[Federal Register Volume 62, Number 48 (Wednesday, March 12, 1997)]
[Proposed Rules]
[Pages 11750-11756]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-6299]
[[Page 11749]]
_______________________________________________________________________
Part XI
Federal Trade Commission
_______________________________________________________________________
16 CFR Part 308
_______________________________________________________________________
Telecommunications Act of 1996; 900-Number Rule Review; Request for
Comment Regarding Possible Modification of Definition of ``Pay-Per-Call
Services''; Proposed Rule
Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 /
Proposed Rules
[[Page 11750]]
FEDERAL TRADE COMMISSION
16 CFR Part 308
900-Number Rule Review; Request For Comment Regarding Possible
Modification of Definition of ``Pay-Per-Call Services'' Pursuant to the
Telecommunications Act of 1996
AGENCY: Federal Trade Commission.
ACTION: Rule review and request for public comments.
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SUMMARY: The Federal Trade Commission (``the Commission'' or ``FTC'')
is requesting public comment on the Commission's Trade Regulation Rule
Pursuant to the Telephone Disclosure and Dispute Resolution Act of 1992
(``the 900-Number Rule''). The 900-Number Rule governs the advertising
and operation of pay-per-call services, and establishes billing dispute
procedures for such services. The 900-Number Rule requires that the
Commission initiate a rulemaking review proceeding to evaluate the
Rule's operation no later than four years after its effective date of
November 1, 1993. Pursuant to this mandatory rule review requirement,
the Commission seeks comment about the overall costs and benefits of
the 900-Number Rule and its overall regulatory and economic impact.
In addition, the Telecommunications Act of 1996 1 granted the
Commission authority to expand the scope of the 900-Number Rule by
broadening the definition of pay-per-call services. Therefore, the
Commission is also seeking public comment on whether it should expand
the scope of its 900-Number Rule to ``audio information or audio
entertainment'' services provided through dialing patterns other than
900 numbers. These questions are published in a Request for Comment
which follows the rule review portion of this notice.
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1 Pub. L. 104, Sec. 701, 110 Stat. 56 (1996) (codified at
47 U.S.C. Sec. 228).
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This document invites written comments and sets forth a list of
specific questions and issues upon which the Commission particularly
desires additional information. This document also contains an
invitation to participate in a public workshop-conference, to be held
following the close of the comment period, to afford Commission staff
and interested parties an opportunity to explore and discuss issues
raised during the comment period.
DATES: Written comments will be accepted until May 12, 1997.
Notification of interest in participating in the public workshop-
conference also must be submitted on or before May 12, 1997. The public
workshop-conference will be held on June 19 and 20, 1997, from 9:00
a.m. until 5:00 p.m.
ADDRESSES: Five paper copies of each written comment should be
submitted to the Office of the Secretary, Room 159, Federal Trade
Commission, Sixth Street and Pennsylvania Avenue, N.W., Washington,
D.C. 20580. To encourage prompt and efficient review and dissemination
of the comments to the public, all comments should also be submitted,
if possible, in electronic form, on either a 5\1/4\ or a 3\1/2\ inch
computer disk, with a label on the disk stating the name of the
commenter and the name and version of the word processing program used
to create the document. (Programs based on DOS are preferred. Files
from other operating systems should be submitted in ASCII text format
to be accepted.) Individual members of the public filing comments need
not submit multiple copies or comments in electronic form. Comments
should be identified as ``900-Number Rule Review--Comment. FTC File No.
R611016.''
Notification of interest in participating in the public workshop-
conference should be submitted in writing to Marianne Kastriner
Schwanke, Division of Marketing Practices, Federal Trade Commission,
Sixth and Pennsylvania Ave., N.W., Washington, D.C. 20580. The public
workshop-conference will be held at the Federal Trade Commission, 6th
Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580.
FOR FURTHER INFORMATION CONTACT: Marianne Kastriner Schwanke, (202)
326-3165, Adam Cohn, (202) 326-3411, or Carole Danielson, (202) 326-
3115, Division of Marketing Practices, Bureau of Consumer Protection,
Federal Trade Commission, Washington, D.C. 20580.
SUPPLEMENTARY INFORMATION: The Commission has determined, as part of
its oversight responsibilities, to review rules and guides periodically
in order to obtain information about the costs and benefits of its
rules and guides, as well as their regulatory and economic impact. The
information the Commission obtains assists it in identifying rules and
guides that warrant modification or rescission. In accord with the
Commission's general policy to review periodically all of its rules and
guides, when the Commission adopted the 900-Number Rule, it included
Section 308.9, which imposes a requirement to undertake a review of the
Rule no later than four years after its effective date of November 1,
1993. Therefore, at this time, pursuant to Section 308.9 of the Rule,
the Commission is initiating this mandatory rule review, and hereby
solicits written public comments concerning the operation of the 900-
Number Rule.
Simultaneous with the Rule review, the Commission also is seeking
public comment on whether it should expand the scope of its 900-Number
Rule to information or entertainment services provided through dialing
patterns other than 900 numbers, as authorized by the
Telecommunications Act of 1996.
Section A. Background
Telephone Disclosure and Dispute Resolution Act of 1992
Congress enacted the Telephone Disclosure and Dispute Resolution
Act of 1992 (``TDDRA''), 15 U.S.C. Sec. 5701 et seq., to curtail
certain unfair and deceptive practices perpetrated by some pay-per-call
businesses, and to encourage the growth of the legitimate pay-per-call
industry.2 Titles II and III of TDDRA required the FTC to
prescribe regulations governing pay-per-call services.3 TDDRA
directed the Commission to enact regulations governing the advertising
and operation of pay-per-call services. Among other things, TDDRA
required that certain disclosures appear in all advertising for pay-
per-call programs and in introductory messages (``preambles'') at the
start of the pay-per-call programs, prohibited pay-per-call providers
from engaging in certain practices (such as directing their services to
children under 12 years of age), and required that the FTC's
regulations establish procedures for correcting billing errors in
connection with pay-per-call services. TDDRA granted the FTC limited
jurisdiction over common carriers for purposes of the 900-Number Rule.
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2 This statement summarizes Congress' findings regarding
the 900-number industry at the time it passed the legislation. For
greater detail concerning the problems Congress found to be
associated with 900-number services, see 15 U.S.C. Sec. 5701(b).
3 Title I of TDDRA directed the Federal Communications
Commission (FCC) to adopt regulations defining the obligations of
common carriers with respect to the provision of pay-per-call
services. The FCC published its Notice of Proposed Rulemaking and
Notice of Inquiry at 58 FR 14,371 (March 17, 1993). The FCC's Rules
are at 47 CFR 64.228.
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900-Number Rule
Pursuant to TDDRA, the FTC adopted its 900-Number Rule, 16 CFR Part
308, on July 26, 1993, and it became effective November 1, 1993.4
The Rule requires
[[Page 11751]]
that advertisements for 900 numbers contain certain disclosures,
including information about the cost of the call. This information must
also be included in an introductory message (preamble) at the beginning
of any 900-number program where the cost of the call could exceed two
dollars. The Rule requires that anyone who calls a 900-number service
must be given the opportunity to hang up, at the conclusion of the
preamble, without incurring any charge for the call. In addition, the
Rule requires that all preambles to 900-number services state that
individuals under the age of 18 must have the permission of a parent or
guardian to complete the call.
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4 The Statement of Basis and Purpose and Final Rule was
published at 58 FR 42364 (August 9, 1993).
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The 900-Number Rule also establishes procedures for resolving
billing disputes for 900-number calls. 16 CFR 308.7. The Rule imposes
certain obligations on entities that bill and collect for 900-number
services, such as investigating reports by consumers of ``billing
errors,'' a defined term in the Rule.5
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5 Other protections were established by the Federal
Communications Commission (FCC) in their rules set out at 47 CFR
64.228. Under those rules, a consumer's telephone service cannot be
disconnected for failure to pay charges for a 900 number call, and
900 number blocking must be made available to consumers who do not
wish to have access to 900 number service from their telephone
lines.
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Initiation of Rule Review
Section 308.9 of the 900-Number Rule, 16 CFR 308.9, requires that
the Commission initiate a rulemaking review proceeding to evaluate the
Rule's operation no later than four years after its effective date of
November 1, 1993. Although the Rule review is not required until
November 1997, the Commission has determined that it would be more
efficient to conduct the evaluation at this time in conjunction with
its issuance of a Request for Comment regarding the possible expanded
definition of ``pay-per-call services'' as provided by the
Telecommunications Act of 1996.
Telecommunications Act of 1996 Authority to Expand the Definition of
Pay-Per-Call Services
On February 8, 1996, the President signed into law the
Telecommunications Act of 1996 to provide a regulatory framework for
telecommunications and information technologies and services. Section
701(b) of the Telecommunications Act provides that:
Section 204 of [TDDRA] (15 U.S.C. Sec. 5714(1)) 6 is
amended to read as follows:
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\6\ ``The term `pay-per-call services' has the meaning provided
in section 228 of Title 47.'' 15 U.S.C. Sec. 5714(1).
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``(1) The term `pay-per-call services' has the meaning provided
in section 228(i) of the Communications Act of 1934,7 except
that the Commission by rule may, notwithstanding subparagraphs (B)
and (C) of Section 228(i)(1) of such Act, extend such definition to
other similar services providing audio information or audio
entertainment if the [Federal Trade] Commission determines that such
services are susceptible to the unfair and deceptive practices that
are prohibited by the rules prescribed pursuant to section 201(a)
[of TDDRA].'' (Emphasis supplied.)
\7\ Section 228(i)(1) of the Communications Act of 1934, 47
U.S.C. Sec. 228(i)(1) provides that:
The term `pay-per-call services' means any service--
(A) in which any person provides or purports to provide--
(i) audio information or audio entertainment produced or
packaged by such person;
(ii) access to simultaneous voice conversation service; or
(iii) any service, including the provision of a product, the
charges for which are assessed on the basis of completion of the
call;
(B) for which the caller pays a per-call or per-time-interval
charge that is greater than, or in addition to, the charge for
transmission of the call; and
(C) which is accessed through use of a 900 telephone number or
other prefix or area code designated by the [Federal Communications]
Commission in accordance with subsection (b)(5) [47
U.S.C.Sec. 228(b)(5)].''
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Thus, Section 701(b) of the Telecommunications Act authorizes the FTC,
for purposes of its 900-Number Rule, to extend the definition of the
term ``pay-per-call services''--and, in effect, the scope of coverage
of the Rule--without regard to whether a caller to the service in
question ``pays a per-call or per-time-interval charge that is greater
than, or in addition to, the charge for transmission of the call,'' and
without regard to whether a call to such service is ``accessed through
use of a 900 telephone number or other prefix or area code designated
by the FCC'' under 47 U.S.C.Sec. 228(b)(5) if the FTC determines that
such services ``are susceptible to the unfair and deceptive practices
that are prohibited by the rules prescribed pursuant to section
201(a)'' of TDDRA.
Therefore, at this time the Commission is publishing a Request for
Comment to determine whether audiotext services 8 that fall
outside the definition of ``pay-per-call'' in the original rule are
susceptible to the same unfair and deceptive practices that prompted
passage of TDDRA. In other words, the Commission seeks to determine
whether the definition of ``pay-per-call services'' should be extended
to other services similar to those presently covered by the Rule and,
if so, what such an expanded definition should be.
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\8\ The term ``audiotext services'' describes audio information
and entertainment services offered through any dialing pattern,
including services accessed via 900-number, as well as international
and other non-900-number, dialing patterns. In this notice, where
the Commission seeks comment on the effect of the 900-Number Rule on
the industry, we use the phrase ``900-number services'' to describe
those services currently covered by the Rule. Where we ask questions
regarding the larger universe of information and entertainment
services offered through the telephone, we use the term ``audiotext
services.''
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Section 701 of the Telecommunications Act also modified some
additional provisions in Section 228 of title 47, mandating that the
Federal Communications Commission amend its regulations regarding pay-
per-call services. The FCC took action to implement this statutory
mandate in July 1996.9 In that proceeding, the FCC also proposed
certain other modifications to its rules not expressly mandated by
statute to help reduce fraudulent practices in the pay-per-call
industry. The Federal Trade Commission thus seeks to determine whether
its rules should be changed to take account of these recent changes and
proposed changes in FCC rules regarding pay-per-call services. As noted
above, the Request for Comment follows the rule review portion of this
notice.
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\9\ Policies and Rules Governing Interstate Pay-Per-Call and
Other Information Services Pursuant to the Telecommunications Act of
1996, Order and Notice of Proposed Rulemaking, CC Docket No. 96-146,
11 FCC Rcd 14,738 (1996) (``FCC Pay-Per-Call Order and Notice'').
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Section B. Invitation to Comment
All persons are hereby given notice of the opportunity to submit
written data, views, facts, and arguments concerning the Commission's
900-Number Rule. The Commission invites written comments to assist it
in ascertaining the facts necessary to reach a determination as to the
costs and benefits of the Rule and its overall regulatory and economic
impact, and on whether to engage in a rulemaking to amend the 900-
Number Rule. Written comments must be submitted to the Office of the
Secretary, Room 159, Federal Trade Commission, Sixth Street and
Pennsylvania Avenue, N.W. Washington, DC 20580, on or before May 12,
1997. Comments submitted will be available for public inspection in
accordance with the Freedom of Information Act (5 U.S.C. Sec. 552) and
Commission Rules of Practice, on normal business days between the hours
of 8:30 a.m. and 5 p.m. at the Public Reference Section, Room 130,
Federal Trade Commission, Sixth Street and Pennsylvania Avenue, N.W.,
Washington, D.C. 20580.
[[Page 11752]]
Section C. Public Workshop-Conference
The FTC staff will conduct a public workshop-conference to discuss
the written comments received in response to the Federal Register
notice. The purpose of the workshop-conference is to afford Commission
staff and interested parties a further opportunity to openly discuss
and explore issues raised in the notice and in the comments, and, in
particular, to examine publicly any areas of significant controversy or
divergent opinions that are raised in the written comments. The
conference is not intended to achieve a consensus among participants or
between participants and Commission staff with respect to any issue
raised in the comments. Commission staff will consider the views and
suggestions made during the conference, in conjunction with the written
comments, in formulating its final recommendation to the Commission
concerning what action, if any, to take in regard to amending the 900-
Number Rule.
Commission staff will select a limited number of parties, from
among those who submit written comments, to represent the significant
interests affected by the issues raised in the notice. These parties
will participate in an open discussion of the issues, including asking
and answering questions based on their respective comments. In
addition, the workshop will be open to the general public. The
discussion will be transcribed and the transcription placed on the
public record.
To the extent possible, Commission staff will select parties to
represent the following interests: advertisers, third-party billing and
collection services, pay-per-call information providers, service
bureaus, local exchange carriers, long distance carriers, consumer
groups, federal and state law enforcement and regulatory authorities;
and any other interests that Commission staff may identify and deem
appropriate for representation.
Parties who represent the above-referenced interests will be
selected on the basis of the following criteria:
1. The party submits a written comment during the 60-day comment
period.
2. During the 60-day comment period the party notifies Commission
staff of its interest in participating in the workshop.
3. The party's participation would promote a balance of interests
being represented at the workshop-conference.
4. The party's participation would promote the consideration and
discussion of a variety of issues raised in this notice.
5. The party has expertise in activities affected by the issues
raised in this notice.
6. The number of parties selected will not be so large as to
inhibit effective discussion among them.
The workshop-conference will be held on June 19 and 20, 1997. Prior
to the workshop-conference, parties selected will be provided with
copies of the comments from all participants received in response to
this notice.
Section D. Regulatory Flexibility Act
The Regulatory Flexibility Act provides for an initial and final
regulatory analysis of the potential impact on small businesses of
Rules proposed by federal agencies. (5 U.S.C. Secs. 603, 604) The
Commission conducted such an analysis when the 900-Number Rule was
promulgated in 1993. In publishing the proposed regulations, the
Commission certified, subject to public comment, that the proposed
regulations would not have a significant economic impact on a
substantial number of small entities and, therefore, that the
provisions of the Regulatory Flexibility Act, 5 U.S.C. 605(b),
requiring the initial regulatory analysis, did not apply.10 The
Commission noted that any economic costs imposed on small entities
were, in many instances, specifically imposed by statute. Where they
were not, efforts had been made to minimize any unforeseen burdens on
small entities by making the proposed rule's requirements flexible. The
public comments and information received by the Commission did not
alter that conclusion.11
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\10\ 58 FR 13379.
\11\ 58 FR 42399.
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No analysis is required in connection with this document because no
new rule or amendments are being proposed. Nonetheless, the Commission
wishes to ensure that no substantial economic impact is being
overlooked that would warrant an initial and final regulatory
flexibility analysis. Therefore, this review of the 900-Number Rule
also requests public comment regarding the effect of the Rule on the
costs to, profitability and competitiveness of, and employment in small
entities. The Commission will revisit this issue in connection with any
Notice of Proposed Rulemaking that may result from this request for
comments.
Section E. Paperwork Reduction Act
In the 1993 Notice of Proposed Rulemaking on the 900-Number Rule,
the Commission solicited comments on the need for and scope of possible
record keeping requirements in provisions governing Commission access
to information and billing and collection for pay-per-call
services.12 Those requirements, had they been adopted, would have
constituted ``collections of information'' as defined under the
Paperwork Reduction Act, 44 U.S.C. 3501-3520. See 44 U.S.C. 3502 and 5
CFR 1320.7. However, the Commission determined not to include such
requirements in its final Rule.13 Accordingly, the requirements of
the Paperwork Reduction Act were not applicable to the final Rule.
Similarly, the requirements are not applicable to this document because
no collections of information are required. The Commission will revisit
this issue in connection with the publication of any subsequent Notice
of Proposed Rulemaking that might result from this request for
comments.
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\12\ 58 FR 13384.
\13\ 58 FR 42399.
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Section F. Questions and Issues for Comment Pursuant to Regulatory
Review of the Rule
The Commission is seeking comment on various aspects of the 900-
Number Rule, in conjunction with its Rule review. Without limiting the
scope of issues it is seeking comment on, the Commission is
particularly interested in receiving comments on the questions that
follow. Where commenters advocate changes to the Rule, please be
specific in describing suggested changes. With respect to suggested
changes to the Rule, please describe any potential costs and benefits
such changes might have on industry and consumers. The Commission would
also be interested in commenters providing any data that exist on
issues raised in the questions.
I. General Issues for Comment
1. Is there a continuing need for the 900-Number Rule?
(a) Since the Rule was issued, have changes in technology, industry
structure, or economic conditions affected the need for or
effectiveness of the Rule?
(b) Does the Rule include provisions that are unnecessary?
(c) What are the aggregate costs and benefits of the Rule?
(d) Have the costs or benefits of the Rule dissipated over time?
(e) Does the Rule contain provisions that have imposed costs not
outweighed by benefits?
2. What effect, if any, has the Rule had on consumers?
[[Page 11753]]
(a) What economic or other costs has the Rule imposed on consumers?
(b) What benefits has the Rule provided to consumers?
(c) What changes, if any, should be made to the Rule to increase
the benefits to consumers?
(d) How would these changes affect the compliance costs the Rule
imposes on industry?
3. What impact, if any, has the Rule had on firms that must comply
with it?
(a) What economic or other costs has the Rule imposed on industry
or individual firms?
(b) What benefits has the Rule provided to the industry or to
individual firms?
(c) What changes, if any, should be made to the Rule to minimize
any burden or cost imposed on industry or individual firms?
(d) How would the changes affect the benefits provided by the Rule
to consumers or industry?
4. How has the Rule affected small business entities with respect
to costs, profitability, competitiveness, and employment? What would be
the economic impact on small businesses if the Rule is left unchanged?
5. Are there regulatory alternatives that might reduce any adverse
economic effect of the 900-Number Rule, yet comply with the mandate of
TDDRA to curtail certain unfair and deceptive practices by some 900-
number providers, yet encourage the growth of the legitimate 900-number
industry?
6. Are there additional advertising, operating, or other standards
for the audiotext industry not included in the Rule that might now be
desirable or necessary to prevent deception or other abuses, or to
prevent evasion of the Rule's requirements and prohibitions?
7. The FCC and FTC share regulatory authority over the audiotext
industry.
(a) Are there any unnecessary regulatory burdens created by
overlapping jurisdiction? What can be done to ease these burdens?
(b) Are there gaps where neither agency has addressed a particular
abuse? For example, does such a regulatory gap exist where a entity
claims status as a ``common carrier'' for purposes of FTC regulation,
but claims that its actions are not those of a common carrier for
purposes of FCC regulation?
(c) Does the Rule overlap or conflict with other federal, state, or
local government laws or regulations?
8. How does Section 701 of the Telecommunications Act of 1996
concerning the FCC's regulation of the pay-per-call industry, or the
FCC's recently adopted and proposed regulatory changes 14 under
that section, affect the FTC's Rule, if at all? How should the FTC's
Rule be amended to harmonize with these changes and proposed changes in
the FCC regulatory approach?
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\14\ FCC Pay-Per-Call Order and Notice, see supra note 9.
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9. What categories of audiotext services (e.g., sports, psychic,
chat, adult) are provided through 900 numbers?
(a) What percentage does each type constitute of all audiotext
services accessed through 900 numbers?
(b) How much gross sales revenue has each category generated in
each year since 1993?
(c) Have the gross sales revenues and/or profits of information
providers using 900 numbers changed since the Rule was promulgated?
What impact, if any, has the 900-Number Rule had on the level of gross
sales revenues and/or profits?
II. Definitions
10. Are the definitions set forth in section 308.2 of the Rule
effective for the purpose of curbing unfair and deceptive practices
targeted by the Rule?
(a) If not, how have the definitions been inadequate?
(b) Are there additional definitions that should be added to the
Rule? Explain.
11. The current definition of ``service bureau'' states that the
term includes any person other than a common carrier.
(a) Is it appropriate to exclude common carriers, regardless of
activities, from the definition?
(b) Should entities engaging in service bureau functions be covered
by the Rule, even if they also engage in ``common carrier'' functions
at other times?
12. Has the Rule's definition of ``presubscription agreement''
affected the market for 900-number services? If so, in what way?
(a) Who uses presubscription agreements, and for what purpose?
(b) What opportunities for unfair and deceptive practices exist
under the current definition of ``presubscription agreement''?
(c) How might the definition be changed to diminish or eliminate
these opportunities?
(d) Should the definition of ``presubscription agreement'' be
modified to harmonize with changes in FCC rules made pursuant to the
Telecommunications Act of 1996, or to harmonize with proposed changes
made by the FCC to the definition of ``presubscription agreement''?
15
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15 FCC Pay-Per-Call Order and Notice, see supra note 9.
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(e) Would any changes in the definition of ``presubscription
agreement'' be appropriate in light of Section 701 of the
Telecommunications Act of 1996? For example, should the Rule require
that a presubscription agreement be in writing?
III. Advertising
13. Are the advertising disclosure provisions in the Rule adequate
for regulating advertising on the Internet or on commercial online
services?
(a) Should the Rule be more precise regarding the definition of
``clear and conspicuous'' in the context of advertising on the Internet
or on commercial online services?
(b) Are there other forms of advertising in other media for which
the Rule should provide specific advertising disclosure requirements?
Explain.
14. Does the Rule provide adequately for disclosing the cost to
consumers prior to making a call to a 900-number service?
(a) Do the current size requirements ensure that the cost
disclosure is ``clear and conspicuous'?
(b) Are there other more effective means for ensuring that the
advertisements provide adequate cost disclosures to consumers?
15. Are the required disclosures for 900-number services that
advertise sweepstakes sufficient to ensure that consumers are informed
of all material information necessary to dispel deception? Have there
been abuses associated with sweepstakes advertised and offered through
the use of a 900 number that make it necessary to require additional
protections for consumers who respond to such sweepstakes offers?
16. Is the requirement governing ``telephone solicitations'' in
section 308.3(h) clear, meaningful, and effective?
(a) Is there additional information that such a solicitation should
include to ensure that consumers have sufficient information prior to
calling a 900-number service advertised in this manner?
(b) Is the Rule clear that it applies to messages left on telephone
answering machines or telephone numbers left on pagers?
(c) What about audio and non-audio messages received on computers?
Should these or other message delivery systems be explicitly included
within this provision?
[[Page 11754]]
(d) Should ``telephone message'' as used within section 308.3(h) be
defined and if so, how?
IV. Operation & Standards
17. In the Statement of Basis and Purpose describing the Rule,
16 the Commission recognized that at the time the Rule was
promulgated, time-sensitive billing involved in 900-number services was
``accomplished in one-minute increments, and that any portion of a
minute will be billed as full time.''
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\16\ 58 FR 42387 (August 1993).
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(a) Has the technology for calculating usage time for billing
purposes changed since the implementation of the Rule? If so, how?
(b) Is it possible using current technology to stop the assessment
of time-based charges immediately upon disconnection by the caller, and
therefore, bill consumers for fractions of minutes?
18. How have technological changes affected the way information
providers can and do set their rates?
(a) Is it now technologically possible to suspend charges during a
program, to provide a period (or periods) of programming free to the
caller? Explain.
(b) Is it now technologically possible to alter the rate at which a
caller is charged during a program, to provide a period (or periods) of
programming charged to the caller at reduced rates or at higher rates
than other portions of the call? Explain.
(c) Is it now technologically possible to have a free introductory
message longer than 18 seconds, which was the standard at the time the
Rule was adopted? Explain.
19. How has the requirement of a preamble affected the 900 number
industry?
(a) Have preambles conferred benefits on consumers who make 900-
number calls?
(b) How might the preamble requirements be changed to make the
preambles more useful or informative to the consumer? What costs would
likely arise from such changes?
(c) How might the preamble requirements be changed to make
compliance easier for information providers? Would such changes
diminish benefits to consumers and if so, how?
20. Are preambles effective in reducing unauthorized use of 900-
number services by minors or others? How is this properly measured?
(a) How might preamble requirements be changed to be made more
effective in addressing the problem of unauthorized calls?
(b) What further actions might be taken by industry or by the FTC
to reduce unauthorized calls to 900 number and other audiotext
services?
21. Section 308.5(a)(3) requires that the preamble state ``that
charges for the call begin, and that to avoid charges the call must be
terminated, three seconds after a clearly discernible signal or tone.''
If an information provider were to provide, for example, the first two
minutes of an audiotext call free, what should the preamble disclose to
inform callers when charges for the call begin?
(a) In the example above, should the information provider be
required to inform the caller, through a tone or other signal, when the
free time has expired?
(b) In the example above, at what point(s), if any, during the call
should the disclosures be made? At what point(s), if any, during the
call should a signal or tone occur?
(c) In the example above, would a single signal following the
preamble but immediately preceding the free time provide sufficient
information to enable consumers to avoid all or most charges from
remaining on the line after close of the free time?
22. Section 308.5(a)(2)(iii) requires that ``if the call is billed
on a variable rate basis, the preamble shall state * * * the cost of
the initial portion of the call, any minimum charges, and the range of
rates that may be charged depending on the options chosen by the
caller.'' Should this provision be construed to cover situations where
pay-per-call services charge different rates for different time periods
within a single call (e.g., no charge for the first two minutes after
the end of the preamble, $3.00 per minute for the third through the
eighth minutes, and $1 per minute for every minute thereafter)?
(a) Assume for purposes of questions 22(a) and (b) that calls to
such services described above are ``calls billed on a variable rate
basis'' covered by Section 308.5(a)(2)(iii). Should that Section be
modified to require something other than preamble disclosures of ``the
cost of the initial portion of the call, any minimum charges, and the
range of rates that may be charged depending on the options chosen by
the caller?'
(b) For example, in the scenario described above, should Section
308.5(a)(2)(iii) explicitly require a clearly discernible signal or
tone to mark the end of the free two-minute period? Should it
explicitly require a clearly discernible signal or tone to mark the end
of the six-minute period during which charges are $3.00 per minute?
23. What percentage of 900-number services fall into the category
of ``nominal cost calls'' as described in section 308.5(c) of the Rule?
(a) Do the data suggest that $2.00 is an appropriate threshold for
designation of ``nominal cost calls'' for which no preamble is
necessary? If not, what ``nominal cost'' threshold do the data support?
(b) Should the ``nominal cost'' figure be adjusted for inflation?
Explain.
24. What percentage of callers to 900-number services hang up the
telephone before the charges begin and how is this ascertained?
(a) Of these, what percentage are first time callers?
(b) Does this percentage correlate to the cost of the call? To the
nature of the service?
25. What impact, if any, has the 900-Number Rule had on the number
of complaints about, or requests for credits or refunds for, calls to
900-number services that allegedly were not authorized by the
subscriber of the telephone line from which the calls were placed?
(a) Has the percentage of such complaints or requests increased,
decreased, or remained the same since the Rule went into effect?
(b) What percentage of all requests for credits or refunds of
charges for 900-number services involve calls allegedly unauthorized by
the telephone subscriber?
(c) What percentage of these requests are due to allegedly
unauthorized calls placed by minors?
26. What, if any, procedures are used by industry to ensure that
calls to audiotext services are authorized by the subscriber of the
telephone line from which the calls are placed?
(a) What, if any, procedures are used by industry to minimize or
eliminate unauthorized calls placed by minors to audiotext services?
(b) How effective have these procedures been in reducing the number
of complaints or the number of requests for credits or refunds
regarding allegedly unauthorized calls to audiotext services?
27. What percentage of telephone subscribers have chosen to block
access to 900 numbers from their telephone lines?
(a) Of those choosing to block access to 900 numbers, what
percentage choose to do so when initiating phone service?
(b) What percentage do so after phone service has been initiated?
(c) Of the latter, what percentage have done so after complaining
about charges to audiotext services?
(d) What percentage of consumers who complain about charges for
[[Page 11755]]
audiotext services choose to block 900 numbers?
(e) To what extent, if any, has blocking been effective in reducing
complaints involving 900-number services?
(f) What, if any, are the costs to consumers or industry of
receiving or providing 900 number blocking services?
V. Billing and Collection
28. What services are provided to the audiotext industry by billing
entities other than the telephone companies (or ``alternative billing
entities'')?
(a) Do the types of services vary for different types of audiotext
services? Explain.
(b) What percentage of audiotext services are billed through
billing entities other than the telephone companies? Explain.
(c) Have the types or number of these alternative billing entities
changed since the Rule went into effect in 1993? What impact, if any,
has the Rule had on the nature of these billing entities?
(d) What are the terms and conditions of the arrangements between
the alternative billing entities and other players in the audiotext
industry?
(e) What is the role of a ``billing aggregator''? What services
does a billing aggregator provide to members of the audiotext industry?
29. Does the definition of ``billing error'' in section 308.7 of
the Rule adequately reflect the range of billing errors occurring in
the 900-number marketplace? If not, how might the definition be
changed?
30. Is there any evidence suggesting that some (adult) consumers
are refusing to pay for audiotext calls or 900-number calls which they
purchased after hearing a preamble containing the disclosure of
material information currently required by the Rule?
(a) If such a problem exists, to what extent is it affected by the
dispute resolution provisions of the 900-Number Rule?
(b) If such a problem exists, to what extent is it affected by the
billing notice requirements set forth in section 308.7(n)?
(c) What steps, if any, could the Commission take to reduce the
incidence of this practice without weakening protections afforded
consumers by TDDRA and the 900-Number Rule?
31. Distinguished from billing for unauthorized calls, the problem
of ``phantom billing'' occurs when a telephone subscriber is billed for
an audiotext call that the subscriber asserts was never placed from the
subscriber's telephone.
(a) How does phantom billing occur?
(b) What procedures and safeguards currently exist or should exist
to ensure that telephone subscribers are billed only for calls which
were actually placed from that subscriber's phone?
(c) How does a billing entity determine that billing tapes or other
records of calls are genuine?
(d) What percentage of consumers who complain about ``phantom
billing'' of audiotext services choose to block access to 900 numbers?
32. Section 308.7(i) places restrictions on the extent to which
adverse credit information can be reported to any person.
(a) How, if at all, has this restriction affected the creation of a
shared database of ``problem callers'' for the purposes of blocking
such persons from 900 or other audiotext transactions?
(b) Would such a database be useful to industry?
(c) Does allowing such a shared database adversely affect
consumers? If so, how?
33. How is ``chargeback'' defined by the industry?
(a) Does the term include the situation where a consumer has
refused to pay for an audiotext service? Does it include the situation
where a consumer pays and then requests a refund?
(b) Are there data on chargeback rates for the 900-number industry?
For the audiotext industry as a whole? Do the data represent chargeback
rates for all types of ``pay-per-call services'' or only for services
provided through 900 numbers?
(c) How do the chargeback rates for the pay-per-call industry
compare with other collection and payment systems, such as the credit
card collection and payment system?
(d) What are the current and projected future trends regarding
chargeback rates for the pay-per-call industry?
34. Do chargeback rates vary according to the category of audiotext
service?
(a) Do the providers of some types of services experience a greater
chargeback rate than other types of services? Are there data
demonstrating these differences?
(b) If certain kinds of audiotext services correlate with higher
chargeback rates, what is the explanation for the correlation?
(c) Are there data to show whether services that attract callers of
certain age groups (e.g., minors) are more likely than others to result
in chargebacks?
(d) How do chargeback rates for non-900 audiotext services compare
to rates for 900 number services?
(e) How do chargeback rates for nominally priced calls (i.e., those
exempted from the preamble requirement) compare to the chargeback rates
for other calls?
35. Do chargeback rates vary according to the payment method?
(a) Do services that utilize a credit card billing system rather
than an Automatic Number Identification (``ANI'') billing system
experience fewer chargebacks?
(b) What about services provided according to oral presubscription
agreements?
(c) What about those services provided according to written
presubscription agreements?
36. Has the advent of third party billers affected the chargeback
rates in the audiotext industry? If so, how?
(a) Is there any correlation between the type of billing entity
(e.g., a local exchange carrier or a third party biller) and the rate
of chargebacks? If so, why?
(b) Are chargeback rates affected by the amount of time a billing
entity gives to a consumer to complain about a bill? To what extent to
different billing entities follow the Rule's time limits on initiation
of billing review?
Section G. Request for Comment
As discussed above, the Telecommunications Act of 1996 gives the
Commission the authority to conduct a rulemaking on the issue of
whether to ``extend'' the definition of ``pay-per-call services'' to
cover other services not currently covered by the 900-Number Rule.
Thus, the Commission currently seeks comment on whether any expansion
should be made, and if so, how such an expansion should be implemented.
Commenters should pay particular attention to the fact that the
Commission's authority is to extend the 900-Number Rule to cover
services which are ``susceptible to the unfair and deceptive trade
practices that are prohibited by [TDDRA].'' Thus, commenters should not
limit themselves to discussing services which are currently associated
with unfair and deceptive practices; rather commenters should discuss
the broader topic of services which are susceptible to becoming havens
for unfair and deceptive practices addressed by TDDRA. Commenters
should attempt to address the questions listed below:
1. Are there ``audio information or audio entertainment''
(``audiotext'') services which are not currently covered by the
definition of ``pay-per-call service,'' but which are susceptible to
the same unfair and deceptive trade practices prohibited by the current
Rule?
[[Page 11756]]
(a) If so, should the Rule be amended to cover these services?
(b) If so, how should the Rule be changed?
(c) How would these changes affect consumers and businesses?
(d) What characteristics of an audiotext service make it
susceptible to the unfair and deceptive trade practices prohibited by
the current Rule?
2. How can a definition of ``pay-per-call service'' be crafted so
that audiotext services which are susceptible to unfair and deceptive
trade practices are covered by the Rule, but any services that are not
susceptible to these practices are not swept into the Rule?
3. Should the Rule be extended to cover any audiotext transaction
where an information provider or service bureau receives a portion of
the fees paid by a caller? Explain.
4. Should the definition of ``pay-per-call service'' be extended to
encompass international audiotext transactions where the information
provider or service bureau receives a portion of the fees paid by the
caller? Explain. If so, are there other modifications to the Rule that
would be necessitated by such a change?
5. Are there technological differences between 900-number and non-
900-number audiotext services that would make it difficult to implement
the Rule in its current form with respect to non-900-number audiotext
services? Explain.
(a) For example, could free preambles (as required by section
308.5) be provided at the beginning of non-900-number audiotext
messages billed through arrangements with international long distance
carriers? How could accurate cost disclosures as required by the Rule
be made for these services?
(b) Must any changes be made to the Rule to accommodate these
differences?
(c) How would these suggested changes affect audiotext services
utilizing 900 numbers?
6. In a Notice and Order 17, the Federal Communications
Commission (FCC) stated that ``regardless of whether the FTC extends
the scope of its pay-per-call regulations [pursuant to Sec. 701(b)(2)
of the Telecommunications Act of 1996], our pay-per-call rules continue
to be delineated by the statutory definition of pay-per-call services
contained in Section 228(i) of the Communications Act.'' Thus, if the
FTC extends the definition of ``pay-per-call services'' pursuant to its
authority under the Telecommunications Act of 1996, then the two
agencies would be regulating the audiotext services industry using two
different definitions of ``pay-per-call services.''
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\17\ FCC Pay-Per-Call Order and Notice, see supra note 9.
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(a) What impact, if any, would this result have on the audiotext
industry?
(b) What could be done to reduce any potential complications or
conflicts? Explain.
7. In light of the FCC's implementation of the Telecommunications
Act of 1996 as it relates to the audiotext industry, are there
additional changes the FTC should consider making to its own 900-Number
Rule?
8. Are there any audiotext services currently being provided over
the Internet or commercial online services? If not, is it likely that
these services will be available over the Internet or commercial online
services in the near future? If yes, how do these services work?
(a) Are there audiotext services provided over the Internet that
are susceptible to the same unfair and deceptive practices prohibited
by the current Rule? If so, should these services be encompassed within
an expanded definition of ``pay-per-call services''?
(b) What elements would a definition have to include to encompass
such services?
(c) What are the costs and benefits to including online services
within the scope of the 900-Number Rule?
(d) If such audiotext services provided over the Internet or
commercial online services were included within an expanded definition
of this term, what, if any, changes to the Rule's provisions would be
necessary in order for the Rule appropriately and effectively to
prevent unfair or deceptive practices in the advertising, sale, and
operation of such services?
(e) How would preamble and other Rule requirements be met for
audiotext numbers which are used to connect a caller's computer to the
Internet or to commercial online services?
9. What steps can a consumer take to prevent his or her telephone
line from being used for unauthorized non-900-number transactions such
as international audiotext transactions?
(a) Is call blocking of international audiotext calls possible
without requiring the consumer to block access to all international
numbers?
(b) If not, what, if any, technology is under development that
would permit selective blocking of particular numbers, area codes or
international country codes?
10. What steps can a consumer take to obtain a credit or refund if
he or she believes that there has been a billing error or an
unauthorized use of his or her telephone for a non-900-number audiotext
transaction? What happens if, for whatever reason, a consumer refuses
to pay for a non-900-number audiotext call?
11. What was the gross sales revenue generated in the non-900-
number audiotext industry for each year since the promulgation of the
Rule in 1993?
(a) What explains the emergence and growth of non-900-number
audiotext services?
(b) What, if any, benefits do audiotext services accessed through
dialing patterns other than ``900'' confer on consumers or industry?
(c) How has the 900-number industry been affected by audiotext
services that are not currently covered by FTC or FCC regulations?
Explain.
12. What categories of audiotext services (e.g., sports, psychic,
chat, adult) are provided through non-900 audiotext numbers?
(a) What percentage does each type constitute of all pay-per-call
information services accessed through dialing patterns other than
``900''?
(b) What was the gross sales revenue for each category in each year
since 1993?
By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 97-6299 Filed 3-11-97; 8:45 am]
BILLING CODE 6750-01-P
