[Federal Register Volume 64, Number 30 (Tuesday, February 16, 1999)]
[Proposed Rules]
[Pages 7763-7770]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-3658]



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

[[Page 7763]]



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: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: In the Further Notice of Proposed Rulemaking (FNPRM) portion 
of the Second Report and Order (Order), we seek comment on several 
proposals to further strengthen our slamming rules, including a 
proposal to require unauthorized carriers to remit to authorized 
carriers certain amounts in addition to the amount paid by slammed 
subscribers, as well as proposals for preventing the confusion and 
slamming that results from resellers using the same carrier 
identification codes (CICs) as their facilities-based carriers.

DATES: Comments on proposed rules 47 CFR 64.1100, 64.1170 and 64.1195, 
which are contained in the FNPRM, and proposed information collections 
are due on or before March 18, 1999. Reply comments are due on or 
before April 2, 1999. Written comments by OMB on the proposed 
information collections are due on or before April 19, 1999. Comments 
may be filed using the Commission's Electronic Comment Filing System 
(ECFS) or by filing paper copies.

ADDRESSES: Comments and reply comments must be sent to the Commission's 
Secretary, Magalie Roman Salas, Office of the Secretary, Federal 
Communications Commission, 445 12th St., S.W., TWA-325, Washington, 
D.C. 20554. In addition to filing comments with the Secretary, a copy 
of any comments on the information collections contained herein should 
be submitted to Judy Boley, Federal Communications Commission, Room 1-
C804, 445 12th Strteet, SW, Washington, DC 20554, or via the Internet 
to [email protected], and to Timothy Fain, OMB Desk Officer, 10236 NEOB, 
725-17th Street, N.W., Washington, DC 20503 or via the Internet to 
[email protected].

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

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's FNPRM 
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 FNPRM 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 NPRM contains a proposed 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 information collections 
contained in this NPRM, as required by the Paperwork Reduction Act of 
1995, Public Law 104-13. Public and agency comments are due at the same 
time as other comments on this NPRM; OMB notification of action is due 
April 19, 1999. Comments should address: (a) whether the proposed 
collection of information is necessary for the proper performance of 
the functions of the Commission, including whether the information 
shall have practical utility; (b) the accuracy of the Commission's 
burden estimates; (c) ways to enhance the quality, utility, and clarity 
of the information collected; and (d) ways to minimize the burden of 
the collection of information on the respondents, including the use of 
automated collection techniques or other forms of information 
technology.
    OMB Approval Number: 3060-0787.
    Title: Implementation of the Subscriber Carrier Selection Changes 
Provisions of the Telecommunications Act of 1996; Policies and Rules 
Concerning 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.

----------------------------------------------------------------------------------------------------------------
                                                                                  Estimated time
                   Annual proposed collections                      Respondents    per response    Total burden
                                                                                      (hours)
----------------------------------------------------------------------------------------------------------------
1. Carrier Liability............................................           1,800               2           3,600
2. Registration.................................................           1,800               2           3,600
3. Reporting....................................................           1,800               2           3,600
----------------------------------------------------------------------------------------------------------------

    Total Annual Burden: 10,800 hours.
    Estimated costs per respondent: N/A.
    Needs and Uses: The information will enable the Commission to 
further deter slamming and track carriers.

Summary of Further Notice of Proposed Rulemaking

I. Background

    1. The rules proposed in the FNPRM are aimed at eliminating 
slamming by attacking the problem on several fronts, including keeping 
profits out of the pockets of slamming carriers, imposing more rigorous 
verification procedures, and broadening the scope of our rules to 
encompass all carriers. We seek additional comment on several issues 
that either were not raised sufficiently in the Order or that require 
additional comment for resolution.

II. Discussion

A. Recovery of Additional Amounts From Unauthorized Carriers

    2. We seek comment on whether the following proposals discussed 
below are within our jurisdiction and consistent with Congress' intent 
embodied in section 258 of the Act. Where a subscriber has paid charges 
to the unauthorized carrier, we propose that the authorized carrier 
collect from the unauthorized carrier double the amount of charges paid 
by the subscriber during the first 30 days after the unauthorized 
change. Where the subscriber has not paid charges to the unauthorized 
carrier, we propose to permit the authorized carrier to collect from 
the unauthorized carrier the amount that would have been billed to the 
subscriber during the first 30 days after the unauthorized change. 
Alternatively, we seek comment on whether the authorized carrier's 
recovery under this proposal should

[[Page 7764]]

equal the amount that the authorized carrier would have billed the 
subscriber during that 30-day time period absent the unauthorized 
change. We note that the rules adopted in the Order require that any 
charges imposed by the unauthorized carrier after the 30-day absolution 
period be paid by the subscriber to the authorized carrier at the 
authorized carrier's rates.
    3. We tentatively conclude that the Commission has the authority to 
permit these additional payments by slamming carriers, based on the 
language of section 258, which provides that ``the remedies provided by 
this section are in addition to any other remedies available by law.'' 
The Commission has additional 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.'' We tentatively 
conclude that permitting an authorized carrier to collect the above-
described amounts from the unauthorized carrier would help to deter 
slamming by making slamming so unprofitable that carriers will cease 
practicing it. We seek comment on these tentative conclusions.

B. Resellers and CICs

    4. Misunderstandings may arise due to the use of CICs, which are 
used by LECs to identify different IXCs. Because CICs are issued by the 
North American Numbering Plan Administrator (NANPA) to facilities-based 
IXCs only, switchless resellers do not have their own CICs, but rather 
use the CICs of their underlying facilities-based carriers. The fact 
that resellers do not have their own CICs results in two slamming-
related problems: (1) the ``soft slam;'' and (2) the misidentification 
of a reseller as the underlying carrier.
    5. A ``soft slam'' occurs when a subscriber is changed, without 
authorization, to a carrier that uses the same CIC as his or her 
authorized carrier. When a subscriber changes from a facilities-based 
IXC to a reseller of that facilities-based IXC's services, or in any 
situation in which a subscriber changes to another carrier that has the 
same CIC as the previous carrier, the execution of the change is 
performed by the facilities-based IXC, not the LEC. The soft slam is 
therefore particularly problematic because it bypasses the LEC and 
enables a slamming reseller to bypass a subscriber's preferred carrier 
freeze protection. Preferred carrier freeze protection, where the LEC 
will change a subscriber's carrier only after it receives express 
written or oral consent from that subscriber to lift the freeze, will 
not be triggered by a soft slam. Further complications arise because 
the name of the facilities-based carrier may continue to appear on the 
subscriber's bill, giving the subscriber no indication that his or her 
preferred carrier has been changed.
    6. We seek comment on the issue of whether switchless resellers 
should be required to have their own CICs or some other identifier that 
would distinguish them from the underlying facilities-based carriers 
and allow the consumer to ensure that slamming has not occurred. We 
seek comment on three options: (1) require each reseller to obtain a 
CIC; (2) require the creation for each reseller of a ``pseudo-CIC,'' 
that is, digits that would be appended to the underlying carrier's own 
CIC for identification of the reseller; or (3) require underlying 
facilities-based carriers to modify their systems to prevent 
unauthorized changes from occurring if a subscriber has a freeze on the 
account and to allow identification of resellers on the consumer's 
bill. We also seek comment on other benefits, unrelated to slamming, 
that may result from adoption of any of these options. See the full 
text of the FNPRM for a more detailed discussion on CICs.
i. Jurisdiction
    7. We tentatively conclude that Commission regulations requiring 
resellers to be identified on their subscribers' monthly bills would be 
consistent with our authority under sections 201(b) and 4(i). The 
Commission has 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.'' Moreover, we tentatively conclude 
that the plain language of section 251(e)(1) gives the Commission 
authority to promulgate regulations of the type proposed below for 
changing the North American Numbering Plan (NANP). We also tentatively 
conclude that the Commission's authority to change the NANP includes 
changes to such documents as the CIC Assignment Guidelines as might be 
required by the Commission in this proceeding. We request comments on 
these tentative conclusions.
ii. Option 1: Require Resellers to Obtain Individual CICs
    8. As our first option, we seek comment on requiring each reseller 
to obtain an individual CIC and on any changes to the NANP that would 
be required to make such a requirement effective. First, we request 
comment on whether we should make the purchase of translations access 
by resellers mandatory in order to deter slamming. We also ask 
commenting parties to address how effective this option would be in 
allowing consumers and carriers to detect slamming. Further, we seek 
comment on whether this option has advantages because it does not 
require facilities-based carriers to modify their existing billing and 
collection systems and will not cause a CIC shortage now that the 
Commission has ended the transition period to four-digit CICs. We 
request comment on the CIC Ad Hoc Working Group's recommendation to 
allow resellers to purchase translations access instead of Feature 
Group D trunk access.
    9. We request further comment on this option's impact on the 
``competitively neutral'' requirements of section 251(e)(2), in lieu of 
the fact that translations access is currently bundled together with 
Feature Group D trunk access. Specifically, should resellers pay the 
full Feature Group D trunk access rates for translations access in 
order to ``level the playing field'' with facilities-based carriers? 
How long of a transition period should we require? Should resellers be 
required to adhere to the same CIC Assignment Guidelines as facilities-
based carriers? What will be the effect on CIC conservation if the 
Commission requires all resellers to obtain CICs? Commenting parties 
are encouraged to include empirical information with their comments.
iii. Option 2: Require the Use of ``Pseudo-CICs'' for Resellers
    10. We seek comment on use of the pseudo-CIC to prevent switchless 
resellers from circumventing a subscriber's preferred carrier freeze 
protection through soft slams. We also request comment on the liability 
of the pseudo-CIC option as a method to identify particular resellers 
of a facilities-based carrier's services so that consumers can detect 
slamming if it occurs. We request comment on recovering the cost of 
implementing the pseudo-CIC option, which would be borne primarily by 
ILECs and other carriers or entities that provide billing and 
collection services to resellers. We request further comment on the 
need to standardize pseudo-CIC assignments,

[[Page 7765]]

particularly in cases where a reseller resells services from multiple 
facilities-based carriers. Should a single pseudo-CIC suffix be used by 
all facilities-based carriers to identify the same reseller, so that 
the 0001 suffix applies to reseller ``A'' regardless of the facilities-
based carrier's CIC? Should the NANPA be required to administrate 
pseudo-CICs, to ensure uniformity? Finally, we request comment on the 
impact of pseudo-CIC implementation on section 251(e)(2)'s requirement 
for competitive neutrality, when determining the cost of its 
administration.
iv. Option 3: Require Facilities-Based Carriers To Modify Their Systems
    11. We seek comment on requiring a facilities-based carrier to 
modify its system to enable it to execute preferred carrier freeze 
protection only for subscribers who are presubscribed to the services 
of either the facilities-based carrier or one of its switchless 
resellers. We propose that LECs be required to provide to each 
facilities-based IXC certain freeze information about subscribers of 
the facilities-based carrier or subscribers of any of the facilities-
based carriers' resellers. We seek comment on this proposal. We also 
seek comment on how frequently the facilities-based IXC would need to 
receive information from the LEC in order to prevent soft slams, as 
well as undue delays in legitimate carrier changes. We seek comment on 
the burden this proposal would impose on both facilities-based IXCs and 
LECs.
    12. We also seek comment on whether facilities-based carriers 
should be required to modify their billing records to allow 
identification of resellers on the consumer's bill, whether such bill 
is issued from the reseller, the LEC, or a billing agent. We also seek 
comment on whether, if the subscriber's carrier has been changed but 
the CIC remains the same, such subscriber's bill should include 
information on how to contact the underlying facilities-based carrier 
if the subscriber believes that an unauthorized change has occurred. We 
seek comment on whether facilities-based carriers possess the 
information needed to distinguish resellers of their services on 
subscribers' monthly telephone bills. We ask for comment on the cost 
and effort associated with placing on consumers' bills information 
based on the reseller usage information already maintained by 
facilities-based carriers. Specifically, how expensive and difficult 
would it be for facilities-based carriers to modify their existing 
billing records to provide the means to identify on the subscribers' 
monthly bills the specific resellers responsible for the service? 
Finally, we request comment on the impact of this proposed option on 
section 251(e)(2)'s requirement for competitive neutrality, when 
determining the cost of its administration.
    13. We also seek comment on any other proposals that would help to 
distinguish the identities of resellers from their facilities-based 
carriers, both for purposes of identification on subscriber bills and 
to prevent soft slams. We seek comment on additional CIC proposals, as 
well as on methods that would not involve CICs, if such proposals would 
attain both goals of properly identifying resellers and preventing 
switchless resellers from slamming subscribers.
    14. We also seek comment on other benefits unrelated to slamming 
remedies that may result from the adoption of any of these options. For 
example, we ask commenters to describe how the enhanced identification 
of resellers may allow more efficient billing or routing of calls. In 
addition, we seek comment on whether such identification would promote 
competition by giving greater emphasis to the identity of resellers 
that provide service.

C. Independent Third Party Verification

    15. We tentatively conclude that we should revise our rules for 
independent third party verification. NAAG suggests in its comments 
that independent third party verification should be separated 
completely from the sales transaction, so that a carrier would not be 
permitted to conduct a three-way call to connect the subscriber to the 
third party verifier. NAAG argues that a verification call initiated by 
the carrier is not truly independent because the subscriber would 
remain under the influence of the carrier's telemarketer during the 
verification. We seek comment on whether, if a telemarketing carrier is 
present during the third party verification, such verification can be 
considered ``independent.''
    16. We seek comment on the use of automated third party 
verification systems, as opposed to ``live'' operator verifiers. We 
seek comment on whether automated third party verification systems 
would comply with our rules concerning independent third party 
verification, as well as with the intent behind our rules to produce 
evidence independent of the telemarketing carrier that a subscriber 
wishes to change his or her carrier. We also note that one commenter, 
VoiceLog, offers an additional system called a ``live-scripted'' 
version. We seek comment on whether such a ``live-scripted'' automated 
verification system would be at odds with our rules because it permits 
the carrier itself, who is not an independent party located in a 
separate physical location, to solicit the subscriber's confirmation. 
We also seek comment on the advantages and disadvantages of using 
automated third party verification and live operator third party 
verification.
    17. We seek comment on the content of the third party verification 
itself. For example, should the independent third party verifier be 
required or permitted to provide certain information in addition to 
confirming a subscriber's carrier change request? We also seek comment 
on whether independent third party verifiers should be permitted to 
dispense information on preferred carrier freeze procedures. We seek 
comment on any benefits that might be gained from permitting or 
requiring third party verifiers to provide additional information. We 
also seek comment on whether such a requirement would compromise the 
independent nature of the verification, or on whether such a 
requirement is necessary. Finally, we seek comment on any other 
proposals that would improve the quality of the third party 
verification.

D. Carrier Changes Using the Internet

    18. As stated in the Order, all carrier changes must be confirmed 
in accordance with one of the three verification methods in our rules: 
written LOA, electronic authorization, or independent third party 
verification. We seek comment on whether a carrier change submitted 
over the Internet could be considered a valid LOA under our 
verification rules. We seek comment on the extent to which current 
carrier change requests submitted over the Internet contain all the 
required elements of a valid LOA in accordance with our rules. We have 
particular concerns about how an Internet sign-up system satisfies the 
signature requirement, which is one of the most important 
identification requirements of the written LOA. The electronic forms 
that we have seen generally contain a section called the ``electronic 
signature'' that serves as a substitute for the consumer's written 
signature. Some electronic signatures consist of the consumer typing 
his or her name into the box. Other electronic signatures consist of 
the consumer submitting the form electronically to the carrier. We 
tentatively conclude that electronic signatures used in Internet 
submissions of carrier changes would not comply with the signature 
requirement for LOAs. We believe that the electronic signature fails to 
identify the ``signer'' as

[[Page 7766]]

the actual individual whose name has been ``signed'' to the Internet 
form. We also believe that the electronic signature fails to identify 
the ``signer'' as an individual who is actually authorized to make 
telecommunications decisions. For example, there appear to be few 
safeguards to prevent someone from simply typing another person's name 
into the field for the electronic signature. There would be no telltale 
variations in handwriting to distinguish one electronic signature from 
another. We seek comment on these tentative conclusions, and seek 
comment generally on how carriers are dealing with the above-identified 
problems or how our rules should be modified to account for these 
differences.
    19. We also seek comment on what additional information would 
provide sufficient consumer protection from an unscrupulous carrier. 
For example, some carriers will accept carrier changes using the 
Internet if subscribers submit their credit card numbers for billing 
purposes. We seek comment on whether obtaining a subscriber's credit 
card number would provide sufficient proof that a subscriber authorized 
a carrier change and that the submitting person is actually the 
subscriber. We seek comment on the extent to which a subscriber would 
be protected by the consumer protection aspects that accompany the use 
of credit cards. We also seek comment on whether carrier changes 
submitted over the Internet should require a subscriber to include 
certain personal information, such as social security number or 
mother's maiden name, to ensure that only the subscriber may change his 
or her own carrier. We seek comment on whether requiring the submission 
of these types of information would be sufficient to prevent slamming 
using the Internet, without jeopardizing the subscriber's privacy and 
other interests.
    20. To the extent that a carrier change using the Internet is not a 
valid LOA, then at a minimum, a carrier using such a method of 
solicitation must verify in accordance with our rules. That is, the 
carrier must either obtain a valid written LOA, or confirm the sale 
with electronic authorization or independent third party verification. 
We seek comment on whether additional methods of verification might be 
particularly appropriate for use by carriers who solicit subscribers 
over the Internet.
    21. We also have general concerns about the content of the 
solicitation using the Internet. For example, some IXC webpages state 
that in changing to that IXC's long distance service, the consumer also 
agrees to change to the IXC's intraLATA toll service where applicable. 
These carriers do not give consumers the option of choosing only 
interLATA service by that carrier, but instead require the consumer to 
accept both interLATA and intraLATA toll service from that IXC. We 
tentatively conclude that such statements would be in violation of our 
rule that requires LOAs to contain separate statements regarding 
choices of interLATA and intraLATA toll service. We seek comment on 
this tentative conclusion and on any other problems that may result 
from carrier use of the Internet to change subscribers' carriers.
    22. Finally, we seek comment on the extent to which subscribers may 
use the Internet to request or lift preferred carrier freezes. We have 
the same general above-mentioned concerns about whether this method 
would identify the submitting party as the actual subscriber whose 
service would be affected by the imposition or lifting of the preferred 
carrier freeze. We also seek comment on the verification procedures 
that should apply. Should subscribers requesting preferred carrier 
freezes over the Internet verify their requests in the same manner as 
requests given directly by telephone to a LEC? LECs should, at a 
minimum, provide subscribers with the option to lift freezes using 
either a written LOA or a three-way call, but that they may offer 
additional options. Could LECs provide a simple and secure method for 
subscribers to impose and lift their freezes using the Internet? We 
seek comment on any other uses of the Internet that would promote 
efficiency and convenience for both carriers and consumers in changing 
telecommunications carriers and other related activities.

E. Definition of ``Subscriber''

    23. Section 258 of the Act and our implementing rules require that 
the carrier obtain authorization from a subscriber before making a 
switch. Neither the Act nor our rules define the term ``subscriber'' 
for this purpose. We seek comment on how a subscriber should be 
defined, in light of our goals of consumer protection and promotion of 
competition. SBC suggests that the term ``subscriber'' should include 
``any person, firm, partnership, corporation, or lawful entity that is 
authorized to order telecommunications services supplied by a 
telecommunications services provider,'' so that carriers could obtain 
authorization from whomever at the business or residence is authorized 
to make the purchasing decision. In the 1995 Report and Order, we 
determined that the only individual qualified to authorize a change in 
carrier selection is the ``telephone line subscriber,'' although we did 
not specifically define the term. We believe that allowing the named 
party on the bill to designate additional persons in the household to 
make telecommunications decisions could promote competition because 
carriers would be able to solicit more than one person in a household. 
We also believe that consumers would find such an arrangement 
convenient because it would allow more than one person to make 
telecommunications decisions, while still giving the named party 
control over which members of the household may make changes to 
telecommunications service. A spouse named on the bill could therefore 
designate the other spouse as being authorized to make decisions 
regarding telecommunications service, although their minor children 
would not be authorized to make such decisions.
    24. On the other hand, we are concerned that adoption of such a 
proposal could lead to an increase in slamming. It is unclear, for 
example, how a marketing carrier would know if the person who has 
authorized a carrier change is in fact authorized to order 
telecommunications services. We are concerned that a slamming carrier 
could simply submit changes requested by unauthorized persons and claim 
that it thought that those persons were authorized. Furthermore, such a 
proposal presumably would require executing carriers to not only 
maintain lists of persons other than the named party who are authorized 
to make telecommunications decisions, but also to check each carrier 
change request against these lists to determine if the person who 
authorized the carrier change is also authorized to make decisions. We 
believe that this could be an unreasonable burden on the executing 
carrier.
    25. We also seek comment on the current practices of carriers with 
regard to which members of a household are permitted to make changes to 
telecommunications service. Carriers who submit proposals should 
include an explanation of how their present systems operate and the 
advantages and disadvantages of their proposals, as opposed to their 
current procedures. We seek comment on this and other proposals to 
define the term ``subscriber'' in order to maximize consumer 
protection, provide consumer convenience, and promote competition in 
telecommunications services.

F. Submission of Reports by Carriers

    26. We seek comment on whether we should require each carrier to 
submit to the Commission a report on the number

[[Page 7767]]

of complaints of unauthorized changes in telecommunications providers 
that are submitted to the carrier by its subscribers. This concept is 
based on a provision in the Senate's anti-slamming bill. Early warning 
about slamming carriers will enable the Commission to take 
investigative action, where warranted, to stop slamming as soon as 
possible. We seek comment on the potential benefits of this reporting 
requirement and on whether such benefits outweigh the burdens on 
carriers. If the Commission were to adopt a reporting requirement, we 
seek comment on the frequency of filing such a report.

G. Registration Requirement

    27. We seek comment on whether the Commission should impose a 
registration requirement on carriers who wish to provide interstate 
telecommunications service. Such a registration requirement could help 
to prevent entry into the telecommunications marketplace by entities 
that are either unqualified or that have the intent to commit fraud. We 
propose that any telecommunications carrier that provides or seeks to 
provide interstate telecommunications service should register with the 
Commission. We seek comment on the information that the registration 
should contain. We propose that the registration should contain, at a 
minimum, the carrier's business name(s); the names and addresses of all 
officers and principals; verification that such officers and principals 
have no prior history of committing fraud; and verification of the 
financial viability of the carrier. To the extent that the Commission 
already possesses some of this information, we seek comment on whether 
the Commission should consolidate the collection of the above-described 
information with other existing collection mechanisms, in order to 
lessen the burden on carriers. We tentatively propose that this 
registration requirement apply not just to new entrants but to all 
entities that offer telecommunications services. We also seek comment 
on the Commission's jurisdiction to require carriers to file a 
registration in order to provide interstate telecommunications service.
    28. We tentatively conclude that the Commission should revoke or 
suspend, after appropriate notice and opportunity to respond, the 
operating authority of those carriers that fail to file a registration 
or that provide false or misleading information in their registration. 
Many states have authority to revoke carriers' operating licenses with 
regard to the provision of intrastate services. These states' 
revocation powers are limited to prohibiting carriers from operating 
within one state, which permits unscrupulous carriers to move to a 
different state to offer service. The revocation power proposed herein 
would enable the Commission to prevent an unscrupulous interstate 
interexchange carrier from operating nationwide. We seek comment on 
whether such penalty is appropriate in these situations, as well as in 
situations where the Commission finds that the provision of 
telecommunications service by a particular carrier would be contrary to 
the public interest. We also tentatively conclude that a carrier has an 
affirmative duty to ascertain whether another carrier has filed a 
registration with the Commission prior to offering service to that 
carrier. This would further check the ability of unscrupulous carriers 
to enter the marketplace. If we were to adopt this requirement, we 
would certainly facilitate the ability of a carrier to check the 
registration status of another carrier. We seek comment on what penalty 
the Commission should impose on carriers that fail to determine the 
registration status of other carriers before providing them with 
service. We believe that the penalty should not be as severe as the 
penalty to be imposed on carriers that fail to file valid 
registrations. We tentatively conclude that these penalties will 
protect consumers by ensuring that unqualified and unscrupulous 
carriers do not profit from the provision of telecommunications 
services. We seek comment on whether the consumer benefits of these 
proposals would outweigh the burden on carriers of filing 
registrations. We seek comment on these proposals and on other 
proposals that would prevent carriers that have a history of fraud or 
are otherwise unqualified from providing telecommunications services.

H. Third Party Administrator for Preferred Carrier Changes and 
Preferred Carrier Freezes

    29. We seek further comment on the implementation by the industry 
of a comprehensive system in which an independent third party would 
administer carrier changes, verification, and preferred carrier 
freezes, as well as the dispute resolution functions mentioned above. 
In the Further Notice and Order, the Commission sought comment on the 
use of an independent third party to execute carrier changes neutrally 
in order to reduce carrier change disputes that might arise if ILECs 
continue to execute changes. Many commenters responded in support of an 
independent third party administrator for carrier changes and even 
verification because such a party would have incentive to administer 
carrier changes in a neutral and accurate manner. Although we agree 
that many of the commenters' contentions have merit, we conclude that 
the record before us is not fully developed to support the creation of 
a new and independent agent to handle execution functions at this time. 
Therefore we seek further comment on the development and implementation 
of a third party administrator for these functions. We note that any 
industry-supported neutral party must administer carrier change 
functions in accordance with the Commission's rules and seek comment on 
how to ensure that the industry's implementation of such a neutral 
third party for these functions would be consistent with the 
Commission's rules, policies, and practices.
    30. An independent third party with broader responsibilities, such 
as administration of carrier changes, verification, and preferred 
carrier freezes, may be useful in addressing concerns raised by the 
commenters about potential anticompetitive practices in this area. 
Although we have concluded that the ability of the LECs to act 
anticompetitively while executing carrier changes is limited, we find 
that the concept of an independent third party for administration of 
carrier changes and preferred carrier freezes is potentially viable. 
Most of the commenters who support such a system, however, are not 
specific about how such a system might work, nor do they offer concrete 
proposals for funding such an administrative scheme. These comments 
fail to provide sufficient detail about the actual implementation and 
funding for a third party administrator system necessary for the 
Commission to mandate at this time. Furthermore, the commenters were 
unable to come to a consensus as to the actual duties of the 
independent third party administrator. Several carriers state that the 
third party administrator would need electronic interconnections with 
every carrier to be able to receive and process carrier changes and 
preferred carrier freezes. On the other hand, TRA suggests that the 
third party administrator should only monitor compliance and document 
execution of carrier changes and preferred carrier freezes, but that it 
should not actually execute carrier changes and preferred carrier 
freezes. We seek comment on concrete suggestions for the implementation 
of a third party administrator that are workable and cost-effective. 
Proposals for such third

[[Page 7768]]

party administration should include specific and detailed information 
regarding the cost of setting up such a system.

III. Conclusion

    31. In the Further Notice of Proposed Rulemaking, we seek comment 
on several proposals to further strengthen our slamming rules, 
including a proposal to require unauthorized carriers to remit to 
authorized carriers certain amounts in addition to the amount paid by 
slammed subscribers, as well as proposals for preventing the confusion 
and slamming that results from resellers using the same CICs as their 
facilities-based carriers.

IV. Procedural Matters

I. Initial Regulatory Flexibility Analysis

    32. As required by the Regulatory Flexibility Act (RFA), the 
Commission has prepared this present Initial Regulatory Flexibility 
Analysis (IRFA) of the possible significant economic impact on small 
entities by the policies and rules proposed in the Order and FNPRM. 
Written public comments are requested on this IRFA. Comments must be 
identified as responses to the IRFA and must be filed by the deadlines 
for comments on the FNPRM provided below in the Comment Filing 
Procedures section. The Commission will send a copy of the Order and 
FNPRM, including this IRFA, to the Chief Counsel for Advocacy of the 
Small Business Administration. In addition, the Order and FNRPM and 
IRFA (or summaries thereof) will be published in the Federal Register.
i. Need for, and Objectives, of Proposed Rules.
    33. The Commission, in its efforts to protect consumers from 
unauthorized switching of preferred carriers, and to implement 
provisions of the Telecommunications Act of 1996 pertaining to illegal 
changes in subscriber carrier selections, is issuing this Further 
Notice of Proposed Rulemaking. Under the Act and the proposed rules, a 
small entity that violates the Commission's carrier change verification 
rules may be liable to an authorized carrier for double the amount of 
charges paid to the slamming entity by a slammed subscriber or for the 
amount for which the slammed subscriber was absolved. Small entities 
may be affected by the proposals for modifying the independent third 
party verification process; verifying carrier changes made on the 
Internet; adopting a definition of ``subscriber;'' requiring carriers 
to submit to the Commission a report on the number of slamming 
complaints received by them; imposing a registration requirement; and 
modifications of the CIC process.
ii. Legal Basis
    34. The Order and FNPRM are adopted pursuant to sections 1, 4(i), 
4(j), 201-205, 258, and 303(r) of the Communications Act of 1934, as 
amended, 47 U.S.C. 151, 154(i), 154(j), 201-205, 258, 303(r).
iii. Description and Estimates of the Number of Small Entities to Which 
Rules Will Apply
    35. In the FRFA, associated with the Order, we have provided a 
detailed description of small entities (See Federal Register Summary of 
Order).1 Those entities include wireline carriers, local 
exchange carriers, small incumbent local exchange carriers, 
interexchange carriers, competitive access providers, resellers, and 
wireless carriers. We hereby incorporate those detailed descriptions by 
reference.
---------------------------------------------------------------------------

    \1\ Published in the Rules section of this issue.
---------------------------------------------------------------------------

iv. Summary of Projected Reporting, Recordkeeping, and Other Compliance 
Requirements
    36. Liability. The proposed rules would permit authorized carriers 
to recover from unauthorized carriers double the amount of charges paid 
by slammed subscribers, or the amount for which the subscriber was 
absolved. This would enable authorized carriers to provide a refund or 
credit to slammed subscribers while keeping the amount they would have 
received in the absence of an unauthorized change. This could affect 
small entities that engage in slamming.
    37. Resellers and CICs. The Commission proposes to require 
switchless resellers to obtain their own CICs, to obtain pseudo-CICs, 
or to have the facilities-based reseller modify its billing systems. 
These proposals are intended to address the confusion that occurs 
because switchless resellers have the same CIC as their underlying 
facilities-based carriers. These proposals would probably impose 
additional costs on switchless resellers, most of whom are small 
entities.
    38. Independent Third Party Verification. Although specific rules 
are not proposed to modify the independent third party verification 
process, which could be used by small carriers, the Commission seeks 
comment on the definition of an independent third party verifier and on 
the content of the independent third party verification.
    39. Internet Carrier Changes. Although specific rules are not 
proposed, the Commission seeks comment on the extent to which the 
electronically-submitted Internet form could be considered a valid LOA 
in accordance with the verification procedures. The Commission also 
seeks comment on other procedures that might be appropriate to verify 
Internet carrier changes. This is in response to the need for standards 
among the widely varying Internet solicitation and verification 
practices being utilized by carriers, including small entities.
    40. Definition of ``Subscriber.'' Although no specific proposals 
were made, the Commission seeks comment on how the term ``subscriber'' 
should be defined, which may affect the marketing practices of small 
entities.
    41. Carrier Reports. The proposed rules would also require each 
carrier to submit to the Commission a report on the number of slamming 
complaints that are submitted to that carrier by subscribers. Small 
carriers would not be exempt from filing this report. This would enable 
the Commission to learn about slamming entities as quickly as possible.
    42. Registration Requirement. This rule proposes to require all 
interstate carriers to register with the Commission. The Commission 
seeks comment on requiring the registration to contain the carrier's 
business name(s); the names and addresses of all officers and 
principals; verification that such officers and principals have no 
prior history of committing fraud; and verification of the financial 
viability of the carrier. The Commission also proposes to revoke or 
suspend the operating authority of any carriers who fail to register or 
who provide false or misleading information in their registration. This 
would apply to all carriers, including small entities. The proposals 
are designed to prevent entry into the telecommunications marketplace 
by entities that are either unqualified or have the intent to commit 
fraud.
    43. Third Party Administrator for Preferred Carrier Changes and 
Preferred Carrier Freezes. Although specific rules are not proposed, 
the Commission seeks comment on the implementation of a comprehensive 
system in which an independent third party would administer carrier 
changes, preferred carrier freezes, and verification. Several 
commenters support the use of an independent administrator, but failed 
to provide sufficient detail on the scope of its functions, how such a 
system would work, and how it would be funded.

[[Page 7769]]

v. Steps Taken To Minimize Significant Economic Impact on Small 
Entities and Significant Alternatives Considered
    44. Liability Proposal. Permitting authorized carriers to recover 
the additional amounts proposed from slamming carriers will make 
slamming unprofitable for carriers. If the carrier provides proof that 
it did not violate the Commission's rules, then it is not required to 
pay any penalty. All carriers, including small carriers, will benefit 
by the reduction in slamming that will result from the implementation 
of our proposals.
    45. Carrier Reports. In order to reduce the burden on carriers, we 
seek comment on requiring the report to be filed only when complaints 
reach a threshold level, rather than requiring the report to be filed 
on a regular basis. We believe that the resulting investigations into 
slamming will reduce slamming and be beneficial to all carriers, 
including those carriers that are small entities.
    46. Registration Requirement. The registration requirement proposal 
is not overly burdensome. This requirement should only burden carriers 
who have a history of fraud, in order to keep them from offering 
telecommunications services. As such, the proposal is narrowly tailored 
to impose only minimal burdens on other carriers.
    47. Resellers and CICs. The Commission offers several options to 
resolve the problems with identification between switchless resellers 
and their facilities-based carriers. They range in expense and burden 
on carriers, so small carriers will have the opportunity to endorse the 
option that best suits their needs.
    48. We invite parties commenting on this regulatory analysis to 
provide information as to the number of small businesses that would be 
affected by our proposed regulations and identify alternatives that 
would reduce the burden on these entities while still ensuring that 
consumers' telecommunications carrier selections are not changed 
without their authorization. Furthermore, in the event of a dispute 
between carriers under our liability provisions, the carriers involved 
in such disputes must pursue private settlement negotiations prior to 
filing a formal complaint with the Commission. As we stated in the IRFA 
of the FNPRM, we believe that the adoption of such a dispute mechanism 
will lessen the economic impact of a dispute on small entities.
vi. Federal Rules That May Overlap, Duplicate, or Conflict With the 
Proposed Rules
    49. None.

J. Initial Paperwork Reduction Act of 1995 Analysis.

    50. The Further Notice of Proposed Rulemaking portion of the Order 
contains either a proposed or modified information collection. As part 
of its continuing effort to reduce paperwork burdens, we invite the 
general public and the Office of Management and Budget (OMB) to comment 
on the information collections contained in the Further Notice of 
Proposed Rulemaking portion of the Order, as required by the Paperwork 
Reduction Act of 1995, Public Law 104-13. Public and agency comments 
are due at the same time as other comments on the Further Notice of 
Proposed Rulemaking; OMB comments are due April 19, 1999. Comments 
should address: (a) whether the proposed collection of information is 
necessary for the proper performance of the functions of the 
Commission, including whether the information shall have practical 
utility; (b) the accuracy of the Commission's burden estimates; (c) 
ways to enhance the quality, utility, and clarity of the information 
collected; and (d) ways to minimize the burden of the collection of 
information on the respondents, including the use of automated 
collection techniques or other forms of information technology.

K. Ex Parte Presentations

    51. This matter shall be treated as a ``permit-but-disclose'' 
proceeding in accordance with the Commission's ex parte rules. Persons 
making oral ex parte presentations are reminded that memoranda 
summarizing the presentations must contain summaries of the substance 
of the presentations and not merely a listing of the subjects 
discussed. More than a one or two sentence description of the views and 
arguments presented is generally required.

L. Comment Filing Procedures

    52. Pursuant to applicable procedures set forth in Secs. 1.415 and 
1.419 of the Commission's rules, 47 CFR 1.415, 1.419, interested 
parties may file comments on or before March 18, 1999, and reply 
comments on or before April 2, 1999. Comments may be filed using the 
Commission's Electronic Comment Filing System (ECFS) or by filing paper 
copies.
    53. Comments filed through the ECFS can be sent as an electronic 
file via the Internet to <http://www.fcc.gov/e-file/ecfs.html>. 
Generally, only one copy of an electronic submission must be filed. If 
multiple docket or rulemaking numbers appear in the caption of this 
proceeding, however, commenters must transmit one electronic copy of 
the comments to each docket or rulemaking number referenced in the 
caption. In completing the transmittal screen, commenters should 
include their full name, Postal Service mailing address, and the 
applicable docket or rulemaking number. Parties may also submit an 
electronic comment by Internet e-mail. To get filing instructions for 
e-mail comments, commenters should send an e-mail to [email protected], and 
should include the following words in the body of the message, ``get 
form [email protected] and 
to Timothy Fain, OMB Desk Officer, 10236 NEOB, 725--17th Street, N.W., 
Washington, DC 20503 or via the Internet to [email protected].

V. Conclusion

    57. In the FNPRM, we seek comment on several proposals to further 
strengthen our slamming rules, including a proposal to require 
unauthorized carriers to remit to authorized carriers certain amounts 
in addition to the amount paid by slammed subscribers, as well as 
proposals for preventing the confusion and slamming that results from 
resellers using the same CICs as their facilities-based carriers.

VI. Ordering Clauses

    58. It is ordered that a further notice of proposed rulemaking is 
issued.
    59. 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.

List of Subjects in 47 CFR Part 64

    Communications common carriers, Consumer protection, 
Telecommunications.

Federal Communications Commission.
Magalie Roman Salas,
Secretary.
[FR Doc. 99-3658 Filed 2-12-99; 8:45 am]
BILLING CODE 6712-01-P