05-10119. Truth-in-Billing and Billing Format; National Association of State Utility Consumer Advocates' Petition for Declaratory Ruling Regarding Truth-in-Billing

AGENCY:

Federal Communications Commission.

ACTION:

Final rule.

SUMMARY:

In this document, the Commission concludes that Commercial Mobile Radio Service (CMRS) carriers should no longer be exempt from the Commission's rule requiring that billing descriptions be brief, clear, non-misleading and in plain language. In addition, the Commission puts CMRS carriers on notice that it intends to review complaints regarding unclear or misleading billing descriptions, and may take enforcement action under this rule, as appropriate, based on such complaints or other evidence of non-compliance.

DATES:

Effective August 23, 2005 except § 64.2400 (b) which contains information collection requirements that have not been approved by the Office of Management and Budget (OMB). Written comments by the public on the modified information collections are due June 24, 2005. The Commission will publish a document in the Federal Register announcing the effective date for that rule.

FOR FURTHER INFORMATION CONTACT:

Michael Jacobs, Consumer & Governmental Affairs Bureau at [phone] (voice), or e-mail [e-mail]. For additional information concerning the PRA information collection requirements contained in this document, contact Leslie Smith at [phone], or via the Internet at [e-mail].

SUPPLEMENTARY INFORMATION:

On June 25, 1999, the Commission included in its Further Notice of Proposed Rulemaking, Truth-in-Billing and Billing Format, published at 64 FR 34499, June 25, 1999, the 60 day Federal Register PRA notice that sought comment on whether the remaining truth-in-billing rules that the Commission adopted in the wireline context should apply to CMRS carriers, in order to protect consumers. On March 18, 2005, the Commission released a Second Report and Order, and Declaratory Ruling (Second Report and Order), Truth-in-Billing and Billing Format; National Association of State Utility Consumer Advocates' Petition for Declaratory Ruling Regarding Truth-in-Billing, in which the Commission determined that CMRS carriers should no longer be exempt from 47 CFR 64.2401(b), which requires that billing descriptions be brief, clear, non-misleading and in plain language. To the extent that any CMRS carrier is not currently in compliance with this requirement, certain modifications to the carrier's billing practice may be required. This Second Report and Order contains modified information collection requirements subject to the PRA of 1995, Public Law 104-13. These will be submitted to the Office of Management and Budget (OMB) for review under § 3507(d) of the PRA. OMB, the general public, and other Federal agencies are invited to comment on the new information collection requirement contained in this proceeding. This Second Report and Order addresses issues arising from Truth-in-Billing and Billing Format, First Report and Order and Further Notice of Proposed Rulemaking, CC Docket No. 98-170 and CG Docket No. 04-208, FCC 99-72; published at 64 FR 34488 and 64 FR 34499, June 25, 1999. Copies of this document and any subsequently filed documents in this matter will be available for public inspection and copying during regular business hours at the FCC Reference Information Center, Portals II, 445 12th Street, SW., Room CY-A257, Washington, DC 20554. The complete text of this decision may be purchased from the Commission's duplicating contractor, Best Copy and Printing, Inc. (BCPI), Portals II, 445 12th Street, SW., Room CY-B402, Washington, DC 20554. Customers may contact BCPI, Inc. at their Web site: www.bcpiweb.com or call 1-800-378-3160. To request materials in accessible formats for people with disabilities (Braille, large print, electronic files, audio format), send an e-mail to [e-mail] or call the Consumer & Governmental Affairs Bureau at [phone] (voice) or [phone] (TTY). This Second Report and Order can also be downloaded in Word and Portable Document Format (PDF) at: http://www.fcc.gov/​cgb/​pol.

Paperwork Reduction Act of 1995 Analysis

This Second Report and Order contains modified information collection requirements. The Commission, as part of its continuing effort to reduce paperwork burdens, invites the general public to comment on the information collection requirements contained in the Second Report and Order as required by the Paperwork Reduction Act (PRA) of 1995, Public Law 104-13. Public and agency comments are due June 24, 2005. In addition, the Commission notes that pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4), we previously sought specific comment on how the Commission might “further reduce the information collection burden for small business concerns with fewer than 25 employees.” In the present document, we have assessed the effects of adopting these rules, and find that there may be an administrative burden on businesses with fewer than 25 employees. However, to the extent that many businesses with fewer than 25 employees also are consumers of wireless telecommunications services, we believe they also will benefit from applying these requirements to wireless carriers in that they too will receive the information they need to understand their bills and to make informed decisions in a competitive marketplace. In addition, the Commission notes that pursuant to the Regulatory Flexibility Act of 1980, as amended, and the Paperwork Reduction Act of 1995, Public Law 104-13, the Commission previously sought specific comment on how applying these requirements to CMRS carriers may have an impact on information collection requirements applicable to small businesses. Indeed, the Commission received comment on its previous Regulatory Flexibility Analysis in this docket, and found that the Commission appropriately considered and balanced the concerns of carriers that detailed rules may increase costs against the Commission's goals of protecting consumers from fraud. Finally, many CMRS carriers have indicated in this proceeding that they already comply with the new requirements, and the principles underlying these requirements always have applied to these carriers. Therefore, the Commission believes that the burden on CMRS carriers, including those with fewer than 25 employees, in complying with these requirements will be negligible.

Synopsis

In this Second Report and Order, the Commission addresses a Petition for Declaratory Ruling filed by the National Association of State Utility Consumer Advocates (NASUCA) seeking to prohibit telecommunications carriers from imposing any separate line item or surcharge on a customer's bill that is not mandated or authorized by federal, state or local law. In light of the significant consumer concerns with the billing practices of wireless and other interstate providers raised in this proceeding and outstanding issues from the 1999 Truth-in-Billing Order and Further Notice, published at 64 FR 34488 and 64 FR 34499, June 25, 1999, the Commission also takes this opportunity to reiterate certain aspects of its existing rules and policies affecting billing for telecommunications services. Specifically, the Commission: (1) Removes the existing exemption for CMRS carriers from 47 CFR 64.2401(b)—requiring that billing descriptions be brief, clear, non-misleading and in plain language; (2) reiterates that non-misleading line items are permissible under the Commission's rules; (3) reiterates that it is misleading to represent discretionary line item charges in any manner that suggests such line items are taxes or charges required by the government; (4) clarifies that the burden rests upon the carrier to demonstrate that any line item that purports to recover a specific governmental or regulatory program fee conforms to the amount authorized by the government to be collected; and (5) clarifies that state regulations requiring or prohibiting the use of line items for CMRS constitute rate regulation and are preempted under section 332(c)(3)(A) of the Communications Act of 1934 (“the Act”).

Supplemental Final Regulatory Flexibility Certification (FRFA)

As required by the Regulatory Flexibility Act of 1980, as amended (RFA), (see 5 U.S.C. 603. The RFA, see 5 U.S.C. 601-612, has been amended by the Small Business Regulatory Enforcement Fairness Act of 1996, Public Law 104-121, Title II, 110 Statute 857 (1996)) an Initial Regulatory Flexibility Analysis (IRFA) was incorporated in the Further Notice of Proposed Rulemaking released by the Federal Communications Commission (Commission) on May 11, 1999. (See Truth-in-Billing and Billing Format, CC Docket No. 98-170, First Report and Order and Further Notice of Proposed Rulemaking, 14 FCC Rcd at 7550-52 at paragraphs 105-111). The Commission sought written public comments on the proposals contained in the FNPRM, including comments on the IRFA. Comments filed in this proceeding specifically identified as comments addressing the IRFA and comments that address the impact of the proposed rules and policies on small entities are discussed below. The 1999 Truth-in-Billing Order and Further Notice included a Final Regulatory Flexibility Analysis (FRFA) that conformed to the RFA. (See Truth-in-Billing Order, 14 FCC Rcd at 7537-7550, paragraphs 72-103). This present supplemental FRFA addresses only the modification to § 64.2400(b) of the Commission's rules adopted in this Second Report and Order, and conforms to the RFA. (See 5 U.S.C. 604. The requirements of the RFA do not extend to the issues set forth in the Declaratory Ruling. Thus, the Commission does not address those issues herein).

Need for, and Objectives of, the Order

In a 1999 Further Notice of Proposed Rulemaking, the Commission sought comment on whether the truth-in-billing rules adopted in the wireline context should apply to CMRS carriers in order to protect consumers. (See Truth-in-Billing Order, 14 FCC Rcd at 7535-36, paragraphs 68-70). In the 1999 Truth-in-Billing Order, the Commission concluded that the broad principles adopted to promote truth-in-billing should apply to all telecommunications carriers, both wireline and wireless. (See Truth-in-Billing Order, 14 FCC Rcd at 7501, paragraph 13 (“[l]ike wireline carriers, wireless carriers also should be fair, clear, and truthful in their billing practices.”). The Commission noted that these principles represent fundamental statements of fair and reasonable practices. In the wireline context, the Commission incorporated these principles and guidelines into rules for enforcement purposes “after considering an extensive record of both the nature and volume of customer complaints, as well as substantial information about wireline billing practices.” (See Truth-in-Billing Order, 14 FCC Rcd at 7501, paragraph 15).

In the wireless context, however, the Commission found that the record at that time did not reflect the same high volume of customer complaints nor did the record indicate that CMRS billing practices failed to provide consumers with the clear and non-misleading information they need to make informed choices. (See Truth-in-Billing Order, 14 FCC Rcd at 7502, paragraph 16. The Commission also noted that notwithstanding the decision not to apply these guidelines to CMRS providers, that such providers remain subject to the reasonableness and nondiscrimination requirements of sections 201 and 202 of the Act, “and our decision here in no way diminishes such obligations as they may relate to billing practices of CMRS carriers.” See Truth-in-Billing Order, 14 FCC Rcd at 7502, paragraph 19). The Commission therefore exempted CMRS carriers from the truth-in-billing rule that requires charges contained on telephone bills to be accompanied by a brief, clear, non-misleading, plain language description of the service or services rendered. (See 47 CFR 64.2400(b), 64.2401(b)). We believe that making the requirements of 47 CFR 64.2401(b) mandatory for CMRS will help to ensure that wireless consumers receive the information that they require to make informed decisions in a competitive marketplace.

Summary of Significant Issues Raised by Public Comments in Response to the IRFA

The Office of Advocacy filed comments specifically addressing the proposed rules and policies presented in the 1999 Truth-in Billing Order FRFA and IRFA. (See, e.g. Office of Advocacy, U.S. Small Business Administration 1999 Reply Comments). In general, the Office of Advocacy argued that the Commission's FRFA and IRFA were flawed due to vagueness. As the Commission has previously stated, however, the Commission believes the Truth-in-Billing Order and regulatory flexibility analysis contained therein appropriately balanced the concerns of carriers that detailed rules may increase costs against the Commission's goal of protecting consumers from fraud. (See Truth-in-Billing Order on Reconsideration, 15 FCC Rcd at 6031, paragraph 20). Moreover, the Commission notes that the scope of this Second Report and Order is significantly more limited than the 1999 Truth-in-Billing Order and the issues that the Office of Advocacy addressed in its comments. The majority of commenters addressing the limited issue presented in the Second Report and Order, representing primarily CMRS providers, responded that the lack of billing complaints against wireless providers along with the competitive nature of the wireless industry should indicate that it is not necessary to apply these rules to CMRS. (See, e.g., Bell Atlantic Mobile 1999 Comments at 3; CTIA 1999 Comments at 5; PCIA 1999 Comments 4-5). Several state commissions, consumer organizations, and individual commenters, however, argued that many consumers were confused by their telephone bills including charges included on their CMRS bills.

Description and Estimate of the Number of Small Entities to Which the Rules Will Apply

The RFA directs agencies to provide a description of, and where feasible, an estimate of the number of, small entities that may be affected by the rules adopted herein. (See 5 U.S.C. 604(a)(3)). The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.” (See 5 U.S.C. 601(6)). In addition, the term “small business” has the same meaning as the term “small business concern” under the Small Business Act. (See 5 U.S.C. 601(3) (incorporating by reference the definition of “small-business concern” in the Small Business Act, 15 U.S.C. 632). Pursuant to 5 U.S.C. 601(3), the statutory definition of a small business applies “unless an agency, after consultation with the Office of Advocacy of the Small Business Administration and after opportunity for public comments, establishes one or more definitions of such term which are appropriate to the activities of the agency and publishes such definition(s) in the Federal Register.”). Under the Small Business Act, a “small business concern” is one that: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the Small Business Administration (SBA). (See 15 U.S.C. 632).

Wireless Service Providers. The SBA has developed a small business size standard for wireless firms within the two broad economic census categories of “Paging” (see 13 CFR 121.201, NAICS code 517211) and “Cellular and Other Wireless Telecommunications.” (See 13 CFR 121.201, NAICS code 517212). Under both SBA categories, a wireless business is small if it has 1,500 or fewer employees. For the census category of Paging, Census Bureau data for 1997 show that there were 1,320 firms in this category, total, that operated for the entire year. (See U.S. Census Bureau, 1997 Economic Census, Subject Series: “Information,” Table 5, Employment Size of Firms Subject to Federal Income Tax: 1997, NAICS code 513321 (issued October 2000). Of this total, 1,303 firms had employment of 999 or fewer employees, and an additional 17 firms had employment of 1,000 employees or more. (See U.S. Census Bureau, 1997 Economic Census, Subject Series: “Information,” Table 5, Employment Size of Firms Subject to Federal Income Tax: 1997, NAICS code 513321 (issued October 2000). The census data do not provide a more precise estimate of the number of firms that have employment of 1,500 or fewer employees; the largest category provided is “Firms with 1000 employees or more.”). Thus, under this category and associated small business size standard, the great majority of firms can be considered small. For the census category Cellular and Other Wireless Telecommunications, Census Bureau data for 1997 show that there were 977 firms in this category, total, that operated for the entire year. (See U.S. Census Bureau, 1997 Economic Census, Subject Series: “Information,” Table 5, Employment Size of Firms Subject to Federal Income Tax: 1997, NAICS code 513322 (issued October 2000). Of this total, 965 firms had employment of 999 or fewer employees, and an additional 12 firms had employment of 1,000 employees or more. (See U.S. Census Bureau, 1997 Economic Census, Subject Series: “Information,” Table 5, Employment Size of Firms Subject to Federal Income Tax: 1997, NAICS code 513322 (issued October 2000). The census data do not provide a more precise estimate of the number of firms that have employment of 1,500 or fewer employees; the largest category provided is “Firms with 1000 employees or more.”). Thus, under this second category and size standard, the great majority of firms can, again, be considered small.

Description of Projected Reporting, Recordkeeping, and Other Compliance Requirements for Small Entities

In this present document, the Commission concludes that CMRS carriers should no longer be exempt from 47 CFR 64.2401(b)—requiring that billing descriptions be brief, clear, non-misleading and in plain language. To the extent that any CMRS carrier is not currently in compliance with this requirement, certain modifications to the carriers' billing practices would be required. Such modifications would include reviewing existing bills and making changes as necessary to ensure that any billing descriptions are clear, non-misleading, and in plain language as required by § 64.2401(b) of the Commission's rules.

Steps Taken To Minimize the Significant Economic Impact on Small Entities, and Significant Alternatives Considered

The RFA requires an agency to describe any significant alternatives that it has considered in reaching its proposed approach, which may include the following four alternatives (among others): (1) The establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) the clarification, consolidation, or simplification of compliance or reporting requirements under the rule for small entities; (3) the use of performance, rather than design standards; and (4) an exemption from coverage of the rule, or any part thereof, for small entities.

The Commission has considered several alternatives to its decision to remove the exemption for CMRS carriers from 47 CFR 64.2400(b), including the retaining of that exemption or forbearing from that requirement under section 10 of the Act. Section 64.2401(b) requires that billing descriptions be brief, clear, non-misleading and in plain language. Although the Commission decided in 1999 to exempt CMRS carriers from the requirements of § 64.2401(b), the Commission nevertheless stated that the underlying principle (i.e. bills must be clear and non-misleading) should apply to wireless carriers and sought further comment on whether such requirement should be made mandatory to CMRS in the future. In addition, the Commission concluded that sections 201(b) and 202 of the Act would continue to apply to wireless billing practices.

The record in this proceeding, including comments of several states and individual consumers and the Commission's own complaint data, leads the Commission to conclude that many wireless consumers are confused by the billing practices of their CMRS provider. As a result, the Commission has decided to require CMRS providers to comply with the Commission's requirement that billing practices be clear, brief, and non-misleading. Many CMRS providers have indicated in this proceeding that they already comply with this requirement. As noted above, the identical underlying truth-in-billing principle and sections 201 and 202 of the Act have always applied to CMRS providers. Thus, the Commission believes that the burden on CMRS carriers in complying with this requirement will be negligible.

Report to Congress

The Commission will send a copy of the Second Report and Order, including this Final Regulatory Flexibility Analysis (FRFA), in a report to be sent to Congress pursuant to the Congressional Review Act. In addition, the Commission will send a copy of the Second Report and Order, including this FRFA, to the Chief Counsel for Advocacy of the SBA. A copy of the Second Report and Order and FRFA (or summaries thereof) will also be published in the Federal Register.

Ordering Clauses

Pursuant to the authority contained in sections 1-4, 201, 202, 206-208, 258, 303(r), and 332 of the Communications Act of 1934, as amended; 47 U.S.C. 151-154, 201, 202, 206-208, 258, 303(r), and 332; section 601(c) of the Telecommunications Act of 1996; and §§ 1.421, 64.2400 and 64.2401 of the Commission's Rules, 47 CFR 1.421, 64.2400, and 64.2401, the second report and order, declaratory ruling are adopted, and Part 64 of the Commission's rules, 47 CFR 64.2400, is amended.

The rules and requirements contained in this Second Report and Order shall become effective within 90 days of their publication in the Federal Register.

The Petition for Declaratory Ruling filed by the National Association of State Utility Consumer Advocates on March 30, 2004, is denied to the extent provided herein.

The Commission's Consumer & Governmental Affairs Bureau, Reference Information Center, shall send a copy of the Second Report and Order and Declaratory Ruling, including the Final Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration.

List of Subjects in 47 CFR Part 64

• Telecommunications
• Communications common carriers
• Reporting and recordkeeping requirements

Federal Communications Commission

Marlene H. Dortch,

Secretary.

Rule Change

For the reasons discussed in the preamble, the Federal Communications Commission amends 47 CFR Part 64 as follows:

PART 64—MISCELLANEOUS RULES RELATING TO COMMON CARRIERS

1. The authority citation continues to read as follows:

Authority: 47 U.S.C. 154, 254(k); secs. 403(b)(2)(B), (c), Public Law 104-104, 110 Stat. 56. Interpret or apply 47 U.S.C. 201, 218, 225, 226, 228, and 254(k) unless otherwise noted.

2. Section 64.2400 is amended by revising paragraph (b) to read as follows:

§ 64.2400

Purpose and scope.

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(b) These rules shall apply to all telecommunications common carriers, except that § 64.2401(a)(2) and 64.2401(c) shall not apply to providers of Commercial Mobile Radio Service as defined in § 20.9 of this chapter, or to other providers of mobile service as defined in § 20.7 of this chapter, unless the Commission determines otherwise in a further rulemaking.

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