[Federal Register Volume 67, Number 14 (Tuesday, January 22, 2002)]
[Rules and Regulations]
[Pages 2814-2820]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-1178]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 64

[CC Docket No. 92-77; FCC 01-355]


Billed Party Preference for InterLATA 0+ Calls.

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this document, the Commission clarifies that the price 
disclosure rules apply to all interstate non-access code operator 
service calls. The Commission confirms that section 226 of the 
Communications Act requires price disclosure for all interstate non-
access code operator service calls. The Commission also clarifies that 
the disclosure of price information is limited to those charges that 
are billed by, or on behalf of, the interstate operator service 
provider. The Commission retains the requirement that oral rate 
information must be provided to both parties on a collect call. 
Finally, the Commission amends the rules to reflect that, in a bill-to-
third-number situation, the rate disclosure option must be offered to 
the party to be billed, if the OSP contacts that person to secure 
approval for billing, as well as to the caller. These minor 
clarifications and changes will better ensure the effectiveness of the 
rules in enabling consumers to take advantage of competition in the 
operator services marketplace, while minimizing administrative burdens.

DATES: Effective Date: February 21, 2002.
    Compliance Date: The oral rate disclosure requirement of 
Sec. 64.703(a)(4) shall not apply to interstate intraLATA operator 
services until June 12, 2002.

FOR FURTHER INFORMATION CONTACT: Mark Nadel, Attorney, or Michele 
Walters, Associate Chief, Accounting Policy Division, Common Carrier 
Bureau, (202) 418-7400.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Second 
Order on Reconsideration in CC Docket No. 92-77, released on December 
12, 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.

Introduction

    1. In 1998, the Commission addressed the problem of widespread 
consumer dissatisfaction with the high rates charged by many operator 
services providers (OSPs) for calls from public phones and other 
aggregator locations such as hotels, hospitals, and educational 
institutions. At that time, an away-from-home caller who dialed ``0'' 
followed by an interexchange number typically did not know what rates 
the particular OSP would be charging. The Commission responded to this 
problem in the Second Report and Order, 63 FR 11612, March 10, 1998, by 
adopting price disclosure rules that apply to providers of interstate 
operator services from such phones and to providers of inmate operator 
services from phones set aside for use by inmates at correctional 
institutions. These rules were designed to ensure that consumers 
receive sufficient information about the rates they will pay for 
operator services at public phones and other aggregator locations, 
thereby fostering a more competitive OSP marketplace. In this Order, we 
largely affirm those rules and dispose of outstanding petitions for 
reconsideration. We make several minor modifications and clarifications 
to the rules.
    2. Specifically, we clarify that the price disclosure rules apply 
to all interstate non-access code operator service calls, even those 
that are initiated by dialing 0-, if the consumer will be liable for 
interstate operator service charges for such calls. We confirm that 
section 226 of the Communications Act requires price disclosure for all 
interstate non-access code operator service calls and therefore decline 
to exempt interstate intraLATA toll calls from the price disclosure 
obligation under our rules. We also clarify that the disclosure of 
price information is limited to those charges that are billed by, or on 
behalf of, the interstate operator service provider and amend the rules 
accordingly. In view of the statutory definition of ``consumer'' in the 
context of operator services, we retain the requirement that oral rate 
information must be provided to both parties on a collect call. 
Finally, we amend the rules to reflect the finding in the Second Report 
and Order that, in a bill-to-third-number situation, the rate 
disclosure option must be offered to the party to be billed, if the OSP 
contacts that person to secure approval for billing, as well as to the 
caller. These minor clarifications and changes will better ensure the 
effectiveness of the rules in enabling consumers to take advantage of 
competition in the operator services marketplace, while minimizing 
administrative burdens.
    3. The Commission has long been concerned about consumer 
dissatisfaction over high charges and certain practices of many OSPs 
with respect to calls from public phones at away-from-home aggregator 
locations. OSPs have historically competed with each other to receive 
operator service calls by offering commissions to payphone or premises 
owners on all such calls from a public phone. In exchange for this 
consideration, premises owners have agreed to designate a particular 
OSP as the presubscribed interexchange carrier (PIC) serving their 
payphones. Many OSPs using this strategy agreed to pay very high 
commissions to both premises owners and sales agents who sign up those 
premises owners and have claimed, as a consequence, that they had to 
impose very high usage charges on consumers placing calls from 
payphones. While this process generated added revenues for premises 
owners and sales agents, it forced callers to pay exceptionally high 
rates. As a result, some callers began to use access codes, such as 800 
numbers, to reach their preferred, lower-priced OSPs and to avoid the 
payphone's presubscribed OSP. Because payphone owners and other 
aggregators did not earn

[[Page 2815]]

commissions on these so-called ``dial around'' calls until relatively 
recently, many aggregators blocked the use of access codes from their 
phones.
    4. In 1990, Congress provided the Commission and consumers with 
tools to address these practices, through the passage of the Telephone 
Operator Consumer Services Improvement Act of 1990 (TOCSIA or Section 
226 of the Communications Act.). Under TOCSIA and the Commission's 
implementing rules, an aggregator must, among other things, permit 
consumers to use an OSP of their choice by dialing an 800 or other 
number to reach that OSP, rather than having to use the OSP the 
aggregator has selected as its PIC for long-distance calls. The 
Commission also mandates, in accordance with TOCSIA, that each OSP 
``brand'' its calls, that is, ``identify itself, audibly and 
distinctly, to the consumer at the beginning of each telephone call and 
before the consumer incurs any charge for the call. In 1996, in 
response to the forbearance provisions of the Telecommunications Act of 
1996, the Commission sought comment on whether to forbear from applying 
the informational tariff filing requirements it had imposed under 
section 226, as well as whether to require all OSPs to disclose their 
rates on all 0+ calls. Based on that record, the Commission adopted its 
Second Report and Order.
    5. In the Second Report and Order, the Commission amended its rules 
to require, inter alia, that operator service providers (OSPs) 
``[d]isclose audibly and distinctly to the consumer, at no charge and 
before connecting any interstate, domestic, interexchange, non-access 
code operator service call, how to obtain the total cost of the call, 
including any aggregator surcharge, or the maximum possible total cost 
of the call, including any aggregator surcharge, before providing 
further oral advice to the consumer on how to proceed to make the 
call.''
    6. The oral price disclosure rule also requires OSPs to instruct 
consumers that they may obtain applicable rate and surcharge quotations 
for 0+ calls either by, at the option of the OSP, dialing no more than 
two digits or remaining on the line. The Commission further amended its 
rules to require ``all providers of operator services from inmate-only 
telephones to identify orally themselves to the party to be billed for 
any interstate call and orally disclose to such party how, without 
having to dial a separate number, it may obtain the charge for the 
first minute of the call and the charge for additional minutes, prior 
to billing for any interstate call from such a telephone.''
    7. The Commission ordered that the disclosure rules would become 
effective generally on July 1, 1998. The Commission extended the 
compliance date until October 1, 1999, for those carriers using store-
and-forward payphones to provide operator services and stated that it 
would consider waiver requests on a specific factual showing of good 
cause.
    8. Thereafter, Ameritech (now operating as SBC) petitioned for a 
stay of the new oral price disclosure rules to the extent that the 
Second Report and Order could be deemed to apply to interstate 
intraLATA toll services. In petitions for clarification or 
reconsideration, Ameritech and US West, Inc. (now operating as Qwest) 
asked the Commission to clarify, or, alternatively, to rule on 
reconsideration, that these rules do not apply to interstate intraLATA 
service. Because these petitions were pending and would not be resolved 
by the July 1, 1998 effective date, the Common Carrier Bureau (the 
Bureau) found that it would be in the public interest for the 
Commission to determine, prior to the compliance deadline, the 
applicability of the rules to interstate intraLATA toll operator 
services. For this reason, the Bureau stayed these requirements with 
respect to such intraLATA calls until 60 days after the release of an 
order addressing Ameritech's and US West's petitions. Seven other 
petitions for clarification and/or reconsideration of the price 
disclosure requirements were timely filed.

II. Discussion

Applicability of Rules to LECs and IntraLATA Calls

    9. We affirm the application of our price disclosure rules to local 
exchange carriers (LECs) when they provide interstate operator services 
within their region. We note that the Telephone Operator Consumer 
Services Improvement Act of 1990 (TOCSIA) expressly defines ``operator 
services'' to include ``any interstate telecommunications service'' 
that meets specified criteria. Thus, there is no basis in the statute 
for exempting LEC-provided interstate operator services, which meet the 
statutory criteria, from the disclosure requirements. We disagree with 
US West's contention that LECs should be exempt from these rules 
because they have never been seen as the source of the kinds of 
problems that TOCSIA was intended to address. While there may have been 
relatively few complaints about interstate operator services provided 
by LECs, this may reflect the fact that LECs have not traditionally 
provided extensive interstate operator services. In view of the 
statutory language, and in the absence of forbearance, we do not 
believe a blanket exemption for LECs providing interstate operator 
services is warranted simply because companies other than LECs have 
been the primary subjects of complaints about high rates.
    10. Some petitioners and commenters assert that we should decline 
to apply our price disclosure requirements to interstate intraLATA 
toll, or isolated so-called ``bubble LATA'' calls for various reasons. 
For example, Ameritech claims that its operator switches cannot 
distinguish between interstate and intrastate intraLATA traffic for 
this purpose and that, as a result, it would have to apply a price 
disclosure requirement in an overinclusive manner to all intraLATA 
calls. We recognize that most intraLATA toll calls are intrastate calls 
within the jurisdiction of the respective state regulatory agencies. We 
further note that many states have responded to consumer concerns over 
high rates and surcharges with regulations that cap rates of operator 
services providers and/or prohibit premises-imposed fees (PIFs). As 
commenters assert, requiring price disclosures may indirectly impose 
additional obligations with respect to all intrastate calls even though 
there are a relatively small number of interstate intraLATA toll calls. 
Commenters also assert that added expense may be required to ensure 
that consumers using operator services for interstate intraLATA calls 
receive price disclosures. Ameritech claims that the history of this 
proceeding demonstrates that the Commission did not intend to apply the 
oral disclosure rule adopted in the Second Report and Order to any 
intraLATA calls. Finally, Ameritech contends that the legislative 
history of TOCSIA supports its view that Congress did not intend for 
the statute to apply to interstate intraLATA calls, but only to 
interstate interLATA calls, despite the fact that the statute only uses 
the term ``interstate.''
    11. Because the statute requires price disclosures to be made for 
any interstate operator service calls, we believe that exempting 
interstate intraLATA calls from our price disclosure requirement would 
be inconsistent with the statutory language, and we decline to do so. 
We will, however, grant US West's request for an additional six months 
after the release of this ruling to come into compliance with the price 
disclosure requirement for interstate intraLATA calls.

[[Page 2816]]

B. Disclosure of Premises-Imposed Fees

    12. We amend our rules to make clear that the only charges that an 
OSP must disclose to a consumer upon request are those that the OSP, or 
its billing agent, will bill the consumer, including any location-
specific charge or premises-imposed fee (PIF) charged by the OSP, and 
not those charged separately by the premises owner or aggregator. Our 
rules already require aggregators to disclose charges they impose and 
collect independently of OSPs, such as a hotel surcharge billed by a 
hotel. PIFs often vary widely among locations and premises owners. OSPs 
often are unaware of the specific surcharges imposed by aggregators, 
such as hotels, motels, and hospitals, on their guests for phone calls 
from their rooms. Further, depending on the particular facts and 
circumstances, aggregators could be subject to regulation as common 
carriers if they impose per call charges on interstate calls. For these 
reasons, the Commission has not required informational tariffs filed by 
OSPs to specify any PIF other than those directly billed and collected 
from consumers by the OSP, or its billing agent. Accordingly, we 
clarify that the tariff and rate disclosure requirements apply only to 
PIFs and other charges collected from consumers by the OSP, or any 
other entity that bills and collects on behalf of the OSP. We can 
revisit this determination, upon complaint or on our own motion, if we 
find that practices of OSPs allow aggregators to impose excessive or 
otherwise unreasonable surcharges on interstate calls.

C. Applicability of Rate Disclosure Rules to Collect Calls

    13. We reject the requests by AT&T and SBC that we only require 
oral rate disclosures to be made to the party responsible for payment 
for collect calls, and not to the party initiating the call. We note, 
rather, that Congress expressly requires that disclosures be made to 
the ``consumer,'' which it defines as ``a person initiating any 
interstate telephone call using operator services.'' Under our current 
rules, the definition of ``consumer'' includes both parties to a 
collect call. Because we find that the statute specifies that callers 
making collect calls must receive rate disclosures, we do not eliminate 
that portion of the requirement. Furthermore, we observe that parties 
initiating collect calls have the option of selecting among OSPs, so 
requiring rate disclosures to them can help them make informed 
selections. Thus, for purposes of the rate disclosures required of the 
presubscribed OSP under TOCSIA, we will continue to define the term 
``consumer'' to include both parties to a collect call.

D. Applicability of Rate Disclosure Rules to Bill-to-Third-Number Calls

    14. We make a minor amendment to our rules with respect to bill-to-
third-number calls when an OSP contacts the party to be billed to 
secure billing approval. For such calls, the rules currently only 
require disclosures to the caller, even if that person is not the party 
responsible for payment of the charges. Although, in the Second Report 
and Order, the Commission stated that it would ``require OSPs to make 
additional oral disclosure at the point of purchase of 0+ calls,'' the 
rules were not amended to reflect this requirement in the context of 
bill-to-third-number calls. To address this discrepancy, we amend the 
definition of ``consumer'' so that the oral rate disclosure 
requirement, in situations involving bill-to-third-number calls, will 
include the party to be billed if the OSP contacts that person to 
secure approval for billing. In any case, the OSP must provide the rate 
disclosure option to the caller, as required by the statute. We note 
that, in the context of inmate operator services, the Commission 
defines the term ``consumer'' as ``the party to be billed,'' which 
would include persons liable for bill-to-third-number calls, if any. 
Our amendment regarding bill-to-third-number calls will help ensure 
that consumers have the ability to make informed choices about the 
rates of OSPs and providers of inmate operator services.

E. Rate Disclosure in Calls by Prison Inmates

    15. We retain the requirement of oral rate disclosure for operator 
service calls from inmates in correctional institutions. We reject the 
requests by US West that we vacate the Commission's decision to apply 
our rules to inmate calling or significantly modify those rules. As US 
West acknowledges, both of its proposed modifications are significantly 
flawed. US West suggests that we permit carriers to use a ``generic'' 
system upgrade that would provide a price quote for the highest 
possible rate the call might entail or, alternatively, that we 
designate a separate phone number for rate quotes. We believe that each 
of these alternatives will fail to meet an important goal. US West 
suggests the first option, the ``generic'' system upgrade, because it 
believes such an approach would be less expensive than implementing a 
system capable of providing the more specific rate disclosures required 
by the current rules. However, as US West observes, this approach would 
not provide accurate rate quotes, and excessive quotations might 
unnecessarily discourage calling. Permitting the provision of inflated 
rate quotes in an inmate environment where OSPs face no competitive 
pressures would be inconsistent with our statutory obligation to 
``ensur[e] that consumers have the opportunity to make informed 
choices'' in using operator services to place interstate telephone 
calls. US West proposes the second modification option, the designation 
of a separate phone number for rate quotes from inmate phones, as 
another way to minimize the expense of compliance with the current 
rules. The drawback of this modification option, as US West also notes, 
is that it would ``open up'' the inmate calling system by giving 
inmates direct access to ``live outside lines,'' thereby threatening 
security. We agree that taking this approach could compromise the 
special security measures the Commission has acknowledged that inmate 
calls require. Because these two alternatives are problematic, US West 
urges us to vacate the rate disclosure requirement for operator service 
calls from inmates in correctional institutions and handle complaints 
about excessive rates for such calls on a case-by-case basis. We find 
that US West has not undermined the reasoning underlying the 
application of the rate disclosure rules to inmate calls, and we 
decline to vacate our rules. We recognize that, unlike persons making 
calls from aggregator locations, inmates typically do not have the 
option of dialing around the (PIC). In the Second Report and Order, the 
Commission concluded that recipients of collect calls from inmates 
``require additional safeguards to avoid being charged excessive rates 
from a monopoly provider.'' The Commission adopted price disclosure 
rules for providers of inmate operator services that are similar to 
those applicable to OSPs in order to ``eliminate some of the abusive 
practices that have led to complaints.'' Finally, while Citizens United 
For Rehabilitation of Errants (CURE) asks us to require OSPs to provide 
copies of informational tariffs to prisons and other consumers, we 
agree with MCI that informational tariffs are already available and 
that prison officials can easily provide them to prisoners.

[[Page 2817]]

F. Rate Disclosure in Air-to-Ground Calls

    16. We also retain the requirement of oral rate disclosure for air-
to-ground calls. One of the principal reasons underlying the adoption 
of the rate prompt requirement was to ensure that prospective away-
from-home callers are reminded of their right to obtain rate quotations 
from the presubscribed OSP because its rates generally are not posted 
at the aggregator location. Although AT&T asserts that oral rate 
disclosure for air-to-ground calls is unnecessary because airplane 
passengers typically sit for at least one hour with rate information 
directly before them, we find that the record is insufficient to 
support a finding that the applicable rates, including any surcharge 
billed and collected by the OSP, for air-to-ground operator services 
always are posted on or near the telephone instrument. Furthermore, for 
collect calls, such posting would not apprise the called parties, who 
are responsible for paying for the calls, of their right to know the 
price of a call at the time of purchase.

G. Use of Visual Rates Display

    17. We decline to issue the ruling US West seeks that would permit 
OSPs to provide the rate quotation visually, if their embedded 
equipment and future business plans make oral presentations expensive. 
US West asserts that an oral alert tone, followed by a visual rate 
display on the caller's phone (e.g., a visual display on the payphone), 
would enable OSPs to convey rate information effectively without 
incurring burdensome costs.
    18. We disagree. The visual rate display on the telephone would 
provide rate information only to the caller, not to the called party. 
As previously noted with respect to inmate calls, as well as bill-to-
third-number calls in certain circumstances, the consumer to whom the 
disclosure must be made is ``the party to be billed,'' which typically 
is not the caller. In the case of collect calls (and certain types of 
bill-to-third number calls), under our rules, the ``consumer'' who must 
receive the required notice includes both the party called and the 
caller. Furthermore, US West does not explain how persons with impaired 
vision would access the information in a visual rate display. 
Accordingly, we will retain the requirement that the rate disclosure 
must be oral.

H. 0- Calls

    19. We clarify that the oral price disclosure requirement does not 
apply to a 0- call, unless the local operator routes the call to an IXC 
that completes an interstate non-access code toll call from an 
aggregator or prison location. As noted by both Bell Atlantic and 
BellSouth, the Second Report and Order, as originally adopted by the 
Commission, required OSPs to advise consumers how to obtain rate 
information for ``any interstate, domestic, interexchange 0+ call.'' As 
they further note, the Bureau subsequently issued an erratum, which, 
among other things, replaced the term ``0+ call'' with the phrase 
``non-access code operator service call,'' in order to make the 
terminology in our rules more uniform. Bell Atlantic and BellSouth 
express concern that the change in wording from ``0+ calls'' to ``non-
access code operator service calls'' could be interpreted as making a 
substantive change regarding ``0-'' calls. They observe that expanding 
the disclosure requirement to cover ``0- '' calls (i.e., calls that 
merely require the caller to enter or dial ``0''), would be contrary to 
the express language of the Second Report and Order. AT&T asks the 
Commission to clarify that the erratum was not intended to override the 
text of the Second Report and Order, and it notes that such an 
interpretation would be inconsistent with the intent of this proceeding 
manifested in its title.
    20. As is clear from the text of the Second Report and Order, the 
Commission intended the new price disclosure rules to apply to 
interstate 0+ calls from aggregator locations and prison inmates. The 
Commission stated that ``[a] 0+ call occurs when the caller enters 
``0'' plus an interexchange number, without first dialing a carrier 
access code * * * .'' On the other hand, a 0- call occurs when the 
caller only dials 0, which routes the call to an operator for 
assistance in making local calls. We never intended our rules to cover 
such intrastate calls. As we said, however, our oral price disclosure 
prompt requirement is applicable if the local operator should route the 
call to a carrier that completes an interstate non-access code toll 
call from an aggregator or prison location. To alleviate any possible 
confusion on this issue, we hereby clarify that these rules are 
applicable to the carrier that provides an interstate call, or if 
consumers otherwise would be liable for interstate operator services 
charges.

I. AT&T's 2000 and 1000 Public Phone Sets

    21. We grant AT&T's request for clarification regarding the 
applicability of the rules to approximately 8,700 of its Public Phone 
2000 and Public Phone 1000 sets, which permit callers to ``swipe'' 
their calling or credit cards into the card-reading devices of the 
phones. This type of phone stores the card digits until after the 
caller dials the phone number of the called party and forwards them 
through the network at the same time that the caller would otherwise 
hear the announcement regarding the availability of rate information. 
We agree with AT&T that, under such circumstances, the phones qualify 
as ``store-and-forward'' payphones for purposes of the operator service 
rate disclosure rules.

J. Other Changes to Text of the Rules

    22. Because a new Commission bureau, the Consumer Information 
Bureau, is now the appropriate recipient of consumer complaints about 
OSPs, we are amending Sec. 64.703(b)(4) to require the new bureau's 
name and address to be posted on payphones in future postings. We are 
mindful of the need to avoid any unnecessary burdens on current 
payphone operators, and we therefore will not require them to correct 
their existing postings until they must replace those postings for 
other reasons. We will also ensure that consumer complaints sent to the 
old address (the Common Carrier Bureau's Enforcement Division, which no 
longer exists) will continue to be delivered to the Consumer 
Information Bureau.
    23. We have removed the term ``domestic'' from the text of our 
rules. The rules are not applicable to foreign calls, but only to 
interstate calls, and the term ``domestic,'' which is not defined in 
the Communications Act, is redundant. We also have removed the term 
``interexchange'' because not all interstate interexchange calls are 
long-distance toll calls covered by the rules. By removing these 
superfluous terms, we do not intend to change the scope or extent of 
our rules as clarified here.
    24. Finally, as suggested by the CURE, we are revising the text of 
the rule applicable to providers of inmate operator services to more 
closely parallel the language of the comparable requirements for OSPs. 
This revision merely clarifies that each provider of inmate operator 
services must identify itself and disclose, audibly and distinctly to 
the consumer, at no charge, and before connecting any interstate, non-
access code operator services call, how to obtain the total cost of the 
call, including any surcharge or premises-imposed fee, or the maximum 
possible total cost of the call, including any such surcharge or fee. 
The required oral disclosure must instruct consumers that they may 
obtain applicable rate and surcharge quotations either, at the

[[Page 2818]]

option of the provider of inmate operator services, by dialing no more 
than two digits or by remaining on the line. As the CURE and the Inmate 
Calling Service Providers Coalition observe, this editorial change does 
not affect the substance of the rule. For the reasons discussed, we do 
not permit OSPs to use generic, maximum call prices for inmate calls, 
where they would not have a competitive incentive to provide more 
accurate prices.

III. Conclusion

    25. We believe that the clarifications and amendments adopted in 
this Order will make our price disclosure rules for operator services 
even more effective, while removing uncertainty and minimizing 
administrative costs.

IV. Supplemental Final Regulatory Flexibility Analysis

    26. As required by the Regulatory Flexibility Act (RFA), a Final 
Regulatory Flexibility Analysis (FRFA) was incorporated in the Second 
Report and Order. The Commission received no written public comments on 
the FRFA. This Supplemental Final Regulatory Flexibility Analysis 
(Supplemental FRFA) conforms to the RFA, as amended by the Contract 
With America Advancement Act of 1996 (CWAAA), Public Law No. 104-121, 
110 Stat. 847 (1996). The Commission is issuing this Second Order on 
Reconsideration to clarify and amend rules it previously adopted in the 
Second Report and Order to protect consumers from excessive charges in 
connection with interstate non-access code operator services for 
payphone and prison inmate calls. Those rules sought to ensure that 
consumers are aware of their right to ascertain the specific cost for 
such calls so that they may hang up before incurring any charge that 
they believe is excessive.

1. Need for, and Objectives of, the Second Order on Reconsideration

    27. In the 1996 Act, Congress sought to establish ``a pro-
competitive, de-regulatory national policy framework'' for the United 
States telecommunications industry. One of the principal goals of the 
telephony provisions of the 1996 Act is promoting increased competition 
in all telecommunications markets, including those that are already 
open to competition, particularly long-distance services markets.
    28. In this Second Order on Reconsideration, we grant, in part, 
several petitions seeking clarification of rules the Commission adopted 
in its Second Report and Order, requiring carriers to orally disclose 
to consumers how to obtain the charges for operator services for 
interstate calls from aggregator locations and from prison inmate-only 
telephones. The objective of the rules previously adopted, and as 
clarified and amended in this Order, is to further implement the 
national telecommunications policies embodied in the 1996 Act and to 
promote the development of competitive, deregulated markets envisioned 
by Congress. In doing so, we are mindful of the balance that Congress 
struck between this goal of bringing the benefits of competition to all 
consumers and Congressional concern toward the impact of the 1996 Act 
on small business entities.

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

    29. In the reconsideration petitions received by the Commission, no 
petitioner commented on the previous FRFA.

3. Description and Estimate of the Number of Small Entities to Which 
Rules Will Apply

    30. 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 revised rules. The RFA defines a ``small business'' to 
be the same as a ``small business concern'' under the Small Business 
Act, 15 U.S.C. 632, unless the Commission has developed one or more 
definitions that are appropriate to its activities. A ``small business 
concern'' is one that: is independently owned and operated; is not 
dominant in its field of operation; and meets any additional criteria 
established by the Small Business Administration (the SBA). The SBA has 
defined a small business for North American Industry Classification 
System (NAICS) codes 51331 and 51333 (Wired Telecommunications Carriers 
and Telecommunications Resellers) to be small entities when they have 
no more than 1,500 employees. In the FRFA, we discussed generally the 
total number of telephone companies falling within these categories and 
estimated the number of carriers falling within relevant subcategories. 
Those sub-categories consisted of telephone companies, wireline 
carriers and service providers, interexchange carriers, resellers, 
operator service providers, and local exchange carriers. Except for 
updating the Operator Service Providers category in the following 
paragraph, we incorporate by reference that discussion into this 
Supplemental FRFA.
    31. Operator Service Providers. According to the most recent Trends 
in Telephone Service data, 21 carriers reported that they were 
primarily engaged in the provision of operator services, but many other 
carriers provide operator services as a secondary business. Carriers 
engaged in providing interstate operator services from aggregator 
locations (OSPs) currently are required under section 226 of the 
Communications Act, and the Commission's rules and orders, to file and 
maintain informational tariffs at the Commission. The number of such 
tariffs on file thus appears to be the most reliable source of 
information regarding the number of OSPs nationwide, including small 
business concerns, that will be affected by decisions and rules adopted 
in this Order. As of September 1, 2000, approximately 725 carriers had 
informational tariffs on file at the Commission. Although it seems 
certain that some of these carriers are not independently owned and 
operated, or have more than 1,500 employees, we are unable at this time 
to estimate with greater precision the number of OSPs that would 
qualify as small business concerns under SBA's definition. 
Consequently, we estimate that there are 725 or fewer small entity OSPs 
that may be affected by the amended rules adopted in this Order.

4. Description of Projected Reporting, Recordkeeping, and Other 
Compliance Requirements

    32. The rule amendments adopted in this Order clarify the current 
requirement that certain carriers disclose audibly to consumers how to 
obtain the price of a call before it is connected. Nondominant long-
distance carriers, including small nondominant interchange carriers, 
currently are required to provide oral information to away-from-home 
callers, advising them how to obtain the cost of an interstate non-
access code call, and similarly to disclose to the party to be billed 
for collect calls from telephones set aside for use by prison inmates 
how to obtain the cost of the call before they may be billed for such 
calls. The rule amendments adopted in this Order should not 
substantially affect the manner in which OSPs and providers of service 
from correctional institutions have been required to operate since the 
rules went into effect on July 1, 1998 (and with respect to store-and-
forward telephones, on October 1, 1999). The changes, as noted 
throughout the text, are mere clarifications. For instance, even when 
we amend our rules to require disclosures to third parties when OSPs 
contact those parties to secure

[[Page 2819]]

approval for bill-to-third number calls, this merely addresses a 
discrepancy that existed between the Order and the Commission rules.
    33. The rules adopted require that hundreds of non-dominant, long-
distance carriers continue to disclose information regarding their 
rates, as well as any related fees they collect on behalf of the owners 
of the premises where the telephone instrument is located. Small 
entities may continue to feel some economic impact in additional 
message production, recording costs, and equipment retrofitting or 
replacement costs due to these policies and rules. Small providers of 
operator services also may experience greater live operator costs 
initially until automated terminal equipment and network systems are 
modified to replace the need for intervention of live operators.

5. Steps Taken To Minimize Significant Economic Impact on Small 
Entities, and Significant Alternatives Considered

    34. In this section, we describe the steps taken to minimize the 
economic impact of our decisions on small entities, including the 
significant alternatives considered and rejected. To the extent that 
any statement contained in this Supplemental FRFA Appendix is perceived 
as creating ambiguity with respect to our rules or statements made in 
this Order, the rules and statements set forth in the Order control.
    35. Previously, in the Second Report and Order, we carefully 
considered and rejected several alternatives to the price disclosure 
requirements and rules adopted therein, as modified herein, finding 
them more burdensome to carriers. For example, we rejected a proposed 
billed party preference routing system, which would have seamlessly 
routed calls to the callers preferred carrier, due to its estimated 
implementation cost of one billion dollars. The costs of hardware and 
software upgrades would have been particularly burdensome to small 
carriers. We also rejected a benchmark pricing system that would have 
required small carriers to carefully monitor the rates of the three 
most popular carriers. Furthermore, we limited our disclosure 
requirements so that they would not apply to those types of calls for 
which they appeared unnecessary. This order attempts to clarify and 
fine tune those distinctions so that disclosure requirements only apply 
where we believe they are in the public interest. Thus, the rules, as 
clarified and modified herein, are applicable only to limited 
interstate, non-access code calls from payphones, or other aggregator 
locations, and from inmate phones in correctional institutions. They 
are not applicable to international calls, intrastate calls, and calls 
made by callers from their regular home or business. The rules also are 
inapplicable to calls that are initiated by dialing an access code 
prefix, such as 10-10-XXX or 1-800-XXX-XXXX, whereby callers can 
circumvent placing the call through the long-distance carrier that is 
presubscribed for that line.
    36. Furthermore, although we find that the law requires rate 
disclosures to be made for interstate intraLATA calls, we are delaying 
the effective date of that requirement for 6 months. We believe that a 
6-month delay should give the affected parties ample opportunity to 
come into compliance with this requirement.
    37. In addition, a new bureau, the Consumer Information Bureau, is 
now the appropriate recipient of consumer complaints, rather than the 
Common Carrier Bureau's Enforcement Division, which no longer exists. 
While we will require the new bureau's name and address to be posted on 
payphones in future postings, we have acted to avoid any unnecessary 
burdens on current payphone operators. We will require them to make the 
appropriate correction whenever they next revise their postings, but we 
are not requiring them to replace their postings now. Instead, we are 
ensuring that mail sent to the old address will continue to be 
delivered to the Consumer Information Bureau.
    38. We believe that our action requiring carriers to orally 
disclose how to obtain the price of their interstate non-access code 
operator services at the point of purchase will continue to facilitate 
the development of increased competition in this segment of the 
interstate market, thereby benefiting all consumers, some of which are 
small business entities. Specifically, we find that the rules adopted 
herein with respect to interstate non-access code operator services 
will continue to enhance competition among OSPs, promote competitive 
market conditions, and achieve other objectives that are in the public 
interest, including establishing market conditions that more closely 
resemble an unregulated environment.

6. Report to Congress

    39. The Commission will send a copy of this Supplementary Final 
Regulatory Flexibility Analysis, along with this Second Order on 
Reconsideration, in a report to be sent to Congress pursuant to the 
Congressional Review Act, see 5 U.S.C. 801(a)(1)(A). In addition, the 
Commission will send a copy of the Second Order on Reconsideration, 
including the Supplemental FRFA, to the Chief Counsel for Advocacy of 
the Small Business Administration. A copy of the Second Order on 
Reconsideration and this Supplemental FRFA will also be published in 
the Federal Register. See 5 U.S.C. 604(b).

V. Ordering Clauses

    40. It is ordered, pursuant to sections 1, 4(i), 4(j), 226, and 405 
of the Communications Act of 1934, as amended, that the petitions for 
clarification or reconsideration filed on April 9, 1998, by Ameritech, 
AT&T, Bell Atlantic, BellSouth, Citizens United for Rehabilitation of 
Errants, Inmate Calling Service Providers Coalition, One Call 
Communications, Inc., US West, Inc., Cleartel Communications, Inc., 
Operator Services Company, and Teltrust Communications Services, Inc. 
are granted in part and denied in part to the extent discussed.
    41. It is further ordered that the Commission's rules are amended 
as set forth, effective February 21, 2002, except that the oral rate 
disclosure requirement of Sec. 64.703(a)(4) shall not apply to 
interstate intraLATA operator services until June 12, 2002.
    42. The Commission's Consumer Information Bureau, Reference 
Information Center, shall send a copy of this Second Order on 
Reconsideration, including 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 carrier, Reporting and recordkeeping, 
Telecommunications, 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 continues to read as follows:

    Authority: 47 U.S.C. 151,154, 201, 202, 205, 218, 220, and 332 
unless otherwise noted. Interpret or apply sections 201, 218, 225, 
226, 227, 229, 332, 48 Stat.1070, as amended, 47 U.S.C. 2201-204, 
208, 225, 226, 227, 229, 332, 501 and 503 unless otherwise noted.

    2. Amend Sec. 64.703 by revising paragraph (a)(4), in paragraph 
(b)(2)

[[Page 2820]]

remove the word ``intestate'' and add in its place, the word 
``interstate'', and revise paragraph (b)(4) to read as follows:


Sec. 64.703  Consumer information.

    (a) * * *
    (4) Disclose, audibly and distinctly to the consumer, at no charge 
and before connecting any interstate non-access code operator service 
call, how to obtain the total cost of the call, including any 
aggregator surcharge, or the maximum possible total cost of the call, 
including any aggregator surcharge, before providing further oral 
advice to the consumer on how to proceed to make the call. The oral 
disclosure required in this subsection shall instruct consumers that 
they may obtain applicable rate and surcharge quotations either, at the 
option of the provider of operator services, by dialing no more than 
two digits or by remaining on the line. The phrase ``total cost of the 
call'' as used in this paragraph means both the variable (duration-
based) charges for the call and the total per-call charges, exclusive 
of taxes, that the carrier, or its billing agent, may collect from the 
consumer for the call. It does not include additional charges that may 
be assessed and collected without the involvement of the carrier, such 
as a hotel surcharge billed by a hotel. Such charges are addressed in 
paragraph (b) of this section.
    (b) * * *
    (4) The name and address of the Consumer Information Bureau of the 
Commission (Federal Communications Commission, Consumer Information 
Bureau, Consumer Complaints-- Telephone, Washington, D.C. 20554), to 
which the consumer may direct complaints regarding operator services. 
An existing posting that displays the address that was required prior 
to the amendment of this rules (i.e., the address of the Common Carrier 
Bureau's Enforcement Division, which no longer exists) may remain until 
such time as the posting is replaced for any other purpose. Any posting 
made after the effective date of this amendment must display the 
updated address (i.e., the address of the Consumer Information Bureau).
* * * * *

    3. Amend Sec. 64.708 by revising paragraph (f) to read as follows:


Sec. 64.708  Definitions.

* * * * *
    (f) Consumer means a person initiating any interstate telephone 
call using operator services. In collect calling arrangements handled 
by a provider of operator services, the term consumer also includes the 
party on the terminating end of the call. For bill-to-third-party 
calling arrangements handled by a provider of operator services, the 
term consumer also includes the party to be billed for the call if the 
latter is contacted by the operator service provider to secure billing 
approval.
* * * * *
    4. Amend Sec. 64.709 revising paragraph (a) to read as follows:


Sec. 64.709  Informational tariffs.

    (a) Informational tariffs filed pursuant to 47 U.S.C. 226(h)(1)(A) 
shall contain specific rates expressed in dollars and cents for each 
interstate operator service of the carrier and shall also contain 
applicable per call aggregator surcharges or other per-call fees, if 
any, collected from consumers by, or on behalf of, the carrier.
* * * * *
    5. Amend Sec. 64.710 by revising paragraph (a)(1) and in paragraphs 
(b)(1) and (b)(4) remove all references to ``domestic, interexchange'' 
to read as follows:


Sec. 64.710  Operator services for prison inmate phones.

    (a) * * *
    (1) Identify itself and disclose, audibly and distinctly to the 
consumer, at no charge and before connecting any interstate, non-access 
code operator service call, how to obtain the total cost of the call, 
including any surcharge or premises-imposed-fee. The oral disclosure 
required in this paragraph shall instruct consumers that they may 
obtain applicable rate and surcharge quotations either, at the option 
of the provider of inmate operator services, by dialing no more than 
two digits or by remaining on the line. The phrase ``total cost of the 
call,'' as used in this paragraph, means both the variable (duration-
based) charges for the call and the total per-call charges, exclusive 
of taxes, that the carrier, or its billing agent, may collect from the 
consumer for the call. Such phrase shall include any per-call surcharge 
imposed by the correctional institution, unless it is subject to 
regulation itself as a common carrier for imposing such surcharges, if 
the contract between the carrier and the correctional institution 
prohibits both resale and the use of pre-paid calling card 
arrangements.
* * * * *
[FR Doc. 02-1178 Filed 1-18-02; 8:45 am]
BILLING CODE 6712-01-P