[Federal Register Volume 64, Number 30 (Tuesday, February 16, 1999)]
[Rules and Regulations]
[Pages 7746-7762]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-3657]



[[Page 7745]]

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Part VII





Federal Communications Commission





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47 CFR Part 64



Implementation of the Subscriber Carrier Selection Changes Provisions 
of the Telecommunications Act of 1996; Unauthorized Changes of 
Consumers' Long Distance Carriers; Final Rule and Proposed Rule

  Federal Register / Vol. 64, No. 30 / Tuesday, February 16, 1999 / 
Rules and Regulations  

[[Page 7746]]



FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 64

[CC Docket 94-129; FCC 98-334]


Implementation of the Subscriber Carrier Selection Changes 
Provisions of the Telecommunications Act of 1996; Unauthorized Changes 
of Consumers' Long Distance Carriers

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: The Commission adopted a Second Report and Order which 
establishes new rules and policies governing the unauthorized switching 
of subscribers telecommunications, an activity more commonly known as 
``slamming.'' The Commission's decision is intended to deter and 
ultimately eliminate unauthorized changes in subscribers 
telecommunications carriers.

DATES: The effective date of the rules adopted in this Order is April 
29, 1999, except for 47 CFR 64.1100(c), 64.1100(d), 64.1170, and 
64.1180, which contain information collection requirements which have 
not been approved by OMB and which will be effective 90 days after 
publication in the Federal Register.

FOR FURTHER INFORMATION CONTACT: Kimberly Parker, Enforcement Division, 
Common Carrier Bureau (202) 418-7393. For additional information 
concerning the information collections contained in this Order contact 
Judy Boley at 202-418-0214, or via the Internet at [email protected].

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Second 
Report and Order in CC Docket No. 94-129 [FCC 98-334], adopted on 
December 17, 1998 and released on December 23, 1998. The full text of 
the Order is available for inspection and copying during normal 
business hours in the FCC Reference Center, Room 239, 1919 M Street, 
N.W., Washington, D.C. 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.
    Paperwork Reduction Act: This Report and Order contains a new or 
modified information collection. The Commission, as part of its 
continuing effort to reduce paperwork burdens, invites the general 
public and the Office of Management and Budget (OMB) to comment on the 
following information collections contained in the Report and Order as 
required by the Paperwork Reduction Act of 1995, Public Law 104-13. OMB 
notification of action is due 60 days from the date of publication of 
the Report and Order in the Federal Register. Comments should address: 
(a) whether the new or modified information collection 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 Control Number: 3060-0787.
    Title: Implementation of the Subscriber Carrier Selection Changes 
Provisions of the Telecommunications Act of 1996; Unauthorized Changes 
of Consumers' Long Distance Carriers, CC Docket No. 94-129.
    Form No.: N/A.
    Type of Review: Revised collections.
    Respondents: Business or other for-profit.

----------------------------------------------------------------------------------------------------------------
                                                                                  Est. time per
                         Section/title                               No. of          response      Total annual
                                                                   Respondents       (hours)      burden (hours)
----------------------------------------------------------------------------------------------------------------
 
a. Section 64.1100                                                         1800              1.5           2,700
b. Section 64.1150.............................................             675              1.5             844
c. Section 64.1160.............................................            1800              1.5           2,700
d. Section 64.1170.............................................            1800              5             9,000
e. Section 64.1180.............................................            1800              4             7,200
f. Section 64.1190.............................................            1800              2             3,600
----------------------------------------------------------------------------------------------------------------

    Total Annual Burden: 26,044 hours.
    Estimated Costs Per Respondent: N/A.
    Needs and Uses: Section 258 of the Communications Act of 1934 
(Act), as amended by the Telecommunications Act of 1996, makes it 
unlawful for any telecommunications carrier to ``submit or execute a 
change in a subscriber's selection of a provider of telecommunications 
exchange service or telephone toll service except in accordance with 
such verification procedures as the Commission shall prescribe.'' The 
section further provides that any telecommunications carrier that 
violates such verification procedures 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 the subscriber after such 
violation. The information collections contained within the Report and 
Order are necessary to accommodate the Commission's implementation of 
Section 258.

Final Regulatory Flexibility Analysis

    1. As required by the Regulatory Flexibility Act (RFA), an Initial 
Regulatory Flexibility Analysis (IRFA) was incorporated in the Further 
Notice of Proposed Rule Making and Memorandum Opinion and Order on 
Reconsideration (Further Notice and Order) in Policies and Rules 
Concerning Unauthorized Changes of Consumers' Long Distance Carrier. 
The Commission sought written public comment on the proposals in the 
Further Notice and Order, including comment on the IRFA. The comments 
received are discussed below. This present Final Regulatory Flexibility 
Analysis (FRFA) conforms to the RFA.
i. Need for and Objectives of This Order and the Rules Adopted Herein
    2. 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.'' Accordingly, the 
Commission adopts rules to implement this provision.

[[Page 7747]]

ii. Summary of the Significant Issues Raised by the Public Comments in 
Response to the IRFA
    3. In the IRFA, the Commission found that the rules it proposed to 
adopt in this proceeding may have a significant impact on a substantial 
number of small businesses as defined by 5 U.S.C. 601(3). The IRFA 
solicited comment on the number of small businesses that would be 
affected by the proposed regulations and on alternatives to the 
proposed rules that would minimize the impact on small entities 
consistent with the objectives of this proceeding.
    4. America's Carriers Telecommunications Association (ACTA) has 
submitted comments directly in response to the IRFA. ACTA states that 
the Commission violated the RFA in its IRFA by not addressing 
sufficiently the ``impact of the vague and standardless environment 
surrounding enforcement of the anti-slamming campaign on small 
carriers.'' ACTA asserts that because the proposed rules define 
slamming to include unintentional acts, small carriers will suffer 
disproportionately. ACTA states that the only proposal the Commission 
made to minimize the impact of its proposed rules on small carriers was 
the proposal to require private settlement negotiations regarding the 
transfer of charges arising due to section 258 liability. ACTA states 
that this proposal is inadequate because liability for inadvertent 
slams should not be imposed in the first place. ACTA submits that 
imposing liability for inadvertent slams will allow dishonest customers 
to claim falsely that they were slammed in order to avoid payment for 
legitimate services. Even when a complaint is not prosecuted to a 
formal decision, ACTA states, handling allegations of slamming are 
expensive and time-consuming for small carriers. ACTA also claims that 
the Commission is prejudiced against small carriers and that this 
attitude is reflected in unbalanced proposals that will allow large 
carriers and the Commission to subject small carriers to misdirected 
enforcement efforts and monetary losses and fines, as well as skew 
competition. ACTA also objects to the following as being harmful to 
small carriers: (1) elimination of the welcome package because it is an 
economical verification method for small carriers; (2) imposing the 
same verification procedures for in-bound and out-bound calls because 
that would overburden small carriers; (3) non-preemption of state 
regulation because small carriers would have difficulty in meeting the 
requirements of different states.
    5. We disagree with ACTA's contentions. We believe that imposing 
liability for all intentional and unintentional unauthorized changes is 
not vague, but rather that it is so clear as to eliminate any doubts as 
to the circumstances that would constitute a slam. The bright-line 
standard that we adopt in this Order should help all carriers, 
including small carriers, to avoid making unauthorized changes to a 
subscriber's selection of telecommunications provider. We also disagree 
with ACTA's contention that defining slamming to include accidental 
slams would disproportionately affect small carriers. Section 258 
prohibits slamming by any telecommunications carrier and does not 
distinguish between intentional and inadvertent conduct. Regardless of 
its size, no carrier has the right to commit unlawful acts. We believe 
that holding carriers liable for intentional and inadvertent 
unauthorized changes to subscribers' preferred carriers will reduce the 
overall incidence of slamming. We also disagree with ACTA's allegation 
that the Commission is biased against small carriers and that this bias 
is evident in the rules we proposed in the Further Notice and Order. 
The rules we adopt require all carriers, regardless of size, to take 
precautions to guard against the harm to consumers that is caused by 
slamming. Finally, regarding the preemption of state law, we decline to 
exercise our preemption authority at this time because the commenters 
have failed to establish a record upon which a specific preemption 
finding could be made.
iii. Description and Estimates of the Number of Small Entities to Which 
the Rules Adopted in the Order in CC Docket No. 94-129 Will Apply
    6. The RFA directs agencies to provide a description of and, where 
feasible, an estimate of the number of small entities that may be 
affected by the adopted rules. The RFA generally defines the term 
``small entity'' as having the same meaning as the terms ``small 
business,'' ``small organization,'' and ``small governmental 
jurisdiction.'' In addition, the term ``small business'' has the same 
meaning as the term ``small business concern'' under the Small Business 
Act. A small business concern is one which: (1) is independently owned 
and operated; (2) is not dominant in its field of operation; and (3) 
satisfies any additional criteria established by the Small Business 
Administration (SBA).
    7. The most reliable source of information regarding the total 
numbers of certain common carrier and related providers nationwide, as 
well as the numbers of commercial wireless entities, appears to be data 
the Commission publishes annually in its Telecommunications Industry 
Revenue report, regarding the Telecommunications Relay Service (TRS). 
According to data in the most recent report, there are 3,459 interstate 
carriers. These carriers include, inter alia, local exchange carriers, 
wireline carriers and service providers, interexchange carriers, 
competitive access providers, operator service providers, pay telephone 
operators, providers of telephone toll service, providers of telephone 
exchange service, and resellers.
    8. The SBA has defined establishments engaged in providing 
``Radiotelephone Communications'' and ``Telephone Communications, 
Except Radiotelephone'' to be small businesses when they have no more 
than 1,500 employees. Below, we discuss the total estimated number of 
telephone companies falling within the two categories and the number of 
small businesses in each, and we then attempt to refine further those 
estimates to correspond with the categories of telephone companies that 
are commonly used under our rules.
    9. Although some affected incumbent local exchange carriers (ILECs) 
may have 1,500 or fewer employees, we do not believe that such entities 
should be considered small entities within the meaning of the RFA 
because they are either dominant in their field of operations or are 
not independently owned and operated, and therefore by definition not 
``small entities'' or ``small business concerns'' under the RFA. 
Accordingly, our use of the terms ``small entities'' and ``small 
businesses'' does not encompass small ILECs. Out of an abundance of 
caution, however, for regulatory flexibility analysis purposes, we will 
separately consider small ILECs within this analysis and use the term 
``small ILECs'' to refer to any ILECs that arguably might be defined by 
the SBA as ``small business concerns.''
    10. Total Number of Telephone Companies Affected. The U.S. Bureau 
of the Census (``Census Bureau'') reports that, at the end of 1992, 
there were 3,497 firms engaged in providing telephone services, as 
defined therein, for at least one year. It is reasonable to conclude 
that fewer than 3,497 telephone service firms are small entity 
telephone service firms or small ILECs that may be affected by the 
proposed rules, if adopted.1
    11. Wireline Carriers and Service Providers. We estimate that fewer 
than 2,295 small telephone communications

[[Page 7748]]

companies other than radiotelephone companies are small entities or 
small ILECs that may be affected by the proposed rules, if 
adopted.1
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    \1\ The proposed rule referenced in paragraphs 10-16 are 
published in the same separate part of this issue.
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    12. Local Exchange Carriers. We estimate that fewer than 1,371 
providers of local exchange service are small entities or small ILECs 
that may be affected by the proposed rules, if adopted.
    13. Interexchange Carriers. We estimate that there are fewer than 
143 small entity IXCs that may be affected by the proposed rules, if 
adopted.
    14. Competitive Access Providers. We estimate that there are fewer 
than 109 small entity CAPs that may be affected by the proposed rules, 
if adopted.
    15. Resellers (including debit card providers). We estimate that 
there are fewer than 339 small entity resellers that may be affected by 
the proposed rules, if adopted.
    16. Cellular Licensees. We estimate that there are fewer than 804 
small cellular service carriers that may be affected by the proposed 
rules, if adopted.
iv. Summary of Projected Reporting, Recordkeeping and Other Compliance 
Requirements
    17. Below, we analyze the projected reporting, recordkeeping, and 
other compliance requirements that may affect small entities and small 
incumbent LECs.
    18. Verification rules. The Commission's verification rules shall 
apply to all carriers, excluding for the present time CMRS carriers, 
that submit or execute carrier changes on behalf of a subscriber.
    19. Elimination of the welcome package. Carriers may not use the 
welcome package as a verification method.
    20. Verification of in-bound telemarketing sales. Carriers must 
comply with our verification rules for all calls that result in carrier 
changes that are submitted on behalf of subscribers, whether those 
calls are consumer-initiated or carrier-initiated.
    21. Third Party Administrator for Dispute Resolution. The effective 
date of the Commission's liability rules (47 CFR 64.1100(c), 
64.1100(d), 64.1170, and 64.1180) is delayed until 90 days after 
publication in the Federal Register to enable carriers to develop and 
implement an alternative carrier dispute resolution mechanism involving 
an independent administrator. If carriers successfully implement such a 
plan, the Commission will entertain carriers' requests for waiver of 
the administrative requirements of our liability rules where such 
carriers voluntarily agree to use the independent administrator.
    22. Preferred Carrier Freeze Procedures. The Commission's rules 
require carriers who offer preferred carrier freeze protection to 
follow certain procedures.
v. Steps Taken To Minimize the Significant Economic Impact of This 
Order on Small Entities and Small Incumbent LECs, Including the 
Significant Alternatives Considered
    23. Verification rules. Ameritech, SBC, and U S WEST propose 
systems that would impose fines or more stringent verification 
requirements on carriers with a history of slamming, as determined by 
the LEC or otherwise. We decline to adopt such proposals because they 
would impose more stringent verification requirements on carriers only 
after such carriers have slammed significant numbers of consumers. 
Furthermore, we find such proposals to be problematic because they 
could permit LECs to target certain carriers for ``punishment.''
    24. Elimination of the welcome package. Several commenters propose 
modifications to the welcome package, rather than elimination of it 
entirely, because the welcome package is an inexpensive verification 
option that is suitable for use by smaller carriers. We conclude that 
it is better to eliminate the welcome package entirely, rather than 
attempt to ``fix'' it with modifications that fail to provide adequate 
protection against fraud or curtail its usefulness.
    25. Verification of in-bound telemarketing. Several commenters 
propose that less burdensome verification procedures apply to in-bound 
telemarketing. We decline to adopt these proposals because we feel that 
they offer little protection to a consumer against an unscrupulous 
carrier.
    26. Independent Third Party Verification. Several commenters 
submitted proposals for determining the independence of a third party 
verifier. These commenters support the criteria that the Commission has 
adopted in this Order.
    27. Verification Records. Several commenters, including NAAG and 
NYSDPS, support a requirement that carriers retain verification records 
for a certain period of time. We choose a retention period of two years 
because any person desiring to file a complaint with the Commission 
alleging a violation of the Act must do so within two years of the 
alleged violation.
    28. Liability rules. To address concerns that smaller carriers may 
suffer from the imposition of our liability rules, we note that a 
carrier accused of slamming has the opportunity to provide evidence of 
verification, in order to prove that it did not slam a subscriber, 
before having to remit any revenues to an authorized carrier.
    29. Third Party Administrator for Dispute Resolution. This 
provision will benefit smaller carriers by providing them with an 
alternative means of compliance with our liability rules. Carriers are 
given a choice of complying with our liability rules in whole by 
administering the requirements themselves, or of complying by using an 
independent third party to administer the requirements.
    30. Preferred Carrier Freeze Procedures. States are free to impose 
restrictions on the use of preferred carrier freezes for local exchange 
and intraLATA toll services if they determine that such steps are 
necessary in light of the availability of local competition in a 
particular market. Furthermore, we impose certain requirements that 
will prevent carriers from using preferred carrier freezes in an 
anticompetitive manner, such as easy procedures to lift freezes. In 
this way, the existence of preferred carrier freeze programs will not 
impede carriers wishing to compete in local services, especially 
smaller carriers.
    31. The Commission will send a copy of the Order, including this 
FRFA, in a report to be sent to Congress pursuant to the Small Business 
Regulatory Enforcement Fairness Act of 1996. In addition, the 
Commission will send a copy of the Order, including the FRFA, to the 
Chief Counsel for Advocacy of the Small Business Administration. A copy 
of the Order and FRFA (or summaries thereof) will also be published in 
the Federal Register.

I. Introduction

    32. In this Second Report and Order and Second Further Notice of 
Proposed Rulemaking (Order), we adopt rules proposed in the First 
Further Notice of Proposed Rulemaking and Memorandum Opinion and Order 
on Reconsideration (Further Notice and Order) to implement section 258 
of the Communications Act of 1934 (Act), as amended by the 
Telecommunications Act of 1996 (1996 Act). Section 258 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

[[Page 7749]]

Commission shall prescribe.'' The goal of section 258 and this Order is 
to eliminate the practice of ``slamming.'' Slamming occurs when a 
company changes a subscriber's carrier selection without that 
subscriber's knowledge or explicit authorization.
    33. Despite the Commission's existing slamming rules, our records 
indicate that slamming has increased at an alarming rate. In 1997, the 
Commission processed approximately 20,500 slamming complaints and 
inquiries, which is an increase of approximately 61% over 1996 and an 
increase of approximately 135% over 1995. From January to the beginning 
of December 1998, the Commission processed 19,769 slamming complaints. 
Furthermore, the number of slamming complaints filed with the 
Commission is a mere fraction of the actual number of slamming 
incidents that occur.
    34. The Commission recently has increased its enforcement actions 
to impose severe financial penalties on slamming carriers. Since April 
1994, the Commission has imposed final forfeitures totaling $5,961,500 
against five companies, entered into consent decrees with eleven 
companies with combined payments of $2,460,000, and has proposed 
$8,120,000 in penalties against six carriers. Additionally, the 
Commission may sanction a carrier by revoking its operating authority 
under section 214 of the Act.
    35. The new rules we adopt in this Order operate to establish a new 
comprehensive framework to combat aggressively and deter slamming in 
the future. Our new rules absolve subscribers of liability for some 
slamming charges in order to ensure that carriers do not profit from 
slamming activities, as well as to compensate subscribers for the 
confusion and inconvenience they experience as a result of being 
slammed. As an additional deterrent, we strengthen our verification 
procedures and broaden the scope of our slamming rules.

II. Background

    36. The Commission's current slamming rules, which apply only to 
long distance carriers, require such carriers to first obtain 
authorization from subscribers for preferred carrier changes and then 
to verify that authorization. The current rules also require IXCs to 
verify all PIC changes using either a written letter of agency (LOA) 
or, if the carrier has used telemarketing to solicit the customer, one 
of the following four procedures: (1) obtain an LOA from the 
subscriber; (2) receive confirmation from the subscriber via a call 
from the subscriber to a toll-free number provided exclusively for the 
purpose of confirming change orders electronically; (3) use an 
independent third party to verify the subscriber's order; or (4) send 
an information package, also known as the ``welcome package,'' that 
includes a postage-paid postcard which the subscriber can use to deny, 
cancel, or confirm a service order, and wait 14 days after mailing the 
packet before submitting the PIC change order. A carrier that makes 
unauthorized changes to a subscriber's selection of telecommunications 
provider and charges rates higher than that of the authorized carrier 
must re-rate that subscriber's bill to ensure that the subscriber pays 
no more than what he or she would have paid the authorized carrier. The 
unauthorized carrier must also pay for any carrier-change charges 
assessed by the LEC.

III. Discussion

A. Section 258(b) Liability

i. Liability of the Slammed Subscriber
    37. We adopt a rule absolving consumers of liability for unpaid 
charges assessed by unauthorized carriers for 30 days after an 
unauthorized carrier change has occurred. Any carrier that the 
subscriber calls to report the unauthorized change, whether that entity 
is the subscriber's LEC, unauthorized carrier, or authorized carrier, 
is required to inform the subscriber that he or she is not required to 
pay for any slamming charges incurred for the first 30 days after the 
unauthorized change. If a subscriber pays charges to his or her 
unauthorized carrier, however, such subscriber's liability will be 
limited to the amount he or she would have paid the authorized carrier. 
We note that, as explained fully in the discussion on Third Party 
Administrator for Dispute Resolution, we delay the effective date of 
the liability rules for 90 days to provide interested carriers an 
opportunity to implement a dispute resolution mechanism involving an 
independent administrator.
    38. Many state commissions and consumer protection organizations 
support absolving the consumer of liability for charges incurred after 
being slammed. Our liability rules that provide for limited absolution 
for slamming charges will deter slamming by minimizing the opportunity 
for unauthorized carriers to physically take control of slamming 
profits for any period of time. Even though section 258(b) requires the 
unauthorized carrier to remit to the authorized carrier all charges 
collected from the subscriber, several commenters state that absolution 
is preferable to using the remedy in section 258(b) because the 
slamming carrier is likely to refuse to remit revenues to the 
authorized carrier.
    39. This rule also makes slamming unprofitable because it provides 
consumers with incentive to scrutinize their monthly telephone bills 
early and carefully. By providing subscribers with a remedy that is 
easy to administer, i.e., consumers simply refuse to pay telephone 
bills containing slamming charges, we provide a quick and simple 
process to stop slamming. We also choose to absolve consumers of 
liability for a limited time because it provides some compensation to 
consumers for the time, effort, and frustration they experience as a 
result of being slammed, as well as for the loss of choice and privacy.
    40. We balance this need to compensate the consumer, however, 
against the possibility of consumers improperly reporting that they 
were slammed in order to obtain free telephone service. To address such 
concerns about fraud, we point out that subscribers may only be 
absolved of liability if they have in fact been slammed. Carriers can, 
as described below, produce proof of valid verification to refute a 
subscriber's claim that he or she was slammed. This approach has the 
added benefit of strengthening carriers' incentive to comply strictly 
with our verification procedures in order to protect themselves from 
inappropriate claims by consumers that they have been slammed.
    41. We limit the absolution period to 30 days after an unauthorized 
change has occurred. Several carriers support a 30-day limit to 
absolution. To the extent that the subscriber receives additional 
charges from the slamming carrier after the 30-day absolution period, 
the subscriber shall pay such charges to the authorized carrier at the 
authorized carrier's rates after the authorized carrier has re-rated 
such charges. In most cases, the consumer will discover the 
unauthorized change upon receipt of the first monthly bill after the 
unauthorized change occurs, because that bill generally provides the 
consumer with the first notice that a carrier change has been made. The 
limitation on absolution for the first 30 days after an unauthorized 
change may be waived by the Commission in circumstances where it is 
necessary to extend the period of absolution in order to provide a 
subscriber with a fair and equitable resolution. The special 
circumstances that may affect this period of absolution would likely be

[[Page 7750]]

practices used to delay the subscriber's realization of the carrier 
change. For example, a waiver of the 30-day limit might be appropriate 
if the subscriber's telephone bill failed to provide reasonable notice 
to the subscriber of a carrier change, or if the slamming carrier did 
not have a monthly billing cycle.
    42. A limited absolution rule does not substantially harm the 
authorized carrier, who has not provided service to the slammed 
consumer during the period of absolution. We conclude that, although 
the authorized carrier is deprived of profits that it would have 
received but for the unauthorized change, it also has not actually 
provided any service to the subscriber and it appears that the 
authorized carrier is not out of pocket for most costs that it would 
have borne if it had in fact provided service. We emphasize that, 
should the authorized carrier conclude that it is entitled to any 
compensation from the slamming carrier that it does not receive under 
our rules, such as lost profits or other damages, the authorized 
carrier has recourse against the slamming carrier in the appropriate 
forum, such as before the Commission or in a state or federal court.
    43. Several commenters, including AT&T and GTE, state that 
consumers should pay for services received in order to give effect to 
the remedy in section 258(b), which requires unauthorized carriers to 
give authorized carriers all charges collected from slammed 
subscribers. By its terms, that remedy applies only when the consumer 
has in fact made payment to the unauthorized carrier. Section 258(b) 
does not require the consumer to pay either the authorized carrier or 
the unauthorized carrier. As discussed in the following section, if a 
subscriber does pay his or her unauthorized carrier, the authorized 
carrier will be entitled to collect that amount from the unauthorized 
carrier in accordance with section 258(b).
    44. We do recognize that by absolving the consumer of liability for 
a certain period of time, our remedy goes beyond the specific statutory 
remedy that is explicitly set forth in section 258(b) of the Act. 
Section 258(b) also states, however, that ``the remedies provided by 
this section are in addition to any other remedies available by law.'' 
Absolving slammed subscribers of liability for a limited period of time 
is within the Commission's authority under section 201(b) to 
``prescribe such rules and regulations as may be necessary in the 
public interest to carry out the provisions of [the] Act,'' as well as 
under section 4(i) to ``perform any and all acts, make such rules and 
regulations, and issue such orders, not inconsistent with [the] Act, as 
may be necessary in the execution of its functions.'' Pursuant to such 
authority, we have determined that the most effective method of 
deterring slamming is to deprive carriers of revenue from slamming by 
absolving consumers of liability for 30 days after the unauthorized 
change. As we have already stated, by enabling the consumer to forgo 
payment to the slamming carrier, we limit the opportunities for 
slamming carriers to profit from slamming. Furthermore, the absolution 
remedy we adopt is not inconsistent with section 258 because the 
section 258(b) remedy only applies to charges that have been paid to 
the slamming carrier and does not reference charges that have not been 
paid.
    45. We also recognize that, to the extent that our rules permit 
authorized carriers to collect some charges, at their rates, for 
services provided by slamming carriers beyond the 30-day absolution 
period, these requirements are not in accordance with Section 203(c), 
which requires carriers to collect charges in accordance with their 
filed tariffs. Because tariffs only permit carriers to collect charges 
for service they actually provide, our new rule requiring authorized 
carriers to collect charges for service provided by slamming carriers 
would not be in accordance with their tariffs. Section 10 of the Act, 
however, permits the Commission to forbear from applying section 203 
tariff requirements to interstate, domestic, interexchange carriers if 
the Commission determines that three statutory forbearance criteria are 
satisfied. We conclude that these criteria are met.
    46. First, we find that enforcement of section 203(c) in this 
instance is not necessary to ensure that the charges, practices, 
classifications, or regulations by, for, or in connection with that 
carrier or service are just and reasonable and are not unjustly or 
unreasonably discriminatory. The circumstances under which we permit 
the authorized carrier to collect charges that are not in accordance 
with its tariff are very limited. In fact, by requiring the subscriber 
to pay the authorized carrier rather than the slamming carrier, our 
rule helps to deter the unlawful, unjust, and unreasonable practices of 
slamming carriers by preventing them from making profits from slammed 
consumers. Under these limited circumstances, our rule is not necessary 
to ensure that the authorized carrier's charges, practices, 
classifications, or regulations from being just and reasonable, and not 
unjustly or unreasonably discriminatory.
    47. Second, enforcement of section 203(c) under these circumstances 
is not necessary for the protection of consumers. On the contrary, 
requiring subscribers to pay their slamming carriers rather than their 
authorized carriers would be harmful to consumers. Our rule operates to 
protect consumers from the abusive practices of slamming carriers by 
depriving such carriers of slamming profits. Therefore enforcement of 
section 203(c) in this particular situation is not necessary to protect 
consumers.
    48. Third, forbearance from applying section 203(c) in this 
instance is consistent with the public interest. In making this 
determination, section 10(b) also requires us to consider whether 
forbearance will promote competitive market conditions, including the 
extent to which forbearance will enhance competition among providers of 
telecommunications services. We conclude that permitting the subscriber 
to pay the authorized carrier for charges imposed by slamming carriers 
after the 30-day absolution period is consistent with the public 
interest. Slamming distorts competition in the marketplace because it 
rewards carriers who employ fraud and deceit over carriers that are 
conducting lawful activities. Slamming also deprives a consumer of 
choice. Because our rule deters slamming by making slamming 
unprofitable, it promotes the public interest, including enhancing 
competition for telecommunications services.
ii. When the Slammed Subscriber Pays the Unauthorized Carrier
    49. We concluded above that a slammed subscriber is not liable for 
charges incurred during the first 30 days after an unauthorized carrier 
change. In the event that a subscriber nevertheless pays the 
unauthorized carrier for slamming charges, two rules shall govern. 
First, the unauthorized carrier is obligated to remit to the authorized 
carrier all charges paid by the subscriber. Second, after receiving 
this amount from the unauthorized carrier, the authorized carrier shall 
provide the subscriber with a refund or credit for any amounts the 
subscriber paid in excess of what he or she would have paid the 
authorized carrier absent the unauthorized change.
a. Liability of the Unauthorized Carrier
    50. We adopt the rule proposed in the Further Notice and Order to 
provide that any telecommunications carrier that violates the 
Commission's verification procedures and that collects charges for

[[Page 7751]]

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. This remedy is 
directed specifically by the language in section 258(b) of the Act.
    51. We also impose certain additional penalties on unauthorized 
carriers. We also require the unauthorized carrier to pay for 
reasonable billing and collection expenses, including attorneys' fees, 
incurred by the authorized carrier in collecting charges from the 
unauthorized carrier. Requiring the unauthorized carrier to pay for 
expenses incurred by the authorized carrier in collecting charges from 
the unauthorized carrier ensures that the authorized carrier does not 
suffer further economic loss because of the unauthorized change, and 
adds an economic incentive for the authorized carrier to seek 
reimbursement for slamming. Additionally, since the rule increases the 
penalty for slamming, the unauthorized carrier may facilitate 
reimbursement to the authorized carrier in order to avoid payment of 
any additional expenses for billing and collection.
    52. We also require the unauthorized carrier to pay for the 
expenses of restoring the subscriber to his or her authorized carrier. 
By requiring the unauthorized carrier to pay the change charge to the 
authorized carrier, we ensure that neither the authorized carrier nor 
the subscriber incurs additional expenses in restoring the subscriber 
to his or her preferred carrier. Furthermore, requiring the 
unauthorized carrier to pay these additional charges will serve as a 
further deterrent to unauthorized changes.
b. Subscriber Refunds or Credits
    53. Our new rules will enable subscribers to prevent carriers from 
profiting by absolving them of liability for the first 30 days after an 
unauthorized change. We conclude, however, that the specific provisions 
of section 258(b) appear to prevent us from absolving consumers of 
liability to the extent that they have already made payments to their 
unauthorized carriers. We conclude that Congress intended that 
subscribers who pay for slamming charges should pay no more than they 
would have paid to their authorized carriers for the same service had 
they not been slammed. Indeed, the legislative history reflects 
Congressional intent that ``the Commission's rules should also provide 
that consumers be made whole.'' Therefore our rules will require the 
authorized carrier to refund or credit the subscriber for any charges 
collected from the unauthorized carrier in excess of what the 
subscriber would have paid the authorized carrier absent the switch. 
This approach is consistent with the Commission's current rules that 
ensure that the slammed subscriber pays no more for service than he or 
she would have paid before the unauthorized switch. Furthermore, we 
conclude that requiring a refund of the excess amounts paid by the 
subscriber does not harm the authorized carrier who has in fact 
received payment for service that it did not provide to the subscriber. 
Should the authorized carrier conclude that it is suffering some 
financial harm, nothing in our rules would preclude the carrier from 
filing a claim against the unauthorized carrier for lost profits or 
other damages.
    54. If the authorized carrier fails to collect the charges paid by 
the subscriber from the unauthorized carrier, the authorized carrier is 
not required to provide a refund or credit to the subscriber. The 
authorized carrier, who has done no wrong, should not be penalized by 
having to provide the subscriber with a refund paid out of the 
authorized carrier's pocket. We require the authorized carrier, 
however, to notify the subscriber within 60 days after the subscriber 
has notified the authorized carrier of an unauthorized change, if the 
authorized carrier has failed to collect from the unauthorized carrier 
the charges paid by the slammed subscriber. Upon receipt of the 
notification, the subscriber will have the opportunity to pursue a 
claim against the slamming carrier for a full refund of all amounts 
paid to the slamming carrier. The subscriber is entitled to the entire 
amount paid, rather than merely a refund or credit of charges paid in 
excess of the authorized carrier's rates. This is because it is the 
subscriber who is collecting the charges from the slamming carrier 
rather than the authorized carrier. The language of section 258(b) 
generally prevents the subscriber from being absolved of liability for 
charges paid because it indicates that the authorized carrier may make 
a claim for, and keep, amounts paid to the slamming carrier. Where the 
authorized carrier has failed in collecting charges from the slamming 
carrier, however, the language of section 258(b) would not apply. 
Therefore the subscriber, who is not bound by the carrier remedy in 
section 258(b), would be entitled to a refund from the slamming carrier 
of all slamming charges paid. If the subscriber has difficulty in 
obtaining this refund from the slamming carrier, the subscriber has the 
option of filing a complaint with the Commission pursuant to section 
208.
iii. Investigation and Reimbursement Procedures
a. When the Subscriber Has Not Paid the Unauthorized Carrier
    55. A subscriber may refuse to pay any charges imposed by the 
slamming carrier for 30 days after the unauthorized change occurred. 
The record supports, however, giving the carrier who has been deprived 
of charges the opportunity to refute a subscriber's slamming claim. We 
therefore impose the following mechanism to limit the ability of 
subscribers to fraudulently claim that they have been slammed.
    56. After the subscriber has reported an allegedly unauthorized 
change and requested to be switched back to the authorized carrier, the 
slamming carrier shall remove from the subscriber's bill, whether 
billed through a LEC or otherwise, all charges that were incurred for 
the first 30 days after the unauthorized change occurred. If the 
allegedly unauthorized carrier has proof of the consumer's valid 
verification of authorization to change to it, however, then the 
allegedly unauthorized carrier shall, within 30 days of the 
subscriber's return to the originally authorized carrier, submit to the 
originally authorized carrier a claim for the amount of charges for 
which the consumer was absolved, along with proof of the subscriber's 
verification of the disputed carrier change. The authorized carrier 
shall conduct a reasonable and neutral investigation of the claim, 
including, where appropriate, contacting the subscriber and the carrier 
making the claim. Within 60 days after receipt of the claim and the 
proof of verification, the originally authorized carrier shall issue a 
decision to the subscriber and the carrier making the claim. If the 
originally authorized carrier decides that the subscriber did in fact 
authorize a carrier change to the carrier making the claim, it shall 
place on the subscriber's bill a charge equal to the amount of charges 
for which the subscriber was previously absolved. Upon receiving this 
amount, the originally authorized carrier shall forward this amount to 
the carrier making the claim. If the authorized carrier determines that 
the subscriber was slammed by the carrier filing the claim, the 
subscriber shall not be required to make any payments for the charges 
for which he or she was absolved. If either the subscriber or the 
carrier making the claim believes that the authorized carrier's 
investigation or

[[Page 7752]]

adjudication of the dispute was in any way improper or wrong, then it 
has the option of filing a section 208 complaint.
b. When the Subscriber Has Paid the Unauthorized Carrier
    57. When the subscriber has paid charges to the slamming carrier, 
the following procedures shall apply. First, we require the authorized 
carrier to submit to the allegedly unauthorized carrier, within 30 days 
of notification of an unauthorized change, a request for proof of 
verification of the subscriber's requested carrier change. Second, we 
require the allegedly unauthorized carrier to provide proof of 
verification to the authorized carrier within ten days of the 
authorized carrier's request. If the allegedly unauthorized carrier 
does provide proof of verification, consistent with the Commission's 
verification procedures, of the disputed carrier change request, then 
the burden shifts to the authorized carrier to prove that an 
unauthorized change occurred. The proof of verification must provide 
clear and convincing evidence that the subscriber provided knowing 
authorization of a carrier change.
    58. If the allegedly unauthorized carrier cannot provide proof of 
verification, then it must provide to the authorized carrier, also 
within ten days of the authorized carrier's request for proof of 
verification, a copy of the subscriber's bill, an amount equal to any 
charge required to return the subscriber to his or her authorized 
carrier, and an amount equal to any charges paid by the subscriber, if 
applicable. In the event that the authorized carrier is unable to 
obtain an appropriate response from the slamming carrier, the 
authorized carrier may bring an action in federal or state court, where 
appropriate, or before the Commission, against the slamming carrier.
iv. Restoration of Premiums
    59. Premiums are bonuses, such as frequent flier miles, that are 
given to subscribers as rewards for each dollar spent on 
telecommunications services. The legislative history of the 1996 Act 
states that ``the Commission's rules should require that carriers 
guilty of `slamming' should be liable for premiums, including travel 
bonuses, that would otherwise have been earned by telephone subscribers 
but were not earned due to the violation of the Commission's rules. * * 
* '' Therefore we require an authorized carrier to reinstate the 
subscriber in any premium program in which the subscriber was enrolled 
prior to being slammed, if that subscriber's participation in the 
premium program was terminated because of the unauthorized change. We 
also require the authorized carrier restore to the subscriber any 
premiums that the subscriber lost due to slamming if a subscriber has 
paid the unauthorized carrier for slamming charges. We emphasize that 
the authorized carrier is entitled to receive from the slamming carrier 
charges paid by the slammed subscriber, and we expect that authorized 
carriers will make every effort to pursue their claims against slamming 
carriers. In the event that an authorized carrier is unable to recover 
from the unauthorized carrier charges that were paid by the subscriber, 
however, the authorized carrier is still required to restore the 
subscriber's premiums. On the other hand, an authorized carrier is not 
required to restore any premiums lost by that subscriber if the 
subscriber has not paid for the charges incurred after being slammed.
    60. Although the Commission proposed in the Further Notice and 
Order to require the unauthorized carrier to remit to the properly 
authorized carrier an amount equal to the value of premiums to be 
restored to the subscriber, we find that this is not necessary to 
enable the authorized carrier to restore premiums to its subscribers. 
If the unauthorized change had never occurred, the authorized carrier 
would have provided the premium to the subscriber on the basis of the 
subscriber's payment to the authorized carrier. Therefore the 
authorized carrier is no worse off than it would have been if it is 
required to restore subscriber premiums upon receipt of the amount paid 
by the subscriber to the unauthorized carrier.
v. Liability for Inadvertent Unauthorized Changes
    61. We reiterate that the statute and our rules impose liability 
for any unauthorized change in a subscriber's preferred carrier, 
whether intentional or inadvertent. Section 258 of the Act makes it 
illegal for a 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.'' Although several commenters assert that 
our rules should apply only to intentional acts that result in 
slamming, the statutory language does not establish an intent element 
for a violation of section 258. Several commenters, such as Ameritech, 
BellSouth, and the North Carolina Commission, support the application 
of a strict liability standard, in which a carrier would be liable for 
slamming if it was responsible for an unauthorized change, regardless 
of whether the unauthorized carrier did so intentionally. We agree that 
such a strict liability standard is required by the statute. We also 
find that the rights of the consumer and the authorized carrier to 
remedies for slamming should not be affected by whether the slam was an 
intentional or accidental act. Regardless of the intent, or lack 
thereof, behind the unauthorized change, the consumer and the 
authorized carrier have suffered injury. We recognize, however, that 
even with the greatest care, innocent mistakes will occur and may 
result in unauthorized changes. In such cases, we will take into 
consideration in any enforcement action the willfulness of the carriers 
involved.
vi. Determining Liability Between Carriers
    62. In order to avoid or minimize disputes over the source or cause 
of unauthorized carrier changes, or over liability for such carrier 
changes, we delineate the duties and obligations of the submitting and 
executing carriers.
    63. As proposed in the Further Notice and Order, we adopt the 
following ``but for'' liability test: (1) where the submitting carrier 
submits a carrier change request that fails to comply with our rules 
and the executing carrier performs the change in accordance with the 
submission, only the submitting carrier is liable as an unauthorized 
carrier; (2) where the submitting carrier submits a change request that 
conforms with our rules and the executing carrier fails to execute the 
change in conformance with the submission, only the executing carrier 
is liable for the unauthorized change; and (3) finally, where the 
submitting carrier submits a carrier change request that fails to 
comply with our rules and the executing carrier fails to perform the 
change in accordance with the submission, only the submitting carrier 
is liable as an unauthorized carrier.

B. Third Party Administrator for Dispute Resolution

    64. We have formulated several mechanisms in this Order that rely 
on the authorized carrier to provide relief to its slammed subscribers 
and to determine whether its subscriber was slammed. We recognize, 
however, that some carriers may find it to be in their interest to make 
other mutually agreeable arrangements that might better serve to 
address our concerns. For instance, several carriers, particularly MCI, 
have indicated that they are willing and able to create quickly a 
system using an independent third party

[[Page 7753]]

administrator to discharge carrier obligations for resolving disputes 
among carriers and subscribers with regard to slamming, including re-
rating subscriber telephone bills and returning the subscriber to the 
proper carrier. We agree that this concept has merit. Consumers would 
benefit by having one point of contact to resolve slamming problems. 
Carriers would benefit by having a neutral body to resolve disputes 
regarding slamming liability. LECs would no longer be the recipients of 
angry phone calls from consumers who have been slammed by long distance 
carriers, while IXCs would be able to divert their resources to 
preventing slamming rather than resolving slamming disputes. Although 
this approach holds promise, we do not believe that we should abandon 
the rules adopted herein because they provide an appropriate mechanism 
for all carriers to render appropriate relief and dispute resolution to 
slammed consumers and carriers. We do, however, encourage carriers to 
work out such arrangements and we will be open to receiving requests 
for waiver of the liability provisions of our rules for carriers that 
agree to implement an acceptable alternative.
    65. To afford carriers time to develop and implement an industry-
funded independent dispute resolution mechanism and to file waiver 
requests as described above, we delay the effective date of the 
liability rules set forth above until 90 days after Federal Register 
publication of this Order. Any waiver request must be filed in a timely 
manner so that the Commission may evaluate and grant or deny such 
request in enough time to enable carriers to implement and utilize the 
mechanism by the effective date of the liability rules. In submitting 
waiver requests, carriers should bear in mind that we would be inclined 
to grant a waiver only if we are satisfied that any such neutral entity 
would fulfill the obligations imposed by our rules with regard to 
liability, in the timeframes specified in the rules. We note that 
nothing in the Commission's liability rules or the use of the third 
party administrator shall preclude a consumer or carrier from filing a 
section 208 complaint or other action in state or federal court.

C. Verification Rules

i. The Welcome Package
    66. One of the verification procedures available to carriers under 
the Commission's rules is the ``welcome package.'' As set forth in 
section 64.1100(d), after obtaining the subscriber's authorization to 
make a carrier change, the IXC may send the consumer a welcome package 
containing information and a prepaid postcard, which the customer can 
use to deny, cancel, or confirm the change order. Section 64.1100(d)(8) 
provides that the package must contain a statement that if the 
subscriber does not return the postcard, the subscriber's long distance 
service will be switched within 14 days after the date the package was 
mailed. In the Further Notice and Order, the Commission sought comment 
on whether the welcome package verification option should be eliminated 
because it could be used in the same manner as a negative-option LOA.
b. Discussion
    67. The record, as well as our experience with consumer complaints, 
supports our decision to eliminate the welcome package as a 
verification option. The welcome package has been a significant source 
of consumer complaints regarding slamming. As many of the commenters 
note, consumers often fail to receive the welcome package, or they 
throw it away as junk mail, or they have their service switched despite 
the fact that they returned postcards requesting that their service not 
be changed. The welcome package becomes a particularly ineffective 
verification method when used in combination with a misleading 
telemarketing script. If a subscriber does not even realize that he or 
she has agreed to change his or her service because the telemarketing 
solicitation was so misleading, that subscriber would reasonably 
conclude that the welcome package is a solicitation, not a 
confirmation, and thus discard it without examination. In all 
instances, however, we find that the welcome package is an ineffective 
verification method because it does not provide evidence, such as a 
written signature or recording, that the subscriber has in fact 
authorized a carrier change. Moreover, even where the subscriber 
actually receives and reads the information in a welcome package, this 
approach places an affirmative burden on the subscriber to avoid having 
his or her preferred carrier switched. As with negative-option LOAs, we 
do not think consumers should have to take affirmative action to avoid 
being slammed.
ii. Application of the Verification Rules to In-Bound Calls
    68. The Commission concluded in the 1995 Report and Order that it 
should extend our verification procedures to consumer-initiated ``in-
bound'' calls. On its own motion the Commission stayed the application 
of the verification rules to in-bound calls pending its decision on 
several petitions for reconsideration by AT&T, MCI, and Sprint. We now 
find that verification of in-bound calls is necessary to deter slamming 
and, accordingly, we lift the stay imposed in the In-bound Stay Order. 
We apply the same verification requirements to in-bound and out-bound 
calls. This will enable carriers to adopt uniform verification 
procedures for all calls. We agree with the state commissions and some 
IXCs that the opportunity for slamming is as great with in-bound calls 
as with out-bound calls. Equally important, we recognize that excluding 
in-bound calls from our verification requirements would open a loophole 
for slammers. Through this loophole, unscrupulous carriers could slam 
not only consumers who initiate calls for reasons other than to change 
carriers, but also consumers who have simply never called in. Consumers 
slammed in this way would have difficulty proving that they had never 
initiated calls to a carrier.
    69. U S WEST included in its comments a Petition for 
Reconsideration of that portion of the 1995 Report and Order that 
applied the Commission's verification rules to in-bound calls. U S WEST 
states that because the 1995 Report and Order pertained only to 
interexchange services and IXCs, a LEC such as U S WEST would not have 
been expected to seek reconsideration of those rules at that time. We 
find that U S WEST's Petition for Reconsideration of the Commission's 
1995 Report and Order is untimely filed. Nevertheless, in making our 
decision regarding in-bound verification in this Order, we have taken 
into consideration the comments regarding in-bound verification 
submitted by U S WEST in its Petition for Reconsideration. Based on the 
evidence in the record, the additional comments sought and received, 
and the anticipated competitive climate, we conclude that imposing 
verification rules on in-bound calls is in the public interest and that 
U S WEST's request to the contrary should be denied.
iii. Independent Third Party Verification
    70. Our existing rules provide for verification by using an 
``appropriately qualified and independent third party operating in a 
location physically separate from the telemarketing representative'' 
who obtained the carrier change request. We now set forth the following 
specific criteria to determine a third party verifier's independence. 
These criteria are not intended to be exhaustive, but rather the 
Commission

[[Page 7754]]

will evaluate the particular circumstances of each case. First, the 
third party verifier should not be owned, managed, controlled, or 
directed by the carrier. Ownership by the carrier would give the third 
party verifier incentive to affirm carrier changes, rather than to 
determine whether the consumer has given authorization for a carrier 
change. Second, the third party verifier should not be given financial 
incentives to approve carrier changes. For example, an independent 
third party verifier should not receive commissions for telemarketing 
sales that are confirmed because such a compensation scheme provides 
the third party verifier with incentive to falsely confirm sales. As 
another example, a carrier should not require an independent third 
party verifier to agree to an exclusive contract with the carrier, such 
that the independent verifier is wholly dependent on that particular 
carrier for revenue. Third, we reiterate that the third party verifier 
must operate in a location physically separate from the carrier. We 
note that our rules already require this, but we highlight this 
requirement because we find it to be an important one. Requiring third 
party verifiers to be in different physical locations from carriers 
reinforces the arms-length nature of their relationship.
    71. Several commenters also propose disclosure requirements for the 
scripts used by third party verifiers. Based on the record, we conclude 
that the scripts used by the independent third party verifier should 
clearly and conspicuously confirm that the subscriber has previously 
authorized a carrier change. The script should not mirror any carrier's 
particular marketing pitch, nor should it market the carrier's 
services. Instead, it should clearly verify the subscriber's decision 
to change carriers. We note that we seek additional comment on 
proposals for script requirements in the Further Notice of Proposed 
Rulemaking.
iv. Other Verification Mechanisms
    72. The Commission sought comment in the Further Notice and Order 
on additional mechanisms for reducing slamming. We received multiple 
proposals and have evaluated them accordingly. We adopt a rule 
requiring carriers to retain LOAs and other verification records for 
two years. We choose a retention period of two years because any person 
desiring to file a complaint with the Commission alleging a violation 
of the Act must do so within two years of the alleged violation. We 
reject remaining proposals made by the commenters because, although 
they might be helpful in preventing slamming, they would be impractical 
to implement. These proposals include, for example, ideas for assigning 
subscribers personal identification numbers (PINs). Several commenters 
suggest limiting our verification options to only written LOAs or to 
independent third party verification, while others propose to add more 
options, such as audio recording. We decline to further limit the 
verification options because we find that a range of verification 
options is necessary to continue to give carriers the maximum 
flexibility to choose a verification method appropriate for their 
needs. Furthermore, the verification rules, as we have modified them in 
this Order will provide consumers with protection against slamming 
while still providing them with the ability to change carriers without 
unnecessary burdens.
    73. We clarify that, regardless of the solicitation method used, 
all carrier changes must be verified. We modify our rules to make clear 
that a carrier must use one of our three verification options (written 
LOA, electronic author ization, and independent third party 
verification) to verify any carrier change. Specifically, the current 
rules appear to create a dichotomy between verification methods to be 
used when a carrier change is obtained through telemarketing, and when 
other marketing methods are used. A strict reading of the rules would 
indicate that, pursuant to current section 64.1100, a telemarketing 
carrier has several verification options, but that a carrier that does 
not telemarket must obtain a written LOA pursuant to current section 
64.1150. This would seem to penalize carriers that use methods other 
than telemarketing, such as in-person solicitations or Internet sign 
ups, by denying them flexibility in their verification methods. We are 
also aware that some carriers have interpreted the difference between 
current sections 64.1100 and 64.1150 to argue that they are not 
required to verify their carrier change requests because such changes 
were not obtained through telemarketing. This is incorrect, as the 
Commission's previous orders have clearly stated that all carrier 
changes must be authorized and verified. Because some confusion appears 
to exist among carriers regarding this subject, we modify our rules 
accordingly.
v. Use of the Term ``Subscriber''
    74. We modify current section 64.1100 to use the term 
``subscriber'' in place of ``customer,'' as proposed in the Further 
Notice and Order. We also amend current section 64.1150(e)(4) to change 
the word ``consumer'' to ``subscriber.'' Because section 258 uses the 
term ``subscriber'' rather than ``customer,'' this will make the 
language in our rules consistent with the statutory language.

D. Extension of the Commission's Verification Rules to the Local Market

i. Application of the Verification Rules to the Local Market
    75. In the Further Notice and Order, the Commission sought comment 
on whether the current verification rules, which apply only to IXCs, 
should be applied to the local market (i.e., local exchange service and 
intraLATA toll service). We adopt a rule requiring that all changes to 
a subscriber's preferred carrier, including local exchange, intraLATA 
toll, and interLATA toll services, must be authorized by that 
subscriber and verified in accordance with our procedures. With the 
advent of competition in the provision of local exchange and intraLATA 
toll services we anticipate a greater incidence of slamming generally 
if effective rules are not put into place.
    76. We also require carriers to identify specifically the types of 
service or services being offered (e.g., interLATA toll, intraLATA 
toll, local exchange) in any preferred carrier solicitation or letter 
of agency, and to obtain separate authorization and verification for 
each service that is being changed. The separate authorization and 
verification may be received and conducted during the same 
telemarketing solicitation or obtained in separate statements on the 
same LOA form. By requiring carriers to describe fully the services 
they offer, and obtain separate authorization and verification for 
different services, carriers will be prevented from taking advantage of 
consumer confusion and changing the preferred carriers for all of a 
subscriber's telecommunications services where the subscriber merely 
intended to change one. Several commenters support more targeted 
proposals, rather than the general application of more rigorous 
verification rules, purportedly to avoid unnecessary costs and harm to 
competition. For example, Ameritech, SBC, and U S WEST propose systems 
that would impose fines or more stringent verification requirements on 
carriers with a history of slamming, as determined by the LEC or 
otherwise. In light of the high incidence of slamming violations we 
currently face, we prefer to adopt the approach taken in the rules in 
this Order because they will help to prevent carriers from slamming 
consumers in the first place. Furthermore, such proposals could

[[Page 7755]]

permit LECs to target certain carriers, including those that are 
offering competing services.
ii. Application of the Verification Rules to All Telecommunications 
Carriers
    77. We adopt a rule requiring that no telecommunications carrier 
shall submit or execute a change on behalf of a subscriber in the 
subscriber's selection of a provider of telecommunications service 
except in accordance with the Commission's verification procedures, 
consistent with the language of section 258. Based on the record, 
however, we create an exception for CMRS providers. We conclude that 
CMRS providers should not be subject to our verification rules at this 
time because slamming does not occur in the present CMRS market. CMRS 
providers are not currently subject to equal access requirements. In 
other words, a CMRS provider is free to designate any toll carrier for 
its subscribers unless it has voluntarily chosen not to do so. It is 
our understanding that the CMRS carrier, which has made contractual 
arrangements with the toll carriers, is in control of this selection 
process and must be contacted by the subscriber in order for any change 
in toll carriers to occur. Furthermore, Bell Atlantic Mobile and CTIA 
state that, at this time, a CMRS carrier cannot change a customer's 
wireless local exchange service without that customer's express 
approval, because the customer must typically physically reprogram the 
handset to initiate service with a new carrier. In light of these 
considerations, we believe that unauthorized changes are much less 
likely to occur and we are not aware of any slamming complaints in this 
area. We may revisit this issue should slamming become a problem in the 
CMRS market.
iii. The States' Role
    78. Section 258 charges the Commission with the responsibility for 
establishing verification procedures for carriers who ``submit or 
execute a change in a subscriber's selection of a provider of telephone 
exchange service or telephone toll service.'' Therefore, section 258 
explicitly grants the Commission authority to create verification 
procedures for both interstate and intrastate services, and our rules 
here indeed apply to both sets of services. Many carriers urge us 
generally to preempt state regulation of slamming by local exchange and 
intrastate interexchange carriers in order to create uniform rules.
    79. We decline to preempt generally state regulation of carrier 
changes. The states and the Commission have a long history of working 
together to combat slamming, and we conclude that state involvement is 
of greater importance than ever before. We find that, although a state 
must accept the same verification procedures as prescribed by the 
Commission, a state may accept additional verification procedures for 
changes to intrastate service if such state concludes that such action 
is necessary based on its local experiences. We further note that 
nothing in our rules prohibits states from deterring slamming through 
means other than regulation of verification procedures, such as general 
consumer protection requirements or direct regulation of telemarketing 
sales. States must, however, write and interpret their statutes and 
regulations in a manner that is consistent with our rules and orders, 
as well as section 258. For example, a state may not adopt the welcome 
package as an additional verification method because we have determined 
that the welcome package fails to protect consumers.
    80. Furthermore, we are obligated and willing to examine state 
rules on a case-by-case basis if it appears that they conflict with the 
purpose of our rules, for instance, by prohibiting or having the effect 
of prohibiting the ability of any entity to provide telecommunications 
service. With regard to the issue of preemption of state verification 
procedures, the Commission will not make a preemption determination in 
the absence of an adequate record clearly describing the state law or 
action to be preempted and precisely how that state law or action 
conflicts with federal law or obstructs federal objectives. The record 
in this proceeding does not contain any comprehensive identification or 
analysis of which particular state laws would be inconsistent with our 
verification rules or would obstruct federal objectives. Accordingly, 
the record does not contain sufficient information about various state 
requirements to allow us to assess the ability of carriers to comply 
with both federal and state anti-slamming mechanisms.
    81. Section 258 expressly grants to the states authority to enforce 
the Commission's verification procedure rules with respect to 
intrastate services. A state therefore may commence proceedings against 
a carrier for violation of the Commission's rules governing changes to 
a subscriber's intrastate service. We conclude that enforcement is 
another area in which the states and the Commission may work together 
to eradicate slamming. A single unauthorized change may result in the 
switching of both a subscriber's intrastate and interstate service in 
violation of the Commission's verification procedures. In the case of 
an unauthorized change that results in changes to intrastate and 
interstate service, a state's proceeding to enforce the Commission's 
rules with respect to the intrastate violation will yield factual 
findings regarding the interstate violation as well. The state's 
factual finding in such a case will be given great weight in the 
Commission's proceeding to determine whether the carrier violated the 
Commission's interstate verification procedures.

E. Submitting and Executing Carriers

i. Definition of ``Submitting'' and ``Executing'' Carriers
    82. A submitting carrier will be generally any carrier that (1) 
requests on the behalf of a subscriber that the subscriber's 
telecommunications carrier be changed; and (2) seeks to provide retail 
services to the end user subscriber. We have modified the rule proposed 
in the Further Notice and Order to take into account the roles of 
underlying carriers and their resellers. We note, however, that either 
the reseller or the facilities-based carrier may be treated as a 
submitting carrier if it is responsible for any unreasonable delays in 
the submission of carrier change requests or if it is responsible for 
submitting unauthorized carrier change requests, including fraudulent 
authorizations.
    83. We note that in situations in which a customer initiates or 
changes long distance service by contacting the LEC directly, 
verification of the customer's choice would not need to be verified by 
either the LEC or the chosen IXC. In this situation, neither the LEC 
nor the IXC is the submitting carrier as we have defined it. The LEC is 
not providing interexchange service to that subscriber. The IXC has not 
made any requests--it has merely been chosen by the consumer. 
Furthermore, because the subscriber has personally requested the change 
from the executing carrier, the IXC is not requesting a change on the 
subscriber's behalf. If a LEC's actions in this situation resulted in 
the subscriber being assigned to a different interexchange carrier than 
the one originally chosen by the subscriber, however, then that LEC 
could be liable for violations of its duties as an executing carrier.
    84. We adopt the definition proposed in the Further Notice and 
Order for an executing carrier, so that an executing carrier is 
generally any carrier that effects a request that a subscriber's 
telecommunications carrier be changed.

[[Page 7756]]

This rule will apply even where a reseller competitive local exchange 
company (CLEC) receives carrier changes and submits such changes to its 
underlying facilities-based LEC. We conclude that the executing carrier 
should be the carrier who has actual physical responsibility for making 
the change to the subscriber's service, rather than a carrier that is 
merely forwarding a carrier change request on behalf of a subscriber. 
We also emphasize, however, that either the reseller or the facilities-
based carrier may be treated as an executing carrier if it is 
responsible for any unreasonable delays in the execution of carrier 
changes or for the execution of unauthorized carrier changes, including 
fraudulent authorizations.
    85. We also note that our definition of an executing carrier could 
also include an IXC in the current environment. When a facilities-based 
IXC resells service to a switchless reseller, the switchless reseller 
uses the same carrier identification code (CIC) as the facilities-based 
IXC. Subscribers of both the facilities-based IXC and the switchless 
reseller would therefore be on the network of the facilities-based IXC, 
with the same CIC. CICs are used by LECs to identify different IXCs so 
that LECs will know to which carrier they should route a subscriber's 
interexchange traffic. Where a subscriber changes from a facilities-
based IXC to a reseller of that facilities-based IXC's services, the 
reseller submits a carrier change order to the facilities-based IXC. 
That facilities-based IXC does not submit that change order to the 
subscriber's LEC because, as far as the LEC is concerned, the routing 
of calls for that subscriber has not changed due to the fact that the 
CIC remains the same (i.e., the LEC will still send interexchange calls 
from that subscriber to the same facilities-based carrier). The 
facilities-based IXC uses the carrier change request to process the 
change in its own system, which enables the reseller to begin billing 
the subscriber. Therefore, in this very limited situation, the 
executing carrier is the facilities-based IXC, not the LEC. In fact, 
the facilities-based IXC would be the executing carrier for all carrier 
changes in which the subscriber remains on the facilities-based IXC's 
network, regardless of whether the subscriber has changed from a 
switchless reseller to the reseller's facilities-based IXC, from the 
facilities-based IXC to a switchless reseller of that IXC's service, or 
from a switchless reseller of the facilities-based IXC's service to 
another switchless reseller of that same IXC's service.
    86. Based on BellSouth's recommendation, we clarify that a billing 
agent has no liability under our verification rules if it is neither an 
executing or submitting carrier, as defined by our rules.
ii. Application of Verification Rules to Submitting and Executing 
Carriers
    87. In the Further Notice and Order, the Commission tentatively 
concluded that the submitting carrier's compliance with our 
verification rules would facilitate timely and accurate execution of 
any carrier change, and that an executing carrier would not be required 
to duplicate the carrier change verification efforts of the submitting 
carrier. We conclude that executing carriers should not verify carrier 
changes prior to executing the change. We agree with several commenters 
that requiring such verification would be expensive, unnecessary, and 
duplicative of the submitting carrier's verification. Although 
executing carriers do not have verification obligations under our 
rules, they do have a responsibility to ensure that subscribers' 
carrier changes are executed as soon and as accurately as possible, 
using the most technologically efficient means available. Executing 
carriers are required to execute promptly and without any unreasonable 
delay changes that have been verified by the submitting carrier.
    88. Some LECs believe that additional verification of carrier 
changes by executing carriers would further reduce the incidence of 
slamming. We find that permitting executing carriers to verify 
independently carrier changes that have already been verified by 
submitting carriers could have anticompetitive effects. We have 
concerns that executing carriers would have both the incentive and 
ability to delay or deny carrier changes, using verification as an 
excuse, in order to benefit themselves or their affiliates. 
Furthermore, we find that an executing carrier that attempts to verify 
a carrier change request would be acting in violation of section 
222(b), which states that a carrier that ``receives or obtains 
proprietary information from another carrier for purposes of providing 
any telecommunications service shall use such information only for such 
purpose[.]'' The information contained in a submitting carrier's change 
request is proprietary information because it must submit that 
information to the executing carrier in order to obtain provisioning of 
service for a new subscriber. Therefore, pursuant to section 222(b), 
the executing carrier may only use such information to provide service 
to the submitting carrier, i.e., changing the subscriber's carrier, and 
may not attempt to verify that subscriber's decision to change 
carriers.
    89. Notwithstanding our prohibition on verification of carrier 
changes by executing carriers, we find that executing carriers may 
still provide a similar level of protection to their customers in ways 
that do not raise anticompetitive concerns, by making preferred carrier 
freezes available for subscribers who have concerns about slamming. 
Executing carriers also have a variety of methods to notify their 
subscribers that their carriers have changed. For example, as discussed 
in the Truth-in-Billing NPRM, carriers may choose to include a separate 
section in their subscriber bills to highlight any changes that have 
occurred on a subscriber's account, including changes to preferred 
carriers.
iii. Concerns With Certain Executing Carriers
a. Interference With the Execution Process
    90. The Commission sought comment in the Further Notice and Order 
on whether ILECs should be subject to different requirements and 
prohibitions because they may have the incentive and the ability to 
delay or refuse to process carrier change orders in order to avoid 
losing local customers, or in order to favor an affiliated IXC. 
Although we find that ILECs may very well have incentive to act 
anticompetitively, their ability to do so is limited by several 
statutory provisions in the Act. For example, section 251 requires 
incumbent LECs to provide facilities and services to requesting 
telecommunications carriers in a nondiscriminatory manner, section 
201(b) prohibits unjust and unreasonable practices, and section 202(a) 
prohibits unjust and unreasonable discrimination. Furthermore, any 
carrier that imposes unreasonable delays in executing carrier changes, 
both for itself and others, will be in violation of our verification 
procedures or acting unreasonably in violation of section 201(b), even 
if it is not acting in violation of a non-discrimination requirement.
b. Timeframe for Execution of Carrier Changes
    91. We decline at this time to adopt any deadlines for execution of 
carrier changes. Mandating a specific deadline for execution of all 
carrier changes could be problematic because there may be many 
legitimate reasons for a delay

[[Page 7757]]

in the execution of a carrier change, such as a consumer request for a 
delay in implementation, or the administrative burden of processing a 
large number of change orders. We also find that it would not be 
feasible to establish a specific deadline for execution of changes that 
would accommodate the needs of the wide variety of carriers in the 
marketplace, including smaller carriers. We believe, however, that 
subscribers should be informed of how long it will take for a carrier 
change to become effective and therefore we strongly encourage a 
submitting carrier to inform subscribers of the expected timeframe for 
implementing the carrier change, if it is able to obtain such 
information from the executing carrier.
c. Marketing Use of Carrier Change Information
    92. In the Further Notice and Order, the Commission voiced concern 
that an incumbent LEC might attempt to engage in conduct that would 
blur the distinction between its role as a neutral executing carrier 
and its objectives as a marketplace competitor. Specifically, the 
Commission stated that an example of this type of conduct could occur 
if an incumbent executing carrier sends a subscriber who has chosen a 
new carrier a promotional letter (winback letter) in an attempt to 
change the subscriber's decision to switch to another carrier. We 
conclude that this is a valid concern and therefore find that an 
executing carrier may not use information gained from a carrier change 
request for any marketing purposes, including any attempts to change a 
subscriber's decision to switch to another carrier. Many commenters 
support this decision. As explained above, we find that carrier change 
information is carrier proprietary information and, therefore, pursuant 
to section 222(b), the executing carrier is prohibited from using such 
information to attempt to change the subscriber's decision to switch to 
another carrier. The executing carrier otherwise would have no 
knowledge at that time of a consumer's decision to change carriers, 
were it not for the executing carrier's position as a provider of 
switched access services. Therefore, when an executing carrier receives 
a carrier change request, section 222(b) prohibits the executing 
carrier from using that information to market services to that 
consumer.

F. Use of Preferred Carrier Freezes

i. Background
    93. In the Further Notice and Order, the Commission sought comment 
on whether it should adopt rules to address preferred carrier freeze 
practices. The Commission noted that, although neither the Act nor its 
rules and orders specifically address preferred carrier freeze 
practices, concerns about carrier freeze solicitations have been raised 
with the Commission. The Commission noted, moreover, that MCI filed a 
Petition for Rulemaking on March 18, 1997, requesting that the 
Commission institute a rulemaking to regulate the solicitation, by any 
carrier or its agent, of carrier freezes or other carrier restrictions 
on a consumer's ability to switch his or her choice of interexchange 
(interLATA or intraLATA toll) and local exchange carrier. The 
Commission determined that it was appropriate to consider MCI's 
petition in the Further Notice and Order and, therefore, incorporated 
MCI's petition and all responsive pleadings into the record of this 
proceeding.
ii. Overview and Jurisdiction
    94. We adopt rules to clarify the appropriate use of preferred 
carrier freezes because we believe that, although preferred carrier 
freezes offer consumers an additional and beneficial level of 
protection against slamming, they also create the potential for 
unreasonable and anticompetitive behavior that might affect negatively 
efforts to foster competition in all markets. While we are confident 
that our carrier change verification rules, as modified in this Order, 
will provide considerable protection for consumers against unauthorized 
carrier changes, we recognize that many consumers wish to utilize 
preferred carrier freezes as an additional level of protection against 
slamming. As noted in the Further Notice and Order, a carrier freeze 
prevents a change in a subscriber's preferred carrier selection until 
the subscriber gives the carrier from whom the freeze was requested his 
or her written or oral consent.
    95. In the Further Notice and Order, however, we stated that 
preferred carrier freezes may have the effect of limiting competition 
among carriers. We share commenters' concerns that in some instances 
preferred carrier freezes are being, or have the potential to be, 
implemented in an unreasonable or anticompetitive manner. By 
definition, preferred carrier freezes create an additional step 
(namely, that subscribers contact directly the LEC that administers the 
preferred carrier freeze program) that customers must take before they 
are able to obtain a change in their carrier selection. Incumbent LECs 
may have incentives to market preferred carrier freezes aggressively to 
their customers and to use different standards for placing and removing 
freezes depending on the identity of the subscriber's carrier. It also 
appears that, at this time, facilities-based LECs--most of which are 
incumbent LECs--are uniquely situated to administer preferred carrier 
freeze programs.
    96. We conclude, contrary to the assertions of Bell Atlantic, that 
we have authority under section 258 to address concerns about 
anticompetitive preferred carrier freeze practices for intrastate, as 
well as interstate, services. Congress, in section 258 of the Act, has 
granted this Commission authority to adopt verification rules 
applicable to both submission and execution of changes in a 
subscriber's selection of a provider of local exchange or telephone 
toll services. Preferred carrier freezes directly impact the 
verification procedures which Congress instructed the Commission to 
adopt because they require subscribers to take additional steps beyond 
those described in the Commission's verification rules to effectuate a 
carrier change. Moreover, where a preferred carrier freeze is in place, 
a submitting carrier that complies with our verification rules may find 
that its otherwise valid carrier change order is rejected by the LEC 
administering the freeze program. Since preferred carrier freeze 
mechanisms can essentially frustrate the Commission's statutorily 
authorized procedures for effectuating carrier changes, we conclude 
that the Commission has authority to set standards for the use of 
preferred carrier freeze mechanisms.
iii. Nondiscrimination and Application of Rules to All Local Exchange 
Carriers
    97. We conclude that preferred carrier freezes should be 
implemented on a nondiscriminatory basis so that LECs do not use 
freezes as a tool to gain an unreasonable competitive advantage. 
Accordingly, local exchange carriers must make available any preferred 
carrier freeze mechanism to all subscribers, under the same terms and 
conditions, regardless of the subscribers' carrier selection. We also 
conclude that our rules for preferred carrier freezes should apply to 
all local exchange carriers and reject those proposals to place 
additional requirements on incumbent LECs, to the exclusion of 
competitive LECs.
iv. Solicitation and Implementation of Preferred Carrier Freezes
    98. We find that the most effective way to ensure that preferred 
carrier freezes are used to protect consumers, rather than as a barrier 
to competition, is to ensure that subscribers fully

[[Page 7758]]

understand the nature of the freeze, including how to remove a freeze 
if they chose to employ one. We thus conclude that any solicitation and 
other carrier-provided information concerning a preferred carrier 
freeze program should be clear and not misleading. We specifically 
decide that, at a minimum, carriers soliciting preferred carrier 
freezes must provide: (1) an explanation, in clear and neutral 
language, of what a preferred carrier freeze is and what services may 
be subject to a preferred carrier freeze; (2) a description of the 
specific procedures necessary to lift a preferred carrier freeze and an 
explanation that these steps are in addition to the Commission's 
regular verification rules for changing subscribers' carrier selections 
and that the subscriber will be unable to make a change in carrier 
selection unless he or she lifts the freeze; and (3) an explanation of 
any charges associated with the preferred carrier freeze service. We 
also conclude that preferred carrier freeze procedures, including any 
solicitation, must clearly distinguish among telecommunications 
services subject to a freeze, i.e., between local, intraLATA toll, 
interLATA toll, and international toll services. We do this to reduce 
consumer confusion about the differences among telecommunications 
services and to prevent unscrupulous carriers from placing freezes on 
all of a subscriber's services when the subscriber only intended to 
authorize a freeze for a particular service or services.
    99. We adopt our proposal to extend our carrier change verification 
procedures to preferred carrier freeze solicitations and note that this 
proposal was supported by a wide range of carriers, state commissions, 
and consumer organizations. This will reduce customer confusion about 
preferred carrier freezes and prevent unscrupulous carriers from 
imposing preferred carrier freezes without the consent of subscribers.
v. Procedures for Lifting Preferred Carrier Freezes
    100. We conclude that a LEC administering a preferred carrier 
freeze program must accept the subscriber's written and signed 
authorization stating an intent to lift a preferred carrier freeze. 
Such written authorization--like the LOAs authorized for use in carrier 
changes and to place a preferred carrier freeze--should state the 
subscriber's billing name and address and each telephone number to be 
affected. In addition, the written authorization should state the 
subscriber's intent to lift the preferred carrier freeze for the 
particular service in question. We also require that LECs must accept 
oral authorization from the customer to remove a freeze and must permit 
submitting carriers to conduct a three-way conference call with the LEC 
and the subscriber in order to lift a freeze. Three-way calling allows 
a submitting carrier to conduct a three-way conference call with the 
LEC administering the freeze program while the consumer is still on the 
line, e.g., during the initial telemarketing session, so that the 
consumer can personally request that a particular freeze be lifted. We 
believe that three-way calling will effectively prevent fraud because a 
three-way call establishes direct contact between the LEC and the 
subscriber.
    101. We decline to enumerate all acceptable procedures for lifting 
preferred carrier freezes. Rather, we encourage parties to develop new 
means of accurately confirming a subscriber's identity and intent to 
lift a preferred carrier freeze, in addition to offering written and 
oral authorization to lift preferred carrier freezes. Other methods 
should be secure, yet impose only the minimum burdens necessary on 
subscribers who wish to lift a preferred carrier freeze.
    102. The essence of the preferred carrier freeze is that a 
subscriber must specifically communicate his or her intent to request 
or lift a freeze. We therefore disagree with MCI that third-party 
verification of a carrier change alone should be sufficient to lift a 
preferred carrier freeze because it does not offer the subscriber any 
additional protection from slamming.
    103. We conclude that, depending on the circumstances, a carrier 
that is asked to lift a freeze should not be permitted to attempt to 
change the subscriber's decision to change carriers. This practice 
could violate the ``just and reasonable'' provisions of section 201(b). 
Much as in the context of executing carriers and carrier change 
requests, we think it is imperative to prevent anticompetitive conduct 
on the part of executing carriers and carriers that administer 
preferred carrier freeze programs. Carriers that administer freeze 
programs otherwise would have no knowledge at that time of a consumer's 
decision to change carriers, were it not for the carrier's position as 
a provider of switched access services. Therefore, LECs that receive 
requests to lift a preferred carrier freeze must act in a neutral and 
nondiscriminatory manner. To the extent that carriers use the 
opportunity with the customer to advantage themselves competitively, 
for example, through overt marketing, such conduct likely would be 
viewed as unreasonable under our rules.
vi. Information About Subscribers With Preferred Carrier Freezes
    104. We do not require LECs administering preferred carrier freeze 
programs to make subscriber freeze information available to other 
carriers because we expect that, particularly in light of our new 
preferred carrier freeze solicitation requirements, more subscribers 
should know whether or not there is a preferred carrier freeze in place 
on their carrier selection. We encourage LECs, however, to consider 
whether preferred carrier freeze indicators might be a part of any 
operational support system that is made available to new providers of 
local telephone service.
vii. When Subscribers Change LECs
    105. Based on the record developed on this issue, we conclude that 
when a subscriber switches LECs, he or she should request the new LEC 
to implement any desired preferred carrier freezes, even if the 
subscriber previously had placed a freeze with the original LEC. We are 
persuaded by the substantial number of LEC commenters asserting that it 
would be technically difficult or impossible to transfer information 
about existing preferred carrier freezes from the original LEC to the 
new LEC.
viii. Preferred Carrier Freezes of Local and IntraLATA Services
    106. We decline the suggestion of a number of commenters that we 
prohibit incumbent LECs from soliciting or implementing preferred 
carrier freezes for local exchange or intraLATA services until 
competition develops in a LEC's service area. We remain convinced of 
the value of preferred carrier freezes as an anti-slamming tool and do 
not wish to limit consumer access to this consumer protection device. 
We do recognize, however, that preferred carrier freezes can have a 
particularly adverse impact on the development of competition in 
markets soon to be or newly open to competition. We encourage parties 
to bring to our attention, or to the attention of the appropriate state 
commissions, instances where it appears that the intended effect of a 
carrier's freeze program is to shield that carrier's customers from any 
developing competition.
    107. We also make clear that states may adopt moratoria on the 
imposition or solicitation of intrastate preferred carrier freezes if 
they deem such action appropriate to prevent incumbent LECs

[[Page 7759]]

from engaging in anticompetitive conduct. We note that a number of 
states have imposed some form of moratorium on the implementation of 
preferred carrier freezes in their nascent markets for local exchange 
and intraLATA toll services. We find that states--based on their 
observation of the incidence of slamming in their regions and the 
development of competition in relevant markets, and their familiarity 
with those particular preferred carrier freeze mechanisms employed by 
LECs in their jurisdictions--may conclude that the negative impact of 
such freezes on the development of competition in local and intraLATA 
toll markets may outweigh the benefit to consumers.

IV. Ordering Clauses

    108. Accordingly, it is ordered that pursuant to sections 1, 4, 
201-205, and 258, of the Communications Act of 1934, as amended, 47 
U.S.C. 151, 154, 201-205, and 258, the policies, rules, and 
requirements set forth herein are adopted.
    109. It is further ordered that 47 CFR 64 is Amended as set forth 
below, effective 70 days after publication of the text thereof in the 
Federal Register, except that the following rules set forth below will 
not become effective until 90 days after publication of the text in the 
Federal Register: sections 64.1100(c), 64.1100(d), 64.1170, and 
64.1180.
    110. It is further ordered that the stay of the application of the 
Commission's verification rules to in-bound calls imposed in Policies 
and Rules Concerning Unauthorized Changes of Consumers' Long Distance 
Carriers, Order, 11 FCC Rcd 856 (1995) is lifted.
    111. It is further ordered that pursuant to section 1.429(d) of the 
Commission's rules, 47 CFR 1.429(d), U S WEST's Petition for 
Reconsideration is dismissed as being untimely filed.
    112. It is further ordered that a further Notice of Proposed 
Rulemaking is issued.\2\
---------------------------------------------------------------------------

    \2\ See the proposed rule published in the same separate part of 
this issue.
---------------------------------------------------------------------------

    113. 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.
    114. It is further ordered that the Commission's Office of Public 
Affairs, Reference Operations Division, shall send a copy of this 
Order, including the Final Regulatory Flexibility Analysis and the 
Initial Regulatory Flexibility Analysis, to the Chief Counsel for 
Advocacy of the Small Business Administration.
    115. The Order is adopted, and the requirements contained herein 
will become effective 70 days after publication of a summary in the 
Federal Register, except Secs. 64.1100(c), 64.1100(d), 64.1170, and 
64.1180 which contain information that is contingent upon approval by 
OMB. The effective date of Secs. 64.1100(c), 64.1100(d), 64.1170, and 
64.1180 is delayed until 90 days after publication in the Federal 
Register to enable carriers to develop and implement an alternative 
carrier dispute resolution mechanism involving an independent 
administrator. The Commission will publish a document in the Federal 
Register announcing the effective date for Secs. 64.1100(c), 
64.1100(d), 64.1170, and 64.1180.

List of Subjects in 47 CFR Part 64

    Communications common carriers, Consumer protection, 
Telecommunications.

Federal Communications Commission.
Magalie Roman Salas,
Secretary.

Rule Changes

    Part 64 of the Commission's Rules and Regulations, Chapter I of 
Title 47 of the Code of Federal Regulations, is amended as follows:

PART 64--[AMENDED]

    1. The authority citation for part 64 continues to read as follows:

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

    2. Revise Sec. 64.1100 to read as follows:


Sec. 64.1100  Changes in subscriber carrier selections.

    (a) No telecommunications carrier shall submit or execute a change 
on the behalf of a subscriber in the subscriber's selection of a 
provider of telecommunications service except in accordance with the 
procedures prescribed in this part. Nothing in this section shall 
preclude any State commission from enforcing these procedures with 
respect to intrastate services.
    (1) No submitting carrier shall submit a change on the behalf of a 
subscriber in the subscriber's selection of a provider of 
telecommunications service prior to obtaining:
    (i) authorization from the subscriber, and
    (ii) verification of that authorization in accordance with the 
procedures prescribed in Sec. 64.1150. For a submitting carrier, 
compliance with the verification procedures prescribed in this part 
shall be defined as compliance with sections (a) and (b) of this 
section, as well with Sec. 64.1150. The submitting carrier shall 
maintain and preserve records of verification of subscriber 
authorization for a minimum period of two years after obtaining such 
verification.
    (2) An executing carrier shall not verify the submission of a 
change in a subscriber's selection of a provider of telecommunications 
service received from a submitting carrier. For an executing carrier, 
compliance with the procedures prescribed in this part shall be defined 
as prompt execution, without any unreasonable delay, of changes that 
have been verified by a submitting carrier.
    (3) Commercial mobile radio services (CMRS) providers shall be 
excluded from the verification requirements of this part as long as 
they are not required to provide equal access to common carriers for 
the provision of telephone toll services, in accordance with 47 U.S.C. 
332(c)(8).
    (b) Where a telecommunications carrier is selling more than one 
type of telecommunications service (e.g., local exchange, intraLATA/
intrastate toll, interLATA/interstate toll, and international toll) 
that carrier must obtain separate authorization from the subscriber for 
each service sold, although the authorizations may be made within the 
same solicitation. Each authorization must be verified separately from 
any other authorizations obtained in the same solicitation. Each 
authorization must be verified in accordance with the verification 
procedures prescribed in this part.
    (c) Carrier liability for charges. Any submitting 
telecommunications carrier that fails to comply with the procedures 
prescribed in this part shall be liable to the subscriber's properly 
authorized carrier in an amount equal to all charges paid to the 
submitting telecommunications carrier by such subscriber after such 
violation, as well as for additional amounts as prescribed in 
Sec. 64.1170 of this part. The remedies provided in this part are in 
addition to any other remedies available by law.
    (d) Subscriber liability for charges. Any subscriber whose 
selection of telecommunications service provider is changed without 
authorization verified in accordance with the procedures set forth in 
this part is absolved of liability for charges imposed by the 
unauthorized carrier for service provided during the first 30 days 
after the unauthorized change. Upon being

[[Page 7760]]

informed by a subscriber that an unauthorized change has occurred, the 
authorized carrier, the unauthorized carrier, or the executing carrier 
shall inform the subscriber of this 30-day absolution period. The 
subscriber shall be absolved of liability for this 30-day period only 
if the subscriber has not already paid charges to the unauthorized 
carrier.
    (1) Any charges imposed by the unauthorized carrier on the 
subscriber after this 30-day period shall be paid by the subscriber to 
the authorized carrier at the rates the subscriber was paying to the 
authorized carrier at the time of the unauthorized change. Upon the 
subscriber's return to the authorized carrier, the subscriber shall 
forward to the authorized carrier a copy of any bill that contains 
charges imposed by the unauthorized carrier after the 30-day period of 
absolution. After the authorized carrier has re-rated the charges to 
reflect its own rates, the subscriber shall be liable for paying such 
re-rated charges to the authorized carrier.
    (2) If the subscriber has already paid charges to the unauthorized 
carrier, and the authorized carrier recovers such charges as provided 
in paragraph (c), the authorized carrier shall refund or credit to the 
subscriber any charges recovered from the unauthorized carrier in 
excess of what the subscriber would have paid for the same service had 
the unauthorized change not occurred, in accordance with the procedures 
set forth in Sec. 64.1170 of this part.
    (3) If the subscriber has been absolved of liability as prescribed 
by this section, the unauthorized carrier shall also be liable to the 
subscriber for any charge required to return the subscriber to his or 
her properly authorized carrier, if applicable.
    (e) Definitions. For the purposes of this part, the following 
definitions are applicable:
    (1) Submitting carrier. A submitting carrier is generally any 
telecommunications carrier that requests on the behalf of a subscriber 
that the subscriber's telecommunications carrier be changed, and seeks 
to provide retail services to the end user subscriber. A carrier may be 
treated as a submitting carrier, however, if it is responsible for any 
unreasonable delays in the submission of carrier change requests or for 
the submission of unauthorized carrier change requests, including 
fraudulent authorizations.
    (2) Executing carrier. An executing carrier is generally any 
telecommunications carrier that effects a request that a subscriber's 
telecommunications carrier be changed. A carrier may be treated as an 
executing carrier, however, if it is responsible for any unreasonable 
delays in the execution of carrier changes or for the execution of 
unauthorized carrier changes, including fraudulent authorizations.
    (3) Authorized carrier. An authorized carrier is generally any 
telecommunications carrier that submits a change, on behalf of a 
subscriber, in the subscriber's selection of a provider of 
telecommunications service with the subscriber's authorization verified 
in accordance with the procedures specified in this part.
    (4) Unauthorized carrier. An unauthorized carrier is generally any 
telecommunications carrier that submits a change, on behalf of a 
subscriber, in the subscriber's selection of a provider of 
telecommunications service but fails to obtain the subscriber's 
authorization verified in accordance with the procedures specified in 
this part.
    (5) Unauthorized change. An unauthorized change is a change in a 
subscriber's selection of a provider of telecommunications service that 
was made without authorization verified in accordance with the 
verification procedures specified in this part.
    3. Revise Sec. 64.1150 to read as follows:


Sec. 64.1150  Verification of orders for telecommunications service.

    (a) No telecommunications carrier shall submit a preferred carrier 
change order unless and until the order has first been confirmed in 
accordance with one of the following procedures:
    (b) The telecommunications carrier has obtained the subscriber's 
written authorization in a form that meets the requirements of 
Sec. 64.1160; or
    (c) The telecommunications carrier has obtained the subscriber's 
electronic authorization to submit the preferred carrier change order. 
Such authorization must be placed from the telephone number(s) on which 
the preferred carrier is to be changed and must confirm the information 
required in paragraph (a) of this section. 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 
preferred carrier change, including automatically recording the 
originating automatic numbering identification; or
    (d) An appropriately qualified independent third party has obtained 
the subscriber's oral authorization to submit the preferred carrier 
change order that confirms and includes appropriate verification data 
(e.g., the subscriber's date of birth or social security number). The 
independent third party must not be owned, managed, controlled, or 
directed by the carrier or the carrier's marketing agent; must not have 
any financial incentive to confirm preferred carrier change orders for 
the carrier or the carrier's marketing agent; and must operate in a 
location physically separate from the carrier or the carrier's 
marketing agent. The content of the verification must include clear and 
conspicuous confirmation that the subscriber has authorized a preferred 
carrier change; or
    (e) Any State-enacted verification procedures applicable to 
intrastate preferred carrier change orders only.
    4. Add Sec. 64.1160 to read as follows:


Sec. 64.1160  Letter of agency form and content.

    (a) A telecommunications carrier may use a letter of agency to 
obtain written authorization and/or verification of a subscriber's 
request to change his or her preferred carrier selection. A letter of 
agency that does not conform with this section is invalid for purposes 
of this part.
    (b) The letter of agency shall be a separate document (or 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 preferred carrier change. 
The letter of agency must be signed and dated by the subscriber to the 
telephone line(s) requesting the preferred 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 as 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 subscriber is authorizing a preferred carrier change by 
signing the check. The letter of agency language 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

[[Page 7761]]

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 preferred carrier change order;
    (2) The decision to change the preferred carrier from the current 
telecommunications carrier to the soliciting telecommunications 
carrier;
    (3) That the subscriber designates [insert the name of the 
submitting carrier] to act as the subscriber's agent for the preferred 
carrier change;
    (4) That the subscriber understands that only one 
telecommunications carrier may be designated as the subscriber's 
interstate or interLATA preferred interexchange carrier for any one 
telephone number. To the extent that a jurisdiction allows the 
selection of additional preferred carriers (e.g., local exchange, 
intraLATA/intrastate toll, interLATA/interstate toll, or international 
interexchange) the letter of agency must contain separate statements 
regarding those choices, although a separate letter of agency for each 
choice is not necessary; and
    (5) That the subscriber understands that any preferred carrier 
selection the subscriber chooses may involve a charge to the subscriber 
for changing the subscriber's preferred carrier.
    (f) Any carrier designated in a letter of agency as a preferred 
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. Add Sec. 64.1170 to read as follows:


Sec. 64.1170  Reimbursement procedures.

    (a) The procedures in this section shall apply only after a 
subscriber has determined that an unauthorized change has occurred, as 
defined by Sec. 64.1100(e)(5) of this part, and the subscriber has paid 
charges to an allegedly unauthorized carrier. Upon receiving 
notification from the subscriber or a carrier that a subscriber has 
been subjected to an unauthorized change and that the subscriber has 
paid charges to an allegedly unauthorized carrier, the properly 
authorized carrier must, within 30 days, request from the allegedly 
unauthorized carrier proof of verification of the subscriber's 
authorization to change carriers. Within ten days of receiving such 
request, the allegedly unauthorized carrier shall forward to the 
authorized carrier either:
    (1) Proof of verification of the subscriber's authorization to 
change carriers; or
    (2) The following:
    (i) An amount equal to all charges paid by the subscriber to the 
unauthorized carrier; and
    (ii) An amount equal to any charge required to return the 
subscriber to his or her properly authorized carrier, if applicable;
    (iii) Copies of any telephone bill(s) issued from the unauthorized 
carrier to the subscriber.
    (b) If an authorized carrier incurs any billing and collection 
expenses in collecting charges from the unauthorized carrier, the 
unauthorized carrier shall reimburse the authorized carrier for 
reasonable expenses.
    (c) Where a subscriber notifies the unauthorized carrier, rather 
than the authorized carrier, of an unauthorized subscriber carrier 
selection change, the unauthorized carrier must immediately notify the 
authorized carrier.
    (d) Subscriber refunds or credits. Upon receipt from the 
unauthorized carrier of the amount described in paragraph (a)(2)(i), 
the authorized carrier shall provide a refund or credit to the 
subscriber of all charges paid in excess of what the authorized carrier 
would have charged the subscriber absent the unauthorized change. If 
the authorized carrier has not received from the unauthorized carrier 
an amount equal to charges paid by the subscriber to the unauthorized 
carrier, the authorized carrier is not required to provide any refund 
or credit. The authorized carrier must, within 60 days after it 
receives notification of the unauthorized change, inform the subscriber 
if it has failed to collect any charges from the unauthorized carrier 
and inform the subscriber of his or her right to pursue a claim against 
the unauthorized carrier for a refund of all charges paid to the 
unauthorized carrier.
    (e) Restoration of premium programs. Where possible, the properly 
authorized carrier must reinstate the subscriber in any premium program 
in which that subscriber was enrolled prior to the unauthorized change, 
if that subscriber's participation in the premium program was 
terminated because of the unauthorized change. If the subscriber has 
paid charges to the unauthorized carrier, the properly authorized 
carrier shall also provide or restore to the subscriber any premiums to 
which the subscriber would have been entitled had the unauthorized 
change not occurred. The authorized carrier must comply with the 
requirements of this section regardless of whether it is able to 
recover from the unauthorized carrier any charges that were paid by the 
subscriber.
    6. Add Sec. 64.1180 to read as follows:


Sec. 64.1180  Investigation procedures.

    (a) The procedures in this section shall apply only after a 
subscriber has determined that an unauthorized change has occurred and 
such subscriber has not paid for charges imposed by the unauthorized 
carrier for the first 30 days after the unauthorized change, in 
accordance with Sec. 64.1100(d) of this part.
    (b) The unauthorized carrier shall remove from the subscriber's 
bill all charges that were incurred for service provided during the 
first 30 days after the unauthorized change occurred.
    (c) The unauthorized carrier may, within 30 days of the 
subscriber's return to the authorized carrier, submit to the authorized 
carrier a claim that the subscriber was not subjected to an 
unauthorized change, along with a request for the amount of charges for 
which the consumer was credited pursuant to paragraph (b) of this 
section and proof that the change to the subscriber's selection of 
telecommunications carrier was made with authorization verified in 
accordance with the verification procedures specified in this part.
    (d) The authorized carrier shall conduct a reasonable and neutral 
investigation of the claim, including, where appropriate, contacting 
the subscriber and the carrier making the claim.
    (e) Within 60 days after receipt of the claim and the proof of 
verification, the authorized carrier shall issue a decision on the 
claim to the subscriber and the carrier making the claim.
    (1) If the authorized carrier decides that the subscriber was not 
subjected to an unauthorized change, the authorized carrier shall place 
on the subscriber's bill a charge equal to the amount of charges for 
which the subscriber was previously credited pursuant to paragraph (b) 
of this section. Upon receiving this amount, the authorized carrier 
shall forward this amount to the carrier making the claim.
    (2) If the authorized carrier decides that the subscriber was 
subjected to an unauthorized change, the subscriber shall not be 
required to pay the charges for which he or she was previously 
absolved.
    7. Add Sec. 64.1190 to read as follows:

[[Page 7762]]

Sec. 64.1190  Preferred carrier freezes.

    (a) A preferred carrier freeze (or freeze) prevents a change in a 
subscriber's preferred carrier selection unless the subscriber gives 
the carrier from whom the freeze was requested his or her express 
consent. All local exchange carriers who offer preferred carrier 
freezes must comply with the provisions of this section.
    (b) All local exchange carriers who offer preferred carrier freezes 
shall offer freezes on a nondiscriminatory basis to all subscribers, 
regardless of the subscriber's carrier selections.
    (c) Preferred carrier freeze procedures, including any 
solicitation, must clearly distinguish among telecommunications 
services (e.g., local exchange, intraLATA/intrastate toll, interLATA/
interstate toll, and international toll) subject to a preferred carrier 
freeze. The carrier offering the freeze must obtain separate 
authorization for each service for which a preferred carrier freeze is 
requested.
    (d) Solicitation and imposition of preferred carrier freezes.
    (1) All carrier-provided solicitation and other materials regarding 
preferred carrier freezes must include:
    (i) An explanation, in clear and neutral language, of what a 
preferred carrier freeze is and what services may be subject to a 
freeze;
    (ii) A description of the specific procedures necessary to lift a 
preferred carrier freeze; an explanation that these steps are in 
addition to the Commission's verification rules in Secs. 64.1150 and 
64.1160 for changing a subscriber's preferred carrier selections; and 
an explanation that the subscriber will be unable to make a change in 
carrier selection unless he or she lifts the freeze; and
    (iii) An explanation of any charges associated with the preferred 
carrier freeze.
    (2) No local exchange carrier shall implement a preferred carrier 
freeze unless the subscriber's request to impose a freeze has first 
been confirmed in accordance with one of the following procedures:
    (i) The local exchange carrier has obtained the subscriber's 
written and signed authorization in a form that meets the requirements 
of Sec. 64.1190(d)(3); or
    (ii) The local exchange carrier has obtained the subscriber's 
electronic authorization, placed from the telephone number(s) on which 
the preferred carrier freeze is to be imposed, to impose a preferred 
carrier freeze. The electronic authorization should confirm appropriate 
verification data (e.g., the subscriber's date of birth or social 
security number) and the information required in 
Secs. 64.1190(d)(3)(ii)(A) through (D). Telecommunications carriers 
electing to confirm preferred carrier freeze orders 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 preferred carrier freeze request, including 
automatically recording the originating automatic numbering 
identification; or
    (iii) An appropriately qualified independent third party has 
obtained the subscriber's oral authorization to submit the preferred 
carrier freeze and confirmed the appropriate verification data (e.g., 
the subscriber's date of birth or social security number) and the 
information required in Sec. 64.1190(d)(3)(ii)(A) through (D). The 
independent third party must not be owned, managed, or directly 
controlled by the carrier or the carrier's marketing agent; must not 
have any financial incentive to confirm preferred carrier freeze 
requests for the carrier or the carrier's marketing agent; and must 
operate in a location physically separate from the carrier or the 
carrier's marketing agent. The content of the verification must include 
clear and conspicuous confirmation that the subscriber has authorized a 
preferred carrier freeze.
    (3) Written authorization to impose a preferred carrier freeze. A 
local exchange carrier may accept a subscriber's written and signed 
authorization to impose a freeze on his or her preferred carrier 
selection. Written authorization that does not conform with this 
section is invalid and may not be used to impose a preferred carrier 
freeze.
    (i) The written authorization shall comply with Secs. 64.1160(b), 
(c), and (h) of the Commission's rules concerning the form and content 
for letters of agency.
    (ii) At a minimum, the written authorization must be printed with a 
readable type of sufficient size to be clearly legible and must contain 
clear and unambiguous language that confirms:
    (A) The subscriber's billing name and address and the telephone 
number(s) to be covered by the preferred carrier freeze;
    (B) The decision to place a preferred carrier freeze on the 
telephone number(s) and particular service(s). To the extent that a 
jurisdiction allows the imposition of preferred carrier freezes on 
additional preferred carrier selections (e.g., for local exchange, 
intraLATA/intrastate toll, interLATA/interstate toll service, and 
international toll), the authorization must contain separate statements 
regarding the particular selections to be frozen;
    (C) That the subscriber understands that she or he will be unable 
to make a change in carrier selection unless she or he lifts the 
preferred carrier freeze; and
    (D) That the subscriber understands that any preferred carrier 
freeze may involve a charge to the subscriber.
    (e) Procedures for lifting preferred carrier freezes. All local 
exchange carriers who offer preferred carrier freezes must, at a 
minimum, offer subscribers the following procedures for lifting a 
preferred carrier freeze:
    (1) A local exchange carrier administering a preferred carrier 
freeze must accept a subscriber's written and signed authorization 
stating her or his intent to lift a preferred carrier freeze; and
    (2) A local exchange carrier administering a preferred carrier 
freeze must accept a subscriber's oral authorization stating her or his 
intent to lift a preferred carrier freeze and must offer a mechanism 
that allows a submitting carrier to conduct a three-way conference call 
with the carrier administering the freeze and the subscriber in order 
to lift a freeze. When engaged in oral authorization to lift a 
preferred carrier freeze, the carrier administering the freeze shall 
confirm appropriate verification data (e.g., the subscriber's date of 
birth or social security number) and the subscriber's intent to lift 
the particular freeze.

[FR Doc. 99-3657 Filed 2-12-99; 8:45 am]
BILLING CODE 6712-01-P