[Federal Register Volume 64, Number 190 (Friday, October 1, 1999)]
[Rules and Regulations]
[Pages 53242-53264]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-25232]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 64

[CC Docket No. 96-115; FCC 99-223]


Telecommunications Carriers' Use of Customer Proprietary Network 
Information and Other Customer Information

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: This document reconsiders the first CPNI order, addresses 
petitions for forbearance from the requirements of that order, and 
establishes rules to implement section 222. The intended effect is to 
further Congress' goals of fostering competition in telecommunications 
markets and ensure the privacy of customer information.

DATES: All of these rules contain information collection requirements 
that have not yet been approved by the Office of Management and Budget 
(OMB). The Commission will publish a document in the Federal Register 
announcing the effective date of these rules.

FOR FURTHER INFORMATION CONTACT: Eric Einhorn, Attorney Adviser, Common 
Carrier Bureau, Policy and Program Planning Division, (202) 418-1580 or 
via the Internet at [email protected]. Further information may also be 
obtained by calling the Common Carrier Bureau's TTY number: 202-418-
0484.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Order 
adopted August 16, 1999, and released September 3, 1999. The full text 
of this Order on Reconsideration is available for inspection and 
copying during normal business hours in the FCC Reference Center, 445 
12th Street, S. W., Room CY-A257, Washington, D.C. The complete text 
also may be obtained through the World Wide Web, at http://www.fcc.gov/
Bureaus/Common Carrier/Orders/fcc99223.wp, or may be

[[Page 53243]]

purchased from the Commission's copy contractor, International 
Transcription Service, Inc., (202) 857-3800, 1231 20th St., N. W., 
Washington, D.C. 20036.

Regulatory Flexibility Certification:

    As required by the Regulatory Flexibility Act, the Order contains a 
Final Regulatory Flexibility. A brief description of the analysis 
follows. Pursuant to section 604 of the Regulatory Flexibility Act, the 
Commission performed a comprehensive analysis of the Order with regard 
to small entities. This analysis includes: (1) A succinct statement of 
the need for, and objectives of, the Commission's decisions in the 
Order; (2) a summary of the significant issues raised by the public 
comments in response to the initial regulatory flexibility analysis, a 
summary of the Commission's assessment of these issues, and a statement 
of any changes made in the Order as a result of the comments; (3) a 
description of and an estimate of the number of small entities to which 
the Order will apply; (4) a description of the projected reporting, 
recordkeeping and other compliance requirements of the Order, including 
an estimate of the classes of small entities which will be subject to 
the requirement and the type of professional skills necessary for 
compliance with the requirement; (5) a description of the steps the 
Commission has taken to minimize the significant economic impact on 
small entities consistent with the stated objectives of applicable 
statutes, including a statement of the factual, policy, and legal 
reasons for selecting the alternative adopted in the Order and why each 
one of the other significant alternatives to each of the Commission's 
decisions which affect small entities was rejected.

Synopsis of Order

I. Introduction

    1. On February 26, 1998, the Commission released the CPNI Order, 63 
FR 20326, April 24, 1998, adopting rules implementing the new statutory 
framework governing carrier use and disclosure of customer proprietary 
network information (CPNI) created by section 222 of the Communications 
Act (hereinafter ``the Act''). CPNI includes, among other things, to 
whom, where, and when a customer places a call, as well as the types of 
service offerings to which the customer subscribes and the extent the 
service is used.
    2. This order on reconsideration is issued in response to a number 
of petitions for reconsideration, forbearance, and/or clarification of 
the CPNI Order. In this order we modify the CPNI Order, in part, to 
preserve the consumer protections mandated by Congress while more 
narrowly tailoring our rules, where necessary, to enable 
telecommunications carriers to comply with the law in a more flexible 
and less costly manner.
    3. The Telecommunications Act of 1996 (1996 Act) became law on 
February 8, 1996. Although most of the provisions in the 1996 Act aim 
to implement Congress' intent that the 1996 Act ``provide for a pro-
competitive, de-regulatory national policy framework designed to 
accelerate rapidly private sector deployment of advanced 
telecommunications and information technologies and services to all 
Americans by opening all telecommunications markets to competition,'' 
section 222 addresses a different and additional goal. CPNI is 
extremely personal to customers as well as commercially valuable to 
carriers. As we stated in the CPNI Order: Congress recognized * * * 
that the new competitive market forces and technology ushered in by the 
1996 Act had the potential to threaten consumer privacy interests. 
Congress, therefore, enacted section 222 to prevent consumer privacy 
protections from being inadvertently swept away along with the prior 
limits on competition.
    4. As the Commission previously noted in the CPNI Order, section 
222 is largely a consumer protection provision that establishes 
restrictions on carrier use and disclosure of personal customer 
information. The aim of section 222 stands in contrast to the other 
provisions of the 1996 Act that seek primarily to ``[open] all 
telecommunications markets to competition,'' and mandate competitive 
access to facilities and services. Section 222 reflects Congress' view 
that as competition increases, it brings with it the potential that 
consumer privacy interests will not be adequately protected by the 
marketplace. Thus, section 222 requires all carriers, whether or not a 
market is competitive, to protect CPNI and embodies the principle that 
customers must be able to control their personal information from 
unauthorized use, disclosure, and access by carriers. Where information 
is not specific to the customer, or where the customer so directs, 
section 222 permits the free flow or dissemination of information 
beyond the existing customer-carrier relationship.
    5. In most circumstances, the constraints placed on carriers by 
section 222 only restrict the use or disclosure of CPNI without 
customer approval. When carriers are prevented from using a customer's 
CPNI by section 222, and the rules we promulgated in the CPNI Order, 
carriers need only obtain the customer's approval to use that 
customer's CPNI. Once a carrier has acquired customer approval, carrier 
use or disclosure of CPNI, in most cases, is unrestricted. Thus, 
section 222 enables customers to relinquish the presumption of privacy 
as they see fit.
    6. Congress' determination in section 222 to balance competitive 
interests with consumers' interests in privacy and control over CPNI 
governed the Commission's reasoning and conclusions in the CPNI Order. 
This order is no different: we seek to carry out vigilantly Congress' 
consumer protection and privacy aims, while simultaneously reducing the 
burden of carrier compliance with section 222 by eliminating 
unnecessary expense and administrative oversight where customer privacy 
and control will not be sacrificed.

II. Overview

    7. By this order, we respond to the requests for reconsideration, 
clarification and forbearance as follows:
    (a) We deny the petitions for reconsideration which ask us to amend 
the CPNI rules to differentiate among telecommunications carriers.
    (b) We decline to modify or forbear from the total service approach 
adopted in the CPNI Order because the total service approach keeps 
control over the use of CPNI with the customer and best protects 
privacy while furthering fair competition. We also clarify a number of 
aspects of the total service approach in response to petitioners' 
requests.
    (c) We grant, in part, the petitions for reconsideration which 
request that we allow all carriers to use CPNI to market customer 
premises equipment (CPE) and information services under section 
222(c)(1) without customer approval. We conclude that all carriers may 
use CPNI, without customer approval, to market CPE. We further conclude 
that CMRS carriers may use CPNI, without customer approval, to market 
all information services, while wireline carriers may do so for certain 
information services. We deny the petitions for forbearance on these 
issues.
    (d) We eliminate the restrictions on a carrier's ability to use 
CPNI to regain customers who have switched to another carrier, 
contained in Section 64.2005(b)(3) of our rules. We find that 
``winback'' campaigns are consistent with Section 222(c)(1). The Order 
concludes, however, that if a carrier uses information regarding a 
customer's decision to switch carriers derived from its wholesale 
operations to retain the

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customer, such conduct violates the prohibitions in section 222(b) 
against use of proprietary information gained from another carrier in 
marketing efforts.
    (e) We address various aspects of a customer's approval to use CPNI 
consistent with section 222. We also grandfather a limited set of pre-
existing notifications to use CPNI and adopt the conclusions reached in 
the Common Carrier Bureau's Clarification Order, 63 FR 33890, June 22, 
1998. We also eliminate, in an effort to reduce confusion and 
regulatory micro-management, Sec. 64.2007(f)(4) of our rules, which 
requires a carrier's solicitation for approval, if written, to be on 
the same document as the carrier's notification. Further, we affirm our 
decision to exercise our preemption authority on a case-by-case basis 
for state rules that conflict with our own.
    (f) We lessen the regulatory burden of various CPNI safeguards 
while continuing to require that carriers protect customer privacy. We 
modify our flagging requirement so that carriers must clearly establish 
the status of a customer's CPNI approval prior to the use of CPNI, but 
leave the specific details of compliance with the carriers. In so 
doing, we allow the carriers the flexibility to adapt their record 
keeping systems in a manner most conducive to their individual size, 
capital resources, culture and technological capabilities. Similarly, 
we amend our rules to eliminate the electronic audit trail requirement 
and instead require carriers to maintain a record of their sales and 
marketing campaigns that use CPNI.
    (g) We affirm our conclusion in the CPNI Order that the most 
reasonable interpretation of the interplay between sections 222 and 272 
is that section 272 does not impose any additional obligations on the 
Bell operating companies (BOCs) when they share their CPNI with their 
section 272 affiliates. We also adopt the Common Carrier Bureau's 
conclusion in the Clarification Order that a customer's name, address 
and telephone number are ``information'' for the purposes of section 
272(c)(1), and consequently, if a BOC makes such information available 
to its 272 affiliate, it must then make it available to non-affiliated 
entities.
    (h) We find that the relationship of sections 222 and 254 does not 
confer any special status to carriers seeking to use CPNI to market 
enhanced services and CPE in rural exchanges to select customers. 
Moreover, the Order rejects the contention that the Commission should 
apply the requirements of sections 201(b), 202(a) and 272 to incumbent 
local exchange carriers (ILECs) to impose a duty on ILECs to 
electronically transmit a customer's CPNI to any other entity that 
obtains a customer's oral approval to do so.

III. Background

A. The CPNI Order

    8. On May 17, 1996, the Commission initiated a rulemaking, in 
response to various formal requests for guidance from the 
telecommunications industry, regarding the obligation of carriers under 
section 222 and related issues. The Commission subsequently released 
the CPNI Order on February 26, 1998. The CPNI Order addressed the scope 
and meaning of section 222, and promulgated regulations to implement 
that section. It concluded, among other things, as follows: (a) 
Carriers are permitted to use CPNI, without customer approval, to 
market offerings that are related to, but limited by, the customers' 
existing service relationship; (b) before carriers may use CPNI to 
market outside the customer's existing service relationship, carriers 
must obtain express written, oral, or electronic customer approval; (c) 
prior to soliciting customer approval, carriers must provide a one-time 
notification to customers of their CPNI rights; (d) in light of the 
comprehensive regulatory scheme established in section 222, the 
Computer III CPNI framework is unnecessary; and (e) sections 272 and 
274 impose no additional CPNI requirements on the Bell Operating 
Companies (BOCs) beyond those imposed by section 222.

B. The Clarification Order

    9. On May 21, 1998, in response to a number of requests for 
clarification of the CPNI Order, the Common Carrier Bureau released a 
Clarification Order. This order addressed several issues. It concluded 
that independently-derived information regarding customer premises 
equipment (CPE) and information services is not CPNI and may be used to 
market CPE and information services to customers in conjunction with 
bundled offerings. In addition, it clarified that a customer's name, 
address, and telephone number are not CPNI. Moreover, it stated that a 
carrier has met the requirements for notice and approval under section 
222 and the Commission's rules if it has both provided annual 
notification to, and obtained prior written authorization from, 
customers with more than 20 access lines in accordance with the 
Commission's former CPNI rules. Finally, it determined that carriers 
are not required to file their certifications of corporate compliance, 
which carriers are required to issue by the CPNI Order, with the 
Commission.

C. The Stay Order

    10. In the CPNI Order, the Commission required, among other things, 
that carriers develop and implement software systems that ``flag'' 
customer service records in connection with CPNI and that carriers 
maintain an electronic audit mechanism (``audit trail'') that tracks 
access to customer accounts. The Commission chose to defer the 
enforcement of these rules until eight months after the effective date 
of the rules: January 26, 1999. On September 24, 1998, however, the 
Commission stayed, until six months after the release date of an order 
addressing these issues on reconsideration, the enforcement of actions 
against carriers for noncompliance with applicable requirements set 
forth in the Commission's rules.

IV. Consistent Treatment for All Carriers

A. Incumbents vs. CLECs

    11. Section 222(c)(1) restricts the ability of telecommunications 
carriers to use CPNI without customer approval. In the CPNI Order, we 
concluded that ``Congress did not intend to, and we should not at this 
time, distinguish among carriers for the purpose of applying Section 
222(c)(1).'' We found, based upon the language of the statute itself, 
that section 222 applies to all carriers equally and, with few 
exceptions, does not distinguish among classes of carriers. Various 
parties on reconsideration, however, seek reversal of this conclusion. 
One group of petitioners advocates that we impose stricter CPNI 
restrictions on incumbent carriers than competitors, based upon the 
greater potential for anticompetitive use or disclosure of CPNI by 
ILECs. We previously rejected this very argument in the CPNI Order. 
These parties have not raised any arguments or facts that persuade us 
to reverse our conclusion that section 222 is intended to apply to all 
segments of the telecommunications marketplace regardless of the level 
of competition present in any segment. Accordingly, we affirm that 
section 222 does not distinguish between classes of carriers and 
applies to all carriers equally.

B. Wireline vs. Wireless

    12. Congress enacted section 222 at a time when the wireless 
industry had been subject to less regulatory requirements than wireline 
carriers. Congress was fully aware that CMRS

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providers, and CLECs for that matter, were to evolve in more 
competitive environments. Notwithstanding, there is nothing in the 
statute or its legislative history to indicate that Congress intended 
that the CPNI requirements in section 222 should not apply to wireless 
carriers. Given the opportunity to exclude competitive carriers from 
the scope of section 222, we must give meaning to the fact that 
Congress did not exempt them. Moreover, the underlying policy objective 
of section 222 is to protect consumers, while balancing competitive 
interests. We believe that the privacy interests of CMRS customers are 
no less deserving of protection than those of wireline customers, 
although the differences in customer expectations may warrant different 
approaches. We note too that this reconsideration lightens the impact 
of compliance with the CPNI rules on all carriers by providing 
flexibility for technological differences in administrative systems 
with regard to the electronic safeguards rules, which should be 
beneficial to all companies, including independent CMRS providers. 
Finally, we note that a few parties urge the Commission to forbear from 
enforcing CPNI obligations on CMRS providers generally. We address 
these arguments in Part V.B.3.d. Therefore, we deny those petitions for 
reconsideration that seek different treatment for CMRS carriers.

C. Small and Rural Carriers

    13. As we noted in the CPNI Order, the Commission's CPNI rules 
apply to small carriers just as they apply to other sized carriers 
``because we are unpersuaded that customers of small businesses have 
less meaningful privacy interests in their CPNI.'' Petitioners have not 
raised any new arguments or facts that persuade us to reverse this 
conclusion with respect to these carriers. Thus, we will not 
distinguish among carriers based upon the number or density of lines 
they serve either.

V. Carrier's Right to Use CPNI Without Customer Approval

A. The Total Service Approach

1. Background
    14. In the CPNI Order, the Commission addressed the instances in 
which a carrier could use, disclose, or permit access to CPNI without 
prior customer approval under section 222(c)(1)(A). Section 222(c)(1) 
provides that a telecommunications carrier that receives or obtains 
CPNI by virtue of its ``provision of a telecommunications service shall 
only use, disclose, or permit access to individually identifiable 
[CPNI] in the provision of (A) the telecommunications service from 
which such information is derived, or (B) services necessary to, or 
used in, the provision of such telecommunications service, including 
the publication of directories.''
    15. After considering the record, statutory language, history, and 
structure of section 222, we concluded that Congress intended that a 
carrier's use of CPNI without customer approval should depend on the 
service subscribed to by the customer. Accordingly, the Commission 
adopted the ``total service approach'' which allows carriers to use a 
customer's entire record, derived from complete service subscribed to 
from that carrier, to market improved services within the parameters of 
the existing customer-carrier relationship. The total service approach 
permits carriers to use CPNI to market offerings related to the 
customer's existing service to which the customer presently subscribes. 
Under the total service approach, the customer retains ultimate control 
over the permissible marketing use of CPNI, a balance which best 
protects customer privacy interests while furthering fair competition. 
Presented with the opportunity to permit or prevent a carrier from 
accessing CPNI for marketing purposes, the customer has the ability to 
determine the bounds of the carrier's use of CPNI.
2. Petitions for Reconsideration
    16. GTE urges the Commission to reconsider the total service 
approach to allow carriers to use, without customer consent, CPNI 
derived from the provision of a package of telecommunications services 
in order to market other telecommunications services to which a 
customer does not subscribe. This ``package approach'' is only a slight 
variation of the ``single category approach,'' which we specifically 
analyzed and rejected in the CPNI Order. The single category approach 
would have permitted carriers to use CPNI obtained from the provision 
of any telecommunications service, including local or long distance or 
CMRS, to market any other service offered by the carrier, regardless of 
whether the customer subscribes to such service from that carrier.
    17. We decline to grant GTE reconsideration on this issue because 
that would vitiate the total service approach and the attendant 
protection of a customer's sensitive information. The hallmark of the 
total service approach is that the customer, whose privacy is at issue, 
establishes the bounds of his or her relationship with the carrier. We 
note, however, that to the extent a customer already subscribes to a 
particular service or subscribes across services, GTE or any carrier 
can use the customer's CPNI to market or create enhancements to those 
services. Congress could not have intended an interpretation of section 
222 that leaves the consumer without privacy protection. We concluded 
in the CPNI Order, and nothing has persuaded us otherwise here, that 
the total service approach best protects customer privacy while 
furthering fair competition. GTE seeks to use CPNI derived from the 
provision of certain telecommunications services to market other 
telecommunications services to which the customer does not subscribe. 
We conclude that this would not further the privacy goals that Congress 
sought to achieve in section 222. Over time, the total service approach 
rewards successful carriers who offer integrated packages by enabling 
marketing in more than one category but in a manner that respects 
customer privacy.
    18. GTE requests, in the alternative, that the Commission adopt a 
rule that permits the use of CPNI for the limited purpose of 
identifying customers from whom it would like to solicit express, 
affirmative approval to use their CPNI for marketing out-of-category 
services. We conclude that such use of CPNI is implicit in section 
222(c)(1) because the solicitation of approval is a logical 
prerequisite to actually obtaining approval. The carrier's use of CPNI 
under these limited circumstances, therefore, is merely a part of the 
process of obtaining approval. Thus, the use of CPNI for solicitations 
of approval to use CPNI to market services outside the bounds of the 
existing customer-carrier relationship necessarily falls under the 
customer approval exception stated in section 222(c)(1).
    19. NTCA urges us to reconsider the total service approach because 
it is particularly disadvantageous to small, rural LECs looking to 
launch new service offerings. We addressed and rejected this argument 
in the CPNI Order. NTCA has presented no new evidence to persuade us 
that its members are disproportionately affected in any cognizable way 
by these requirements.
3. Petitions for Forbearance
    20. Alternatively, GTE and Ameritech seek forbearance from the 
application of the total service approach to the marketing of out-of-
category packages or service enhancements to customers. After careful 
review, we believe the forbearance test is not met. Forbearance

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under section 10 of the Act is required where:
    (1) Enforcement of such regulation or provision is not necessary to 
ensure that the charges, practices, classifications, or regulations by, 
for, or in connection with that telecommunications carrier or 
telecommunications service are just and reasonable and are not unjustly 
or unreasonably discriminatory;
    (2) Enforcement of such regulation or provision is not necessary 
for the protection of consumers; and
    (3) Forbearance from applying such provision or regulation is 
consistent with the public interest.
    Section 10(b) provides that, in making the determination whether 
forbearance is consistent with the public interest, the Commission must 
consider whether forbearance will promote competitive market 
conditions, including the extent to which forbearance will enhance 
competition among providers of telecommunications services.
    21. Section 10(a)(1). GTE and Ameritech assert that the ability to 
offer service packages will not result in unreasonable or 
discriminatory rates.
    22. The primary focus of the CPNI rules is not, nor ever has been, 
intended to ensure reasonable rates or practices. Therefore, we 
determine that enforcement of the total service approach is not 
necessary to ensure that the charges, practices, classifications, or 
regulations are just and reasonable and are not unjustly or 
unreasonably discriminatory.
    23. Section 10(a)(2). GTE asserts that prohibiting the use of CPNI 
without approval to market package enhancements is not necessary to 
protect consumers. Ameritech believes CPNI protection is not necessary 
where, like here, the use is consistent with customer expectations.
    24. We conclude that the second criterion for forbearance is not 
met because customers' privacy interests would not be adequately 
protected absent the total service approach. GTE and Ameritech would 
have us forbear from enforcing the total service approach when consumer 
protection is a primary concern of section 222. Specifically, the 
customer approval process for the use of CPNI is necessary to protects 
customers' privacy expectations because, as stated in the CPNI Order, 
we do not believe that we can properly infer that a customer's decision 
to purchase one type of service offering constitutes approval for a 
carrier to use CPNI to market other service offerings to which the 
customer does not subscribe. Nor are we aware of any other law, 
regulation, agency or state requirement that would substitute for the 
effectiveness of our approach. The total service approach protects 
customer privacy expectations by placing the control over the approval 
process in the hands of the customer. The total service approach also 
protects customers in many instances where they would not realize 
potentially sensitive, personal information had been accessed or used. 
The GTE and Ameritech approaches lack this crucial element of consumer 
protection.
    25. Section 10(a)(3). GTE believes forbearance is in the public 
interest because of the reduction in carriers' administrative costs to 
communicate with customers where a carrier can use CPNI to market 
across service categories without the need for customer approval.
    26. We find that forbearance would not be in the public interest. 
The privacy goals of the statute are not met where carriers can use 
CPNI without customer approval to sell products and services outside 
the existing customer-carrier relationship. Although reducing the 
administrative costs to carriers may assist these companies in 
competing with other carriers, we find that any potential benefit is 
outweighed by the need to protect customer privacy. Customers who are 
interested in obtaining more information can arrange to do so easily by 
granting consent for their carriers' use of CPNI.
    27. Pursuant to section 10(b) of the Act, we have evaluated whether 
forbearance from the total service approach will promote competitive 
market conditions, including the extent to which forbearance will 
enhance competition among providers of telecommunications services. We 
agree that, as a general matter, reducing carriers' administrative and 
regulatory costs promotes competitive market conditions and would 
improve the ability of new entrants to introduce new, improved 
combinations of competitive services and products. However, we are 
concerned that the GTE and Ameritech proposals, which eliminate the 
boundaries we have established for the use of CPNI, may unreasonably 
deprive other telecommunications carriers the opportunity to compete 
for a customer's business. The ability to use CPNI from an existing 
service relationship to market new services to a customer bestows an 
enormous competitive advantage on those carriers that currently have a 
service relationship with customers, particularly incumbent exchange 
carriers and interexchange carriers with a large existing customer 
base. This, in turn, poses a significant risk to the development of 
competition. For this reason, as well, we cannot find that forbearance 
is in the public interest.
4. Requests for Clarification
    28. Several petitioners request clarification of aspects of the 
total service approach and its application in specific contexts. We 
address these requests.
    a. Multiple Lines and Carriers. 29. MCI requests clarification as 
to whether the total service approach should be applied on a subscriber 
line-by-line basis or to the subscriber's services overall. MCI poses a 
second, related question, whether a customer can have more than one 
carrier in any given service category, thus allowing both carriers to 
market other services in the same category to that customer.
    30. We believe that the total service approach applies to the 
customer's total telecommunications service subscription, and proper 
use of CPNI is not necessarily limited to the line from which it was 
derived. Section 64.2005(a) of our rules permits a telecommunications 
carrier to use CPNI for the purpose of marketing service offerings 
among the categories of service already subscribed to by the customer 
from the same carrier. Although MCI proposes to use CPNI from one line 
to market to another line of the same customer, the use of CPNI is 
permissible because it remains within the category of service. As to 
MCI's second question, we do not limit a customer's choice to select 
more than one carrier in a given service category. For the same reasons 
cited above, where the use of CPNI remains within a service category, a 
carrier is able to market that same service to the customer without the 
need for express customer approval. In this manner, a carrier's attempt 
to garner more of the customer's business is pro-competitive and does 
not impinge on a customer's privacy.
    b. Codification of Service Categories. 31. MCI and CommNet request 
that the Commission explicitly state that all telecommunications 
services fall within three groupings--local, interLATA, and CMRS.
    32. We decline to do so because it would have the effect of 
grafting onto the total service approach one of the critical flaws of 
the so-called ``three category'' approach. As explained in greater 
detail in the CPNI Order, the three category approach parsed 
telecommunications services into the three traditional service 
distinctions--local, interLATA, and CMRS. Given the dynamic nature of 
the telecommunications industry, we can not assume that all services 
necessarily fall into such categories. We believe the

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total service approach is sufficiently flexible to incorporate new and 
different categories without periodic reviews to ascertain whether 
changes in the competitive environment should translate into changes in 
service categories. Rather, it is unnecessary to modify the total 
service approach in this regard or to further codify the three service 
categories in the rules.
    c. Use of CPNI to Market Paging.
    33. In the CPNI Order, the Commission determined that CMRS should 
be viewed in the entirety, when considering the ``total service 
approach.'' CommNet urges the Commission to revise its rules to make it 
clear that the service categories to which the ``total service'' 
relationship applies are only local exchange service, interexchange 
service, and CMRS, so that a paging carrier could use CPNI to market 
cellular service and vice versa. 
U S WEST objects on the grounds that the language of the current rule 
was taken directly from the statute and that the categories may blur 
over time and may disappear as customers migrate to single source 
providers.
    34. We find that our rules are clear that under the total service 
approach, a CMRS carrier may use CPNI to market any CMRS service, 
including paging and cellular service. Therefore, no revision of the 
rules is required.
    d. IntraLATA Toll Services. 35. In the CPNI Order, the Commission 
concluded that insofar as both local exchange carriers and 
interexchange carriers currently provide short-haul toll, it should be 
considered part of both local and long-distance service. We further 
concluded that permitting short-haul toll to ``float'' between 
categories would not confer a competitive advantage upon either 
interexchange or local exchange carriers. MCI concludes that the 
provision of short-haul toll may only be considered part of carrier's 
``primary service category'' and requests that we make such a 
clarification.
    36. We agree with MCI that our prior conclusion requires 
clarification. MCI argues that if a local exchange carrier is providing 
local service, then it may use a customer's local service CPNI to 
market intraLATA toll to that customer, and vice-versa, and if an 
interexchange carrier is providing long distance service to a customer, 
then it may use that customer's long distance CPNI to market intraLATA 
toll to him or her, and vice versa. We conclude that short-haul toll 
shall be considered as falling within the category of service the 
carrier is already providing to the customer. Long distance carriers 
providing intraLATA toll service, however, need obtain customer 
approval to use intraLATA toll CPNI to market local service. Likewise, 
local exchange carriers would need customer approval to use intraLATA 
toll CPNI to market interLATA long distance service. In this way, the 
rule is fair to both interexchange and local exchange carriers and 
treats them symmetrically.

B. Use of CPNI to Market Customer Premises Equipment and Information 
Services

1. Background
    37. Section 222(c)(1) states that, ``[e]xcept as required by law or 
with the approval of the customer, a telecommunications carrier that 
receives or obtains [CPNI] by virtue of its provision of a 
telecommunications service shall only use, disclose, or permit access 
to individually identifiable [CPNI] in its provision of (A) the 
telecommunications service from which such information is derived, or 
(B) services necessary to, or used in, the provision of such 
telecommunications service, including the publishing of directories.'' 
In the CPNI Order, we concluded that Congress intended that section 
222(c)(1)(A) govern carriers' use of CPNI for providing 
telecommunications services and that section 222(c)(1)(B) governs 
carriers' use of CPNI for non-telecommunications services. Based upon 
the language of section 222(c)(1), we further concluded that: (1) 
inside wiring, CPE, and certain information services do not fall within 
the scope of section 222(c)(1)(A) because they are not 
``telecommunications services''; and (2) CPE and most information 
services do not fall under section 222(c)(1)(B) because they are not 
``services necessary to, or used in, the provision of such 
telecommunications service.'' We now find that the phrase ``services 
necessary to, or used in, the provision of such telecommunications 
service'' should be given a broader reading than the one given in the 
CPNI Order. The record produced on reconsideration persuades us that a 
different statutory interpretation is permissible, and importantly, 
would lead to appropriate policy results consistent with the statutory 
goals. Therefore, we conclude that section 222(c)(1)(B) allows carriers 
to use CPNI, without customer approval, to separately market CPE and 
many information services to their customers. We further clarify that 
the tuning and retuning of CMRS units and repair and maintenance of 
such units is a service necessary to or used in the provision of CMRS 
service under section 222(c)(1)(B). Finally, we deny petitioners' 
requests that we forbear from applying these restrictions for related 
CPE and information services.
2. Petitions for Reconsideration
    38. Customer Premises Equipment and Information Services under 
Section 222(c)(1). We grant the petitions for reconsideration that 
argue that CPE and certain information services are ``necessary to, or 
used in, the provision of'' telecommunications services, and therefore 
use of CPNI derived from the provision of a telecommunications service, 
without customer approval, to market CPE and information services would 
be permitted under section 222(c)(1)(B). Under our previous 
interpretation, the exception was narrowly construed, resulting in very 
few services for which CPNI could be shared. Indeed, we rejected all 
CPE because it was not a ``service'' and most information services 
because they were not necessary to or used in the carrier's provision 
of the telecommunications service. While this interpretation is not 
inconsistent with the statutory language, we are persuaded that the 
better interpretation is that the exception includes certain products 
and services provisioned by the carrier with the underlying 
telecommunications service to comprise the customer's total service. 
This is because those related services and products facilitate the 
underlying telecommunications service and customers expect that they 
will be used in the provisioning of that service offering. Our new 
interpretation accords with the Commission's stated intention in the 
CPNI Order to revisit and if necessary revise its conclusions regarding 
customer expectations as those expectations changed in the marketplace 
with advancements in technology or as new evidence of the evolution of 
customer expectations becomes available to the Commission. Such 
evidence has now been made available to us by the record developed on 
reconsideration.
    39. When evaluated as a whole, the exception can be reasonably 
interpreted to include those products used in the provision of 
telecommunications, including directories and CPE. First, we find 
statutory support for this interpretation through the only example 
Congress included in the exception--the publishing of directories. As 
described in the CPNI Order, directories are ``necessary to and used 
in'' the provision of service because without access to phone numbers, 
customers cannot complete calls. A directory is not a ``service,'' but 
rather, like CPE, is a product. Consistent with the statutory 
exception, however, the ``publishing'' of the directory is a service--
the service by

[[Page 53248]]

which the carrier provisions the product necessary to, or used in, the 
customer's telecommunications service. Thus, Congress' publishing of 
directories example supports including those products as well as 
services provisioned by the carrier that are used in and necessary to 
the customer's telecommunications service. We believe that our previous 
interpretation construed the term ``services'' in isolation from the 
phrase ``necessary to, or used in.'' While it is obvious that CPE 
itself is not a service, the provision of CPE is a service that is 
necessary to, or used in the provision of the underlying 
telecommunications service. Customers cannot make, or complete, calls 
without CPE. This is consistent with Congress' example of the 
publishing of directories in section 222. Therefore, this finding 
concerning CPE is limited to section 222. Also, the CPE that is 
included in this exception is limited to CPE that is used in the 
provision of the telecommunications service from which the CPNI is 
derived.
    40. Second, our broader statutory interpretation appropriately 
protects the customer's reasonable expectations of privacy in 
connection with CPNI, which many petitioners argue is the appropriate 
test for determining the limitations on the use of CPNI without a 
customer's approval. We are persuaded that CPE and many information 
services properly come within the meaning of section 222(c)(1)(B).
    41. In the wireless context, our regulation of CMRS providers and 
the history of the industry has allowed the development of bundles of 
CPE and information services with the underlying telecommunications 
service. Thus, information services and CPE offered in connection with 
CMRS are directly associated and developed together with the service 
itself. Indeed, we are persuaded by the record and our observations of 
the development of the CMRS market generally that the information 
services and CPE associated with CMRS are reasonably understood by 
customers as within the existing service relationship with the CMRS 
provider. Customers expect to have CPE and information services 
marketed to them along with their CMRS service by their CMRS provider. 
Accordingly, we conclude that such CPE and information services come 
within the meaning of ``necessary to, or used in,'' the provision of 
service. In the CMRS context, carriers should be permitted to use CPNI, 
without customer approval, to market information services and CPE to 
their CMRS customers.
    42. The wireline industry has developed somewhat differently from 
CMRS and, while the analysis is the same, the results concerning how 
carriers may use CPNI accordingly differ from the wireless industry. No 
evidence has been produced on the record which shows that allowing 
wireline carriers to market CPE to their customers, using CPNI without 
customer consent, violates customers' expectations. We are convinced 
that such usage by carriers would be beneficial to customers as new and 
advanced products develop. Therefore, wireline carriers should be 
permitted to use CPNI, without customer approval, to market CPE to 
their customers.
    43. Within the broader reading of the statute, we find that certain 
wireline information services should also be considered necessary to, 
or used in, the provision of the underlying telecommunications service. 
In the CPNI Order, the Commission listed several information services 
that it believed should not be considered necessary to, or used in, the 
underlying telecommunications service: call answering, voice mail or 
messaging, voice storage and retrieval services, and fax storage and 
retrieval services. Applying the broader reading of the statute, along 
with the new evidence on the record, we now believe that all of these 
services should be considered necessary to, or used in, the provision 
of the underlying telecommunications service because customers have 
come to depend on these services to help them make or complete calls. 
The record indicates that customers have come to expect that their 
service provider can and will offer these services along with the 
underlying telecommunications service. Therefore, carriers may use 
CPNI, without customer approval, to market call answering, voice mail 
or messaging, voice storage and retrieval services, and fax storage and 
retrieval services.
    44. We continue to exclude from this list, as the Commission did in 
the CPNI Order, Internet access services. There is no convincing new 
evidence on the record that shows that such services are necessary to, 
or used in, the making of a call, even in the broadest sense. There is 
also no evidence, currently, that customers expect to receive such 
services from their wireline provider, or that they expect to use such 
services in the way that they expect to receive or use the above-listed 
services.
    45. We will, however, add protocol conversions to the list of 
services that carriers may market using CPNI without customer approval. 
In its petition, Bell Atlantic requests that we redefine protocol 
conversion as a telecommunications service. Bell Atlantic asserts that 
protocol conversions that do not alter the underlying information sent 
and received should not be defined as information services. We do not 
believe that protocol conversions should be redefined as a 
telecommunications service but because protocol conversions are 
necessary to the provision of the telecommunications service, in the 
instances where they are used, protocol conversions should be included 
in the group of information services listed above. Accordingly, we 
grant Bell Atlantic's request to use CPNI to market, without customer 
approval, protocol conversions.
3. Petitions for Forbearance
    a. Introduction. 46. In the alternative, many parties urge the 
Commission to forbear from prohibiting CMRS providers and wireline 
carriers from using CPNI to market CPE and/or information services 
without customer approval. As we described in detail, section 10 of the 
Act requires the Commission to forbear from regulation when: (1) 
enforcement is not necessary to ensure that the carrier's charges and 
practices are just and reasonable; (2) enforcement is not necessary for 
the protection of consumers; and (3) forbearance is consistent with the 
public interest.
    b. CMRS Providers. 47. In the preceding section, we granted the 
petitions for reconsideration to allow CMRS providers to use CPNI, 
without customer approval, to market CPE and information services to 
their customers. Therefore, we deny as moot the petitions for 
forbearance from section 222's prohibition against CMRS providers using 
CPNI to market, without customer approval, CPE and information 
services.
    c. Wireline Carriers. 48. In the preceding section, we granted the 
petitions for reconsideration to allow wireline carriers to use CPNI, 
without customer approval, to market CPE and some information services 
to their customers. Therefore, we deny as moot the petitions requesting 
that we forbear from enforcing section 222's prohibition against 
wireline carriers to use CPNI to market CPE and information services 
such as call answering, voice mail or messaging, voice storage and 
retrieval services, fax storage and retrieval services, and protocol 
conversions. Bell Atlantic has requested that we forbear from enforcing 
section 222's prohibition against using CPNI without prior customer 
consent to market all

[[Page 53249]]

information services. We deny this request.
    49. Section 10(a)(1). The primary focus of the CPNI rules is not, 
nor ever has been, intended to ensure reasonable rates or practices. 
Therefore, we determine that enforcement of the restrictions on the use 
of CPNI to market those information services that are not ``necessary 
to, or used in, the provision of'' telecommunications services are not 
necessary to ensure that the charges, practices, classifications, or 
regulations are just and reasonable and are not unjustly or 
unreasonably discriminatory.
    50. Section 10(a)(2). We are unable to conclude that forbearing 
from enforcement of restrictions on the use of CPNI for marketing all 
information services would satisfy the second criterion. We note, 
however, that the ``integrated'' services that Bell Atlantic identifies 
include the information services which we have found above to be 
necessary to, or used in, the provision of the underlying 
telecommunications service. We have, on reconsideration, identified 
those types of information services for which our broader 
interpretation of section 222(c)(1)(B) is more in line with customer 
expectations and congressional intent. For these services, forbearance 
is not necessary. With regard to other information services such as 
Internet access, we find that enforcing section 222(c)(1)(B) is still 
necessary to protect consumers. Requiring prior consent protects 
customers in many instances where they would not realize potentially 
sensitive, personal information had been accessed or used. As noted 
above, there is no evidence, currently, that customers expect to 
receive such services from their wireline provider, or that they expect 
to use such services in the way that they expect to receive or use more 
integrated services. Nor are we aware of any other law, regulation, 
agency or state requirement that would substitute for the effectiveness 
of a prior consent requirement, which protects customer privacy 
expectations by placing the control over the use of CPNI for purposes 
of marketing non-integrated information services in the hands of the 
customer.
    51. Section 10(a)(3). We concluded in the CPNI Order, however, that 
``[u]nlike the Commission's pre-existing policies under Computer III, 
which were largely intended to address competitive concerns, section 
222 of the Act explicitly directs a greater focus on protecting 
customer privacy and control.'' We further concluded that ``[t]his new 
focus embodied in section 222 evinces Congress' intent to strike a 
balance between competitive and customer privacy interests different 
from that which existed prior to the 1996 Act, and thus supports a more 
rigorous approval standard for carrier use of CPNI than in the prior 
Commission Computer III framework.'' More specifically, we concluded 
that an opt-out scheme does not provide any assurance that consent for 
the use of a customer's CPNI would be informed, and found that opt-out 
does not adequately protect customer privacy interests. Bell Atlantic, 
therefore, is incorrect in its assertion that our conclusions in 
Computer III dictate our findings relating to the public interest. We 
also conclude that the record on forbearance suggested here does not 
convince us that the privacy goals of the statute are met where 
carriers can use CPNI without express customer approval to sell 
services outside the existing customer-carrier relationship. We 
accordingly find that Bell Atlantic's request for forbearance of 
section 222's affirmative approval requirement is generally 
inconsistent with the public interest. Customers who are interested in 
obtaining more information can arrange to do so easily by granting 
consent for their carriers' use of CPNI. We have found no public 
interest benefits that would outweigh these concerns.
    52. Pursuant to section 10(b) of the Act, we have evaluated whether 
forbearance from the prior consent requirement will promote competitive 
market conditions, including the extent to which forbearance will 
enhance competition among providers of telecommunications services. As 
we concluded above, the ability to use CPNI from an existing service 
relationship to market new services to a customer bestows an enormous 
competitive advantage for those carriers that currently have a service 
relationship with customers, particularly incumbent exchange carriers 
and interexchange carriers with a large existing customer base. This, 
in turn, poses a significant risk to the development of competition. 
Therefore, to the extent that Bell Atlantic is requesting forbearance 
from section 222's restrictions on the use of CPNI to market Internet 
access service, we find that such forbearance would neither promote 
competition nor enhance competition among telecommunications service 
providers. For instance, we recently stated that, although many 
Internet service providers (ISPs) ``compete against one another, each 
ISP must obtain the underlying basic services from the incumbent local 
exchange carrier, often still a BOC, to reach its customers.'' Because 
of the competitive advantage that many BOCs retain, we concluded that 
we would not remove certain safeguards designed to protect against BOC 
discrimination despite the competitive ISP marketplace. We reach a 
similar conclusion here: giving wireline carriers, particularly ILECs, 
the right to use CPNI without affirmative customer approval to market 
Internet access services could damage the competitive Internet access 
services market at this point in time. Accordingly, we deny Bell 
Atlantic's petition for forbearance on this issue.
    d. Forbearance from all CPNI Rules for CMRS Providers. 53. A few 
parties urge the Commission to forbear from imposing any CPNI 
obligations on CMRS providers. Forbearance from enforcing all CPNI 
rules against CMRS carriers, according to one petitioner, will permit 
many beneficial and pro-competitive marketing practices to continue. 
The Commission must forbear from enforcing its rules or any statutory 
provision where the criteria of the forbearance test, set out in Part 
V.A.3 are satisfied. We deny this request.
    54. Section 10(a)(1). As we have previously stated, the primary 
focus of the CPNI rules is not, nor ever has been, intended to ensure 
reasonable rates or practices. Therefore, we determine that enforcement 
of the CPNI rules for CMRS carriers is not necessary to ensure that the 
charges, practices, classifications, or regulations are just and 
reasonable and are not unjustly or unreasonably discriminatory.
    55. Section 10(a)(2). We are unable to find that CMRS customers' 
privacy interests would be adequately protected absent section 222 and 
the rules promulgated in this proceeding. We are concerned, for 
example, that customers would be harmed by elimination of the 
restriction on carriers' use of CPNI to identify or track customers who 
call competing service providers contained in section 64.2005(b)(1) of 
our rules. Section 222 and our implementing rules protect customers in 
many instances where they would not realize potentially sensitive, 
personal information had been accessed or used. Moreover, we would be 
remiss in our duty under the statute if we created an environment in 
which CMRS customers' only recourse was to switch carriers after 
discovering that their CPNI had been used without authorization. Nor 
are we aware of any other law, regulation, agency or state requirement 
that would substitute for the effectiveness of our rules implementing 
section 222. Consequently, the second

[[Page 53250]]

criterion for forbearance has not been met.
    56. Section 10(a)(3). We do not find that forbearance from section 
222 and our CPNI rules for all CMRS providers is consistent with the 
public interest. Complete forbearance would eliminate section 222's 
procedures for the protection of both customers and carriers, such as 
the process for transferring CPNI from a former carrier to a new 
carrier pursuant to a customer's written request and the obligation to 
protect carrier proprietary information. Pursuant to section 10(b) of 
the Act, we have evaluated whether forbearance from section 222 for 
CMRS carriers will promote competitive market conditions, including the 
extent to which forbearance will enhance competition among providers of 
telecommunications services. On balance, we find that forbearance from 
the full range of CPNI protections would undermine consumer privacy to 
an extent that outweighs the potential benefits demonstrated on the 
record in terms of carrier cost savings. Therefore, we conclude that 
there is insufficient basis for a public interest finding under the 
third criterion.

C. Use of CPNI to Market to Former and ``Soon-to-be Former'' Customers

1. Background
    57. The CPNI Order adopted section 64.2005(b)(3) to prohibit a 
carrier from using or accessing CPNI to regain the business of a 
customer who has switched to another provider. The Commission decided 
as a matter of statutory interpretation that once a customer terminates 
service from a carrier, CPNI derived from the previously subscribed 
service may not be used to retain or regain that customer. 
Specifically, the Commission foreclosed the use of CPNI for customer 
retention purposes under section 222(c)(1) because it felt such use was 
not carried out in the ``provision of'' service, but rather, for the 
purpose of retaining a customer that has already taken steps to change 
its provider. The CPNI Order also precluded the use of CPNI under 
section 222(d)(1), insofar as such use would be undertaken to market a 
service, rather than to ``initiate'' a service within the meaning of 
that provision.
    58. A significant majority of the petitioners have requested that 
the Commission reconsider or forbear from the restrictions of section 
64.2005(b)(3), which has been referred to as the ``winback'' 
prohibitions.
2. ``Winback''
    a. Discussion. 59. Petitioners challenge the winback restrictions 
on a variety of grounds. On reconsideration, we conclude that all 
carriers should be able to use CPNI to engage in winback marketing 
campaigns to target valued former customers that have switched to other 
carriers. After reviewing the fuller record on this issue developed on 
reconsideration, we are persuaded that winback campaigns are consistent 
with section 222(c)(1) and in most instances facilitate and foster 
competition among carriers, benefiting customers without unduly 
impinging upon their privacy rights. Accordingly, we reverse our 
position and eliminate rule 64.2005(b)(3).
    60. On reconsideration, we believe that section 222(c)(1)(A) is 
properly construed to allow carriers to use CPNI to regain customers 
who have switched to another carrier. While section 222(c)(1) is 
susceptible to different interpretations, we now think that the better 
reading of this language permits use of CPNI of former customers to 
market the same category of service from which CPNI was obtained to 
that former customer. We agree with those petitioners who argue that 
the use of CPNI in this manner is consistent with both the language and 
the goals of the statute. Section 222(c)(1)(A) permits the use of CPNI 
in connection with the ``provision of the telecommunications service 
from which the information is derived.'' The marketing of service 
offerings within a given presubscribed telecommunications service is 
encompassed within the ``provision of'' that service. In developing the 
total service approach, the Commission recognized that marketing is 
implicit in the term ``provision'' as used in section 222(c)(1). The 
CPNI Order stated that ``we believe that the best interpretation of 
section 222(c)(1) is the total service approach, which affords carriers 
the right to use or disclose CPNI for, among other things, marketing 
related offerings within customers' existing service for their benefit 
and convenience.'' While we recognize that this discussion in the CPNI 
Order also referred to the customer's ``existing'' service, we now 
conclude upon further reflection that our focus should not be so 
limited. Common sense tells us that customers are aware of and expect 
that their former carrier has information about the services to which 
they formerly subscribed. Businesses do not customarily purge their 
records of a customer when that customer leaves. We therefore disagree 
with the assertion that extending winback marketing for the same 
service to a former customer is an indefensible stretch of the total 
service approach.
    61. Because customer expectations form the basis of the total 
service approach, they properly influence our understanding of the 
statute, a goal of which is to balance competitive concerns with those 
of customer privacy. Customers expect carriers to attempt to win back 
their business by offering better-tailored service packages, and that 
such precise tailoring is most effectively achieved through the use of 
CPNI. Winback restrictions may deprive customers of the benefits of a 
competitive market. Winback facilitates direct competition on price and 
other terms, for example, by encouraging carriers to ``out bid'' each 
other for a customer's business, enabling the customer to select the 
carrier that best suits the customer's needs.
    62. Some commenters argue that ILECs should be restricted from 
engaging in winback campaigns, as a matter of policy, because of the 
ILECs' unique historic position as regulated monopolies. We believe 
that such action by an ILEC is a significant concern during the time 
subsequent to the customer's placement of an order to change carriers 
and prior to the change actually taking place. Therefore, we have 
addressed that situation at Part V.C.3. However, once a customer is no 
longer obtaining service from the ILEC, the ILEC must compete with the 
new service provider to obtain the customer's business. We believe that 
such competition is in the best interest of the customer and see no 
reason to prohibit ILECs from taking part in this practice.
    63. We are also unpersuaded by the allegations that an incumbent 
carrier's use of CPNI in winback campaigns amounts to a predatory 
practice designed to prevent effective market entry by new competitors. 
Contrary to the commenters' suggestions, we believe such use of CPNI is 
neither a per se violation of section 201 of the Communications Act, as 
amended, nor the antitrust laws. Prior to the adoption of the rules 
promulgated under 1996 Act, incumbent carriers were able to use CPNI to 
regain customers lost to competitors. Assuming incumbent LECs have 
sufficient market power to engage in predatory strategies, they are 
constrained in their ability to raise and lower prices by our tariff 
rules and non-discrimination requirements. Because winback campaigns 
can promote competition and result in lower prices to consumers, we 
will not condemn such practices absent a showing that they are truly 
predatory.

[[Page 53251]]

    64. Thus, we conclude that the statute permits a carrier evaluating 
whether to launch a winback campaign to use CPNI to target valued 
former customers who have switched service providers.
    65. An important limitation derived from the statutory language is 
that the carrier may use CPNI of the former customer to offer that 
customer the service or services to which the customer previously 
subscribed. It would be inconsistent with the total service approach 
for a carrier to use such CPNI to offer new services outside the former 
customer-carrier relationship.
    66. Some petitioners assert that winback is permissible under the 
exceptions enumerated in Section 222(d)(1) that allow the use of CPNI 
without customer approval to ``render'' or ``initiate'' service. Based 
upon our decision that the use of CPNI to winback customers is 
consistent with section 222(c)(1), we decline to reach these arguments. 
Similarly, we need not address arguments concerning the 
constitutionality of, propriety under the APA, and forbearance from, 
the former rule. Consequently, we eliminate Sec. 64.2005(b)(3). We 
therefore do not need to reach the clarification petitions submitted on 
the former rule.
3. Retention of Customers
    a. Background. 67. As noted above, the CPNI Order also prohibited a 
carrier's access to or the use of the CPNI of a ``soon-to-be-former'' 
customer to market the same services to retain that customer. The CPNI 
Order did not distinguish between marketing for the purpose of 
retaining customers versus regaining them. As explained above, on 
reconsideration, we believe that use of CPNI to regain former customers 
falls within the ambit of section 222(c)(1). We conclude here that use 
of CPNI to retain customers ordinarily does not come under section 
222(c)(1), and in such instances would likely violate section 222(b).
    b. Discussion. 68. We conclude that section 222 does not allow 
carriers to use CPNI to retain soon-to-be former customers where the 
carrier gained notice of a customer's imminent cancellation of service 
through the provision of carrier-to-carrier service. We conclude that 
competition is harmed if any carrier uses carrier-to-carrier 
information, such as switch or PIC orders, to trigger retention 
marketing campaigns, and consequently prohibit such actions 
accordingly.
    69. The Commission previously determined that carrier change 
information is carrier proprietary information under section 222(b). In 
the Slamming Order, 64 FR 9219, February 24, 1999, the Commission 
stated that pursuant to section 222(b), the carrier executing a change 
``is prohibited from using such information to attempt to change the 
subscriber's decision to switch to another carrier.'' Thus, where a 
carrier exploits advance notice of a customer change by virtue of its 
status as the underlying network-facilities or service provider to 
market to that customer, it does so in violation of section 222(b). We 
concede that in the short term this prohibition falls squarely on the 
shoulders of the BOCs and other ILECs as a practical matter. As 
competition grows, and the number of facilities-based local exchange 
providers increases, other entities will be restricted from this 
practice as well.
    70. We agree that section 222(b) is not violated if the carrier has 
independently learned from its retail operations that a customer is 
switching to another carrier; in that case, the carrier is free to use 
CPNI to persuade the customer to stay, consistent with the limitations 
set forth in the preceding section. We thus distinguish between the 
``wholesale'' and the ``retail'' services of a carrier. If the 
information about a customer switch were to come through independent, 
retail means, then a carrier would be free to launch a ``retention'' 
campaign under the implied consent conferred by section 222(c)(1).
    c. Petitions for Forbearance. 71. A number of petitioners seek 
forbearance from restrictions that limit the ability of a carrier to 
retain a soon-to-be former customer who has indicated an intent to 
switch carriers. Petitioners request forbearance from the application 
of rules prohibiting retention marketing, however, as part of their 
overall requests that the Commission forbear from applying winback 
restrictions generally. Because the Commission has revised its 
interpretation and eliminated rule 64.2005(b)(3), that portion of their 
petitions is moot.
    72. Section 10 of the Act requires the Commission to forbear from 
regulation when: (1) enforcement is not necessary to ensure that the 
carrier's charges and practices are just and reasonable; (2) 
enforcement is not necessary for the protection of consumers; and (3) 
forbearance is consistent with the public interest. For the reasons 
discussed below, we conclude the forbearance standard has not been met 
to the extent that carriers would seek to use CPNI to regain a soon-to-
be former customer, precipitated by the receipt of a carrier-to-carrier 
order.
    73. Section 10(a)(1). Petitioners assert that limiting the use of 
CPNI in retention efforts is not necessary to ensure just, reasonable, 
and nondiscriminatory rates.
    74. We agree that the primary focus of the CPNI rules is not, nor 
ever has been, intended to ensure reasonable rates or practices. 
Therefore, we determine that enforcement of section 222's prohibition 
against allowing a carrier to use proprietary information that it 
receives by virtue of fulfilling carrier-to-carrier orders in a 
``wholesale'' capacity is not necessary to ensure that the charges, 
practices, classifications, or regulations are just and reasonable and 
are not unjustly or unreasonably discriminatory.
    75. Section 10(a)(2). Petitioners assert that retention 
restrictions are not necessary to protect customers generally. Although 
we agree that privacy concerns are not particularly jeopardized in 
winback situations, generally, that does not mean that enforcement of 
this restriction is unnecessary to protect customers. Rather, we 
conclude that consumers' substantial interests in a competitive and 
fair marketplace would be undermined if this restriction was not 
enforced. Consequently, the second criterion is not satisfied.
    76. Section 10(a)(3). Finally, petitioners contend that customer 
retention is in the public interest. We are not persuaded, however, 
that permitting carriers to unfairly use information that they obtain 
in a ``wholesale'' capacity is in the public's interest. We conclude 
that there is insufficient basis for a public interest finding in this 
instance under the third criterion. Therefore, we deny the forbearance 
petitions on this issue.

D. Disclosure of CPNI to New Carriers When a Customer is ``Won''

    77. In the CPNI Order we definitively concluded that the term 
``initiate'' in section 222(d)(1) does not require that a customer's 
CPNI be disclosed by a carrier to a competing carrier who has ``won'' 
the customer as its own. We found that section 222(d)(1) applies only 
to carriers already possessing the CPNI, within the context of the 
existing service relationship, and not to any other carriers merely 
seeking access to CPNI. We noted, however, that section 222(c)(1) does 
not prohibit carriers from disclosing CPNI to competing carriers upon 
customer approval. Accordingly, we reasoned that although an incumbent 
carrier is not required to disclose CPNI pursuant to section 222(d)(1) 
or section 222(c)(2) absent an affirmative written request, local 
exchange carriers may need to disclose a customer's service record upon 
oral approval of a customer to a competing

[[Page 53252]]

carrier prior to its commencement of service as part of a local 
exchange carrier's section 251(c)(3) and (c)(4) obligations. In this 
way, we concluded, section 222(c)(1) permits the sharing of customer 
records necessary for the provisioning of service by a competitive 
carrier. Finally, we also noted that a carrier's failure to disclose 
CPNI to a competing carrier that seeks to initiate service to that 
customer who wishes to subscribe to a competing carrier's service, may 
well constitute an unreasonable practice in violation of section 
201(b), depending on the circumstances.
    78. We reject MCI's various requests for disclosure of CPNI by 
former carriers, without customer approval, to new carriers to enable 
the new carriers to initiate service. We deny MCI's petition in this 
regard.
    79. First, MCI and TRA ask that we find that section 222(d)(1) 
allows ``one carrier to disclose CPNI to another to enable the latter 
to initiate service without customer approval'' thereby reversing our 
conclusion in the CPNI Order. Neither MCI nor TRA has presented any new 
facts or arguments that the Commission did not fully consider in the 
CPNI Order regarding the interpretation of section 222(d)(1). We 
therefore deny MCI and TRA's request that we reverse this portion of 
the CPNI Order.
    80. Second, MCI also requests that the Commission, in any case, 
find that section 222(c)(1) authorizes the disclosure of CPNI without 
customer approval. We find that MCI's request is contrary to our 
conclusion in the CPNI Order that the language of 222(c)(1)(A) reflects 
Congress' judgment that customer approval for carriers to use, 
disclose, and permit access to CPNI can be inferred in the context of 
an existing customer relationship. We reasoned that such an inference 
is appropriate because the customer is aware that his or her carrier 
has access to CPNI, and, through subscription to the carrier's service, 
has implicitly approved the carrier's use of CPNI within the existing 
relationship. We are not persuaded that the disclosure of CPNI to a 
different carrier to initiate service without customer approval for 
that disclosure would be contemplated by a customer as a carrier's use 
of his or her CPNI within the existing customer-carrier relationship. 
As such, we deny MCI's request.
    81. Third, MCI also asserts that sections 272, 201(b), and 202(a) 
require BOCs and other ILECs that disclose CPNI to affiliates without 
customer approval in order to initiate service to likewise disclose 
CPNI to any other requesting carrier ``needing it to initiate service. 
MCI has not provided any reasonable basis for altering these 
conclusions. Further, we are not persuaded by MCI's unsupported request 
that section 202(a) would require such relief. Accordingly, we deny 
MCI's request.
    82. Fourth, MCI further argues that if the Commission does not 
grant any of the relief requested, then it should allow carriers to 
notify customers that their failure to approve the disclosure of CPNI 
to a new carrier may disrupt the installation of any new service they 
may request. As MCI has not persuaded us, however, that a customer's 
failure to approve such a disclosure may disrupt the installation of 
service, we deny MCI's request.
    83. Finally, MCI requests that the Commission ``reconfirm'' that 
CPNI is an unbundled network element ``that BOCs and other ILECs must 
provide to all requesting carriers under section 251(c)(3) of the 
Act.'' This is not a fair characterization of the CPNI Order's 
conclusion. Rather, the CPNI Order held that local exchange carriers 
may need to disclose a customer's service record upon oral approval of 
a customer to a competing carrier prior to its commencement of service 
as part of a local exchange carrier's section 251(c)(3) and (c)(4) 
obligations. This conclusion does not indicate, as MCI has implied, 
that CPNI is an unbundled network element subject to section 
251(c)(3)'s unbundling requirements separate from the Commission's 
requirement that incumbent carriers provide unbundled access to 
operations support systems and the information they contain. Therefore, 
MCI incorrectly concludes that the CPNI Order found that CPNI is an 
unbundled network element. In any case, the United States Supreme Court 
recently concluded that the Commission's unbundling rule, Sec. 51.319 
of the Commission's rules, should be vacated. As a result, the 
Commission reopened CC Docket 96-98 to refresh the record on the issues 
of (1) how, in light of the Supreme Court ruling, the Commission should 
interpret the standards set forth in section 251(d)(2) of the 
Telecommunications Act of 1996; and (2) which specific network elements 
the Commission should require incumbent LECs to unbundle.

VI. ``Approval'' Under Section 222(c)(1)

A. Grandfathering Pre-existing Notifications

    84. On May 21, 1998, the Common Carrier Bureau released the 
Clarification Order clarifying several issues in the CPNI Order. Among 
other things, the Clarification Order made it clear that carriers that 
have complied with the Computer III notification and prior written 
approval requirements in order to market enhanced services to business 
customers with more than 20 access lines are also in compliance with 
section 222 and the Commission's rules. CompTel and LCI request that 
the Commission reverse the Clarification Order's conclusion. We decline 
to do so for the reasons discussed below and, in fact, hereby adopt the 
Clarification Order.
    85. As discussed in the Clarification Order, the framework 
established under the Commission's Computer III regime, prior to the 
adoption of section 222, governed the use of CPNI by the BOCs, AT&T, 
and GTE to market CPE and enhanced services. Under this framework, 
those carriers were obligated to: (1) provide an annual notification of 
CPNI rights to multi-line customers regarding enhanced services, as 
well as a similar notification requirement that applied only to the 
BOCs regarding CPE; and (2) obtain prior written authorization from 
business customers with more than 20 access lines to use CPNI to market 
enhanced services. The CPNI Order, however, replaced the Computer III 
CPNI framework in all material respects. In its place, the CPNI Order 
established requirements compelling carriers to provide customers with 
specific one-time notifications prior and proximate to soliciting 
express written, oral, or electronic approval for CPNI uses beyond 
those set forth in sections 222(c)(1)(A) and (B). The CPNI Order 
further established an express approval mechanism for such 
solicitations as it is the ``best means to implement this provision 
because it will minimize any unwanted or unknowing disclosure of CPNI'' 
and will also ``limit the potential for untoward competitive advantages 
by incumbent carriers.''
    86. The Clarification Order noted that, like the requirements 
established in the CPNI Order, ``the notification obligation 
established by the Computer III framework required, among other things, 
that carriers provide customers with illustrative examples of enhanced 
services and CPE, expanded definitions of CPNI and CPE, information 
about a customer's right to restrict CPNI use at any time, information 
about the effective duration of requests to restrict CPNI, and 
background information to enable customers to understand why they were 
being asked to make decisions about their CPNI.'' The Clarification 
Order determined that these Computer III notifications comply 
materially with the form and content of the notices

[[Page 53253]]

required by the CPNI Order. In addition, the Clarification Order 
concluded that the Computer III requirement to obtain prior written 
authorization constitutes a form of express, affirmative approval, as 
required by section 222. Accordingly, the Clarification Order concluded 
that carriers that complied with the Computer III notification and 
prior written approval requirement in order to market enhanced services 
to such carriers are also in compliance with section 222 and the 
Commission's rules.
    87. We agree with the Bureau that carriers that have complied with 
the Computer III notification and prior written approval requirements 
in order to market enhanced services to certain large business 
customers should be deemed in compliance with section 222 and the 
Commission's rules. For the reasons stated in the Clarification Order, 
we agree that the Computer III framework required carriers to provide 
these large business customers with adequate notice and obtain express, 
affirmative approval in material compliance with the form and content 
of those required by section 222 and the Commission's rules. Although 
it is true that the Computer III consents were given prior to the 
advent of local competition, we believe that the detailed notice and 
express, affirmative consent required under that regime compensate for 
this deficiency. Moreover, we are not persuaded by CompTel's assertion 
that the BOCs warnings that they may have to change the customer's 
account representatives put undue pressure on these business customers 
to relent. Finally, we also conclude that although some of the Computer 
III annual notifications may not have been ``proximate to'' the carrier 
solicitations as required by section 222, the Computer III regime's 
annual notification requirement and limitation to business customers 
with more than 20 access lines--requirements that we note are more 
stringent than required by section 222--materially satisfy the concerns 
we intended to address by the proximate notification requirement 
promulgated in the CPNI Order. As such, we agree with the Bureau that 
the Computer III notifications are in material compliance with section 
222 and the Commission's rules, and adopt the reasoning and conclusions 
of the Clarification Order as our own.
    88. Other carriers request that the Commission ``grandfather'' 
authorizations obtained subsequent to the enactment of section 222, but 
prior to the promulgation of rules in the CPNI Order.
    89. We conclude, based upon the evidence presented in the record of 
this proceeding, that AT&T's solicitations constitute a good faith 
effort to materially comply with section 222 provided they are 
supplemented with the curative written notification of rights AT&T has 
offered to distribute. Accordingly, we find that AT&T may continue to 
rely on the approvals given, provided the approvals were obtained in 
the manner detailed above, so long as AT&T supplements those approvals 
with a written notice to customers of their rights including an 
explanation that they have the right to withdraw their approval.
    90. Other than AT&T, the parties in this proceeding have not 
provided sufficient detail describing their solicitations for the 
Commission to make a determination of material compliance. We urge them 
to examine the showing made by AT&T as discussed above. We will accept 
further waiver requests that are materially compliant with section 222, 
provided the carriers requesting waivers can make a showing similar to 
the one made by AT&T.

B. Oral and Written Notification

1. Background
    91. Section 64.2007 of the Commission's Rules sets out several 
requirements for carriers who wish to obtain a customer's consent for 
the use of that customer's CPNI. Vanguard requests that the Commission 
clarify the requirements established in the Order for 
telecommunications providers seeking customer consent for the use of 
CPNI. Vanguard expresses concern that the rules will hinder providers 
from obtaining consent at the time of the execution of initial customer 
agreements.
    92. GTE requests clarification of the ``one-time'' notification 
rules, noting that, under Sec. 64.2007(f)(3), solicitation of approval 
to use CPNI must be proximate to the notification of a customer's CPNI 
rights. GTE requests that the Commission ``clarify that written notice 
followed proximately by either written or oral solicitation is 
sufficient and is consistent with the FCC's finding that `one-time' 
notice is sufficient.'' GTE contends that this would require amending 
Sec. 64.2007(f)(4).
    93. SBC also requests that the Commission clarify that written 
notification followed by either an oral or written solicitation for 
approval is appropriate under the one-time notification scheme.
    94. Omnipoint requests that, for CMRS providers, the Commission 
replace its ``opt-in'' requirement for approval of the use of CPNI with 
an ``opt-out'' rule.
2. Discussion
    95. We find that Omnipoint has presented no new circumstances that 
warrant reversal of the Commission's conclusion that the requirement of 
affirmative consent is consistent with Congressional intent, as well as 
with the principles of customer control and convenience. Nor has 
Omnipoint shown that wireless carriers should not be subject to the 
requirement of affirmative consent.
    96. We conclude, however, that the Commission should not attempt to 
micro-manage the methods by which carriers meet their obligations to 
secure customer consent. As long as the carrier can show that the rules 
previously promulgated, which ensure that the customer has been clearly 
notified of his or her right to refuse consent before the CPNI is used 
and that the notification clearly informs the customer of the 
consequences of giving or refusing consent, have been complied with, 
the consent will be effective. However, we note that those rules are 
specific in the requirements for written notification, e.g., that the 
notice must be clearly legible, use sufficiently large type, and be 
placed in an area so as to be readily apparent to the customer. We 
intend to be vigilant in enforcing these rules, as we have in enforcing 
the rules against slamming, which similarly provide for clear and 
unambiguous notice to the telephone subscriber who signs a letter of 
agency for authorizing a change in his or her primary interexchange 
carrier. This policy is also consistent with the Commission's recent 
action to help ensure that consumers are provided with essential 
information in phone bills in a clear and conspicuous manner. We will 
entertain complaints that carriers have not met these requirements on a 
case-by-case basis.
    97. We clarify, at Vanguard's request, that its plan for obtaining 
consent at the time of the execution of initial customer agreements 
would be appropriate assuming Vanguard provides ``complete disclosure'' 
prior to seeking customer approval as required by section 64.2007(f) of 
the Commission's rules, and is otherwise compliant with the remainder 
of section 64.2007. In other words, seeking customer consent at the 
time of execution of initial customer agreements is not prohibited by 
our rules. We also concur with U S WEST's assertion, however, that 
carriers should be left with flexibility in implementing our rules. 
Accordingly, Vanguard's proposal is merely one option among many that 
could comply with our rules.

[[Page 53254]]

    98. Moreover, in keeping with our desire to avoid micro-management 
of the notification and authorization process, we shall grant SBC, 
Frontier, and GTE's requests that we eliminate Sec. 64.2007(f)(4) of 
the Commission's rules.

C. Preemption of State Notification Requirements

    99. In the CPNI Order, we declined to exercise our preemption 
authority, although we concluded that in connection with CPNI 
regulation we ``may preempt state regulation of intrastate 
telecommunications matters where such regulation would negate the 
Commission's exercise of its lawful authority because regulation of the 
interstate aspects of the matter cannot be severed from the intrastate 
aspects.'' Rather, we stated that we would examine any conflicting 
state rules on a case-by-case basis once the states have had an 
opportunity to review the requirements we adopted in the CPNI Order. At 
that time we noted that state rules that are vulnerable to preemption 
are those that (1) permit greater carrier use of CPNI than section 222 
and the Commission's rules allow, or (2) seek to impose additional 
limitations on carriers' use of CPNI. We also indicated, however, that 
state rules that would not directly conflict with the balance or goals 
set by Congress were not vulnerable to preemption.
    100. On reconsideration, we affirm our decision to exercise our 
preemption authority on a case-by-case basis. While it is possible that 
states might impose additional CPNI conditions that could require the 
expenditure of resources, we conclude it would be inappropriate for the 
Commission to speculate in this proceeding about what such conditions 
might be and how much compliance might cost. We note that while 
deciding to address preemption requests on a case-by-case basis, we 
reserve the right to consider the potential costs and burdens imposed 
by any state requirements that would apply retroactively. For these 
same reasons, we also deny GTE's request that we find that ``additional 
CPNI use restrictions will be expeditiously preempted, particularly 
where other federal statutes, such as 47 U.S.C. 227(c), already address 
customer privacy concerns.''
    101. Neither AT&T nor GTE has presented any new facts or arguments 
that require us to reconsider our prior ruling. Both GTE and AT&T point 
to the Comments of the Texas Public Utility Commission, which describe 
and attach a CPNI rule under consideration by the Texas Commission, as 
support for the need to reconsider our conclusion on preemption in the 
CPNI Order. They assert that the proposed Texas rule is in conflict 
with the CPNI Order and the Commission's rules. That Texas, or any 
other state, might implement CPNI rules that may be in conflict with 
our rules was certainly considered in the CPNI Order. If such an event 
occurs, AT&T, GTE, or any other party may request that we preempt the 
alleged conflicting rules. We will then consider the specific 
circumstances at that time.

D. Details of CPNI Notice

    102. Section 64.2007 of our rules establishes the minimum form and 
content requirements of the notification a carrier must provide to a 
customer when seeking approval to use CPNI. Section 64.2007(f)(2)(ii) 
requires that the notification must specify, inter alia, ``the types of 
information that constitute CPNI'' and ``the specific entities'' that 
will receive it. GTE requests that the Commission clarify the rule to 
permit carriers to avoid exhaustively specifying all types of CPNI and 
all of a carrier's subsidiaries and affiliates that may receive CPNI. 
We decline to do so. The minimum requirements of Sec. 64.2007 were not 
crafted to provide precise guidance, but rather as general notice 
requirements. The rule seeks to strike an appropriate balance between 
giving carriers flexibility to craft CPNI notices tailored to their 
business plans and ensuring that customers are adequately informed of 
their CPNI rights.
    103. Thus, at a minimum, a carrier must inform a customer of the 
types of CPNI it intends to use. We wish to ensure that any decision by 
a customer to grant or deny approval is fully informed and that we 
reduce the potential for carrier abuse. Also, to the extent a carrier 
intends to disseminate a customer's CPNI, the customer has a right to 
know the entities that will receive the CPNI derived from his or her 
calling habits. Contrary to GTE's assertion, we don't believe that a 
customer necessarily will be confused by the name of the recipient. 
Importantly, the customer should have the option of restricting access 
to CPNI among the carrier's intended recipients of his or her personal 
information.

VII. Safeguards Under Section 222

A. Background

    104. In the CPNI Order, the Commission concluded that ``all 
telecommunications carriers must establish effective safeguards to 
protect against unauthorized access to CPNI by their employees or 
agents, or by unaffiliated third parties.'' To this end, we required 
carriers to develop and implement software systems that ``flag'' 
customer service records in connection with CPNI, and maintain an 
electronic audit mechanism (``audit trail'') that tracks access to 
customer accounts. In addition, the CPNI Order stated that carriers 
were to: train their employees as to when it would be permissible to 
access customers' CPNI; establish a supervisory review process that 
ensures compliance with CPNI restrictions when conducting outbound 
marketing; and, on an annual basis, submit a certification signed by a 
current corporate officer attesting that he or she has personal 
knowledge that the carrier is in compliance with the Commission's 
requirements. Because the Commission anticipated that carriers would 
need time to conform their data systems and operations to comply with 
the software flags and electronic audit mechanisms required by the 
Order, we deferred enforcement of those rules until eight months from 
when the rules became effective: specifically, January 26, 1999.
    105. Following the release of the CPNI Order, several petitioners 
sought reconsideration of a variety of issues, including the decision 
to require carriers to implement the use of flags and audit trails. 
Other carriers sought reconsideration of the CPNI Order's employee 
training and discipline requirement in Sec. 64.2009(b) of the 
Commission's rules, as well as the supervisory review requirement in 
Sec. 64.2009(d) of the Commission's rules. On September 24, 1998, in 
response to concerns raised by a number of parties, the Commission 
ruled in the Stay Order that it would not seek enforcement actions 
against carriers regarding compliance with the CPNI software flagging 
and audit trail requirements as set forth in 47 CFR 64.2009(a) and (c) 
until six months after the release date of this order on 
reconsideration. We concluded that it serves the public interest to 
extend the deadline for the initiation of enforcement of the software 
flagging and audit trail rules so that the Commission could ``consider 
recent proposals to tailor our requirements more narrowly and to reduce 
burdens on the industry while serving the purposes of the CPNI rules.''
    106. On November 9, 1998, PCIA filed a petition for reconsideration 
of the Stay Order requesting that the Commission retract the additional 
requirement for deployment of systems pending the Commission's 
reconsideration of the CPNI Order. We deny PCIA's petition, however, as 
we have granted, in part, the petitions for reconsideration with 
respect to the flagging and audit trail requirements. Thus, although 
new systems implemented prior to the

[[Page 53255]]

expiration of the stay period will be required to comply with the new 
rules promulgated in this order, we believe the new rules are 
significantly less burdensome. We have considered the potential impact 
of our rules in this area on carriers' year 2000 (Y2K) remedial efforts 
and their plans to stabilize their networks over the Y2K conversion. We 
expect, however, that the increased flexibility, reduction in 
compliance burden and additional time for implementation that we grant 
here will greatly reduce the risk of such impact. Thus, and in light of 
the facts before us, we believe that our rules will have no significant 
detrimental effect on carriers' Y2K efforts. We conclude that it is in 
the public interest to extend the stay period an additional two months 
so as not to impede those efforts for carriers that chose to implement 
electronic safeguards under the modified rules. Accordingly, the 
Commission will not seek enforcement actions against carriers regarding 
compliance with sections 64.2009(a) and (c) of the Commission's rules 
until eight months after the release date of this order on 
reconsideration.
    107. An industry coalition (Coalition) comprised of a combination 
of thirty-one industry representatives has proposed specific amendments 
to Secs. 64.2009(a), 64.2009(c), and 64.2009(e) of the Commission's 
rules (Coalition Proposal). After consideration of this proposal and 
other comments in the record, we adopt modifications to our flagging 
and audit trail requirements.

B. Notice

    108. In the NPRM, we tentatively concluded that ``all 
telecommunications carriers must establish effective safeguards to 
protect against unauthorized access to CPNI by their employees or 
agents, or by unaffiliated third parties.'' We further noted that we 
previously required AT&T, the BOCs, and GTE to implement computerized 
safeguards and manual file indicators to prevent unauthorized access to 
CPNI, and sought comment on whether such safeguards should continue to 
apply to those carriers. The NPRM also tentatively concluded that we 
should not specify safeguard requirements for other carriers, but 
sought comment on the issue.
    109. We reject CompTel's assertion that the Commission failed to 
give adequate notice of the ``systems modifications'' announced in the 
CPNI Order because, in fact, the NPRM stated that the Commission might 
require carriers other than AT&T, the BOCs, and GTE to implement 
computerized safeguards and manual file indicators, and solicited 
comment on the issue. As we modify the flagging and audit trail rules 
on reconsideration to allow carriers to institute non-computerized 
systems, we grant CompTel's Petition in this regard.
    110. We also reject NTCA's argument that our description of the 
projected reporting, record-keeping, and other compliance requirements 
of the rule we proposed in the NPRM was inaccurate. As we described, 
the NPRM tentatively concluded that we would not require carriers other 
than AT&T, the BOCs, and GTE to implement specified safeguard 
requirements as those carriers had been required to under Computer III. 
Thus, the NPRM's Initial Regulatory Flexibility Analysis correctly 
stated that there were no projected reporting, record-keeping, or other 
compliance requirements for small business entities as a result of the 
NPRM.

C. Evidence of Cost of Compliance

    111. When we established the flagging and audit trail requirements 
in the CPNI Order, the evidence before us was that carriers could, with 
relative ease, modify their systems to accommodate these requirements. 
Based upon many of the petitions filed on reconsideration, however, it 
does not appear that all of the relevant facts were before the 
Commission at that time. Numerous petitioners have now presented 
evidence that the safeguards we adopted would be costly to implement.

D. The Flagging Requirement

    112. Upon reconsideration, based upon the new evidence before us, 
we agree with the petitioners that we should modify the flagging 
requirement promulgated in the CPNI Order for all carriers. The goal of 
the CPNI flagging rule is to ensure that carriers are aware of the 
status of, and observe, a customer's CPNI approval status prior to any 
use of that customer's CPNI. The Coalition proposes that we modify our 
rule to require carriers to train their marketing personnel to 
determine a customer's CPNI status prior to using that customer's CPNI 
for ``out of category'' marketing, and to make customer approval status 
available to such personnel in a readily accessible and easily 
understandable format. As is only now evident from the new evidence 
presented on reconsideration, implementation of the flagging rules 
promulgated in the CPNI Order will require significant expenditures of 
monetary and personnel resources for most carriers, regardless of size. 
Although we agree in principle that the Coalition's proposal will 
achieve the goals of the flagging requirements at a substantially 
reduced cost, we conclude that the Coalition's proposal can be modified 
to even simpler, less regulatory terms. We find that the carriers are 
in a better position than the Commission to create individual systems 
which ensure that their employees check each customer's CPNI approval 
status prior to any use of that customer's CPNI for out of category 
marketing. Accordingly, we amend section 64.2009(a) of our rules to 
state that telecommunications carriers must implement a system by which 
the status of a customer's CPNI approval can be clearly established 
prior to the use of CPNI. This modification will permit all carriers to 
develop and implement a system that is suitable to, among other things, 
its unique size, capital resources, culture, and technological 
capabilities.

E. The Audit Trail Requirement

    113. We also agree with the petitioners, based upon the new 
evidence before us, that we should modify the CPNI Order's electronic 
audit trail requirement. This requirement was broadly intended to track 
access to a customer's CPNI account, recording whenever customer 
records are opened, by whom, and for what purpose. As AT&T points out, 
the CPNI Order's electronic audit trail requirement would generate 
``massive'' data storage requirements at great cost. As it is already 
incumbent upon all carriers to ensure that CPNI is not misused and that 
our rules regarding the use of CPNI are not violated we conclude that, 
on balance, such a potentially costly and burdensome rule does not 
justify its benefit. As an alternative to the CPNI Order's electronic 
audit trail requirement, the Coalition has proposed that we require the 
creation of such a record, but only with respect to ``marketing 
campaigns.'' We find that the Coalition proposal is too narrow because, 
as MCI noted in an ex parte meeting with the Common Carrier Bureau, 
many carriers distinguish between ``sales'' and ``marketing.'' We 
determine that carriers must maintain a record, electronically or in 
some other manner, of their sales and marketing campaigns that use 
CPNI. The record must include a description of each campaign, the 
specific CPNI that was used in the campaign, the date and purpose of 
the campaign, and what products or services were offered as part of the 
campaign. We will also require carriers to retain the record for a 
minimum of one year. We amend section 64.2009(c) accordingly.

[[Page 53256]]

F. The Corporate Officer Certification

    114. The Coalition also requests that we amend the Officer 
Certification rule to eliminate the requirement that the corporate 
officer signing the certification have personal knowledge that the 
carrier is in compliance with the Commission's CPNI rules. This we 
decline to do. Our revisions of the flagging and audit trail 
requirements in this order will allow telecommunications carriers more 
flexibility in determining how they will ensure their compliance with 
our CPNI rules. This flexibility puts the responsibility squarely on 
the carriers to ensure their compliance. This flexibility, and its 
concurrent responsibility, requires that some officer of the carrier 
have personal knowledge that the scheme designed by the carrier is 
adequate and complies with our CPNI rules. Because neither the 
petitioners nor the Coalition have persuaded us that personal knowledge 
on the part of an officer is unnecessary, we will not omit that 
requirement from our rule. We will, however, amend the rule to omit the 
word ``corporate'' because, as some parties explain, not all carriers 
are organized as corporations.
    115. We will also amend Sec. 64.2009(e) to require that 
telecommunications carriers have an officer, as an agent of the 
carrier, sign a compliance certificate on an annual basis stating that 
the operating procedure established by the carrier is or is not in 
compliance with the rules in this subpart. The carrier must provide a 
statement accompanying the certificate detailing how the carrier's 
operating procedure is and/or is not in compliance.

G. Other Safeguard Provisions

    116. Parties also seek reconsideration of other safeguard 
provisions. In light of the important role these rules play in 
safeguarding the proper use of CPNI, we are not persuaded that these 
rules are so burdensome that they warrant modification. Moreover, as we 
have taken steps on reconsideration to allow carriers to decide for 
themselves how to implement the flagging and audit trail rules, the 
rules are now even less burdensome. It is, in fact, the continued 
application of the employees training and discipline rules, and the 
officer certification requirement, that permits us to make the 
substantial modifications of the flagging and audit trail requirements 
on reconsideration. Thus, we conclude the remaining requirements in 
section 64.2009 are reasonable as presently written.

H. Petitions for Forbearance

    117. We deny both as moot NTCA and PCIA's petitions for forbearance 
from enforcement of the audit trail and flagging rules. Section 10 of 
the Act requires the Commission to forbear from regulation when: (1) 
Enforcement is not necessary to ensure that the carrier's charges and 
practices are just and reasonable; (2) enforcement is not necessary for 
the protection of consumers; and (3) forbearance is consistent with the 
public interest. Both PCIA and NTCA premise their forbearance arguments 
upon the fact that the flagging and audit trail requirements, as 
detailed in the CPNI Order, require the implementation of electronic 
safeguards. Based upon the new evidence the parties presented on 
reconsideration, we agree with both NTCA and PCIA that the rules we 
promulgated in the CPNI Order are unduly burdensome. We deny these 
forbearance petitions, however, because we conclude that the revised 
flagging and audit trail requirements resolve NTCA and PCIA's 
criticisms of the former rules and the basis for their forbearance 
requests. Under our new rules carriers, including NTCA and PCIA 
members, may establish non-computerized systems of their own design to 
comply with our requirements.

I. Small and Rural Carriers

    118. We recognize, in light of the new evidence presented to the 
Commission, that the flagging and audit trail requirements promulgated 
in the CPNI Order might have a disparate impact on rural and small 
carriers. Our modification of the flagging and audit trail requirements 
in this order, however, effectively moots the requests we received from 
the parties seeking special treatment for small and rural carriers with 
respect to these requirements. In particular, under the amended rules, 
carriers are not required to maintain flagging and audit capabilities 
in electronic format. Rather, the amended rules leave it to the 
carriers' discretion to determine what sort of system is best for their 
circumstances. Thus, carriers whose records are not presently 
maintained in electronic form are not required to implement electronic 
systems if they do not wish to do so. We deny, therefore, the 
Independent Alliance's petition to exempt small and rural carriers from 
the provisions of sections 64.2009(a) and (c) because we have amended 
our rules to accommodate, in part, the concerns of small and rural 
carriers. Likewise, we deny NTCA's request that rural 
telecommunications companies should be eligible for a blanket waiver of 
the flagging and audit trail provisions, and TDS's request for 
reconsideration of the flagging and tagging rules for small and mid-
sized carriers, for the same reason. Finally, on the same basis, we 
reject ALLTEL's request that we reconsider the application of the 
``enforcement time frames and other requirements to rural and small 
carriers.''

J. Adequate Cost Recovery

    119. We deny TDS's request that the Commission provide a mechanism, 
in the form of a ``nationwide averaged [and] clearly identified flat 
charge on all customers,'' to recover the costs that carriers will 
incur complying with section 222, the CPNI Order, and the Commission's 
rules. As we have now amended our rules to allow carriers the freedom 
to implement these safeguards in a more effective and flexible manner, 
we believe that carrier costs will be significantly reduced from the 
costs estimated by carriers subsequent to the CPNI Order. Accordingly, 
we reject TDS's request for a separate cost recovery mechanism at this 
time.

K. Enforcement of CPNI Obligations

    120. In this Order, we have amended our rules to reflect a 
deregulatory approach which leaves many of the specific details of 
compliance to the carriers. However, we intend to enforce the rules, as 
amended, zealously. We expect carriers to protect the confidentiality 
of the CPNI in their possession in accordance with our rules. Carriers 
will be subject to penalties for improper use of CPNI. Moreover, 
failure to develop and implement a compliance plan to safeguard CPNI 
consistent with our rules will form a separate basis for liability. We 
also note that we will address, in a separate order, the enforcement 
and compliance issues raised in response to the FNPRM.

VIII. Section 222 and Other Act Provisions

A. Section 222 and Section 272

1. Background
    121. Section 272(c)(1) states that, ``[i]n its dealings with its 
[section 272 affiliates], a Bell operating company . . . may not 
discriminate between the company or affiliate and any other entity in 
the provision or procurement of goods, services, facilities, and 
information, or in the establishment of standards.'' The Commission 
concluded in the Non-Accounting Safeguards Order that: (1) The term 
``information'' in section 272(c)(1) includes CPNI; and (2) the BOCs 
must comply with the

[[Page 53257]]

requirements of both sections 222 and 272(c)(1). The Commission, 
however, declined to address the parties' other arguments regarding the 
interplay between section 272(c)(1) and section 222 to avoid prejudging 
issues that would be addressed in the CPNI Order. The Commission also 
declined to address the parties' arguments regarding the interplay 
between section 222 and section 272(g), which permits certain joint 
marketing between a BOC and its section 272 affiliate. The Commission 
emphasized, however, that, if a BOC markets or sells the services of 
its section 272 affiliate pursuant to section 272(g), it must comply 
with the statutory requirements of section 222 and any rules 
promulgated thereunder.
    122. In the CPNI Order the Commission overruled the Non-Accounting 
Safeguards Order, in part, concluding that the most reasonable 
interpretation of the interplay between sections 222 and 272 is that 
the latter does not impose any additional CPNI requirements on BOCs' 
sharing of CPNI with their section 272 affiliates when they share 
information with their section 272 affiliates according to the 
requirements of section 222. The Commission reached this conclusion 
only after recognizing an apparent conflict between sections 222 and 
272. We noted in the CPNI Order that, on the one hand, certain parties 
argued that under the principle of statutory construction the 
``specific governs the general,'' and that section 222 specifically 
governs the use and protection of CPNI, but section 272 only refers to 
``information'' generally. As such, they claimed that section 222 
should control section 272. On the other hand, under the same principle 
of construction, other parties argued that section 272 specifically 
governs the BOCs' sharing of information with affiliates, whereas 
section 222 generally relates to all carriers. Therefore, they 
asserted, section 272 should control section 222. Because either 
interpretation is plausible, it was left to the Commission to resolve 
the tension between these provisions, and to formulate the 
interpretation that, in the Commission's judgment, best furthers the 
policies of both provisions and the statutory design. We determine that 
interpreting section 272 to impose no additional obligations on the 
BOCs when they share CPNI with their section 272 affiliates according 
to the requirements of section 222 most reasonably reconciles the goals 
of these two principles.
2. Discussion
    123. We affirm our conclusion in the CPNI Order that the most 
reasonable interpretation of the interplay of sections 222 and 272 is 
that section 272 does not impose any additional obligations on the BOCs 
when they share CPNI with their section 272 affiliates. For the same 
reasons described in the CPNI Order, however, we conclude that our 
prior interpretation of the relationship between sections 222 and 272 
is correct.
    124. At the outset, we reject MCI's argument that there was not 
adequate notice that the Commission might reverse its conclusion in the 
Non-Accounting Safeguards Order relating to CPNI.
    125. We further disagree with MCI's claim that the Commission's 
``approach'' is flawed. We affirm our previous conclusion based upon 
our prior reasoning.
    126. We also reject MCI and TRA's argument that the ``except as 
required by law'' clause in section 222(c)(1) encompasses, at least in 
part, section 272(c)(1). We conclude, for the same reasons as those we 
previously described in the CPNI Order, that the ``except as required 
by law'' clause does not encompass section 272.
    127. We affirm the CPNI Order's conclusion that the term 
``information'' in section 272(c)(1) does not include CPNI despite 
CompTel and Intermedia's assertion that such an interpretation is 
contrary to the plain meaning of the Act and should be reconsidered.
    128. While the legislative history is silent about the meaning of 
``information'' in section 272(c)(1), the structure of the Act 
indicates strongly that the provision is susceptible to differing 
meanings. Indeed, as the courts have cautioned, the Commission is bound 
to move beyond dictionary meanings of terms and to consider other 
possible interpretations, assess statutory objectives, weigh 
congressional policy, and apply our expertise in telecommunications in 
determining the meaning of provisions. In this instance, we believe 
that the structure of the Act belies petitioners' contention that the 
term ``information'' has a plain meaning that encompasses CPNI. In 
enacting section 222, Congress carved out very specific restrictions 
governing consumer privacy in CPNI and consolidated those restrictions 
in a single, comprehensive provision. We believe that the specific 
requirements governing CPNI use are contained in that section and we 
disfavor, accordingly, an interpretation of section 272 that would 
create constraints for CPNI beyond those embodied in the specific 
provision delineating those constraints. As a practical matter, the 
interpretation proffered by petitioners would bar BOCs from sharing 
CPNI with their affiliates: the burden imposed by the nondiscrimination 
requirements would, in this context, pose a potentially insurmountable 
burden because a BOC soliciting approval to share CPNI with its 
affiliate would have to solicit approval for countless other carriers 
as well, known or unknown. We do not believe that is what Congress 
envisioned when it enacted sections 222 and 272. Rather, as we 
concluded in the CPNI Order, we find it a more reasonable 
interpretation of the statute to conclude that section 222 contemplates 
a sharing of CPNI among all affiliates (whether BOCs or others), 
consistent with customer expectations that related entities will share 
information so as to offer services best tailored to customers' needs. 
For these reasons, we find that the ``plain meaning'' argument raised 
by Comptel and Intermedia is not persuasive, and further that their 
meaning is not the one Congress most likely intended. Therefore, we 
affirm our previous conclusion.
    129. In addition, we are not persuaded by CompTel's assertion that 
there is no indication that section 222 was intended to trump section 
272 because the Commission previously recognized, in the First Report 
and Order, that section 222's obligations are not exclusive. Because 
Congress unambiguously prohibited the use of such CPNI in section 
275(d), we concluded that the specific prohibition in section 275(d) 
controls the general CPNI rules described in section 222. This stands 
in stark contrast to the difficult task of reconciling sections 222 and 
272.
    130. Moreover, we do not agree with WorldCom's assertion that the 
Commission ignored section 272(b)(1). Thus, we deny reconsideration on 
this basis as WorldCom has not presented any new arguments or facts we 
did not already consider.
    131. Finally, several parties also argue that our interpretation of 
the interplay of sections 222 and 272 gives BOC affiliates an unfair 
competitive advantage over other competitors. These parties raise no 
new arguments or facts on reconsideration of this point that we did not 
already consider. We previously identified in detail specific 
mechanisms in section 222 that address such competitive concerns. We 
therefore deny these parties' requests for reconsideration of this 
conclusion.

[[Page 53258]]

B. Disclosure of Non-CPNI Information Pursuant to Section 272

    132. The Commission noted in a footnote in the CPNI Order that BOC 
non-discrimination obligations under section 272 would apply to the 
sharing of all other information and services with their section 272 
affiliates. The Common Carrier Bureau further concluded in the 
Clarification Order that a customer's name, address, and telephone 
number are not CPNI. The Bureau reasoned that ``[i]f the definition of 
CPNI included a customer's name, address, and telephone number, a 
carrier would be prohibited from using its business records to contact 
any of its customers to market any new service that falls outside the 
scope of the existing service relationship with those customers.
    133. We agree with the Common Carrier Bureau's clarification and 
adopt its reasoning and conclusion as our own. Accordingly, we grant 
MCI's request that we clarify that a customer's name, address, and 
telephone number are ``information'' for purposes of section 272(c)(1), 
and if a BOC makes such information available to its affiliate, then it 
must make that information available to non-affiliated entities.
    134. MCI also argues that the Commission should find that a 
customer's PIC choice and PIC-freeze status are not CPNI as defined in 
section 222(f)(1). We are not persuaded by MCI's statutory 
interpretation. We conclude that a customer's PIC choice falls squarely 
within the definition of CPNI set out in both sections 222(f)(1)(A) and 
(B), and that PIC-freeze information meets the requirements of section 
222(f)(1)(A). Finally, we agree with GTE that this result is consistent 
with the privacy goals set out by Congress in section 222.

C. Section 222 and Section 254

    135. CenturyTel also argues that restricting the use of CPNI in 
marketing enhanced services and CPE to existing customers in rural 
exchanges is inconsistent with Universal Service provisions of the Act.
    136. We disagree with the arguments made by CenturyTel and NTCA. As 
stated in Section V.A of this Order, we affirm the ``total service 
approach'' for all carriers. We find no reason to impose different 
notification requirements on large and small carriers. As we stated in 
the CPNI Order, concerns regarding customer privacy are the same 
irrespective of the carrier's size or identity. Further to the extent 
that CenturyTel and NTCA are requesting to use CPNI, without customer 
approval, to market CPE and certain information services, those 
requests have been granted. We also disagree with CenturyTel and NTCA's 
argument that section 254 requires the use of CPNI to allow rural 
carriers to implement Congress' Universal Service standards. Section 
254 envisions that rural carriers would introduce and make available 
new technology to all of its customers. The CPNI rules in no way 
discourage rural carriers from doing that. In fact, one could argue 
that some of the CPNI rules require a carrier to make all of its 
customers aware of such new technology rather than using CPNI to pick 
and choose which customers to market the new technology to. The basis 
of CenturyTel and NTCA's arguments, however, is that they do not want 
to market the new technology to all of its customers. They want to make 
it available only to certain customers that they select by using their 
customers' CPNI. We fail to see how section 254 requires this outcome.

D. Application of Nondiscrimination Rules Under Sections 201(b) and 
202(a)

    137. We reject MCI's argument that the nondiscrimination 
requirement described in section 272 should be applied to all ILECs 
through the requirements of sections 201(b) and 202(a).
    138. We agree with GTE that there is no justification to conclude, 
as a matter of statutory construction, that the broad non-
discrimination requirements of these sections impose a specific 
disclosure obligation on ILEC use of CPNI. In any case, the same 
privacy concerns we identified in our discussion of the relationship 
between sections 222 and 272 apply here equally. For instance, 
requiring the disclosure of CPNI to other companies to maintain 
competitive neutrality would defeat, rather than protect, customers' 
privacy expectations and control over their own CPNI. We conclude that 
the specific consumer privacy and consumer choice protections 
established in section 222 supersede the general protections identified 
in sections 201(b) and 202(a). Thus, we are not persuaded that section 
201(b) or section 202(a) require the result MCI seeks. Accordingly, we 
reject MCI's request.

IX. Other Issues

A. Status of Customer Rewards Program

    139. Section 64.2005(b) of the Commission's Rules prohibits a 
telecommunications carrier from using, disclosing, or permitting access 
to CPNI to market to a customer, without customer approval, service 
offerings that are within a category of service to which the customer 
does not already subscribe.
    140. Omnipoint and Vanguard contend that when a carrier provides 
free rewards, such as free equipment, for the purpose of retaining its 
accounts, the prohibition in section 64.2005(b) should not apply 
because (1) the customer subscribes to the service for which the reward 
is provided; and (2) the reward is free, and therefore is not 
``marketed.'' Omnipoint and Vanguard request clarification because they 
claim that carriers are more likely to offer rewards if they are able 
to target them to high-volume or long-term customers, and if carriers 
do not need to seek customer approval. No party has objected to this 
proposal.
    141. We agree with Omnipoint and Vanguard that, where a carrier 
uses CPNI to provide free rewards to its customer, such use of CPNI is 
within the scope of the carrier-customer relationship. As such, the use 
of the CPNI is limited to the existing service relationship between the 
carrier and the customer. Therefore, although the provision of free 
rewards is a marketing activity, it does not violate the Act or our 
rules, provided the telecommunications service being marketed is the 
service currently subscribed to by the customer.

B. Non-telecommunications Services Listed on Telephone Bill

    142. CPNI is defined in section 222(f)(1)(B) of the Act as 
including ``information contained in the bills pertaining to telephone 
exchange service or telephone toll service received by a customer of a 
carrier; except that such term does not include subscriber list 
information.'' However, section 222(c)(1) prohibits a carrier's use of 
CPNI only where it receives the CPNI ``by virtue of its provision of a 
telecommunications service.''
    143. In the Common Carrier Bureau's Clarification Order, the Bureau 
said that ``customer information derived from the provision of any non-
telecommunications service, such as CPE or information services * * * 
may be used to provide or market any telecommunications service * * *'' 
Omnipoint asks the Commission to clarify that section 222 does not 
prohibit the use of customer information derived from non-
telecommunications services bundled with telecommunications services 
merely because charges for those services appeared on a customer's 
telephone bill.
    144. Section 222(c)(1) prohibits the use of CPNI only where it is 
derived

[[Page 53259]]

from the provision of a telecommunications service. Consequently, we 
find that information that is not received by a carrier in connection 
with its provision of telecommunications service can be used by the 
carrier without customer approval, regardless of whether such 
information is contained in a bill generated by the carrier. Therefore, 
consistent with the Clarification Order, customer information derived 
from information services that are held not to be telecommunications 
services may be used, even if the telephone bill covers charges for 
such information services.

C. Provision of Calling Card as ``Provision'' of Service

    145. LECs often offer so-called ``post-paid'' calling cards that 
enable customers to complete long distance calls over a particular 
interexchange carrier's network when the customer is away from home. 
Such cards enable a customer to have the calls billed subsequently on 
the customer's local bill issued by the LEC. MCI asks the Commission to 
clarify that LECs may not use CPNI garnered in such circumstances to 
market services that the LEC offers absent permission from the 
customer.
    146. We grant MCI's request for clarification. In the traditional 
LEC post-paid calling card situation, the LEC serves merely as a 
billing and collection agent on behalf of the interexchange carrier, 
much as the LEC does when a customer places long distance calls from 
home through the customer's pre-subscribed interexchange carrier (IXC). 
In both instances, the customer has established a customer-carrier 
relationship for the provision of interexchange services with the IXC 
that carried the customer's call over its network. The LEC, on the 
other hand, is standing in the place of the IXC only for billing and 
collection purposes, a service which the IXC could have chosen to 
provide itself. Where a LEC acts as a billing and collection agent, it 
may not use CPNI without the customer's permission under the total 
services approach.

D. Use of CPNI To Prevent Fraud

    147. Section 222(d)(2) of the Act permits the use of CPNI to 
``protect the rights or property of the carrier, or to protect users of 
those services and other carriers from fraudulent, abusive, or unlawful 
use of, or subscription to services * * *'' Section 64.2005 of the 
Commission's rules provides that a telecommunications carrier may use, 
disclose, or permit access to CPNI, without customer approval, for a 
number of purposes, but does not mention the use of CPNI in connection 
with fraud prevention programs.
    148. Comcast requests that the Commission clarify its rules to 
specify that (1) carriers are authorized to use CPNI in connection with 
fraud prevention programs; and (2) such use is permissible even after a 
customer has terminated service from the carrier making such use of the 
customer's CPNI.
    149. We agree that Section 222(d)(2) on its face permits the use of 
CPNI in connection with fraud prevention programs, and does not limit 
such use of CPNI that is generated during the customer's period of 
service to any period of time. Since our rules do not cover the use of 
CPNI for fraud prevention programs, we will amend our rules to do so, 
in order to eliminate the possibility of misinterpretation.

E. Definition of ``Subscribed'' in Section 222(f)(1)(A)

    150. We grant MCI's request for clarification of the meaning of the 
phrase ``service subscribed to by any other customer'' in section 
222(f)(1)(A).

F. CPNI ``Laundering''

    151. MCI requests clarification that ``the status of information as 
CPNI or carrier proprietary information [under section 222] is not lost 
or altered if [a] carrier discloses or transmits such information to an 
affiliated or unaffiliated entity, whether or not that entity transfers 
such information to other parties or back to the original carrier.''
    152. We agree that as the stewards of CPNI and carrier proprietary 
information carriers must take steps to safeguard such information. 
Moreover, we find that implicit in section 222 is a rebuttable 
presumption that information that fits the definition of CPNI contained 
in section 222(f)(1) is in fact CPNI. We decline, however, to speak to 
MCI's other clarification requests as they regard issues relating to 
carrier proprietary information in section 222(b) and enforcement 
mechanisms to ensure carrier compliance with both sections 222(a) and 
(b). As FNPRM in this docket seeks comment on those specific issues, we 
would not want to prejudice resolution of those issues in this order.

G. Acts of Agents of Wireless Providers

    153. Vanguard argues that sales agents of CMRS providers are not 
subject to Commission rules, and that CMRS providers should not be held 
responsible for the use of CPNI independently obtained by agents 
because it would be difficult or impossible for CMRS providers to 
enforce these obligations on agents.
    154. We find that telecommunications service providers will be 
responsible for the actions of their agents to comply with our CPNI 
rules to the extent that telecommunications service providers share 
CPNI with their agents. Moreover, telecommunications service providers 
will be responsible for the actions of agents with respect to the use 
of CPNI acquired by their agents. It is well established that 
principals are responsible for the actions of their agents. In the 
absence of such a rule, the important consumer protections enacted by 
Congress in section 222 may be vitiated by the actions of agents.
    155. We believe that telecommunications service providers can meet 
these requirements through the private contract arrangements they have 
with their agents. Carriers would normally have negotiating leverage to 
enforce this requirement in the case of agents who serve more than one 
carrier, since all carriers would be required to enforce the same 
rules. To the extent that it may be shown that some carriers would not 
be able to enforce these requirements, the Commission will address the 
exceptions on a case-by-case basis.

H. Information Known to Employees

    156. Section 222(f)(1)(A) defines CPNI, in part, as including 
information ``that is made available to the carrier by the customer 
solely by virtue of the carrier-customer relationship.'' We reject 
Comcast's argument that, based upon this definition, CPNI should not 
include ``institutional knowledge'' of the attributes of a particular 
customer's account gained by a carrier's employee from his or her work 
on the customer's account over the years if the employee does not 
actually access the customer's record, and U S WEST's argument that so 
long as an employee does not use a customer's record containing that 
customer's CPNI, the employee has not violated section 222. We are not 
persuaded that section 222(f)(1)(A) implies an exception based on 
whether the information acquired as part of the carrier-customer 
relationship is reduced to writing or is kept in the memory of a 
carrier representative. Thus, if a customer tells a carrier's employee 
information that otherwise fits the definition of CPNI provided in 
section 222(f)(1)(A), then that information is CPNI, no matter how the 
information is retained by the carrier.

[[Page 53260]]

I. Use of CPNI Under Section 222(d)(3) During Inbound Calls

    157. Several carriers request that the Commission clarify the 
requirements for obtaining customer approval under section 222(d)(3). 
This section states that ``[n]othing in [section 222] prohibits a 
telecommunications carrier from using, disclosing, or permitting access 
to customer proprietary network information obtained from its 
customers, either directly or indirectly through its agents . . . to 
provide any inbound telemarketing, referral, or administrative services 
to the customer for the duration of the call, if such call was 
initiated by the customer and the customer approves of the use of such 
information to provide such service.
    158. We agree that the detailed notification outlined in section 
64.2007(f) of our rules is not necessary prior to soliciting a 
customer's approval to use his or her CPNI for the duration of an 
inbound call. It is unduly burdensome to require carriers to comply 
with the rule in light of the limited coverage of section 222(d)(3). 
Moreover, the rule reflects a discussion in the CPNI Order of the 
content of the general notification requirements under section 
222(c)(1), and not those required for section 222(d)(3). Accordingly, 
we clarify that section 64.2007(f) does not apply to solicitations for 
customer approval under section 222(d)(3).
    159. We deny, however, TDS's request that we reconsider our prior 
conclusion that section 222(d)(3) requires an affirmative customer 
approval. We previously stated in the CPNI Order that section 222(d)(3) 
``contemplates oral approval.'' We conclude that a plain reading of the 
statute contradicts TDS's conclusion: If Congress meant consent to be 
inferred from the mere fact that the customer initiated the call, it 
would not have required that the customer both initiate the call and 
``approve[] of the use of such information to provide such service.'' 
We deny TDS's request for reconsideration for this reason and because 
TDS has not presented any new arguments or facts that the Commission 
did not consider in the CPNI Order with regard to this issue.
    160. Finally, pursuant to GTE's request, we clarify that carriers 
need not maintain records of notice and approval of carrier use of CPNI 
during inbound calls under section 222(d)(3). Section 64.2007(e) of the 
Commission's rules requires that carriers maintain customer 
notification and approval records for one year. Notifications and 
approvals under section 222(c)(1) and 222(d)(3), however, are markedly 
different in scope. Notifications and approvals under section 222(c)(1) 
are valid until revoked or limited by the customer, whereas 
notifications and approvals for inbound calls pursuant to section 
222(d)(3) are only valid for the duration of each call. Therefore, 
unlike the retention of records of notifications and approvals under 
section 222(c)(1), which we previously concluded would facilitate the 
disposition of individual complaint proceedings if the sufficiency of a 
customer's notification or approval is challenged at some later time, 
requiring the retention of records of section 222(d)(3) notifications 
and approvals would provide little evidentiary value because the 
notification and customer's authorization to use CPNI automatically 
evaporate upon completion of the call. We do not find any advantage to 
requiring carriers to retain such records for purposes of section 
222(d)(3). As such, we conclude that such a requirement would place an 
unnecessary burden on carriers.

X. Procedural Issues

    161. As required by the Regulatory Flexibility Act (RFA), an 
Initial Regulatory Flexibility Analysis (IRFA) was incorporated in the 
FNPRM. The Commission sought written public comment on the proposals in 
the FNPRM, including comment on the IRFA. This present Final Regulatory 
Flexibility Analysis (FRFA) conforms to the RFA.

I. Need for and Objectives of This Order on Reconsideration and the 
Rules Adopted Herein

    162. In the Order on Reconsideration, the Commission reconsiders 
the rules promulgated in the CPNI Order in light of an expanded record 
to better balance customer privacy concerns with those of customer 
convenience with the effect of minimizing the impact of our 
requirements on all carriers, including small and rural carriers. We 
have amended our rules relating to flagging and audit trails for all 
carriers, which will have a beneficial impact on small carriers. 
Additionally, we modify our rules to permit all carriers to use CPNI to 
market CPE to their customers, without express approval. We also find 
that customers give implied consent to use CPNI to CMRS carriers for 
the purpose of marketing all information services, but only give 
implied consent to wireline carriers for certain information services. 
We further modify our rules to allow carriers to use CPNI to regain 
customers who have switched to another carrier.

II. Summary of Significant Issues Raised by Public Comments in Response 
to the FRFA

    163. As discussed in Section V, a number of small carriers or their 
advocates present evidence that the safeguard requirements of the CPNI 
rules are particularly burdensome for small and rural carriers. We 
recognize, in light of the new evidence presented to the Commission, 
that the flagging and audit trail requirements promulgated in the CPNI 
Order might have a disparate impact on rural and small carriers. Our 
modification of the flagging and audit trail requirements in this 
order, however, effectively moots the requests we received from the 
parties seeking special treatment for small and rural carriers with 
respect to these requirements. Moreover, the restrictions lifted on the 
marketing of CPE and information services will lessen the impact of 
compliance with our rules for small and rural carriers, generally, and 
enable these carriers to more efficiently use their marketing 
resources.

III. Description and Estimates of the Number of Small Entities Affected 
by the First Report and Order

    164. 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 actions taken in this Order on Reconsideration. 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). The SBA has defined a small 
business for Standard Industrial Classification (SIC) categories 4812 
(Radiotelephone Communications) and 4813 (Telephone Communications, 
Except Radiotelephone) to be small entities when they have no more than 
1,500 employees. We first discuss generally the total number of small 
telephone companies falling within both of those SIC categories. Then, 
we discuss the number of small businesses within the two subcategories, 
and attempt to refine further those estimates to correspond with the 
categories of telephone companies that are commonly used under our 
rules.

[[Page 53261]]

    165. Although affected ILECs may have no more than 1,500 employees, 
we do not believe that such entities should be considered small 
entities within the meaning of the RFA because they either are dominant 
in their field of operations or are not independently owned and 
operated, and are 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 SBA as ``small business 
concerns.''
    166. Total number of telephone companies affected. The United 
States Bureau of the Census (the 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. This number 
contains a variety of different categories of carriers, including local 
exchange carriers, interexchange carriers, competitive access 
providers, cellular carriers, mobile service carriers, operator service 
providers, pay telephone operators, PCS providers, covered SMR 
providers, and resellers. It seems certain that some of those 3,497 
telephone service firms may not qualify as small entities because they 
are not ``independently owned and operated.'' For example, a PCS 
provider that is affiliated with an interexchange carrier having more 
than 1,500 employees would not meet the definition of a small business. 
It seems reasonable to conclude, therefore, that fewer than 3,497 
telephone service firms are either small entities or small incumbent 
LECs that may be affected by this order.
    167. Wireline carriers and service providers. The SBA has developed 
a definition of small entities for telephone communications companies 
other than radiotelephone (wireless) companies. The Census Bureau 
reports there were 2,321 such telephone companies in operation for at 
least one year at the end of 1992. According to the SBA's definition, a 
small business telephone company other than a radiotelephone company is 
one employing fewer than 1,500 persons. All but 26 of the 2,321 non-
radiotelephone companies listed by the Census Bureau were reported to 
have fewer than 1,000 employees. Thus, even if all 26 of those 
companies had more than 1,500 employees, there would still be 2,295 
non-radiotelephone companies that might qualify as small entities or 
small incumbent LECs. Although it seems certain that some of these 
carriers are not independently owned and operated, we are unable at 
this time to estimate with greater precision the number of wireline 
carriers and service providers that would qualify as small business 
concerns under the SBA's definition. Consequently, we estimate that 
fewer than 2,295 small entity telephone communications companies other 
than radiotelephone companies are small entities or small ILECs that 
may be affected by this order.
    168. Local exchange carriers. Neither the Commission nor the SBA 
has developed a definition of small providers of local exchange 
services. The closest applicable definition under the SBA's rules is 
for telephone communications companies other than radiotelephone 
(wireless) companies. The most reliable source of information regarding 
the number of LECs nationwide of which we are aware appears to be the 
data that we collect annually in connection with the Telecommunications 
Relay Service (TRS). According to our most recent data, 1,371 companies 
reported that they were engaged in the provision of local exchange 
services. Although it seems certain that some of these carriers are not 
independently owned and operated, or have more than 1,500 employees, or 
are dominant we are unable at this time to estimate with greater 
precision the number of LECs that would qualify as small business 
concerns under the SBA's definition. Consequently, we estimate that 
fewer than 1,371 small providers of local exchange service are small 
entities or small ILECs that may be affected by this order.
    169. Interexchange carriers. Neither the Commission nor the SBA has 
developed a definition of small entities specifically applicable to 
providers of interexchange services (IXCs). The closest applicable 
definition under the SBA's rules is for telephone communications 
companies other than radiotelephone (wireless) companies. The most 
reliable source of information regarding the number of IXCs nationwide 
of which we are aware appears to be the data that we collect annually 
in connection with TRS. According to our most recent data, 143 
companies reported that they were engaged in the provision of 
interexchange services. Although it seems certain that some of these 
carriers are not independently owned and operated, or have more than 
1,500 employees, we are unable at this time to estimate with greater 
precision the number of IXCs that would qualify as small business 
concerns under the SBA's definition. Consequently, we estimate that 
there are fewer than 143 small entity IXCs that may be affected by this 
order.
    170. Competitive access providers. Neither the Commission nor the 
SBA has developed a definition of small entities specifically 
applicable to providers of competitive access services (CAPs). The 
closest applicable definition under the SBA's rules is for telephone 
communications companies other than radiotelephone (wireless) 
companies. The most reliable source of information regarding the number 
of CAPs nationwide of which we are aware appears to be the data that we 
collect annually in connection with the TRS. According to our most 
recent data, 109 companies reported that they were engaged in the 
provision of competitive access services. Although it seems certain 
that some of these carriers are not independently owned and operated, 
or have more than 1,500 employees, we are unable at this time to 
estimate with greater precision the number of CAPs that would qualify 
as small business concerns under the SBA's definition. Consequently, we 
estimate that there are fewer than 109 small entity CAPs that may be 
affected by this order.
    171. Operator service providers. Neither the Commission nor the SBA 
has developed a definition of small entities specifically applicable to 
providers of operator services. The closest applicable definition under 
the SBA's rules is for telephone communications companies other than 
radiotelephone (wireless) companies. The most reliable source of 
information regarding the number of operator service providers 
nationwide of which we are aware appears to be the data that we collect 
annually in connection with the TRS. According to our most recent data, 
27 companies reported that they were engaged in the provision of 
operator services. Although it seems certain that some of these 
companies are not independently owned and operated, or have more than 
1,500 employees, we are unable at this time to estimate with greater 
precision the number of operator service providers that would qualify 
as small business concerns under the SBA's definition. Consequently, we 
estimate that there are fewer than 27 small entity operator service 
providers that may be affected by this order.
    172. Pay telephone operators. Neither the Commission nor the SBA 
has developed a definition of small entities specifically applicable to 
pay telephone operators. The closest applicable definition under the 
SBA's rules is for telephone communications companies

[[Page 53262]]

other than radiotelephone (wireless) companies. The most reliable 
source of information regarding the number of pay telephone operators 
nationwide of which we are aware appears to be the data that we collect 
annually in connection with the TRS. According to our most recent data, 
441 companies reported that they were engaged in the provision of pay 
telephone services. Although it seems certain that some of these 
carriers are not independently owned and operated, or have more than 
1,500 employees, we are unable at this time to estimate with greater 
precision the number of pay telephone operators that would qualify as 
small business concerns under the SBA's definition. Consequently, we 
estimate that there are fewer than 441 small entity pay telephone 
operators that may be affected by this order.
    173. Wireless carriers. The SBA has developed a definition of small 
entities for radiotelephone (wireless) companies. The Census Bureau 
reports that there were 1,176 such companies in operation for at least 
one year at the end of 1992. According to the SBA's definition, a small 
business radiotelephone company is one employing no more than 1,500 
persons. The Census Bureau also reported that 1,164 of those 
radiotelephone companies had fewer than 1,000 employees. Thus, even if 
all of the remaining 12 companies had more than 1,500 employees, there 
would still be 1,164 radiotelephone companies that might qualify as 
small entities if they are independently owned and operated. Although 
it seems certain that some of these carriers are not independently 
owned and operated, we are unable at this time to estimate with greater 
precision the number of radiotelephone carriers and service providers 
that would qualify as small business concerns under the SBA's 
definition. Consequently, we estimate that there are fewer than 1,164 
small entity radiotelephone companies that may be affected by this 
order.
    174. Cellular service carriers. Neither the Commission nor the SBA 
has developed a definition of small entities specifically applicable to 
providers of cellular services. The closest applicable definition under 
the SBA's rules is for telephone communications companies other than 
radiotelephone (wireless) companies. The most reliable source of 
information regarding the number of cellular service carriers 
nationwide of which we are aware appears to be the data that we collect 
annually in connection with the TRS. According to our most recent data, 
804 companies reported that they were engaged in the provision of 
cellular services. Although it seems certain that some of these 
carriers are not independently owned and operated, or have more than 
1,500 employees, we are unable at this time to estimate with greater 
precision the number of cellular service carriers that would qualify as 
small business concerns under the SBA's definition. Consequently, we 
estimate that there are fewer than 804 small entity cellular service 
carriers that may be affected by this order.
    175. Mobile service carriers. Neither the Commission nor the SBA 
has developed a definition of small entities specifically applicable to 
mobile service carriers, such as paging companies. The closest 
applicable definition under the SBA's rules is for telephone 
communications companies other than radiotelephone (wireless) 
companies. The most reliable source of information regarding the number 
of mobile service carriers nationwide of which we are aware appears to 
be the data that we collect annually in connection with the TRS. 
According to our most recent data, 172 companies reported that they 
were engaged in the provision of mobile services. Although it seems 
certain that some of these carriers are not independently owned and 
operated, or have more than 1,500 employees, we are unable at this time 
to estimate with greater precision the number of mobile service 
carriers that would qualify under the SBA's definition. Consequently, 
we estimate that there are fewer than 172 small entity mobile service 
carriers that may be affected by this order.
    176. Broadband PCS licensees. The broadband PCS spectrum is divided 
into six frequency blocks designated A through F, and the Commission 
has held auctions for each block. The Commission has defined small 
entity in the auctions for Blocks C and F as an entity that has average 
gross revenues of less than $40 million in the three previous calendar 
years. For Block F, an additional classification for ``very small 
business'' was added and is defined as an entity that, together with 
its affiliates, has average gross revenue of not more than $15 million 
for the preceding three calendar years. These regulations defining 
small entity in the context of broadband PCS auctions have been 
approved by the SBA. No small business within the SBA-approved 
definition bid successfully for licenses in Blocks A and B. There were 
90 winning bidders that qualified as small entities in the Block C 
auctions. A total of 93 small and very small businesses won 
approximately 40 percent of the 1,479 licenses for Blocks D, E, and F. 
However, licenses for Blocks C through F have not been awarded fully; 
therefore, there are few, if any, small businesses currently providing 
PCS services. Based on this information, we conclude that the number of 
small broadband PCS licensees will include the 90 winning bidders and 
the 93 qualifying bidders in the D, E, and F Blocks, for a total of 183 
small PCS providers as defined by the SBA and the Commission's auction 
rules.
    177. Narrowband PCS licensees. The Commission does not know how 
many narrowband PCS licenses will be granted or auctioned, as it has 
not yet determined the size or number of such licenses. Two auctions of 
narrowband PCS licenses have been conducted for a total of 41 licenses, 
out of which 11 were obtained by small businesses owned by members of 
minority groups and/or women. Small businesses were defined as those 
with average gross revenues for the prior three fiscal years of $40 
million or less. For purposes of this FRFA, the Commission is utilizing 
the SBA definition applicable to radiotelephone companies, i.e., an 
entity employing no more than 1,500 persons. Not all of the narrowband 
PCS licenses have yet been awarded. There is therefore no basis to 
determine the number of licenses that will be awarded to small entities 
in future auctions. Given the facts that nearly all radiotelephone 
companies have fewer than 1,000 or fewer employees and that no reliable 
estimate of the number of prospective narrowband PCS licensees can be 
made, we assume, for purposes of the evaluations and conclusions in 
this FRFA, that all the remaining narrowband PCS licenses will be 
awarded to small entities.
    178. SMR licensees. Pursuant to 47 CFR 90.814(b)(1), the Commission 
has defined ``small entity'' in auctions for geographic area 800 MHz 
and 900 MHz SMR licenses as a firm that had average annual gross 
revenues of less than $15 million in the three previous calendar years. 
This definition of a ``small entity'' in the context of 800 MHz and 900 
MHz SMR has been approved by the SBA. The rules adopted in this order 
may apply to SMR providers in the 800 MHz and 900 MHz bands that either 
hold geographic area licenses or have obtained extended implementation 
authorizations. We do not know how many firms provide 800 MHz or 900 
MHz geographic area SMR service pursuant to extended implementation 
authorizations, nor how many of these providers have annual revenues of 
less than $15 million. We assume, for purposes of this FRFA, that all 
of the extended implementation

[[Page 53263]]

authorizations may be held by small entities, which may be affected by 
this order.
    179. The Commission recently held auctions for geographic area 
licenses in the 900 MHz SMR band. There were 60 winning bidders who 
qualified as small entities in the 900 MHz auction. Based on this 
information, we conclude that the number of geographic area SMR 
licensees affected by the rule adopted in this order includes these 60 
small entities. No auctions have been held for 800 MHz geographic area 
SMR licenses. Thus, no small entities currently hold these licenses. A 
total of 525 licenses will be awarded for the upper 200 channels in the 
800 MHz geographic area SMR auction. The Commission, however, has not 
yet determined how many licenses will be awarded for the lower 230 
channels in the 800 MHz geographic area SMR auction. Moreover, there is 
no basis on which to estimate how many small entities will win these 
licenses. Given that nearly all radiotelephone companies have fewer 
than 1,000 employees and that no reliable estimate of the number of 
prospective 800 MHz licensees can be made, we assume, for purposes of 
this FRFA, that all of the licenses may be awarded to small entities 
who, thus, may be affected by this order.
    180. Resellers. Neither the Commission nor the SBA has developed a 
definition of small entities specifically applicable to resellers. The 
closest applicable definition under the SBA's rules is for all 
telephone communications companies. The most reliable source of 
information regarding the number of resellers nationwide of which we 
are aware appears to be the data that we collect annually in connection 
with the TRS. According to our most recent data, 339 companies reported 
that they were engaged in the resale of telephone services. Although it 
seems certain that some of these carriers are not independently owned 
and operated, or have more than 1,500 employees, we are unable at this 
time to estimate with greater precision the number of resellers that 
would qualify as small business concerns under the SBA's definition. 
Consequently, we estimate that there are fewer than 339 small entity 
resellers that may be affected by this order.

IV. Steps Taken To Minimize Significant Economic Impact on Small 
Entities and Small Incumbent LECs, and Alternatives Considered

    181. We recognize, in light of the new evidence presented to the 
Commission, that the flagging and audit trail requirements promulgated 
in the CPNI Order might have a disparate impact on rural and small 
carriers. We have amended the flagging and audit trail requirements, 
and as more fully discussed in Section V, the amended rules leave it to 
the carrier's discretion to determine what sort of system is best for 
their circumstances. Thus, carriers whose records are not presently 
maintained in electronic form are not required to implement electronic 
systems if they do not wish to do so. We believe this modification of 
our rules will significantly minimize any adverse economic impact on 
small entities that our original rules may have had.

V. Report to Congress

    182. The Commission shall send a copy of this Supplemental Final 
Regulatory Flexibility Analysis, along with this Order on 
Reconsideration, in a report to Congress pursuant to the Small business 
Regulatory Enforcement Fairness Act of 1996, 5 U.S.C. 801(a)(1)(A). A 
copy of this SFRFA will also be published in the Federal Register.

B. Supplemental Final Paperwork Reduction Analysis

    183. The CPNI Order from which this Order on Reconsideration issues 
proposed changes to the Commission's information collection 
requirements. As required by the Paperwork Reduction Act of 1995, 
Public Law 104-13, the CPNI Order invited the general public and the 
Office of Management and Budget (OMB) to comment on the proposed 
changes. On June 23, 1998, OMB approved all of the proposed changes to 
our information collection requirements in accordance with the PRA.
    184. This Order on Reconsideration amends our rules to merely state 
that telecommunications carriers must implement a system by which the 
status of a customer's CPNI approval can be clearly established prior 
to the use of CPNI, and must maintain an audit mechanism that tracks 
CPNI usage. We have removed the requirements of Sec. 64.2009 (a) and 
(c) that carriers must develop and implement software that flags a 
customer's CPNI approval status and must maintain an electronic audit 
mechanism that tracks access to customer accounts. These amendments are 
new collections of information within the meaning of the PRA. 
Implementation of these requirements is subject to approval by the OMB, 
as prescribed by the PRA.

XI. Ordering Clauses

    185. Accordingly, it is ordered that, pursuant to Sections 1, 4(i), 
10, 222 and 303(r) of the Communications Act of 1934, as amended, 47 
U.S.C. 151, 154(i), 160, 222 and 303(r), the Order is hereby adopted. 
The rules established by the Order contain information collection 
requirements that have not yet been approved by the Office of 
Management and budget (OMB). The Commission will publish a document in 
the Federal Register announcing the effective date of these rules. It 
is further ordered that, pursuant to sections 1, 4(i) and 222 of the 
Communications Act of 1934, as amended, 47 U.S.C. 151, 154(i) and 222, 
the Petitions for Reconsideration, as listed in the Appendix to the 
Order, are granted to the extent indicated herein and otherwise denied.
    186. It is further ordered that, pursuant to sections 1, 4(i), 10 
and 222 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 
154(i), 160 and 222, the Petitions for Forbearance, as listed in 
Appendix A hereto, are denied.
    187. It is further ordered that 64.2005(b)(3) of part 64 of the 
Commission's rules, 47 CFR 64.2005(b)(3), is removed.
    188. It is further ordered that 64.2007(f)(4) of part 64 of the 
Commission's rules, 47 CFR 64.2007(f)(4), is removed.
    189. It is further ordered, pursuant to sections 4(i) and 303(r) of 
the Communications Act of 1934, as amended, 47 U.S.C. 154(i) and 
303(r), that we shall not seek enforcement against carriers regarding 
compliance with 64.2009(a) and (c) of part 64 of the Commission's 
rules, 47 CFR 64.2009(a) and (c), as amended herein, until eight months 
after the release of this Order.
    190. It is further ordered that part 64 of the Commission's rules, 
47 CFR is amended. These rules contain information collection 
requirements that have not yet been approved by OMB. The Commission 
will publish a document in the Federal Register announcing the 
effective date of those sections. 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, to the Chief Counsel for Advocacy of the Small 
Business Administration.

List of Subjects in 47 CFR Part 64

    Communications common carriers, Reporting and recordkeeping 
requirements, Telephone.

Federal Communications Commission.
Magalie Roman Salas,
Secretary.

Appendix--Petition for Forbearance

    Note: This Appendix will not appear in the Code of Federal 
Regulations.

[[Page 53264]]

Petitions for Reconsideration Filed May 26, 1998

ALLTEL Communications, Inc. (ALLTEL)
AT&T Corp.
BellSouth Corporation
Comcast Cellular Communications, Inc.
Competitive Telecommunications Association (CompTel)
Independent Alliance (Alliance)
LCI International Telecom Corp.
MCI Telecommunications Corporation
Metrocall, Inc. (Metrocall)
Omnipoint Communications, Inc
Paging Network, Inc. (PageNet)
Personal Communications Industry Association (PCIA)
RAM Technologies, Inc. (RAM)
SBC Communications Inc.
Sprint Corporation
TDS Telecommunications Corporation
United States Telephone Association (USTA)
Vanguard Cellular Systems, Inc. (Vanguard)

Petitions for Forbearance

Personal Communications Industry Association (PCIA)

Petitions for Reconsideration/Forbearance

360 deg. Communications Company
Ameritech
Bell Atlantic Telephone Companies (Bell Atlantic)
Cellular Telecommunications Industry Association
CommNet Cellular Inc.
GTE Service Corporation (GTE)
National Telephone Cooperative Association (NTCA)
Paging Network, Inc.
PrimeCo Personal Communications, L.P.
United States Telephone Association

Rule Changes

    For the reasons discussed in the preamble, 47 CFR Part 64 is 
amended as follows:

PART 64--MISCELLANEOUS RULES RELATING TO COMMON CARRIERS

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

    Authority: 47 U.S.C. 10, 201, 218, 226, 228, 332, unless 
otherwise noted.


Sec. 64.2005  [Amended]

    2. In Sec. 64.2005, paragraph(b)(1) is revised, paragraph (b)(3) is 
removed, and paragraph (d) is added to read as follows:
* * * * *
    (b) * * *
    (1) A wireless provider may use, disclose, or permit access to CPNI 
derived from its provision of CMRS, without customer approval, for the 
provision of CPE and information service(s). A wireline carrier may 
use, disclose or permit access to CPNI derived from its provision of 
local exchange service or interexchange service, without customer 
approval, for the provision of CPE and call answering, voice mail or 
messaging, voice storage and retrieval services, fax store and forward, 
and protocol conversions.
* * * * *
    (d) A telecommunications carrier may use, disclose, or permit 
access to CPNI to protect the rights or property of the carrier, or to 
protect users of those services and other carriers from fraudulent, 
abusive, or unlawful use of, or subscription to, such services.


Sec. 64.2007  [Amended]

    3. In Sec. 64.2007 remove paragraph (f)(4).


Sec. 64.2009  [Amended]

    4. In Sec. 64.2009, paragraphs (a), (c) and (e) are revised to read 
as follows:
    (a) Telecommunications carriers must implement a system by which 
the status of a customer's CPNI approval can be clearly established 
prior to the use of CPNI.
* * * * *
    (c) All carriers shall maintain a record, electronically or in some 
other manner, of their sales and marketing campaigns that use CPNI. The 
record must include a description of each campaign, the specific CPNI 
that was used in the campaign, the date and purpose of the campaign, 
and what products or services were offered as part of the campaign. 
Carriers shall retain the record for a minimum of one year.
* * * * *
    (e) A telecommunications carrier must have an officer, as an agent 
of the carrier, sign a compliance certificate on an annual basis 
stating that the officer has personal knowledge that the company has 
established operating procedures that are adequate to ensure compliance 
with the rules in this subpart. The carrier must provide a statement 
accompanying the certificate explaining how its operating procedures 
ensure that it is or is not in compliance with the rules in this 
subpart.
* * * * *
[FR Doc. 99-25232 Filed 9-30-99; 8:45 am]
BILLING CODE 6712-01-U