[Federal Register Volume 68, Number 75 (Friday, April 18, 2003)]
[Proposed Rules]
[Pages 19176-19180]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-9119]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 64

[CC Docket No. 94-129, FCC 03-42]


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: Notice of proposed rulemaking.

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SUMMARY: In this document, the Commission seeks comment on whether to 
revise, clarify, or adopt any additional rules in order to more 
effectively carry out Congress' directives in the Communications Act to 
combat unauthorized changes in a subscriber's telecommunications 
providers (also known as ``slamming''). In order to maximize the 
accuracy and efficiency for consumers, carriers, and the Commission, 
additional minimum requirements for third party verification may be 
necessary. It is the Commission's experience that additional 
requirements may address issues that the Commission has seen repeatedly 
in our enforcement of the slamming rules. Therefore, we seek comment on 
whether third party verifiers should state the date during the taped 
verification process. We also seek comment on whether the verifier 
should be required to make additional statements and whether these 
additional statements would serve to lessen or heighten customer 
confusion.

DATES: Comments are due June 2, 2003 and reply comments are due June 
17, 2003. Written comments by the public on the proposed information 
collections are due June 2, 2003. Written comments must be submitted by 
the Office of Management and Budget (OMB) on the proposed information 
collection on or before June 17, 2003.

ADDRESSES: Parties who choose to file comment by paper must file an 
original and four copies to the Commission's Secretary, Marlene H. 
Dortch, Office of the Secretary, Federal Communications

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Commission, 445 12th Street, SW, Room TW-A325, Washington, DC 20554. 
Comments may also be filed using the Commission's Electronic Filing 
System, which can be accessed via the Internet at www.fcc.gov/e-file/ecfs.html. In addition to filing comments with the Secretary, a copy of 
any comments on the information collections contained herein should be 
submitted to Les Smith, Federal Communications Commission, Room 1-A804, 
445 12th Street, SW., Washington, DC 20554, or via the Internet to 
[email protected].

FOR FURTHER INFORMATION CONTACT: Nancy Stevenson at 202-418-2512, 
Consumer & Governmental Affairs Bureau. For additional information 
concerning the information collection(s) contained in this document, 
contact Les Smith at 202-418-0217 or via the Internet at 
[email protected].

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Second 
Further Notice of Proposed Rulemaking (NPRM) in CC Docket No. 94-129, 
FCC 03-42, released March 17, 2003, that is contained in the Third 
Order on Reconsideration. This NPRM contains proposed information 
collection(s) subject to the Paperwork Reduction Act of 1995 (PRA). It 
will be submitted to the Office of Management and Budget (OMB) for 
review under the PRA. OMB, the general public, and other Federal 
agencies are invited to comment on the proposed information 
collection(s) contained in this proceeding. The full text of this 
document is available on the Commission's Web site Electronic Comment 
Filing System and for public inspection during regular business hours 
in the FCC Reference Center, Room CY-A257, 445 12th Street, SW., 
Washington, DC 20554.
    Paperwork Reduction Act: This NPRM contains proposed information 
collection(s) subject to the Paperwork Reduction Act of 1995 (PRA). It 
will be submitted to the Office of Management and Budget (OMB) for 
review under the PRA. OMB, the general public, and other Federal 
agencies are invited to comment of the proposed information 
collection(s) contained in this proceeding. Public and agency comments 
are due at the same time as other comments on this NPRM; OMB 
notification of action is due 60 days from date of publication of this 
NPRM in the Federal Register. Comments should address: (a) Whether the 
proposed collection of information is necessary for the proper 
performance of the functions of the Commission, including whether the 
information shall have practical utility; (b) the accuracy of the 
Commission's burden estimates; (c) ways to enhance the quality, 
utility, and clarity of the information collected; and (d) ways to 
minimize the collection techniques or other forms of information 
technology.
    OMB Control Number: 3060-0787.
    Title: Implementation of the Subscriber Carrier Selection Changes 
Provisions of the Telecommunications Act of 1996. Policies and Rules 
Concerning Unauthorized Changes of Consumers' Long Distance Carriers.
    Form Number: N/A.
    Type of Review: New collection.
    Number of Respondents: 1772.
    Estimated Time Per Response: .010 hours.
    Frequency of Response: On occasion.
    Total Annual Burden: 17.72 hours.
    Total Annual Costs: $163.91.
    Needs and Uses: Based on the Commission's experience the need for 
additional minimum requirements for third party verifications may be 
necessary in order to maximize their accuracy and efficiency for 
consumers, carriers, and the Commission.

Synopsis of NPRM

    1. Background. As noted, in the Third Report and Order, the 
Commission declined to mandate specific language to be used in third 
party verification calls. However, in order to eliminate uncertainty as 
to what constitutes necessary and acceptable practices, the Commission 
adopted minimum content requirements for third party verification. The 
Commission stated that minimum requirements for such calls would 
provide useful guidance to the third party verifiers and carriers 
without locking carriers into using a set script. In addition, the 
Commission stated that the requirements would also permit more 
streamlined enforcement by helping the Commission to determine the 
adequacy of steps taken by independent third parties in the 
verification process. Accordingly, the Commission concluded that 
scripts for third party verifications 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). The Commission noted that these content 
requirements do not differ in substance from the rules regarding LOAs.
    2. In addition, the Commission found that the third party 
verification must be conducted in the same language that was used in 
the underlying sales transaction, and that the entire third party 
verification transaction must be recorded. The Commission also 
reiterated that, consistent with its rules regarding verifications 
generally, submitting carriers must maintain and preserve the 
recordings for a minimum period of two years after obtaining such 
verification. The Commission observed that, if a slamming dispute 
arises, a recorded verification will help determine whether the 
subscriber was simply seeking information or was in fact agreeing to 
change carriers and, if so, which service(s) the subscriber had agreed 
to change.
    3. Discussion. Based on our experience since the effective date of 
the Third Report and Order, we seek comment on the need for additional 
minimum requirements for third party verification calls in order to 
maximize their accuracy and efficiency for consumers, carriers, and the 
Commission. These additional possible requirements address issues we 
have seen repeatedly in our enforcement of the slamming liability 
rules. First, we seek comment on whether third party verifiers should 
state the date during the taped verification process. Through our 
slamming enforcement efforts, we have become aware of situations in 
which, for example, a carrier may have obtained a valid authorization 
for a past carrier change, but the customer has since switched away 
from the carrier and now alleges that he or she was switched back to 
that carrier without authorization. Without a clearly articulated date 
on the verification tapes, the carrier could use the former 
verification tape to defend itself against the subsequent unauthorized 
change.
    4. Next, we seek comment on whether the verifier should explicitly 
state that, if the customer has additional questions for the carrier's 
sales representative regarding the carrier change after verification 
has begun, the verification will be terminated, and further 
verification proceedings will not be carried out until after the 
customer has finished speaking with the sales representative. We note 
that, according to our rules, final verification cannot be obtained 
until after the carrier's sales representative has ceased speaking to 
the customer. Accordingly, we seek comment as to whether such a 
requirement would lessen possible customer confusion in situations in 
which a verification is terminated because the customer seeks further 
discussions with the carrier's sales agent. We also seek comment on 
whether the verifier should convey to the customer that the carrier 
change can

[[Page 19178]]

be effectuated without any further contact with the customer once the 
verification has been completed in full. We have found that customers 
may not realize that a carrier cannot in most cases ``undo'' a PIC 
change after it has been submitted, even if the subscriber quickly 
requests cancellation of the change order.
    5. We seek comment on whether verifiers should be required to make 
clear to a customer that he or she is not verifying an intention to 
retain existing service, but is in fact asking for a carrier change. We 
have observed instances in which, for example, carriers seeking to 
obtain customer authorization for a carrier change merely inform 
customers that they are consenting to an ``upgrade'' of the customers' 
service or to bill consolidation. We also note that it can be difficult 
to ascertain whether a subscriber has fully and knowingly provided an 
answer to each question posed by a third party verifier if some 
questions are presented as a group rather than individually. 
Accordingly, commenters should address whether each piece of 
information that a third party verifier must gather under our rules 
should be the subject of a separate and distinct third party verifier 
inquiry and subscriber response. Finally, we seek comment on whether, 
when verifying an interLATA service change, the verifier should specify 
that interLATA service encompasses both international and state-to-
state calls, and whether a verifier should define the terms ``intraLATA 
toll'' and ``interLATA toll'' service. We have observed that carriers 
sometimes use differing terms for these services; for example, a 
carrier might refer to intraLATA service as ``short haul long distance, 
local toll, local long distance, or long distance calls within your 
state.'' Accordingly, we have received numerous complaints from 
consumers that assert they unknowingly gave up the flat rate for 
intraLATA service they paid to their LEC when consenting to a carrier 
change for different services.

Initial Regulatory Flexibility Analysis

    1. As required by the Regulatory Flexibility Act (RFA), as amended, 
the Commission has prepared this present Initial Regulatory Flexibility 
Analysis (IRFA) of the possible significant economic impact on small 
entities by the policies and rules proposed in this Third Order on 
Reconsideration and Second Further Notice of Proposed Rulemaking 
(Second Further NPRM). Written public comments are requested on this 
IRFA. Comments must be identified as responses to the Second Further 
NPRM. The Commission will send a copy of the Notice, including this 
IRFA, to the Chief Counsel for Advocacy of the Small Business 
Administration. See 5 U.S.C. 603(a). In addition, the Notice and the 
IRFA (or summaries thereof) will be published in the Federal Register.

A. Need for, and Objectives of, the Proposed Rules

    2. 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,'' distorts the 
telecommunications market by enabling companies that engage in 
fraudulent activity to increase their customer and revenue bases at the 
expense of consumers and law-abiding companies. In this Order, we 
address certain issues raised in petitions for reconsideration of the 
Second Report and Order and Further Notice of Proposed Rulemaking, the 
First Order on Reconsideration, and the Third Report and Order. This 
Order also contains a Second Further Notice of Proposed Rulemaking, in 
which we propose several modifications to our carrier change rules. 
Specifically, we seek comment on rule modifications with respect to 
third party verifications.

B. Legal Basis

    3. The Second Further Notice is adopted pursuant to Sections 1, 
4(i), 4(j) of the Communications Act of 1934, as amended, 47 U.S.C.151, 
154(i), 154(j), and Sec.  1.429 of the Commission's Rules, 47 CFR 
1.429.

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

    4.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,'' and ``small governmental 
jurisdiction.'' In addition, the term ``small business'' has the same 
meaning as the term ``small business concern'' under section 3 of the 
Small Business Act. Under the Small business Act, a ``small business 
concern'' is one that: (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.
    5. The definition of ``small governmental jurisdiction'' is one 
with populations of fewer than 50,000. There are approximately 85,006 
governmental entities in the nation. This number includes such entities 
as states, counties, cities, utility districts and school districts. 
There are no figures available on what portion of this number has 
populations of fewer than 50,000. However, this number includes 38,978 
counties, cities and towns, and of those, 37,556, or ninety-six 
percent, have populations of fewer than 50,000. The Census Bureau 
estimates that this ratio is approximately accurate for all government 
entities. Thus, of the 85,006 governmental entities, we estimate that 
ninety-six percent, or about 81,600, are small entities that may be 
affected by our rules.
    6. We have included small incumbent LECs in this 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 
wireline telecommunications 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 the Commission's analyses and determinations in other, non-
RFA contexts.
    7. Incumbent Local Exchange Carriers. Neither the Commission nor 
the SBA has developed a specific small business size standard for 
providers of incumbent local exchange services. The closest applicable 
size standard under the SBA rules is for Wired Telecommunications 
Carriers. Under that standard, such a business is small if it has 1,500 
or fewer employees. According to the FCC's Telephone Trends Report 
data, 1,329 incumbent local exchange carriers reported that they were 
engaged in the provision of local exchange services. Of these 1,329 
carriers, an estimated 1,024 have 1,500 or fewer employees and 305 have 
more than 1,500 employees. Consequently, we estimate that the majority 
of providers of local exchange service are small entitles that may be 
affected by the rules and policies adopted herein.
    8. Competitive Local Exchange Carriers. Neither the Commission nor

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the SBA has developed a specific small business size standard for 
providers of competitive local exchange services. The closest 
applicable size standard under the SBA rules is for Wired 
Telecommunications Carriers. Under that standard, such a business is 
small if it has 1,500 or fewer employees. According to the FCC's 
Telephone Trends Report data, 532 companies reported that they were 
engaged in the provision of either competitive access provider services 
or competitive local exchange carrier services. Of these 532 companies, 
an estimated 411 have 1,500 or fewer employees and 121 have more than 
1,500 employees. Consequently, the Commission estimates that the 
majority of providers of competitive local exchange service are small 
entities that may be affected by the rules.
    9. Competitive Access Providers. Neither the Commission nor the SBA 
has developed a specific size standard for competitive access providers 
(CAPS). The closest applicable standard under the SBA rules is for 
Wired Telecommunications Carriers. Under that standard, such a business 
is small if it has 1,500 or fewer employees. According to the FCC's 
Telephone Trends Report data, 532 CAPs or competitive local exchange 
carriers and 55 other local exchange carriers reported that they were 
engaged in the provision of either competitive access provider services 
or competitive local exchange carrier services. Of these 532 
competitive access providers and competitive local exchange carriers, 
an estimated 411 have 1,500 or fewer employees and 121 have more than 
1,500 employees. Of the 55 other local exchange carriers, an estimated 
53 have 1,500 or fewer employees and 2 have more than 1,500 employees. 
Consequently, the Commission estimates that the majority of small 
entity CAPS and the majority of other local exchange carriers may be 
affected by the rules.
    10. Local Resellers. The SBA has developed a specific size standard 
for small businesses within the category of Telecommunications 
Resellers. Under that standard, such a business is small if it has 
1,500 or fewer employees. According to the FCC's Telephone Trends 
Report data, 134 companies reported that they were engaged in the 
provision of local resale services. Of these 134 companies, an 
estimated 131 have 1,500 or fewer employees and 3 have more than 1,500 
employees. Consequently, the Commission estimates that the majority of 
local resellers may be affected by the rules.
    11. Toll Resellers. The SBA has developed a specific size standard 
for small businesses within the category of Telecommunications 
Resellers. Under that SBA definition, such a business is small if it 
has 1,500 or fewer employees. According to the FCC's Telephone Trends 
Report data, 576 companies reported that they were engaged in the 
provision of toll resale services. Of these 576 companies, an estimated 
538 have 1,500 or fewer employees and 38 have more than 1,500 
employees. Consequently, the Commission estimates that a majority of 
toll resellers may be affected by the rules.
    12. Interexchange Carriers. Neither the Commission nor the SBA has 
developed a specific size standard for small entities specifically 
applicable to providers of interexchange services. The closest 
applicable size standard under the SBA rules is for Wired 
Telecommunications Carriers. Under that standard, such a business is 
small if it has 1,500 or fewer employees. According to the FCC's 
Telephone Trends Report data, 229 carriers reported that their primary 
telecommunications service activity was the provision of interexchange 
services. Of these 229 carriers, an estimated 181 have 1,500 or fewer 
employees and 48 have more than 1,500 employees. Consequently, we 
estimate that a majority of IXCs may be affected by the rules.
    13. Operator Service Providers. Neither the Commission nor the SBA 
has developed a specific size standard for small entities specifically 
applicable to operator service providers. The closest applicable size 
standard under the SBA rules is for Wired Telecommunications Carriers. 
Under that standard, such a business is small if it has 1,500 or fewer 
employees. According to the FCC's Telephone Trends Report data, 22 
companies reported that they were engaged in the provision of operator 
services. Of these 22 companies, an estimated 20 have 1,500 or fewer 
employees and two have more than 1,500 employees. Consequently, the 
Commission estimates that a majority of local resellers may be affected 
by the rules.
    14. Prepaid Calling Card Providers. The SBA has developed a size 
standard for small businesses within the category of Telecommunications 
Resellers. Under that size standard, such a business is small if it has 
1,500 or fewer employees. According to the FCC's Telephone Trends 
Report data, 32 companies reported that they were engaged in the 
provision of prepaid calling cards. Of these 32 companies, an estimated 
31 have 1,500 or fewer employees and one has more than 1,500 employees. 
Consequently, the Commission estimates that a majority of prepaid 
calling providers may be affected by the rules.
    15. Other Toll Carriers. Neither the Commission nor the SBA has 
developed a specific size standard for small entities specifically 
applicable to ``Other Toll Carriers.'' This category includes toll 
carriers that do not fall within the categories of interexchange 
carriers, operator service providers, prepaid calling card providers, 
satellite service carriers, or toll resellers. The closest applicable 
size standard under the SBA rules is for Wired Telecommunications 
Carriers. Under that standard, such a business is small if it has 1,500 
or fewer employees. According to the FCC's Telephone Trends Report 
data, 42 carriers reported that they were engaged in the provision of 
``Other Toll Services.'' Of these 42 carriers, an estimated 37 have 
1,500 or fewer employees and five have more than 1,500 employees. 
Consequently, the Commission estimates that a majority of ``Other Toll 
Carriers'' may be affected by the rules.

D. Description of Projected Reporting, Recordkeeping, and Other 
Compliance Requirements for Small Entities

    16. As noted, we have sought comment on the need for additional 
minimum requirements for third party verification calls in order to 
maximize their accuracy and efficiency for consumers, carriers, and the 
Commission. These additional possible requirements address issues we 
have seen repeatedly in our enforcement of the slamming liability 
rules. We do not believe that adoption of any or all of the proposals 
would create the need for any additional professional skills beyond 
those already employed to comply with the current third party 
verification rules.

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

    17. The RFA requires an agency to describe any significant 
alternatives that it has considered in reaching its proposed approach, 
which may include the following four alternatives (among others): (1) 
The establishment of differing compliance or reporting requirements or 
timetables that take into account the resources available to small 
entities; (2) the clarification, consolidation, or simplification of 
compliance or reporting requirements under the rule for small entities; 
(3) the use of performance, rather than design standards; and (4) an 
exemption from coverage of the rule, or any part thereof, for small 
entities.

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    18. Third Party Verification. The Commission is considering 
additional requirements which would address issues we have seen in the 
enforcement of our slamming rules, and we therefore seek comment on the 
need for additional minimum requirements for third party verification 
calls and of the impact of any additional requirements on small 
entities. We especially seek information addressing the possible 
financial impact on smaller carriers.

F. Federal Rules That May Duplicate, Overlap, or Conflict With the 
Proposed Rules

    19. None.

List of Subjects in 47 CFR Part 64

    Telephone.

Federal Communications Commission.
William F. Caton,
Deputy Secretary.
[FR Doc. 03-9119 Filed 4-17-03; 8:45 am]
BILLING CODE 6712-01-P