[Federal Register Volume 64, Number 77 (Thursday, April 22, 1999)]
[Rules and Regulations]
[Pages 19722-19725]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-10023]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 42

[CC Docket No. 96-61; FCC 99-47]


Nondominant Interexchange Carriers

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this Second Order on Reconsideration, the Commission 
consider again whether nondominant interexchange carriers (IXCs) should 
be required to make available to the public information concerning the 
rates, terms, and conditions for all of their interstate, domestic, 
interexchange services. Like other common carriers, IXCs historically 
have been required to file tariffs with the appropriate regulatory body 
(this Commission, in the case of interstate services) establishing the 
rates, terms, and conditions of service. The tariff does not simply 
serve as a public source of such information; under the judicially 
created ``filed-rate'' doctrine, the tariffed rate for a service is the 
only lawful rate that the carrier may charge for that service. Even if 
a carrier intentionally misrepresents its rate and a customer relies on 
the misrepresentation, the carrier cannot be held to the promised rate 
if it conflicts with the tariffed rate. When a single carrier dominated 
the interstate, interexchange market, tariffing was an effective tool 
for ensuring compliance with various common carrier requirements, 
including rules that require nondiscrimination among customers.

EFFECTIVE DATE: May 24, 1999.

FOR FURTHER INFORMATION CONTACT: Andrea Kearney, Attorney, Common 
Carrier Bureau, Policy and Program Planning Division, (202) 418-1580.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Second 
Order On Reconsideration and Erratum adopted March 18, 1999, and 
released March 31, 1999 (FCC 99-47). The full text of this Order is 
available for inspection and copying during normal business hours in 
the FCC Reference Center, 425 12th Street, SW, Washington, D.C. the 
complete text also may be obtained through the World Wide Web, at 
http:/www.fcc.gov/Bureaus/Common Carrier/Order/fcc9947.wp, or may be 
purchased from the Commission's copy contractor, International 
Transcription Service, Inc., (202) 857-3800, 1231 20th St., N.W., 
Washington, D.C. 20036.

Synopsis of Second Order on Reconsideration and Erratum Overview

A. Overview

    1. In this Second Order on Reconsideration, we consider again 
whether nondominant interexchange carriers (IXCs) should be required to 
make available to the public information concerning the rates, terms, 
and conditions for all of their interstate, domestic, interexchange 
services. Like other common carriers, IXCs historically have been 
required to file tariffs with the appropriate regulatory body (this 
Commission, in the case of interstate services) establishing the rates, 
terms, and conditions of service. The tariff does not simply serve as a 
public source of such information; under the judicially created 
``filed-rate'' doctrine, the tariffed rate for a service is the only 
lawful rate that the carrier may charge for that service. Even if a 
carrier intentionally misrepresents its rate and a customer relies on 
the misrepresentation, the carrier cannot be held to the promised rate 
if it conflicts with the tariffed rate. When a single carrier dominated 
the interstate, interexchange market, tariffing was an effective tool 
for ensuring compliance with various common carrier requirements, 
including rules that require nondiscrimination among customers.
    2. With the advent of competition in the provision of interstate, 
interexchange services, however, tariffing became less beneficial and, 
in some ways, harmful to consumers. The Commission previously has 
concluded that tariffing can discourage competitive pricing, restrict 
the flexibility of carriers seeking to offer service arrangements 
tailored to an individual customer's needs, and impose unnecessary 
regulatory costs on carriers. In view of these concerns as well as the 
potentially harsh consequences of the ``filed-rate'' doctrine for 
consumers, and pursuant to a statutory amendment contained in the 
Telecommunications Act of 1996, the Commission in the Second Report and 
Order, 61 FR 59340 (November 22, 1996) required the complete 
detariffing of interstate, domestic, interexchange services offered by 
nondominant carriers.
    3. At the same time, the Commission sought to retain the one aspect 
of tariffing that continued to serve the public interest, i.e., giving 
consumers access to information about the rates, terms and conditions 
of services offered by these carriers. Thus, in the same order in which 
the Commission eliminated tariffing of interstate, domestic, 
interexchange services, the Commission imposed a public disclosure 
requirement.
    4. Following a stay of the Second Report and Order by the Court of 
Appeals for the District of Columbia Circuit, and upon the petitions of 
a number of parties who claimed that the public disclosure requirement 
would lead to some of the same ills that prompted the Commission to 
order complete detariffing, the Commission eliminated the public 
disclosure requirement in the Order on Reconsideration. Acting on 
petitions for reconsideration of that order, we now conclude that in a 
detariffed and increasingly competitive environment, consumers should 
have ready access to information concerning the rates, terms, and 
conditions governing the provision of interstate, domestic, 
interexchange services offered by nondominant IXCs. We therefore 
reinstate the public disclosure requirement that was originally 
established in the Second Report and Order, and also require 
nondominant IXCs that have Internet websites to post this information 
on-line.

B. Procedural Background

    5. On October 29, 1996, the Commission adopted the Second Report 
and Order in its proceeding reviewing the regulation of interstate, 
domestic, interexchange telecommunications services. Throughout this 
proceeding, the Commission's objective has remained constant: to foster 
increased competition in the market for interstate, domestic, 
interexchange telecommunications services by eliminating unnecessary 
regulation, in accordance with the goals established by Congress in the 
1996 Act. The 1996 Act added section 10 to the Communications Act, 
which requires the Commission to forbear from applying any provision of 
the Communications Act, or any of the Commission's regulations, to a 
telecommunications carrier or telecommunications service, or class 
thereof, if the Commission makes certain specified findings with 
respect to such provisions or regulations.

[[Page 19723]]

    6. For more than a decade prior to the 1996 Act, the Commission 
attempted to forbear from tariff regulation of nondominant IXCs, but 
was struck down by the courts. Subsequently, the Commission requested, 
and Congress granted in section 10 of the Act, forbearance authority, 
with the express understanding that it would be used to effectuate 
interexchange detariffing. Exercising its forbearance authority, the 
Commission eliminated its tariff filing requirements for nondominant 
IXCs in the Second Report and Order. While tariffs originally were 
required to protect consumers from unjust, unreasonable, and 
discriminatory rates in a virtually monopolistic market, the Commission 
concluded that such tariffs had become unnecessary for this purpose in 
an increasingly competitive market. The Commission found that it is 
highly unlikely that interexchange carriers that lack market power 
could successfully charge rates, or impose terms and conditions, for 
interstate, domestic, interexchange services that violate sections 201 
and 202 of the Communications Act because consumers could simply switch 
to a competing provider that offered better rates, terms, and 
conditions. Instead of tariffs, the Commission found that it could rely 
on market forces, the section 208 complaint process, and its ability to 
reimpose tariff requirements, if necessary, to fulfill its mandate 
under the Communications Act to ensure that rates are just and 
reasonable and not unreasonably discriminatory, and to protect 
consumers. Moreover, the Commission concluded that tariffs can have 
negative effects that impair market efficiency and increase costs to 
consumers. The Commission found that, in particular, tariffs impede 
competition by permitting carriers to invoke the ``filed-rate'' 
doctrine and by not requiring carriers to provide rate and service 
information directly to consumers. The Commission also stated that 
tariffs provide a source of information that carriers can use to engage 
in tacit price coordination.
    7. Although the Commission concluded that tariffs harm competition 
in the market for interstate, domestic, interexchange services, it also 
acknowledged that in the absence of some rate disclosure requirement, 
even in a competitive market, consumers might not have access to 
sufficient information about such services for purposes of bringing 
complaints under section 254(g) of the Act or for choosing the 
particular rate plan that best suits their individual needs. Yet the 
Commission also recognized that requiring carriers to make such 
information publicly available for these purposes may be at odds with 
its goals to reduce regulatory burdens on nondominant IXCs and to 
foster additional competition in the interstate, domestic, 
interexchange market. In addition, an information disclosure 
requirement may detract from the Commission's goal of deterring any 
tacit price coordination that might exist because rate and service 
information would be collected and made available in a single, central 
location.
    8. The Commission determined in the Second Report and Order that 
the statutory forbearance criteria in section 10 of the Communications 
Act were met for complete detariffing of the interstate, domestic, 
interexchange services offered by nondominant IXCs. The Commission 
concluded that complete detariffing would foster increased competition 
without failing to protect consumers by eliminating the possible 
invocation of the ``filed-rate'' doctrine in ways that would otherwise 
lead to harsh results for consumers, establishing market conditions 
that more closely resemble an unregulated environment, and deterring 
any potential for tacit price coordination.
    9. The Commission also adopted a public disclosure requirement in 
the Second Report and Order because it recognized that, even in a 
competitive market, nondominant IXCs might not provide complete 
information about the rates, terms, and conditions of their interstate, 
domestic, interexchange services to enable customers to bring to the 
Commission's attention violations of the Communications Act and to 
choose the calling plan that best suits their individual needs. For 
example, nondominant IXCs might engage in targeted advertising 
concerning particular discounts and rate plans that might be the most 
appropriate plan for some, but not all, consumers. The Commission 
required nondominant IXCs to disclose to the public information about 
the rates, terms, and conditions of all of their interstate, domestic, 
interexchange services, in at least one location during regular 
business hours. The Commission did not, however, require that public 
disclosure be made in any particular format or at any particular 
location, although it encouraged nondominant IXCs to consider ways to 
make this information more widely available to the public, for example, 
posting such information on-line, mailing relevant information to 
consumers, or responding to inquiries over the telephone. In addition 
to adopting the public disclosure requirement, the Commission required 
nondominant IXCs to: (1) file an annual certification stating that they 
are in compliance with the geographic rate averaging and rate 
integration requirements of section 254(g) of the Communications Act, 
and (2) maintain supporting documentation on the rates, terms, and 
conditions of all of their interstate, domestic, interexchange services 
that they could submit to the Commission and to state commissions 
within ten business days upon request.
    10. Several parties filed petitions for review of the Second Report 
and Order in the District of Columbia Circuit and filed motions 
requesting that the court stay the Second Report and Order pending 
judicial review. On February 13, 1997, the court granted these motions. 
In addition, a number of parties filed petitions requesting that the 
Commission reconsider or clarify the rules it adopted in the Second 
Report and Order.
    11. On August 15, 1997, the Commission adopted the Order on 
Reconsideration. The Commission placed more weight on its concern that 
making available rate and service information to the public may detract 
from its objectives of deterring tacit price coordination and allowing 
market forces rather than regulation to discipline carriers. The 
Commission recognized that elimination of the public disclosure 
requirement could make the access to rate and service information more 
difficult for businesses, including consumer groups that offer their 
analyses of the rates and services of IXCs to the public, as well as 
for resellers that are both customers and competitors of IXCs. The 
Commission nevertheless concluded that the benefits of eliminating the 
public disclosure requirement would outweigh any adverse effects. The 
Commission determined that elimination of the public disclosure 
requirement would decrease the regulatory burden on nondominant IXCs 
and deter any tacit price coordination that might exist. The Commission 
also found that, in all likelihood, consumers would still receive the 
information they need to ensure that they have been correctly billed 
and to bring to the Commission's attention possible violations of 
section 254(g) and other provisions of the Act. The Commission stated, 
however, that it remained willing to revisit its decision regarding the 
elimination of the public disclosure requirement. The Commission did 
not modify the requirements adopted in the Second Report and Order that 
nondominant IXCs file an annual certification and that they maintain 
supporting

[[Page 19724]]

documentation on their interstate, domestic, interexchange services 
that they could submit to the Commission and to state regulatory 
commissions within ten business days upon request.
    12. Five parties filed petitions for further reconsideration asking 
the Commission to reinstate the public disclosure requirement. The D.C. 
Circuit subsequently deferred the briefing schedule in the appeal of 
the Second Report and Order to allow the Commission to act on these 
petitions. The judicial stay of the Commission's rules adopted in this 
proceeding, therefore, remains in effect.
    13. The single issue raised on reconsideration is whether the 
Commission should require nondominant IXCs to make available to the 
public information on the rates, terms, and conditions of their 
interstate, domestic, interexchange services. For the reasons set 
forth, we reinstate the public disclosure requirement that was 
originally specified in the Second Report and Order and also require 
that carriers make this information publicly available on-line at their 
Internet websites.

C. Discussion

    14. The parties who filed the petitions for reconsideration that 
are before us today express grave concerns about the effects on 
consumers of the Commission's decision to eliminate the public 
disclosure requirement. These parties generally disagree with the 
Commission's finding in the Order on Reconsideration that consumers 
will have access to the information they need to select a 
telecommunications carrier and to bring to the Commission's attention 
possible violations of the Communications Act without a specific public 
disclosure requirement. Eighty-five percent of consumers believe that 
the public disclosure requirement will serve their interests, according 
to a study commissioned by one of the members of petitioner TURN/TMISC. 
Consumers find that IXCs' billing information often is ``inaccurate and 
difficult to understand'' and that their marketing information is 
``confusing,'' according to findings of other studies cited by 
petitioners. Consumers find it impossible to obtain accurate and 
detailed information directly from carriers concerning their calling 
plans, according to TURN/TMISC and TRAC, on the basis of their own 
experiences in attempting to obtain such information directly from 
IXCs. These petitioners claim that carrier representatives: (1) 
provided information that was generally incomplete or inaccurate; (2) 
referred callers to their filed tariffs rather than provide information 
verbally; (3) withheld information about lower-cost calling plans; and 
(4) provided information verbally, but only reluctantly confirmed it in 
writing. We also note that MCI WorldCom recently ended its cooperation 
with TRAC to provide information that TRAC summarizes in its 
comparative chart of long distance calling plans, citing the ``time-
consuming nature of gathering and confirming information,'' and 
referred the organization to its filed tariffs.
    15. There is abundant evidence that making information available to 
consumers is beneficial to competitive markets. In addition to the 
evidence set forth and in prior orders in this proceeding, several of 
our recent decisions clearly recognize the beneficial effects of 
publicly available information on competitive markets and consumers. 
For instance, we proposed rules in the Truth-in-Billing Notice to make 
telephone bills more readable and accurate, because we believe that 
``consumers must have adequate information about the services they are 
receiving, and the alternatives available to them, if they are to reap 
the benefits of a competitive market.'' In 1998, we adopted a price 
disclosure requirement for long distance carriers providing service at 
public phones that ``more readily enables consumers to obtain valuable 
information necessary in making the decision whether to have that 
[carrier] carry the call at the identified rates, or to use another 
carrier.'' We took these actions to address concerns that consumers 
were not receiving sufficient information to protect themselves against 
fraud and misinformation, and to select telecommunications services and 
providers that best suit their individual needs. There are many 
examples of government mandating disclosure of information to protect 
and promote consumer interests.
    16. In comparison with abundant evidence in this proceeding of the 
benefits of information to competition and consumers, the 
anticompetitive effect of a public disclosure requirement is sparse and 
indeterminate. Moreover, the growing number of competitors in this 
market substantially lessens the risk of tacit price collusion. As 
antitrust law recognizes, tacit price collusion is more likely to occur 
where there are only a few competitors who have an oligopoly in the 
market. Where there are greater numbers of competitors and low barriers 
to entry, as in the long distance market, the likelihood of such 
coordinated behavior is marginal. In light of the ``conflicting and 
inconclusive'' evidence of tacit price collusion and the competitive 
nature of the market, we now are convinced that the public availability 
of pricing information presents only the slimmest opportunity for 
collusion and thus a public disclosure requirement need not be 
eliminated on that basis. Consequently, in light of the very positive 
public benefits of a limited public disclosure requirement, we believe 
that the Commission erred in previously eliminating that requirement in 
the Order on Reconsideration. In addition, the growth of competition in 
the long distance market means that consumers have more choices and, in 
turn, need more information in order to choose the long distance 
service plan that best suits their needs. We also note that IXCs have 
superior resources and incentives to stay informed of the rate plans of 
their competitors whether or not rate and service information is made 
publicly available. Therefore, it is consumers who likely will 
experience the most harm in the absence of a meaningful public 
disclosure requirement. We clearly recognize that tacit price collusion 
is one of the grounds on which the Commission relied in choosing to 
forbear from the tariffing requirement and that basis is incongruous 
with our current holding. Nonetheless, we emphasize that the Commission 
substantially rested its detariffing decision on grounds other than 
collusion that remain compelling; thus, we find no conflict between the 
Commission's decision to order complete detariffing and our decision to 
require public disclosure.
    17. We agree with Ad Hoc that the ``filed-rate'' doctrine that the 
courts have applied to the tariff filing requirement should not apply 
to the public disclosure requirement. The ``filed-rate'' doctrine is 
applied to the rates, terms, and conditions of services specified in 
tariffs that are ``duly filed'' with the Commission in accordance with 
section 203 of the Communications Act. The ``filed-rate'' doctrine is 
inapplicable to the public disclosure requirement because it is not a 
filing requirement within the meaning of section 203, but rather simply 
requires carriers to make information available to the public. 
Moreover, the Commission has long held that the ``filed-rate'' doctrine 
is harmful to competition and consumers, as noted.
    18. In the face of opposing positions on whether public disclosure 
should be required, we strike the balance once again in favor of 
consumer concerns. We therefore reinstate the public disclosure 
requirement as originally established in the Second Report and Order.

[[Page 19725]]

Specifically, we require nondominant IXCs to make information available 
to the public concerning current rates, terms, and conditions for all 
of their interstate, domestic, interexchange services, in at least one 
location during regular business hours. We also require such carriers 
that have Internet websites to post this information on-line. Carriers 
should post rate and service information at their Internet websites in 
a timely and easily accessible manner and update such information 
regularly. We agree with TRAC and Ad Hoc that an on-line public 
disclosure requirement will make rate and service information more 
readily available and beneficial for consumers directly, as well as for 
businesses and consumer organizations that collect and analyze rate and 
service information and offer their analyses to the public, 
particularly in view of the tremendous growth in usage of the Internet 
since the adoption of the Second Report and Order in 1996 and forecasts 
for additional growth. We find that an on-line requirement is not 
unduly burdensome, because the growth of Internet usage has increased 
the benefits of an on-line requirement to consumers, and the costs of 
maintaining an Internet website and posting the information on-line for 
carriers are moderate. We exempt from the Internet posting requirement 
nondominant IXCs that do not have Internet websites, to avoid imposing 
undue burdens on such carriers.
    19. Our decision to reinstate the public disclosure requirement can 
be reconciled with our previous decision to implement complete 
detariffing. The Commission's decision to forbear from applying the 
tariff filing requirements to nondominant IXCs and require complete 
detariffing is amply supported by evidence of numerous concerns that 
are independent of, and more compelling than, tacit price coordination. 
These concerns, as set forth in the Second Report and Order and the 
Order on Reconsideration, include promoting competitive market 
conditions, eliminating problems resulting from the ``filed-rate'' 
doctrine, and preserving the public's reasonable commercial 
expectations. We believe that our decision to reinstate the public 
disclosure requirement retains the one positive aspect of tariffing, 
making information on the rates, terms, and conditions of interstate, 
interexchange services available to the public, without the negative 
aspects of tariffing.

II. Erratum

    20. This Erratum corrects a final rule in the Order on 
Reconsideration, which was released by the Commission on August 20, 
1997 and published at 62 FR 46447, September 3, 1997. Rule changes to 
the Order on Reconsideration is corrected to include a reference to 
state regulatory commissions that was contained in the text of 
paragraph 69 of the Order on Reconsideration, but was inadvertently not 
included in the rule to be codified at 47 CFR 42.11. The corrected 
final rule is contained in this order.

III. Ordering Clauses

    Accordingly, it is ordered, that, pursuant to sections 1-4, 10, 
201-205, 215, 218, 220, 226, and 254 of the Communications Act of 1934, 
as amended, 47 U.S.C. 151-154, 160, 201-205, 215, 218, 220, 226, and 
254, the second order on reconsideration is hereby adopted. The 
requirements adopted in this Second Order on Reconsideration shall be 
effective [30 days after publication of a summary thereof in the 
Federal Register] or on the date when the requirements adopted in the 
Second Report and Order in this proceeding become effective, whichever 
is later.
    22. It is further ordered that the Petitions for Further 
Reconsideration filed in this proceeding are granted to the extent 
described in this order.
    23. It is further ordered that Part 42 of the Commission's rules, 
47 CFR 42, is amended as set forth in the Rule Changes.
    24. It is further ordered that the Commission's Office of Public 
Affairs, Reference Operations Division, shall send a copy of this 
Second Order on Reconsideration, including the Supplemental FRFA, to 
the Chief Counsel for Advocacy of the Small Business Administration.

Federal Communications Commission.
Shirley S. Suggs,
Chief, Publications Branch.

Rules Changes

    For the reasons discussed in the preamble, the Federal 
Communications Commission amends 47 CFR Part 42 as follows:

PART 42--PRESERVATION OF RECORDS OF COMMUNICATIONS COMMON CARRIERS

    1. The authority citation for part 42 continues to read as follows:

    Authority: Sec. 4(i), 48 Stat. 1066, as amended, 47 U.S.C. 
154(i). Interprets or applies secs. 219 and 220, 48 Stat. 1077-78, 
47 U.S.C. 219, 220.

    2. The undesignated center heading preceding Sec. 42.11 is revised 
to read as follows:

Specific Instructions for Carriers Offering Interexchange Services

    3. Section 42.10 is added to read as follows:


Sec. 42.10  Public availability of information concerning interexchange 
services.

    (a) A nondominant interexchange carrier (IXC) shall make available 
to any member of the public, in at least one location, during regular 
business hours, information concerning its current rates, terms and 
conditions for all of its interstate, domestic, interexchange services. 
Such information shall be made available in an easy to understand 
format and in a timely manner. Following an inquiry or complaint from 
the public concerning rates, terms and conditions for such services, a 
carrier shall specify that such information is available and the manner 
in which the public may obtain the information.
    (b) In addition, a nondominant IXC that maintains an Internet 
website shall make such rate and service information specified in 
paragraph (a) of this section available on-line at its Internet website 
in a timely and easily accessible manner, and shall update this 
information regularly.
    4. Section 42.11 is amended by revising paragraph (a) to read as 
follows:


Sec. 42.11  Retention of information concerning interexchange services.

    (a) A nondominant IXC shall maintain, for submission to the 
Commission and to state regulatory commissions upon request, price and 
service information regarding all of the carrier's interstate, 
domestic, interexchange service offerings. The price and service 
information maintained for purposes of this paragraph shall include 
documents supporting the rates, terms, and conditions of the carrier's 
interstate, domestic, interexchange offerings. The information 
maintained pursuant to this section shall be maintained in a manner 
that allows the carrier to produce such records within ten business 
days.
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[FR Doc. 99-10023 Filed 4-21-99; 8:45 am]
BILLING CODE 6712-01-P