[Federal Register Volume 66, Number 41 (Thursday, March 1, 2001)]
[Rules and Regulations]
[Pages 12877-12894]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-4794]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 64

[CC Docket No. 94-129; FCC 00-255 and FCC 01-67]


Implementation of the Subscriber Carrier Selection Changes 
Provisions of the Telecommunications Act of 1996, Policies and Rules 
Concerning Unauthorized Changes of Consumers Long Distance Carriers

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this document, the Commission adopts rules proposed in the 
Second Report and Order and Further Notice of Proposed Rulemaking to 
implement the slamming provisions of the Communications Act of 1934, as 
amended by the Telecommunications Act of 1996. Telecommunications 
carriers are prohibited from carrier from submitting or executing an 
unauthorized change in a subscriber's selection of a provider of 
telephone exchange service or telephone toll service. This practice, 
known as ``slamming,'' enables those companies who engage in fraudulent 
activity to increase their customer and revenue bases at the expense of 
consumers and law-abiding companies. The rules adopted in this document 
will improve the carrier change process for consumers and carriers 
alike, while making it more difficult for unscrupulous carriers to 
perpetrate slams.

DATES: Effective April 2, 2001 except for Secs. 64.1130(a) through (c), 
64.1130(i), 64.1130(j), 64.1180, 64.1190(d)(2), 64.1190(d)(3), 
64.1190(e), and 64.1195, which 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 those sections.

FOR FURTHER INFORMATION CONTACT: Dana Walton-Bradford, Attorney, 
Accounting Policy Division, Common Carrier Bureau, (202) 418-7400.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Third 
Report and Order and Second Order on Reconsideration (Third Report and 
Order) in CC Docket No. 94-129, which was released on August 15, 2000. 
This summary also contains amendments and modifications to the Third 
Report and Order that were adopted in an Order released on February 22, 
2001. The full text of this document is available for public inspection 
during regular business hours in the FCC Reference Center, Room CY-
A257, 445 Twelfth Street, SW., Washington, DC 20554.

I. Introduction and Background

    1. In this Third Report and Order and Second Order on 
Reconsideration (Order), we adopt rules proposed in the Second Report 
and Order and Further Notice of Proposed Rulemaking (Section 258 Order 
or FNPRM, 64 FR 07745 (2/16/1999) to implement Section 258 of the 
Communications Act of 1934 (Act), as amended by the Telecommunications 
Act of 1996 (1996 Act). Section 258 prohibits any telecommunications 
carrier from submitting or executing an unauthorized change in a 
subscriber's selection of a provider of telephone exchange service or 
telephone toll service. This practice, known as ``slamming,'' enables 
those companies who engage in fraudulent activity to increase their 
customer and revenue bases at the expense of consumers and law-abiding 
companies. The rules we adopt in this Order will improve the carrier 
change process for consumers and carriers alike, while making it more 
difficult for unscrupulous carriers to perpetrate slams.
    2. In the Section 258 Order, we established a comprehensive 
framework designed to close loopholes used by carriers who slam 
consumers and to bolster certain aspects of our slamming rules to 
increase their deterrent effect. In particular, we adopted aggressive 
new liability rules designed to take the profit out of slamming. We 
also broadened the scope of our slamming rules to encompass all 
carriers and imposed more rigorous verification measures. In our First 
Reconsideration Order, we amended certain aspects of the slamming 
liability rules, granting in part petitions for reconsideration of our 
Section 258 Order. Although the petitions raised a broad range of 
issues relating to the slamming rules, the First Reconsideration Order 
addressed only those issues relating to our liability rules, which had 
been stayed by the D.C. Circuit. We chose to resolve those issues 
separately, and on an expedited basis, because of the overriding public 
interest in reinstating the liability rules in order to deter slamming.
    3. When the Commission released the Section 258 Order, it 
recognized that additional revisions to the slamming rules could 
further improve the preferred carrier change process and prevent 
unauthorized changes. Thus, concurrent with the release of the Section 
258 Order, the Commission issued a Further Notice of Proposed 
Rulemaking and sought comment on the following proposals: (1) 
Permitting the authorization and verification of preferred carrier 
changes over the Internet; (2) requiring resellers to obtain their own 
carrier identification codes (CICs), or, in the alternative, some type 
of pseudo-CIC that would provide underlying facilities-based carriers 
and subscribers of resellers with a way to identify the service 
provider; (3) modifying the independent third party verification 
method; (4) defining the term ``subscriber'' for purposes of 
authorizing preferred carrier changes; (5) requiring carriers to submit 
reports on the number of slamming complaints they receive; (6) creating 
a registration requirement for all providers of interstate 
telecommunications services; and (7) requiring unauthorized carriers to 
remit to authorized carriers certain amounts in addition to the amount 
paid by slammed subscribers.
    4. On June 30, 2000, the President signed into law a piece of 
legislation that is relevant to our slamming rules and some of the 
issues pending in this proceeding, particularly our proposal in the 
FNPRM to allow the authorization and verification of preferred carrier 
changes using the Internet. The Electronic Signatures in Global and 
National Commerce Act, S. 761 (E-Sign Act) is intended to foster the 
development of e-commerce, or commerce conducted electronically over 
the Internet. To accomplish this goal, the E-Sign Act establishes a 
framework governing the use of electronic signatures and records in 
transactions in or affecting interstate and foreign commerce. With 
certain exceptions not relevant here, the provisions of the E-Sign Act 
took effect on October 1, 2000.
    5. In this Order, we adopt a number of the proposals discussed in 
the FNPRM, and we also address the remaining issues that were raised on 
reconsideration of the Section 258 Order. Specifically, in this Order, 
we amend the current carrier change authorization and verification 
rules to expressly permit the use of Internet Letters of Agency 
(Internet LOAs) in a

[[Page 12878]]

manner consistent with the new E-Sign Act; we direct the North American 
Numbering Plan Administration (NANPA) to eliminate the requirement that 
carriers purchase Feature Group D access in order to obtain a CIC; we 
provide further guidance on independent third party verification; we 
define the term ``subscriber;'' we require each carrier providing 
telephone exchange and/or telephone toll service to submit a semiannual 
report on the number of slamming complaints it receives; and we expand 
the existing registration requirement on carriers providing interstate 
telecommunications service to include additional facts that will assist 
our enforcement efforts. This Order also contains a Second Order on 
Reconsideration, in which we uphold our rules governing the submission 
of preferred carrier freeze orders, the handling of preferred carrier 
change requests and freeze orders in the same transaction, and the 
automated submission and administration of freeze orders and changes. 
In addition, we reaffirm our decision not to preempt state regulations 
governing verification procedures for preferred carrier change requests 
that are consistent with the provisions of Section 258. We also decline 
to adopt a 30-day limit on the amount of time an LOA confirming a 
carrier change request should be considered valid and instead adopt a 
60-day limit. Finally, we clarify certain of our rules regarding the 
payment of preferred carrier change charges after a slam.

II. Third Report and Order

A. Preferred Carrier Changes Using the Internet

    6. Discussion. We continue to believe that the Internet provides a 
quick and efficient means of signing up new subscribers and should be 
made widely available to carriers and consumers. We recognize that 
consumers' use of the Internet for electronic commerce has grown 
tremendously in recent years, as more and more businesses provide 
services online, and a greater percentage of consumers and businesses 
utilize computers and the Internet to transact business. In addition, 
we recognize that Section 104(e) of the E-Sign Act directs us not to 
differentiate between written LOAs and LOAs that are submitted and 
signed electronically. In view of these developments, we hereby amend 
our carrier change authorization and verification rules to expressly 
permit the use of Internet LOAs, in a manner consistent with the 
provisions of the E-Sign Act.
1. Authorization and Verification of Internet LOAs.
    7. As stated in the FNPRM, we believe that subscribers using the 
Internet to change telecommunications service providers are entitled to 
the same level of protection against slamming that we have mandated for 
other forms of solicitation. Internet LOAs must comply with the 
requirements of our rules governing written LOAs, subject to the 
clarifications and modifications adopted in this Order. Carriers who 
wish to sign up new subscribers over the Internet must adhere to the 
informational requirements for written LOAs, as specified in 
Sec. 64.1130(e) of our existing rules. In light of the E-Sign Act, we 
now conclude that an electronic signature used for a carrier change 
submitted over the Internet will satisfy the signature requirement of 
Sec. 64.1130(b) governing LOAs, and that the information submitted to 
authorize and verify a carrier change request may be submitted in the 
form of an electronic record.
    8. Carriers using Internet LOAs to sign up subscribers will be 
required to comply with the consumer disclosure requirements of Section 
101(c) of the E-Sign Act. Section 101(c) requires, among other things, 
that the carrier obtain the subscriber's consent to use electronic 
records, obtain the subscriber's acknowledgment that he or she has the 
software and hardware necessary to access the information in the 
electronic form (i.e., Internet LOA) used by the carrier, and give the 
subscriber notice of the procedures for withdrawing consent. Section 
101(c) also requires carriers to inform subscribers of any right (after 
consent to the transaction) to a non-electronic (that is, paper) copy 
of the electronic record of the transaction, to tell them how to obtain 
such a copy, and to make clear whether a fee will be charged for the 
copy. Accordingly, we modify our rules to incorporate by reference the 
requirements of Section 101(c) of the E-Sign Act. We note that these 
consumer disclosures, in conjunction with the form and content 
requirements for LOAs under Sec. 64.1130 of our rules, are likely to 
address concerns about unwary consumers who might inadvertently switch 
their telephone service providers while exploring websites or 
participating in contests on the Internet. At the same time, we 
recognize that many commenters expressed concerns regarding fraudulent 
use of Internet LOAs that may not be fully addressed by the protections 
afforded by compliance with Section 101(c) of the E-Sign Act. In this 
regard, we note that, if a subscriber contests the authenticity of an 
Internet LOA, the carrier will have the burden of proof to counter the 
subscriber's allegation. For this reason, we would expect a carrier to 
employ procedures that would enable it to demonstrate that the 
electronic signature on an Internet LOA could not have been submitted 
by anyone other than the subscriber. While it is our expectation that 
the consumer protection measures afforded by the combination of the 
requirements in the E-Sign Act and our LOA rules will suffice, we note 
that, if we detect an inordinate increase in slamming after these 
changes take effect, we may choose to re-evaluate our rules.
    9. We are aware that some consumers may be concerned about security 
and privacy issues associated with submitting carrier change requests 
and associated personal information over the Internet. Security and 
privacy issues arise because Internet communications are sent from 
computer to computer until the communications reach their final 
destinations. When information is sent from point A to point B over the 
Internet, every computer involved in the transmission path has an 
opportunity to intercept and view the information being sent. As a 
result, we acknowledge the concerns of commenters who argue that 
carriers should provide subscribers with a secured web transaction for 
submitting Internet LOAs. At this time, we decline to impose specific 
requirements regarding security and privacy as it relates to Internet 
LOAs, but we strongly encourage carriers who utilize Internet LOAs to 
sign up new subscribers to employ security measures in keeping with the 
best practices used for Internet transactions, such as providing 
subscribers with secured web access. In addition, we strongly encourage 
carriers to provide notice to subscribers regarding the level of 
security that applies to the submission of Internet LOAs. We also 
support the use of digital signatures, when they are made widely 
available, in order to more precisely establish the identity of the 
subscriber submitting an Internet LOA, the date of the submission, and 
other specifics.
    10. We also acknowledge that consumers have a legitimate interest 
in the privacy of personal information that they may be asked to submit 
with an Internet LOA. Again, we decline to mandate a specific action 
with regard to such information at this time. However, we encourage 
carriers to keep such information confidential and not use a 
subscriber's information, including his or her electronic mail (e-mail) 
address, for marketing or other business purposes without the express 
consent of

[[Page 12879]]

the subscriber. In addition, we recognize that some consumers may 
prefer, for a variety of reasons, not to use the Internet to authorize 
carrier changes. Consistent with Section 101(b)(2) of the E-Sign Act, 
we will amend our rules to state that carriers must give subscribers 
the option of using one of the other authorization and verification 
methods specified in Sec. 64.1120 of our rules, in addition to the use 
of Internet LOAs.
2. Pre-Existing Relationships
    11. We recognize that some carriers and subscribers who have pre-
existing business relationships may wish to follow a more truncated 
authorization and verification process for making carrier changes than 
required for written and Internet LOAs. AOL and other commenters assert 
that subscribers and carriers belonging to a closed user group (CUG) or 
linked in a similar ongoing business relationship should be permitted 
to utilize a less stringent verification method for Internet LOAs. 
However, we see no compelling reason to determine that our LOA rules, 
which are designed to protect subscribers, should apply to a lesser 
degree when the subscriber belongs to a CUG or has a similar type of 
pre-existing relationship with the carrier. Therefore, at this time, we 
decline to permit carriers and subscribers with pre-existing business 
relationships, such as CUG providers and members, to use less stringent 
verification methods to authorize and verify carrier changes processed 
over the Internet.
3. Separate Screen Requirement
    12. In the FNPRM, we sought comment on the extent to which change 
requests submitted over the Internet may or may not contain all the 
required elements of a valid LOA, and we also sought comment on ways in 
which we might ensure that consumer interests are protected when 
Internet LOAs are used. In certain respects, our existing rules on the 
form and content of LOAs reflect the fact that they were written with 
paper documents in mind. For example, a written LOA must be a separate 
document not combined with inducements of any kind. In order to conform 
Internet LOAs to this preexisting requirement, we amend our rules to 
specify that Internet LOAs must appear on a separate screen from any 
inducements or solicitations for a carrier's services and contain only 
the authorizing language found in Sec. 64.1130(e) of our rules. We 
regard this requirement as the functional equivalent of the pre-
existing requirements that a written LOA must be a separate document 
not combined with inducements of any kind. Moreover, as noted by 
several commenters, this separate screen requirement is easily 
achievable and is necessary to eliminate the possibility of customer 
confusion and the potential for inadvertent selection of a new 
preferred carrier.
    13. We believe that this determination is consistent with Section 
104(b)(2)(C) of the E-Sign Act. That section of the E-Sign Act allows 
agencies to include requirements for electronic records that are 
``substantially equivalent to the requirements imposed on records that 
are not electronic records,'' that will not ``impose unreasonable costs 
on the acceptance and use of electronic records,'' and will not 
``require, or accord greater legal status or effect to, the 
implementation or application of a specific technology or technical 
specification for performing the functions of creating, storing, 
generating, receiving, communicating, or authenticating electronic 
records or electronic signatures.'' As stated above, this separate 
screen requirement is substantially equivalent to the requirements 
found in Secs. 64.1130(b) and (c) as they apply to written LOAs. 
Moreover, the record in this proceeding indicates that this separate 
screen requirement will not impose unreasonable costs on the acceptance 
and use of electronic records.
4. Choice of Telecommunications Services
    14. We adopt our tentative conclusion that carriers who solicit 
service over the Internet and require subscribers to sign up for more 
than one service (e.g., interLATA and intraLATA) in order to authorize 
a carrier change, rather than giving subscribers the option of signing 
up for individual services, violate our rule requiring all LOAs to 
contain separate statements regarding choices of interLATA and 
intraLATA toll service. While we presented this issue in the FNPRM as a 
``general concern[] about the content of the solicitation using the 
Internet'' and cited some IXC webpages as examples of the practice, we 
note that there is no reason to believe this type of inappropriate 
carrier change solicitation would only appear in an electronic medium. 
We emphasize that carriers must clearly and conspicuously delineate on 
any LOA, written or Internet, the individual services that the 
subscriber may choose to be covered by the carrier change request, 
including, but not limited to, local, intraLATA, and interLATA 
services. Consumers should know what specific services are being 
offered and should have the discretion to subscribe to only the 
services they desire. Such consumer choice and discretion are essential 
to maintaining and advancing the development of a competitive 
telecommunications marketplace.
5. Preferred Carrier Freeze
    15. Consistent with our amendment of the rules governing LOAs, we 
are also amending our rules to allow subscribers to submit, and 
carriers to process, the imposition and/or lifting of preferred carrier 
freezes over the Internet, as recommended by many commenters. Carriers 
must comply with the same verification requirements that apply to LOAs, 
as discussed, to help prevent the unauthorized imposition or lifting of 
preferred carrier freezes over the Internet. In addition, we encourage 
carriers to employ measures to protect the security and confidentiality 
of subscribers' personal information.
6. State Authority
    16. We note that the amendments to our rules that we adopt in this 
Order for Internet LOAs represent a minimum threshold for carrier 
change authorization and verification with which all carriers must 
comply. State jurisdictions may adopt verification requirements for 
Internet LOAs, so long as they are consistent with Section 258, as 
implemented by our rules, and the E-Sign Act. We disagree with Cable & 
Wireless that we should preempt state laws regarding the legality and 
form of Internet LOAs at this time. Carriers already must comply with 
state requirements for written LOAs that are consistent with Section 
258 and the Commission's rules, and state requirements for Internet 
LOAs that are consistent with Section 258, as implemented by our rules, 
and the E-Sign Act warrant the same compliance.

B. Resellers and CICs

    17. Discussion. As set forth below, we shall direct the NANPA to 
eliminate the requirement that carriers purchase ``Feature Group D'' to 
obtain CICs. This action will facilitate the assignment of CICs to 
switchless resellers and remove one obstacle to their independent use 
of CICs. At the present time, we are not requiring resellers to obtain 
their own CICs, nor are we adopting either of our other two proposals. 
Although we believe that requiring switchless resellers to obtain CICs 
may well be an effective solution to soft slamming and related carrier 
identification problems, commenters have raised a number of concerns 
regarding the potential impact of such a requirement on the carrier 
industry. Based on our review of the record, as discussed herein, we 
are not persuaded that we should adopt a CIC

[[Page 12880]]

requirement for switchless resellers at this time. However, in order to 
continue developing the record, we shall refer the CIC assignment and 
use issues discussed below to the North American Numbering Council 
(NANC) for analysis and recommendations. We intend to reevaluate the 
costs and benefits of the proposed CIC requirement when we receive the 
NANC's report.
    18. Under the current CIC Assignment Guidelines, a carrier must 
purchase Feature Group D access service to be assigned a CIC. A 
switchless reseller does not require the physical or trunk access to 
the public switched telephone network (PSTN) available through the 
purchase of Feature Group D, and is unlikely to bear the expense simply 
to obtain a CIC. The NANC's CIC Ad Hoc Working Group has recommended 
elimination of the Feature Group D requirement as ``an unnecessary 
administrative burden for resale providers[.]'' In light of this 
recommendation, and based on our examination of the record in this 
proceeding, we direct the NANPA to eliminate the Feature Group D 
requirement. This action, which is an aspect of our first proposal, 
``will facilitate the assignment of CICs to resellers, and thereby 
allow easier [carrier] identification * * *, enhancing the ability to 
resolve conflicts, including disputes which involve slamming.''
    19. Commenters are divided on our proposal to require switchless 
resellers to obtain their own CICs. Generally, supporters argue that it 
would be a cost-effective and administratively simple solution to soft 
slamming and related problems. Opponents raise a number of concerns 
regarding the impact of a CIC requirement on the carrier industry, 
including that it would: (1) Impose undue financial burdens on 
resellers and damage them competitively; (2) require expensive and 
time-consuming LEC switch upgrades; and (3) accelerate exhaustion of 
the four-digit CIC pool. Opponents also contend that the record 
contains insufficient evidence of the dimensions of soft slamming and 
related problems to warrant regulatory action and, in any event, that 
other recent Commission actions are likely to address such problems. We 
address these issues in turn below.
    20. Turning to the first issue, the principal cost of the subject 
proposal for a switchless reseller would be deploying or loading a CIC 
in LEC switches in each LATA where it operates. In this regard, ``the 
use of translations access does not significantly reduce the time or 
expense required'' to deploy a CIC. On a nationwide basis, most 
estimates of this cost range from $500,000 to $1 million for a single 
CIC. Relying on such estimates, and on the small size of many 
resellers, opponents maintain that a CIC requirement would create a 
substantial market entry barrier for resellers. Our review of the 
record suggests that in many cases such estimates are unrealistic 
because resellers typically operate on a regional basis. In addition, 
CIC deployment costs may be viewed as ``a legitimate cost of doing 
business,'' and the independent use of CICs clearly has competitive 
advantages for resellers. Nevertheless, we are concerned about 
restricting competition in the wholesale long distance service market 
by limiting resellers' ability to change and/or use multiple underlying 
carriers. Although some resellers use their own CICs despite the 
asserted disadvantages, we are reluctant to adopt a requirement that 
resellers obtain their own CICs pending further review of the 
conclusions reached by the NANC.
    21. Second, GTE, SBC, and USTA express concern that a CIC 
requirement may exhaust the limited capacity of certain types of LEC 
switches. For example, GTE states that:

    [GTE] generally averages over two hundred CICs per switch in its 
1600 plus switches. Almost half of these switches have a capacity of 
only 255 codes today. * * * The GTD5 switch, which comprises over a 
third of [GTE's] total, has a capacity of only 500 CICs. A 500 CIC 
capacity could well be insufficient in some locations to handle all 
resellers who would obtain CICs. * * * [GTE] cannot add any new CICs 
to its switches in Hawaii because international operations have 
already utilized the total capacity.

    It is unclear how many LEC switches are implicated by this issue, 
as only GTE has identified the number of limited-capacity switches 
deployed in its territory, and the likelihood of exhausting switch 
capacity depends on the related questions of demand and location. To 
the extent that upgrades are necessary, however, GTE, SBC, and USTA 
state that they are likely to be costly and time-consuming. 
Furthermore, although the need for upgrades was contemplated when the 
carrier industry moved from a three-digit to a four-digit CIC format, 
USTA suggests that requiring investment in switch upgrades may be 
wasteful because the industry now is moving towards new technology 
platforms. There may be ways to ensure that any systems modifications 
necessary to accommodate the use of additional CICs do not impose undue 
burdens on LECs. Nevertheless, we believe that this matter warrants 
further consideration.
    22. Third, several commenters argue that adoption of a CIC 
requirement would accelerate exhaustion of the pool of four-digit CICs, 
thereby inflicting undue disruption and expense on the entire carrier 
industry. Preliminarily, we find no compelling evidence of a 
significant threat of premature CIC exhaustion. The pool of four-digit 
CICs is 10,000, of which only 2,031 were assigned as of January, 2000, 
and the NANC CIC Report predicts that they will last for 22 years, 
assuming a limit of six per carrier. In addition, it is not clear that 
the subject proposal would substantially increase the long-term net 
demand for CICs, given that some resellers already have CICs, and those 
without CICs are likely to obtain them as their businesses develop, 
without any regulatory requirement.
    23. Turning to the fourth issue, there is a consensus among 
commenters that the shared use of CICs by resellers gives rise to 
significant problems that warrant Commission action. Opponents of the 
subject proposal, however, argue that the record contains insufficient 
evidence for us to determine whether a CIC requirement is warranted in 
light of its potential costs. The Commission does not maintain data as 
to the specific dimensions of these problems, but our review of the 
record suggests that they represent a substantial percentage of all 
slamming complaints. We agree, however, that recent Commission actions 
in this proceeding and in the Truth-in-Billing proceeding may help to 
address soft slamming and related problems indirectly. In this regard, 
Bell Atlantic and USTA point out that the Section 258 Order imposes on 
facilities-based carriers the responsibilities of executing carriers in 
soft slam situations, and AT&T notes that the framework of the slamming 
rules is ``intended to increase effective deterrence of slamming, 
including * * * `soft slamming.' '' In the Truth-in-Billing proceeding, 
the Commission adopted a rule that the name of the service provider 
associated with each charge must be clearly and conspicuously 
identified on the telephone bill. AT&T contends that this action 
``should substantially alleviate the `soft slamming' problem by making 
unauthorized carrier changes readily detectable by end users.''
    24. Based on our review of the record as a whole, we are not 
persuaded that we should adopt a CIC requirement at this time. Rather, 
as explained below, we wish to have more information on the financial 
and competitive issues discussed herein before imposing a CIC 
requirement. By directing that the Feature Group D requirement be 
eliminated, we are taking a step that will facilitate the ability of 
switchless resellers to obtain and use their own

[[Page 12881]]

CICs, while allowing them to choose whether to do so based on their own 
competitive needs. Nevertheless, we continue to believe that requiring 
resellers to obtain their own CICs holds promise as a direct and 
effective solution to the significant problems that arise from the 
shared use of CICs. We therefore wish to continue developing a record 
on the subject proposal, in order to be in a position to take informed 
and expeditious action, should we deem it necessary to do so. 
Accordingly, we shall refer the CIC use and assignment issues discussed 
herein to the NANC for analysis and recommendations. To the extent 
possible, we also request that the NANC submit any data it develops 
that may shed light on the financial and competitive issues discussed 
herein, as well as the dimensions of soft slamming and related 
problems. We request that the NANC provide its report to the Commission 
by August 1, 2001. We intend to reassess the costs and benefits of the 
proposed CIC requirement after receiving the NANC's report. In the 
meantime, we anticipate that the reporting requirements we adopt herein 
will help to furnish us with more data as to the ongoing significance 
of the problems at issue and the impact of the Commission's recent 
anti-slamming and truth-in-billing measures.
    25. Finally, we conclude that adoption of either the second or the 
third proposals set forth in the FNPRM would not serve the public 
interest. Whereas a CIC requirement would rely on existing call routing 
and billing systems and provide consumers with equal access to 
switchless resellers, the ``pseudo-CIC'' proposal would require 
extensive systems modifications by both LECs and underlying carriers, 
without the advantage of equal access. Commenters argue persuasively 
that the third proposal, carrier systems modifications, is not viable 
because, among other things, it would be costly and time-consuming to 
implement, would be likely to complicate and delay the carrier change 
process, and would not comport with existing billing systems.

C. Independent Third Party Verification

    34. Discussion. The first issue we address is whether a carrier's 
sales representative should be permitted to remain on the line during 
the three-way verification call. NAAG raises concerns that the 
subscriber might remain under the influence of the sales representative 
during the verification process. NAAG argues that third party 
verification should be separated completely from the sales transaction, 
so that a carrier would not be permitted to connect the subscriber to 
the third party verifier by initiating a three-way call. Other 
commenters support allowing the carrier's representative to remain on 
the line during the three-way conference call.
    35. As we stated in the FNPRM, the three-way call is often the most 
efficient means of accomplishing third party verification. We believe 
that subscribers may benefit from the convenience of authorizing and 
verifying the carrier change in one phone call. In addition, use of 
this method of verification minimizes the risk that the subscriber will 
not be available when the third party verifier calls to confirm the 
change.
    36. Some commenters propose that the Commission impose certain 
limited restrictions on such calls to ensure that the verification 
process will not become tainted, cause subscriber confusion, or go 
forward without the subscriber's express consent. The proposed 
restrictions range from prohibiting carriers from remaining on the line 
once a connection is established with the third party verifier to 
requiring that all conversation on a three-way conference call be 
recorded.
    37. We agree with NAAG and others that the Commission should 
delineate minimum requirements to ensure that verification ultimately 
involves only the consumer and the third party verifier. Given the 
convenience and cost-effectiveness of the three-way conference call as 
a verification method, we will retain the three-way call as a 
verification method, subject to one limited restriction. The carrier's 
sales representative may initiate the three-way conference call but 
must drop off the call once the connection has been established between 
the subscriber and the third party verifier. We believe that this 
limited restriction will help ensure the independence of the third 
party verification process and prevent the carrier's sales 
representative from improperly influencing subscribers, without 
burdening the verification process. Once the connection has been 
established between the subscriber and the third party verifier, there 
is no need for the carrier's sales representative to stay on the line.
    38. With respect to the content and format of the third party 
verification, we asked parties in the FNPRM to comment on a possible 
requirement that all third party verifications include certain 
information, such as information on preferred carrier freezes or the 
carrier change process. We also asked parties to comment on any 
benefits that might be gained from permitting or requiring third party 
verifiers to provide subscribers with such additional information. This 
proposal generated both strong support and opposition. Although many 
commenters argue that requiring third party verifiers to follow a 
scripted format would impose unnecessary, additional rules on the 
carrier change process without producing a significant corresponding 
benefit, several other commenters ask the Commission for additional 
guidance regarding the format and content of the third party 
verification. For instance, Media One states that third party verifiers 
should be required to confirm the identity of the subscriber, to 
ascertain that the person contacted is authorized to make a change, and 
to frame the request for confirmation of the change as a simple yes/no 
question.
    39. We decline to mandate specific language to be used in third 
party verification calls. In order to eliminate uncertainty as to what 
practices are necessary and acceptable, however, we adopt minimum 
content requirements for third party verification. We believe that 
having minimum content requirements for third party verification calls 
will provide useful guidance to the third party verifiers and carriers 
without locking carriers into using a set script. These requirements 
also allow for more streamlined enforcement because they will assist 
the Commission in determining the adequacy of steps taken by 
independent third parties in the verification process. Accordingly, we 
conclude that a script for third party verification should elicit, at a 
minimum, the identity of the subscriber; confirmation that the person 
on the call is authorized to make the carrier change; confirmation that 
the person on the call wants to make the change; the names of the 
carriers affected by the change; the telephone numbers to be switched; 
and the types of service involved (i.e., local, in-state toll, out-of-
state toll, or international service). We note that these content 
requirements do not differ in substance from our rules regarding LOAs.
    40. In addition, the third party verification must be conducted in 
the same language that was used in the underlying sales transaction. We 
also conclude that the entire third party verification transaction must 
be recorded, a practice that is already common in the industry. 
Consistent with our requirements under Sec. 64.1120(a)(1)(ii), 
submitting carriers must maintain and preserve these recordings for a 
minimum period of two years after obtaining such verification. If a 
slamming dispute arises, having a recorded verification will help 
determine whether the subscriber was

[[Page 12882]]

simply seeking information or was in fact agreeing to change carriers 
and, if so, which service(s) the subscriber agreed to change.
    41. We further conclude that third party verifiers may not dispense 
information concerning the carrier or its services, including 
information regarding preferred carrier freeze procedures or other non-
telecommunications services that the carrier may offer to the 
subscriber. Allowing third party verifiers to effectively market the 
carrier's services could compromise the third party verifiers' 
independence and neutrality because verifiers could easily be drawn 
into presenting the particular market viewpoints of carriers by whom 
they are retained. In addition, providing the verifier with certain 
carrier information could result in the disclosure of proprietary 
information to competing carriers. We also believe that incorporating 
information about preferred carrier freezes into the verification 
script is likely to be confusing to subscribers and would prolong the 
verification process unnecessarily.
    42. Finally, we conclude that automated systems that preserve the 
independence of the third party verification process may be used to 
verify carrier change requests. The use of automated third party 
verification systems not only promotes consistency in the verification 
process and adequacy of the information provided to subscribers, but 
also gives carriers a cost-effective way to create a readily accessible 
record of each order confirmation. Moreover, the recordings generated 
by this automated process may be useful in addressing subscriber 
complaints of slamming. For instance, the recording can reveal whether 
the carrier change at issue was properly verified and whether an 
authorized person provided the verification. Automated systems may also 
help provide predictable and consistent service.
    43. Although several commenters argue that using automated 
verification systems that record the verification should obviate the 
need for more detailed script requirements, we conclude that these 
systems should elicit, at a minimum, the same information that our 
rules currently require, as well as the information specified. To 
reiterate, automated verification systems must elicit, at a minimum, 
the identity of the subscriber; confirmation that the person on the 
call is authorized to make the carrier change; confirmation that the 
person on the call wants to make the change; the names of the carriers 
affected by the change; the telephone numbers to be switched; and the 
types of service affected by the transaction (i.e., local, in-state 
toll, out-of-state toll, or international service). In addition, 
automated verifications must be conducted in the same language that was 
used in the underlying sales transaction and must be recorded in their 
entirety to ensure that there is a record of the verification in the 
event of a slamming dispute. As with the three-way conference call, and 
for the same reasons, a carrier's sales representative initiating the 
automated verification call may not remain on the line after the 
connection has been established. We further conclude that automated 
verification systems should provide subscribers with an option of 
speaking with a live person at any time during the call. We believe 
that, in situations where the subscriber cannot follow the prompts of 
an automated system (or has questions once the automated verification 
commences), the subscriber should be able to reach a live person who 
can complete the process. If the subscriber does not want to complete 
the verification process, or is unable to do so, the third party 
verifier must end the call, and the transaction must be treated as 
unverified.
    44. We note that, although our rules do not generally prohibit 
automated third party verification systems, certain types of automated 
verification systems undermine the independence requirement and 
contradict the intent behind our rules to produce evidence, independent 
of the telemarketing carrier, that a subscriber wishes to change his or 
her carrier. In particular, we conclude that the ``live-scripted'' 
automated verification system is at odds with our rules because it 
permits the carrier's agent, who is not an independent party located in 
a separate physical location, to solicit the subscriber's confirmation. 
From a subscriber perspective, the ``live-scripted'' version may be 
appealing because the subscriber is interacting with a live person, 
even though that person is following a set script. The fact that the 
questions on the script are being read by the carrier's sales 
representative, however, compromises the independence of the 
verification. The risk that the sales representative may ask the 
questions in a pressuring or misleading manner is inherent in the 
``live-scripted'' version. Because the carrier's sales representative 
is usually compensated for sales completed, and not for sales attempts, 
the sales representative could not be considered an unbiased third 
party that lacks motivation to influence the outcome of the 
verification process.

D. Definition of ``Subscriber''

    45. Discussion. Based on our consideration of the comments filed in 
this proceeding, we adopt the following definition of the term 
``subscriber'' for purposes of our rules implementing Section 258 of 
the Act: ``The party identified in the account records of a common 
carrier as responsible for payment of the telephone bill, any adult 
person authorized by such party to change telecommunications services 
or to charge services to the account, and any person contractually or 
otherwise lawfully authorized to represent such party.'' We believe 
that this definition will serve our public interest goals of promoting 
consumer protection, consumer convenience, and competition in 
telecommunications services. Specifically, this definition will allow 
customers of record to authorize additional persons to make 
telecommunications decisions, while protecting consumers by giving the 
customers of record control over who is authorized to make such 
decisions on their behalf. In addition, this definition will provide 
carriers with the flexibility to establish authorization procedures 
that are appropriate to their own and their customers' needs, 
consistent with the framework of our rules.
    46. The definition we adopt is similar to the SBC proposal set 
forth in the FNPRM, in that it allows customers of record to authorize 
additional persons to make telecommunications decisions. We believe 
that it is preferable to the SBC proposal, however, because it clearly 
identifies the customer of record as the source of authority over who 
is authorized to make telecommunications decisions. In addition, the 
definition we adopt distinguishes between two different types of 
authority: (1) Authority based on the express or implied authorization 
of the customer of record, as reflected in carrier account records or 
elsewhere; and (2) authority based on federal and/or state law and 
regulations concerning agency and authority.
    47. The principal concern expressed by commenters opposed to a 
definition that allows customers of record to authorize additional 
persons to make telecommunications decisions is that such a definition 
invites disputes among household members. We conclude that this concern 
does not warrant restricting customer options. Commenters favoring a 
broad definition generally indicate that the current carrier practice 
is to allow persons other than the customer of record to make 
telecommunications

[[Page 12883]]

decisions subject to varying authorization procedures, and that 
consumers expect and value this service. Examination of the record does 
not indicate that this practice has given rise to a substantial number 
of slamming complaints. Moreover, as discussed below, we believe that 
our current rules provide sufficient incentives for carriers to adopt 
appropriate safeguards to ensure that only authorized persons are 
permitted to change telecommunications services. Absent more concrete 
evidence of the likelihood of harm to consumers, we agree with the 
majority of commenters that consumers ``should be able to make 
decisions about their preferred carrier [and] delegate that authority 
if needed[.]''
    48. We emphasize that, by adopting a definition, we are not 
imposing additional responsibilities on carriers in the submission or 
execution of carrier changes. Rather, carriers' responsibilities are 
determined by the framework of the current rules. Under these rules, 
submitting carriers are subject to liability for the submission of 
unauthorized changes, regardless of intent. As we held in the Section 
258 Order, strict liability ``provides appropriate incentives for 
carriers to obtain authorization properly and to implement their 
verification procedures in a trustworthy manner.'' Within this 
framework, the definition that we adopt will permit submitting carriers 
to utilize varying authorization procedures based on their own and 
their customers' needs, without tolerating procedures likely to enable 
unauthorized persons to make telecommunications decisions. With regard 
to executing carriers, their responsibility is limited to prompt 
execution of changes verified by a submitting carrier. Carriers that 
execute changes verified by submitting carriers are not subject to 
liability for unauthorized changes. For these reasons, we are not 
concerned that the definition we adopt will impose unreasonable burdens 
on executing carriers.
    49. In sum, we believe the ``subscriber'' definition that we adopt 
herein will serve our public interest goals of promoting consumer 
convenience and competition in telecommunications services, without 
leading to increased slamming. The definition we adopt is consistent 
with the framework of our rules and will enable carriers to adopt 
safeguards against unauthorized carrier changes that are suited to 
their own and their customers' needs.

E. Submission of Reports by Carriers

    50. Discussion. We will require carriers providing telephone 
exchange and/or telephone toll service to periodically submit reports 
regarding slamming complaints they received. Carriers objecting to this 
reporting requirement are concerned that the reports on slamming 
complaints received by carriers would produce inaccurate and misleading 
information. Specifically, these carriers argue that such information, 
when provided by LECs, will inflate the number of slams attributed to 
other carriers because what is reported is the total number of slamming 
allegations, without reference to their validity or their underlying 
causes. We believe the reporting requirement adopted herein is designed 
to address these concerns, and we are confident that reliance on the 
reported information as an ``early warning'' system will not misdirect 
the enforcement of the Commission's slamming rules. Moreover, the 
information will be invaluable in enabling the Commission to identify, 
as soon as possible, the carriers who repeatedly initiate unauthorized 
changes. In addition, because the reports will be available for public 
inspection, they may compel carriers to reduce slamming on their own to 
avoid public embarrassment or loss of goodwill.
    51. We recognize that a subscriber complaint is not, in and of 
itself, dispositive proof of a slam. Nevertheless, an excessive number 
of complaints directed at a particular carrier, or an increase in the 
number of such complaints, suggests that an immediate investigation 
into that carrier's practices may be warranted. Accordingly, to assist 
our enforcement efforts in this area, we conclude that each carrier 
providing telephone exchange and/or telephone toll service must submit 
to the Commission via e-mail, U.S. Mail, or facsimile, a slamming 
complaint reporting form which will identify the number of slamming 
complaints received and state the number of such complaints that the 
carrier has investigated and found to be valid. This report also must 
include the number of slamming complaints involving local intrastate 
and interstate interexchange service, investigated or not, that the 
carrier has chosen to resolve directly with subscribers. Moreover, 
because most subscribers who are slammed by an IXC report the slam to 
their LEC, rather than the IXC, LECs should include in their reports 
the name of each entity against which slamming complaints have been 
directed and the number of complaints involving unauthorized changes 
that have been lodged against each entity. Carriers shall file their 
first slamming complaint reports on August 15, 2001, to cover the 
period commencing on the effective date of this requirement, as 
announced in the Federal Register, and ending on June 30, 2001. Reports 
for the second half of 2001 shall be filed on February 15, 2002, 
covering the period between July 1, 2001 and December 31, 2001. 
Thereafter, carriers shall submit their semiannual slamming complaint 
reports on August 15 (covering January 1 through June 30) and on 
February 15 (covering July 1 through December 31). The slamming 
complaint reporting form may be obtained in the Commission's Public 
Reference Room or by accessing the Commission's website.
    52. Based on the record before us, we do not believe that this 
requirement will impose significant additional costs or administrative 
burdens on carriers. Indeed, several carriers have indicated that they 
already track slamming complaints received from subscribers. It would 
be a reasonable business practice for all telecommunications carriers, 
including small carriers, to track slamming complaints they receive in 
the course of their business; we would be surprised if carriers did not 
do this. Thus, we do not believe we are requiring carriers to keep 
information that they would not otherwise keep.

F. Registration Requirement

    53. Discussion. The Commission currently requires carriers 
providing interstate interexchange telecommunications service to submit 
various types of information, and the Commission recently streamlined 
many of these information collection requirements. For example, the 
Commission has consolidated several different worksheets into the 
Telecommunications Reporting Worksheet (FCC Form 499), which is used to 
calculate carriers' contributions to fund four different programs: 
interstate telecommunications relay service (TRS), federal universal 
service support mechanisms, the cost-recovery mechanism for the North 
American Numbering Plan Administration, and the cost recovery mechanism 
for the shared costs of long-term local number portability. In 
addition, to assist carriers in meeting the requirement of Section 1.47 
of our rules that all common carriers must designate an agent for 
service of process in the District of Columbia, we have allowed 
carriers to report such information on the Form 499. Our rules now 
provide that carriers may file the relevant portion of the

[[Page 12884]]

Form 499 with the Commission to satisfy this requirement, and must 
update the information about the registered agent for service of 
process by submitting the revised portion of the Form 499 to the Chief 
of the Enforcement Bureau's Market Disputes Resolution Division within 
one week of any changes. The rules also provide that a paper copy of 
the designation list shall be maintained in the Office of the Secretary 
of the Commission.
    54. We adopt our tentative conclusion that all new and existing 
common carriers providing interstate telecommunications service must 
register with the Commission. We believe such a registration 
requirement will bolster our efforts to curb slamming by enabling us to 
monitor the entry of carriers into the interstate telecommunications 
market and any associated increases in slamming activity. This 
requirement will also enhance our ability to take appropriate 
enforcement action against carriers that have demonstrated a pattern or 
practice of slamming. Slammers that simply change their names and/or 
move to different jurisdictions will find it difficult to escape 
detection if they cannot escape the obligation to register with the 
Commission. This registration information will enable the Commission to 
identify those entities providing interstate telecommunications 
service, it will complement the certification and registration 
requirements in effect in almost every state for intrastate service 
providers, and it will enable the Commission and state authorities to 
coordinate enforcement actions through the creation of a central 
repository of key facts about carriers providing interstate 
telecommunications.
    55. While we decline to rely exclusively on existing annual 
reporting mechanisms, we are mindful of the importance of not 
overburdening carriers with obligations. Therefore, we will revise the 
annually-filed Telecommunications Reporting Worksheet (FCC Form 499-A), 
which must be filed by all telecommunications carriers in April of each 
year, to include the following additional information that is targeted 
to assist our anti-slamming efforts and thereby minimize the burden of 
this registration requirement: the carrier's business name(s) and 
primary address; the names and business addresses of the carrier's 
chief executive officer, chairman, and president, or, in the event that 
a company does not have such executives, three similarly senior-level 
officials of the company; the carrier's regulatory contact and/or 
designated agent for service of process; all names under which the 
carrier has conducted business in the past; and the state(s) in which 
the carrier provides telecommunications service. The next scheduled 
filing of the Form 499-A is April 1, 2001, at which time carriers will 
file the revised form containing the additional information described 
above in accordance with the Instructions to FCC Form 499-A. This 
information shall be submitted under oath and penalty of perjury, and 
must be updated to reflect any changes. Pursuant to the existing 
requirement in Sec. 1.47 of our rules, a carrier shall update its 
registration to reflect any changes by submitting the revised relevant 
portion of the FCC Form 499-A within no more than one week of the 
change. The Commission will make the registration information described 
above available for public inspection in its reference room and on its 
website.
    56. We believe that all carriers providing interstate 
telecommunications service, including small carriers providing such 
service, should be able to submit this information without much expense 
or difficulty because it is readily available and, to a large degree, 
must already be submitted in state jurisdictions. In addition, we note 
that making the registration information part of an existing form that 
must be completed and submitted for other obligations will minimize the 
burden on carriers. We therefore conclude that carriers failing to 
register with the Commission may, after notice and opportunity to 
respond, be subject to a fine. Carriers providing false or misleading 
information in their registrations may have their operating authority 
revoked or suspended, after receiving appropriate notice and 
opportunity to respond.
    57. We further conclude that any telecommunications carrier 
providing telecommunications service for resale shall have an 
affirmative duty to ascertain whether a potential carrier-customer 
(i.e., a reseller) has filed a registration with the Commission prior 
to providing that carrier-customer with service. Once the 
telecommunications carrier that provides telecommunications service for 
resale determines the registration status of its potential carrier-
customer, such carrier will not be responsible for monitoring the 
registration status of that customer on an ongoing basis, although we 
believe that a prudent carrier may choose to do so. In situations where 
such carrier is currently providing a reseller with service, we direct 
the reseller to notify its underlying carrier that it has submitted the 
registration information to the Commission, within a week of having 
done so.
    58. We note that a telecommunications carrier providing 
telecommunications service for resale will not be responsible for the 
accuracy of the registration provided to the Commission by its 
potential carrier-customer, nor will such carrier, relying in good 
faith on the absence of such registration, be liable under Section 251 
of the Act for withholding service from the unregistered entity. The 
Commission may, however, after giving appropriate notice and 
opportunity to respond, impose a fine on carriers that fail to 
determine the registration status of other carriers before providing 
them with service. The dollar amount of the fine imposed on such 
carrier for failing to meet its affirmative duty with respect to an 
unregistered reseller will depend on the egregiousness of the facts 
surrounding the particular incident. We conclude that this will deter 
carriers from providing service to resellers that have not registered 
with the Commission, which will, in turn, make it more difficult for 
``bad actor'' resellers to stay in business.

G. Recovery of Additional Amounts from Unauthorized Carriers

    59. Discussion. We believe that the issue of recovery of additional 
amounts from unauthorized carriers has been effectively resolved in the 
context of our First Reconsideration Order. As discussed, in that 
order, we reaffirmed our decision to absolve consumers of liability for 
slamming charges for a limited period of time, i.e., within the first 
30 days after the unauthorized change. We established procedures that 
apply when a consumer has not paid charges to the slamming carrier and 
also modified the liability rules that apply when a subscriber has paid 
charges to a slamming carrier. Specifically, we concluded that, when 
the slamming carrier receives payment from the subscriber, such carrier 
must pay out 150% of the collected charges to the authorized carrier, 
which, in turn, will pay to the subscriber 50% of his or her original 
payment. In addition, the order provides specific notification 
requirements to facilitate carriers' compliance with the liability 
rules. Given these modifications, we do not believe that there is a 
need for further action in this area at the present time.

[[Page 12885]]

III. Second Order on Reconsideration

A. Administration of Preferred Carrier Freezes

1. IXC Submission of Preferred Carrier Freeze Orders and Freeze Lifts
    60. Several parties argue on reconsideration that the Commission 
should allow carriers to verify and submit orders to implement or lift 
preferred carrier freezes, just as the Commission allows carriers to 
verify and submit preferred carrier change orders. We decline to modify 
our rules and retain the requirement that subscribers must implement or 
lift preferred carrier freezes through contact with their local 
carriers.
    61. In the Section 258 Order, we decided carriers should not be 
permitted to submit preferred carrier freeze lifts, even if those lift 
orders were first verified by a neutral third party. We stated that 
``the essence of a preferred carrier freeze is that a subscriber must 
specifically communicate his or her intent to request or lift a freeze 
[and it is this] limitation on lifting preferred carrier freezes that 
gives the freeze mechanism its protective effect.'' We determined that 
subscribers would gain no additional protection from the implementation 
of a preferred carrier freeze if we were to allow third party 
verification of a carrier change to override a preferred carrier 
freeze. Although such a proposal minimizes the risk that unscrupulous 
carriers might attempt to impose preferred carrier freezes without the 
consent of subscribers, we concluded that it frustrates the 
subscriber's ability to change carriers. Petitioners have not persuaded 
us that we erred in making these determinations. We therefore affirm 
our decision that only a subscriber may request or lift a preferred 
carrier freeze.
    62. Consistent with this purpose, we also take this opportunity to 
clarify that LECs may not accept preferred carrier freeze orders from 
carriers on behalf of subscribers, even if they are properly verified. 
We believe that limiting the submission of preferred carrier freeze 
requests to subscribers will help curb the potential for abuse by 
slamming carriers. To interpret our rules otherwise would undermine the 
effectiveness of preferred carrier freezes. For example, if a slamming 
carrier were allowed to submit an unauthorized freeze order with an 
unauthorized change order, not only would the subscriber be slammed, 
but it would also be more difficult for the subscriber to be switched 
back to the authorized carrier because of the unauthorized freeze. This 
freeze mechanism assures that no carrier change is processed without 
the direct involvement of the subscriber.
2. Simultaneous Submission of Preferred Carrier Change Requests and 
Preferred Carrier Freeze Requests
    63. RCN and Excel seek clarification that a subscriber request a 
change and obtain a preferred carrier freeze in the same transaction. 
Nothing in our rules prohibits a subscriber from changing a carrier and 
requesting a freeze in the same transaction. We emphasize that the LEC 
must, however, verify both the freeze request and the carrier change 
request in accordance with our rules. Specifically, the LEC must obtain 
a Letter of Agency, electronic authorization, or third party 
verification that applies to the freeze request and, if the LEC is the 
provider of the requested long distance service, the LEC must also 
properly verify the carrier change request. We note that, in situations 
where a customer initiates or changes long distance service by 
contacting the LEC directly, verification of the customer's choice is 
not necessary by either the LEC or the chosen IXC because neither 
carrier is the ``submitting carrier'' as we have defined it.
3. Effecting Freeze Lifts and Change Requests in the Same Three-Way 
Call
    64. MCI asks the Commission to clarify that executing carriers have 
an obligation to lift a preferred carrier freeze and switch a customer 
during the same three-way call. MCI states that it has experienced 
difficulties in making authorized carrier changes where preferred 
carrier freezes have been in place. MCI explains that, after a carrier 
change request is properly verified, MCI electronically sends the 
request to the executing carrier. In situations where the customer has 
a preferred carrier freeze in place, but may have forgotten, the change 
request has been rejected by the executing carrier. At that point, MCI 
states that it contacts the customer and initiates a three-way call 
between the executing carrier, the customer, and MCI. According to MCI, 
the executing carrier will only sometimes accept the three-way call, 
will only sometimes lift the preferred carrier freeze during the three-
way call, and will never execute the carrier change during the three-
way call. Thus, MCI appears to argue that, in situations where the 
submitting carrier initiates a three-way call for the purpose of 
simultaneously lifting a preferred carrier freeze and submitting a 
carrier change request that has been already properly verified, the 
Commission should require the executing carrier to accept the freeze 
lift and effect the carrier change request in the same three-way call.
    65. Although we agree with MCI that accepting both freeze lift and 
properly verified carrier change requests during the same three-way 
call may be an efficient means of effectuating a consumer's carrier 
change request, we need not mandate that executing carriers follow this 
course at this time. As we stated in the Section 258 Order, carriers 
must offer subscribers a simple, easily understandable, but secure way 
of lifting preferred carrier freezes in a timely manner. We concluded 
that LECs administering a preferred carrier freeze program must accept 
the subscriber's authorization, either oral or written and signed, 
stating an intent to lift a preferred carrier freeze. We determined 
that LECs also must permit a submitting carrier to conduct a three-way 
conference call with the LEC and the subscriber in order to lift a 
freeze. Our rules do not, however, prohibit LECs from requiring 
submitting carriers to use separate methods for lifting a preferred 
carrier freeze and submitting a carrier change request. If MCI is 
concerned about the delay that may result from some LECs refusing to 
accept properly verified carrier change orders during the same three-
way call initiated for the purpose of lifting a freeze, it may file a 
complaint in the appropriate forum.
    66. We also note that, in the Section 258 Order, we declined to 
enumerate all acceptable procedures for lifting preferred carrier 
freezes. Rather, we encouraged parties to develop other methods of 
accurately confirming a subscriber's identity and intent to lift a 
preferred carrier freeze, in addition to offering written and oral 
authorization to lift preferred carrier freezes. We continue to believe 
that, as long as these other methods are secure and ``impose only the 
minimum burdens necessary on subscribers who wish to lift a preferred 
carrier freeze,'' we need not mandate an automated process for carrier 
freezes, as requested by AT&T.
    67. Furthermore, for the same reasons articulated in the Section 
258 Order, we will not require LECs administering preferred carrier 
freeze programs to make subscriber freeze information available to 
other carriers. We continue to believe that, in light of our preferred 
carrier freeze solicitation requirements, subscribers should know 
whether there are preferred carrier freezes in place on their carrier 
selections. As we noted in the Section 258 Order, if a subscriber is 
uncertain about whether a preferred carrier freeze has been imposed, 
the submitting carrier may use the three-way calling mechanism to 
confirm the

[[Page 12886]]

presence of a freeze. Carriers therefore would not need to rely on a 
LEC-prepared list identifying those subscribers who have freezes in 
place. Moreover, there is no indication, based on the record before us, 
that this information has been used in an anti-competitive manner, as 
AT&T suggests. If, in the future, we find that LECs are using this 
information for anti-competitive purposes, we will revisit this issue 
at that time.

B. Verification of Preferred Carrier Changes

1. Liability of an Executing Carrier
    68. Several carriers ask the Commission to clarify that an 
executing carrier is liable for an unauthorized carrier change when the 
carrier improperly executes a carrier change request. Section 258 of 
the Act contemplates that the submitting carrier and/or the executing 
carrier could be liable for an unauthorized change in a subscriber's 
telecommunications service. In the Section 258 Order, we delineated the 
duties and obligations of submitting and executing carriers in order to 
minimize disputes over the source or cause of unauthorized carrier 
changes. Generally, we concluded that submitting carriers are 
responsible for submitting, without unreasonable delay, authorized and 
properly verified carrier change requests; while executing carriers are 
charged with executing promptly and without unreasonable delay changes 
that have been verified by the submitting carrier. We found that 
``where the submitting carrier submits a carrier change request that 
fails to comply with our rules and the executing carrier performs the 
change in accordance with the submission, only the submitting carrier 
is liable as an unauthorized carrier; [but] where the submitting 
carrier submits a change request that conforms with our rules and the 
executing carrier fails to perform the change in conformance with the 
submission, * * * the executing carrier is liable.  * * *'' Thus, an 
executing carrier that fails to execute promptly and without 
unreasonable delay a change request that has been properly submitted 
and verified is in violation of Section 258 of the Act and 
Sec. 64.1100(b) of our rules and may be subject to liability for 
damages.
2. Separate Authorizations for Multiple Services
    69. We affirm our decision to require separate authorization for 
each service for which a subscriber requests a carrier change and/or 
freeze. Excel has not presented any new arguments or credible evidence 
that would cause us to conclude our original decision was in error.
    70. We also clarify that the separate authorization requirement 
does not prohibit carriers from obtaining a customer's authorization to 
change more than one service on the same LOA. Section 64.1130(d) of our 
rules allows carriers to use these ``combined check-LOAs,'' as long as 
they comply with all the requirements governing Letters of Agency in 
Sec. 64.1130. Thus, a carrier may use one combined check-LOA to obtain 
authorization for more than one service. It must be clear to the 
subscriber, however, that he or she will be receiving each service 
listed on the combined check-LOA from the same carrier.

C. Rules Governing LOAs

1. Limitation on the Effectiveness of an LOA
    71. We will not adopt a 30-day limit on the effectiveness of an LOA 
as suggested by petitioner SBC. We believe a more reasonable limitation 
on the amount of time an LOA should be considered valid is 60 days, and 
we hereby adopt this 60-day limit. We further conclude that the 60-day 
limit shall apply to submitting carriers rather than executing 
carriers, because submitting carriers are actually parties to the 
contractual agreement with the customer and, as such, are more capable 
of conforming their behavior to the obligation.
    72. Although we recognize that a LEC may be able to lift a freeze 
in as few as 24 or 48 hours, there are several factors to consider in 
determining the time period that an LOA should be considered valid. For 
example, if a carrier change request is rejected because the subscriber 
has not lifted the freeze on his or her account, the carrier must 
contact the subscriber and give him or her the opportunity to lift the 
freeze via a three-way call to the LEC. The subscriber may, however, be 
out of town or otherwise unable to be reached immediately. In either 
case, the carrier will be forced to continue to hold the LOA 
indefinitely or until the subscriber can be contacted. A 60-day 
limitation permits more flexibility under these and other, similar 
circumstances. We emphasize that this 60-day limitation represents the 
maximum time period for which an LOA will be considered valid. We note 
that consumers expect that their expressed preference for a new carrier 
will be honored within a reasonable time frame, and we think that a 60-
day period sets a reasonable outer limit. In addition, a time period 
exceeding 60 days may cause confusion for customers regarding requests 
they may have made concerning their account but no longer remember. We 
encourage carriers to submit a change order immediately after the 
subscriber authorizes the change to minimize the risk that the 
subscriber will have forgotten the change.
2. Contents of LOA Regarding Preferred Carrier Change Charge
    73. Under Sec. 64.1130(e)(5) of our rules, LOAs are required to 
include a statement ``[t]hat the subscriber understands that any 
preferred carrier selection the subscriber chooses may involve a charge 
to the subscriber for changing the subscriber's preferred carrier.'' In 
its petition, MediaOne explains that this requirement, which initially 
applied only to changes of a subscriber's long distance provider, can 
now be read to apply to changes of local service providers. Because 
preferred carrier change charges do not apply when a subscriber changes 
from one local service provider to another, MediaOne argues that the 
requirement set forth in Section 64.1130(e) will result in consumer 
confusion. Accordingly, MediaOne asserts that this rule should be 
revised to provide that this statement is not required in LOAs 
authorizing changes of local service providers.
    74. We will revise our requirements for the content of LOAs. Our 
current rules state that an LOA must indicate to the subscriber that a 
charge ``may'' be assessed for any preferred carrier change. We agree 
with MediaOne that Sec. 64.1130(e)(5) of our rules, as written, may 
result in consumer confusion to the extent there is no preferred 
carrier change charge applied for a change in local service providers. 
To alleviate consumer confusion, we therefore amend Sec. 64.1130(e)(5) 
to provide that an LOA must contain language giving a subscriber the 
option of consulting with the carrier as to whether a fee applies to 
his or her preferred carrier change.

D. Payment of Preferred Carrier Change Charges After Slam

    75. There are two preferred carrier change charges that can be 
involved in a slam. The first charge is assessed when the LEC executes 
the slamming carrier's preferred carrier change order. The second 
charge is assessed when the LEC returns the subscriber to his or her 
authorized carrier. SBC seeks clarification as to whether, under the 
new slamming procedures, the unauthorized carrier is responsible for 
paying the carrier change charge when

[[Page 12887]]

the subscriber is returned to his or her authorized carrier. SBC also 
requests clarification that, when a slam has been alleged, the LEC, 
acting as executing carrier, is no longer obligated to investigate or 
make a determination as to the validity of the initial carrier change.
    76. We have previously stated that where an IXC submits a request 
that is disputed by a subscriber and the IXC is unable to produce 
verification of that subscriber's change request, the LEC must assess 
the applicable change charge against that IXC. We also stated in the 
Section 258 Order that the unauthorized carrier must pay for the 
expenses of restoring the subscriber to his or her authorized carrier. 
We continue to believe that an unscrupulous carrier should bear full 
financial responsibility for the costs of its unlawful actions. 
Accordingly, we hereby clarify that the unauthorized carrier shall pay 
the preferred carrier change charges that are assessed in the event of 
a slam, i.e., the charge assessed when the LEC executes the slamming 
carrier's preferred carrier change order and the charge assessed when 
the LEC returns the subscriber to his or her authorized carrier. 
Unauthorized carriers also are responsible for reimbursing authorized 
carriers in accordance with the requirements set forth in Section 258 
of the Act and Sec. 64.1170 of our rules.
    77. We note that SBC's second clarification request regarding the 
executing carrier's role in investigating slamming allegations was made 
in response to the Commission's prior liability rules, which were 
superceded by the liability rules adopted in the First Reconsideration 
Order. The procedures we adopted in the First Reconsideration Order 
provide that ``disputes between alleged slamming carriers, authorized 
carriers, and subscribers now will be brought before an appropriate 
state commission, or this Commission in cases where the state has not 
elected to administer these rules, rather than to the authorized 
carriers, as adopted in the Section 258 Order.'' Under these 
procedures, carriers must inform subscribers who believe that they have 
been slammed of their right to file a complaint with the appropriate 
governmental entity. We have not, however, restricted the ability of 
carriers to try to satisfy subscribers who alleged they have been 
slammed. For example, an IXC might authorize a LEC to fix alleged slams 
on a no-fault basis or to investigate the validity of the carrier 
changes. Nothing in the First Reconsideration Order precludes carriers 
from attempting to resolve slamming allegations, either directly or 
through contractual arrangement with another carrier, before the 
subscribers have filed complaints, and, indeed, we anticipate that 
carriers will have incentives to continue such practices.

E. Preemption of State Regulations

    78. Excel and RCN argue in their petitions that the Commission 
should reconsider its decision not to preempt state regulations 
regarding slamming because they believe that ``the costs to carriers to 
comply with a patchwork of inconsistent federal and state regulations 
could be exorbitant, while accruing little benefit to consumers.'' 
Although we recognize that it may be simpler for carriers to comply 
with one set of verification rules, we will not interfere with the 
states' ability to adopt more stringent regulations. As we observed in 
both the Section 258 Order and the First Reconsideration Order, the 
Commission must work hand-in-hand with the states towards the common 
goal of eliminating slamming. States have valuable insight into the 
slamming problems experienced by consumers in their respective locales 
and can share their expertise with this Commission. We will not thwart 
that effort by requiring states to limit their verification 
requirements so that they are no more stringent than those promulgated 
by this Commission. The carriers challenging the Commission's decision 
to refrain from preempting state regulations have failed to identify a 
particular state law that should be preempted and how that state law 
conflicts with federal law or obstructs federal objectives. In the 
absence of such evidence, we will not preempt state regulations 
governing verification procedures for preferred carrier change 
requests.

A. Procedural Matters

A. Final Regulatory Flexibility Analysis

    89. As required by the Regulatory Flexibility Act (RFA), an Initial 
Regulatory Flexibility Analysis (IRFA) was incorporated in the FNPRM in 
this proceeding. The Commission sought written public comment on the 
proposals in the FNPRM, including comment on the IRFA. The comments 
received are discussed below. The instant Final Regulatory Flexibility 
Analysis (FRFA) conforms to the RFA.
1. Need For and Objectives of This Action
    90. Section 258 of the Act makes it unlawful for any 
telecommunications carrier ``to submit or execute a change in a 
subscriber's selection of a provider of telephone exchange services or 
telephone toll service except in accordance with such verification 
procedures as the Commission shall prescribe.'' In the Section 258 
Order, the Commission established a comprehensive framework of rules to 
implement Section 258 and strengthen its existing anti-slamming rules. 
Concurrent with the release of the Section 258 Order, the Commission 
issued a FNPRM seeking comment on a number of additional proposals to 
further improve the preferred carrier change process and to prevent 
unauthorized carrier changes. In the instant Order, the Commission 
adopts some of the proposals set forth in the FNPRM. Specifically, the 
Commission: (1) amends the current carrier change authorization and 
verification rules to expressly permit the use of Internet Letters of 
Agency (Internet LOAs) in a manner consistent with the new E-Sign Act; 
(2) directs the North American Numbering Plan Administration (NANPA) to 
eliminate the requirement that carriers purchase Feature Group D access 
in order to obtain a carrier identification code (CIC); (3) provides 
further guidance on the independent third party verification process; 
(4) defines the term ``subscriber'' for purposes of its slamming rules; 
(5) requires carriers providing telephone exchange and/or telephone 
toll service to submit a semiannual report on the number of slamming 
complaints it receives; and (6) expands the existing registration 
requirement on carriers providing interstate telecommunications service 
to include additional facts that will assist the Commission's 
enforcement efforts. The objectives of the modified rules adopted in 
this Order are to implement Section 258 by improving the preferred 
carrier change process and strengthening the Commission's framework of 
anti-slamming rules.
2. Summary of Significant Issues Raised by Public Comments in Response 
to the IRFA
    91. The Commission received no comments directly in response to the 
IRFA.
    92. Resellers and CICs. Relying in part on the small size of many 
resellers, opponents of the Commission's proposal to require switchless 
resellers to use their own CICs argue that such a requirement would 
create a substantial market entry barrier for resellers. Others 
maintain that CIC deployment costs would be manageable for resellers 
because they typically operate on a regional rather than on a national 
basis, that such costs may be viewed as ``a

[[Page 12888]]

legitimate cost of doing business,'' and that the independent use of 
CICs has significant competitive advantages for switchless resellers. 
These comments are discussed in more detail in paragraph 27 above.
    93. Submission of Reports by Carriers. Commenters contend that 
requiring each carrier to submit reports on the number of slamming 
complaints that it receives would create serious burdens for the 
Commission and compliant carriers alike. We do not believe that the 
reporting requirement adopted in this Order will impose significant 
additional costs or administrative burdens on carriers. Several 
carriers indicated that they already track slamming complaints received 
from subscribers. Thus, we do not believe that we are requiring 
carriers to keep information that they would not otherwise already 
keep. Moreover, this requirement will enable the Commission to identify 
the carriers who repeatedly initiate unauthorized changes. In addition, 
carriers may be compelled to reduce slamming on their own because the 
reports will be available for public inspection.
    94. Registration Requirement. Commenters argue that the proposed 
registration requirement would impose unnecessary costs on carriers and 
would do little to alleviate the slamming problem. We believe that all 
carriers providing interstate telecommunications should be able to 
comply with the registration requirement adopted herein without much 
expense or difficulty because the information requested is readily 
available, and to a large degree, must be provided to the states. We 
have minimized the burden that this requirement may have on carriers by 
making the registration information part of an existing form that must 
be completed and submitted for other obligations. We believe this 
requirement will benefit consumers by enhancing our ability to take 
appropriate enforcement action against carriers that have demonstrated 
a pattern or practice of slamming.
3. Description and Estimate of the Number of Small Entities To Which 
This Action Will Apply
    95. 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 proposed rules, if adopted. The RFA generally defines 
the term ``small entity'' as having the same meaning as the terms 
``small business,'' ``small organization,'' ``small governmental 
jurisdiction,'' and ``small business concern'' under section 3 of 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). A small organization is generally 
``any not-for-profit enterprise which is independently owned and 
operated and is not dominant in its field.'' Nationwide, as of 1992, 
there were approximately 275,801 small organizations. ``Small 
governmental jurisdiction'' generally means ``governments of cities, 
counties, towns, townships, villages, school districts, or special 
districts, with a population of less than 50,000.'' As of 1992, there 
were approximately 85,006 such jurisdictions in the United States. This 
number includes 38,978 counties, cities, and towns; of these, 37,566, 
or 96 percent, have populations of fewer than 50,000. The Census Bureau 
estimates that this ratio is approximately accurate for all 
governmental entities. Thus, of the 85,006 governmental entities, we 
estimate that 81,600 (96 percent) are small entities. According to SBA 
reporting data, there were 4.44 million small business firms nationwide 
in 1992. Below, we further describe and estimate the number of small 
entity licensees and regulatees that may be affected by the proposed 
rules, if adopted.
    96. The most reliable source of information regarding the total 
numbers of certain common carrier and related providers nationwide, as 
well as the number of commercial wireless entities, appears to be data 
the Commission publishes in its Trends in Telephone Service report. In 
a recent news release, the Commission indicated that there are 4,144 
interstate carriers. These carriers include, inter alia, local exchange 
carriers, wireline carriers and service providers, interexchange 
carriers, competitive access providers, operator service providers, pay 
telephone operators, providers of telephone service, providers of 
telephone exchange service, and resellers.
    97. The SBA has defined establishments engaged in providing 
``Radiotelephone Communications'' and ``Telephone Communications, 
Except Radiotelephone'' to be small businesses when they have no more 
than 1,500 employees. Below, we discuss the total estimated number of 
telephone companies falling within the two categories and the number of 
small businesses in each, and we then attempt to refine further those 
estimates to correspond with the categories of telephone companies that 
are commonly used under our rules.
    98. We have included small incumbent LECs in this present RFA 
analysis. As noted above, a ``small business'' under the RFA is one 
that, inter alia, meets the pertinent small business size standard 
(e.g., a telephone communications business having 1,500 or fewer 
employees), and ``is not dominant in its field of operation.'' The 
SBA's Office of Advocacy contends that, for RFA purposes, small 
incumbent LECs are not dominant in their field of operation because any 
such dominance is not ``national'' in scope. We have therefore included 
small incumbent LECs in this RFA analysis, although we emphasize that 
this RFA action has no effect on FCC analyses and determinations in 
other, non-RFA contexts.
    99. Total Number of Telephone Companies Affected. The U.S. Bureau 
of the Census (``Census Bureau'') reports that, at the end of 1992, 
there were 3,497 firms engaged in providing telephone services, as 
defined therein, for at least one year. 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, covered specialized mobile radio providers, and 
resellers. It seems certain that some of these 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 is 
reasonable to conclude that 3,497 or fewer telephone service firms are 
small entity telephone service firms that may be affected by the new 
rules.
    100. Wireline Carriers and Service Providers. The SBA has developed 
a definition of small entities for telephone communications companies 
except radiotelephone (wireless) companies. The Census Bureau reports 
that there were 2,321 such telephone companies in operation for at 
least one year at the end of 1992. According to the SBA's definition, a 
small business telephone company other than a radiotelephone company is 
one employing no more 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. We 
do

[[Page 12889]]

not have data specifying the number of these carriers that are not 
independently owned and operated, and thus 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 2,295 or fewer 
small telephone communications companies other than radiotelephone 
companies are small entities that may be affected by the new rules.
    101. Local Exchange Carriers. Neither the Commission nor the SBA 
has developed a definition for small providers of local exchange 
services (LECs). The closest applicable definition under the SBA rules 
is for telephone communications companies other than radiotelephone 
(wireless) companies. According to the most recent Telecommunications 
Industry Revenue data, 1,348 incumbent carriers reported that they were 
engaged in the provision of local exchange services. We do not have 
data specifying the number of these carriers that are either dominant 
in their field of operations, are not independently owned and operated, 
or have more than 1,500 employees, and thus 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 1,348 or fewer providers of local exchange service are 
small entities that may be affected by the new rules.
    102. 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 rules is for telephone communications 
companies other than radiotelephone (wireless) companies. According to 
the most recent Trends in Telephone Service data, 171 carriers reported 
that they were engaged in the provision of interexchange services. We 
do not have data specifying the number of these carriers that are not 
independently owned and operated or have more than 1,500 employees, and 
thus 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 171 or fewer 
small entity IXCs that may be affected by the new rules.
    103. Competitive Access Providers. Neither the Commission nor the 
SBA has developed a definition of small entities specifically 
applicable to competitive access services providers (CAPs). The closest 
applicable definition under the SBA rules is for telephone 
communications companies other than radiotelephone (wireless) 
companies. According to the most recent Trends in Telephone Service 
data, 212 CAP/CLECs carriers and 10 other LECs reported that they were 
engaged in the provision of competitive local exchange services. We do 
not have data specifying the number of these carriers that are not 
independently owned and operated, or have more than 1,500 employees, 
and thus 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 212 or fewer 
small entity CAPs and 10 other LECs that may be affected by the new 
rules.
    104. 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 rules is for telephone communications companies other than 
radiotelephone (wireless) companies. According to the most recent 
Trends in Telephone Service data, 24 carriers reported that they were 
engaged in the provision of operator services. We do not have data 
specifying the number of these carriers that are not independently 
owned and operated or have more than 1,500 employees, and thus 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 24 or fewer small entity operator service providers that may 
be affected by the new rules.
    105. 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 SBA 
rules is for telephone communications companies other than 
radiotelephone (wireless) companies. According to the most recent 
Trends in Telephone Service data, 615 carriers reported that they were 
engaged in the provision of pay telephone services. We do not have data 
specifying the number of these carriers that are not independently 
owned and operated or have more than 1,500 employees, and thus 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 
615 or fewer small entity pay telephone operators that may be affected 
by the new rules.
    106. Resellers (including debit card providers). Neither the 
Commission nor the SBA has developed a definition of small entities 
specifically applicable to resellers. The closest applicable SBA 
definition for a reseller is a telephone communications company other 
than radiotelephone (wireless) companies. According to the most recent 
Trends in Telephone Service data, 388 toll and 54 local entities 
reported that they were engaged in the resale of telephone service. We 
do not have data specifying the number of these carriers that are not 
independently owned and operated or have more than 1,500 employees, and 
thus 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 388 or 
fewer small toll entity resellers and 54 small local entity resellers 
that may be affected by the new rules.
    107. Toll-Free 800 and 800-Like Service Subscribers. Neither the 
Commission nor the SBA has developed a definition of small entities 
specifically applicable to 800 and 800-like service (``toll free'') 
subscribers. The most reliable source of information regarding the 
number of these service subscribers appears to be data the Commission 
collects on the 800, 888, and 877 numbers in use. According to our most 
recent data, at the end of January 1999, the number of 800 numbers 
assigned was 7,692,955; the number of 888 numbers that had been 
assigned was 7,706,393; and the number of 877 numbers assigned was 
1,946,538. We do not have data specifying the number of these 
subscribers that are not independently owned and operated or have more 
than 1,500 employees, and thus are unable at this time to estimate with 
greater precision the number of toll free subscribers that would 
qualify as small business concerns under the SBA's definition. 
Consequently, we estimate that there are 7,692,955 or fewer small 
entity 800 subscribers, 7,706,393 or fewer small entity 888 
subscribers, and 1,946,538 or fewer small entity 877 subscribers may be 
affected by the new rules.
    108. Cellular Licensees. Neither the Commission nor the SBA has 
developed a definition of small entities applicable to cellular 
licensees. Therefore, the applicable definition of small entity is the 
definition under the SBA rules applicable to radiotelephone (wireless) 
companies. This provides that a small entity is a radiotelephone 
company

[[Page 12890]]

employing no more than 1,500 persons. According to the Census Bureau, 
only twelve radiotelephone firms from a total of 1,178 such firms which 
operated during 1992 had 1,000 or more employees. Therefore, even if 
all twelve of these firms were cellular telephone companies, nearly all 
cellular carriers were small businesses under the SBA's definition. In 
addition, we note that there are 1,758 cellular licenses; however, a 
cellular licensee may own several licenses. In addition, according to 
the most recent Telecommunications Industry Revenue data, 808 carriers 
reported that they were engaged in the provision of either cellular 
service or Personal Communications Service (PCS) services, which are 
placed together in the data. We do not have data specifying the number 
of these carriers that are not independently owned and operated or have 
more than 1,500 employees, and thus 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 808 or fewer small cellular 
service carriers that may be affected by the new rules.
4. Summary of Projected Reporting, Recordkeeping, and Other Compliance 
Requirements
    109. Below, we analyze the projected reporting, recordkeeping, and 
other compliance requirements that might affect small entities.
    110. Preferred Carrier Changes Using the Internet. The Commission 
amends its rules to expressly permit preferred carrier changes to be 
conducted electronically through the use of Internet Letters of Agency 
(LOAs). Internet LOAs must comply with all current Commission 
authorization and verification requirements (as modified), and 
consumers must have the option of using alternative authorization and 
verification methods. This action is consistent with the E-Sign Act's 
mandate that electronic signatures and transactions be treated the same 
as written ones, and will promote consumer convenience and competition 
by facilitating the use of the Internet for preferred carrier changes.
    111. Resellers and CICs. The Commission directs the NANPA to 
eliminate the requirement that carriers purchase ``Feature Group D 
access'' to obtain CICs. This action will facilitate the assignment of 
CICs to switchless resellers and eliminate a financial and 
administrative obstacle to their independent use of CICs.
    112. Independent Third Party Verification. The Commission retains 
the three-way conference call and confirms that automated systems may 
be used as independent third party verification methods, but requires 
that the carrier's sales representative drop off the call once the 
connection has been established between the subscriber and the third-
party verifier. This action will ensure the independence of the third 
party verification process and prevent the carrier's sales 
representative from improperly influencing subscribers, without 
burdening the verification process. In addition, the Commission adopts 
minimum content requirements for third party verification to provide 
guidance as to what practices are necessary and acceptable, and 
confirms that automated verification systems that preserve the 
independence of the third party verification process may be used to 
verify carrier change requests.
    113. Definition of ``Subscriber.'' The Commission adopts a 
definition of the term ``subscriber'' for purposes of its slamming 
rules that will allow customers of record to authorize additional 
persons to make telecommunications decisions, while retaining control 
over who is authorized to make such decisions on their behalf. The 
adoption of this definition will benefit all carriers, including small 
carriers, by providing them with the flexibility to establish 
authorization procedures appropriate to their own and their customers' 
needs, consistent with the framework of the Commission's slamming 
rules.
    114. Submission of Reports by Carriers. Each carrier providing 
telephone exchange and/or telephone toll service is required to submit 
to the Commission a semiannual report identifying the number of 
complaints involving unauthorized changes that it has received, the 
number that it has investigated and found to be valid, and the number, 
investigated or not, that it has chosen to resolve directly with 
consumers. The report also must include the number of slamming 
complaints involving local intrastate and interstate interexchange 
service, investigated or not, that the carrier has chosen to resolve 
directly with subscribers. Because most subscribers who are slammed by 
an IXC report the slam to their LEC, rather than the IXC, LECs should 
include in their reports the name of each entity against which slamming 
complaints were directed and the number of complaints involving 
unauthorized changes that have been lodged against each entity. These 
reporting requirements will enable the Commission to identify carriers 
who repeatedly initiate unauthorized changes, and may induce carriers 
to reduce slamming on their own to avoid public embarrassment or loss 
of goodwill.
    115. Registration Requirement. Each carrier is required to register 
with the Commission, and an affirmative duty is established on the part 
of a telecommunications carrier providing telecommunications service 
for resale to confirm that a reseller has registered with the 
Commission prior to providing that reseller with service. Specifically, 
the annually-filed Telecommunications Reporting Worksheet (FCC Form 
499-A), which must be filed by all telecommunications carriers in April 
of each year, will be revised to include the following additional 
information that is targeted to assist the Commission's anti-slamming 
efforts: the carrier's business name(s) and primary address; the names 
and business addresses of the carrier's chief executive office, 
chairman, and president, or, in the event that a company does not have 
such executives, three similarly senior-level officials of the company; 
the carrier's regulatory contact and/or designated agent for service of 
process; all names under which the carrier has conducted business in 
the past; and the state(s) in which the carrier provides 
telecommunications service. The new registration requirement will 
enable the Commission to monitor the entry of carriers into the 
interstate telecommunications market and any associated increases in 
slamming, enhance the Commission's ability to take appropriate 
enforcement action against carriers that have demonstrated a pattern or 
practice of slamming, and deter carrier providing telecommunications 
service for resale from offering service to unregistered resellers.
5. Steps Taken to Minimize the Significant Economic Impact of This 
Action on Small Entities, and Significant Alternatives Considered
    116. Resellers and CICs. The Commission requested comment in the 
FNPRM on three possible approaches to the problems arising from the 
shared use of CICs by switchless resellers and their underlying, 
facilities-based carriers. The Commission believes that its proposal to 
require resellers to obtain their own CICs holds promise as a direct 
and effective solution to the significant problems that arise from the 
shared use of CICs. Based on review of the record as a whole, however, 
including concerns raised by some commenters regarding the financial 
and competitive impact of a CIC requirement on

[[Page 12891]]

resellers, many of which are small entities, the Commission is not 
adopting a CIC requirement at this time. By directing that the Feature 
Group D requirement be eliminated, the Commission is taking a step that 
will facilitate the ability of resellers to obtain and use their own 
CICs, while allowing them to choose whether to do so based on their own 
competitive needs.
    117. Submission of Reports by Carriers. The Commission has 
considered whether the reporting requirements adopted herein will 
impose significant additional costs or administrative burdens on 
carriers. The Commission concludes that this requirement would not 
impose significant additional costs or administrative burdens on 
carriers. In this regard, the Commission notes the comments of several 
carriers that they already track slamming complaints received from 
subscribers, and reasons that it would be a reasonable business 
practice for all telecommunications carriers, including small carriers, 
to track slamming complaints they receive in the course of their 
business. Indeed, the Commission states that it would be surprised if 
carriers did not do this. Accordingly, the Commission concludes that it 
is not requiring carriers to keep information that they would not 
otherwise keep. Moreover, these modest reporting requirements will help 
the Commission to achieve important objectives: identifying carriers 
that repeatedly initiate unauthorized changes, and deterring carriers 
from slamming.
    118. Registration Requirement. To minimize the administrative 
burden on carriers of the registration requirement adopted herein, the 
Commission makes the registration information part of an existing form 
that must be completed and submitted for other obligations. The 
Commission also observes that all carriers providing interstate 
telecommunications service, including small carriers providing such 
service, should be able to submit this information without much expense 
or difficulty because it is readily available, and to a large degree, 
must already be submitted in state jurisdictions.
6. Report to Congress
    119. The Commission will send a copy of the Order, including this 
FRFA, in a report to Congress pursuant to the Small Business Regulatory 
Enforcement Fairness Act of 1996. In addition, the Commission will send 
a copy of the Order, including the FRFA, to the Chief Counsel for 
Advocacy of the Small Business Administration. A copy of the Order and 
FRFA (or summaries thereof) also will be published in the Federal 
Register.

B. Supplemental Final Regulatory Flexibility Analysis

    120. As required by the Regulatory Flexibility Act (RFA), an 
Initial Regulatory Flexibility Analysis (IRFA) was incorporated in the 
Further Notice of Proposed Rule Making and Memorandum Opinion and Order 
on Reconsideration, 62 FR 43493, August 14, 1997, in this proceeding. 
The Commission sought written public comment on the proposals in the 
FNPRM and Order, including comment on the IRFA. A Final Regulatory 
Flexibility Analysis (FRFA) was incorporated in the subsequent Section 
258 Order in this proceeding. The Commission received a number of 
petitions for reconsideration in response to the Section 258 Order. The 
instant Second Order on Reconsideration addresses issues raised in 
those reconsideration petitions. This associated Supplemental Final 
Regulatory Flexibility Analysis (SFRFA) reflects revised or additional 
information to that contained in the FRFA. This SFRFA is thus limited 
to matters raised in response to the Section 258 Order and addressed in 
the instant Second Order on Reconsideration. This SFRFA conforms to the 
RFA.
1. Need for and Objectives of this Action
    121. Section 258 of the Act makes it unlawful for any 
telecommunications carrier ``to submit or execute a change in a 
subscriber's selection of a provider of telephone exchange services or 
telephone toll service except in accordance with such verification 
procedures as the Commission shall prescribe.'' In the Section 258 
Order, the Commission established a comprehensive framework of rules to 
implement section 258 and strengthen its existing anti-slamming rules. 
In this Second Order on Reconsideration, the Commission upholds its 
rules governing the submission of preferred carrier freeze orders, the 
handling of preferred carrier change requests and freeze orders in the 
same transaction, and the automated submission and administration of 
freeze orders and changes. In addition, the Commission reaffirms its 
decision not to preempt state regulations governing verification 
procedures for preferred carrier change requests that are consistent 
with the provisions of Section 258. Furthermore, the Commission 
declines to adopt a 30-day limit on the amount of time an LOA 
confirming a carrier change request should be considered valid and 
instead adopts a 60-day limit. Finally, the Commission clarifies 
certain of its rules regarding the payment of preferred carrier change 
charges after a slam.
2. Summary of Significant Issues Raised by Petitions in Response to the 
FRFA
    122. The Commission received no comments directly in response to 
the previous FRFA concerning the issues addressed in this Order.
3. Description and Estimate of the Number of Small Entities To Which 
This Action Will Apply
    123. In the associated FRFA, supra, we have provided a detailed 
description of the pertinent small entities. Those entities include 
wireline carriers, local exchange carriers, interexchange carriers, 
competitive access providers, resellers, and wireless carriers. We 
hereby incorporate those detailed descriptions by reference.
4. Summary of Projected Reporting, Recordkeeping, and Other Compliance 
Requirements
    124. Administration of Preferred Carrier Freezes. The Commission 
clarifies that only subscribers may submit freeze requests to LECs. The 
Commission also clarifies that a subscriber may request a preferred 
carrier change and obtain a preferred carrier freeze in the same 
transaction. In addition, the Commission declines to prohibit LECs from 
requiring submitting carriers to use separate methods for lifting a 
preferred carrier freeze and submitting a carrier change request, or to 
require LECs to make subscriber freeze information available to other 
carriers.
    125. Verification of Preferred Carrier Changes. The Commission 
clarifies that an executing carrier that fails to promptly execute a 
properly submitted and verified change request has violated Section 258 
and the Commission's slamming rules. In addition, the Commission 
reaffirms its prior decision to require separate authorization for each 
service for which a subscriber requests a carrier change and/or freeze, 
and clarifies that the separate authorization requirement does not 
prohibit carriers from obtaining authorization to change more than one 
service in the same LOA.
    126. Rules Governing Letters of Agency (LOAs). The Commission 
declines to adopt 30-day limit on the amount of time that an LOA 
confirming a carrier change request is considered valid, instead 
adopting a 60-day limit as a more reasonable limitation. The 60-day 
limit applies to submitting carriers only. To avoid customer confusion 
as to whether a preferred carrier change

[[Page 12892]]

charge applies for a change in local service providers, the Commission 
also amends its rules to provide that LOAs must contain language giving 
a subscriber the option of consulting with the carrier as to whether a 
fee applies to his or her preferred carrier change.
    127. Payment of Preferred Carrier Change Charge After Slam. The 
Commission clarifies that the unauthorized carrier shall pay the 
preferred carrier change charge assessed when the LEC executes the 
slamming carrier's preferred carrier change order and the change charge 
assessed when the LEC returns the subscriber to his or her authorized 
carrier. The Commission also clarifies that slamming carriers are 
responsible for payment of all preferred carrier change charges 
associated with a slam, including both the charge assessed when the LEC 
executes the slamming carrier's preferred carrier change order and the 
charge assessed when the LEC returns the subscriber to his or her 
authorized carrier.
    128. Preemption of State Regulations. The Commission reaffirms its 
decision in the Section 258 Order not to preempt state regulations 
regarding slamming.
5. Steps Taken To Minimize the Significant Economic Impact of This 
Action on Small Entities, and Significant Alternatives Considered
    129. The clarifications and minor modifications to the Commission's 
slamming rules made in this Second Order on Reconsideration will 
benefit all carriers, including small carriers, by providing certainty 
and guidance in the preferred carrier change process. For instance, the 
Commission declines to adopt a 30-day time limit on the amount of time 
that an LOA confirming a carrier change request is considered valid 
because it does not provide enough flexibility to submitting carriers. 
Instead, the Commission adopts a 60-day time limit as a reasonable time 
frame which will provide flexibility but will also avoid consumer 
confusion that may be produced by a indefinite period of validity. We 
expect that the 60-day time limit will have no significant economic 
impact.
6. Report to Congress
    130. The Commission will send a copy of the Second Order on 
Reconsideration, including this SFRFA, in a report to Congress pursuant 
to the Small Business Regulatory Enforcement Fairness Act of 1996. In 
addition, the Commission will send a copy of the Second Order on 
Reconsideration, including the SFRFA, to the Chief Counsel for Advocacy 
of the Small Business Administration. A copy of the Second Order on 
Reconsideration and SFRFA (or summaries thereof) also will be published 
in the Federal Register.

C. Paperwork Reduction Act

    131. The action contained herein has been analyzed with respect to 
the Paperwork Reduction Act of 1995 and found to impose new or modified 
reporting and recordkeeping requirements or burdens on the public. 
Implementation of these new or modified reporting and recordkeeping 
requirements will be subject to approval by the Office of Management 
and Budget (OMB) as prescribed by the Act and will go into effect upon 
announcement in the Federal Register of OMB approval.

VI. Ordering Clauses

    132. Pursuant to Sections 1, 4, 201-205, and 258 of the 
Communications Act of 1934, as amended, the policies, rules, and 
requirements set forth herein are adopted. It is further ordered that 
47 CFR Part 64 is amended as set forth.
    133. Pursuant to Sections 1, 4(i), 4(j) of the Communications Act 
of 1934, as amended, that the petitions for reconsideration or 
clarification filed by AT&T Corp., Excel Telecommunications, Inc., 
MediaOne Group, National Telephone Cooperative Association, RCN Telecom 
Services, Inc., Rural LECs, and SBC Communications, Inc. are granted in 
part and denied in part to the extent discussed.
    134. The requirements contained herein not pertaining to new or 
modified reporting or recordkeeping requirements shall become effective 
April 2, 2001 except for Secs. 64.1130(a) through (c), 64.1130(i), 
64.1130(j), 64.1180, 64.1190(d)(2), 64.1190(d)(3), 64.1190(e), and 
64.1195, which contain information collection requirements that have 
not yet been approved by the Office of Management Budget (OMB). The 
Commission will publish a document in the Federal Register announcing 
the effective date of those sections.
    135. The Commission's Consumer Information Bureau, Reference 
Information Center, shall send a copy of this Order, including the 
Final Regulatory Flexibility Analysis and the Supplemental 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.
William F. Caton,
Deputy Secretary.

Rule Changes

    For the reasons discussed in the preamble, the Federal 
Communications Commission amends 47 CFR part 64 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. 154, 47 U.S.C. 225, 47 U.S.C. 251(e)(1). 
151, 154, 201, 202, 205, 218-220, 254, 302, 303, and 337 unless 
otherwise noted. Interpret or apply sections 201, 218, 225, 226, 
227, 229, 332, 48 Stat. 1070, as amended. 47 U.S.C. 201-204, 208, 
225, 226, 227, 229, 332, 501 and 503 unless otherwise noted.

    2. Section 64.1100 is amended by adding paragraph (h) to read as 
follows:


Sec. 64.1100  Definitions.

* * * * *
    (h) The term subscriber is any one of the following:
    (1) The party identified in the account records of a common carrier 
as responsible for payment of the telephone bill;
    (2) Any adult person authorized by such party to change 
telecommunications services or to charge services to the account; or
    (3) Any person contractually or otherwise lawfully authorized to 
represent such party.

    3. Section 64.1120 is amended by revising paragraphs (c)(1), 
(c)(3), and by adding paragraph (d).


Sec. 64.1120  Verification of orders for telecommunications service.

* * * * *
    (c) * * *
    (1) The telecommunications carrier has obtained the subscriber's 
written or electronically signed authorization in a form that meets the 
requirements of Sec. 64.1130; or
* * * * *
    (3) An appropriately qualified independent third party has 
obtained, in accordance with the procedures set forth in paragraphs 
(c)3)(i) through (c)(3)(iv) of this section, the subscriber's oral 
authorization to submit the preferred carrier change order that 
confirms and includes appropriate verification data (e.g., the 
subscriber's date of birth or social security number). The independent 
third party must not be owned, managed, controlled, or directed by the 
carrier or the carrier's marketing agent; must not have any

[[Page 12893]]

financial incentive to confirm preferred carrier change orders for the 
carrier or the carrier's marketing agent; and must operate in a 
location physically separate from the carrier or the carrier's 
marketing agent.
    (i) Methods of third party verification. Automated third party 
verification systems and three-way conference calls may be used for 
verification purposes so long as the requirements of paragraphs 
(c)(3)(ii) through (c)(3)(iv) of this section are satisfied.
    (ii) Carrier initiation of third party verification. A carrier or a 
carrier's sales representative initiating a three-way conference call 
or a call through an automated verification system must drop off the 
call once the three-way connection has been established.
    (iii) Requirements for content and format of third party 
verification. All third party verification methods shall elicit, at a 
minimum, the identity of the subscriber; confirmation that the person 
on the call is authorized to make the carrier change; confirmation that 
the person on the call wants to make the carrier change; the names of 
the carriers affected by the change; the telephone numbers to be 
switched; and the types of service involved. Third party verifiers may 
not market the carrier's services by providing additional information, 
including information regarding preferred carrier freeze procedures.
    (iv) Other requirements for third party verification. All third 
party verifications shall be conducted in the same language that was 
used in the underlying sales transaction and shall be recorded in their 
entirety. In accordance with the procedures set forth in 
64.1120(a)(1)(ii), submitting carriers shall maintain and preserve 
audio records of verification of subscriber authorization for a minimum 
period of two years after obtaining such verification. Automated 
systems must provide consumers with an option to speak with a live 
person at any time during the call.
* * * * *
    (d) Telecommunications carriers must provide subscribers the option 
of using one of the authorization and verification procedures specified 
in Sec. 64.1120(c) in addition to an electronically signed 
authorization and verification procedure under 64.1120(c)(1).

    3. Section 64.1130 is amended by revising paragraphs (a), (b), (c), 
and (e)(4), and by adding paragraphs (i) and (j) to read as follows:


Sec. 64.1130  Letter of Agency form and content.

    (a) A telecommunications carrier may use a written or 
electronically signed letter of agency to obtain authorization and/or 
verification of a subscriber's request to change his or her preferred 
carrier selection. A letter of agency that does not conform with this 
section is invalid for purposes of this part.
    (b) The letter of agency shall be a separate document (or an easily 
separable document) or located on a separate screen or webpage 
containing only the authorizing language described in paragraph (e) of 
this section having the sole purpose of authorizing a 
telecommunications carrier to initiate a preferred carrier change. The 
letter of agency must be signed and dated by the subscriber to the 
telephone line(s) requesting the preferred carrier change.
    (c) The letter of agency shall not be combined on the same 
document, screen, or webpage with inducements of any kind.
* * * * *
    (e) * * *
    (4) That the subscriber may consult with the carrier as to whether 
a fee will apply to the change in the subscriber's preferred carrier.
* * * * *
    (i) Letters of agency submitted with an electronically signed 
authorization must include the consumer disclosures required by Section 
101(c) of the Electronic Signatures in Global and National Commerce 
Act.
    (j) A telecommunications carrier shall submit a preferred carrier 
change order on behalf of a subscriber within no more than 60 days of 
obtaining a written or electronically signed letter of agency.

    4. Add Sec. 64.1180 to subpart K to read as follows:


Sec. 64.1180  Reporting requirement.

    (a) Applicability. Each provider of telephone exchange and/or 
telephone toll service shall submit to the Commission via e-mail 
([email protected]), U.S. Mail, or facsimile a slamming complaint 
report form identifying the number of slamming complaints received 
during the reporting period and other information as specified in 
paragraph (b) of this section.
    (b) Contents of report. The report shall contain the following 
information:
    (1) The information specified in paragraph (a) of this section;
    (2) The number of slamming complaints received during the reporting 
period that the carrier has investigated and found to be valid.
    (3) The number of slamming complaints received during the reporting 
period, investigated or not, that the carrier has directly resolved 
with consumers;
    (4) If the reporting carrier is a wireline or fixed wireless local 
exchange carrier providing service to end user subscribers, the name of 
each entity against which the slamming complaints received during the 
reporting period were directed;
    (5) If the reporting carrier is a wireline or fixed wireless local 
exchange carrier providing service to end user subscribers, the number 
of slamming complaints received during the reporting period that were 
lodged against each entity identified in paragraph (b)(4) of this 
section; and
    (6) The total number of subscribers the reporting carrier is 
serving at the end of the relevant reporting period.
    (c) Semiannual reporting requirement. Reporting shall commence on 
August 15, 2001, covering the effective date of this requirement, as 
announced in the Federal Register, through June 30, 2001. Reports filed 
on February 15, 2002 shall cover the period between July 1, 2001 and 
December 31, 2001. Thereafter, carriers subject to the reporting 
requirement pursuant to paragraph (a) of this section shall submit 
semiannual slamming complaint reports on August 15 (covering January 1 
through June 30) and on February 15 (covering July 1 through December 
31).

    5. Section 64.1190 is amended by revising paragraphs (d)(1)(ii), 
(d)(2)(i), (d)(3)(i), and (e)(1) to read as follows:


Sec. 64.1190  Preferred carrier freezes.

* * * * *
    (d) * * *
    (1) * * *
    (ii) A description of the specific procedures necessary to lift a 
preferred carrier freeze; an explanation that these steps are in 
addition to the Commission's verification rules in Secs. 64.1120 and 
64.1130 for changing a subscriber's preferred carrier selections; and 
an explanation that the subscriber will be unable to make a change in 
carrier selection unless he or she lifts the freeze.
* * * * *
    (2) * * *
    (i) The local exchange carrier has obtained the subscriber's 
written or electronically signed authorization in a form that meets the 
requirements of Sec. 64.1190(d)(3); or
* * * * *
    (3) * * *
    (i) The written authorization shall comply with Secs. 64.1130(b), 
(c), and (h) of the Commission's rules concerning the form and content 
for letters of agency.
* * * * *
    (e) * * *
    (1) A local exchange carrier administering a preferred carrier 
freeze

[[Page 12894]]

must accept a subscriber's written or electronically signed 
authorization stating his or her intent to lift a preferred carrier 
freeze; and
* * * * *

    6. Add Sec. 64.1195 to Subpart K to read as follows:


Sec. 64.1195  Registration requirement.

    (a) Applicability. A telecommunications carrier that will provide 
interstate telecommunications service shall file the registration 
information described in paragraph (b) of this section in accordance 
with the procedures described in paragraphs (c) and (g) of this 
section. Any telecommunications carrier already providing interstate 
telecommunications service on the effective date of these rules shall 
submit the relevant portion of its FCC Form 499-A in accordance with 
paragraphs (b) and (c) of this section.
    (b) Information required for purposes of part 64. A 
telecommunications carrier that is subject to the registration 
requirement pursuant to paragraph (a) of this section shall provide the 
following information:
    (1) The carrier's business name(s) and primary address;
    (2) The names and business addresses of the carrier's chief 
executive officer, chairman, and president, or, in the event that a 
company does not have such executives, three similarly senior-level 
officials of the company;
    (3) The carrier's regulatory contact and/or designated agent;
    (4) All names that the carrier has used in the past; and
    (5) The state(s) in which the carrier provides telecommunications 
service.
    (c) Submission of registration. A carrier that is subject to the 
registration requirement pursuant to paragraph (a) of this section 
shall submit the information described in paragraph (b) of this section 
in accordance with the Instructions to FCC Form 499-A. FCC Form 499-A 
must be submitted under oath and penalty of perjury.
    (d) Rejection of registration. The Commission may reject or suspend 
a carrier's registration for any of the reasons identified in 
paragraphs (e) or (f) of this section.
    (e) Revocation or suspension of operating authority. After notice 
and opportunity to respond, the Commission may revoke or suspend the 
authorization of a carrier to provide service if the carrier provides 
materially false or incomplete information in its FCC Form 499-A or 
otherwise fails to comply with paragraphs (a), (b), and (c) of this 
section.
    (f) Imposition of fine. After notice and opportunity to respond, 
the Commission may impose a fine on a carrier that is subject to the 
registration requirement pursuant to paragraph (a) of this section if 
that carrier fails to submit an FCC Form 499-A in accordance with 
paragraphs (a), (b), and (c) of this section.
    (g) Changes in information. A carrier must notify the Commission of 
any changes to the information provided pursuant to paragraph (b) of 
this section within no more than one week of the change. Carriers may 
satisfy this requirement by filing the relevant portion of FCC Form 
499-A in accordance with the Instructions to such form.
    (h) Duty to confirm registration of other carriers. The Commission 
shall make available to the public a comprehensive listing of 
registrants and the information that they have provided pursuant to 
paragraph (b) of this section. A telecommunications carrier providing 
telecommunications service for resale shall have an affirmative duty to 
ascertain whether a potential carrier-customer (i.e., reseller) that is 
subject to the registration requirement pursuant to paragraph (a) of 
this section has filed an FCC Form 499-A with the Commission prior to 
offering service to that carrier-customer. After notice and opportunity 
to respond, the Commission may impose a fine on a carrier for failure 
to confirm the registration status of a potential carrier-customer 
before providing that carrier-customer with service.

[FR Doc. 01-4794 Filed 2-28-01; 8:45 am]
BILLING CODE 6712-01-U