[Federal Register Volume 68, Number 143 (Friday, July 25, 2003)]
[Rules and Regulations]
[Pages 44144-44179]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-18766]



[[Page 44143]]

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Part II





Federal Communications Commission





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47 CFR Parts 64 and 68



Rules and Regulations Implementing the Telephone Consumer Protection 
Act (TCPA) of 1991; Final Rule

  Federal Register / Vol. 68, No. 143 / Friday, July 25, 2003 / Rules 
and Regulations  

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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 64 and 68

[CG Docket No. 02-278, FCC 03-153]


Rules and Regulations Implementing the Telephone Consumer 
Protection Act (TCPA) of 1991

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this document, we revise the current Telephone Consumer 
Protection Act of 1991 (TCPA) rules, and adopt new rules to provide 
consumers with several options for avoiding unwanted telephone 
solicitations. These new rules establish a national do-not-call 
registry, set a maximum rate on the number of abandoned calls, require 
telemarketers to transmit caller ID information, and modify the 
Commission's unsolicited facsimile advertising requirements.

DATES: Effective August 25, 2003, except for Sec.  64.1200(c)(2), which 
contains the national do-not-call rules, and will become effective on 
October 1, 2003; Sec.  64.1200(a)(5) and (a)(6), which contain the call 
abandonment rules, and will become effective on October 1, 2003; Sec.  
64.1601(e), which contains the caller ID rules, and will become 
effective on January 29, 2004; and Sec. Sec.  64.1200(a)(3)(i), (d)(1), 
(d)(3), (d)(6), (f)(3), and (g)(1), which contain information 
collection requirements under the Paperwork Reduction Act (PRA) that 
have not been approved by the Office of Management and Budget. The 
Commission will publish a document in the Federal Register announcing 
the effective date for these sections. Written comments by the public 
on the new and modified information collections are due September 23, 
2003.

ADDRESSES: In addition to filing comments with the Office of the 
Secretary, a copy of comments on the information collection(s) 
contained herein should be submitted to Leslie 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: Erica H. McMahon or Richard D. Smith 
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 Report 
and Order (Order) in CG Docket No. 02-278, FCC 03-153, adopted on June 
26, 2003 and released July 3, 2003. The full text of this document is 
available at the Commission's Web site (http://www.fcc.gov) on the 
Electronic Comment Filing System and for public inspection and copying 
during regular business hours in the FCC Reference Center, Room CY-
A257, 445 12th Street, SW., Washington, DC 20554. The complete text may 
be purchased from the Commission's copy contractor, Qualex 
International, 445 12th Street, SW., Room CY-B402, Washington, DC 
20554. To request materials in accessible formats for people with 
disabilities (braille, large print, electronic files, audio format), 
send an email to [email protected] or call the Consumer & Governmental 
Affairs Bureau at (202) 418-0531 (voice) or (202) 418-7365 (tty).
    Paperwork Reduction Act: The Report and Order contains either new 
and/or modified information collections. The Commission, as part of its 
continuing effort to reduce paperwork burdens, invites the general 
public to comment on the information collection(s) contained in this 
Report and Order as required by the PRA. Public and agency comments are 
due September 23, 2003.

Synopsis

    1. We revise the TCPA rules and adopt new rules to provide 
consumers with several options for avoiding unwanted telephone 
solicitations. Specifically, we establish with the Federal Trade 
Commission (FTC) a national do-not-call registry for consumers who wish 
to avoid unwanted telemarketing calls. The national do-not-call 
registry will supplement the current company-specific do-not-call rules 
for those consumers who wish to continue requesting that particular 
companies not call them. To address the more prevalent use of 
predictive dialers, we have determined that a telemarketer may abandon 
no more than three percent of calls answered by a person and must 
deliver a prerecorded identification message when abandoning a call. 
The new rules will also require all companies conducting telemarketing 
to transmit caller identification (caller ID) information, when 
available, and prohibit them from blocking such information. The 
Commission has revised its earlier determination that an established 
business relationship constitutes express invitation or permission to 
receive an unsolicited fax, and we have clarified when fax broadcasters 
are liable for the transmission of unlawful facsimile advertisements.

National Do-Not-Call List

    2. Section 227. The TCPA requires the Commission to protect 
residential telephone subscribers' privacy rights to avoid receiving 
telephone solicitations to which they object. In so doing, 47 U.S.C. 
227(c)(1) directs the Commission to ``compare and evaluate alternative 
methods and procedures'' including the use of electronic databases and 
other alternatives in protecting such privacy rights. Pursuant to 47 
U.S.C. 227(c)(3), the Commission ``may require the establishment and 
operation of a single national database to compile a list of telephone 
numbers of residential subscribers who object to receiving telephone 
solicitations, and to make that compiled list and parts thereof 
available for purchase.'' If the Commission determines that adoption of 
a national database is warranted, 47 U.S.C. 227(c)(3) enumerates a 
number of specific statutory requirements that must be satisfied. 
Additionally, 47 U.S.C. 227(c)(4) requires the Commission to consider 
the different needs of telemarketers operating on a local or regional 
basis and small businesses. In addition to our general authority over 
interstate communications, section 2(b) of the Communications Act 
specifically provides the Commission with the authority to apply 
section 227 to intrastate communications.
    3. We conclude that the record compiled in this proceeding supports 
the establishment of a single national database of telephone numbers of 
residential subscribers who object to receiving telephone 
solicitations. Consistent with the mandate of Congress in the Do-Not-
Call Implementation Act (Do-Not-Call Act), the national do-not-call 
rules that we establish in this order ``maximize consistency'' with 
those of the FTC. The record clearly demonstrates widespread consumer 
dissatisfaction with the effectiveness of the current rules and network 
technologies available to protect consumers from unwanted telephone 
solicitations. Indeed, many consumers believe that with the advent of 
such technologies as predictive dialers that the vices of telemarketing 
have become inherent, while its virtues remain accidental. We have 
compared and evaluated alternative methods to a national do-not-call 
list for protecting consumer privacy rights and conclude that these 
alternatives are costly and/or ineffective for both telemarketers and 
consumers. See 47 U.S.C. 227(c)(1)(A).

[[Page 44145]]

    4. A national do-not-call registry that is supplemented by the 
amendments made to our existing rules will provide consumers with a 
variety of options for managing telemarketing calls. Consumers may now: 
(1) Place their number on the national do-not-call list; (2) continue 
to make do-not-call requests of individual companies on a case-by-case 
basis; and/or (3) register on the national list, but provide specific 
companies with express permission to call them. Telemarketers may 
continue to call individuals who do not place their numbers on a do-
not-call list and consumers with whom they have an established business 
relationship. We believe this result is consistent with Congress' 
directive in the TCPA that ``[i]ndividuals'' privacy rights, public 
safety interests, and commercial freedoms of speech and trade must be 
balanced in a way that protects the privacy of individuals and permits 
legitimate telemarketing practices.'' See TCPA, Section 2(9), reprinted 
in 7 FCC Rcd at 2744.
    5. We agree with Congress that consistency in the underlying 
regulations and administration of the national do-not-call registry is 
essential to avoid consumer confusion and regulatory uncertainty in the 
telemarketing industry. In so doing, we emphasize that there will be 
one centralized national do-not-call database of telephone numbers. The 
FTC has set up and will maintain the national database, while both 
agencies will coordinate enforcement efforts pursuant to a forthcoming 
Memorandum of Understanding. The states will also play an important 
role in the enforcement of the do-not-call rules. The FTC has received 
funding approval from Congress to begin implementation of the national 
do-not-call registry. Because the FTC lacks jurisdiction over certain 
entities, including common carriers, banks, insurance companies, and 
airlines, those entities would be allowed to continue calling 
individuals on the FTC's list absent FCC action exercising our broad 
authority given by Congress over telemarketers. In addition, the FTC's 
jurisdiction does not extend to intrastate activities. Action by this 
Commission to adopt a national do-not-call list, as permitted by the 
TCPA, requires all commercial telemarketers to comply with the national 
do-not-call requirements, thereby providing more comprehensive 
protections to consumers and consistent treatment of telemarketers.

National Do-Not-Call Registry

    6. Pursuant to our authority under 47 U.S.C. 227(c), we adopt a 
national do-not-call registry that will provide residential consumers 
with a one-step option to prohibit unwanted telephone solicitations. 
This registry will be maintained by the FTC. Consistent with the FTC's 
determination, the national registry will become effective on October 
1, 2003. Subject to certain exemptions, telemarketers will be 
prohibited from contacting those consumers that register their 
telephone numbers on the national list. In reaching this conclusion, we 
agree with the vast majority of consumers in this proceeding and the 
FTC that a national do-not-call registry is necessary to enhance the 
privacy interests of those consumers that do not wish to receive 
telephone solicitations. In response to the widespread consumer 
dissatisfaction with telemarketing practices, Congress has recently 
affirmed its support of a national do-not-call registry in approving 
funding for the FTC's national database. See H.R. J. Res. 2, 108th 
Congress at 96 (2003). See also H.R. REP. NO. 108-8 at 3 (2003), 
reprinted in 2003 U.S.C.C.A.N. 688, 670 (``[i]t is the strongly held 
view of the Committee that a national do-not-call list is in the best 
interest of consumers, businesses and consumer protection authorities. 
This legislation is an important step toward a one-stop solution to 
reducing telemarketing abuses.''). In so doing, Congress has indicated 
that this Commission should adopt rules that ``maximize consistency'' 
with those of the FTC. The record in this proceeding is replete with 
examples of consumers that receive numerous unwanted calls on a daily 
basis. The increase in the number of telemarketing calls over the last 
decade combined with the widespread use of such technologies as 
predictive dialers has encroached significantly on the privacy rights 
of consumers. For example, the effectiveness of the protections 
afforded by the company-specific do-not-call rules have been reduced 
significantly by dead air and hang-up calls that result from predictive 
dialers. In these situations, consumers have no opportunity to invoke 
their do-not-call rights and the Commission cannot pursue enforcement 
actions. Such intrusions have led many consumers to disconnect their 
phones during portions of the day or avoid answering their telephones 
altogether. The adoption of a national do-call-list will be an 
important tool for consumers that wish to exercise control over the 
increasing number of unwanted telephone solicitation calls.
    7. Although some industry commenters attempt to characterize 
unwanted solicitation calls as petty annoyances and suggest that 
consumers purchase certain technologies to block unwanted calls, the 
evidence in this record leads us to believe the cumulative effect of 
these disruptions in the lives of millions of Americans each day is 
significant. As a result, we conclude that adoption of a national do-
not-call list is now warranted. We believe that consumers should, at a 
minimum, be given the opportunity to determine for themselves whether 
or not they wish to receive telephone solicitation calls in their 
homes. The national do-not-call list will serve as an option for those 
consumers who have found the company-specific list and other network 
technologies ineffective. The telephone network is the primary means 
for many consumers to remain in contact with public safety 
organizations and family members during times of illness or emergency. 
Consumer frustration with telemarketing practices has reached a point 
in which many consumers no longer answer their telephones while others 
disconnect their phones during some hours of the day to maintain their 
privacy. We agree with consumers that incessant telephone solicitations 
are especially burdensome for the elderly, disabled, and those that 
work non-traditional hours. Persons with disabilities are often unable 
to register do-not-call requests on many company-specific lists because 
many telemarketers lack the equipment necessary to receive that 
request. Given the record evidence, along with Congress's recent 
affirmative support for a national do-not-call registry, we adopt a 
national do-not-call registry. We are mindful of the need to balance 
the privacy concerns of consumers with the interests of legitimate 
telemarketing practices. Therefore, we have provided for certain 
exemptions to the national do-not-call registry.
    8. While we agree that concerns regarding the cost, accuracy, and 
privacy of a national do-not-call database remain relevant, we believe 
that circumstances have changed significantly since the Commission 
first reviewed this issue over a decade ago such that they no longer 
impose a substantial obstacle to the implementation of a national 
registry. As several commenters in this proceeding note, advances in 
computer technology and software now make the compilation and 
maintenance of a national database a more reasonable proposition. In 
addition, considerable experience has been gained through the 
implementation of many state do-not-

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call lists. In 1992, it was estimated by some commenters that the cost 
of establishing such a list in the first year could be as high as $80 
million. Congress has recently reviewed and approved the FTC's request 
for $18.1 million to fund the national do-not-call list. We believe 
that the advent of more efficient technologies and the experience 
acquired in dealing with similar databases at the state level is 
responsible for this substantial reduction in cost.
    9. Similarly, we believe that technology has become more proficient 
in ensuring the accuracy of a national database. The FTC indicates that 
to guard against the possibility of including disconnected or 
reassigned telephone numbers, technology will be employed on a monthly 
basis to check all registered telephone numbers against national 
databases, and remove those numbers that have been disconnected or 
reassigned. The length of time that registrations remain valid also 
directly affects the accuracy of the registry as telephone numbers 
change hands over time. We conclude that the retention period for both 
the national and company-specific do-not-call requests will be five 
years. See FTC Order, 68 FR 4580 at 4640 (January 29, 2003). Our rules 
previously required a company-specific do-not-call request to be 
honored for ten years. See 47 CFR 64.1200(e)(2)(vi). Five years is 
consistent with the FTC's determination and our own record that reveals 
that the current ten-year retention period for company-specific 
requests is too long given changes in telephone numbers. Consumers must 
also register their do-not-call requests from either the telephone 
number of the phone that they wish to register or via the Internet. The 
FTC will confirm the accuracy of such registrations through the use of 
automatic number identification (ANI) and other technologies. The term 
``ANI'' refers to the delivery of the calling party's billing number by 
a local exchange carrier to any interconnecting carrier for billing or 
routing purposes, and to the subsequent delivery of such number to end 
users. 47 CFR 64.1600(b). We believe that a five-year registration 
period coupled with a monthly purging of disconnected telephone numbers 
adequately balances the need to maintain accuracy in the national 
registry with any burden imposed on consumers to re-register 
periodically their telephone numbers.
    10. We conclude that appropriate action has been taken to ensure 
the privacy of those registering on the national list. Specifically, 
the only consumer information telemarketers and sellers will receive 
from the national registry is the registrant's telephone number. This 
is the minimum amount of information that can be provided to implement 
the national registry. We note that the majority of telephone numbers 
are publicly available through telephone directories. To the extent 
that consumers have an unlisted number, the consumer will have to make 
a choice as to whether they prefer to register on a national do-not-
call list or maintain complete anonymity. We reiterate, however, that 
the only information that will be provided to the telemarketer is the 
telephone number of the consumer. The ``seller'' and ``telemarketer'' 
may be the same entity or separate entities. Each entity on whose 
behalf the telephone call is being made must purchase access to the do-
not-call database. No corresponding name or address information will be 
provided. We believe that this approach reduces the privacy concerns of 
such consumers to the greatest extent possible. As an additional 
safeguard, we find that restrictions should be imposed on the use of 
the national list. Consistent with the FTC's determination and 47 
U.S.C. 227(c)(3)(K), we conclude that no person or entity may sell, 
rent, lease, purchase, or use the national do-not-call database for any 
purpose except compliance with section 227 and any such state or 
federal law to prevent telephone solicitations to telephone numbers on 
such list. See 47 U.S.C. 227(c)(3)(K). See also 16 CFR 310.4(b)(2). We 
conclude that these safeguards adequately protect the privacy rights of 
those consumers who choose to register on the national do-not-call 
list.
    11. We conclude that the national database should allow for the 
registration of wireless telephone numbers, and that such action will 
better further the objectives of the TCPA and the Do-Not-Call Act. In 
so doing, we agree with the FTC and several commenters that wireless 
subscribers should not be excluded from the protections of the TCPA, 
particularly the option to register on a national do-not-call list. 
Congress has indicated its intent to provide significant protections 
under the TCPA to wireless users. 47 U.S.C. 227(b)(1)(iii). Allowing 
wireless subscribers to register on a national do-not-call list 
furthers the objectives of the TCPA, including protection for wireless 
subscribers from unwanted telephone solicitations for which they are 
charged.
    12. Nextel Communications, Inc. (Nextel) argues, however, that, 
because the ``TCPA only authorizes the Commission to regulate 
solicitations to `residential telephone subscribers,' '' wireless 
subscribers may not participate in the do-not-call list. Nextel 
Comments at 19. Nextel states we should define ``residential 
subscribers'' to mean ``telephone service used primarily for 
communications in the subscriber's residence.'' However, Nextel's 
application would result in ``[a]t most, the Commission [having the] 
authority to regulate solicitations to wireless subscribers in those 
circumstances where wireless service actually has displaced a 
residential land line, and functions as a consumer's primary 
residential telephone service.'' Nextel Comments at 21.
    13. Nextel's definition of ``residential subscribers'' is far too 
restrictive and inconsistent with the intent of section 227. 
Specifically, there is nothing in section 227 to suggest that only a 
customer's ``primary residential telephone service'' was all that 
Congress sought to protect through the TCPA. In addition, had Congress 
intended to exclude wireless subscribers from the benefits of the TCPA, 
it knew how to address wireless services or consumers explicitly. For 
example, in section 227(b)(1), Congress specifically prohibited calls 
using automatic telephone dialing systems or artificial or prerecorded 
voice to telephone numbers assigned to ``paging service [or] cellular 
telephone service * * *.'' Moreover, under Nextel's definition, even 
consumers who use their wireless telephone service in their homes to 
supplement their residential wireline service, such as by using their 
wireless telephone service to make long distance phone calls to avoid 
wireline toll charges, would be excluded from the protections of the 
TCPA. Such an interpretation is at odds even with Nextel's own 
reasoning for its definition--that the TCPA's goal is ``to curb the 
`pervasive' use of telemarketing `to market goods and services to the 
home'.'' Nextel Comments at 20. It is well established that wireless 
subscribers often use their wireless phones in the same manner in which 
they use their residential wireline phones. Indeed, as even Nextel 
recognizes, there is a growing number of consumers who no longer 
maintain wireline phone service, and rely only on their wireless 
telephone service. Thus, we are not persuaded by Nextel's arguments.
    14. Moreover, we believe it is more consistent with the overall 
intent of the TCPA to allow wireless subscribers to benefit from the 
full range of TCPA protections. Congress afforded wireless subscribers 
particular protections in the context of autodialers and prerecorded 
calls. 47 U.S.C. 227(b)(1)(A)(iii). In

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addition, although Congress expressed concern with residential privacy, 
it also was concerned with the nuisance, expense and burden that 
telephone solicitations place on consumers. Therefore, we conclude that 
wireless subscribers may participate in the national do-not-call list. 
As a practical matter, since determining whether any particular 
wireless subscriber is a ``residential subscriber'' may be more fact-
intensive than making the same determination for a wireline subscriber, 
we will presume wireless subscribers who ask to be put on the national 
do-not-call list to be ``residential subscribers.'' This presumption is 
only for the purposes of section 227 and is not in any way indicative 
of any attempt to classify or regulate wireless carriers for purposes 
of other parts of Title II. Such a presumption, however, may require a 
complaining wireless subscriber to provide further proof of the 
validity of that presumption should we need to take enforcement action.
    15. We emphasize that it is not our intent in adopting a national 
do-not-call list to prohibit legitimate telemarketing practices. We 
believe that industry commenters present a false choice between the 
continued viability of the telemarketing industry and the adoption of a 
national do-not-call list. We are not persuaded that the adoption of a 
national do-not-call list will unduly interfere with the ability of 
telemarketers to contact consumers. Many consumers will undoubtedly 
take advantage of the opportunity to register on the national list. 
Several industry commenters suggest, however, that consumers derive 
substantial benefits from telephone solicitations. If so, many such 
consumers will choose not to register on the national do-not-call list 
and will opt instead to make do-not-call requests on a case-by-case 
basis or give express permission to be contacted by specific companies. 
In addition, we have provided for certain exemptions to the do-not-call 
registry in recognition of legitimate telemarketing business practices. 
For example, sellers of goods or services via telemarketing may 
continue to contact consumers on the national list with whom they have 
an established business relationship. We also note that calls that do 
not fall within the definition of ``telephone solicitation'' as defined 
in section 227(a)(3) will not be precluded by the national do-not-call 
list. These may include surveys, market research, political or 
religious speech calls.\1\ The national do-not-call rules will also not 
prohibit calls to businesses and persons with whom the marketer has a 
personal relationship. Telemarketers may continue to contact all of 
these consumers despite the adoption of a national do-not-call list. 
Furthermore, we decline to adopt more restrictive do-not-call 
requirements on telemarketers as suggested by several commenters. For 
example, we decline to adopt an ``opt-in'' approach that would ban 
telemarketing to any consumer who has not expressly agreed to receive 
telephone solicitations. We believe that establishing such an approach 
would be overly restrictive on the telemarketing industry. We also 
decline to extend the national do-not-call requirements to tax-exempt 
nonprofit organizations or entities that telemarket on behalf of 
nonprofit organizations.
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    \1\ Such calls may be prohibited if they serve as a pretext to 
an otherwise prohibited advertisement or a means of establishing a 
business relationship. Moreover, responding to such a ``survey'' 
does not constitute express permission or establish a business 
relationship exemption for purposes of a subsequent telephone 
solicitation. See H.R. Rep. No. 102-317 at 13 (``[T]he Committee 
does not intend the term ``telephone solicitation'' to include 
public opinion polling, consumer or market surveys, or other survey 
research conducted by telephone. A call encouraging purchase, 
rental, or investment would fall within the definition, however, 
even though the caller purports to be taking a poll or conducting a 
survey.'').
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    16. We agree with the FTC that a safe harbor should be established 
for telemarketers that have made a good faith effort to comply with the 
national do-not-call rules. A seller or telemarketer acting on behalf 
of the seller that has made a good faith effort to provide consumers 
with an opportunity to exercise their do-not-call rights should not be 
liable for violations that result from an error. Consistent with the 
FTC, we conclude that a seller or the entity telemarketing on behalf of 
the seller will not be liable for violating the national do-not-call 
rules if it can demonstrate that, as part of the seller's or 
telemarketer's routine business practice: (i) It has established and 
implemented written procedures to comply with the do-not-call rules; 
(ii) it has trained its personnel, and any entity assisting in its 
compliance, in the procedures established pursuant to the do-not-call 
rules; (iii) the seller, or telemarketer acting on behalf of the 
seller, has maintained and recorded a list of telephone numbers the 
seller may not contact; (iv) the seller or telemarketer uses a process 
to prevent telemarketing to any telephone number on any list 
established pursuant to the do-not-call rules employing a version of 
the do-not-call registry obtained from the administrator of the 
registry no more than three months prior to the date any call is made, 
and maintains records documenting this process; and (v) any subsequent 
call otherwise violating the do-not-call rules is the result of error. 
We acknowledge that the three-month safe harbor period for 
telemarketers may prove to be too long to benefit some consumers. The 
national do-not-call list has the capability to process new registrants 
virtually instantaneously and telemarketers will have the capability to 
download the list at any time at no extra cost. The Commission intends 
to monitor carefully the impact of this requirement pursuant to its 
annual report to Congress and may consider a shorter time frame in the 
future.
    17. As required by 47 U.S.C. 227(c)(1)(A), we have compared and 
evaluated the advantages and disadvantages of certain alternative 
methods to protect consumer privacy including the use of network 
technologies, special directory markings, and company-specific lists in 
adopting a national do-not-call database. The effectiveness of the 
company-specific approach has significantly eroded as a result of hang-
up and ``dead air'' calls from predictive dialers. Consumers in these 
circumstances have no opportunity to assert their do-not-call rights. 
We believe that, as a stand-alone option, the company-specific approach 
no longer provides consumers with sufficient privacy protections. We 
also conclude that the availability of certain network technologies to 
reduce telephone solicitations is often ineffective and costly for 
consumers. Although technology has improved to assist consumers in 
blocking unwanted calls, it has also evolved in such a way as to assist 
telemarketers in making greater numbers of calls and even circumventing 
such blocking technologies. Millions of consumers continue to register 
on state do-not-call lists despite the availability of such 
technologies. Several commenters note that they continue to receive 
unwanted calls despite paying for technologies to reduce telephone 
solicitations. Several commenters also note that telemarketers 
routinely block transmission of caller ID. In particular, we are 
concerned that the cost of technologies such as caller ID, call 
blocking, and other such tools in an effort to reduce telemarketing 
calls fall entirely on the consumer. We believe that reliance on a 
solution that places the cost of reducing the number of unwanted 
solicitation calls entirely on the consumer is inconsistent with 
Congress' intent in the TCPA. For the reasons outlined in the 1992 TCPA 
Order, we also decline to adopt special area codes or prefixes for 
telemarketers. We believe this option is costly for

[[Page 44148]]

telemarketers that would be required to change their telephone numbers 
and administratively burdensome to implement. We also decline to adopt 
special directory markings of area white page directories because it 
would require telemarketers to purchase and review thousands of local 
telephone directories, at great cost to the telemarketers. We also note 
that telemarketers often compile solicitation lists from many sources 
other than local telephone directories. In addition, such directories 
do not include unlisted or unregistered telephone numbers and are often 
updated infrequently. We also note that the record in this proceeding 
provides little support for this option.
    18. We now review the other requirements of 47 U.S.C. 227(c)(1). As 
required by section 227(c)(1)(B), we have evaluated AT&T Government 
Solutions, the entity selected by the FTC to administer the national 
database, and conclude that it has the capacity to establish and 
administer the national database. Congress has reviewed and approved 
funding for the implementation of that database. We believe that it is 
unnecessary to evaluate any other such entities at this time. We have 
considered whether different methods and procedures should apply for 
local telephone solicitations and small businesses as required by 
section 227(c)(1)(C). We conclude that the national do-not-call 
database takes into consideration the costs of those conducting 
telemarketing on a local or regional basis, including many small 
businesses. In particular, we note that the national do-not-call 
database will permit access to five or fewer area codes at no cost to 
the seller. Pursuant to section 227(c)(1)(D), we have considered 
whether there is a need for additional authority to further restrict 
telephone solicitations. We conclude that no such authority is required 
at this time. Pursuant to the Do-Not-Call Act, the Commission must 
report to Congress on an annual basis the effectiveness of the do-not-
call registry. Should the Commission determine that additional 
authority is required over telephone solicitations as part of that 
analysis; the Commission will propose specific restrictions pursuant to 
that report. As required by section 227(c)(1)(E), we have developed 
regulations to implement the national do-not-call database in the most 
effective and efficient manner to protect consumer privacy needs while 
balancing legitimate telemarketing interests.
    19. The FTC's decision to adopt a national do-not-call list is 
currently under review in federal district court. Because Congress has 
approved funding for the administration of the national list only for 
the FTC, this Commission would be forced to stay implementation of any 
national list should the plaintiffs prevail in one of those 
proceedings.

Exemptions

    20. Established Business Relationship. We agree with the majority 
of industry commenters that an exemption to the national do-not-call 
list should be created for calls to consumers with whom the seller has 
an established business relationship. We note that 47 U.S.C. 227(a)(3) 
excludes from the definition of telephone solicitation calls made to 
any person with whom the caller has an established business 
relationship. We believe the ability of sellers to contact existing 
customers is an important aspect of their business plan and often 
provides consumers with valuable information regarding products or 
services that they may have purchased from the company. For example, 
magazines and newspapers may want to contact customers whose 
subscriptions have or soon will expire and offer new subscriptions. 
This conclusion is consistent with that of the FTC and the majority of 
states that have adopted do-not-call requirements and considered this 
issue. We revise the definition of an established business relationship 
so that it is limited in duration to eighteen (18) months from any 
purchase or transaction and three (3) months from any inquiry or 
application.
    21. To the extent that some consumers oppose this exemption, we 
find that once a consumer has asked to be placed on the seller's 
company-specific do-not-call list, the seller may not call the consumer 
again regardless of whether the consumer continues to do business with 
the seller. We believe this determination constitutes a reasonable 
balance between the interests of consumers that may object to such 
calls with the interests of sellers in contacting their customers. This 
conclusion is also consistent with that of the FTC.
    22. Prior Express Permission. In addition to the established 
business relationship exemption, we conclude that sellers may contact 
consumers registered on a national do-not-call list if they have 
obtained the prior express permission of those consumers. We note that 
section 227(a)(3) excludes from the definition of telephone 
solicitation calls to any person with ``that person's prior express 
invitation or permission.'' Consistent with the FTC's determination, we 
conclude that for purposes of the national do-not-call list such 
express permission must be evidenced only by a signed, written 
agreement between the consumer and the seller which states that the 
consumer agrees to be contacted by this seller, including the telephone 
number to which the calls may be placed. For purposes of this 
exemption, the term ``signed'' shall include an electronic or digital 
form of signature, to the extent that such form of signature is 
recognized as a valid signature under applicable federal or state 
contract law. Consumers registered on the national list may wish to 
have the option to be contacted by particular entities. Therefore, we 
conclude that sellers may obtain the express written agreement to call 
such consumers. The express agreement between the parties shall remain 
in effect as long as the consumer has not asked to be placed on the 
seller's company-specific do-not-call list. If the consumer 
subsequently requests not to be called, the seller must cease calling 
the consumer regardless of whether the consumer continues to do 
business with the seller. We also note that telemarketers may not call 
consumers on the national do-not-call list to request their written 
permission to be called unless they fall within some other exemption. 
We believe that to allow such calls would circumvent the purpose of 
this exemption. Prior express permission must be obtained by some other 
means such as direct mailing.
    23. Tax-Exempt Nonprofit Organizations. We agree with those 
commenters that contend that the national do-not-call requirements 
should not be extended to tax-exempt nonprofit organizations or calls 
made by independent telemarketers on behalf of tax-exempt nonprofit 
organizations. We note that 47 U.S.C. 227(a)(3) specifically excludes 
calls made by tax-exempt nonprofit organizations from the definition of 
telephone solicitation. In so doing, we believe Congress clearly 
intended to exclude tax-exempt nonprofit organizations from 
prohibitions on telephone solicitations under the TCPA. The legislative 
history indicates that commercial calls constitute the bulk of all 
telemarketing calls. A number of commenters and the FTC agree with 
Congress' conclusion as it relates to a national do-not-call list. For 
this reason, we decline to extend the national do-not-call requirements 
to tax-exempt nonprofit organizations. A few commenters seek 
clarification that requests for blood donations will be exempt from the 
national do-not-call list. When such requests are made by tax-exempt 
nonprofit organizations, they will fall within the exemption for tax-
exempt nonprofit organizations.
    24. Others. We decline to create specific exemptions to the 
national do-

[[Page 44149]]

not-call requirements for entities such as newspapers, magazines, 
regional telemarketers, or small businesses. We find unpersuasive 
arguments that application of the national do-not-call database adopted 
herein will result in severe economic consequences for these entities. 
In particular, we note the exemptions adopted for calls made to 
consumers with whom the seller has an established business relationship 
and those that have provided express agreement to be called. As noted, 
many consumers may also determine not to register on the national 
database. Telemarketers may continue to contact all of these consumers. 
We believe these exemptions provide telemarketers with a reasonable 
opportunity to conduct their business while balancing consumer privacy 
interests. Although we agree that newspapers and other entities may 
often provide useful information and services to the public, given our 
conclusion that adoption of the national do-not-call list will not 
unduly interfere with the ability of telemarketers to reach consumers, 
we do not find this to be a compelling basis to exempt these entities.
    25. We find that the national do-not-call rules do not apply to 
calls made to persons with whom the marketer has a personal 
relationship. As discussed herein, a ``personal relationship'' refers 
to an individual personally known to the telemarketer making the call. 
In such cases, we believe that calls to family members, friends and 
acquaintances of the caller will be both expected by the recipient and 
limited in number. In determining whether a telemarketer is considered 
a ``friend'' or ``acquaintance'' of a consumer, we will look at, among 
other things, whether a reasonable consumer would expect calls from 
such a person because they have a close or, at least, firsthand 
relationship. If a complaining consumer were to indicate that a 
relationship is not sufficiently personal for the consumer to have 
expected a call from the marketer, we would be much less likely to find 
that the personal relationship exemption is applicable. While we do not 
adopt a specific cap on the number of calls that a marketer may make 
under this exemption, we underscore that the limited nature of the 
exemption creates a strong presumption against those marketers who make 
more than a limited number of calls per day. Therefore, the two most 
common sources of consumer frustration associated with telephone 
solicitations--high volume and unexpected solicitations--are not likely 
present when such calls are limited to persons with whom the marketer 
has a personal relationship. Accordingly, we find that these calls do 
not represent the type of ``telephone solicitations to which [telephone 
subscribers] object'' discussed in 47 U.S.C. 227(c)(1). Moreover, we 
conclude that the Commission also has authority to recognize this 
limited carve-out pursuant to 47 U.S.C. 227(c)(1)(E). This subsection 
provides the Commission with discretion in implementing rules to 
protect consumer privacy to ``develop proposed regulations to implement 
the methods and procedures that the Commission determines are the most 
effective and efficient to accomplish the purpose of this section.'' 47 
U.S.C. 227(c)(1)(E). To the extent that any consumer objects to such 
calls, the consumer may request to be placed on the telemarketer's 
company's company-specific do-not-call list. We intend to monitor these 
rules and caution that any individual or entity relying on personal 
relationships abusing this exemption may be subject to enforcement 
action.
    26. In addition, we decline to extend this approach beyond persons 
that have a personal relationship with the marketer. For example, 
Vector urges the Commission to adopt an exemption that covers ``face-
to-face'' appointment calls to anyone known personally to the 
``referring source.'' We note that such relationships become 
increasingly tenuous as they extend to individuals not personally known 
to the marketer and thus such calls are more likely to be unexpected to 
the recipient and more voluminous. Accordingly, referrals to persons 
that do not have a personal relationship with the marketer will not 
fall within the category of calls discussed above.
    27. We also decline to establish an exemption for calls made to set 
``face-to-face'' appointments per se. We conclude that such calls are 
made for the purpose of encouraging the purchase of goods and services 
and therefore fall within the statutory definition of telephone 
solicitation. We find no reason to conclude that such calls are somehow 
less intrusive to consumers than other commercial telephone 
solicitations. The FTC has reviewed this issue and reached the same 
conclusion. In addition, we decline to exempt entities that make a ``de 
minimis'' number of commercial telemarketing calls. In contrast to 
Congress' rationale for exempting nonprofit organizations, we believe 
that such commercial calls continue to be unexpected to consumers even 
if made in low numbers. We do not believe the costs to access the 
national database is unreasonable for any small business or entity 
making a ``de minimis'' number of calls.
    28. In response to the Rules and Regulations Implementing the 
Telephone Consumer Protection Act of 1991, Further Notice of Proposed 
Rulemaking, CG Docket No. 02-278, FCC 03-62 published at 68 FR 16250, 
April 3, 2003 (FNPRM) a few commenters contend that any new rules the 
Commission adopts would not apply to entities engaged in the business 
of insurance, because such rules would conflict with the McCarran-
Ferguson Act. The McCarran-Ferguson Act provides that ``[t]he business 
of insurance * * * shall be subject to the laws of the * * * States 
which relate to the regulation * * * of such business.'' 15 U.S.C. 
1012(a). The McCarran-Ferguson Act further provides that ``[n]o Act of 
Congress shall be construed to invalidate, impair, or supersede any law 
enacted by any State for the purpose of regulating the business of 
insurance * * * unless such Act specifically relates to the business of 
insurance.'' 15 U.S.C. 1012(b). American Council of Life Insurers 
(ACLI) explains that insurers' marketing activities are extensively 
regulated at the state level. The Commission's proposal, ACLI argues, 
``intrudes upon the insurance regulatory framework established by the 
states'' and, therefore, should not be applicable to insurers under 
McCarran-Ferguson.
    29. The McCarran-Ferguson Act does not operate to exempt insurance 
companies wholesale from liability under the TCPA. It applies only when 
their activities constitute the ``business of insurance,'' the state 
has enacted laws ``for the purpose of regulating'' the business of 
insurance, and the TCPA would ``impair, invalidate, or supersede'' such 
state laws. See 15 U.S.C. 1012(b). In the one case cited by commenters 
as addressing the interplay between McCarran-Ferguson and the TCPA, a 
federal district court dismissed a claim brought against two insurance 
companies under the TCPA for sending unsolicited facsimile 
advertisements. The Chair King, Inc. v. Houston Cellular Corp., 1995 WL 
1760037 (S.D. Tex. 1995), vacated for lack of subject matter 
jurisdiction 131 F.3d 507 (5th Cir. 1997). The Chair King court found 
that the TCPA conflicted with a Texas law that prohibited untrue, 
deceptive, or misleading advertising by insurers and their agents. In 
its analysis, the court determined that insurance advertising was part 
of the ``business of insurance,'' and that the Texas law in question 
was enacted for the purpose of regulating the business of insurance. 
The court then concluded that because the TCPA

[[Page 44150]]

``prohibits unsolicited insurance advertising by facsimile while the 
Texas [laws] permit [such] advertising * * * so long as the 
advertisements are truthful and not misleading,'' the TCPA conflicts 
with the Texas law and is preempted under McCarran-Ferguson. See 47 
U.S.C. 227(b)(1)(C) and (a)(4).
    30. To the extent that any state law regulates the ``business of 
insurance'' and the TCPA is found to ``invalidate, impair, or 
supersede'' such state law, it is possible that a particular activity 
involving the business of insurance would not fall within the reach of 
the TCPA. Any determination about the applicability of McCarran-
Ferguson, however, requires an analysis of the particular activity and 
State law regulating it. In addition, McCarran-Ferguson applies only to 
federal statutes that ``invalidate, impair, or supersede'' state 
insurance regulation. Courts have held that duplication of state law 
prohibitions by a federal statute do not ``invalidate, impair, or 
supersede'' state laws regulating the business of insurance. Nor is the 
mere presence of a regulatory scheme enough to show that a state 
statute is ``invalidated, impaired or superseded.''
    31. We believe that the TCPA, which was enacted to protect consumer 
privacy interests, is compatible with states' regulatory interests. In 
fact, the TCPA permits States to enforce the provisions of the TCPA on 
behalf of residents of their State. 47 U.S.C. 227(f)(1). In addition, 
we believe that uniform application of the national do-not-call 
registry to all entities that use the telephone to advertise best 
serves the goals of the TCPA. To exempt the insurance industry from 
liability under the TCPA would likely confuse consumers and interfere 
with the protections provided by Congress through the TCPA. Therefore, 
to the extent that the operation of McCarran-Ferguson on the TCPA is 
unclear, we will raise this issue in our Report to Congress as required 
by the Do-Not-Call Act.
    32. We conclude that the national do-not-call mechanism established 
by the FTC and this Commission adequately takes into consideration the 
needs of small businesses and entities that telemarket on a local or 
regional basis in gaining access to the national database. As required 
by 47 U.S.C. 227(c)(1)(C), we have considered whether different 
procedures should apply for local solicitations and small businesses. 
We decline, however, to exempt such entities from the national do-not-
call requirements. Given the large number of entities that solicit by 
telephone, and the technological tools that allow even small entities 
to make a significant number of solicitation calls, we believe that to 
do so would undermine the effectiveness of the national do-not-call 
rules in protecting consumer privacy and create consumer confusion and 
frustration. In so doing, we conclude that the approach adopted herein 
satisfies section 227(c)(4)'s requirement that the Commission, in 
developing procedures for gaining access to the database, consider the 
different needs of telemarketers conducting business on a national, 
regional, State, or local level and develop a fee schedule for 
recouping the cost of such database that recognizes such differences. 
The national database will be available for purchase by sellers on an 
area-code-by-area-code basis. The cost to access the database will vary 
depending on the number of area codes requested. Sellers need only 
purchase those area codes in which the seller intends to telemarket. In 
fact, sellers that request access to five or fewer area codes will be 
granted access to those area codes at no cost. We note that thirty-
three states currently have five or fewer area codes. Thus, 
telemarketers or sellers operating on a ``local'' or ``regional'' basis 
within one of these thirty-three states will have access to all of that 
state's national do-not-call registrants at no cost. In addition, the 
national database will provide a single number lookup feature whereby a 
small number of telephone numbers can be entered on a web page to 
determine whether any of those numbers are included on the national 
registry. We believe this fee structure adequately reflects the needs 
of regional telemarketers, small business and those marketing on a de 
minimis level. For these reasons, we conclude that this approach will 
not place any unreasonable costs on small businesses. 47 U.S.C. 
227(c)(4)(B)(iii).

Section 227(c)(3) Requirements

    33. We conclude that the national do-not-call database adopted 
jointly by this Commission and the FTC satisfies each of the statutory 
requirements outlined in 47 U.S.C. 227(c)(3)(A) through (c)(3)(L). We 
now discuss each such requirement. Section 227(c)(3)(A) requires the 
Commission to specify the method by which an entity to administer the 
national database will be selected. On August 2, 2002, the FTC issued a 
Request for Quotes (RFQ) to selected vendors on GSA schedules seeking 
proposals to develop, implement, and operate the national registry. 
After evaluating those proposals, the FTC selected a competitive range 
of vendors and issued an amended RFQ to those vendors on November 25, 
2002. After further evaluation, the FTC selected AT&T Government 
Solutions as the successful vendor for the national do-not-call 
database on March 1, 2003. Congress has approved the necessary funding 
for implementation of the national database.
    34. Pursuant to sections 227(c)(3)(B) through (c)(3)(C), we require 
each common carrier providing telephone exchange service to inform 
subscribers for telephone exchange service of the opportunity to 
provide notification that such subscriber objects to receiving 
telephone solicitations. Each telephone subscriber shall be informed, 
by the common carrier that provides local exchange service to that 
subscriber, of (i) the subscriber's right to give or revoke a 
notification of an objection to receiving telephone solicitations 
pursuant to the national database and (ii) the methods by which such 
rights may be exercised by the subscriber. Pursuant to section 
227(c)(3)(C), we conclude that, beginning on January 1, 2004, such 
common carriers shall provide an annual notice, via an insert in the 
customer's bill, to inform their subscribers of the opportunity to 
register or revoke registrations on the national do-not-call database. 
Although we do not specify the exact description or form that such 
notification should take, such notification must be clear and 
conspicuous. At a minimum, it must include the toll-free telephone 
number and Internet address established by the FTC to register or 
revoke registrations on the national do-not-call database.
    35. Section 227(c)(3)(D) requires the Commission to specify the 
methods by which registrations shall be collected and added to the 
database. Consumers will be able to add their telephone numbers to the 
national do-not-call registry either through a toll-free telephone call 
or over the Internet. Consumers who choose to register by phone will 
have to call the registration number from the telephone line that they 
wish to register. Their calls will be answered by an Interactive Voice 
Response (IVR) system. The consumers will be asked to enter on their 
telephone keypad the telephone number from which the consumer is 
calling. This number will be checked against the ANI that is 
transmitted with the call. If the number entered matches the ANI, then 
the consumer will be informed that the number has been registered. 
Consumers who choose to register over the Internet will go to a Web 
site dedicated to the registration process where they will be asked to 
enter the telephone number they wish to register. We encourage the FTC 
to notify consumers in the IVR message that the national registry will

[[Page 44151]]

prevent most, but not all, telemarketing calls. Specifically, we 
believe consumers should be informed that the do-not-call registry does 
not apply to tax-exempt nonprofit organizations and companies with whom 
consumers have an established business relationship. The effectiveness 
and value of the national registry depends largely on an informed 
public. Therefore, we also intend to emphasize in our educational 
materials and on our Web site the purpose and scope of the new rules.
    36. Section 227(c)(3)(E) prohibits any residential subscriber from 
being charged for giving or revoking notification to be included on the 
national do-not-call database. Consumers may register or revoke do-not-
call requests either by a toll-free telephone call or over the 
Internet. No charge will be imposed on the consumer. Section 
227(c)(3)(F) prohibits any person from making or transmitting a 
telephone solicitation to the telephone number of any subscriber 
included on the national database. Subject to the exemptions, we adopt 
rules herein that will prohibit telephone solicitations to those 
consumers that have registered on the national database. See also 16 
CFR 310.4(b)(1)(iii)(B).
    37. Section 227(c)(3)(G) requires the Commission to specify (i) the 
methods by which any person deciding to make telephone solicitations 
will obtain access to the database, by area code or local exchange 
prefix, and (ii) the costs to be recovered from such persons. Section 
227(c)(3)(H) requires the Commission to specify the methods for 
recovering, from the persons accessing the database, the costs involved 
in the operations of the database. To comply with the national do-not-
call rules, telemarketers must gain access to the telephone numbers in 
the national database. Telemarketers will have access to the national 
database by means of a fully-automated, secure Web site dedicated to 
providing information to these entities. The first time a telemarketer 
accesses the system, the company will be asked to provide certain 
limited identifying information, such as name and address, contact 
person, and contact person's telephone number and address. If a 
telemarketer is accessing the registry on behalf of a client seller, 
the telemarketer will also need to identify that client. When a 
telemarketer first submits an application to access registry 
information, the company will be asked to specify the area codes they 
want to access. An annual fee will be assessed based upon the number of 
area codes requested. The FTC has proposed that sellers be charged $29 
per area code with a maximum annual fee of $7,250 for access to the 
entire national database. Sellers may request access to five or less 
area codes for free. Each entity on whose behalf the telephone 
solicitation is being made must pay this fee via credit card or 
electronic funds transfer. After payment is processed, the telemarketer 
will be given an account number and permitted to access the appropriate 
portions of the registry. Telemarketers will be permitted to access the 
registry as often as they wish for no additional cost, once the annual 
fee is paid.
    38. Section 227(c)(3)(I) requires the Commission to specify the 
frequency with which the national database will be updated and specify 
the method by which such updates will take effect for purposes of 
compliance with the do-not-call regulations. Because the registration 
process will be completely automated, updates will occur continuously. 
Consumer registrations will be added to the registry at the same time 
they register--or at least within a few hours after they register. The 
safe harbor provision requires telemarketers to employ a version of the 
registry obtained not more than three months before any call is made. 
Thus, telemarketers will be required to update their lists at least 
quarterly. Instead of making the list available on specific dates, the 
registry will be available for downloading on a constant basis so that 
telemarketers can access the registry at any time. As a result, each 
telemarketer's three-month period may begin on different dates. 
Appropriate state and federal regulators will be capable of verifying 
when the telemarketer last accessed the list. In addition, the 
administrator will check all telephone numbers in the do-not-call 
registry each month against national databases, and those numbers that 
have been disconnected or reassigned will be removed from the registry. 
We encourage parties that may have specific recommendations on ways to 
improve the overall accuracy of the database in removing disconnected 
and reassigned telephone numbers to submit such proposals to our 
attention and to the FTC directly.
    39. Section 227(c)(3)(J) requires that the Commission's regulations 
be designed to enable states to use the database for purposes of 
administering or enforcing state law. In fact, 47 U.S.C. 227(e)(2) 
prohibits states from using any database that does not include the part 
of the national database that relates to such state. Section 
227(c)(3)(K) prohibits the use of the database for any purpose other 
than compliance with the do-not-call rules and any such state law and 
requires the Commission to specify methods for protection of the 
privacy rights of persons whose numbers are included in such database. 
Consistent with the determination of the FTC, we conclude that any law 
enforcement agency that has responsibility to enforce federal or state 
do-not-call rules or regulations will be permitted to access the 
appropriate information in the national registry. This information will 
be obtained through a secure Internet Web site. Such law enforcement 
access to data in the national registry is critical to enable state 
Attorneys General, public utility commissions or an official or agency 
designated by a state, and other appropriate law enforcement officials 
to gather evidence to support enforcement of the do-not-call rules 
under the state and federal law. In addition, we have imposed 
restrictions on the use of the national list. Consistent with the FTC's 
determination, we have concluded that no person or entity may sell, 
rent, lease, purchase, or use the national do-not-call database for any 
purpose except compliance with section 227 and any such state or 
federal law to prevent telephone solicitations to telephone numbers on 
such list. We specifically prohibit any entity from purchasing this 
list from any entity other than the national do-not-call administrator 
or dispensing the list to any entity that has not paid the required fee 
to the administrator. The only information that will be made available 
to telemarketers is the telephone number of consumers registered on the 
list. Given the restrictions imposed on the use of the national 
database and the limited amount of information provided, we believe 
that adequate privacy protections have been established for consumers.
    40. Section 227(c)(3)(L) requires each common carrier providing 
services to any person for the purpose of making telephone 
solicitations to notify such person of the requirements of the national 
do-not-call rules and the regulations thereunder. We therefore require 
common carriers, beginning January 1, 2004, to make a one-time 
notification to any person or entity making telephone solicitations 
that is served by that carrier of the national do-not-call 
requirements. We do not specify the exact description or form that such 
notification should take. At a minimum, it must include a citation to 
the relevant federal do-not-call rules as set forth in 47 CFR 64.1200 
and 16 CFR part 310, respectively. Although we recognize that carriers 
may not be capable of identifying every person or entity engaged in 
telephone solicitations

[[Page 44152]]

served by that carrier, we require carriers to make reasonable efforts 
to comply with this requirement. We note that failure to give such 
notice by the common carrier to a telemarketer served by that carrier 
will not excuse the telemarketer from violations of the Commission's 
rules.

Constitutionality

    41. We conclude that a national do-not-call registry is consistent 
with the First Amendment. We believe, like the FTC, that our 
regulations satisfy the criteria set forth in Central Hudson Gas & 
Elec. v. Pub. Serv. Comm. of N.Y., in which the Supreme Court 
established the applicable analytical framework for determining the 
constitutionality of a regulation of commercial speech. Central Hudson 
Gas & Elec. v. Pub. Serv. Comm. of N.Y., 447 U.S. 557 (1980). See 
Kathryn Moser v. Federal Communications Commission, 46 F.3d 970 (9th 
Cir. 1995) (Moser) cert. denied, 515 U.S. 1161 (1995) (upholding ban on 
prerecorded telephone calls); State of Missouri v. American Blast Fax, 
323 F.3d 649 (8th Cir. 2003) (American Blast Fax), pet. for rehearing 
pending (upholding ban on unsolicited fax advertising) and Destination 
Ventures v. Federal Communications Commission, 46 F.3d 54 (9th 
Cir.1995) (Destination Ventures) (upholding ban on unsolicited fax 
advertising). Our conclusion is also consistent with every Court of 
Appeals decision that has considered First Amendment challenges to the 
TCPA.
    42. Under the framework established in Central Hudson, a regulation 
of commercial speech will be found compatible with the First Amendment 
if (1) there is a substantial government interest; (2) the regulation 
directly advances the substantial government interest; and (3) the 
proposed regulations are not more extensive than necessary to serve 
that interest. Central Hudson, 447 U.S. at 566. Specifically, the Court 
found that ``[f]or commercial speech to come within the First 
Amendment, it at least must concern lawful activity and not be 
misleading. Next, it must be determined whether the asserted 
governmental interest to be served by the restriction on commercial 
speech is substantial. If both inquiries yield positive answers, it 
must then be decided whether the regulation directly advances the 
governmental interest asserted, and whether it is not more extensive 
than is necessary to serve that interest.'' Id. at 557. Under the first 
prong, we find that there is a substantial governmental interest in 
protecting residential privacy. The Supreme Court has ``repeatedly held 
that individuals are not required to welcome unwanted speech into their 
homes and that the government may protect this freedom.'' Frisby v. 
Schultz, 487 U.S. 474, 485. See also Federal Communications Commission 
v. Pacifica Foundation, 438 U.S. 726, 748 (1978) (``[I]n the privacy of 
the home, * * * the individual's right to be left alone plainly 
outweighs the First Amendment rights of an intruder.'').
    43. In particular, the government has an interest in upholding the 
right of residents to bar unwanted speech from their homes. In Rowan v. 
United States Post Office, the Supreme Court upheld a statute that 
permitted a person to require that a mailer remove his name from its 
mailing lists and stop all future mailings to the resident:

    The Court has traditionally respected the right of a householder 
to bar, by order or notice, solicitors, hawkers, and peddlers from 
his property. In this case the mailer's right to communicate is 
circumscribed only by an affirmative act of the addressee giving 
notice that he wishes no further mailings from that mailer. * * * In 
effect, Congress has erected a wall--or more accurately permits a 
citizen to erect a wall--that no advertiser may penetrate without 
his acquiescence.

Rowan v. United States Post Office, 397 U.S. 728 at 737-738 (1970).
    44. Here, the record supports that the government has a substantial 
interest in regulating telemarketing calls. In 1991, Congress held 
numerous hearings on telemarketing, finding, among other things, that 
``[m]ore than 300,000 solicitors call more than 18,000,000 Americans 
every day'' and ``[u]nrestricted telemarketing can be an intrusive 
invasion of privacy and, when an emergency or medical assistance 
telephone line is seized, a risk to public safety.'' Our record, like 
the FTC's, demonstrates that telemarketing calls are even more of an 
invasion of privacy than they were in 1991. The number of daily calls 
has increased five fold (to an estimated 104 million), due in part to 
the use of new technologies, such as predictive dialers. An 
overwhelming number of consumers in the approximately 6,500 commenters 
in this proceeding support the adoption and implementation of a 
national do-not-call registry. In addition to citing concerns about the 
numerous and ever-increasing number of calls, they complain about the 
inadequacies of the company-specific approach, the burdens of such 
calls on the elderly and people with disabilities, and the costs of 
acquiring technologies to reduce the number of unwanted calls. 
Accordingly, we believe that the record demonstrates that telemarketing 
calls are a substantial invasion of residential privacy, and 
regulations that address this problem serve a substantial government 
interest.
    45. Under Central Hudson's second prong, we find that the 
Commission's regulations directly advance the substantial government 
interest. Under this prong, the government must demonstrate that ``the 
harms it recites are real and that its restriction will in fact 
alleviate them to a material degree.'' Florida Bar v. Went For It, 
Inc., 515 U.S. 618, 626 (1995) (citations omitted). It may justify the 
restrictions on speech ``based solely on history, consensus, and 
``simple common sense. '' Id. at 628 (citation omitted). Creating and 
implementing a national do-not-call registry will directly advance the 
government's interest in protecting residential privacy from unwanted 
telephone solicitations. Congress, consumers, state governments and the 
FTC have reached the same conclusion. The history of state administered 
do-not-call lists demonstrates that such do-not-call programs have a 
positive impact on the ability of many consumers to protect their 
privacy by reducing the number of unwanted telephone solicitations that 
they receive each day. Congress has reviewed the FTC's decision to 
establish a national do-not-call list and concluded that the do-not-
call initiative will provide significant benefits to consumers 
throughout the United States. We reject the arguments that because our 
do-not-call registry provisions do not apply to tax-exempt nonprofit 
organizations, our regulations do not directly and materially advance 
the government interest of protecting residential privacy. ``Government 
[need not] make progress on every front before it can make progress on 
any front.'' United States v. Edge Broadcasting Company, 509 U.S. 418, 
434 (1993). See also Moser v. FCC, 46 F.3d at 975 (``Congress may 
reduce the volume of telemarketing calls without completely eliminating 
the calls.'').
    46. We believe that the facts here are easily distinguishable from 
those in Rubin v. Coors Brewing Company, 514 U.S. 476 (1995) and City 
of Cincinnati v. Discovery Network, 507 U.S. 410 (1993). In Coors, the 
Court struck down a prohibition against disclosure of alcoholic content 
on labels or in advertising that applied to beer but not to wine or 
distilled spirits, finding that ``the irrationality of this unique and 
puzzling regulatory framework ensures that the labeling ban will fail 
to achieve [the Government's interest in combating strength wars.]'' In 
Discovery Network, the Court struck down an ordinance which banned 62 
newsracks containing commercial publications but did not ban 1,500-
2,000 newsracks containing

[[Page 44153]]

newspapers, finding that ``the distinction bears no relationship 
whatsoever to the particular [aesthetic] interests that the city has 
asserted.'' Here, Congress' decision to exclude tax-exempt nonprofit 
organizations from the definition of telemarketing in the TCPA was both 
rational and related to its interest in protecting residential privacy. 
The House Report finds that ``the record suggests that most unwanted 
telephone solicitations are commercial in nature. * * *[T]he Committee 
also reached the conclusion, based on the evidence, that `` calls [from 
tax-exempt nonprofit organizations] are less intrusive to consumers 
because they are more expected. Consequently, the two main sources of 
consumer problems `` high volume of solicitations and unexpected 
solicitations--are not present in solicitations by nonprofit 
organizations.'' H.R. Rep. No. 102-317, at 16 (1991).
    47. Commenters in our record also express the concern that 
subjecting tax-exempt nonprofit organizations to the national do-not-
call requirements may sweep too broadly because it would prompt some 
consumers to accept blocking of non-commercial, charitable calls to 
which they might not otherwise object as an undesired effect of 
registering on the national database to stop unwanted commercial 
solicitation calls. Both the Eighth and the Ninth Circuits in American 
Blast Fax and Destination Ventures found that the provisions of the 
TCPA, which bans unsolicited commercial faxes but not non-commercial 
faxes, directly advance a substantial government interest, and we 
believe that the same distinction may be applied to the national do-
not-call registry.
    48. We find under the third prong of the Central Hudson test that 
our proposed regulations are not more extensive than necessary to 
protect residential privacy. The Supreme Court has made clear that with 
respect to this prong, ``the differences between commercial speech and 
noncommercial speech are manifest.'' Florida Bar, 515 U.S. 618, 632. 
The Court held that:

    [T]he least restrictive means test has no role in the commercial 
speech context. What our decisions require, instead, is a fit 
between the legislature's ends and the means chosen to accomplish 
those ends, a fit that is not necessarily perfect, but reasonable; 
that represents not necessarily the single best disposition but one 
whose scope is in proportion to the interest served * * * [T]he 
existence of numerous and obvious less-burdensome alternatives to 
the restriction on commercial speech is certainly a relevant 
consideration in determining whether the fit between the ends and 
means is reasonable.

    In Florida Bar, the Supreme Court found that a prohibition against 
lawyers using direct mail to solicit personal injury or wrongful death 
clients within 30 days of an accident was not more extensive than 
necessary to ``protect * * * the privacy and tranquility of personal 
injury victims and their loved ones against intrusive, unsolicited 
contact by lawyers.'' Id. at 624. Similarly, the Ninth Circuit has 
found that the TCPA's ban on prerecorded telemarketing calls 
constitutes a ``reasonable fit'' with the government's legitimate 
interest in protecting residential privacy. Moser, 46 F.3d at 975.
    49. Here, we find that our regulations meet the requirements of 
Central Hudson's third prong. Pursuant to our regulations, we adopt a 
single, national do-not-call database that we will enforce jointly with 
the FTC. Our rules mandate that common carriers providing telephone 
exchange service shall inform their subscribers of their right to 
register on the database either through a toll-free telephone call or 
over the Internet. Furthermore, telemarketers and sellers must gain 
access to telephone numbers in the national database and will be able 
to do so by means of a fully automated, secure Web site dedicated to 
providing information to these entities. In addition, sellers will be 
assessed an annual fee based upon the number of area codes they want to 
assess, with the maximum annual fee capped at $7,250. Our rules also 
provide that the national database will be updated continuously, and 
telemarketers must update their lists quarterly. We find that our 
regulations are a reasonable fit between the ends and means and are not 
as restrictive as the bans upheld in the cases cited. In Florida Bar, 
the Supreme Court upheld an absolute ban against lawyers using direct 
mail to solicit personal injury or wrongful death clients within 30 
days of an accident. Similarly, the Ninth Circuit has upheld the TCPA's 
absolute ban on prerecorded telemarketing calls, and both the Eighth 
and Ninth Circuit have upheld the TCPA's absolute ban on unsolicited 
faxes. Here, our regulations do not absolutely ban telemarketing calls. 
Rather, they provide a mechanism by which individual consumers may 
choose not to receive telemarketing calls. We also note that there are 
many other ways available to market products to consumers, such as 
newspapers, television, radio advertising and direct mail. See Florida 
Bar, 515 U.S. at 633-34. In addition, there simply are not ``numerous 
and obvious less-burdensome alternatives'' to the national do-not-call 
registry. The record clearly demonstrates widespread consumer 
dissatisfaction both with the effectiveness of the current company-
specific rules that are currently in place and the effectiveness and 
expense of certain technological alternatives to reduce telephone 
solicitations. We also note that many of the ``burdens'' of the 
national do-not-call registry--issues concerning its costs, accuracy, 
and privacy--have been addressed by advances in computer technology and 
software over the last ten years. Thus, we find that our regulations 
implementing the national do-not-call registry are consistent with the 
First Amendment and the framework established in Central Hudson.
    50. Furthermore, we reject the arguments that the Central Hudson 
framework is not appropriate and that strict scrutiny is required 
because the regulations implementing the national do-not-call list are 
content-based, due to the TCPA's exemptions for non-profit 
organizations and established business relationships. For support, 
commenters cite to Discovery Network, 507 U.S. 410, in which the Court 
struck down Cincinnati's ordinance which banned newsracks containing 
commercial publications but did not ban newsracks containing 
newspapers. The Court found that the regulation could neither be 
justified as a restriction on commercial speech under Central Hudson, 
nor could it be upheld as a valid time, place, or manner restriction on 
protected speech. City of Cincinnati v. Discovery Network Inc. et al., 
507 U.S. 410 at 430 (1993). The Court explained that ``the government 
may impose reasonable restrictions on the time, place or manner of 
engaging in protected speech provided that they are adequately 
justified ``without reference to the content of the regulated 
speech'.'' Id. at 428 (citation omitted). In this case, the Court held 
that the City's ban which covered commercial publications but not 
newspapers was content-based. Id. at 429. ``It is the absence of a 
neutral justification for its selective ban on newsracks that prevents 
the city from defending its newsrack policy as content neutral.'' Id. 
at 429-30.
    51. Here, however, there was a neutral justification for Congress' 
decision to exclude non-profit organizations. Congress found that ``the 
two sources of consumer problems--high volume of solicitations and 
unexpected solicitations--are not present in solicitations by nonprofit 
organizations.'' H.R. Rep. No. 102-317, at 16 (1991). Congress also 
made a similar finding with respect to solicitations based on 
established

[[Page 44154]]

business relationships. Id. at 14. Consumers are more likely to 
anticipate contacts from companies with whom they have an existing 
relationship and the volume of such calls will most likely be lower. 
Furthermore, as the Eighth Circuit noted when it distinguished the 
Discovery Network case in upholding the TCPA's ban on unsolicited faxes 
that applies to commercial speech but not to noncommercial speech, 
``the government may regulate one aspect of a problem without 
regulating all others.'' Missouri ex rel. v. American Blast Fax, 323 
F.3d at 656 n.4 (citing United States v. Edge Broad. Co., 509 U.S. 418 
at 434). Thus, we believe it is clear that our do-not-call registry 
regulations may apply to commercial solicitations without applying to 
tax-exempt nonprofit solicitations, and that such regulations are not 
subject to a higher level of scrutiny. Indeed, we agree with the FTC 
that regulation of non-profit solicitations are subject to a higher 
level of scrutiny than solicitations of commercial speech FTC Order, 68 
FR at 4636, n. 675, quoting from Metromedia v. San Diego, 453 U.S. 490, 
513 (1981) and citing Watchtower Bible and Tract Soc'y v. Village of 
Stratton, 122 S.Ct. 2080, and ``greater care must be given [both] to 
ensuring that the governmental interest is actually advanced by the 
regulatory remedy, and [to] tailoring the regulation narrowly so as to 
minimize its impact on First Amendment rights.'' FTC Order, 68 FR at 
4636.

Consistency With State and FTC Do-Not-Call Rules

    52. We conclude that harmonization of the various state and federal 
do-not-call programs to the greatest extent possible will reduce the 
potential for consumer confusion and regulatory burdens on the 
telemarketing industry. An underlying concern expressed by many 
commenters in this proceeding is the potential for duplication of 
effort and/or inconsistency in the rules relating to the state and 
federal do-not-call programs. Congress has indicated a similar concern 
in requiring the Commission to ``maximize consistency'' with the FTC's 
rules. We find that the use of a single national database of do-not-
call registrants will ultimately prove the most efficient and 
economical means for consumer registrations and access for compliance 
purposes by telemarketing entities and regulators.
    53. The states have a long history of regulating telemarketing 
practices, and we believe that it is critical to combine the resources 
and expertise of the state and federal governments to ensure compliance 
with the national do-not-call rules. In fact, the TCPA specifically 
outlines a role for the states in this process. See 47 U.S.C. 227(e) 
and (f). In an effort to reconcile the state and federal roles, we have 
conducted several meetings with the states and FTC. We expect such 
coordination to be ongoing in an effort to promote the continued 
effectiveness of the national do-not-call program. We clarify the 
respective governmental roles in this process under the TCPA. We intend 
to develop a Memorandum of Understanding with the FTC in the near 
future outlining the respective federal responsibilities under the 
national do-not-call rules. We note that a few commenters have 
expressed concern that the FTC and this Commission may adopt separate 
national do-not-call lists. We reiterate here that there will be only 
one national database.
    54. Use of a Single Database. We conclude that the use of a single 
national do-not-call database, administered by the vendor selected by 
the FTC, will ultimately prove the most efficient and economical means 
for consumer registrations and access by telemarketers and regulators. 
The establishment of a single database of registrants will allow 
consumers to register their requests not to be called in a single 
transaction with one governmental agency. In addition, telemarketers 
may access consumer registrations for purposes of compliance with the 
do-not-call rules through one visit to a national database. This will 
substantially alleviate the potential for consumer confusion and 
administrative burden on telemarketers that would exist if required to 
access multiple databases. In addition, we note that section 227(e)(2) 
prohibits states, in regulating telephone solicitations, from using any 
database, list, or list system that does not include the part of such 
single national database that relates to that state. Thus, pursuant to 
this requirement, any individual state do-not-call database must 
include all of the registrants on the national database for that state. 
We determine that the administrator of the national database shall make 
the numbers in the database available to the states as required by the 
TCPA.
    55. We believe the most efficient way to create a single national 
database will be to download the existing state registrations into the 
national database. The FTC has indicated that the national database is 
designed to allow the states to download into the national registry--at 
no cost--the telephone numbers of consumers that have registered with 
their state do-not-call lists. We believe that consumers, 
telemarketers, and regulators will benefit from the efficiencies 
derived from the creation of a single do-not-call database. We 
encourage states to work diligently toward this goal. We recognize that 
a reasonable transition period may be required to incorporate the state 
registrations in a few states into the national database. We therefore 
adopt an 18-month transition period for states to download their state 
lists into the national database. Having an 18-month transition period 
will allow states that do not have full-time legislatures to complete a 
legislative cycle and create laws that would authorize the use of a 
national list. In addition, this transition period is consistent with 
the amount of time that the FTC anticipates it would take to 
incorporate the states' lists into the national database. Although we 
do not preempt or require states to discontinue the use of their own 
databases at this time, once the national do-not-call registry goes 
into effect, states may not, in their ``regulation of telephone 
solicitations, require the use of any database, list, or listing system 
that does not include the part of [the national do-not-call registry] 
that relates to [each] State.'' See 47 U.S.C. 227(e)(2). We believe 
that there are significant advantages and efficiencies to be derived 
from the creation and use of a single database for all parties, 
including states, and we strongly encourage states to assist in this 
effort. The Commission intends to work diligently with the states and 
FTC in an effort to establish a single do-not-call database.
    56. Interplay of State and Federal Do-Not-Call Regulations. In the 
Rules and Regulations Implementing the Telephone Consumer Protection 
Act of 1991, Notice of Proposed Rulemaking and Memorandum Opinion and 
Order, 17 FCC Rcd 17459, CG Docket No. 02-278 and CC Docket No. 92-90 
(2002) (2002 Notice), we generally raised the issue of the interplay of 
state and federal do-not-call statutes and regulations. In response, 
several parties argued that state regulations must or should be 
preempted in whole, or at least in part, and several other parties 
argued that the Commission cannot or should not preempt. For example, 
several industry commenters contend that the TCPA provides the 
Commission with the authority to preempt state do-not-call regulations. 
These commenters contend that Congress intended the TCPA to occupy the 
field or, at the very least, intended to preempt state regulation of 
interstate telemarketing. Many state and consumer commenters note, 
however, that the TCPA contemplates a role for the states in regulating 
telemarketing

[[Page 44155]]

and specifically prohibits preemption of state law in certain 
instances. States and consumers note that state do-not-call regulations 
have been a successful initiative in protecting consumer privacy 
rights. In addition, several commenters note the importance of federal 
and state cooperation in enforcing the national do-not-call 
regulations. The record also indicates that states have historically 
enforced their own state statutes within, as well as across state 
lines. The statute also contains a savings clause for state proceedings 
to enforce civil or criminal statutes, and at least one federal court 
has found that the TCPA does not preempt state regulation of 
autodialers that are not in actual conflict with the TCPA. Van Bergen 
v. Minnesota, 59 F.3d 1541, 1547-48 (8th Cir. 1995).
    57. The main area of difference between the state and federal do-
not-call programs relates to the exemptions created from the respective 
do-not-call regulations. Some state regulations are less restrictive by 
adopting exemptions that are not recognized under federal law. For 
example, some states have adopted exemptions for insurance agents, 
newspapers, or small businesses. In addition, a few states have enacted 
laws that are more restrictive than the federal regulations by not 
recognizing federal exemptions such as the established business 
relationship. Most states, however, exempt nonprofit organizations and 
companies with whom the consumer has an established business 
relationship in some manner consistent with federal regulations.
    58. At the outset, we note that many states have not adopted any 
do-not-call rules. The national do-not-call rules will govern 
exclusively in these states for both intrastate and interstate 
telephone solicitations. Pursuant to 47 U.S.C. 227(f)(1), all states 
have the ability to enforce violations of the TCPA, including do-not-
call violations, in federal district court. Thus, we conclude that 
there is no basis for conflict regarding the application of do-not-call 
rules in those states that have not adopted do-not-call regulations.
    59. For those states that have adopted do-not-call regulations, we 
make the following determinations. First, we conclude that, by 
operation of general conflict preemption law, the federal rules 
constitute a floor, and therefore would supersede all less restrictive 
state do-not-call rules. We believe that any such rules would frustrate 
Congress' purposes and objectives in promulgating the TCPA. 
Specifically, application of less restrictive state exemptions directly 
conflicts with the federal objectives in protecting consumer privacy 
rights under the TCPA. Thus, telemarketers must comply with the federal 
do-not-call rules even if the state in which they are telemarketing has 
adopted an otherwise applicable exemption. Because the TCPA applies to 
both intrastate and interstate communications, the minimum requirements 
for compliance are therefore uniform throughout the nation. We believe 
this resolves any potential confusion for industry and consumers 
regarding the application of less restrictive state do-not-call rules.
    60. Second, pursuant to 47 U.S.C. 227(e)(1), we recognize that 
states may adopt more restrictive do-not-call laws governing intrastate 
telemarketing. With limited exceptions, the TCPA specifically prohibits 
the preemption of any state law that imposes more restrictive 
intrastate requirements or regulations. Section 227(e)(1) further 
limits the Commission's ability to preempt any state law that prohibits 
certain telemarketing activities, including the making of telephone 
solicitations. This provision is ambiguous, however, as to whether this 
prohibition applies both to intrastate and interstate calls, and is 
silent on the issue of whether state law that imposes more restrictive 
regulations on interstate telemarketing calls may be preempted. We 
caution that more restrictive state efforts to regulate interstate 
calling would almost certainly conflict with our rules.
    61. We recognize that states traditionally have had jurisdiction 
over only intrastate calls, while the Commission has had jurisdiction 
over interstate calls. Here, Congress enacted section 227 and amended 
section 2(b) to give the Commission jurisdiction over both interstate 
and intrastate telemarketing calls. Congress did so based upon the 
concern that states lack jurisdiction over interstate calls. Although 
section 227(e) gives states authority to impose more restrictive 
intrastate regulations, we believe that it was the clear intent of 
Congress generally to promote a uniform regulatory scheme under which 
telemarketers would not be subject to multiple, conflicting 
regulations. We conclude that inconsistent interstate rules frustrate 
the federal objective of creating uniform national rules, to avoid 
burdensome compliance costs for telemarketers and potential consumer 
confusion. The record in this proceeding supports the finding that 
application of inconsistent rules for those that telemarket on a 
nationwide or multi-state basis creates a substantial compliance burden 
for those entities.
    62. We therefore believe that any state regulation of interstate 
telemarketing calls that differs from our rules almost certainly would 
conflict with and frustrate the federal scheme and almost certainly 
would be preempted. We will consider any alleged conflicts between 
state and federal requirements and the need for preemption on a case-
by-case basis. Accordingly, any party that believes a state law is 
inconsistent with section 227 or our rules may seek a declaratory 
ruling from the Commission. We reiterate the interest in uniformity--as 
recognized by Congress--and encourage states to avoid subjecting 
telemarketers to inconsistent rules.
    63. National Association of Attorneys General (NAAG) contends that 
states have historically enforced telemarketing laws, including do-not-
call rules, within, as well as across, state lines pursuant to ``long-
arm'' statutes. According to NAAG, these state actions have been met 
with no successful challenges from telemarketers. We note that such 
``long-arm'' statutes may be protected under section 227(f)(6) which 
provides that ``nothing contained in this subsection shall be construed 
to prohibit an authorized State official from proceeding in State court 
on the basis of an alleged violation of any general civil or criminal 
statute of such state.'' 47 U.S.C. 227(f)(6). Nothing that we do in 
this order prohibits states from enforcing state regulations that are 
consistent with the TCPA and the rules established under this order in 
state court.

Company Specific Do-Not-Call Lists

Efficacy of the Company-Specific Rules

    64. We conclude that retention of the company-specific do-not-call 
rules will complement the national do-not-call registry by providing 
consumers with an additional option for managing telemarketing calls. 
We believe that providing consumers with the ability to tailor their 
requests not to be called, either on a case-by-case basis under the 
company do-not-call approach or more broadly under the national 
registry, will best balance individual privacy rights and legitimate 
telemarketing practices. As a result, those consumers that wish to 
prohibit telephone solicitations from only certain marketers will 
continue to have the option to do so. In addition, consumers registered 
on the national do-not-call registry will have the opportunity to 
request that they not be called by entities that would otherwise fall 
within the established business relationship exemption by using the 
option to be placed on the company-

[[Page 44156]]

specific lists. This finding is consistent with that of the FTC.
    65. We agree with those commenters that contend that the company-
specific do-not-call approach has not proven ideal as a stand-alone 
method to protect consumer privacy. In particular, the increase in 
telemarketing calls over the last decade now places an extraordinary 
burden on consumers that do not wish to receive telephone 
solicitations. These consumers must respond on a case-by-case basis to 
request that they not be called. The record in this proceeding is 
replete with examples of consumers that receive numerous unwanted 
telemarketing calls each day. In addition, the widespread use of 
predictive dialers now results in many ``dead air'' or hang-up calls in 
which consumers do not even have the opportunity to make a do-not-call 
request. Such calls are particularly burdensome for the elderly and 
disabled consumers. We believe, however, that the measures adopted in 
this order will enhance the effectiveness of the company-specific list. 
For example, the adoption of a national do-not-call registry alleviates 
the concerns of those consumers, including elderly and disabled 
consumers that may find a case-by-case do-not-call option particularly 
burdensome. In addition, restrictions on abandoned calls will reduce 
the number of ``dead air'' calls. Caller ID requirements will improve 
the ability of consumers to identify and enforce do-not-call rights 
against telemarketers. We also note that although many commenters 
question the effectiveness of the company-specific approach, there is 
little support in the record to eliminate those rules based on the 
adoption of the national do-not-call list. We retain the option for 
consumers to request on a case-by-case basis whether they desire to 
receive telephone solicitations.

Amendments to the Company-Specific Rules

    66. We agree with several industry commenters that the retention 
period for records of those consumers requesting not to be called 
should be reduced from the current ten-year requirement to five years. 
As many commenters note, telephone numbers change hands over time and a 
shorter retention period will help ensure that only those consumers who 
have requested not to be called are retained on the list. Both 
telemarketers and consumers will benefit from a list that more 
accurately reflects those consumers who have requested not to be 
called. The FTC has concluded and several commenters in this proceeding 
agree that five years is a more reasonable period to retain consumer 
do-not-call requests. We believe a five-year retention period 
reasonably balances any administrative burden imposed on consumers in 
requesting not to be called with the interests of telemarketers in 
contacting consumers. As noted, a shorter retention period increases 
the accuracy of the database while the national do-not-call option 
mitigates the burden on those consumers who may believe more frequent 
company-specific do-not-call requests are overly burdensome. We believe 
any shorter retention period, as suggested by a few industry 
commenters, would unduly increase the burdens on consumers who would be 
forced to make more frequent renewals of their company-specific do-not-
call requests without substantially improving the accuracy of the 
database. We therefore amend our rules to require that a do-not-call 
request be honored for five years from the time the request is made.
    67. We decline at this time to require telemarketers to make 
available a toll-free number or Web site that would allow consumers to 
register company-specific do-not-call requests or verify that such a 
request was made with the marketer. We also decline to require 
telemarketers to provide a means of confirmation so that consumers may 
verify their requests have been processed at a later date. 
Telemarketers should, however, confirm that any such request will be 
recorded at the time the request is made by the consumer. In addition, 
consumers calling to register do-not-call requests in response to 
prerecorded messages should be processed in a timely manner without 
being placed on hold for unreasonable periods of time. Although we 
believe the additional measures discussed above would improve the 
ability of consumers, including consumers with disabilities, to 
register do-not-call requests, we agree with those commenters that 
contend that such requirements would be unduly costly to businesses. In 
particular, we are concerned with the costs imposed on small 
businesses. The Commission will, however, continue to monitor 
compliance with our company-specific do-not-call rules and take further 
action as necessary.
    68. We conclude that telemarketers must honor a company-specific 
do-not-call request within a reasonable time of such request. We 
disagree, however, with commenters that suggest that periods of up to 
90 days are a reasonable time required to process do-not-call requests. 
Although some administrative time may be necessary to process such 
requests, this process is now largely automated. As a result, such 
requests can often be honored within a few days or weeks. Taking into 
consideration both the large databases of such requests maintained by 
some entities and the limitations on certain small businesses, we 
conclude that a reasonable time to honor such requests must not exceed 
thirty days from the date such a request is made. Consistent with our 
existing rules, such request applies to all telemarketing campaigns of 
the seller and any affiliated entities that the consumer reasonably 
would expect to be included given the identification of the caller and 
the product being advertised. 47 CFR 64.1200(e)(2)(v). We note that the 
Commission's rules require that entities must record company-specific 
do-not-call requests and place the subscriber's telephone number on the 
do-not-call list at the time the request is made. 47 CFR 
64.1200(e)(2)(iii). Therefore, telemarketers with the capability to 
honor such company-specific do-not-call requests in less than thirty 
days must do so. We believe this determination adequately balances the 
privacy interests of those consumers that have requested not to be 
called with the interests of the telemarketing industry. Consumers 
expect their requests not to be called to be honored in a timely 
manner, and thirty days should be the maximum administrative time 
necessary for telemarketers to process that request.
    69. In addition, we decline to extend the company-specific do-not-
call rules to entities that solicit contributions on behalf of tax-
exempt nonprofit organizations. The TCPA excludes calls or messages by 
tax-exempt nonprofit organizations from the definition of telephone 
solicitation. See 47 U.S.C. 227(a)(3)(C). The Commission has clarified 
that telemarketers who solicit on behalf of tax-exempt nonprofit 
organizations are not subject to the rules governing telephone 
solicitations. In the 2002 Notice, the Commission declined to seek 
further comment on this issue. We acknowledge that this determination 
creates an inconsistency with the FTC's conclusion to extend its 
company-specific requirements to entities that solicit contributions on 
behalf of tax-exempt nonprofit organizations. The Commission, however, 
derives its authority to regulate telemarketing from the TCPA, which 
excludes tax-exempt nonprofit organizations from the definition of 
telephone solicitation. We therefore decline to extend the company-
specific requirements to entities that solicit on behalf of tax-

[[Page 44157]]

exempt nonprofit organizations. We note that some tax-exempt nonprofit 
organizations have determined to honor voluntarily specific do-not-call 
requests. Other organizations may find it advantageous to follow this 
example.
    70. Finally, to make clear our determination that a company must 
cease making telemarketing calls to a customer with whom it has an 
established business relationship when that customer makes a do-not-
call request, we amend the company-specific do-not-call rules to apply 
to any call for telemarketing purposes. We also adopt a provision 
stating that a consumer's do-not-call request terminates the 
established business relationship for purposes of telemarketing calls 
even if the consumer continues to do business with the seller.

Interplay of Sections 222 and 227

    71. We first note that the fact that a telecommunications carrier 
has current CPNI about a particular consumer indicates that the 
consumer is a customer of that carrier. In that situation, there exists 
an established business relationship between the customer and the 
carrier. See 47 CFR 64.1200(f)(4). The established business 
relationship is an exception to the national do-not-call registry. 
However, based on the evidence in the record and as supported by 
numerous commenters, we confirm our tentative conclusion that if a 
customer places her name on a carrier's do-not-call list, that request 
must be honored even though the customer may also have provided consent 
to use her CPNI under section 222. By doing so, we maximize the 
protections and choices available to consumers, while giving maximum 
effect to the language of both statutes. At the outset, the average 
consumer seems rather unlikely to appreciate the interrelationship of 
the Commission's CPNI and do-not-call rules. Allowing CPNI consent to 
trump a do-not-call request would, therefore, thwart most consumers' 
reasonable expectations about how a company-specific do-not-call list 
functions. Equally important, permitting a consumer's CPNI consent to 
supercede a consumer's express do-not call request might undermine the 
carrier's do-not-call database as the first source of information about 
the consumer's telemarketing preferences.
    72. Because we retain the exemption for calls and messages to 
customers with whom the carrier has an established business 
relationship, the determination that a customer's CPNI approval does 
not trump her inclusion on a do-not-call list should have no impact on 
carriers' ability to communicate with their customers via 
telemarketing. Carriers will be able to contact customers with whom 
they have an established business relationship via the telephone, 
unless the customer has placed her name on the company's do-not-call 
list; whether the customer has consented to the use of her CPNI does 
not impact the carrier's ability to contact the customer via 
telemarketing.
    73. We are not persuaded by the arguments of those commenters who 
urge the Commission to find that CPNI consent should trump a customer's 
request to be placed on a do-not-call list or similarly, that CPNI 
consent equates to permission to market ``without restriction.'' We 
note that the Concerned Telephone Companies assert that CPNI consent 
equates to ``consent to market without restriction based on 
[customers'] CPNI.'' Concerned Telephone Companies Comments at 2 
(emphasis added). The Commission finds no support for this assertion in 
any Commission order or statutory provision and, we specifically 
determine that CPNI approval does not equate to unlimited consent to 
market without restriction.
    74. Similarly, a number of commenters argue that a customer's CPNI 
authorization ``covers a number of forms of marketing, including 
telemarketing.'' AT&T Wireless Reply Comments at 26-27. However, such 
assertions ignore the plain fact that CPNI approval deals specifically 
with a carrier's use of a customer's personal information, and only 
indirectly pertains to or arguably ``authorizes'' marketing to the 
customer. Do-not-call lists, on the other hand, speak directly to 
customers' preferences regarding telemarketing contacts. Accordingly, 
we are convinced that a customer's do-not-call request demonstrates 
more directly her willingness (or lack thereof) to receive 
telemarketing calls, as opposed to any indirect inference that can be 
drawn from her CPNI approval.
    75. Additionally, we disagree with those commenters who claim that 
allowing CPNI approval to trump a consumer's request to be on a 
national or state do-not-call list gives consumers greater flexibility. 
A carrier's established business relationship with a customer exempts 
the carrier from honoring the customer's national do-not-call request. 
However, as stated above, CPNI consent is not deemed to trump a 
carrier-specific do-not-call list request. For similar reasons, we 
decline to make a distinction based on what type of CPNI consent (opt-
in versus opt-out) received, as some commenters urge.
    76. We do not allow carriers to combine the express written consent 
to allow them to contact customers on a do-not-call list with the CPNI 
notice in the manner that AT&T Wireless describes. However, we do allow 
carriers to combine in the same document CPNI notice with a request for 
express written consent to call customers on a do-not-call list, 
provided that such notices and opportunities for consumer consent are 
separate and distinct. That is, consumers must have distinct choices 
regarding both whether to allow use of their CPNI and whether to allow 
calls after registering a do-not-call request, but carriers may combine 
those requests for approval in the same notice document. Finally, we 
find a distinction based on the type of CPNI consent unnecessary here, 
as carriers can avail themselves of the established business 
relationship exception to contact their existing customers, 
irrespective of the type of CPNI consent obtained.
    77. Similarly, we agree with those commenters who advise against 
using a time element to determine whether a customer's do-not-call 
request takes precedence over the customer's opt-in approval to use her 
CPNI, because adding a time element would unnecessarily complicate 
carrier compliance and allow carriers to game the system. In 
particular, the New York State Consumer Protection Board (NYSCPB) 
argues that ``enrollment on a national do-not-call list should take 
precedence over the prior implied consent through the `opt-out' 
procedure, but that the latest in time should prevail regarding `opt-
in' consents.'' NYSCPB Comments at 5. Because we determine that 
carriers can contact consumers with whom they have established business 
relationships, irrespective of those consumers' CPNI preferences, we 
find this proposed methodology unnecessary in determining whether a 
customer's CPNI consent should trump her do-not-call request. 
Additionally, we note that this proposal could be manipulated by 
carriers to overcome consumers' do-not-call preferences, by allowing 
carriers to send CPNI notices to customers that are intentionally timed 
to ``overcome'' previously expressed do-not-call requests.
    78. Finally, although it was not directly raised in the 2002 
Notice, some commenters raised the issue of whether any type of do-not-
call request revokes or limits a carrier's ability to use CPNI in a 
manner other than telemarketing. To the degree such affirmation is 
necessary, we agree with those commenters who maintain that a carrier's 
ability to use CPNI is not impacted by a customer's inclusion on a do-
not-call list, except as noted.

[[Page 44158]]

    79. Constitutional Implications. We disagree with those commenters 
who argue that our decision that a customer's CPNI approval does not 
trump her request to be on a do-not-call list violates the First 
Amendment rights of carriers and customers. Commenters cite no 
authority to support their arguments, and we do not believe the fact 
that customers have given their approval for carriers to use their CPNI 
implicates any additional First Amendment issues beyond those 
discussed. Accordingly, we find our rules implementing the do-not-call 
registry are consistent with the First Amendment as applied to any 
consumer, including those who have previously given their approval to 
carriers to use their CPNI, pursuant to section 222. Furthermore, we 
believe that the exception which allows carriers to call consumers with 
whom they necessarily have an established business relationship renders 
commenters' arguments moot, as carriers necessarily have an established 
business relationship with any customer from whom they solicit CPNI 
approval.

Established Business Relationship

    80. We conclude that, based on the record, an established business 
relationship exemption is necessary to allow companies to communicate 
with their existing customers. The ``established business 
relationship,'' or EBR, permits telemarketers to call consumers 
registered on the national do-not-call list and to deliver prerecorded 
messages to consumers. The ``established business relationship,'' 
however, is not an exception to the company-specific do-not-call rules. 
Companies that call their EBR customers must maintain company-specific 
do-not-call lists and record any do-not-call requests as required by 
amended 47 CFR 64.1200(d). The Commission has also reversed its prior 
conclusion that an ``established business relationship'' provides the 
necessary permission to deliver unsolicited facsimile advertisements. 
Companies maintain that the exemption allows them to make new offers to 
existing customers, such as mortgage refinancing, insurance updates, 
and subscription renewals. They suggest that customers benefit from 
calls that inform them in a timely manner of new products, services and 
pricing plans. American Express contends that its financial advisors 
have a fiduciary duty to their customers, requiring them to contact 
customers with time-sensitive information. We are persuaded that 
eliminating this EBR exemption would possibly interfere with these 
types of business relationships. Moreover, the exemption focuses on the 
relationship between the sender of the message and the consumer, rather 
than on the content of the message. It appears that consumers have come 
to expect calls from companies with whom they have such a relationship, 
and that, under certain circumstances, they may be willing to accept 
these calls. Finally, we believe that while consumers may find 
prerecorded voice messages intrusive, such messages do not necessarily 
impose the same costs on the recipients as, for example, unsolicited 
facsimile messages. Therefore, we retain the exemption for established 
business relationship calls from the ban on prerecorded messages. 
Telemarketers that claim their prerecorded messages are delivered 
pursuant to an established business relationship must be prepared to 
provide clear and convincing evidence of the existence of such a 
relationship.

Definition of Established Business Relationship

    81. We conclude that the Commission's current definition of 
``established business relationship'' should be revised. We are 
convinced that consumers are confused and even frustrated more often 
when they receive calls from companies they have not contacted or done 
business with for many years. The legislative history suggests that it 
was Congress's view that the relationship giving a company the right to 
call becomes more tenuous over time. In addition, we believe that this 
is an area where consistency between the FCC rules and FTC rules is 
critical for both consumers and telemarketers. We conclude that, based 
on the range of suggested time periods that would meet the needs of 
industry, along with consumers' reasonable expectations of who may call 
them and when, eighteen (18) months strikes an appropriate balance 
between industry practices and consumers' privacy interests. Therefore, 
the Commission has modified the definition of established business 
relationship to mean:

    A prior or existing relationship formed by a voluntary two-way 
communication between a person or entity and a residential 
subscriber with or without an exchange of consideration, on the 
basis of the subscriber's purchase or transaction with the entity 
within the eighteen (18) months immediately preceding the date of 
the telephone call or on the basis of the subscriber's inquiry or 
application regarding products or services offered by the entity 
within the three (3) months immediately preceding the date of the 
call, which relationship has not been previously terminated by 
either party.

See amended 47 CFR 64.1200(f)(3). The 18-month time period runs from 
the date of the last payment or transaction with the company, making it 
more likely that a consumer would expect a call from a company with 
which they have recently conducted business. The amended definition 
permits the relationship, once begun, to exist for eighteen (18) months 
in the case of purchases or transactions and three (3) months in the 
case of inquiries or applications, unless the consumer or the company 
``terminates'' it. We emphasize here that the termination of an 
established business relationship is significant only in the context of 
solicitation calls. We also note that the act of ``terminating'' an 
established business relationship will not hinder or thwart creditors' 
attempts to reach debtors by telephone, to the extent that debt 
collection calls constitute neither telephone solicitations nor include 
unsolicited advertisements. Therefore, consistent with the language in 
the definition, a company's prior relationship with a consumer entitles 
the company to call that consumer for eighteen (18) months from the 
date of the last payment or financial transaction, even if the company 
does not currently provide service to that customer. For example, a 
consumer who once had telephone service with a particular carrier or a 
subscription with a particular newspaper could expect to receive a call 
from those entities in an effort to ``win back'' or ``renew'' that 
consumer's business within eighteen (18) months. In the context of 
telemarketing calls, a consumer's ``prior or existing relationship'' 
continues for eighteen (18) months (3 months in the case of inquiries 
and applications) or until the customer asks to be placed on that 
company's do-not-call list.
    82. Inquiries. The Commission asked whether we should clarify the 
type of consumer inquiry that would create an ``established business 
relationship'' for purposes of the exemption. Some consumers and 
consumer groups maintain that a consumer who merely inquires about a 
product should not be subjected to subsequent telemarketing calls. 
Industry commenters, on the other hand, believe that companies should 
be permitted to call consumers who have made inquiries about their 
products and services, and that consumers have come to expect such 
calls. The legislative history suggests that Congress contemplated that 
an inquiry by a consumer could be the basis of an established business 
relationship, but that such an inquiry should occur within a reasonable 
period of time.

[[Page 44159]]

While we do not believe any communication would amount to an 
established business relationship for purposes of telemarketing calls, 
we do not think the definition should be narrowed to only include 
situations where a purchase or transaction is completed. The nature of 
any inquiry must, however, be such to create an expectation on the part 
of the consumer that a particular company will call them. As confirmed 
by several industry commenters, an inquiry regarding a business's hours 
or location would not establish the necessary relationship as defined 
in Commission rules. By making an inquiry or submitting an application 
regarding a company's products or services, a consumer might reasonably 
expect a prompt follow-up telephone call regarding the initial inquiry 
or application, not one after an extended period of time. Consistent 
with the FTC's conclusion, the Commission believes three months should 
be a reasonable time in which to respond to a consumer's inquiry or 
application. Thus, we amend the definition of ``established business 
relationship'' to permit telemarketing calls within three (3) months of 
an inquiry or application regarding a product or service offered by the 
company.
    83. We emphasize here that the definition of ``established business 
relationship'' requires a voluntary two-way communication between a 
person or entity and a residential subscriber regarding a purchase or 
transaction made within eighteen (18) months of the date of the 
telemarketing call or regarding an inquiry or application within three 
(3) months of the date of the call. Any seller or telemarketer using 
the EBR as the basis for a telemarketing call must be able to 
demonstrate, with clear and convincing evidence, that they have an EBR 
with the called party.
    84. Different Products and Services. The Commission also invited 
comment on whether to consider modifying the definition of 
``established business relationship'' so that a company that has a 
relationship with a customer based on one type of product or service 
may not call consumers on the do-not-call list to advertise a different 
service or product. Industry commenters believe an EBR with a consumer 
should not be restricted by product or service, but rather, should 
permit them to offer the full range of their services and products. 
Consumer advocates who commented on the issue maintain that a company 
that has a relationship based on one service or product should not be 
allowed to use that relationship to market a different service or 
product. The Commission agrees with the majority of industry commenters 
that the EBR should not be limited by product or service. In today's 
market, many companies offer a wide variety of services and products. 
Restricting the EBR by product or service could interfere with 
companies' abilities to market them efficiently. Many 
telecommunications and cable companies, for example, market products 
and services in packages. As long as the company identifies itself 
adequately, a consumer should not be surprised to receive a 
telemarketing call from that company, regardless of the product being 
offered. If the consumer does not want any further calls from that 
company, he or she may request placement on its do-not-call list.
    85. Affiliated Entities. In the Rules and Regulations Implementing 
the Telephone Consumer Protection Act of 1991, CC Docket No. 92-90, 
Report and Order, 7 FCC Rcd 8752 (1992) (1992 TCPA Order), the 
Commission found that a consumer's established business relationship 
with one company may also extend to the company's affiliates and 
subsidiaries. See 1992 TCPA Order, 7 FCC Rcd at 8770-71, para. 34. 
Consumer advocates maintain that the EBR exemption should not 
automatically extend to affiliates of the company with whom a consumer 
has a business relationship. Industry members argue that it should 
apply to affiliates that provide reasonably-related products or 
services. The Commission finds that, consistent with the FTC's amended 
Rule, affiliates fall within the established business relationship 
exemption only if the consumer would reasonably expect them to be 
included given the nature and type of goods or services offered and the 
identity of the affiliate. This definition offers flexibility to 
companies whose subsidiaries or affiliates also make telephone 
solicitations, but it is based on consumers' reasonable expectations of 
which companies will call them. As the American Teleservices 
Association (ATA) and other commenters explain, consumers often welcome 
calls from businesses they know. A call from a company with which a 
consumer has not formed a business relationship directly, or does not 
recognize by name, would likely be a surprise and possibly an 
annoyance. This determination is also consistent with current 
Commission rules on the applicability of do-not-call requests made to 
affiliated persons or entities. Under those rules, a residential 
subscriber's do-not-call request will not apply to affiliated entities 
unless the consumer reasonably would expect them to be included given 
the identification of the caller and the product advertised. See 47 CFR 
64.1200(e)(2)(v).
    86. Other Issues. The Commission clarifies that the established 
business relationship exemption does not permit companies to make calls 
based on referrals from existing customers and clients, as the person 
referred presumably does not have the required business relationship 
with the company that received the referral. An EBR is similarly not 
formed when a wireless subscriber happens to use another carrier's 
services through roaming. In such a situation, the consumer has not 
made the necessary purchase or inquiry that would constitute an EBR or 
provided prior express consent to receive telemarketing calls from that 
company. We recognize that companies often hire third party 
telemarketers to market their services and products. In general, those 
telemarketers may rely on the seller's EBR to call an individual 
consumer to market the seller's services and products. However, we 
disagree with Nextel that a consumer's EBR with a third party 
telemarketer, including a retail store or independent dealer, extends 
to a seller simply because the seller has a contractual relationship 
with that telemarketer. The seller would only be entitled to call a 
consumer under the EBR exemption based on its own EBR with a consumer. 
We also disagree with WorldCom, Inc. (WorldCom) that the EBR should 
extend to marketing partners for purposes of telemarketing joint 
offers, to the extent the ``partner'' companies have no EBR with the 
consumer.

Telecommunications Common Carriers

    87. In the 2002 Notice, we asked what effect the established 
business relationship exemption might have on the telecommunications 
industry, if a national do-not-call list is established. According to 
WorldCom, telephone solicitations are the primary mechanism for, and 
the means by which consumers are accustomed to, purchasing competitive 
telecommunications services. WorldCom argues that with the advent of 
competition in the formerly monopolized local telephone markets, and 
the entry of the Regional Bell Operating Companies into the long 
distance market, carriers need to be able to market effectively their 
new services. WorldCom argues that a national do-not-call list that 
exempts calls to persons with whom a company has established business 
relationships will favor incumbent providers. According to WorldCom, 
incumbent local exchange carriers maintain most of the

[[Page 44160]]

local customer base, and therefore would be able to telemarket new 
services to all those customers, regardless of whether they were on the 
national do-not-call registry, because of the established business 
relationship exemption. New competitors, on the other hand, would be 
restricted from calling those same consumers.
    88. One approach would be to narrow the ``established business 
relationship'' for telecommunications carriers, so that a carrier doing 
business with customers based on one type of service may not call those 
customers registered with the national do-not-call list to advertise a 
different service. We find, however, that the record does not support 
such an approach in the context of telemarketing calls. Along with the 
majority of industry commenters in this proceeding, WorldCom maintains 
that companies ``must have flexibility in communicating with their 
customers not only about their current services, but also to discuss 
available alternative services or products. * * * '' WorldCom Comments 
at 15. Limiting a common carrier's ``established business 
relationship'' by product or service might harm competitors'' efforts 
to market new goods or services to existing customers, and would not be 
in the public interest.
    89. WorldCom proposes instead that the Commission revise the 
definition of established business relationship so that all providers 
of a telecommunications service--incumbents and new entrants alike--are 
deemed to have an established business relationship with all consumers. 
Alternatively, WorldCom suggests that the definition of an established 
business relationship be revised to exclude a company whose 
relationship with a consumer is based solely on a service for which the 
company has been a dominant or monopoly provider of the service, until 
such time as competitors for that service have sufficiently penetrated 
the market.
    90. Although we take seriously WorldCom's concerns about the 
potential effects of a national do-not-call list on competition in the 
telecommunications marketplace, we decline to expand the definition of 
``established business relationship'' so that common carriers are 
deemed to have relationships with all consumers for purposes of making 
telemarketing calls. Broadening the scope of the established business 
relationship in such a way would be inconsistent with Congress's 
mandate ``to protect residential telephone subscribers' privacy rights 
to avoid receiving telephone solicitations to which they object.'' See 
47 U.S.C. 227(c)(1). To permit common carriers to call consumers with 
whom they have no existing relationships and who have expressed a 
desire not to be called by registering with the national do-not-call 
list, would likely confuse consumers and interfere with their ability 
to manage and monitor the telemarketing calls they receive.
    91. We further note that with the establishment of a national do-
not-call registry, carriers will still be permitted to contact 
competitors' customers who have not placed their numbers on the 
national list. In addition, carriers will be able to call their prior 
and existing customers for 18 months to market new products and 
services, such as long distance, local, or DSL services, as long as 
those customers have not placed themselves on that carrier's company-
specific do-not-call list. For the remaining consumers with whom common 
carriers have no established business relationship and who are 
registered with the do-not-call list, carriers may market to them using 
different advertising methods, such as direct mail. Therefore, we find 
that treating common carriers like other entities that use the 
telephone to advertise, best furthers the goals of the TCPA to protect 
consumer privacy interests and to avoid interfering with existing 
business relationships.

Interplay Between Established Business Relationship and Do-Not-Call 
Request

    92. In the 2002 Notice, we sought comment on the effect of a do-
not-call request on an established business relationship. We noted the 
legislative history on this issue, which suggests that despite an 
established business relationship, a company that has been asked by a 
consumer not to call again, must honor that request and avoid further 
calls to that consumer. Consumer advocates who discussed the interplay 
between the established business relationship and a do-not-call request 
maintained that a do-not-call request should ``trump'' an established 
business relationship, and that consumers should not be required to 
terminate business relationships in order to stop unwanted 
telemarketing calls. The majority of industry commenters also supported 
the notion that companies should honor requests from individual 
consumers not to be called, regardless of whether there is a business 
relationship. Companies will be permitted to call consumers with whom 
they have an established business relationship for a period of 18 
months from the last payment or transaction, even when those consumers 
are registered on the national do-not-call list, as long as a consumer 
has not asked to be placed on the company's do-not-call list. Once the 
consumer asks to be placed on the company-specific do-not-call list, 
the company may not call the consumer again regardless of whether the 
consumer continues to do business with the company. This will apply to 
all services and products offered by that company. If the consumer 
continues to do business with the telemarketer after asking not to be 
called (by, for example, continuing to hold a credit card, subscribing 
to a newspaper, or making a subsequent purchase), the consumer cannot 
be deemed to have waived his or her company-specific do-not-call 
request. In some instances, however, a consumer may grant explicit 
consent to be called during the course of a subsequent purchase or 
transaction. We amend the company-specific do-not-call rules to apply 
to ``any call for telemarketing purposes'' to make clear that a company 
must cease making telemarketing calls to any customer who has made a 
do-not-call request, regardless of whether they have an EBR with that 
customer. We also adopt a provision stating that a consumer's do-not-
call request terminates the EBR for purposes of telemarketing calls 
even if the consumer continues to do business with the seller.

Tax-Exempt Nonprofit Organization Exemption

    93. We reaffirm the determination that calls made by a for-profit 
telemarketer hired to solicit the purchase of goods or services or 
donations on behalf of a tax-exempt nonprofit organization are exempted 
from the rules on telephone solicitation. We again reiterate that calls 
that do not fall within the definition of ``telephone solicitation'' as 
defined in 47 U.S.C. 227(a)(3) will not be precluded by the national 
do-not-call list. These may include calls regarding surveys, market 
research, and calls involving political and religious discourse. In 
crafting the TCPA, Congress sought primarily to protect telephone 
subscribers from unrestricted commercial telemarketing activities, 
finding that most unwanted telephone solicitations are commercial in 
nature. In light of the record before us, the Commission believes that 
there has been no change in circumstances that warrant distinguishing 
those calls made by a professional telemarketer on behalf of a tax-
exempt nonprofit organization from those made by the tax-exempt 
nonprofit itself. The Commission recognizes that charitable and other 
nonprofit entities with limited expertise, resources and 
infrastructure, might find it advantageous to contract out its

[[Page 44161]]

fundraising efforts. Consistent with section 227, a tax-exempt 
nonprofit organization that conducts its own fundraising campaign or 
hires a professional fundraiser to do it, will not be subject to the 
restrictions on telephone solicitations. If, however, a for-profit 
organization is delivering its own commercial message as part of a 
telemarketing campaign (i.e., encouraging the purchase or rental of, or 
investment in, property, goods, or services), even if accompanied by a 
donation to a charitable organization or referral to a tax-exempt 
nonprofit organization, that call is not by or on behalf of a tax-
exempt nonprofit organization. Such calls, whether made by a live 
telemarketer or using a prerecorded message, would not be entitled to 
exempt treatment under the TCPA. Similarly, an affiliate of a tax-
exempt nonprofit organization that is itself not a tax-exempt nonprofit 
is not exempt from the TCPA rules when it makes telephone 
solicitations. We emphasize here, as we did in the 2002 Notice, that 
the statute and our rules clearly apply already to messages that are 
predominantly commercial in nature, and that we will not hesitate to 
consider enforcement action should the provider of an otherwise 
commercial message seek to immunize itself by simply inserting 
purportedly ``non-commercial'' content into that message. A call to 
sell debt consolidation services, for example, is a commercial call 
regardless of whether the consumer is also referred to a tax-exempt 
nonprofit organization for counseling services. Similarly, a seller 
that calls to advertise a product and states that a portion of the 
proceeds will go to a charitable cause or to help find missing children 
must still comply with the TCPA rules on commercial calls.

Automated Telephone Dialing Equipment

Predictive Dialers

    94. Automated Telephone Dialing Equipment. The record demonstrates 
that a predictive dialer is equipment that dials numbers and, when 
certain computer software is attached, also assists telemarketers in 
predicting when a sales agent will be available to take calls. The 
hardware, when paired with certain software, has the capacity to store 
or produce numbers and dial those numbers at random, in sequential 
order, or from a database of numbers. As commenters point out, in most 
cases, telemarketers program the numbers to be called into the 
equipment, and the dialer calls them at a rate to ensure that when a 
consumer answers the phone, a sales person is available to take the 
call. The principal feature of predictive dialing software is a timing 
function, not number storage or generation. Household Financial 
Services states that these machines are not conceptually different from 
dialing machines without the predictive computer program attached.
    95. The TCPA defines an ``automatic telephone dialing system'' as 
``equipment which has the capacity (A) to store or produce telephone 
numbers to be called, using a random or sequential number generator; 
and (B) to dial such numbers.'' 47 U.S.C. 227(a)(1). The statutory 
definition contemplates autodialing equipment that either stores or 
produces numbers. It also provides that, in order to be considered an 
``automatic telephone dialing system,'' the equipment need only have 
the ``capacity to store or produce telephone numbers (emphasis added) * 
* *.'' It is clear from the statutory language and the legislative 
history that Congress anticipated that the FCC, under its TCPA 
rulemaking authority, might need to consider changes in technologies. 
In the past, telemarketers may have used dialing equipment to create 
and dial 10-digit telephone numbers arbitrarily. As one commenter 
points out, the evolution of the teleservices industry has progressed 
to the point where using lists of numbers is far more cost effective. 
The basic function of such equipment, however, has not changed--the 
capacity to dial numbers without human intervention. We fully expect 
automated dialing technology to continue to develop.
    96. The legislative history also suggests that through the TCPA, 
Congress was attempting to alleviate a particular problem--an 
increasing number of automated and prerecorded calls to certain 
categories of numbers. The TCPA does not ban the use of technologies to 
dial telephone numbers. It merely prohibits such technologies from 
dialing emergency numbers, health care facilities, telephone numbers 
assigned to wireless services, and any other numbers for which the 
consumer is charged for the call. Such practices were determined to 
threaten public safety and inappropriately shift marketing costs from 
sellers to consumers. Coupled with the fact that autodialers can dial 
thousands of numbers in a short period of time, calls to these 
specified categories of numbers are particularly troublesome. 
Therefore, to exclude from these restrictions equipment that use 
predictive dialing software from the definition of ``automated 
telephone dialing equipment'' simply because it relies on a given set 
of numbers would lead to an unintended result. Calls to emergency 
numbers, health care facilities, and wireless numbers would be 
permissible when the dialing equipment is paired with predictive 
dialing software and a database of numbers, but prohibited when the 
equipment operates independently of such lists and software packages. 
We believe the purpose of the requirement that equipment have the 
``capacity to store or produce telephone numbers to be called'' is to 
ensure that the prohibition on autodialed calls not be circumvented. 
See 47 U.S.C. 227(a)(1). Therefore, the Commission finds that a 
predictive dialer falls within the meaning and statutory definition of 
``automatic telephone dialing equipment'' and the intent of Congress. 
Because the statutory definition does not turn on whether the call is 
made for marketing purposes, we also conclude that it applies to modems 
that have the ``capacity (A) to store or produce telephone numbers to 
be called, using a random or sequential number generator; and (B) to 
dial such numbers.'' See 47 U.S.C. 227(a)(1).
    97. Predictive Dialers as Customer Premises Equipment. A few 
commenters maintain that predictive dialers are Customer Premises 
Equipment (CPE) over which the Communications Act gives the FCC 
exclusive jurisdiction. The ATA and Direct Marketing Association (DMA) 
urge the Commission to assert exclusive authority over CPE and, in the 
process, preempt state laws governing predictive dialers. They contend 
that, in the absence of a single national policy on predictive dialer 
use, telemarketers will be subject to the possibility of conflicting 
state standards. In the past, CPE was regulated as a common carrier 
service based on the Commission's jurisdiction and statutory 
responsibilities over carrier-provided equipment. The Commission long 
ago deregulated CPE, finding that the CPE market was becoming 
increasingly competitive, and that in order to increase further the 
options that consumers had in obtaining equipment, it would require 
common carriers to separate the provision of CPE from the provision of 
telecommunications services. As part of its review of CPE regulations, 
the Commission pointed out that it had never regarded the provision of 
terminal equipment in isolation as an activity subject to Title II 
regulation. While the Commission recognized that such equipment is 
within the FCC's authority over wire and radio communications, it found 
that the equipment, by itself, is not a

[[Page 44162]]

``communication'' service, and therefore there was no mandate that it 
be regulated. None of the commenters who argue this point describe a 
change in circumstances that would warrant reevaluating the 
Commission's earlier determination and risk disturbing the competitive 
balance the Commission deemed appropriate in 1980. In addition, it is 
not the equipment itself that states are considering regulating; it is 
the use of such equipment that has caught the attention of some state 
legislatures. We believe it is preferable at this time to regulate the 
use of predictive dialers under the TCPA's specific authority to 
regulate telemarketing practices. Therefore, we decline to preempt 
state laws governing the use of predictive dialers and abandoned calls 
or to regulate predictive dialers as CPE.

``War Dialing''

    98. In the 2002 Notice, the Commission sought comment on the 
practice of using autodialers to dial large blocks of telephone numbers 
in order to identify lines that belong to telephone facsimile machines. 
Of those commenters who weighed in on ``war dialing'' (using automated 
equipment to dial telephone numbers, generally sequentially, and 
software to determine whether each number is associated with a fax line 
or voice line), there was unanimous support for a ban on the practice. 
Commenters explained that ringing a telephone for the purpose of 
determining whether the number is associated with a fax or voice line 
is an invasion of consumers' privacy interests and should be 
prohibited. Moreover, they asserted there is no free speech issue when 
the caller has no intention of speaking with the called party. The TCPA 
prohibits the transmission of unsolicited facsimile advertisements 
absent the consent of the recipient. The Commission agrees that because 
the purpose of ``war dialing'' is to identify those numbers associated 
with facsimile machines, the practice serves few, if any, legitimate 
business interests and is an intrusive invasion of consumers' privacy. 
Therefore, the Commission adopts a rule that prohibits the practice of 
using any technology to dial any telephone number for the purpose of 
determining whether the line is a fax or voice line.

Artificial or Prerecorded Voice Messages

Offers for Free Goods or Services; Information-Only Messages

    99. Congress found that ``residential telephone subscribers 
consider automated or prerecorded telephone calls * * * to be a 
nuisance and an invasion of privacy.'' TCPA, Section 2(10), reprinted 
in 7 FCC Rcd at 2744. It also found that ``[b]anning such automated or 
prerecorded telephone calls to the home, except when the receiving 
party consents to receiving the call or when such calls are necessary 
in an emergency situation affecting the health and safety of the 
consumer, is the only effective means of protecting telephone consumers 
from this nuisance and privacy invasion.'' TCPA, Section 2(12), 
reprinted in 7 FCC Rcd at 2744-45. Congress determined that such 
prerecorded messages cause greater harm to consumers' privacy than 
telephone solicitations by live telemarketers. The record reveals that 
consumers feel powerless to stop prerecorded messages largely because 
they are often delivered to answering machines and because they do not 
always provide a means to request placement on a do-not-call list.
    100. Additionally, the term ``unsolicited advertisement'' means 
``any material advertising the commercial availability or quality of 
any property, goods, or services which is transmitted to any person 
without that person's prior express invitation or permission.'' 47 
U.S.C. 227(a)(4); 47 CFR 64.1200(f)(5). The TCPA's definition does not 
require a sale to be made during the call in order for the message to 
be considered an advertisement. Offers for free goods or services that 
are part of an overall marketing campaign to sell property, goods, or 
services constitute ``advertising the commercial availability or 
quality of any property, goods, or services.'' See 47 U.S.C. 227(a)(4). 
Therefore, the Commission finds that prerecorded messages containing 
free offers and information about goods and services that are 
commercially available are prohibited to residential telephone 
subscribers, if not otherwise exempted. For example, a prerecorded 
message that contains language describing a new product, a vacation 
destination, or a company that will be in ``your area'' to perform home 
repairs, and asks the consumer to call a toll-free number to ``learn 
more,'' is an ``unsolicited advertisement'' under the TCPA if sent 
without the called party's express invitation or permission. See 47 
U.S.C. 227(a)(4). However, as long as the message is limited to 
identification information only, such as name and telephone number, it 
will not be considered an ``unsolicited advertisement'' under our 
rules.
    101. In addition, we amend the prerecorded message rule at 47 CFR 
64.1200(c)(2) so that the prohibition expressly applies to messages 
that constitute ``telephone solicitations,'' as well as to those that 
include or introduce an ``unsolicited advertisement.'' The current rule 
exempts from the prohibition any call that is made for a commercial 
purpose but does not include the transmission of any unsolicited 
advertisement. See 47 CFR 64.1200(c)(2). We amend the rule to exempt a 
call that is made for a commercial purpose but does not include or 
introduce an unsolicited advertisement or constitute a telephone 
solicitation. See amended rule at 47 CFR 64.1200(a)(2)(iii). We agree 
with those commenters who suggest that application of the prerecorded 
message rule should turn, not on the caller's characterization of the 
call, but on the purpose of the message. Amending the rule to apply to 
messages that constitute ``telephone solicitations,'' is consistent 
with the goals of the TCPA and addresses the concerns raised by 
commenters about purported ``free offers.'' In addition, we believe the 
amended rule will afford consumers a greater measure of protection from 
unlawful prerecorded messages and better inform the business community 
about the general prohibition on such messages.
    102. The so-called ``dual purpose'' calls described in the record--
calls from mortgage brokers to their clients notifying them of lower 
interest rates, calls from phone companies to customers regarding new 
calling plans, or calls from credit card companies offering overdraft 
protection to existing customers--would, in most instances, constitute 
``unsolicited advertisements,'' regardless of the customer service 
element to the call. The Commission explained in the 2002 Notice that 
such messages may inquire about a customer's satisfaction with a 
product already purchased, but are motivated in part by the desire to 
sell ultimately additional goods or services. If the call is intended 
to offer property, goods, or services for sale either during the call, 
or in the future (such as in response to a message that provides a 
toll-free number), that call is an advertisement. Similarly, a message 
that seeks people to help sell or market a business' products, 
constitutes an advertisement if the individuals called are encouraged 
to purchase, rent, or invest in property, goods, or services, during or 
after the call. However, the Commission points out that, if the message 
is delivered by a company that has an established business relationship 
with the recipient, it would be permitted under our rules.

[[Page 44163]]

We also note that absent an established business relationship, the 
telemarketer must first obtain the prior express consent of the called 
party in order to lawfully initiate the call. Purporting to obtain 
consent during the call, such as requesting that a consumer ``press 1'' 
to receive further information, does not constitute the prior consent 
necessary to deliver the message in the first place, as the request to 
``press 1'' is part of the telemarketing call.

Identification Requirements

    103. The TCPA rules require that all artificial or prerecorded 
messages delivered by an automatic telephone dialing system identify 
the business, individual, or other entity initiating the call, and the 
telephone number or address of such business, individual or other 
entity. See 47 CFR 64.1200(d). Additionally, the Commission's rules 
contain identification requirements that apply without limitation to 
``any telephone solicitation to a residential telephone subscriber.'' 
47 CFR 64.1200(e)(2)(iv). The term ``telephone solicitation'' is 
defined to mean ``the initiation of a telephone call or message for the 
purpose of encouraging the purchase or rental of * * * property, goods, 
or services * * *'' (emphasis added). 47 CFR 64.1200(f)(3). We sought 
comment, however, on whether we should modify our rules to state 
expressly that the identification requirements apply to otherwise 
lawful artificial or prerecorded messages, as well as to live 
solicitation calls.
    104. The vast majority of consumer and industry commenters support 
modifying the rules to provide expressly that telemarketers must comply 
with the identification requirements when delivering prerecorded 
messages. Some consumers urge the Commission to require specifically 
that companies provide the name of the company under which it is 
registered to do business. They explain that a company will often use a 
``d/b/a'' (``doing business as'') or ``alias'' in the text of the 
prerecorded message, making it difficult to identify the company 
calling. The Commission recognizes that adequate identification 
information is vital so that consumers can determine the purpose of the 
call, possibly make a do-not-call request, and monitor compliance with 
the TCPA rules. Therefore, we are amending our rules to require 
expressly that all prerecorded messages, whether delivered by automated 
dialing equipment or not, identify the name of the business, individual 
or other entity that is responsible for initiating the call, along with 
the telephone number of such business, other entity, or individual. 
With respect to the caller's name, the prerecorded message must 
contain, at a minimum, the legal name under which the business, 
individual or entity calling is registered to operate. The Commission 
recognizes that some businesses use ``d/b/as'' or aliases for marketing 
purposes. The rule does not prohibit the use of such additional 
information, provided the legal name of the business is also stated. 
The rule also requires that the telephone number stated in the message 
be one that a consumer can use during normal business hours to ask not 
to be called again.\2\ If the number provided in the message is that of 
a telemarketer hired to deliver the message, the company on whose 
behalf the message is sent is nevertheless liable for failing to honor 
any do-not-call request. This is consistent with the rules on live 
solicitation calls by telemarketers. If a consumer asks not to be 
called again, the telemarketer must record the do-not-call request, and 
the company on whose behalf the call was made must honor that request.
---------------------------------------------------------------------------

    \2\ This would be 9 a.m.-5 p.m., Monday through Friday, during 
the particular telemarketing campaign. A seller or telemarketer's 
telephone number must permit consumers to make their do-not-call 
requests in a timely manner. Therefore, the seller or telemarketer 
must staff the ``do-not-call number'' sufficiently or use an 
automated system for processing requests in such a way that 
consumers are not placed on hold or forced to wait for an agent to 
answer the connection for an unreasonable length of time. We also 
reiterate the Commission's determination in its 1995 TCPA 
Reconsideration Order that any number provided for identification 
purposes may not be a number that requires the recipient of a 
solicitation to incur more than nominal costs for making a do-not-
call request (i.e., for which charges exceed costs for transmission 
of local or ordinary station-to-station long distance calls). See 
1995 TCPA Reconsideration Order, 10 FCC Rcd 12391, 12409, para. 38. 
See also amended 47 CFR 64.1200(b)(2).
---------------------------------------------------------------------------

Radio Station and Television Broadcaster Calls

    105. The TCPA prohibits the delivery of prerecorded messages to 
residential telephone lines without the prior express consent of the 
called party. 47 U.S.C. 227(b)(1)(B). Commission rules exempt from the 
prohibition calls that are made for a commercial purpose but do not 
include any unsolicited advertisement. 47 CFR 64.1200(c)(2). The 
Commission sought comment on prerecorded messages sent by radio 
stations or television broadcasters that encourage telephone 
subscribers to tune in at a particular time for a chance to win a prize 
or similar opportunity. We asked whether the Commission should 
specifically address these kinds of calls, and if so, how. The record 
reveals that such calls by radio stations and television broadcasters 
do not at this time warrant the adoption of new rules. Few commenters 
in this proceeding described either receiving such messages or that 
they were particularly problematic. The few commenters who addressed 
the issue were split on whether such messages fall within the TCPA's 
definition of ``unsolicited advertisement'' and are thus subject to the 
restrictions on their delivery. We conclude that if the purpose of the 
message is merely to invite a consumer to listen to or view a 
broadcast, such message is permitted under the current rules as a 
commercial call that ``does not include the transmission of any 
unsolicited advertisement'' and under the amended rules as ``a 
commercial call that does not include or introduce an unsolicited 
advertisement or constitute a telephone solicitation.'' See amended 47 
CFR 64.1200(a)(2)(iii). However, messages that encourage consumers to 
listen to or watch programming, including programming that is 
retransmitted broadcast programming for which consumers must pay (e.g., 
cable, digital satellite, etc.), would be considered advertisements for 
purposes of our rules. The Commission reiterates, however, that 
messages that are part of an overall marketing campaign to encourage 
the purchase of goods or services or that describe the commercial 
availability or quality of any goods or services, are 
``advertisements'' as defined by the TCPA. Messages need not contain a 
solicitation of a sale during the call to constitute an advertisement.

Abandoned Calls

    106. Given the arguments raised on both sides of this issue as well 
as the FTC's approach to the problem, the Commission has determined to 
adopt a rule to reduce the number of abandoned calls consumers receive. 
Under the new rules, telemarketers must ensure that any technology used 
to dial telephone numbers abandons no more than three (3) percent of 
calls answered by a person, measured over a 30-day period. A call will 
be considered abandoned if it is not transferred to a live sales agent 
within two (2) seconds of the recipient's completed greeting. When a 
call is abandoned within the three (3) percent maximum allowed, a 
telemarketer must deliver a prerecorded identification message 
containing only the telemarketer's name, telephone number, and 
notification that the call is for ``telemarketing purposes.'' To allow 
time for a consumer to answer the phone, the telemarketer must allow 
the phone to ring for fifteen seconds or four rings before 
disconnecting any unanswered call. Finally, telemarketers

[[Page 44164]]

using predictive dialers must maintain records that provide clear and 
convincing evidence that the dialers used comply with the three (3) 
percent call abandonment rate, ``ring time'' and two-second-transfer 
rule.

Maximum Rate on Abandoned Calls

    107. The Commission believes that establishing a maximum call 
abandonment rate is the best option to reduce effectively the number of 
hang-ups and ``dead air'' calls consumers experience. We recognize that 
industry generally advocates a five percent abandonment rate, claiming 
that a rate lower than five percent would reduce efficiencies the 
technology provides. Some industry commenters indicate that a 3 percent 
rate still obtains productivity benefits. However, the Commission is 
not convinced that a five percent rate will lead to a reasonable 
reduction in the number of abandoned calls. The DMA's current 
guideline, cited by many commenters, calls for an abandonment rate of 
no higher than five percent. And several telemarketers maintain that 
they now utilize an abandonment rate of five percent or lower in their 
calling campaigns. Consumers nevertheless report receiving as many as 
20 dropped calls per day that interrupt dinners, interfere with home 
business operations, and sometimes frighten the elderly and parents 
with young children. A rule that is consistent with the FTC's will 
effectively create a national standard with which telemarketers must 
comply and should lead to fewer abandoned calls, while permitting 
telemarketers to continue to benefit from such technology. It is also 
responsive to Congress' mandate in the Do-Not-Call Act to maximize 
consistency with the FTC's rules.
    108. The three percent abandonment rate will be measured over a 30-
day period, a standard supported by several industry commenters. 
Industry members maintain that measuring the abandonment rate on a per 
day basis would severely curtail the efficiencies gained from the use 
of predictive dialers, and may be overly burdensome to smaller 
telemarketers. A per day measurement, they argue, would not account for 
short-term fluctuations in marketing campaigns. They further argue that 
the impact of abandoned calls on consumers depends more on the 
aggregate number of contacts made by a telemarketer over time and not 
on the number in any given day. The Commission believes that a three 
(3) percent abandonment rate measured over a 30-day period will ensure 
that consumers consistently receive fewer disconnected calls, and that 
telemarketers are permitted to manage their calling campaigns 
effectively under the new rules on abandoned calls. Although we 
recognize that this rate of measurement differs from the FTC's rule, we 
believe a rate measured over a longer period of time will allow for 
variations in telemarketing campaigns such as calling times, number of 
operators available, number of telephone lines used by the call 
centers, and other similar factors. The record also suggests that an 
abandonment rate measured over a 30-day period will allow telemarketers 
to more easily comply with the recordkeeping requirements associated 
with the use of predictive dialers.

Two-Second-Transfer Rule

    109. The record confirms that many consumers are angered by the 
``dead air'' they often face when answering the telephone. Running to 
the telephone only to be met by silence can be frustrating and even 
frightening, if the caller cannot be identified. To address the problem 
of ``dead air'' produced by dialing technologies, the Commission has 
determined that a call will be considered abandoned if the telemarketer 
fails to connect the call to a sales representative within two (2) 
seconds of the person's completed greeting. Calls disconnected because 
they were never answered (within the required 15 seconds or 4 rings) or 
because they received busy signals will not be considered abandoned. 
Calls that reach voicemail or an answering machine will not be 
considered ``answered'' by the called party. Therefore, a call that is 
disconnected upon reaching an answering machine will not be considered 
an abandoned call. This requirement is consistent with the FTC's rule.
    110. Answering Machine Detection. Opposition from industry to the 
two-second-transfer requirement appears to be based largely on its 
implications for use of Answering Machine Detection (AMD). Some 
industry members explain that AMD is used by telemarketers to detect 
answering machines, and thereby avoid leaving messages on them. The ATA 
and DMA maintain that if telemarketers are required to connect to a 
sales agent or message within 1-2 seconds, a large percentage of calls 
reaching answering machines will be transferred to sales agents, 
thereby reducing the efficiencies gained from AMD. According to these 
commenters, 1-2 seconds is often insufficient for AMD to determine 
accurately if the call has reached an answering machine. Other 
commenters explain that AMD is used instead by telemarketers to 
transmit prerecorded messages to answering machines; in such 
circumstances, calls that reach live persons are disconnected. It is 
unclear from the record how prevalent the use of AMD is in the 
telemarketing industry. One commenter stated that the elimination of 
AMD would put ``consumer-oriented'' telemarketing firms out of 
business. However, other industry members acknowledge that AMD 
contributes significantly to the amount of ``dead air'' consumers 
experience, and one large telemarketing firm maintains that AMD should 
be banned completely. The Commission believes that the record does not 
warrant a ban on the use of AMD. Instead, if the AMD technology is 
deployed in such a way that the delay in transfer time to a sales agent 
is limited to two seconds, then its continued use should not adversely 
affect consumers' privacy interests.

Prerecorded Message for Identification

    111. The FTC's ``safe harbor'' provisions require that, when a 
sales agent is unavailable to speak to a person answering the phone, 
marketers deliver a prerecorded message that states the name and 
telephone number of the seller on whose behalf the call was made. The 
Commission has similarly determined that when a telemarketer abandons a 
call under the three (3) percent rate allowed, the telemarketer must 
deliver a prerecorded message containing the name of the business, 
individual or other entity initiating the call, as well as the 
telephone number of such business, individual or other entity. The 
message must also state that the call is for ``telemarketing 
purposes.'' By requiring such notice, we believe consumers will be less 
likely to return the call simply to learn the purpose of the call and 
possibly incur unnecessary charges. We recognize that many consumers 
are frustrated with prerecorded messages. However, the record also 
reveals that consumers are frightened and angered by ``dead air'' calls 
and repeated hang-ups. A prerecorded message, limited to identification 
information only, should mitigate the harms that result from ``dead 
air,'' as consumers will know who is calling them. And, they will more 
easily be able to make a do-not-call request of a company by calling 
the number provided in the message. We note that such messages sent in 
excess of the three (3) percent allowed under the call abandonment 
rate, will be considered abandoned calls, unless otherwise permitted by 
our rules. The content of the message must be limited

[[Page 44165]]

to name and telephone number, along with a notice to the called party 
that the call is for ``telemarketing purposes.'' The message may not be 
used to deliver an unsolicited advertisement. As long as the message is 
limited to identification information only, it will not be considered 
an ``unsolicited advertisement'' under our rules. We caution that 
additional information in the prerecorded message constituting an 
unsolicited advertisement would be a violation of our rules, if not 
otherwise permitted under 47 CFR 64.1200(a)(2).

Established Business Relationship

    112. While the TCPA prohibits telephone calls to residential phone 
lines using an artificial or prerecorded voice to deliver a message 
without the prior express consent of the called party, the Commission 
determined that the TCPA permits an exemption for established business 
relationship calls from the restriction on artificial or prerecorded 
message calls to residences. The record reveals that an established 
business relationship exemption is necessary to allow companies to 
contact their existing customers. Companies currently use prerecorded 
messages, for example, to notify their customers about new calling 
plans, new mortgage rates, and seasonal services such as chimney 
sweeping and lawn care. Therefore, prerecorded messages sent by 
companies to customers with whom they have an established business 
relationship will not be considered ``abandoned'' under the revised 
rules, if they are delivered within two (2) seconds of the person's 
completed greeting. Similarly, any messages initiated with the called 
party's prior express consent and delivered within two (2) seconds of 
the called person's completed greeting are not ``abandoned'' calls 
under the new rules. Such messages must identify the business, 
individual or entity making the call and contain a telephone number 
that a consumer may call to request placement on a do-not-call list. We 
recognize that the established business relationship exception to the 
prohibition on prerecorded messages conflicts with the FTC's amended 
rule. However, for the reasons described above, we believe the current 
exception is necessary to avoid interfering with ongoing business 
relationships.

Ring Duration

    113. The Commission also adopts a requirement that telemarketers 
allow the phone to ring for 15 seconds or four (4) rings before 
disconnecting any unanswered call. This standard is consistent with 
that of the FTC, similar to current DMA guidelines, and used by some 
telemarketers already. One industry commenter asserted that 
telemarketers often set the predictive dialers to ring for a very short 
period of time before disconnecting the call; in such cases, the 
predictive dialer does not record the call as having been abandoned. 
The practice of ringing and then disconnecting the call before the 
consumer has an opportunity to answer the phone is intrusive of 
consumer privacy and serves only to increase efficiencies for 
telemarketers. Moreover, in discussing the interplay between the FTC's 
rules with the Commission's rules, very few commenters opposed the 
``ring time'' requirement adopted by the FTC, or raised any particular 
concerns about how it might work in the TCPA framework. Therefore, 
given the substantial interest in protecting consumers' privacy 
interests, as well as Congress's direction to maximize consistency with 
the FTC's rules, we have determined to adopt the 15 second or four (4) 
ring requirement.
    114. Finally, consistent with the FTC's rules, the Commission has 
determined that telemarketers must maintain records establishing that 
the technology used to dial numbers complies with the three (3) percent 
call abandonment rate, ``ring time,'' and two-second rule on connecting 
to a live sales agent. Telemarketers must provide such records in order 
to demonstrate compliance with the call abandonment rules. Only by 
adopting a recordkeeping requirement will the Commission be able to 
enforce adequately the rules on the use of predictive dialers.
    115. The TCPA seeks primarily to protect subscribers from 
unrestricted commercial telemarketing calls, and therefore exempts 
calls or messages by tax-exempt nonprofit organizations from the 
definition of telephone solicitation. Therefore, the Commission has 
determined not to extend the call abandonment rules to tax-exempt 
nonprofit organizations in the absence of further guidance from 
Congress. Because this will result in an inconsistency with the FTC's 
rules, we will discuss the call abandonment rules in the report due to 
Congress within 45 days after the promulgation of final rules. See Do-
Not-Call Act, Section 4. However, the call abandonment rules will apply 
to all other companies engaged in telemarketing, and the existence of 
an established business relationship between the telemarketer and 
consumer will not be an exception to these rules. For these entities, 
the call abandonment rules will become effective on October 1, 2003. We 
decline to establish an effective date beyond October 1, 2003, which is 
consistent with the date that telemarketers must comply with the FTC's 
call abandonment rules. This should permit telemarketers to make any 
modifications to their autodialing equipment or purchase any new 
software to enable them to comply with the three (3) percent call 
abandonment rate, the prerecorded message requirement and the two-
second-transfer rule.

Wireless Telephone Numbers

Telemarketing Calls to Wireless Numbers

    116. We affirm that under the TCPA, it is unlawful to make any call 
using an automatic telephone dialing system or an artificial or 
prerecorded message to any wireless telephone number. See 47 U.S.C. 
227(b)(1). Both the statute and our rules prohibit these calls, with 
limited exceptions, ``to any telephone number assigned to a paging 
service, cellular telephone service, specialized mobile radio service, 
or other common carrier service, or any service for which the called 
party is charged.'' 47 U.S.C. 227(b)(1)(A)(iii). This encompasses both 
voice calls and text calls to wireless numbers including, for example, 
short message service calls, provided the call is made to a telephone 
number assigned to such service. Congress found that automated or 
prerecorded telephone calls were a greater nuisance and invasion of 
privacy than live solicitation calls. Moreover, such calls can be 
costly and inconvenient. The Commission has long recognized, and the 
record in this proceeding supports the same conclusion, that wireless 
customers are charged for incoming calls whether they pay in advance or 
after the minutes are used. Wireless subscribers who purchase a large 
``bucket'' of minutes at a fixed rate nevertheless are charged for 
those minutes, and for any minutes that exceed the ``bucket'' 
allowance. This ``bucket'' could be exceeded more quickly if consumers 
receive numerous unwanted telemarketing calls. Moreover, as several 
commenters point out, telemarketers have no way to determine how 
consumers are charged for their wireless service.
    117. Although the same economic and safety concerns apply to all 
telephone solicitation calls received by wireless subscribers, the 
Commission has determined not to prohibit all live telephone 
solicitations to wireless numbers. We note, however, that the TCPA 
already prohibits live solicitation calls to wireless numbers using an 
autodialer. See 47 U.S.C. 227(b)(1). The national do-not-call database 
will allow for the registration of wireless telephone

[[Page 44166]]

numbers for those subscribers who wish to avoid live telemarketing 
calls to their wireless phones. Wireless subscribers thus have a simple 
means of preventing most live telemarketing calls if they so desire. 
Registration on the do-not-call database will not prevent calls from 
entities that have an established business relationship with a wireless 
subscriber. Wireless subscribers who receive such live calls can easily 
make a company-specific do-not-call request. Moreover, relying on the 
do-not-call database to control live telephone solicitations recognizes 
that prohibiting such calls to wireless numbers may unduly restrict 
telemarketers' ability to contact those consumers who do not object to 
receiving telemarketing calls and use their wireless phones as either 
their primary or only phone.
    118. The Commission's rules provide that companies making telephone 
solicitations to residential telephone subscribers must comply with 
time of day restrictions and must institute procedures for maintaining 
do-not-call lists. See 47 CFR 64.1200(e). We conclude that these rules 
apply to calls made to wireless telephone numbers. We believe that 
wireless subscribers should be afforded the same protections as 
wireline subscribers.

Wireless Number Portability and Pooling

    119. Based on the evidence in the record, we find that it is not 
necessary to add rules to implement the TCPA as a result of the 
introduction of wireless Local Number Portability (LNP) and thousands-
block number pooling. The TCPA rules prohibiting telemarketers from 
placing autodialed and prerecorded message calls to wireless numbers 
have been in place for twelve years. Further, the Commission's pooling 
requirements have been in place for several years and the porting 
requirements have been in place for over five years. Accordingly, 
telemarketers have received sufficient notice of these requirements in 
order to develop business practices that will allow them to continue to 
comply with the TCPA.
    120. Additionally, telemarketers have taken measures in the past to 
identify wireless numbers, and there is no indication that these 
measures would not continue to be effective for identifying wireless 
numbers affected by pooling and porting. As noted above, the industry 
currently makes use of a variety of tools to enable it to avoid making 
prohibited calls. The record provides a sampling of methods, including 
the DMA's ``Wireless Telephone Suppression Service,'' that 
telemarketers use to avoid making prohibited calls to wireless numbers.
    121. LNP and pooling do not make it impossible for telemarketers to 
comply with the TCPA. The record demonstrates that information is 
available from a variety of sources to assist telemarketers in 
determining which numbers are assigned to wireless carriers. For 
example, NeuStar, Inc. as the North American Numbering Plan 
Administrator, the National Pooling Administrator, and the LNP 
Administrator makes information available that can assist telemarketers 
in identifying numbers assigned to wireless carriers. Also, other 
commercial enterprises such as Telcordia, the owner-operator of the 
Local Exchange Routing Guide maintain information that can assist 
telemarketers in identifying numbers assigned to wireless carriers. We 
acknowledge that beginning November 24, 2003, numbers previously used 
for wireline service could be ported to wireless service providers and 
that telemarketers will need to take the steps necessary to identify 
these numbers. We also note that there are various solutions that will 
enable telemarketers to identify wireless numbers in a pooling and 
number portability environment. We decline to mandate a specific 
solution, but rather rely on the telemarketing industry to select 
solutions that best fit telemarketers' needs. The record demonstrates 
that telemarketers have found adequate methods in the past to comply 
with the TCPA's prohibition on telephone calls using an autodialer or 
an artificial or prerecorded voice message to any telephone number 
assigned to a cellular telephone service, a paging service, or any 
service for which the called party is charged for the call. We expect 
telemarketers to continue to make use of the tools available in the 
marketplace in order to ensure continued compliance with the TCPA.
    122. Moreover, the record indicates that telemarketing to wireless 
phones is not a significant problem, indicating that the industries' 
voluntary efforts have been successful. Commenters further declare that 
the wireless and telemarketing industries have been actively working 
together to ensure that telemarketing does not become a problem for 
wireless customers.
    123. Finally, we reject proposals to create a good faith exception 
for inadvertent autodialed or prerecorded calls to wireless numbers and 
proposals to create implied consent because we find that there are 
adequate solutions in the marketplace to enable telemarketers to 
identify wireless numbers.

Caller Identification

    124. The Commission has determined to require all sellers and 
telemarketers to transmit caller ID information, regardless of their 
calling systems. In addition, any person or entity engaging in 
telemarketing is prohibited from blocking the transmission of caller ID 
information. Caller ID information must include either ANI or Calling 
Party Number (CPN) and, when available by the telemarketer's carrier, 
the name of the telemarketer. If the information required is not passed 
through to the consumer, through no fault of the telemarketer 
originating the call, then the telemarketer will not be held liable for 
failure to comply with the rules. In such a circumstance, the 
telemarketer must provide clear and convincing evidence that the caller 
ID information could not be transmitted. However, the Commission 
concurs with the FTC that caller ID information can be transmitted cost 
effectively for the vast majority of calls made by telemarketers. 
Caller ID allows consumers to screen out unwanted calls and to identify 
companies that they wish to ask not to call again. Knowing the identity 
of the caller is also helpful to consumers who feel frightened or 
threatened by hang-up and ``dead air'' calls. We disagree with those 
commenters who argue that caller ID information only benefits those 
consumers who subscribe to caller ID services. Consumers can also use 
the *69 feature to obtain caller ID information transmitted by a 
telemarketer. The *69 feature, available through many subscribers' 
telephone service providers, provides either: (1) Information regarding 
the last incoming call, and the option to dial the caller back, or (2) 
the ability to return the last incoming call. Call information, 
however, would not be available for an incoming call, if the caller 
failed to transmit caller ID information or blocked such information. 
Caller ID also should increase accountability and provide an important 
resource for the FCC and FTC in pursuing enforcement actions against 
TCPA and TSR violators.
    125. We conclude that while SS7 capability is not universally 
available, the vast majority of the United States has access to SS7 
infrastructure. The SS7 network contains functionality to transmit both 
the CPN and the charge number. ``Charge number'' is defined in 47 CFR 
64.1600(d) and refers to the delivery of the calling party's billing 
number by a local exchange carrier for billing or routing purposes, and 
to the subsequent delivery of such number to end users. Under the 
Commission's rules, with certain limited exceptions,

[[Page 44167]]

common carriers using SS7 and offering or subscribing to any service 
based on SS7 functionality are required to transmit the CPN associated 
with an interstate call to connecting carriers. See 47 CFR 64.1600, 
64.1601. Regardless of whether SS7 is available, a LEC at the 
originating end of a call must receive and be able to transmit the ANI 
to the connecting carrier, as the ANI is the number transmitted through 
the network that identifies the calling party for billing purposes. The 
term ``ANI'' refers to the delivery of the calling party's billing 
number by a local exchange carrier to any interconnecting carrier for 
billing or routing purposes, and to the subsequent delivery to end 
users. See 47 CFR 64.1600(b). ANI is generally inferred by the switch. 
Each line termination on the telco switch corresponds to a different 
phone number for ANI. Thus, we determine that telemarketers must ensure 
that either CPN or ANI is made available for all telemarketing calls in 
order to satisfy their caller ID requirements. Whenever possible, CPN 
is the preferred number and should be transmitted. Provision of Caller 
ID information does not obviate the requirement for a caller to 
verbally supply identification information during a call. See 47 CFR 
64.1200(e)(iv). Consistent with the FTC's rules, CPN can include any 
number associated with the telemarketer or party on whose behalf the 
call is made, that allows the consumer to identify the caller. This 
includes a number assigned to the telemarketer by its carrier, the 
specific number from which a sales representative placed a call, the 
number for the party on whose behalf the telemarketer is making the 
call, or the seller's customer service number. Any number supplied must 
permit an individual to make a do-not-call request during regular 
business hours for the duration of the telemarketing campaign.\3\
---------------------------------------------------------------------------

    \3\ This would mean 9 a.m.-5 p.m. Monday through Friday. A 
seller or telemarketer calling on behalf of a seller must be able to 
record do-not-call requests at the number transmitted to consumers 
as caller ID. Therefore, if the person answering the calls at this 
number is not the sales representative who made the call or an 
employee of the seller or telemarketer who made the call, or if the 
telemarketer is using an automated system to answer the calls, the 
seller is nevertheless responsible for ensuring that any do-not-call 
request is recorded and the consumer's name, if provided, and 
telephone number are placed on the seller's do-not-call list at the 
time the request is made.
---------------------------------------------------------------------------

    126. Some commenters state that it is not technically feasible for 
telemarketers to transmit caller ID information when using a private 
branch exchange (PBX) and typical T-1 trunks. As noted by National 
Association of State Utility Consumer Advocates, the Commission's rules 
exempt from the current caller ID rules, PBX and Centrex systems which 
lack the capability to pass CPN information. Regardless of whether a 
call is made using a typical T-1 trunk or an ISDN trunk, ANI is 
transmitted to the Local Exchange Carrier for billing purposes. With 
both PBX and Centrex systems, the carrier can determine the billing 
number from the physical line being used to make a call, even if the 
billing number is not transmitted along that line to the carrier. We 
are cognizant of the fact that with PBX and Centrex systems, the 
billing number could be associated with multiple outgoing lines. 
Nevertheless, telemarketers using PBX or Centrex systems are required 
under the new rules not to block ANI, at a minimum, for caller ID 
purposes.
    127. We recognize that ISDN technology is preferred, as it presents 
the opportunity to transmit both CPN and ANI. However, in situations 
where existing technology permits only the transmission of the ANI or 
charge number, then the ANI or charge number will satisfy the 
Commission's rules, provided it allows a consumer to make a do-not-call 
request during regular business hours. By allowing transmission of ANI 
or charge number to satisfy the caller ID requirement, we believe that 
carriers need not incur significant costs to upgrade T-1 and ISDN 
switches. For these same reasons, we also believe that mandating caller 
ID will not create a competitive advantage towards particular carriers. 
As typical T-1 technology is upgraded to ISDN technology, we expect 
that telemarketers will increasingly be able to transmit the preferred 
CPN instead of ANI or charge number.
    128. Finally, the record strongly supports a prohibition on 
blocking caller ID information. Both National Consumers League and 
National Association of State Utility Consumer Advocates state that 
there is no valid reason why a telemarketer should be allowed to 
intentionally block the transmission of caller ID. We conclude that the 
caller ID requirements for commercial telephone solicitation calls do 
not implicate the privacy concerns associated with blocking capability 
for individuals. See 47 CFR 64.1601(b). We recognize that absent a 
prohibition on blocking, a party could transmit CPN in accordance with 
the new rules and simultaneously transmit a request to block 
transmission of caller ID information. Thus, the Commission has 
determined to prohibit any request by a telemarketer to block caller ID 
information or ANI.
    129. The TCPA seeks primarily to protect subscribers from 
unrestricted commercial telemarketing calls. Therefore, the Commission 
has determined not to extend the caller ID requirements to tax-exempt 
nonprofit organizations. However, the caller ID rules will apply to all 
other companies engaged in telemarketing, and the existence of an 
established business relationship between the telemarketer and the 
consumer shall not be an exception to these rules. For all covered 
entities, the effective date of the caller ID requirements will be 
January 29, 2004. This will provide telemarketers a reasonable period 
of time to obtain or update any equipment or systems to enable them to 
transmit caller ID information. We decline to extend the effective date 
beyond January 29, 2004, which is consistent with the date on which 
telemarketers are required to comply with the FTC's caller ID 
provision.

Unsolicited Facsimile Advertisements

Prior Express Invitation or Permission

    130. The Commission has determined that the TCPA requires a person 
or entity to obtain the prior express invitation or permission of the 
recipient before transmitting an unsolicited fax advertisement. This 
express invitation or permission must be in writing and include the 
recipient's signature. The term ``signature'' in the amended rule shall 
include an electronic or digital form of signature, to the extent that 
such form of signature is recognized as a valid signature under 
applicable federal law or state contract law. The recipient must 
clearly indicate that he or she consents to receiving such faxed 
advertisements from the company to which permission is given, and 
provide the individual or business's fax number to which faxes may be 
sent.
    131. Established Business Relationship. The TCPA does not act as a 
total ban on fax advertising. Persons and businesses that wish to 
advertise using faxes may, under the TCPA, do so with the express 
permission of the recipients. In the 2002 Notice, we sought comment on 
whether an established business relationship between a fax sender and 
recipient establishes the requisite consent to receive telephone 
facsimile advertisements. The majority of industry commenters support 
the finding that facsimile transmissions from persons or entities that 
have an established business relationship with the recipient can be 
deemed to be invited or permitted by the recipient. These commenters 
maintain that

[[Page 44168]]

eliminating the EBR exemption for facsimile advertisements would 
interfere with ongoing business relationships, raise business costs, 
and limit the flow of valuable information to consumers. They urge the 
Commission to amend the rules to provide expressly for the EBR 
exemption. Conversely, the majority of consumer advocates argue that 
the TCPA requires companies to obtain express permission from 
consumers--even their existing customers--before transmitting a fax to 
a consumer. Some consumer advocates maintain that the Commission erred 
in its 1992 determination that a consumer, by virtue of an established 
business relationship, has given his or her express invitation or 
permission to receive faxes from that company. They urge the Commission 
to eliminate the EBR exemption, noting that Congress initially included 
in the TCPA an EBR exemption for faxes, but removed it from the final 
version of the statute.
    132. We now reverse our prior conclusion that an established 
business relationship provides companies with the necessary express 
permission to send faxes to their customers. As of the effective date 
of these rules, the EBR will no longer be sufficient to show that an 
individual or business has given their express permission to receive 
unsolicited facsimile advertisements. The record in this proceeding 
reveals consumers and businesses receive faxes they believe they have 
neither solicited nor given their permission to receive. Recipients of 
these faxed advertisements assume the cost of the paper used, the cost 
associated with the use of the facsimile machine, and the costs 
associated with the time spent receiving a facsimile advertisement 
during which the machine cannot be used by its owner to send or receive 
other facsimile transmissions.
    133. The legislative history indicates that one of Congress' 
primary concerns was to protect the public from bearing the costs of 
unwanted advertising. Certain practices were treated differently 
because they impose costs on consumers. For example, under the TCPA, 
calls to wireless phones and numbers for which the called party is 
charged are prohibited in the absence of an emergency or without the 
prior express consent of the called party. See 47 U.S.C. 227(b)(1). 
Because of the cost shifting involved with fax advertising, Congress 
similarly prohibited unsolicited faxes without the prior express 
permission of the recipient. 47 U.S.C. 227(b)(1)(C) and (a)(4). Unlike 
the do-not-call list for telemarketing calls, Congress provided no 
mechanism for opting out of unwanted facsimile advertisements. Such an 
opt-out list would require the recipient to possibly bear the cost of 
the initial facsimile and inappropriately place the burden on the 
recipient to contact the sender and request inclusion on a ``do-not-
fax'' list.
    134. Instead, Congress determined that companies that wish to fax 
unsolicited advertisements to customers must obtain their express 
permission to do so before transmitting any faxes to them. See 47 
U.S.C. 227(b)(1)(C) and (a)(4). Advertisers may obtain consent for 
their faxes through such means as direct mail, Web sites, and 
interaction with customers in their stores. Under the new rules, the 
permission to send fax advertisements must be provided in writing, 
include the recipient's signature and facsimile number, and cannot be 
in the form of a ``negative option.'' A facsimile advertisement 
containing a telephone number and an instruction to call if the 
recipient no longer wishes to receive such faxes, would constitute a 
``negative option.'' This option (in which the sender presumes consent 
unless advised otherwise) would impose costs on facsimile recipients 
unless or until the recipient were able to ask that such transmissions 
be stopped. For example, a company that requests a fax number on an 
application form could include a clear statement indicating that, by 
providing such fax number, the individual or business agrees to receive 
facsimile advertisements from that company. Such statement, if 
accompanied by the recipient's signature, will constitute the necessary 
prior express permission to send facsimile advertisements to that 
individual or business. We believe that even small businesses may 
easily obtain permission from existing customers who agree to receive 
faxed advertising, when customers patronize their stores or provide 
their contact information. The Commission believes that given the cost 
shifting and interference caused by unsolicited faxes, the interest in 
protecting those who would otherwise be forced to bear the burdens of 
unwanted faxes outweighs the interests of companies that wish to 
advertise via fax.
    135. Membership in a Trade Association. In its 1995 Reconsideration 
Order, the Commission determined that mere distribution or publication 
of a telephone facsimile number is not the equivalent of prior express 
permission to receive faxed advertisements. The Commission also found 
that given the variety of circumstances in which such numbers may be 
distributed (business cards, advertisements, directory listings, trade 
journals, or by membership in an association), it was appropriate to 
treat the issue of consent in any complaint regarding unsolicited 
facsimile advertisements on a case-by-case basis. In the 2002 Notice, 
we sought comment specifically on the issue of membership in a trade 
association or similar group and asked whether publication of one's fax 
number in an organization's directory constitutes an invitation or 
permission to receive an unsolicited fax. The American Business Media 
argued that those willing to make fax numbers available in directories 
released to the public do so with an expectation that such fax numbers 
will be used for advertising. Consumer advocates, however, contend that 
publicly listing a fax number is not a broad invitation to send 
commercial faxes. TOPUC asserted that businesses often publish their 
fax numbers for the convenience of their customers, clients and other 
trade association members, not for the benefit of telemarketers.
    136. The Commission agrees that fax numbers are published and 
distributed for a variety of reasons, all of which are usually 
connected to the fax machine owner's business or other personal and 
private interests. The record shows that they are not distributed for 
other companies' advertising purposes. Thus, a company wishing to fax 
ads to consumers whose numbers are listed in a trade publication or 
directory must first obtain the express permission of those consumers. 
Express permission to receive a faxed ad requires that the consumer 
understand that by providing a fax number, he or she is agreeing to 
receive faxed advertisements. We believe the burden on companies to 
obtain express permission is warranted when balanced against the need 
to protect consumers and businesses from bearing the advertising costs 
of those companies. Finally, the Commission affirms that facsimile 
requests for permission to transmit faxed ads, including toll-free opt-
out numbers, impose unacceptable costs on the recipients. This kind of 
``negative option'' is contrary to the statutory requirement for prior 
express permission or invitation.

Fax Broadcasters

    137. The Commission explained in the 2002 Notice that some fax 
broadcasters, who transmit other entities' advertisements to a large 
number of telephone facsimile machines for a fee, maintain lists of 
facsimile numbers that they use to direct their clients' 
advertisements. We noted that this practice, among others, indicates a 
fax broadcaster's close involvement in sending unlawful fax 
advertisements

[[Page 44169]]

and may subject such entities to enforcement action under the TCPA and 
our existing rules. We then sought comment on whether the Commission 
should address specifically in the rules the activities of fax 
broadcasters. Companies and organizations whose members hire fax 
broadcasters to transmit their messages argue that the fax broadcaster 
should be liable for violations of the TCPA's faxing prohibition. 
American International Automobile Dealers Association maintains this 
should be the case, even if the fax broadcaster uses the list of fax 
numbers provided by the company doing the advertising. Nextel argues 
that liability ought to lie with the party controlling the destination 
of the fax; that fax broadcasters who actively compile and market 
databases of fax numbers are the major perpetrators of TCPA fax 
violations. Nextel specifically urges the Commission to find that 
companies whose products are advertised by independent retailers should 
not be liable for TCPA violations when they have no knowledge of such 
activities. Fax broadcasters disagree that they should be liable for 
unlawful faxes, maintaining that many of them do not exercise any 
editorial control or discretion over the content of the messages, and 
do not provide the list of fax numbers to which the ads are 
transmitted. Many industry as well as consumer commenters agree that 
only those fax broadcasters who are closely involved in the 
transmission of the fax should be subject to liability. Reed asserts 
that liability should rest with the entity on whose behalf a fax is 
sent; that fax broadcasters are not in a position to know firsthand 
whether, for example, an established business relationship exists 
between the company and consumer.
    138. The Commission's rulings clearly indicate that a fax 
broadcaster's exemption from liability is based on the type of 
activities it undertakes, and only exists ``[i]n the absence of `a high 
degree of involvement or actual notice of an illegal use and failure to 
take steps to prevent such transmissions.''' 1992 TCPA Order, 7 FCC Rcd 
at 8780, para. 54 (quoting Use of Common Carriers, 2 FCC Rcd 2819, 2820 
(1987)). The Commission believes that, based on the record and our own 
enforcement experience, addressing the activities of fax broadcasters 
will better inform both consumers and businesses about the prohibition 
on unsolicited fax advertising. The Commission has determined to amend 
the rules to state explicitly that a fax broadcaster will be liable for 
an unsolicited fax if there is a high degree of involvement or actual 
notice on the part of the broadcaster. The new rules provide that if 
the fax broadcaster supplies the fax numbers used to transmit the 
advertisement, the fax broadcaster will be liable for any unsolicited 
advertisement faxed to consumers and businesses without their prior 
express invitation or permission. We agree, however, that if the 
company whose products are advertised has supplied the list of fax 
numbers, that company is in the best position to ensure that recipients 
have consented to receive the faxes and should be liable for violations 
of the prohibition. Therefore, the fax broadcaster will not be 
responsible for the ads, in the absence of any other close involvement, 
such as determining the content of the faxed message. A high degree of 
involvement might be demonstrated by a fax broadcaster's role in 
reviewing and assessing the content of a facsimile message. In such 
circumstances where both the fax broadcaster and advertiser demonstrate 
a high degree of involvement, they may be held jointly and severally 
liable for violations of the unsolicited facsimile provisions. In 
adopting this rule, the Commission focuses on the nature of an entity's 
activity rather than on any label that the entity may claim. We believe 
the rule will better inform the business community about the 
prohibition on unsolicited fax advertising and the liability that 
attaches to such faxing. And, it will better serve consumers who are 
often confused about which party is responsible for unlawful fax 
advertising. For the same reasons, the new rules define ``facsimile 
broadcaster'' to mean a person or entity that transmits messages to 
telephone facsimile machines on behalf of another person or entity for 
a fee. See 47 CFR 64.1200(f)(4).
    139. Some commenters ask the Commission to clarify the extent of 
common carriers' liability for the transmission of unsolicited faxes. 
Cox specifically urges the Commission to distinguish the obligations of 
fax broadcasters from ``traditional common carriers.'' As noted above, 
the Commission has stated that ``[i]n the absence of `a high degree of 
involvement or actual notice of an illegal use and failure to take 
steps to prevent such transmissions,' common carriers will not be held 
liable for the transmission of a prohibited facsimile message.'' 1992 
TCPA Order, 7 FCC Rcd at 8780, para. 54 (quoting Use of Common 
Carriers, 2 FCC Rcd 2819, 2820 (1987)). We reiterate here that if a 
common carrier is merely providing the network over which a subscriber 
(a fax broadcaster or other individual, business, or entity) sends an 
unsolicited facsimile message, that common carrier will not be liable 
for the facsimile.
    140. Nextel urges the Commission to clarify that section 217 of the 
Communications Act does not impose a higher level of liability on 
common carriers than on other entities for violations of the TCPA. 
Section 217 provides that ``[i]n construing and enforcing the 
provisions of this Act, the act, omission, or failure of any officer, 
agent, or other person acting for or employed by any common carrier or 
user, acting within the scope of his employment, shall in every case be 
also deemed to be the act, omission, or failure of such carrier or user 
as well as that of the person.'' 47 U.S.C. 217. The Commission declines 
to address the scope of section 217 in this rulemaking, which was not 
raised in the 2002 Notice or in subsequent notices in this proceeding.

Fax Servers

    141. The TCPA makes it unlawful for any person to use any telephone 
facsimile machine, computer, or other device to send an unsolicited 
advertisement to a telephone facsimile machine. 47 U.S.C. 227(b)(1)(C). 
The TCPA defines the term ``telephone facsimile machine'' to mean 
``equipment which has the capacity (A) to transcribe text or images, or 
both, from paper into an electronic signal and to transmit that signal 
over a regular telephone line, or (B) to transcribe text or images (or 
both) from an electronic signal received over a regular telephone line 
onto paper.'' 47 U.S.C. 227(a)(2). The Commission sought comment on any 
developing technologies, such as computerized fax servers, that might 
warrant revisiting these rules.
    142. Commenters who addressed this issue were divided on whether 
fax servers should be subject to the unsolicited facsimile provisions. 
Some industry representatives urged the Commission to clarify that the 
TCPA does not prohibit the transmission of unsolicited fax 
advertisements to fax servers and personal computers because these 
transmissions are not sent to a ``telephone facsimile machine,'' as 
defined in the statute. Nextel maintains that such faxes do not 
implicate the harms Congress sought to redress in the TCPA, as they are 
not reduced to paper and can be deleted from one's inbox without being 
opened or examined. Other commenters disagree, noting that there are 
other costs associated with faxes sent to computers and fax servers. 
They note that the TPCA only requires

[[Page 44170]]

that the equipment have the capacity to transcribe text or messages 
onto paper, and that computer fax servers and personal computers have 
that capacity.
    143. We conclude that faxes sent to personal computers equipped 
with, or attached to, modems and to computerized fax servers are 
subject to the TCPA's prohibition on unsolicited faxes. However, we 
clarify that the prohibition does not extend to facsimile messages sent 
as email over the Internet. The record confirms that a conventional 
stand-alone telephone facsimile machine is just one device used for 
this purpose; that developing technologies permit one to send and 
receive facsimile messages in a myriad of ways. Today, a modem attached 
to a personal computer allows one to transmit and receive electronic 
documents as faxes. ``Fax servers'' enable multiple desktops to send 
and receive faxes from the same or shared telephony lines.
    144. The TCPA's definition of ``telephone facsimile machine'' 
broadly applies to any equipment that has the capacity to send or 
receive text or images. The purpose of the requirement that a 
``telephone facsimile machine'' have the ``capacity to transcribe text 
or images'' is to ensure that the prohibition on unsolicited faxing not 
be circumvented. Congress could not have intended to allow easy 
circumvention of its prohibition when faxes are (intentionally or not) 
transmitted to personal computers and fax servers, rather than to 
traditional stand-alone facsimile machines. As the House Report 
accompanying the TCPA explained, ``facsimile machines are designed to 
accept, process and print all messages which arrive over their 
dedicated lines. The fax advertiser takes advantage of this basic 
design by sending advertisements to available fax numbers, knowing that 
it will be received and printed by the recipient's machine.'' H.R. Rep. 
No. 102-317 at 10 (1991). However, Congress also took account of the 
``interference, interruptions, and expense'' resulting from junk faxes, 
emphasizing in the same Report that ``[i]n addition to the costs 
associated with the fax advertisements, when a facsimile machine is 
receiving a fax, it may require several minutes or more to process and 
print the advertisement. During that time, the fax machine is unable to 
process actual business communications. H.R. Rep. No. 102-317 at 25 
(1991).''
    145. Facsimile messages sent to a computer or fax server may shift 
the advertising costs of paper and toner to the recipient, if they are 
printed. They may also tie up lines and printers so that the 
recipients' requested faxes are not timely received. Such faxes may 
increase labor costs for businesses, whose employees must monitor faxes 
to determine which ones are junk faxes and which are related to their 
company's business. Finally, because a sender of a facsimile message 
has no way to determine whether it is being sent to a number associated 
with a stand-alone fax machine or to one associated with a personal 
computer or fax server, it would make little sense to apply different 
rules based on the device that ultimately received it.

Identification Requirements

    146. The TCPA and Commission rules require that any message sent 
via a telephone facsimile machine contain the date and time it is sent 
and an identification of the business, other entity, or individual 
sending the message and the telephone number of the sending machine or 
of such business, other entity, or individual. 47 U.S.C. 227(d)(1)(B); 
47 CFR 68.318(d). In the 2002 Notice, the Commission asked whether 
these rules have been effective at protecting consumers' rights to 
enforce the TCPA. The Commission determined in its Rules and 
Regulations Implementing the Telephone Consumer Protection Act of 1991, 
CC Docket No. 92-90, Order on Further Reconsideration, 12 FCC Rcd 4609, 
4613, para. 6 (1997) (1997 TCPA Reconsideration Order) that a facsimile 
broadcast service must ensure that the identifying information of the 
entity on whose behalf the provider sent messages appear on facsimile 
messages. In its discussion, the Commission clarified that the sender 
of a facsimile message is the creator of the content of the message, 
finding that Section 227(d)(1) of the TCPA mandates that a facsimile 
include the identification of the business, other entity, or individual 
creating or originating a facsimile message, and not the entity that 
transmits the message. The Commission believes that if a fax 
broadcaster is responsible for the content of the message or for 
determining the destination of the message (i.e., supplying the list of 
facsimile numbers to which the faxes are sent), it should be identified 
on the facsimile, along with the entity whose products are advertised. 
Therefore, we amend the rules to require any fax broadcaster that 
demonstrates a high degree of involvement in the transmission of such 
facsimile message to be identified on the facsimile, along with the 
identification of the sender. This will permit consumers to hold fax 
broadcasters accountable for unlawful fax advertisements when there is 
a high degree of involvement on the part of the fax broadcaster. 
Commenters suggested the Commission clarify what constitutes an 
adequate identification header. Consistent with our amended 
identification rules for telemarketing calls, senders of fax 
advertisements will be required under the new rules to use the name 
under which they are officially registered to conduct business. Use of 
a ``d/b/a'' (``doing business as'') or other more widely recognized 
name is permissible; however, the official identification of the 
business, as filed with state corporate registration offices or 
comparable regulatory entities, must be included, at a minimum.

Private Right of Action

    147. The Commission declines to make any determination about the 
specific contours of the TCPA's private right of action. Congress 
provided consumers with a private right of action, ``if otherwise 
permitted by the laws or rules of court of a State.'' 47 U.S.C. 
227(c)(5). This language suggests that Congress contemplated that such 
legal action was a matter for consumers to pursue in appropriate state 
courts, subject to those courts' rules. The Commission believes it is 
for Congress, not the Commission, to either clarify or limit this right 
of action.

Informal Complaint Rules

    148. In the 2002 Notice, the Commission noted that it had released 
another Notice of Proposed Rulemaking in February of 2002, seeking 
comment on whether to extend the informal complaint rules to entities 
other than common carriers. We sought comment in this proceeding on 
whether the Commission should amend these informal complaint rules to 
apply to telemarketers. We will review this issue as part of the 
Informal Complaints proceeding. All comments filed in this proceeding 
that address the applicability of the informal complaint rules to 
telemarketers will be incorporated into CI Docket No. 02-32.

Time of Day Restrictions

    149. Commission rules restrict telephone solicitations between the 
hours of 8 a.m. and 9 p.m. local time at the called party's location. 
47 CFR 64.1200(e)(1). As part of our review of the TCPA rules, we 
sought comment on how effective these time restrictions have been at 
limiting objectionable solicitation calls. The Commission also asked 
whether more restrictive calling times could work in conjunction with a 
national registry to better protect

[[Page 44171]]

consumers from telephone solicitations to which they object.
    150. Industry members that commented on the calling time 
restrictions unanimously asserted that the current calling times should 
be retained. Some explained that any restrictions on calls made during 
the early evening hours, in particular, would interfere with 
telemarketers' ability to reach their customers. Consumers, on the 
other hand, urged the Commission to adopt tighter restrictions on the 
times that telemarketers may call them. Some object to calls at the end 
of the day and during the dinner hour; others prefer that telemarketers 
not be able to begin calling until later in the morning. Some suggest 
the calling times should parallel local noise ordinances. EPIC 
advocated allowing consumers to specify the hours they wish to receive 
calls.
    151. The Commission declines to revise the restrictions on calling 
times. Instead, we retain the current calling times, which are 
consistent with the FTC's rules. We believe the current calling times 
strike the appropriate balance between protecting consumer privacy and 
not unduly burdening industry in their efforts to conduct legitimate 
telemarketing. We also believe that Commission rules that diverge from 
the FTC's calling restrictions will lead to confusion for consumers. 
Moreover, consumers who want to block unwanted calls during certain 
times will now have the option of placing their telephone numbers on 
the national do-not-call registry. They will have the additional option 
of giving express verifiable authorization to only those companies from 
which they wish to hear. The Commission declines at this time to 
require companies to adhere to consumers' calling preferences, 
including ``acceptable'' calling times. The Commission encourages any 
seller or telemarketer to comply with consumers' requests not to be 
called during certain times of the day. We believe that the costs of 
monitoring calling times for individual consumers could be substantial 
for many companies, particularly small businesses.

Enforcement Priorities

    152. TCPA enforcement has been a Commission priority over the past 
several years, and we intend that it remain so. In guiding our future 
enforcement plans, we recognize that the FTC's recent rule changes 
expand that agency's regulation of telemarketing activities and require 
coordination to ensure consistent and non-redundant federal enforcement 
in this area. Most notably, the FTC's adoption of a nationwide do-not-
call registry, the related Do-Not-Call Act, and finally our adoption of 
requirements that maximize consistency with those adopted by the FTC 
create an overlap in federal regulations governing major telemarketing 
activities. There are other overlapping regulations such as provisions 
governing abandoned calls, transmission of caller ID, and time-of-day 
restrictions. We hereby direct Commission staff to negotiate with FTC 
staff a Memorandum of Understanding between the respective staffs to 
achieve an efficient and effective enforcement strategy that will 
promote compliance with federal telemarketing regulations.
    153. The FCC's jurisdiction over telemarketing is significantly 
broader than the FTC's. First, as noted above, the FTC does not have 
authority over telemarketing calls made by in-house employees of common 
carriers, banks, credit unions, savings and loans, insurance companies, 
and airlines. In addition, the FTC's telemarketing rules pertain only 
to interstate transmissions. In contrast, the FCC's telemarketing rules 
apply without exception to any entity engaged in any of the 
telemarketing activities targeted by the TCPA and the Commission's 
related rules, including those that involve purely intrastate 
activities. 47 U.S.C. 152(b). Given the substantial gaps in the FTC's 
authority over the full range of telemarketing activities, we 
contemplate that our enforcement staff will focus particularly on those 
activities and entities that fall outside the FTC's reach--airlines, 
banks, credit unions, savings and loans, insurance companies, and 
common carriers, as well as intrastate transmissions by any entity.
    154. Nevertheless, we do not contemplate Commission enforcement 
that targets only those activities, entities, or transmissions that are 
outside the FTC's jurisdiction. The TCPA creates a statutory 
expectation for FCC enforcement in the telemarketing area. See 47 
U.S.C. 227(f)(3), (7). Moreover, the TCPA's detailed standards 
pertaining to do-not-call matters evince Congressional intent that the 
FCC assume a prominent role in federal regulation of this aspect of 
telemarketing, a mandate that is not altered by the Do-Not-Call Act. 
Accordingly, even with the FTC's new do-not-call regulations, including 
its administration of a national do-not-call registry, we emphasize 
that the Commission must stand ready to enforce each of our 
telemarketing rules in appropriate cases. For reasons of efficiency and 
fairness, our staff will work closely with the FTC to avoid 
unnecessarily duplicative enforcement actions.
    155. In determining enforcement priorities under the new 
telemarketing rules, we contemplate that the Enforcement Bureau will 
continue its policy of reviewing FCC and FTC consumer complaint data 
and conferring with appropriate state and federal agencies to detect 
both egregious violations and patterns of violations, and will act 
accordingly. The Enforcement Bureau has in place effective procedures 
to review aggregate complaint information to determine the general 
areas that merit enforcement actions, and to identify both particular 
violators and the individual consumers who may be able to assist the 
staff in pursuing enforcement actions against such violators. 
Enforcement action could include, for example, forfeiture proceedings 
under section 503(b),\4\ cease and desist proceedings under section 
312(c), injunctions under section 401, and revocation of common carrier 
section 214 operating authority.
---------------------------------------------------------------------------

    \4\ Before initiating a forfeiture proceeding against most 
entities that do not hold an FCC authorization, the violator must 
have received a Commission citation and then engaged in an 
additional violation. 47 U.S.C. 503(b)(5).
---------------------------------------------------------------------------

Other Issues

Access to TCPA Inquiries and Complaints

    156. The Commission stated that the 2002 Notice was ``prompted, in 
part, by the increasing number and variety of inquiries and complaints 
involving our rules on telemarketing and unsolicited fax 
advertisements.'' A few commenters maintain that the Commission should 
not consider final rules until parties have had an opportunity to 
analyze the consumer complaints referenced in the 2002 Notice. Other 
commenters contend that the number of complaints received by the 
Commission does not necessarily demonstrate a problem that demands 
government intervention. The ATA filed a Freedom of Information Act 
(FOIA) request with the Commission on October 16, 2002, seeking access 
to the TCPA-related informal complaints. The FOIA generally provides 
that any person has a right to obtain access to federal agency records, 
subject to enumerated exemptions from disclosure. The FOIA requirements 
do not apply to records that contain ``personnel and medical files and 
similar files the disclosure of which would constitute a clearly 
unwarranted invasion of personal privacy.'' See 5 U.S.C. 552(b)(6). 
Many of the complaints sought by the ATA contain personal private 
information. In addition, the complaints are part of a

[[Page 44172]]

system of records subject to the Privacy Act. 5 U.S.C. 552(a); 47 CFR 
0.551 et seq. For these reasons, the Commission agreed to release the 
complaints on a rolling basis only after personal information was 
redacted. In response to ATA's FOIA request, the Commission has thus 
far provided approximately 2,420 redacted complaints.
    157. We agree with commenters that the increasing number of 
inquiries and complaints about telemarketing practices should not form 
the basis upon which we revise or adopt new rules under the TCPA. 
Rather, such information can be considered in determining whether to 
seek comment on the effectiveness of any of its rules. Other 
considerations included: the Commission's own enforcement experience; 
the amount of time that had passed since the Commission undertook a 
broad review of the TCPA rules, during which time telemarketing 
practices have changed significantly; and the actions by the FTC to 
consider changes to its telemarketing rules, including the 
establishment of a national do-not-call registry. We note that, even in 
the absence of any such complaints, the Commission is required by the 
Do-Not-Call Act to complete the TCPA rulemaking commenced last year. We 
disagree with commenters who suggest that parties must have access to 
all of the complaints referenced in the NPRM in order to be able to 
have a meaningful opportunity to participate in this proceeding. It is 
not the existence of the complaints, or the number of complaints, that 
led the Commission to institute this proceeding to consider revision of 
its TCPA rules. Rather, our TCPA rules have been in place for more than 
ten years. We opened this proceeding to determine ``whether the 
Commission's rules need to be revised in order to more effectively 
carry out Congress's directives in the TCPA.'' 2002 Notice, 17 FCC Rcd 
at 17461, para. 1. In any event, since September 2002, consumers, 
industry, and state governments have filed over 6,000 comments in this 
proceeding, during which time the Commission extended the comment 
periods twice and released an FNPRM in order to ensure that parties had 
ample opportunity to comment on possible FCC action. The substantial 
record compiled in this proceeding, along with the Commission's own 
enforcement experience, provides the basis for the actions we take here 
today.

Reports to Congress

    158. The Do-Not-Call Act requires the Commission to transmit 
reports to Congress within 45 days after the promulgation of final 
rules in this proceeding, and annually thereafter. By this Order, the 
Commission delegates its authority to the Chief, Consumer & 
Governmental Affairs Bureau, to issue all such reports.

Procedural Issues

Final Regulatory Flexibility Analysis

    159. As required by the Regulatory Flexibility Act of 1980, as 
amended (RFA), 5 U.S.C. 603,\5\ an Initial Regulatory Flexibility 
Analysis (IRFA) was incorporated in the 2002 Notice released by the 
Commission on September 18, 2002. The Commission sought written public 
comments on the proposals contained in the 2002 Notice, including 
comments on the IRFA. On March 25, 2003, the Commission released the 
FNPRM, seeking comments on the requirements contained in the Do-Not-
Call Act which was signed into law on March 11, 2003. None of the 
comments filed in this proceeding were specifically identified as 
comments addressing the IRFA; however, comments that address the impact 
of the proposed rules and policies on small entities are discussed 
below. This present Final Regulatory Flexibility Analysis (FRFA) 
conforms to the RFA. See 5 U.S.C. 604.
---------------------------------------------------------------------------

    \5\ The RFA, see 5 U.S.C. 601-612, has been amended by the Small 
Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), 
Public Law 104-121, Title II, 110 Stat. 857 (1996).
---------------------------------------------------------------------------

A. Need for, and Objectives of, the Order
    160. Since 1992, when the Commission adopted rules pursuant to the 
TCPA, telemarketing practices have changed significantly. New 
technologies have emerged that allow telemarketers to better target 
potential customers and make marketing using telephones and facsimile 
machines more cost-effective. At the same time, these new telemarketing 
techniques have heightened public concern about the effect 
telemarketing has on consumer privacy. A growing number of states have 
passed, or are considering, legislation to establish statewide do-not-
call lists, and the FTC has decided to establish a national do-not-call 
registry. Congress provided in the TCPA that ``individuals' privacy 
rights, public safety interests, and commercial freedoms of speech and 
trade must be balanced in a way that protects the privacy of 
individuals and permits legitimate telemarketing practices.'' See TCPA, 
Section 2(9), reprinted in 7 FCC Rcd 2736 at 2744.
    161. The 2002 Notice sought comments on whether to revise or 
clarify Commission rules governing unwanted telephone solicitations, 
the use of automatic telephone dialing systems, prerecorded or 
artificial voice messages, telephone facsimile machines, the 
effectiveness of company-specific do-not-call lists, and the 
appropriateness of establishing a national do-not-call list. In 
addition, in the IRFA, the Commission sought comments on the effect the 
proposed policies and rules would have on small business entities.
    162. In this Order the Commission revises the current TCPA rules 
and adopts new rules to provide consumers with additional options for 
avoiding unwanted telephone solicitations. We establish a national do-
not-call registry for consumers who wish to avoid most unwanted 
telemarketing calls. This national do-not-call registry will supplement 
the current company-specific do-not-call rules, which will continue to 
permit consumers to request that particular companies not call them. 
The Commission also adopts a new provision to permit consumers 
registered with the national do-not-call list to provide permission to 
call to specific companies by an express written agreement. The TCPA 
rules exempt from the ``do-not-call'' requirements nonprofit 
organizations and companies with whom consumers have an established 
business relationship. The definition of ``established business 
relationship'' has been amended so that it is limited to 18 months from 
any purchase or financial transaction with the company and to three 
months from any inquiry or application from the consumer. Any company 
that is asked by a consumer, including an existing customer, not to 
call again must honor that request for five years. We retain the 
current calling time restrictions of 8 a.m. until 9 p.m.
    163. To address the use of predictive dialers, we have determined 
that a telemarketer must abandon no more than three percent of calls 
answered by a person, must deliver a prerecorded identification message 
when abandoning a call, and must allow the telephone to ring for 15 
seconds or four rings before disconnecting an unanswered call. The new 
rules also require all companies conducting telemarketing to transmit 
caller identification information when available, and they prohibit 
companies from blocking such information. The Commission has revised 
its earlier determination that an established business relationship 
constitutes express invitation or permission to receive an unsolicited 
facsimile advertisement. We find that the

[[Page 44173]]

permission to send fax ads must be in writing, include the recipient's 
signature, and clearly indicate the recipient's consent to receive such 
ads. In addition, we have clarified when fax broadcasters are liable 
for the transmission of unlawful fax advertisements.
    164. We believe the rules the Commission adopts in the Order strike 
an appropriate balance between maximizing consumer privacy protections 
and avoiding imposing undue burdens on telemarketers. In addition, the 
Commission must comply with the Do-Not-Call Act, which requires the 
Commission to file an annual report to the House Committee on Energy 
and Commerce and the Senate Committee on Commerce, Science and 
Transportation. This report is to include: (1) An analysis of the 
effectiveness of the registry; (2) the number of consumers included on 
the registry; (3) the number of persons accessing the registry and the 
fees collected for such access; (4) a description of coordination with 
state do-not-call registries; and, lastly, (5) a description of 
coordination of the registry with the Commission's enforcement efforts.
B. Summary of Significant Issues Raised by Public Comments in Response 
to the IRFA
    165. There were no comments filed in direct response to the IRFA. 
Some commenters, however, raised issues and questions about the impact 
the proposed rules and policies would have on small entities. 
Telemarketers maintained that ``telemarketing is used to introduce 
consumers to novel and competitive products and services,'' often 
offered by small businesses. Some commenters insisted that business-to-
business telemarketing is essential for small businesses. They 
indicated that they rely on fax broadcasting as a cost-effective form 
of advertising. On the other hand, other small businesses have 
requested that the Commission allow their telephone numbers to be 
included on any national do-not-call list and urged the Commission to 
adopt rules protecting them from unsolicited faxes. The rules adopted 
herein reflect not only the difficult balancing of individuals' privacy 
rights against the protections afforded commercial speech, but the 
difficult balancing of the interests of small businesses that rely on 
telemarketing against those that are harmed by unwanted telephone calls 
and facsimile transmissions. The amended rules should reduce burdens on 
both consumers and businesses, including small businesses.
    166. National Do-Not-Call List. As discussed more extensively in 
the Order, some commenters opposed the adoption of a national do-not-
call registry, stating that company-specific do-not-call lists 
adequately protect consumer privacy. Other commenters supported the 
establishment of a national do-not-call registry, arguing that 
``further regulation is needed because the current system does little 
or nothing to protect privacy in the home.'' See Privacy Rights 
Clearinghouse (Privacy Rights) at 2. National Federation of Independent 
Business (NFIB) ``believes that significant burdens are being placed 
upon businesses of all sizes in order to comply with the regulations * 
* *, but that small businesses bear the brunt of those burdens.'' NFIB 
Comments at 1. NFIB suggested that women, minorities and small 
businesses will be affected disproportionately by any new restrictions. 
And, some commenters maintained that businesses, including small 
businesses, will suffer a reduction in telemarketing sales as a result 
of the establishment of a national do-not-call list. Small Business 
Survival Committee (SBSC), while opposed to a national do-not-call 
list, nevertheless offered a recommendation that would make such a list 
less onerous for small businesses. SBSC suggested exempting local calls 
that might result in a face-to-face transaction from the do-not-call 
list requirements. National Association of Insurance & Financial 
Advisors also encouraged exempting calls which result in face-to-face 
meetings and recommended an exemption for those businesses that make a 
de minimis number of calls.
    167. The Commission received comments arguing that a national do-
not-call list ``would be cumbersome'' and too expensive for small 
businesses to use. Direct Selling Association specifically indicated 
that a national do-not-call list would increase businesses' start-up 
costs if they were required to purchase the list. In addition, Mortgage 
Bankers Association of America (MBA) maintained that many small lenders 
use referrals from existing customers, not large lists, to attract new 
business. Such referrals, MBA suggested, will be difficult to scrub 
against a national do-not-call list. Some commenters suggested that an 
option to help reduce the cost of a national do-not-call list for small 
businesses would be to offer smaller pieces of the list to small 
businesses.
    168. Yellow Pages Integrated Media Association urged the Commission 
to continue to exempt business-to-business calls from a national do-
not-call list, because small businesses benefit tremendously by 
advertising in yellow pages and on-line. However, other commenters 
requested that small businesses be allowed to include their telephone 
numbers on the national do-not-call list. One small business commenter 
stated that ''* * * telemarketing * * * interferes with business 
operations, especially small business operations * * *.'' 
Mathemaesthetics, Inc. (Mathemaesthetics) Comments at 6. Another 
commenter argued that ``people that work from home * * * should not 
have to be bothered with telemarketing calls that would impact their 
job performance and potentially their ability to make a living.'' David 
T. Piekarski Comments (Docket No. 03-62) at 1-2. Finally, some have 
assured the Commission that a national do-not-call list would be 
manageable and feasible to maintain. NCS Pearson, Inc. (NCS), for 
example, maintained that even extremely small telemarketers could gain 
access to the do-not-call list at a reasonable cost using the Internet.
    169. Web site or Toll-Free Number to Access Company-Specific Lists 
and to Confirm Requests. The Commission sought comment on whether to 
consider any modifications that would allow consumers greater 
flexibility to register on company-specific do-not-call lists. We 
specifically asked whether companies should be required to provide a 
toll-free number and/or Web site that consumers can access to register 
their names on do-not-call lists. Some commenters argued that it would 
be costly if small, local businesses were required to design and 
maintain Web sites or provide toll-free numbers for consumers to make 
do-not-call requests. In addition, they maintained that businesses 
should not be required to confirm registration of a consumer's name on 
a company's do-not-call list. Confirmations by mail, they stated, would 
be expensive for a business and probably perceived by the consumer as 
``junk mail.''
    170. Established Business Relationship. One issue raised by 
commenters as particularly burdensome for small business was monitoring 
existing business relationships and do-not-call requests. NFIB stated 
that members have found requests by existing customers to cease 
contacting them ``unwieldy and difficult * * * to translate as a 
business practice.'' NFIB Comments at 2. ``An individual who continues 
to interact with a [sic] these small businesses following a `do not 
contact' request does not sever the business relationship de facto * * 
*''. NFIB Comments at 2. According to

[[Page 44174]]

NFIB, it should be the right of the business to continue to call that 
customer. They argued that it should be the responsibility of the 
customer to terminate the relationship with that business 
affirmatively.
    171. National Automobile Dealers Association (NADA) indicated that 
there has been no significant change that would warrant a revision of 
the established business relationship exemption. In fact, NADA stated 
that ``narrowing the exemption would unnecessarily deprive small 
businesses of a cost-effective marketing opportunity.'' NADA Comments 
at 2. According to NADA, small businesses must maximize their marketing 
resources and the best way to do so is to direct their marketing 
efforts toward their existing customers.
    172. While no commenter specifically addressed the effect of time 
limits on small businesses, several entities discussed time limits for 
the established business relationship rule in general. DMA indicated 
the difficulty in establishing a ``clock'' that ``will apply across all 
the industries that use the phone to relate to their customers.'' DMA 
Comments at 20. DMA continued by stating ``[d]ifferent business models 
require different periods of time.'' DMA Comments at 20. This concept 
was supported by Nextel, ``the FTC's eighteen-month limit on its EBR 
rule would be inappropriate for the telecommunications industry'' and 
would ``dramatically increase administrative burdens and costs for all 
businesses as they would be forced to monitor and record every customer 
inquiry and purchasing pattern to ensure compliance with the FCC's 
rules.'' Nextel Reply Comments 12-13.
    173. Unsolicited Facsimile Advertising and ``War Dialing''. Privacy 
Rights commented that the practice of dialing large blocks of numbers 
to identify facsimile lines, i.e., ``war dialing,'' should be 
prohibited, especially because such calls cannot be characterized as 
telemarketing. It argued that ``this practice is particularly troubling 
for small business owners who often work out of home offices'' because 
it deprives the small business owner of the use of the equipment, 
creates an annoyance and interrupts business calls. Privacy Rights 
Comments at 4-5.
    174. NFIB advocated on behalf of its small business members that 
``the ability to fax information to their established customers is an 
essential commercial tool.'' NFIB Comments at 3-4. Any customer who 
provides contact information when patronizing a business is providing 
express permission to be contacted by that business, including via 
facsimile advertising. In addition, NFIB indicated that businesses 
engaged in facsimile advertising should not be required to identify 
themselves, and that customers should be required to notify the 
business that they do not wish to receive such faxes. NADA agreed that 
the Commission should ``preserve its determination that a prior 
business relationship between a fax sender and recipient establishes 
the requisite consent to receive fax advertisements.'' NADA Comments at 
2. According to NADA, changing these rules would deprive small 
businesses of a marketing tool upon which they have come to rely.
    175. Other commenters disagreed, explaining that numerous small 
businesses are burdened by the intrusion of ringing telephones and fax 
machines, the receipt of advertisements in which they are not 
interested, the depletion of toner and paper, and the time spent 
dealing with these unwanted faxes. A few home-based businesses and 
other companies maintain that facsimile advertisements interfere with 
the receipt of faxes connected to their own business, and that the time 
spent collecting and sorting these faxes increases their labor costs. 
In fact, NFIB has received complaints from its own members ``who * * * 
failed to realize that their membership entitles them to the receipt of 
such information via fax.'' NFIB Comments at 2 (emphasis added).
    176. Caller ID Requirements. In response to the Commission's 
proposal to require telemarketers to transmit caller ID or prohibit the 
blocking of such information, NYSCPB favored prohibiting the 
intentional blocking of caller ID information, but acknowledged that 
requiring the transmission of caller ID may be inappropriate for 
smaller firms. NYSCPB stated that ``[w]hile mandatory transmission of 
caller ID information would undoubtedly facilitate do-not-call 
enforcement * * * we would not want to impose onerous burdens on 
smaller, less technically sophisticated firms * * *.'' NYSCPB-Other 
Than National DNC List Comments at 9. In addition, NYSCPB suggested 
that smaller businesses that lack the capability to transmit caller ID 
be exempt from providing caller ID information until the business 
installs new equipment with caller ID capabilities.
C. Description and Estimate of the Number of Small Entities to Which 
the Rules Will Apply
    177. 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 rules adopted herein. The RFA generally defines the 
term ``small entity'' as having the same meaning as the terms ``small 
business,'' ``small organization,'' and ``small governmental 
jurisdiction.'' 5 U.S.C. 601(6). In addition, the term ``small 
business'' has the same meaning as the term ``small business concern'' 
under the Small Business Act. 5 U.S.C. 601(3) (incorporating by 
reference the definition of ``small-business concern'' in the Small 
Business Act, 15 U.S.C. 632). 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). 15 U.S.C. 632.
    178. The Commission's rules on telephone solicitation and the use 
of autodialers, artificial or prerecorded messages and telephone 
facsimile machines apply to a wide range of entities, including all 
entities that use the telephone or facsimile machine to advertise. 47 
CFR 64.1200. That is, our action affects the myriad of businesses 
throughout the nation that use telemarketing to advertise. For 
instance, funeral homes, mortgage brokers, automobile dealers, 
newspapers and telecommunications companies could all be affected. 
Thus, we expect that the rules adopted in this proceeding could have a 
significant economic impact on a substantial number of small entities.
    179. Nationwide, there are a total of 22.4 million small 
businesses, according to SBA data. And, as of 1992, nationwide there 
were approximately 275,801 small organizations [not-for-profit].
    180. Again, we note that our action affects an exhaustive list of 
business types and varieties. We will mention with particularity the 
intermediary groups that engage in this activity. SBA has determined 
that ``telemarketing bureaus'' with $6 million or less in annual 
receipts qualify as small businesses. See 13 CFR 121.201, NAICS code 
561422. For 1997, there were 1,727 firms in the ``telemarketing 
bureau'' category, total, which operated for the entire year. Of this 
total, 1,536 reported annual receipts of less than $5 million, and an 
additional 77 reported receipts of $5 million to $9,999,999. Therefore, 
the majority of such firms can be considered to be small businesses.
D. Description of Projected Reporting, Recordkeeping, and Other 
Compliance Requirements for Small Entities
    181. The rules contained herein require significant recordkeeping

[[Page 44175]]

requirements on the part of businesses, including small business 
entities. First, while the national do-not-call list will be developed 
and maintained by the FTC, all businesses that engage in telemarketing 
will be responsible for obtaining the list of telephone numbers on the 
national do-not-call list and scrubbing their calling lists to avoid 
calling those numbers. They must also continue to be responsible for 
maintaining their own company-specific do-not-call lists; however, this 
is not a new requirement, but a continuation of the Commission's 
existing rules. The Commission has reduced the period of time that 
businesses must retain company-specific do-not-call requests from 10 
years to five years. In addition, for those businesses, including small 
businesses, that wish to call consumers under the ``established 
business relationship'' exemption, they must continue to maintain 
customer lists in the normal course of business. Because of the time 
limits associated with this rule, businesses will need to monitor and 
record consumer contacts to assure that they are complying with the 18-
month and three-month provisions in the rule. Businesses that want to 
call consumers with whom they have no relationship, but who are listed 
on the national do-not-call list, must obtain a consumer's express 
permission to call. This permission must be evidenced by a signed, 
written agreement.
    182. Second, all businesses that use autodialers, including 
predictive dialers, to sell goods or services, will be required to 
maintain records documenting compliance with the call abandonment 
rules. Such records should demonstrate the telemarketers' compliance 
with a call abandonment rate of no less than three percent measured 
over a 30-day period, with the two-second-transfer rule, and with the 
ring duration requirement.
    183. Third, with the exception of tax-exempt nonprofit 
organizations, all businesses that engage in telemarketing will be 
required to transmit caller ID information.
    184. Fourth, businesses that advertise by fax will be required to 
maintain records demonstrating that recipients have provided express 
permission to send fax advertisements. Such permission must be given in 
writing, and businesses must document that they have obtained the 
required permission.
E. Steps Taken To Minimize the Significant Economic Impact on Small 
Entities, and Significant Alternatives Considered
    185. The RFA requires an agency to describe any significant 
alternatives that it has considered in developing its 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 such 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 
such small entities.'' 5 U.S.C. 603(c)(1) through (c)(4).
    186. There were five specific areas in which the Commission 
considered alternatives for small businesses. These areas were: (1) 
Establishing a National Do-Not-Call List ((a) providing a portion of 
the national do-not-call list (five area codes) for free, (b) providing 
businesses with 30 days to process do-not-call requests, and (c) 
reducing the do-not-call record retention rate from 10 years to five 
years); (2) maintaining the current established business rule exemption 
and adopting the FTC's time limits of 18 months and three months; (3) 
establishing a call abandonment rate of three percent, rather than zero 
percent, and measuring the rate over a 30-day period, rather than on a 
per day basis; (4) continuing to prohibit facsimile advertising to 
residential and business numbers; and (5) declining to require 
businesses to maintain a Web site or toll-free number for do-not-call 
requests or confirmation of such requests by consumers. Small 
businesses presented arguments on both sides of each of these issues.
    187. National Do-Not-Call List. This Order establishes a national 
do-not-call list for those residential telephone subscribers who wish 
to avoid most unwanted telephone solicitations. Although many 
businesses, including small businesses, objected to a national do-not-
call registry, the Commission determined that a national do-not-call 
list was necessary to carry out the directives in the TCPA. We agreed 
with those commenters who maintained that the company-specific approach 
to concerns about unwanted telephone solicitations does not alone 
adequately protect individuals' privacy interests. We declined to 
exempt local solicitations and small businesses from the national do-
not-call list. Given the numerous entities that solicit by telephone, 
and the technological tools that allow even small entities to make a 
significant number of solicitation calls, we believe that to do so 
would undermine the effectiveness of the national do-not-call rules in 
protecting consumer privacy. In addition, we declined to permit 
businesses to register their numbers on the national do-not-call 
registry, despite the requests of numerous small business owners to do 
so. The TCPA expressly contemplates that a national do-not-call 
database includes residential telephone subscribers' numbers. Although 
business numbers will not be included in the national do-not-call 
database, a business could nevertheless request that its number be 
added to a company's do-not-call list.
    188. The Commission considered the costs to small businesses of 
purchasing the national do-not-call list. In an attempt to minimize the 
cost for small businesses, we have considered an alternative and 
determined that businesses will be allowed to obtain up to five area 
codes free of charge. Since many small businesses telemarket within a 
local area, providing five area codes at no cost should help to reduce 
or eliminate the costs of purchasing the national registry for small 
businesses. Furthermore, as suggested by NCS, small businesses should 
be able to gain access to the national list in an efficient, cost-
effective manner via the Internet.
    189. As discussed extensively in the Order, many businesses, 
including small business entities, requested specific exemptions from 
the requirements of a national do-not-call list. In order to minimize 
potential confusion for both consumers and businesses alike, we 
declined to create specific exemptions for small businesses. We believe 
the exemptions adopted for calls made to consumers with whom a seller 
has an established business relationship and those that have provided 
express agreement to be called provide businesses with a reasonable 
opportunity to conduct their business while protecting consumer privacy 
interests.
    190. The Commission also considered modifying for small businesses 
the time frames for (1) processing consumers' do-not-call requests; (2) 
retaining consumer do-not-call records; and (3) scrubbing calling lists 
against the national do-not-call registry. In doing so, we recognized 
the limitations on small businesses of processing requests in a timely 
manner. Therefore, we determined to require that both large and small 
businesses must honor do-not-call requests within 30 days from the date 
such a request is made, instead of requiring that businesses honor 
requests in less time. Although some commenters suggested periods of up 
to 60 to 90 days to process do-not-call requests, we determined that 
such an inconsistency in the rules would lead to confusion for 
consumers.

[[Page 44176]]

Consumers might not easily recognize that the telemarketer calling 
represented a small business and that they must then allow a longer 
period of time for their do-not-call requests to be processed.
    191. The Commission also determined to reduce the retention period 
of do-not-call records from 10 years to five years. This modification 
should benefit businesses that are concerned about telephone numbers 
that change hands over time. They argue that a shorter retention 
requirement will result in do-not-call lists that more accurately 
reflect those consumers who have requested not to be called. Finally, 
we considered allowing small businesses additional time to scrub their 
customer call lists against the national do-not-call database. The 
FTC's rules require telemarketers to scrub their lists every 90 days. 
For the sake of consistency, and to avoid confusion on the part of 
consumers and businesses, the Commission determined to require all 
businesses to access the national registry and scrub their calling 
lists of numbers in the registry every 90 days.
    192. Established Business Relationship. We have modified the 
current definition of ``established business relationship'' so that it 
is limited in duration to 18 months from any purchase or transaction 
and three months from any inquiry or application. The revised 
definition is consistent with the definition adopted by the FTC. We 
concluded that regulating the duration of an established business 
relationship is necessary to minimize confusion and frustration for 
consumers who receive calls from companies they have not contacted or 
patronized for many years. There was little consensus among industry 
members about how long an established business relationship should last 
following a transaction between the consumer and seller. We believe the 
18-month timeframe strikes an appropriate balance between industry 
practices and consumer privacy interests. Although businesses, 
including small businesses must monitor the length of relationships 
with their customers to determine whether they can lawfully call a 
customer, we believe that a rule consistent with the FTC's will benefit 
businesses by creating one uniform standard with which businesses must 
comply.
    193. Call Abandonment. In the 2002 Notice, the Commission requested 
information on the use of predictive dialers and the harms that result 
when predictive dialers abandon calls. In response, some small 
businesses urged the Commission to adopt a maximum rate of zero on 
abandoned calls. They described their frustration over hang-up calls 
that interrupt their work and with answering the phone ``only to find 
complete silence on the other end.'' Mathemaesthetics Comments at 6. 
Most industry members encouraged the Commission to adopt an abandonment 
rate of no less than five percent, claiming that this rate ``minimizes 
abandoned calls, while still allowing for the substantial benefits 
achieved by predictive dialers.'' WorldCom Reply at 18-19. The 
Commission has determined that a three percent maximum rate on 
abandoned calls balances the interests of businesses that derive 
economic benefits from predictive dialers and consumers who find 
intrusive those calls delivered by predictive dialers. We believe that 
this alternative, a rate of three percent, will also benefit small 
businesses that are affected by interruptions from hang-ups and ``dead 
air'' calls.
    194. The three percent rate will be measured over a 30-day period, 
rather than on a per day basis. Industry members maintained that a per 
day measurement would not account for short-term fluctuations in 
marketing campaigns and may be overly burdensome to smaller 
telemarketers. We believe that measuring the three percent rate over a 
longer period of time will still reduce the overall number of abandoned 
calls, yet permit telemarketers to manage individual calling campaigns 
effectively. It will also permit telemarketers to more easily comply 
with the recordkeeping requirements associated with the use of 
predictive dialers.
    195. Unsolicited Facsimile Advertising. The record reveals that 
facsimile advertising can both benefit and harm small businesses with 
limited resources. The small businesses and organizations that rely 
upon faxing as a cost-effective way to advertise insist that the 
Commission allow facsimile advertising to continue. Other small 
businesses contend that facsimile advertising interferes with their 
daily operations, increases labor costs, and wastes resources such as 
paper and toner. The Commission has reversed its prior conclusion that 
an established business relationship provides companies with the 
necessary express permission to send faxes to their customers. Under 
the amended rules, a business may advertise by fax with the prior 
express permission of the fax recipient, which must be in writing. 
Businesses may obtain such written permission through direct mail, Web 
sites, or during interaction with customers in their stores. This 
alternative will benefit those small businesses, which are inundated 
with unwanted fax advertisements.
    196. Web site or Toll-Free Number to Access Company-Specific Lists 
and to Confirm Requests. Lastly, the Commission has determined not to 
require businesses to provide a Web site or toll-free number for 
consumers to request placement on company-specific do-not-call lists or 
to respond affirmatively to do-not-call requests or otherwise provide 
some means of confirmation that consumers have been added to a 
company's do-not-call list. Several commenters indicated that such 
requirements would be costly to small businesses. Although we believe 
these measures would improve the ability of consumers to register do-
not-call requests, we agree that such requirements would be potentially 
costly to businesses, particularly small businesses. Instead, we 
believe that the national do-not-call registry will provide consumers 
with a viable alternative if they are concerned that their company-
specific do-not-call requests are not being honored. In addition, 
consumers may pursue a private right of action if there is a violation 
of the do-not-call rules. This alternative should reduce, for small 
businesses who engage in telemarketing, both the potential cost and 
resource burdens of maintaining company-specific lists.
    197. Report to Congress: The Commission will send a copy of the 
Order, including this FRFA, in a report to be sent to Congress pursuant 
to the Congressional Review Act, 5 U.S.C. 801(a)(1)(A). In addition, 
the Commission will send a copy of the Order, including this FRFA, to 
the Chief Counsel for Advocacy of the SBA. A copy of the Order and FRFA 
(or summaries thereof) will also be published in the Federal Register.

Ordering Clauses

    198. Accordingly, pursuant to the authority contained in Sections 
1-4, 222, 227, and 303(r) of the Communications Act of 1934, as 
amended; 47 U.S.C. 151-154, 222 and 227; and 47 CFR 64.1200 of the 
Commission's rules, and the Do-Not-Call Implementation Act, Public Law 
108-10, 117 Stat. 557, the Report and Order in CG Docket No. 02-278 IS 
ADOPTED, and Parts 64 and 68 of the Commission's rules, 47 CFR Parts 
64.1200, 64.1601, and 68.318, are amended as set forth in the attached 
Rule Changes. Effective August 25, 2003, except for 47 CFR 
64.1200(c)(2), which contains the national do-not-call rules, which 
will go into effect on October 1, 2003; 47 CFR 64.1200(a)(5)

[[Page 44177]]

and (6) which contain the call abandonment rules, which will go into 
effect on October 1, 2003; 47 CFR 64.1601(e), which contains the caller 
ID rules, which will go into effect on January 29, 2004; and 
Sec. Sec. 64.1200(a)(3)(i), (d)(1), (d)(3), (d)(6), (f)(3) and (g)(1), 
which contain information collection requirements under the Paperwork 
Reduction Act (PRA) that have not been approved by the Office of 
Management and Budget (OMB). The Commission will publish a document in 
the Federal Register announcing the effective date for those sections.
    199. The comments addressing the applicability of the informal 
complaint rules to telemarketers ARE INCORPORATED into CI Docket 02-32.
    200. The Commission's Consumer & Governmental Affairs Bureau shall 
have authority to issue any reports to Congress as required by the Do-
Not-Call Implementation Act.
    201. The Commission's Consumer & Governmental Affairs Bureau, 
Reference Information Center, SHALL SEND a copy of this Report and 
Order, including the Final Regulatory Flexibility Analysis, to the 
Chief Counsel for Advocacy of the Small Business Administration.

List of Subjects in 47 CFR Parts 64 and 68

    Telephone.

Federal Communications Commission.
William F. Caton,
Deputy Secretary.

Final Rules

0
For the reasons discussed in the preamble, the Federal Communications 
Commission amends parts 64 and 68 of the Code of Federal Regulations as 
follows:

PART 64--MISCELLANEOUS RULES RELATING TO COMMON CARRIERS

0
1. The authority citation for part 64 continues to read:

    Authority: 47 U.S.C. 154, 254(k); secs. 403(b)(2)(B), (c), 
Public Law 104-104, 110 Stat. 56. Interpret or apply 47 U.S.C. 201, 
218, 225, 226, 228, and 254(k) unless otherwise noted.


0
2. Subpart L is amended by revising the subpart heading to read as 
follows:
* * * * *

Subpart L--Restrictions on Telemarketing and Telephone Solicitation

* * * * *

0
3. Section 64.1200 is revised to read as follows:


Sec.  64.1200  Delivery restrictions.

    (a) No person or entity may: (1) Initiate any telephone call (other 
than a call made for emergency purposes or made with the prior express 
consent of the called party) using an automatic telephone dialing 
system or an artificial or prerecorded voice,
    (i) To any emergency telephone line, including any 911 line and any 
emergency line of a hospital, medical physician or service office, 
health care facility, poison control center, or fire protection or law 
enforcement agency;
    (ii) To the telephone line of any guest room or patient room of a 
hospital, health care facility, elderly home, or similar establishment; 
or
    (iii) To any telephone number assigned to a paging service, 
cellular telephone service, specialized mobile radio service, or other 
radio common carrier service, or any service for which the called party 
is charged for the call.
    (2) Initiate any telephone call to any residential line using an 
artificial or prerecorded voice to deliver a message without the prior 
express consent of the called party, unless the call,
    (i) Is made for emergency purposes,
    (ii) Is not made for a commercial purpose,
    (iii) Is made for a commercial purpose but does not include or 
introduce an unsolicited advertisement or constitute a telephone 
solicitation,
    (iv) Is made to any person with whom the caller has an established 
business relationship at the time the call is made, or
    (v) Is made by or on behalf of a tax-exempt nonprofit organization.
    (3) Use a telephone facsimile machine, computer, or other device to 
send an unsolicited advertisement to a telephone facsimile machine,
    (i) For purposes of paragraph (a)(3) of this section, a facsimile 
advertisement is not ``unsolicited'' if the recipient has granted the 
sender prior express invitation or permission to deliver the 
advertisement, as evidenced by a signed, written statement that 
includes the facsimile number to which any advertisements may be sent 
and clearly indicates the recipient's consent to receive such facsimile 
advertisements from the sender.
    (ii) A facsimile broadcaster will be liable for violations of 
paragraph (a)(3) of this section if it demonstrates a high degree of 
involvement in, or actual notice of, the unlawful activity and fails to 
take steps to prevent such facsimile transmissions.
    (4) Use an automatic telephone dialing system in such a way that 
two or more telephone lines of a multi-line business are engaged 
simultaneously.
    (5) Disconnect an unanswered telemarketing call prior to at least 
15 seconds or four (4) rings.
    (6) Abandon more than three percent of all telemarketing calls that 
are answered live by a person, measured over a 30-day period. A call is 
``abandoned'' if it is not connected to a live sales representative 
within two (2) seconds of the called person's completed greeting. 
Whenever a sales representative is not available to speak with the 
person answering the call, that person must receive, within two (2) 
seconds after the called person's completed greeting, a prerecorded 
identification message that states only the name and telephone number 
of the business, entity, or individual on whose behalf the call was 
placed, and that the call was for ``telemarketing purposes.'' The 
telephone number so provided must permit any individual to make a do-
not-call request during regular business hours for the duration of the 
telemarketing campaign. The telephone number may not be a 900 number or 
any other number for which charges exceed local or long distance 
transmission charges. The seller or telemarketer must maintain records 
establishing compliance with paragraph (a)(6) of this section.
    (i) A call for telemarketing purposes that delivers an artificial 
or prerecorded voice message to a residential telephone line that is 
assigned to a person who either has granted prior express consent for 
the call to be made or has an established business relationship with 
the caller shall not be considered an abandoned call if the message 
begins within two (2) seconds of the called person's completed 
greeting.
    (ii) Calls made by or on behalf of tax-exempt nonprofit 
organizations are not covered by paragraph (a)(6) of this section.
    (7) Use any technology to dial any telephone number for the purpose 
of determining whether the line is a facsimile or voice line.
    (b) All artificial or prerecorded telephone messages shall:
    (1) At the beginning of the message, state clearly the identity of 
the business, individual, or other entity that is responsible for 
initiating the call. If a business is responsible for initiating the 
call, the name under which the entity is registered to conduct business 
with the State Corporation Commission (or comparable regulatory 
authority) must be stated, and
    (2) During or after the message, state clearly the telephone number 
(other than that of the autodialer or prerecorded message player that 
placed the call) of such business, other entity,

[[Page 44178]]

or individual. The telephone number provided may not be a 900 number or 
any other number for which charges exceed local or long distance 
transmission charges. For telemarketing messages to residential 
telephone subscribers, such telephone number must permit any individual 
to make a do-not-call request during regular business hours for the 
duration of the telemarketing campaign.
    (c) No person or entity shall initiate any telephone solicitation, 
as defined in paragraph (f)(9) of this section, to:
    (1) Any residential telephone subscriber before the hour of 8 a.m. 
or after 9 p.m. (local time at the called party's location), or
    (2) A residential telephone subscriber who has registered his or 
her telephone number on the national do-not-call registry of persons 
who do not wish to receive telephone solicitations that is maintained 
by the federal government. Such do-not-call registrations must be 
honored for a period of 5 years. Any person or entity making telephone 
solicitations (or on whose behalf telephone solicitations are made) 
will not be liable for violating this requirement if:
    (i) It can demonstrate that the violation is the result of error 
and that as part of its routine business practice, it meets the 
following standards:
    (A) Written procedures. It has established and implemented written 
procedures to comply with the national do-not-call rules;
    (B) Training of personnel. It has trained its personnel, and any 
entity assisting in its compliance, in procedures established pursuant 
to the national do-not-call rules;
    (C) Recording. It has maintained and recorded a list of telephone 
numbers that the seller may not contact;
    (D) Accessing the national do-not-call database. It uses a process 
to prevent telephone solicitations to any telephone number on any list 
established pursuant to the do-not-call rules, employing a version of 
the national do-not-call registry obtained from the administrator of 
the registry no more than three months prior to the date any call is 
made, and maintains records documenting this process; and
    (E) Purchasing the national do-not-call database. It uses a process 
to ensure that it does not sell, rent, lease, purchase or use the 
national do-not-call database, or any part thereof, for any purpose 
except compliance with this section and any such state or federal law 
to prevent telephone solicitations to telephone numbers registered on 
the national database. It purchases access to the relevant do-not-call 
data from the administrator of the national database and does not 
participate in any arrangement to share the cost of accessing the 
national database, including any arrangement with telemarketers who may 
not divide the costs to access the national database among various 
client sellers; or
    (ii) It has obtained the subscriber's prior express invitation or 
permission. Such permission must be evidenced by a signed, written 
agreement between the consumer and seller which states that the 
consumer agrees to be contacted by this seller and includes the 
telephone number to which the calls may be placed; or
    (iii) The telemarketer making the call has a personal relationship 
with the recipient of the call.
    (d) No person or entity shall initiate any call for telemarketing 
purposes to a residential telephone subscriber unless such person or 
entity has instituted procedures for maintaining a list of persons who 
request not to receive telemarketing calls made by or on behalf of that 
person or entity. The procedures instituted must meet the following 
minimum standards:
    (1) Written policy. Persons or entities making calls for 
telemarketing purposes must have a written policy, available upon 
demand, for maintaining a do-not-call list.
    (2) Training of personnel engaged in telemarketing. Personnel 
engaged in any aspect of telemarketing must be informed and trained in 
the existence and use of the do-not-call list.
    (3) Recording, disclosure of do-not-call requests. If a person or 
entity making a call for telemarketing purposes (or on whose behalf 
such a call is made) receives a request from a residential telephone 
subscriber not to receive calls from that person or entity, the person 
or entity must record the request and place the subscriber's name, if 
provided, and telephone number on the do-not-call list at the time the 
request is made. Persons or entities making calls for telemarketing 
purposes (or on whose behalf such calls are made) must honor a 
residential subscriber's do-not-call request within a reasonable time 
from the date such request is made. This period may not exceed thirty 
days from the date of such request. If such requests are recorded or 
maintained by a party other than the person or entity on whose behalf 
the telemarketing call is made, the person or entity on whose behalf 
the telemarketing call is made will be liable for any failures to honor 
the do-not-call request. A person or entity making a call for 
telemarketing purposes must obtain a consumer's prior express 
permission to share or forward the consumer's request not to be called 
to a party other than the person or entity on whose behalf a 
telemarketing call is made or an affiliated entity.
    (4) Identification of sellers and telemarketers. A person or entity 
making a call for telemarketing purposes must provide the called party 
with the name of the individual caller, the name of the person or 
entity on whose behalf the call is being made, and a telephone number 
or address at which the person or entity may be contacted. The 
telephone number provided may not be a 900 number or any other number 
for which charges exceed local or long distance transmission charges.
    (5) Affiliated persons or entities. In the absence of a specific 
request by the subscriber to the contrary, a residential subscriber's 
do-not-call request shall apply to the particular business entity 
making the call (or on whose behalf a call is made), and will not apply 
to affiliated entities unless the consumer reasonably would expect them 
to be included given the identification of the caller and the product 
being advertised.
    (6) Maintenance of do-not-call lists. A person or entity making 
calls for telemarketing purposes must maintain a record of a caller's 
request not to receive further telemarketing calls. A do-not-call 
request must be honored for 5 years from the time the request is made.
    (7) Tax-exempt nonprofit organizations are not required to comply 
with 64.1200(d).
    (e) The rules set forth in paragraph (c) and (d) of this section 
are applicable to any person or entity making telephone solicitations 
or telemarketing calls to wireless telephone numbers to the extent 
described in the Commission's Report and Order, CG Docket No. 02-278, 
FCC 03-153, ``Rules and Regulations Implementing the Telephone Consumer 
Protection Act of 1991.''
    (f) As used in this section:
    (1) The terms automatic telephone dialing system and autodialer 
mean equipment which has the capacity to store or produce telephone 
numbers to be called using a random or sequential number generator and 
to dial such numbers.
    (2) The term emergency purposes means calls made necessary in any 
situation affecting the health and safety of consumers.
    (3) The term established business relationship means a prior or 
existing relationship formed by a voluntary two-way communication 
between a person or entity and a residential subscriber with or without 
an exchange of consideration, on the basis of the subscriber's purchase 
or transaction

[[Page 44179]]

with the entity within the eighteen (18) months immediately preceding 
the date of the telephone call or on the basis of the subscriber's 
inquiry or application regarding products or services offered by the 
entity within the three months immediately preceding the date of the 
call, which relationship has not been previously terminated by either 
party.
    (i) The subscriber's seller-specific do-not-call request, as set 
forth in paragraph (d)(3) of this section, terminates an established 
business relationship for purposes of telemarketing and telephone 
solicitation even if the subscriber continues to do business with the 
seller.
    (ii) The subscriber's established business relationship with a 
particular business entity does not extend to affiliated entities 
unless the subscriber would reasonably expect them to be included given 
the nature and type of goods or services offered by the affiliate and 
the identity of the affiliate.
    (4) The term facsimile broadcaster means a person or entity that 
transmits messages to telephone facsimile machines on behalf of another 
person or entity for a fee.
    (5) The term seller means the person or entity on whose behalf a 
telephone call or message is initiated for the purpose of encouraging 
the purchase or rental of, or investment in, property, goods, or 
services, which is transmitted to any person.
    (6) The term telemarketer means the person or entity that initiates 
a telephone call or message for the purpose of encouraging the purchase 
or rental of, or investment in, property, goods, or services, which is 
transmitted to any person.
    (7) The term telemarketing means the initiation of a telephone call 
or message for the purpose of encouraging the purchase or rental of, or 
investment in, property, goods, or services, which is transmitted to 
any person.
    (8) The term telephone facsimile machine means equipment which has 
the capacity to transcribe text or images, or both, from paper into an 
electronic signal and to transmit that signal over a regular telephone 
line, or to transcribe text or images (or both) from an electronic 
signal received over a regular telephone line onto paper.
    (9) The term telephone solicitation means the initiation of a 
telephone call or message for the purpose of encouraging the purchase 
or rental of, or investment in, property, goods, or services, which is 
transmitted to any person, but such term does not include a call or 
message:
    (i) To any person with that person's prior express invitation or 
permission;
    (ii) To any person with whom the caller has an established business 
relationship; or
    (iii) By or on behalf of a tax-exempt nonprofit organization.
    (10) The term unsolicited advertisement means any material 
advertising the commercial availability or quality of any property, 
goods, or services which is transmitted to any person without that 
person's prior express invitation or permission.
    (11) The term personal relationship means any family member, 
friend, or acquaintance of the telemarketer making the call.
    (g) Beginning January 1, 2004, common carriers shall:
    (1) When providing local exchange service, provide an annual 
notice, via an insert in the subscriber's bill, of the right to give or 
revoke a notification of an objection to receiving telephone 
solicitations pursuant to the national do-not-call database maintained 
by the federal government and the methods by which such rights may be 
exercised by the subscriber. The notice must be clear and conspicuous 
and include, at a minimum, the Internet address and toll-free number 
that residential telephone subscribers may use to register on the 
national database.
    (2) When providing service to any person or entity for the purpose 
of making telephone solicitations, make a one-time notification to such 
person or entity of the national do-not-call requirements, including, 
at a minimum, citation to 47 CFR 64.1200 and 16 CFR 310. Failure to 
receive such notification will not serve as a defense to any person or 
entity making telephone solicitations from violations of this section.
    (h) The administrator of the national do-not-call registry that is 
maintained by the federal government shall make the telephone numbers 
in the database available to the States so that a State may use the 
telephone numbers that relate to such State as part of any database, 
list or listing system maintained by such State for the regulation of 
telephone solicitations.

0
4. Section 64.1601 is amended by adding paragraph (e) to read as 
follows:


Sec.  64.1601  Delivery requirements and privacy restrictions.

* * * * *
    (e) Any person or entity that engages in telemarketing, as defined 
in section 64.1200(f)(7) must transmit caller identification 
information.
    (1) For purposes of this paragraph, caller identification 
information must include either CPN or ANI, and, when available by the 
telemarketer's carrier, the name of the telemarketer. It shall not be a 
violation of this paragraph to substitute (for the name and phone 
number used in, or billed for, making the call) the name of the seller 
on behalf of which the telemarketing call is placed and the seller's 
customer service telephone number. The telephone number so provided 
must permit any individual to make a do-not-call request during regular 
business hours.
    (2) Any person or entity that engages in telemarketing is 
prohibited from blocking the transmission of caller identification 
information.
    (3) Tax-exempt nonprofit organizations are not required to comply 
with this paragraph.

PART 68--CONNECTION OF TERMINAL EQUIPMENT TO THE TELEPHONE NETWORK

0
5. The authority citation for part 68 continues to read:

    Authority: 47 U.S.C. 154, 303.



0
6. Section 68.318 is amended by revising paragraph (d) to read as 
follows:


Sec.  68.318  Additional limitations.

* * * * *
    (d) Telephone facsimile machines; Identification of the sender of 
the message. It shall be unlawful for any person within the United 
States to use a computer or other electronic device to send any message 
via a telephone facsimile machine unless such person clearly marks, in 
a margin at the top or bottom of each transmitted page of the message 
or on the first page of the transmission, the date and time it is sent 
and an identification of the business, other entity, or individual 
sending the message and the telephone number of the sending machine or 
of such business, other entity, or individual. If a facsimile 
broadcaster demonstrates a high degree of involvement in the sender's 
facsimile messages, such as supplying the numbers to which a message is 
sent, that broadcaster's name, under which it is registered to conduct 
business with the State Corporation Commission (or comparable 
regulatory authority), must be identified on the facsimile, along with 
the sender's name. Telephone facsimile machines manufactured on and 
after December 20, 1992, must clearly mark such identifying information 
on each transmitted page.
* * * * *

[FR Doc. 03-18766 Filed 7-24-03; 8:45 am]
BILLING CODE 6712-01-P