sections
201 and 202 is no longer necessary to ensure that rates and practices
associated with broadband PCS, or imposed by broadband PCS providers,
are just, reasonable, and not unjustly discriminatory.
9. Given the ongoing competitive development of the markets in
which broadband PCS providers operate, constraints on market entry
imposed by the need for spectrum licenses, and uncertainties regarding
the extent to which a competitive market structure can ensure
reasonable and nondiscriminatory practices toward all consumers, the
Commission is unwilling to assume that current market conditions alone
will adequately constrain unjust and unreasonable or unjustly and
unreasonably discriminatory rates and practices without specific
evidence to that effect. Neither PCIA nor any other source has brought
such evidence to the Commission's attention. The Commission therefore
concludes that the first prong of the section 10 forbearance standard
has not been satisfied.
10. Under the second prong of the section 10 forbearance standard,
a party seeking forbearance must show that enforcement of a provision
is not necessary for the protection of consumers. PCIA asserts that the
variety of competitive alternatives available to consumers, along with
the broad range of pricing plans from which they may choose, renders
the continued application of sections 201 and 202 to broadband PCS
providers unnecessary for consumers' protection. The Commission
recognizes that consumers in today's market may have a broad choice of
calling plans, and that many consumers are able to choose to take
service from among several providers. Nonetheless, the Commission found
in connection with the first prong of the section 10 forbearance
standard, the record does not show that today's market conditions
eliminate all remaining concerns about whether broadband PCS providers'
rates and practices are just, reasonable, and non-discriminatory. For
the same reasons, the Commission cannot conclude that sections 201 and
202 are not necessary to protect consumers.
11. The third prong of the section 10 forbearance standard requires
the Commission to forbear only if it finds that forbearance is
consistent with the public interest. In evaluating whether forbearance
is consistent with the public interest, the Commission must consider
whether forbearance from enforcing the provision or regulation will
promote competitive market conditions, including the extent to which
forbearance will enhance competition among providers. In making this
assessment, the Commission may consider the benefits a regulation
bestows upon the public, along with any potential detrimental effects
or costs of enforcing a provision. PCIA argues that forbearance from
applying sections 201 and 202 to broadband PCS providers would further
the public interest because these sections limit carriers' ability to
develop specialized offerings for particular customers, and impose
administrative costs on carriers. Thus, PCIA contends, sections 201 and
202 retard competition and ultimately harm consumers. The Commission
rejects PCIA's argument for several reasons.
12. The Commission believes that the benefits sections 201 and 202
confer upon the public by protecting consumers and preventing unjust,
unreasonable, and discriminatory practices are important parts of its
public interest analysis. Indeed, as customers begin to rely on CMRS as
a partial or complete substitute for wireline service, it becomes
increasingly important for the Commission to preserve the basic
relationship between carriers and customers enshrined in sections 201
and 202.
13. Sections 201 and 202 continue to provide important safeguards
to
[[Page 43035]]
consumers of broadband PCS against carrier abuse in an area that has
already been largely deregulated by the Commission. The Commission
therefore finds that at this time it is necessary to maintain sections
201 and 202, which enable the Commission to ensure that broadband PCS
carriers provide service in a just, reasonable, and non-discriminatory
manner, and to provide all consumers, including other carriers, with a
mechanism through which they can seek redress for unreasonable carrier
practices.
B. Resale Rule, 47 CFR 20.12(b)
14. Background. PCIA has also requested that the Commission forbear
from applying the CMRS resale rule to broadband PCS carriers. On June
12, 1996, the Commission adopted a rule prohibiting certain providers
of CMRS from unreasonably restricting the resale of their services
during a transitional period. Prior to 1996, the Commission applied a
similar rule only to providers of cellular service. In Interconnection
and Resale Obligations Pertaining to Commercial Mobile Radio Services,
published at 61 FR 38399 (July 24, 1996) CC Docket No. 94-54, 11 FCC
Rcd. 18455 (1996) (First Report and Order), the Commission extended the
resale rule to providers of broadband PCS and certain ``covered''
specialized mobile radio (SMR) services in order to promote competition
in those services.
15. Section 20.12(b) of the Commission's rules, which was adopted
in the First Report and Order, states that ``[e]ach carrier subject to
this section must permit unrestricted resale of its service'' until the
transition period expires. The Commission explained in the First Report
and Order that the rule has two straightforward requirements: (1) no
provider may offer like communications services to resellers at less
favorable prices, terms, or conditions than are available to other
similarly situated customers, absent reasonable justification; and (2)
no provider may explicitly ban resale or engage in practices that
effectively restrict resale, unless those practices are justified as
reasonable. It essentially prohibits covered carriers from unreasonably
discriminating against resellers. The resale rule does not require
providers to structure their operations or offerings in any particular
way, such as to promote resale, adopt wholesale/retail business
structures, establish a margin for resellers, or guarantee resellers a
profit.
16. Discussion. PCIA argues that the Commission should not wait
until the end of the transition period established in the First Report
and Order to sunset the CMRS resale rule, but rather should forbear
from applying that rule to broadband PCS providers immediately. Several
commenters support PCIA's position, arguing that the Commission should
either forbear from enforcing the resale rule or significantly relax
the current requirements due to robust competition in CMRS markets. The
Commission finds that the record does not show that the three-pronged
forbearance test set out in section 10 of the Act has been met. It
therefore declines to forbear from enforcing the resale rule with
respect to broadband PCS providers at this time.
17. To some extent, PCIA's arguments for forbearance from enforcing
the resale rule simply repeat its arguments with respect to sections
201 and 202; namely, that the criteria in section 10 are met because of
the level of competition faced by broadband PCS providers and the
growth of broadband PCS service. The Commission rejects these general
arguments for the reasons discussed above. Specifically, the Commission
has already found that, notwithstanding many promising developments,
the competitive development of the market in which broadband PCS
providers operate is not yet complete. Moreover, although increased
competition brings many benefits to consumers and eliminates the
rationale for many regulations, the Commission cannot assume that
increased competition alone will protect consumers from unjust or
discriminatory practices. Under these circumstances, the evidence does
not establish that current market conditions will ensure that
providers' practices are just, reasonable, and not unjustly or
unreasonably discriminatory, and that consumers will not be harmed.
18. With respect to the first prong of the test, PCIA argues that
the resale rule is unnecessary because, given the competitive state of
the market, broadband PCS providers have no incentive to engage in
unjust or unreasonable resale practices, or to unjustly or unreasonably
discriminate against resellers. Indeed, PCIA states, in a competitive
environment facilities-based operators have a natural incentive to
promote distribution of their services through the use of resellers.
PCIA asserts that facilities-based operators are even more likely to
rely on resellers where, as is the case with broadband PCS providers,
they have extremely high spectrum acquisition and operating costs.
To the contrary, the record contains significant evidence
suggesting that despite the current resale rule, abuses in the form of
refusals to offer services for resale still exist. While the Commission
cannot conclude from this record that all of these alleged practices
are unreasonable, these allegations, which have not been effectively
refuted, support its conclusion that the resale rule has not been shown
unnecessary to ensure that rates and practices are just, reasonable,
and non-discriminatory. Although the Commission has received few formal
complaints about CMRS providers' failure to permit unrestricted resale
of their services, it will vigorously investigate any complaints that
it receives and take appropriate enforcement action.
19, The Commission also finds that PCIA's petition does not satisfy
the second prong of the forbearance test. PCIA argues that the resale
rule is not necessary to protect consumers because the competitive
marketplace will ensure the efficient availability of resale, with its
attendant consumer benefits. The Commission rejects this contention
because the record does not show that current market conditions can
effectively prevent unreasonable resale practices. In this regard, the
Commission emphasizes that unrestricted resale promises many benefits
to consumers, especially in markets where direct competition among
underlying providers remains somewhat limited. With more retail
competitors, consumers benefit from alternative choices and higher
quality services as carriers vie for customers. As many commenters
note, the unrestricted availability of resale helps ensure that
consumers will have access to favorable rates and innovative service
offerings.
20. Finally, the record does not show forbearance from enforcement
of the resale rule to be in the public interest. In particular, the
Commission finds that continued enforcement of the resale rule is
important to promote the rapid development of vigorous competition in
the market in which broadband PCS providers compete. One of the
Commission's major reasons for adopting the CMRS resale rule in 1996
was to speed the development of competition by permitting new entrants
to begin offering service to the public before building out their
facilities. This capability would help new entrants to overcome the
advantages enjoyed by two types of earlier entrants. First, all new
entrants, including broadband PCS providers, would be competing
directly with cellular firms that in many instances had been in the
market for a decade or more, and therefore enjoyed substantial
advantages of incumbency. Second, even among broadband PCS providers,
the earliest licensed entrant in a geographic market might receive its
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license and begin operating substantially before its last competitors.
The Commission continues to believe that resale opportunities will help
later entrants to overcome their competitors' advantages by entering
the market through resale before their facilities are built out, and
finds nothing in the record to contradict this conclusion.
21. The resale rule also promotes competition in ways other than
facilitating the early entry of new licensees. In a market that has not
achieved sufficient competition, an active resale market can help to
replicate many of the features of competition, including spurring
innovation and discouraging unreasonably discriminatory practices, by
increasing the number of entities offering service at the retail level.
In addition, the availability of resale permits more entities to offer
packages containing a variety of services including CMRS, thereby
increasing competition in the market for multiple-service packages.
Resale may also be used as an entry strategy by small entities that may
aspire to offer facilities-based services in the future.
22. Furthermore, even assuming that forbearance from enforcing the
resale rule would confer certain public interest benefits, forbearance
would also impose costs. If the Commission were to forbear from
enforcing the rule only as applied to broadband PCS providers, it would
create a regulatory asymmetry between those providers and their
cellular and covered SMR competitors. This result could distort the
working of market forces, and contradict clear Congressional intent.
If, however, the Commission were to forbear with respect to all CMRS
providers, it would further exacerbate the competitive advantage
enjoyed by the cellular incumbents.
23. The Commission therefore concludes at this time that it should
continue enforcing the resale rule against all covered providers until
the scheduled sunset date five years after it awards the last group of
initial broadband PCS licenses. The Commission recognizes, however,
that market conditions or other developments may justify termination of
the resale rule, as applied to some or all covered providers, before
that time. In particular, conditions in some geographic markets may
support forbearance at the same time as the rule is still needed in
other locations. In evaluating future petitions, the Commission will
consider the state of facilities-based competition, the extent of
resale activity within the relevant market, the immediate prospects for
future development of additional facilities-based competition, the
value of service to previously unserved or underserved markets, and
other factors relevant to determining whether the requirements of
section 10 would be satisfied by the granting of such a petition. In
order to resolve such petitions in an expeditious fashion, the
Commission will place those petitions promptly on public notice and it
will establish expedited pleading cycles. The Commission will make
every effort to resolve such petitions substantially in advance of the
statutory deadline for forbearance petitions.
C. International Section 214 Authorizations
24. PCIA asks the Commission to forbear from the international
section 214 facilities authorization requirement as it applies to
broadband PCS providers. Pursuant to section 214, the Commission
requires carriers to obtain separate Commission authorizations to
provide international telecommunications service, whether by acquiring
facilities or by reselling the international services of another
carrier. International section 214 authorizations are filed according
to section 63.18 of the Commission's rules and processed pursuant to
section 63.12. All CMRS providers are currently required to obtain
section 214 authorization before providing international service.
25. For the reasons discussed below, the Commission finds that it
is necessary to continue to require that international services be
provided only pursuant to an authorization that can be conditioned or
revoked. The Commission therefore concludes, based on the record
generated in this proceeding, that the section 10 forbearance standard
for the international section 214 authorization requirement has not
been satisfied. As part of its 1998 biennial review, however, the
Commission is considering what steps can be taken to minimize
regulatory burdens on international carriers, including PCS providers.
The Commission believes that at the conclusion of this review, many of
PCIA's concerns with the section 214 authorization process will have
been addressed.
26. The Commission is unable to conclude on the present record that
forbearance from the section 214 authorization requirement would be
consistent with the public interest as required under the section 10
standard. PCIA's petition does not address the leveraging of foreign
market power by foreign-affiliated carriers except to assert that ``as
new entrants into the international telecommunication market, broadband
PCS providers are without international market power and, therefore,
lack the ability to engage in unjust or unreasonable practices.'' The
Commission is concerned that a broadband PCS provider, like any other
carrier of international traffic that competes against other
international carriers, could acquire an affiliation with a foreign
carrier that has market power and that the foreign affiliate would then
have the ability and incentive to discriminate against unaffiliated
U.S. international carriers on the affiliated route. The Commission
therefore must continue to require that international service be
provided only pursuant to an authorization that can be conditioned or
revoked if necessary to ensure that rates and conditions of service are
just, reasonable, and nondiscriminatory and to protect consumers.
27. PCIA's argument that forbearance would serve the public
interest is unpersuasive in light of the above considerations. The
great majority of international section 214 applications are granted
through a streamlined process under which the applicant may commence
service on the 36th day after public notice of its application.
Applications that are opposed or that the Commission deems unsuitable
for streamlined processing are generally disposed of within 90 days.
This delay is not so great a burden as to outweigh the needs described
above.
28. The Commission concludes that the record does not show that it
would be consistent with the public interest to forbear from the
international section 214 authorization requirement. Therefore, the
third prong of the forbearance standard is not met. Because the third
prong of the standard is not satisfied, the Commission cannot grant the
forbearance PCIA seeks, and it need not address the first two prongs.
D. International Tariffing Requirements
29. PCIA next asks the Commission to forbear from imposing on
broadband PCS carriers the requirement of filing tariffs for their
international services. In the CMRS Second Report and Order, 59 FR
18493 (April 19, 1994), the Commission exercised its forbearance
authority under section 332(c) to forbear from requiring or permitting
tariffs for interstate service offered directly by CMRS providers to
their customers. The Commission did not address the tariffing
obligations as they apply to international services.
30. The Commission concludes, based on the present record, that the
section 10 standard is met for forbearance from
[[Page 43037]]
the international tariffing requirement for CMRS providers that offer
international service directly to their customers for international
routes where they are not affiliated with any carrier that terminates
U.S. international traffic and collects settlement payments from U.S.
carriers. Thus, the Commission will forbear from the mandatory
tariffing requirement and adopt permissive detariffing of international
services to unaffiliated points for CMRS providers.
31. Under the first criterion for forbearance under section 10, the
Commission must determine that mandatory tariff filing requirements are
unnecessary to ensure that charges, practices, classifications, or
regulations are just and reasonable and are not unjustly or
unreasonably discriminatory. In the domestic context, the Commission
has determined that tariffing is not necessary to ensure reasonable
rates for carriers that lack market power. In the CMRS Second Report
and Order, the Commission found that competition in the CMRS market for
domestic services will lead to reasonable rates and that enforcement of
the tariffing requirement is therefore not necessary. In the absence of
an affiliation with a foreign carrier, the same considerations apply in
the CMRS market for international services. The CMRS market is
sufficiently competitive that there is no reason to regulate any CMRS
carrier as dominant on an international route for any reason other than
an affiliation with a foreign carrier.
32. Under the second statutory criterion for forbearance, the
Commission must determine that mandatory tariff filing requirements for
CMRS providers serving unaffiliated international routes are
unnecessary to protect consumers. As explained above, tariffs are not
necessary to ensure that rates are just and reasonable. Therefore,
tariffs are also not necessary to protect consumers. Accordingly, the
second criterion is met.
33. Under the third criterion, the Commission must determine that
permissive detariffing of CMRS providers serving unaffiliated
international routes is consistent with the public interest. Permissive
detariffing reduces transaction costs for service providers and reduces
administrative burdens on service providers and the Commission. Thus,
carriers that choose not to file tariffs would not need to undertake
the time and expense of preparing and filing tariffs, and the
Commission would not incur the administrative burden of reviewing them.
Section 10(b) requires the Commission, in determining whether
forbearance would be consistent with the public interest, to consider
whether forbearance would promote competitive market conditions. The
Commission believes that permissive detariffing would enable carriers
to avoid impediments that mandatory tariffing might impose on a
carrier's ability to introduce services because of the time and expense
of preparing and filing tariffs. Thus, detariffing should lower the
cost of entry into the international services market by CMRS providers.
Further, permissive detariffing would facilitate the provision of
international service by CMRS providers by not requiring that they
disclose their prices to competitors and would enable carriers that
offer international services directly to their customers to enjoy the
benefits of the Commission's earlier decision to prohibit tariffs for
domestic CMRS services. These considerations outweigh any public
interest benefit of requiring CMRS providers to file tariffs for the
provision of international service on unaffiliated routes.
34. The Commission is unable to find, however, that it would be
consistent with the public interest to adopt permissive detariffing for
CMRS providers serving international routes where the carrier is
affiliated with a foreign carrier that terminates U.S. international
traffic. Currently, the Commission's ability to detect and deter
certain kinds of anticompetitive pricing practices on affiliated routes
depends on the availability of tariffed rates on those routes. When an
international carrier serves an affiliated route, the carrier and its
affiliate may have the ability and incentive to engage in
anticompetitive pricing behavior that can harm competition and
consumers in the U.S. market. If tariffs were not available, the
Commission would need to rely on another mechanism for detecting, as
well as deterring, price squeezes by facilities-based carriers on
affiliated routes. The record in this proceeding does not address the
extent to which other sources of pricing information are sufficiently
available to permit the Commission and interested parties to detect
price squeeze behavior by foreign-affiliated carriers in a timely
manner.
35. Price squeeze behavior on affiliated routes can have
anticompetitive effects that are inconsistent with competitive market
conditions, and enforcement of the Commission's rules and policies
against such behavior currently depends on the availability of tariffed
rates on affiliated routes. The Commission therefore concludes that the
third prong of the forbearance standard, that forbearance would be
consistent with the public interest, is not met for any CMRS provider
providing international service to a destination market in which it is
affiliated with a foreign carrier that terminates U.S. international
traffic and collects settlement payments from U.S. carriers. Because
the third prong of the forbearance standard is not satisfied for
affiliated routes, the Commission cannot forbear in those
circumstances, and it need not address the first two prongs.
36. The Commission will forbear from applying the international
tariffing requirement on unaffiliated routes to all CMRS providers
despite the fact that PCIA's petition seeks forbearance only for
broadband PCS providers. If the Commission could not extend forbearance
to all CMRS providers, it would not be able to grant the forbearance
that PCIA seeks, because it would not find that the public interest
would be served by granting forbearance that would create a disparity
in regulatory treatment among like CMRS providers. Therefore,
forbearance should be applied equally to all CMRS providers.
37. The Commission will not adopt complete detariffing, i.e.,
prohibiting the filing of tariffs, in this proceeding. Although there
are usually added benefits to complete detariffing, PCIA's petition did
not request complete detariffing and there is no discussion of that
option in this record. Because the Commission continues to require
tariffs on affiliated routes, there could be complications to adopting
complete detariffing on unaffiliated routes that are not present in the
domestic context. Therefore, it would be imprudent to prohibit the
filing of tariffs on unaffiliated routes while continuing to require
tariffs on affiliated routes without any discussion in the record of
the consequences of such a policy.
38. The Commission grants PCIA's request for forbearance from the
international tariffing requirement to the extent described above. As a
result, a CMRS carrier offering international service directly to its
customers need not file tariffs for its service to international points
where it is not affiliated with a carrier that terminates U.S.
international traffic. If the CMRS carrier acquires an affiliation with
a foreign carrier that collects settlement payments from U.S. carriers,
it must file a tariff in order to continue to provide service to any
market where the foreign carrier terminates U.S. international traffic.
In addition, when any authorized international carrier, including a
CMRS provider with international section 214 authority, acquires an
affiliation with a foreign carrier, it must notify the
[[Page 43038]]
Commission as required by Sec. 63.11 of the Commission's rules.
E. Section 226: Telephone Operator Consumer Services Improvement Act
39. Background. In 1990, Congress passed and the President signed
TOCSIA to ``protect consumers who make interstate operator service
calls from pay telephones, hotels, and other public locations against
unreasonably high rates and anticompetitive practices.'' TOCSIA
regulates two classes of telecommunications service providers: (1)
``aggregators,'' which are defined as persons or entities that make
telephones available to the public or to transient users of their
facilities for interstate telephone calls using a provider of operator
services, and (2) ``providers of operator services'' (OSPs), which are
defined as common carriers that provide operator services, or any other
persons determined by the Commission to be providing operator services.
``Operator services'' have been defined as any interstate
telecommunications service initiated from an aggregator location that
includes, as a component, any automatic or live assistance to a
consumer to arrange for billing or completion, or both, of an
interstate telephone call through a method other than: (1) automatic
completion with billing to the telephone from which the call
originated; or (2) completion through an access code used by the
consumer, with billing to an account previously established with the
carrier by the consumer.
40. TOCSIA and the Commission's regulations impose several
requirements upon aggregators. Aggregators must post the following
information on or near the telephone instrument, in plain view of
consumers: (a) the name, address, and toll-free telephone number of the
OSP presubscribed to the telephone; (b) a written disclosure that rates
for service are available on request, and that consumers have a right
to obtain access to the OSP of their choice and may contact their
preferred OSP for information on accessing its service using that
telephone; (c) in the case of a pay telephone, the local coin rate for
the pay telephone location; and (d) the name and address of the
Enforcement Division of the Common Carrier Bureau of the Commission.
Aggregators must also ensure that each of their telephones
presubscribed to an OSP allows consumers to use ``800,'' ``900'' or
``10XXX'' access codes to reach the OSP of their choice, and ensure
that consumers are not charged higher rates for calls placed using
these access codes.
41. TOCSIA and the Commission's regulations also impose a number of
requirements upon OSPs. OSPs must identify themselves, audibly and
distinctly, to the consumer at the beginning of each telephone call and
before the consumer incurs any charge for the call. They must also
disclose immediately to the consumer, upon request and at no charge to
the consumer, a quotation of their rates or charges for the call, the
methods by which such rates or charges will be collected, and the
method by which complaints concerning such rates, charges, or
collection practices will be resolved. OSPs must also permit the
consumer to terminate a telephone call at no charge before the call is
connected; not bill for unanswered telephone calls; not engage in
``call splashing'' unless the consumer requests to be transferred to
another OSP after being informed, prior to such a transfer, and prior
to incurring any charges, that the rates for the call may not reflect
the rates from the actual originating location of the call; and not
bill for a call that does not reflect the location of the origination
of the call. The Commission recently added an additional requirement:
OSPs must now audibly disclose to consumers how to obtain the price of
a call before it is connected.
42. The regulatory scheme of TOCSIA also affirmatively charges OSPs
with overseeing aggregator compliance with both the statute's posting
requirement and its prohibitions on restricting consumers' access to
the OSP of their choice. Finally, TOCSIA requires OSPs to file
informational tariffs with the Commission, the Commission requires OSPs
to regularly publish and make available at no cost to inquiring
customers written materials that describe any recent changes in
operator services and in the choices available to consumers in that
market, and the Commission requires OSPs and aggregators to ensure
immediate connection of emergency telephone calls to the appropriate
emergency service of the reported location of the emergency, if known,
and, if not known, of the originating location of the call.
43. The Commission has previously considered the issue of TOCSIA's
application to wireless service. In 1993, the Common Carrier Bureau
denied a Petition for Declaratory Ruling filed by GTE that sought a
ruling that TOCSIA did not apply to certain activities of GTE's mobile
affiliates. The Common Carrier Bureau held that TOCSIA required the
Commission to regulate as an aggregator any entity that makes
telephones available to the public or transient users of its premises,
and to regulate as an OSP any entity that provides interstate
telecommunications service initiated from an aggregator location that
includes automatic or live assistance to arrange for billing or call
completion. The Common Carrier Bureau found that certain GTE affiliates
provided services which made them aggregators and that commercial air-
to-ground carriers provided services which made them OSPs. GTE
subsequently requested reconsideration or waiver of this decision,
arguing that it could not be reconciled with the language, legislative
history, and purposes of TOCSIA or sound public policy.
44. In the CMRS Second Report and Order, adopted in 1994, the
Commission concluded, based on the record before it at that time, that
forbearance from TOCSIA was not warranted for CMRS providers in
general. However, in the Further Forbearance NPRM, 59 FR 25432 (May 16,
1994), issued later that year, the Commission sought comment on whether
there were particular classes of CMRS providers that warranted
forbearance from certain regulations. Although the Commission is now
terminating the Further Forbearance NPRM, it incorporates the comments
received in that proceeding that relate to TOCSIA into the record of
this proceeding. Since the Commission is resolving GTE's
Reconsideration Petition with this Order, it also incorporates the
record of both the GTE Declaratory Ruling and the GTE Reconsideration
Petition into this proceeding.
45. Discussion. The requirements of TOCSIA and the Commission's
implementing regulations apply only to entities functioning as
aggregators or OSPs. Thus, only a small subset of CMRS activities is
affected by TOCSIA. The Commission will forbear from applying to CMRS
providers those provisions of TOCSIA that impose requirements that are
identical or similar to requirements that Congress or the Commission
have previously found unnecessary. Thus, the Commission will forbear
from enforcing the provisions of TOCSIA related to unblocked access
against CMRS aggregators and OSPs, and will forbear from requiring CMRS
OSPs to file informational tariffs. As discussed below, the three-
pronged test under section 10 is satisfied as to these provisions.
Although the current factual record is insufficient to support
forbearance from other provisions of TOCSIA, the Commission explores in
the Notice of Proposed Rulemaking (summarized elsewhere in this edition
of the Federal Register) the possibility of further forbearance from
TOCSIA and proposes to modify its rules in a manner
[[Page 43039]]
tailored to the mobile phone environment.
46. Unblocked Access. TOCSIA and its implementing rules contain
several provisions based on the premise that consumers should be
allowed access to the OSP of their choice. Aggregators are required to
ensure that their telephones presubscribed to a particular OSP allow
consumers to use 800 and 950 access codes to reach their preferred OSP.
Aggregators also must not charge consumers more for using an access
code than the amount the aggregator charges for calls placed using the
presubscribed OSP, and they must post a written disclosure that
consumers have a right to obtain access to the interstate common
carrier of their choice and may contact their preferred interstate
common carrier for information on accessing that carrier's service
using that telephone. OSPs must ensure, by contract or tariff, that
aggregators allow consumers to use 800 and 950 access codes to reach
the OSP of their choice and must withhold payment of any compensation
due to aggregators if the OSP reasonably believes that the aggregator
is blocking such access.
47. In order to forbear, the first prong of the section 10
forbearance test requires that the Commission find that enforcement of
these provisions is not necessary to ensure that the charges,
practices, classifications, or regulations of CMRS providers acting as
OSPs are just and reasonable and are not unjustly or unreasonably
discriminatory. Discussing the requirements of TOCSIA in general, PCIA
asserts that the most persuasive support for such a finding is the
``complete lack of complaints'' about mobile public phone services,
which have been offered since before TOCSIA was enacted. According to
PCIA, there is also no evidence that blocking or discriminatory charges
have been a problem in the mobile context. The Commission believes that
the absence of complaints filed with the Commission about access
blocking or discriminatory charges for access by CMRS aggregators,
standing alone, may not be enough to support forbearance, particularly
since the public mobile phone industry is relatively young.
Nonetheless, nothing in the record contradicts PCIA's assertion that
blocking of access is not a problem in this context. The principal
purpose of TOCSIA, as suggested by its name, is to protect consumers.
This function is addressed under the second prong of the forbearance
test. In this context, in the absence of some evidence suggesting that
without the unblocked access rules CMRS aggregators would engage in
unjust, unreasonable, or discriminatory practices, the first prong of
the forbearance test is satisfied.
48. The second prong of the section 10 forbearance test requires
that the Commission find that enforcement of the provisions at issue is
not necessary for the protection of consumers. PCIA contends that
requiring CMRS providers to comply with the statutory and regulatory
requirements of TOCSIA is not necessary to protect consumers because
none of the abuses that led to the enactment of TOCSIA, including call
blocking, have occurred in the mobile context. With respect to the
obligation of OSPs to ensure that aggregators comply with the
unblocking requirement of TOCSIA and its prohibition against charging
higher rates for using access codes to reach a preferred OSP, PCIA
states that, because of the resale obligation, CMRS providers may not
know that their services are being resold for mobile public phone
purposes and therefore have no contract with the aggregator. Finally,
PCIA asserts that the TOCSIA unblocking requirements have been
superseded by the limitation that section 332(c)(8) places on the
Commission's ability to order unblocking.
49. The Commission does not have a factual record that would
support a finding that CMRS providers are unable to comply with the
requirement that they ensure aggregators' compliance with unblocking
because they do not have contracts with aggregators. However, the
Commission believes that it would be inconsistent with section
332(c)(8) to fail to forbear from enforcing the unblocking requirements
in question here. The Commission believes that section 332(c)(8)
reflects a determination on the part of Congress that equal access and
unblocking regulations are generally unnecessary to protect consumers
of CMRS. In light of these circumstances, the Commission sees no need
to provide transient users of CMRS with consumer protections that
neither Congress nor the Commission has provided for ordinary
subscribers. In sum, the Commission concludes that enforcement of the
equal access and unblocking provisions of TOCSIA is unnecessary for the
protection of consumers.
50. The third prong of the section 10 forbearance test requires
that the Commission find that forbearance from applying the provisions
in question is consistent with the public interest. In determining
whether forbearing from certain regulations meets the public interest
prong of the section 10 test, the Commission balances the costs
carriers must incur to comply with regulations and the effects of these
costs upon competition with the benefits that these regulations bestow
on the public. In light of Congressional concerns that equal and
unblocked access requirements would increase the cost of service, and
the absence of evidence that such requirements would produce any
identifiable benefits, the Commission concludes that forbearance from
the unblocking provisions of TOCSIA with respect to CMRS is consistent
with the public interest.
51. Informational Tariffs. Under TOCSIA, OSPs are required to file
tariffs specifying rates, terms, and conditions, and including
commissions, surcharges, any fees which are collected from consumers,
and reasonable estimates of the amount of traffic priced at each rate,
with respect to calls for which operator services are provided.
52. Having further considered this issue, the Commission now
believes that it should forbear from applying the informational tariff
requirement to CMRS OSPs. The first prong of section 10 requires a
finding that enforcement of the tariff filing requirement is not
necessary to ensure that the charges and practices of OSPs are just and
reasonable and are not unjustly or unreasonably discriminatory. The
rates and related surcharges or fees in OSPs' informational tariffs may
be changed without prior notice to consumers or to the Commission.
Moreover, the CMRS marketplace is becoming increasingly competitive and
will continue to promote rates and practices that are just and
reasonable. In the event isolated abuses do occur, they can be dealt
with under sections 201 and 202 through the Commission's complaint
procedures. Therefore, the tariff filings required under section 226
are not necessary to ensure just and reasonable rates and practices.
53. The second prong of section 10 requires the Commission to find
that enforcement of the section 226 tariff filing requirement is not
necessary for the protection of consumers. For the same reasons stated
under the first prong, the Commission believes that the tariff
requirement is not necessary to protect consumers. There is no record
evidence that indicates a need for these informational tariffs to
protect consumers.
54. Under the third prong of section 10, the Commission must find
that forbearance from applying the section 226 tariffing requirement is
consistent with the public interest. With respect to this prong of the
section 10 test, PCIA claims that forbearance from TOCSIA is in the
public interest because the statute
[[Page 43040]]
undermines the benefits derived from detariffing CMRS providers.
Consistent with its previous mandatory detariffing decision for
CMRS, the Commission therefore forbids CMRS OSPs from filing
informational tariffs under section 226, and it requires CMRS OSPs with
tariffs currently on file to cancel those tariffs within 90 days of
publication of this Memorandum Opinion and Order in the Federal
Register.
55. Other Requirements. PCIA claims in its Petition that other OSP
requirements of TOCSIA are irrelevant to CMRS, unduly burdensome, or
impossible for broadband PCS providers to meet. Thus, for example, PCIA
states that the requirement that OSPs disclose their rates immediately
to the consumer is irrelevant in the CMRS context because charges are
determined by the aggregator. PCIA also asserts that other requirements
would be very costly, and produce little benefit, because CMRS
providers cannot generally distinguish calls from public mobile phones
from calls placed by subscribers using their own phones. However,
neither PCIA nor any of the commenters has supplied sufficient specific
factual material in support of these claims. Thus, the Commission
believes that it does not have an adequate record at this time to
forbear from any of the OSP provisions of TOCSIA other than those
already discussed. It similarly lacks a record to forbear from
enforcing any additional aggregator disclosure provisions, which may
provide important information to consumers.
56. GTE Petition for Reconsideration. With respect to its petition
for reconsideration, GTE contends that Congress did not intend TOCSIA
to apply to mobile telecommunications service providers. The Commission
disagrees. As the Common Carrier Bureau stated in the GTE Declaratory
Ruling, the statutory language and legislative history indicate that
Congress intended TOCSIA to apply to all phones made available to the
public in situations where the consumer, not the telephone provider,
pays for the cost of the call, regardless of whether the phone is a
mobile phone or not. Furthermore, although numerous commenters on the
Further Forbearance NPRM contend that the ``captive customer'' problem
Congress passed TOCSIA to remedy is uniquely a landline telephone
service problem, customers who need to place a call from a public
telephone located on an airplane or a train are as ``captive,'' if not
more ``captive,'' than customers making a landline OSP call from a
hotel or hospital. The Commission believes that Congress imposed
TOCSIA's aggregator regulations to protect ``captive'' customers, and
therefore these provisions should apply to commercial air-ground
telephone service and Railfone service.
57. Upon review of the record, the Commission finds that GTE offers
no new facts or legal arguments in support of its position that TOCSIA
does not apply to the actions of certain of its mobile affiliates,
other than to allege that the decision failed to consider the policy
and practical implications of classifying cellular carriers as OSPs in
the Railfone and rental cellular phone contexts. Upon consideration of
the entire record, the Commission finds no reason to overturn the
Common Carrier Bureau's decision. It therefore affirms the decision in
the GTE Declaratory Ruling that TOCSIA applies to the actions of
certain GTE affiliates, and deny the GTE Reconsideration Petition.
However, this Order provides relief from certain of the provisions of
TOCSIA for CMRS providers and will grant GTE some of the relief it
sought in its petition. The Commission is exploring other issues
concerning TOCSIA's application to mobile service in the Notice of
Proposed Rulemaking, summarized elsewhere in this edition of the
Federal Register.
IV. Procedural Matters
58. Paperwork Reduction Act Analysis. This Memorandum Opinion and
Order does not contain any information collections requiring approval
by the Office of Management and Budget because, in it, the Commission
forbears from applying already established rules.
V. Ordering Clauses
59. Accordingly, it is ordered that, pursuant to sections 1, 4(i),
10, 11 and 332 of the Communications Act of 1934, as amended, 47 U.S.C.
151, 154(i), 160, 161 and 332, the outstanding portions of the Petition
for Forbearance filed by the Broadband Personal Communications Services
Alliance of the Personal Communications Industry Association on May 22,
1997, are granted in part and denied in part to the extent discussed
above.
60. It is further ordered that, pursuant to sections 1, 4(i), 226
and 332 of the Communications Act of 1934, as amended, 47 U.S.C. 151,
154(i), 226 and 332, the Petition for Reconsideration or Waiver filed
by GTE on September 27, 1993, is denied.
61. It is further ordered that, pursuant to sections 1, 4(i) and
332 of the Communications Act of 1934, as amended, 47 U.S.C. 151,
154(i) and 332, the rulemaking proceeding captioned Further Forbearance
from Title II Regulation for Certain Types of Commercial Mobile Radio
Service Providers, GN Docket No. 94-33, is terminated.
62. It is further ordered that, Parts 20 and 64 of the Commission's
Rules are amended effective September 10, 1998.
List of Subjects
47 CFR Part 20
Communications common carriers, Radio.
47 CFR Part 64
Communications common carriers, Telephone.
Federal Communications Commission.
Magalie Roman Salas,
Secretary.
Rule Changes
Title 47 of the Code of Federal Regulations, parts 20 and 64, is
amended as follows:
PART 20--COMMERCIAL MOBILE RADIO SERVICES
1. The authority citation for part 20 is amended to read as
follows:
Authority : 47 U.S.C. 154, 160, 251-254, 303, and 332 unless
otherwise noted.
2. Section 20.15 is amended by revising paragraphs (c) and (d) to
read as follows:
Sec. 20.15 Requirements under Title II of the Communications Act.
* * * * *
(c) Commercial mobile radio service providers shall not file
tariffs for interstate service to their customers, interstate access
service, or interstate operator service. Sections 1.771-1.773 and part
61 of this chapter are not applicable to interstate services provided
by commercial mobile radio service providers. Commercial mobile radio
service providers shall cancel tariffs for interstate service to their
customers, interstate access service, and interstate operator service.
(d) Nothing in this section shall be construed to modify the
Commission's rules and policies on the provision of international
service under Part 63 of this chapter, except that a commercial mobile
radio service provider is not required to file tariffs for its
provision of international service to markets where it does not have an
affiliation with a foreign carrier that collects settlement payments
from U.S. carriers. For purposes of this paragraph,
[[Page 43041]]
affiliation is defined in Sec. 63.18(h)(1)(i) of this chapter.
* * * * *
PART 64--MISCELLANEOUS RULES RELATING TO COMMON CARRIERS
1. The authority citation for part 64 is amended to read as
follows:
Authority: 47 U.S.C. 10, 201, 218, 226, 228, 332, unless
otherwise noted.
2. Section 64.703 is amended by removing the word ``A'' at the
beginning of paragraph (b)(2) and inserting in its place the phrase
``Except for CMRS aggregators, a''.
3. Section 64.704 is amended by adding a new paragraph (e) to read
as follows:
Sec. 64.704 Call blocking prohibited.
* * * * *
(e) The requirements of this section shall not apply to CMRS
aggregators and providers of CMRS operator services.
4. Section 64.705 is amended by adding a new paragraph (c) to read
as follows:
Sec. 64.705 Restrictions on charges related to the provision of
operator services.
* * * * *
(c) The requirements of paragraphs (a)(5) and (b) of this section
shall not apply to CMRS aggregators and providers of CMRS operator
services.
5. Section 64.708 is amended by redesignating paragraphs (d)
through (h) as (f) through (j), redesignating paragraph (i) as
paragraph (l) and adding paragraphs (d), (e) and (k) to read as
follows:
Sec. 64.708 Definitions.
* * * * *
(d) CMRS aggregator means an aggregator that, in the ordinary
course of its operations, makes telephones available to the public or
to transient users of its premises for interstate telephone calls using
a provider of CMRS operator services;
(e) CMRS operator services means operator services provided by
means of a commercial mobile radio service as defined in section 20.3
of this chapter;
* * * * *
(k) Provider of CMRS operator services means a provider of operator
services that provides CMRS operator services;
* * * * *
[FR Doc. 98-21257 Filed 8-10-98; 8:45 am]
BILLING CODE 6712-01-P
