[Federal Register Volume 62, Number 157 (Thursday, August 14, 1997)]
[Proposed Rules]
[Pages 43493-43500]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-21528]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 64
[CC Docket No. 94-129; FCC 97-248]
Implementation of the Subscriber Carrier Selection Changes
Provisions of the Telecommunications Act of 1996
AGENCY: Federal Communications Commission.
ACTION: Proposed rule.
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SUMMARY: The Commission adopted a combined Further Notice of Proposed
Rule Making and Memorandum Opinion and Order on Reconsideration which
amends the Commission's rules and policies governing the unauthorized
switching of subscribers' primary interexchange carriers (PICs), an
activity more commonly known as ``slamming.'' In the Further NPRM, the
Commission proposes specific requirements to implement Section 258 of
the Telecommunications Act of 1996, which extends the Commissions PIC-
change verification rules to apply with equal force to all
telecommunications carriers. The Commission also seeks comment
regarding the liability among carriers and subscribers when slamming
occurs. The Commission's objective in seeking comment in the FNPRM is
to identify and evaluate further safeguards to protect consumers from
unauthorized switching of their long distance carriers and to encourage
full and fair competition among telecomunications carriers in the
marketplace.
DATES: Written comments by the public on the proposed and/or modified
information collections are due September 15, 1997 and reply comments
on or before September 29, 1997. Written comments must be submitted by
the OMB on the proposed and/or modified information collections on or
before October 14, 1997.
ADDRESSES: In addition to filing comments with the Secretary, a copy of
any comments on the information collections contained herein should be
submitted to Judy Boley, Federal Communications Commission, Room 234,
1919 M Street, N.W., Washington, DC 20554, or via the Internet to
jboley@fcc.gov, and to Timothy Fain, OMB Desk Officer, 10236 NEOB,
725--17th Street, N.W., Washington, DC 20503 or via the Internet to
fain__t@al.eop.gov.
FOR FURTHER INFORMATION CONTACT: Cathy Seidel, Enforcement Division,
Common Carrier Bureau, (202) 418-0960. For additional information
concerning the information collections contained in this Further NPRM
contact Judy Boley at 202-418-0217, or via the Internet at
jboley@fcc.gov.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's
Further NPRM in CC Docket No. 94-129 [FCC 97-248], adopted on July 14,
1997 and released on July 15, 1997. The full text of the Further NPRM
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. The complete text of this decision may also be purchased from the
Commission's duplicating contractor, International Transcription
Services, 1231 20th Street, N.W., Washington, D.C. This Further NPRM
contains proposed or modified information collections subject to the
Paperwork Reduction Act of 1995 (PRA), Public Law 104-13. It has been
submitted to the Office of Management and Budget (OMB) for review under
Section 3507(d) of the PRA. OMB, the general public, and other Federal
agencies are invited to comment on the proposed or modified information
collections contained in this proceeding. Paperwork Reduction Act: This
Further NPRM contains either a proposed or modified information
collection. The Commission, as part of its continuing effort to reduce
paperwork burdens, invites the general public and the OMB to comment on
the information collections contained in this Further NPRM, as required
by the Paperwork Reduction Act of 1995, Public Law 104-13. Public and
agency comments are due at the same time as other comments on this
Further NPRM; OMB notification of action is due Otober 14, 1997.
Comments should address: (a) Whether the proposed collection of
information is necessary for the proper performance of the functions of
the Commission, including whether the information shall have practical
utility; (b) the accuracy of the Commission's burden estimates; (c)
ways to enhance the quality, utility, and clarity of the information
collected; and (d) ways to minimize the burden of the collection of
information on the respondents, including the use of automated
collection techniques or other forms of information technology.
OMB Approval Number: None.
Title: Implementation of the Subscriber Carrier Selection Changes
Provisions of the Telecommunications Act of 1996.
Form No.: N/A.
Type of Review: New collection.
Respondents: Business or other for-profit, including small
business.
[[Page 43494]]
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Number of Est. time Tot. annual Est. costs
Proposed sec. resp. per resp. burden per resp.
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Sec. 64.1100............................................... 675 1.25 844
Sec. 64.1150............................................... 1800 2 3600
Sec. 64.1170............................................... 1800 3 5400
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Needs and Uses: The Commission, in its effort to protect
subscribers from unauthorized switching of their preferred carriers,
and to implement Section 258 of the Telecommunications Act of 1996
pertaining to illegal changes in subscriber carrier selections, issued
the Further NPRM to propose specific requirements and seek comments
regarding, inter alia, the liability of (1) slammed subscribers to
carriers, (2) unauthorized carriers to properly authorized carriers,
and (3) carriers to slammed subscribers. This information will be used
to revise the Commission's rules to reflect its expanded authority to
address unauthorized changes of both telephone toll and telephone
exchange service by any telecommunications carrier.
Summary of Further Notice of Proposed Rule Making
I. Background
1. On July 14, 1997, the Commission adopted a combined Further
Notice of Proposed Rule Making and Memorandum Opinion and Order on
Reconsideration in Docket 94-129. The Commission adopted the Further
NPRM to seek comment on (1) a proposal to amend the Commission's rules
regarding verification of orders for long distance service generated by
telemarketing to apply to all telecommunications carriers who submit or
execute orders for telecommunications service; (2) whether the
verification rules should apply to solicitation of preferred carrier
freezes; (3) whether the ``welcome package'' verification option
described in Sec. 64.1100(d) continues to be a viable and necessary
verification alternative; (4) the costs and benefits associated with
verification of in-bound (or consumer-initiated) carrier change
requests; (5) liability among carriers and subscribers when slamming
occurs; and, (6) whether to establish a bright-line evidentiary
standard for determining whether a subscriber has relied on a resale
carrier's identity of its underlying, facilities-based network
provider, hence requiring that the resale carrier notify the subscriber
if the underlying network provider is changed.
2. The Commission first established safeguards to deter slamming
when equal access was implemented in 1985. By 1992, because the
interexchange market had become more competitive, the need for
additional safeguards to deter slamming increased. Therefore, the
Commission adopted rules requiring that all IXCs institute one of four
verification procedures before submitting a carrier change request
generated through telemarketing, on behalf of a customer. 7 FCC Rcd
1038 (1992), recon. denied, 8 FCC Rcd 3215 (1993). In 1994, the
Commission on its own motion and in response to continuing complaints
from subscribers regarding slamming, instituted a rule making and
adopted rules in its 1995 Report and Order, 10 FCC Rcd 9560 (1995), 60
FR 35846 (July 12, 1995), establishing further anti-slamming safeguards
to deter misleading letters of agency (LOAs). A LOA is a document
signed by a subscriber which states that a particular carrier has been
selected as that subscriber's preferred carrier. Despite the
Commissions anti-slamming efforts, the number of written slamming
complaints received by the Commission in 1995 was 11,278, which
represents a six-fold increase over the number of such complaints
received in 1993. That number has continued to rise; over 16,000 such
complaints were received in 1996. Shortly after the adoption of the
1995 Report and Order, the Commission, on its own motion, stayed its
1995 Report and Order insofar as it extends the PIC-change verification
requirements set forth in Sec. 64.1100 of the Commission's rules to
consumer-initiated or in-bound telemarketing calls. The stay was
imposed before the effective date of the 1995 Report and Order. The
consumer-initiated or in-bound telemarketing provision is the only
component of its anti-slamming rules that the Commission stayed. The
stay of this provision of the 1995 Report and Order, remains in effect.
II. Discussion
3. The Commission expanded the above-captioned docket to seek
comment on proposed modifications to its rules to implement Section 258
of the Communications Act of 1934, 47 U.S.C. 258, as amended by the
Telecommunications Act of 1996, Public Law 104-104, 110 Stat. 56 (Act).
Section 258 of the Act makes it unlawful for any telecommunications
carrier to ``submit or execute a change in a subscriber's selection of
a provider of telephone exchange service or telephone toll service
except in accordance with such verification procedures as the
Commission shall prescribe.'' The section further provides that:
[a]ny telecommunications carrier that violates the verification
procedures described in subsection (a) and that collects charges for
telephone exchange service or telephone toll service from a
subscriber shall be liable to the carrier previously selected by the
subscriber in an amount equal to all charges paid by such subscriber
after such violation.
The plain language of Section 258 reflects Congressional
recognition that unauthorized changes in subscribers' carrier
selections, or ``slamming,'' is a significant consumer problem that
threatens the pro-competitive goals and policies underlying the Act.
4. By enacting Section 258, Congress has substantially bolstered
the Commission's continuing efforts and ability to deter, punish and,
ultimately, eliminate slamming. The Commission stated that its
verification procedures, together with the economic disincentives
embodied in Section 258 (whereby unauthorized carriers must forfeit all
charges collected from a subscriber it has slammed to the subscriber's
properly authorized carrier) and the rules proposed in the Further
NPRM, provide a two-pronged approach to deter slamming. The Commission
has tentatively concluded that its current rules, with the additions
and modifications described in the Further NPRM, will best implement
the statutory prohibition against slamming by any telecommunications
carrier, protect the right of consumers to be free of deceptive and
misleading marketing practices, and help promote full and fair
competition among telecommunications carriers in the marketplace by
ensuring that consumers' choices are honored in the marketplace.
III. Ex Parte Requirements
5. This Further NPRM is a permit-but-disclose rule making
proceeding. Ex parte presentations are permitted, in accordance with
Commission rules, see generally 47 CFR 1.1200, 1.1202, 1.1204, 1.1206,
provided that they are disclosed as required.
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IV. Regulatory Flexibility Analysis
6. As required by the Regulatory Flexibility Act (RFA), 5 U.S.C.
603, the Commission has prepared an Initial Regulatory Flexibility
Analysis (IRFA) of the expected significant economic impact on small
entities by the policies and rules proposed in the Implementation of
the Subscriber Carrier Selection Changes Provisions of the
Telecommunications Act of 1996, Further NPRM. Written public comments
are requested on the IRFA. Comments must be identified as responses to
the IRFA and must be filed by the deadlines for comments on the Further
NPRM. The Secretary shall send a copy of this NPRM to the Chief Counsel
for Advocacy of the Small Business Administration (SBA) in accordance
with the RFA, 5 U.S.C. Sec. 603(a).
i. Need for and Objectives of the Proposed Rules
7. The Commission, in its effort to protect subscribers from
unauthorized switching of preferred carriers, and to implement
provisions of the Telecommunications Act of 1996 pertaining to illegal
changes in subscriber carrier selections, issues the Further NPRM to
propose specific verification requirements for all carriers and to seek
comments regarding the liability of (1) slammed subscribers to
carriers, (2) unauthorized carriers to properly authorized carriers,
and (3) carriers to slammed subscribers.
ii. Legal Basis
8. This Further NPRM is adopted pursuant to Sections 1, 4(i), 4(j),
201-205, 258, and 303(r) of the Communications Act of 1934, as amended,
47 U.S.C. 151, 154(i), 154(j), 201-205, 258, 303(r).
iii. Description and Number of Small Entities Which May Be Affected
9. As set forth above, in its specific efforts to deter
unauthorized changes in subscribers' preferred carriers, the Commission
is seeking comment on rules regarding changes in subscriber carrier
selections. Under the Act and proposed rules, small entities that
violate the Commission's preferred carrier change verification rules by
slamming subscribers shall be liable to the subscriber's properly
authorized carrier for all charges paid by the slammed subscriber and
for the value of any premiums to which the subscriber would have been
entitled if the slam had not occurred.
10. For the purposes of the analysis, the Commission examined the
relevant definition of ``small entity'' or ``small business'' and
applied this definition to identify those entities that may be affected
by the rules adopted in this Further NPRM. The RFA defines a ``small
business'' to be the same as a ``small business concern'' under the
Small Business Act, 15 U.S.C. 632, unless the Commission has developed
one or more definitions that are appropriate to its activities. 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) meets any additional criteria established by the
SBA. Moreover, the SBA has defined a small business for Standard
Industrial Classification (SIC) categories 4812 (Radiotelephone
Communications) and 4813 (Telephone Communications, Except
Radiotelephone) to be small entities when they have fewer than 1,500
employees.
11. Consistent with prior practice, the Commission excludes small
incumbent LECs from the definition of ``small entity'' and ``small
business concerns'' for the purpose of this IRFA. Because the small
incumbent LECs subject to these rules are either dominant in their
field of operations or are not independently owned and operated,
consistent with our prior practice, they are excluded from the
definition of ``small entity'' and ``small business concerns.''
Accordingly, the Commission's use of the terms ``small entities'' and
``small businesses'' does not encompass small incumbent LECs. Out of an
abundance of caution, however, for regulatory flexibility analysis
purposes, the Commission considers small incumbent LECs within this
analysis and uses the term ``small incumbent LECs'' to refer to any
incumbent LECs that arguably might be defined by SBA as ``small
business concerns.''
Telephone Companies (SIC 4813)
12. Total Number of Telephone Companies Affected. The decisions and
rules adopted by the Commission may have a significant effect on a
substantial number of small telephone companies identified by the SBA.
The United States Bureau of the Census (Census Bureau) reports that, at
the end of 1992, there were 3,497 firms engaged in providing telephone
service, as defined therein, for at least one year. This number
contains a variety of different categories of carriers, including local
exchange carriers, interexchange carriers, competitive access
providers, cellular carriers, mobile service carriers, operator service
providers, pay telephone operators, PCS providers, covered SMR
providers, and resellers. It seems certain that some of those 3,497
telephone service firms may not qualify as small entities or small
incumbent LECs because they are not ``independently owned and
operated.'' For example, a PCS provider that is affiliated with an
interexchange carrier having more than 1,500 employees would not meet
the definition of a small business. It seems reasonable to conclude,
therefore, that fewer than 3,497 telephone service firms are small
entity telephone service firms or small incumbent LECs that may be
affected by the Further NPRM.
13. Wireline Carriers and Service Providers. The SBA has developed
a definition of small entities for telecommunications companies other
than radiotelephone (wireless) companies (Telephone Communications,
Except Radiotelephone). The Census Bureau reports that there were 2,321
such telephone companies in operation for at least one year at the end
of 1992. According to the SBA definition, a small business telephone
company other than a radiotelephone company is one employing fewer than
1,500 persons. Of the 2,321 non-radiotelephone companies listed by the
Census Bureau, 2,295 companies (or, all but 26) were reported to have
fewer than 1,000 employees. Thus, at least 2,295 non-radiotelephone
companies might qualify as small incumbent LECs or small entities based
on these employment statistics. However, because it seems certain that
some of these carriers are not independently owned and operated, this
figure necessarily overstates the actual number of non-radiotelephone
companies that would qualify as ``small business concerns'' under the
SBA definition. Consequently, the Commission estimates using this
methodology that there are fewer than 2,295 small entity telephone
communications companies (other than radiotelephone companies) that may
be affected by the actions proposed herein and seeks comment on this
conclusion.
14. Local Exchange Carriers. Although neither the Commission nor
the SBA has developed a definition of small providers of local exchange
services, the Commission considered two methodologies available for
making these estimates. The closest applicable definition under SBA
rules is for telephone communications companies other than
radiotelephone (wireless) companies (SIC 4813) (Telephone
Communications, Except Radiotelephone) as previously detailed, supra.
The Commission's alternative method for estimation utilizes the data
[[Page 43496]]
that it collects annually in connection with the Telecommunications
Relay Service (TRS). This data provides the Commission with the most
reliable source of information of which it is aware regarding the
number of LECs nationwide. According to the Commission's most recent
data, 1,347 companies reported that they were engaged in the provision
of local exchange services. Although it seems certain that some of
these carriers are not independently owned and operated, or have more
than 1,500 employees, we are unable at this time to estimate with
greater precision the number of incumbent LECs that would qualify as
small business concerns under SBA's definition. Consequently, the
Commission estimates that there are fewer than 1,347 small LECs
(including small incumbent LECs) that may be affected by the actions
proposed in the Further NPRM.
15. Non-LEC wireline carriers. Next the Commission estimates the
number of non-LEC wireline carriers, including interexchange carriers
(IXCs), competitive access providers (CAPs), Operator Service Providers
(OSPs), Pay Telephone Operators, and resellers that may be affected by
these rules. Because neither the Commission nor the SBA has developed
definitions for small entities specifically applicable to these
wireline service types, the closest applicable definition under the SBA
rules for all these service types is for telephone communications
companies other than radiotelephone (wireless) companies. However, the
TRS data provides an alternative source of information regarding the
number of IXCs, CAPs, OSPs, Pay Telephone Operators, and resellers
nationwide. According to the Commission's most recent data: 130
companies reported that they are engaged in the provision of
interexchange services; 57 companies reported that they are engaged in
the provision of competitive access services; 25 companies reported
that they are engaged in the provision of operator services; 271
companies reported that they are engaged in the provision of pay
telephone services; and 260 companies reported that they are engaged in
the resale of telephone services and 30 reported being ``other'' toll
carriers. Although it seems certain that some of these carriers are not
independently owned and operated, or have more than 1,500 employees,
the Commission is unable at this time to estimate with greater
precision the number of IXCs, CAPs, OSPs, Pay Telephone Operators, and
resellers that would qualify as small business concerns under SBA's
definition. Firms filing TRS Worksheets are asked to select a single
category that best describes their operation. As a result, some long
distance carriers describe themselves as resellers, some as OSPs, some
as ``other,'' and some simply as IXCs. Consequently, the Commission
estimates that there are fewer than 130 small entity IXCs; 57 small
entity CAPs; 25 small entity OSPs; 271 small entity pay telephone
service providers; and 260 small entity providers of resale telephone
service; and 30 ``other'' toll carriers that might be affected by the
actions proposed in the Further NPRM.
16. Radiotelephone (Wireless) Carriers: The SBA has developed a
definition of small entities for Wireless (Radiotelephone) Carriers.
The Census Bureau reports that there were 1,176 such companies in
operation for at least one year at the end of 1992. According to the
SBA's definition, a small business radiotelephone company is one
employing fewer than 1,500 persons. The Census Bureau also reported
that 1,164 of those radiotelephone companies had fewer than 1,000
employees. Thus, even if all of the remaining 12 companies had more
than 1,500 employees, there would still be 1,164 radiotelephone
companies that might qualify as small entities if they are
independently owned and operated. Although it seems certain that some
of these carriers are not independently owned and operated, the
Commission is unable to estimate with greater precision the number of
radiotelephone carriers and service providers that would both qualify
as small business concerns under SBA's definition. Consequently, the
Commission estimates that there are fewer than 1,164 small entity
radiotelephone companies that might be affected by the actions proposed
in the Further NPRM.
17. Cellular and Mobile Service Carriers. In an effort to further
refine its calculation of the number of radiotelephone companies
affected by the rules adopted herein, the Commission considers the
categories of radiotelephone carriers, Cellular Service Carriers and
Mobile Service Carriers. Neither the Commission nor the SBA has
developed a definition of small entities specifically applicable to
Cellular Service Carriers and to Mobile Service Carriers. The closest
applicable definition under SBA rules for both services is for
telephone companies other than radiotelephone (wireless) companies. The
most reliable source of information regarding the number of Cellular
Service Carriers and Mobile Service Carriers nationwide of which the
Commission is aware appears to be the data that it collects annually in
connection with the TRS. According to the Commission's most recent
data, 792 companies reported that they are engaged in the provision of
cellular services and 138 companies reported that they are engaged in
the provision of mobile services. Although it seems certain that some
of these carriers are not independently owned and operated, or have
more than 1,500 employees, the Commission is unable at this time to
estimate with greater precision the number of Cellular Service Carriers
and Mobile Service Carriers that would qualify as small business
concerns under SBA's definition. Consequently, the Commission estimates
that there are fewer than 792 small entity Cellular Service Carriers
and fewer than 138 small entity Mobile Service Carriers that might be
affected by the actions proposed in the Further NPRM.
18. Broadband PCS Licensees. In an effort to further refine its
calculation of the number of radiotelephone companies affected by the
rules adopted herein, the Commission considers the category of
radiotelephone carriers, Broadband PCS Licensees. The broadband PCS
spectrum is divided into six frequency blocks designated A through F.
As set forth in 47 CFR 24.720(b), the Commission has defined ``small
entity'' in the auctions for Blocks C and F as a firm that had average
gross revenues of less than $40 million in the three previous calendar
years. For Block F, an additional classification for ``very small
business'' was added and is defined as an entity that, together with
its affiliates, has average gross revenues of not more than $15 million
for the preceding three calendar years. The Commissions definition of a
``small entity'' in the context of broadband PCS auctions has been
approved by SBA. The Commission has auctioned broadband PCS licenses in
Blocks A through F. The Commission does not have sufficient data to
determine how many small businesses bid successfully for licenses in
Blocks A and B. There were 183 winning bidders that qualified as small
entities in the Blocks C, D, E, and F auctions. Based on this
information, the Commission concludes that the number of broadband PCS
licensees that may be affected by the actions proposed in the Further
NPRM includes, at a minimum, the 183 winning bidders that qualified as
small entities in the Blocks C through F broadband PCS auctions.
19. SMR Licensees. Pursuant to 47 CFR 90.814(b)(1), the Commission
has defined ``small entity'' in auctions for geographic area 800 MHz
and 900 MHz SMR licenses as a firm that had average
[[Page 43497]]
annual gross revenues of less than $15 million in the three previous
calendar years. This definition of a ``small entity'' in the context of
800 MHz and 900 MHz SMR has been approved by the SBA. The rules
proposed in the Further NPRM may apply to SMR providers in the 800 MHz
and 900 MHz bands that either hold geographic area licenses or have
obtained extended implementation authorizations. The Commission does
not know how many firms provide 800 MHz or 900 MHz geographic area SMR
service pursuant to extended implementation authorizations, nor how
many of these providers have annual revenues of less than $15 million.
The Commission assumes, for purposes of the IRFA, that all of the
extended implementation authorizations may be held by small entities,
which may be affected by the rules proposed in the Further NPRM.
20. Potential SMR Licensees. The Commission completed its auctions
for geographic area licenses in the 900 MHz SMR band on April 15, 1996.
There were 60 winning bidders who qualified as small entities in the
900 MHz auction. Based on this information, the Commission concludes
that the number of geographic area SMR licensees that might be affected
by the rules proposed in this Further NPRM includes these 60 small
entities. No auctions have been held for 800 MHz geographic area SMR
licenses. Therefore, no small entities currently hold these licenses. A
total of 525 licenses will be awarded for the upper 200 channels in the
800 MHz geographic area SMR auction. However, the Commission has not
yet determined how many licenses will be awarded for the lower 230
channels in the 800 MHz geographic area SMR auction. There is no basis,
moreover, on which to estimate how many small entities will win these
licenses. Given that nearly all radiotelephone companies have fewer
than 1,000 employees and that no reliable estimate of the number of
prospective 800 MHz licensees can be made, the Commission assumes, for
purposes of the IRFA, that all of the licenses may be awarded to small
entities who, thus, may be affected by the rules proposed in the
Further NPRM.
21. Cable Systems: SBA has developed a definition of small entities
for cable and other pay television services, which includes all such
companies generating less than $11 million in revenue annually. This
definition includes cable systems operators, closed circuit television
services, direct broadcast satellite services, multipoint distribution
systems, satellite master antenna systems and subscription television
services. According to the Census Bureau, there were 1,423 such cable
and other pay television services generating less than $11 million in
revenue that were in operation for at least one year at the end of
1992.
(a) The Commission has developed its own definition of a small
cable system operator for the purposes of rate regulation. Under the
Commission's rules, a ``small cable company,'' is one serving fewer
than 400,000 subscribers nationwide. 47 CFR 76.901(e). Based on the
Commission's most recent information, it estimates that there were
1,439 cable operators that qualified as small cable system operators at
the end of 1995. Since then, some of those companies may have grown to
serve over 400,000 subscribers, and others may have been involved in
transactions that caused them to be combined with other cable
operators. Consequently, the Commission estimates that there are fewer
than 1,439 small entity cable system operators that may be affected by
the rules proposed in the Further NPRM.
(b) The Communications Act also contains a definition of a small
cable system operator, which is ``a cable operator that, directly or
through an affiliate, serves in the aggregate fewer than 1 percent of
all subscribers in the United States and is not affiliated with any
entity or entities whose gross annual revenues in the aggregate exceed
$250,000,000.'' 47 U.S.C. 543(m)(2). The Commission has determined that
there are 61,700,000 subscribers in the United States. Therefore, the
Commission found that an operator serving fewer than 617,000
subscribers shall be deemed a small operator, if its annual revenues,
when combined with the total annual revenues of all of its affiliates,
do not exceed $250 million in the aggregate. Based on available data,
the Commission finds that the number of cable operators serving 617,000
subscribers or less totals 1,450. Although it seems certain that some
of these cable system operators are affiliated with entities whose
gross annual revenues exceed $250,000,000, the Commission is unable at
this time to estimate with greater precision the number of cable system
operators that would qualify as small cable operators under the
definition in the Communications Act.
iv. Summary of Projected Reporting, Recordkeeping, and Other Compliance
Requirements
22. The proposed rules would impose verification and disclosure
requirements upon telecommunications carriers that wish to submit or
execute a change in a subscriber's selection of a provider of
telecommunications service. Submitting and executing telecommunications
carriers would be required to ensure that a carrier change comports
with the verification requirements of 47 CFR 64.1100 and 64.1150
established by the Commission. Furthermore, if a subscriber is a victim
of slamming, the unauthorized carrier would be required to remit to the
properly authorized carrier (1) all charges paid by the subscriber from
the time the slam occurred, and (2) the value of any premiums to which
the subscriber would have been entitled if the slam had not occurred.
The properly authorized carrier would be required to request such
payments from the unauthorized carrier within ten days of notification
from the subscriber that an unauthorized carrier change has occurred.
Upon notification that the subscriber has been slammed, the
unauthorized carrier would be required to remit such payments to the
properly authorized carrier. The subscriber's properly authorized
telecommunications carrier would then be responsible for restoring to
the subscriber any premiums to which the subscriber would have been
entitled had the slam not occurred. In the event of disputes between
carriers regarding the transfer of charges and the value of lost
premiums, the carriers would be required to pursue private settlement
negotiations before instituting proceedings before the Commission to
resolve such disputes.
v. Significant Alternatives to Proposed Rules Which Minimize the
Significant Economic Impact on Small Entities and Small Incumbent LECs
and Accomplish Stated Objectives
23. The Commission has considered proposing no rule changes beyond
those specifically required by the Act. Therefore, as discussed above,
the Commission is proposing very limited rule changes to its existing
rules which, given that slamming is becoming an increasingly prevalent
practice, it believes that there are minimally intrusive steps
necessary to discourage possible evasion of the Subscriber Carrier
Selection Change requirements contained in Section 258 of the
Communications Act. The Commission proposes that, in the event of a
dispute between carriers under these liability provisions, the carriers
involved in such disputes must pursue private settlement negotiations
regarding the transfer of charges and the value of lost premiums from
the unauthorized carrier to the properly authorized carrier. The
[[Page 43498]]
Commission believes that the adoption of such a dispute mechanism will
lessen the economic impact of a dispute on small entities. Under the
proposed rules, telecommunications carriers, including small entities,
that violate the Commission's verification rules and slam subscribers
would be liable to the subscriber's properly authorized carrier in an
amount equal to all charges paid by the slammed subscriber plus the
value of premiums to which the subscriber would have been entitled had
the slam not occurred. The Commission invites parties commenting on the
regulatory analysis to provide information as to the number of small
businesses that would be affected by the proposed regulations and
identify alternatives that would reduce the burden on these entities
while still ensuring that subscribers' telecommunications carrier
selections are not changed without their authorization.
24. Although the Commission has proposed no rule regarding the
circumstances under which resale carriers must notify their subscribers
of a change in their underlying network provider, the Commission
received a request for clarification of this issue from TRA. TRA
proposes that, instead of determining the materiality of such changes
on a case-by-case basis, the Commission establish a ``bright-line''
materiality test that would offer the subscriber safeguards now
provided by the current case-by-case approach, while minimizing the
regulatory burden on small to mid-sized carriers. According to TRA, the
unpredictability of the case-by-case approach is unduly burdensome on
small to mid-sized resale carriers, and thus diminishes competition.
The Commission invites parties to comment on whether the current case-
by-case approach has a significant economic impact on small entities,
and on whether the Commission's proposal to establish a bright-line
test for determining whether a subscriber has relied on a resale
carrier's identity of its underlying facilities-based network provider,
hence requiring that the resale carrier notify the subscriber if the
underlying network provider is changed, would minimize any significant
economic impact. The Commission also seeks comment on alternatives that
would reduce the burden on these entities without diminishing consumer
safeguards now in place.
vi. Federal Rules That May Overlap, Duplicate, or Conflict With the
Proposed Rules
25. None.
V. Conclusion
26. With the Further NPRM, the Commission seeks comment on the
foregoing issues regarding implementation of Section 258 of the
Telecommunications Act of 1996 and PC-change verification procedures to
deter illegal changes in subscriber carrier selections. Any party
disagreeing with the Commission's tentative conclusions should explain
with specificity its position in terms of costs and benefits.
VI. Ordering Clauses
27. It is ordered, pursuant to Sections 1, 4, 201-205, 215, 218,
220 and 258 of the Communications Act of 1934, as amended, 47 U.S.C.
151, 154, 201-205, 215, 218, 220, and 258, that a further notice of
proposed rule making is issued, proposing the amendment of 47 CFR Part
64 as set forth below.
28. It is further ordered that the Chief of the Common Carrier
Bureau is delegated authority to require the submission of additional
information, make further inquiries, and modify the dates and
procedures if necessary to provide for a fuller record and a more
efficient proceeding.
29. It is further ordered that the Secretary shall send a copy of
this further notice of proposed rule making, including the Initial
Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of
the Small Business Administration, in accordance with paragraph 603(a)
of the Regulatory Flexibility Act, 5 U.S.C. 601 et seq. (1981).
List of Subjects in 47 CFR Part 64
Communications common carriers, Consumer protection,
Telecommunications.
Federal Communications Commission
William F. Caton,
Acting Secretary.
Rules Changes
47 CFR Part 64 is proposed to be amended as follows:
1. The authority citation for part 64 continues to read as follows:
Authority: Sec. 4, 48 Stat. 1066, as amended; 47 U.S.C. 154,
unless otherwise noted. Interpret or apply secs. 201, 218, 226, 228,
258, 48 Stat. 1070, as amended, 1077; 47 U.S.C. 201, 218, 226, 228,
258, unless otherwise noted.
2. The heading for Subpart K is proposed to be revised to read as
follows:
Subpart K--Changing Telecommunications Service
3. Section 64.1100 is proposed to be revised to read as follows:
Sec. 64.1100 Verification of orders for telecommunications service
generated by telemarketing.
No telecommunications carrier shall submit a primary carrier change
order generated by telemarketing unless and until the order has first
been confirmed in accordance with the following procedures:
(a) The telecommunications carrier has obtained the subscriber's
written authorization in a form that meets the requirements of
Sec. 64.1150; or
(b) The telecommunications carrier has obtained the subscriber's
electronic authorization, placed from the telephone number(s) on which
the primary carrier is to be changed, to submit the order that confirms
the information described in paragraph (a) of this section to confirm
the authorization. Telecommunications carriers electing to confirm
sales electronically shall establish one or more toll-free telephone
numbers exclusively for that purpose. Calls to the number(s) will
connect a subscriber to a voice response unit, or similar mechanism
that records the required information regarding the primary carrier
change, including automatically recording the originating automatic
numbering identification; or
(c) An appropriately qualified independent third party operating in
a location physically separate from the telemarketing representative
has obtained the subscriber's oral authorization to submit the primary
carrier change order that confirms and includes appropriate
verification data (e.g., the subscriber's date of birth or social
security number); or
(d) Within three business days of the subscriber's request for a
primary carrier change, the telecommunications carrier must send the
subscriber an information package by first class mail containing at
least the following information concerning the requested change:
(1) An explanation that the information is being sent to confirm a
telemarketing order placed by the subscriber within the previous week;
(2) The name of the subscriber's current carrier;
(3) The name of the newly-requested carrier;
(4) A description of any terms, conditions, or charges that will be
incurred;
(5) The name of the person ordering the change;
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(6) The name, address, and telephone number of both the subscriber
and the soliciting carrier;
(7) A postpaid postcard which the subscriber can use to deny,
cancel or confirm a service order;
(8) A clear statement that if the customer does not return the
postcard the customer's long distance service will be switched within
14 days after the date the information package was mailed to [name of
soliciting carrier];
(9) The name, address, and telephone number of a contact point at
the Commission for consumer complaints; and
(10) Carriers must wait 14 days after the form is mailed to
subscribers before submitting their primary carrier change orders. If
subscribers have cancelled their orders during the waiting period,
carriers cannot submit the subscribers' orders.
4. Section 64.1150 is proposed to be revised to read as follows:
Sec. 64.1150 Letter of agency form and content.
(a) A telecommunications carrier relying on a written authorization
for a primary carrier change must obtain a letter of agency as
specified in this section. Any letter of agency that does not conform
with this section is invalid.
(b) The letter of agency shall be a separate document (an easily
separable document containing only the authorizing language described
in paragraph (e) of this section) having the sole purpose of
authorizing a telecommunications carrier to initiate a primary carrier
change. The letter of agency must be signed and dated by the subscriber
to the telephone line(s) requesting the primary carrier change.
(c) The letter of agency shall not be combined on the same document
with inducements of any kind.
(d) Notwithstanding paragraphs (b) and (c) of this section, the
letter of agency may be combined with checks that contain only the
required letter of agency language prescribed in paragraph (e) of this
section and the necessary information to make the check a negotiable
instrument. The letter of agency check shall not contain any
promotional language or material. The letter of agency check shall
contain in easily readable, bold-face type on the front of the check, a
notice that the consumer is authorizing a primary carrier change by
signing the check. The letter of agency language also shall be placed
near the signature line on the back of the check.
(e) At a minimum, the letter of agency must be printed with a type
of sufficient size and readable type to be clearly legible and must
contain clear and unambiguous language that confirms:
(1) The subscriber's billing name and address and each telephone
number to be covered by the primary carrier change order;
(2) The decision to change the primary carrier from the current
telecommunications carrier to the prospective telecommunications
carrier;
(3) That the subscriber designates [name of the submitting carrier]
to act as the subscriber's agent for the primary carrier change;
(4) That the subscriber understands that only one
telecommunications carrier may be designated as the subscriber's
interstate or interLATA primary interexchange carrier for any one
telephone number. To the extent that a jurisdiction allows the
selection of additional primary interexchange carriers (e.g., for
intrastate, intraLATA or international calling), the letter of agency
must contain separate statements regarding those choices. One
telecommunications carrier can be both a subscriber's interstate or
interLATA primary interexchange carrier and a subscriber's intrastate
or intraLATA primary interexchange carrier; and
(5) That the subscriber understands that any primary carrier
selection the subscriber chooses may involve a charge to the subscriber
for changing the subscriber's primary carrier.
(f) Any carrier designated in a letter of agency as a primary
interexchange carrier must be the carrier directly setting the rates
for the subscriber.
(g) Letters of agency shall not suggest or require that a
subscriber take some action in order to retain the subscriber's current
telecommunications carrier.
(h) If any portion of a letter of agency is translated into another
language then all portions of the letter of agency must be translated
into that language. Every letter of agency must be translated into the
same language as any promotional materials, oral descriptions or
instructions provided with the letter of agency.
5. Section 64.1160 is proposed to be added to subpart K to read as
follows:
Sec. 64.1160 Changes in subscriber carrier selections.
(a) Prohibition. No telecommunications carrier shall submit or
execute a change in a subscriber's selection of a provider of
telecommunications service except in accordance with the verification
procedures prescribed in this Subpart. Nothing in this section shall
preclude any State commission from enforcing these procedures with
respect to intrastate services.
(1) Where the submitting carrier submits a verification that fails
to comply with Sec. 64.1160, the executing carrier will be liable where
there has been some wrongdoing or malfeasance on the part of the
executing carrier; otherwise the submitting carrier will be solely
liable for violating Sec. 64.1160(a).
(2) Where the submitting carrier has complied with Sec. 64.1160(a),
but the executing carrier executes the change inconsistent with the
subscriber carrier change selection, the executing carrier will be
solely liable for violating Sec. 64.1160(a).
(3) When a dispute arises between the submitting and executing
carriers the carriers must pursue private settlement negotiations prior
to requesting that the Commission institute proceedings to resolve any
such dispute.
(b) Carrier Liability for Charges. Any telecommunications carrier
that violates the verification procedures prescribed by the Commission
and that collects charges for telecommunications service from a
subscriber shall be liable to the subscriber's properly authorized
carrier in an amount equal to all charges paid by such subscriber after
such violation. The remedies provided by this subsection are in
addition to any other remedies available by law.
6. Section 64.1170 is proposed to be added to subpart K to read as
follows:
Sec. 64.1170 Reimbursement procedures.
(a) Upon receiving notification from the subscriber that the
subscriber's carrier selection was changed without authorization, the
properly authorized carrier must, within ten days, request from the
unauthorized carrier the following:
(1) An amount equal to the charges paid by the subscriber to the
unauthorized carrier; and,
(2) An amount equal to the value of any premiums to which the
subscriber would have been entitled if the subscriber's selection had
not been changed. Where a subscriber notifies the unauthorized carrier,
rather than the properly authorized carrier, of an unauthorized
subscriber carrier selection change, the unauthorized carrier must,
within ten days, notify the properly authorized carrier.
(b) Upon notification of a violation of Sec. 64.1160(a), the
unauthorized carrier must remit to the affected subscriber's properly
authorized carrier the total charges collected from the subscriber and
the value of any premiums to which the consumer would have been
entitled if the subscriber's selection had not been changed.
(c) Restoration of Premium Programs. Upon receiving from the
unauthorized
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carrier the value of premiums to which the consumer would have been
entitled if the subscriber's selection had not been changed, the
properly authorized carrier must provide or restore to the subscriber
any premiums to which the consumer would have been entitled if the
subscriber's selection had not been changed. Where a particular premium
cannot be restored, the properly authorized carrier may substitute an
equivalent premium or dollar amount as reasonably determined by the
properly authorized carrier.
(d) Dispute Resolution. Carriers must pursue private settlement
negotiations regarding the transfer of charges and the value of lost
premiums from the unauthorized carrier to the properly authorized
carrier prior to requesting that the Commission institute proceedings
to resolve any dispute regarding such transfer of charges and the value
of lost premiums.
[FR Doc. 97-21528 Filed 8-13-97; 8:45 am]
BILLING CODE 6712-01-P
