[Federal Register Volume 73, Number 23 (Monday, February 4, 2008)]
[Rules and Regulations]
[Pages 6444-6446]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-1980]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 64

[CC Docket No. 94-129; FCC 07-222]


Implementation of the Subscriber Carrier Selection Changes 
Provisions of the Telecommunications Act of 1996; Policies and Rules 
Concerning Unauthorized Changes of Consumers' Long Distance Carriers; 
LEC Coalition Application for Review Regarding Carrier Change Rules

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this document, the Commission denies an Application for 
Review filed by a coalition of local exchange carriers (``LEC 
Petitioners'') regarding the Commission's carrier change verification 
rules. Specifically, the Commission affirms that it is not permissible 
for an executing carrier to block a carrier change submission by a 
submitting carrier, based on the executing carrier's own finding that 
the customer's information does not match exactly the information in 
the executing carrier's records.

DATES: Effective February 4, 2008.

ADDRESSES: Federal Communications Commission, 445 12th Street, SW., 
Washington, DC 20554.

FOR FURTHER INFORMATION CONTACT: Nancy Stevenson, Consumer & 
Governmental Affairs Bureau at (202)

[[Page 6445]]

418-7039 (voice), or e-mail [email protected].

SUPPLEMENTARY INFORMATION: On July 8, 2005, an application for review 
was filed by a coalition of local exchange carriers against the 
Commission's Implementation of the Subscriber Carrier Selection Changes 
Provisions of the Telecommunications Act of 1996, declaratory ruling, 
DA 05-1618, published at 71 FR 2895 (January 18, 2006). This is a 
summary of the Commission's document FCC 07-222, adopted December 18, 
2007, released January 4, 2008, denying the application for review. 
Copies of document FCC 07-222 and any subsequently filed documents in 
this matter will be available for public inspection and copying during 
regular business hours at the FCC Reference Information Center, Portals 
II, 445 12th Street, SW., Room CY-A257, Washington, DC 20554. Document 
FCC 07-222 and any subsequently filed documents in this matter may also 
be purchased from the Commission's duplicating contractor at Portals 
II, 445 12th Street, SW., Room CY-B402, Washington, DC 20554. Customers 
may contact the Commission's duplicating contractor at their Web site: 
http://www.bcpiweb.com or call 1-800-378-3160. To request materials in 
accessible formats for people with disabilities (Braille, large print, 
electronic files, audio format), send an e-mail to [email protected] or 
call the Consumer & Governmental Affairs Bureau at (202) 418-0530 
(voice) or (202) 418-0432 (TTY). Document FCC 07-222 can also be 
downloaded in Word and Portable Document Format (PDF) at: http://www.fcc.gov/cgb/policy.

Paperwork Reduction Act of 1995 Analysis

    The document does not contain new information collection 
requirements subject to the Paperwork Reduction Act of 1995 (PRA), 
Public Law 104-13. In addition, it does not contain any new or modified 
``information collection burden for small business concerns with fewer 
than 25 employees,'' pursuant to the Small Business Paperwork Relief 
Act of 2002, Public Law 107-198. See 47 U.S.C. 3506(c)(4).

Synopsis

    Section 64.1120(a)(2) of the Commission's rules provides that 
``[a]n executing carrier shall not verify the submission of a change in 
the subscriber's selection of a telecommunications service received 
from a submitting carrier.'' The Commission affirms that it is not 
permissible for an executing carrier to block a carrier change 
submission by a submitting carrier, based on the executing carrier's 
own finding that the customer's information does not match exactly the 
information in the executing carrier's records. The Commission 
expressed concern that executing carriers could use the verification 
process as a means to delay or deny carrier change requests in order to 
benefit themselves or their affiliates. While the Commission agreed 
that allowing executing carriers to re-verify carrier change requests 
could, under certain circumstances, help deter slamming, it ultimately 
concluded that the anti-competitive effects of re-verification 
outweighed the potential benefits.
    The LEC Petitioners contend that the Bureau mischaracterized their 
argument. Rather, according to the LEC Petitioners, under general 
principles of agency law, an executing carrier simply has a much more 
limited obligation to its subscribers not to make changes to subscriber 
accounts without prior indication from the subscriber that the 
submitting carrier request was so authorized. The LEC Petitioners liken 
their actions to that of a clerk at a liquor store that asks a customer 
for identification as a condition of purchase.
    The Commission disagrees with LEC Petitioners and finds there is no 
material distinction between rejecting a carrier change request because 
of a determination that the customer is not authorized, and rejecting a 
change request because the LEC has determined that customer information 
does not match the LEC's records. As the Bureau emphasized in its 
declaratory ruling, and as commenters reiterate here, the Commission 
has already clearly defined the roles of the submitting and executing 
carrier in a carrier change request. Specifically, in the course of 
verifying the subscriber's intention to change long distance service, a 
submitting carrier's independent, third-party verifier is required to 
elicit confirmation that the person contacted is authorized to make the 
change (that is, either the party or an agent of the party identified 
on the account). As to executing carriers, the Commission's rules 
simply require ``prompt execution of changes verified by a submitting 
carrier.'' As stated in the declaratory ruling, the mere fact that the 
name(s) contained in the executing carrier's LEC account information 
may differ from that of the contact person listed on the submitting 
carrier's change request does not necessarily indicate a lack of 
authority or agency on the part of the person requesting the IXC 
change. The Commission finds credible, and LEC Petitioners do not 
dispute, that ``customers often authorize a spouse, a roommate, or 
other associate to act on their behalf,'' or may use a different name 
for billing purposes, and this information may not reside in the LEC's 
files. The Commission does not believe the LEC Petitioners' liquor 
store analogy is applicable to the actions at issue here. In the LEC 
Petitioners' purported analogy, the customer is directly requesting a 
product sold by that store. Here, an executing carrier seeks to block a 
transaction that has already occurred between a customer and another 
carrier.
    The LEC Petitioners also argue that the Bureau erred when it failed 
to consider their arguments in light of AT&T v. FCC. In that decision, 
the court found that the Commission could not require submitting 
carriers to obtain actual authorization from a subscriber for a carrier 
change. Instead, the court found that Section 258 of the Act provides 
that carriers must comply only with ``such verification procedures as 
the Commission shall prescribe (emphasis added).'' The court added that 
requiring actual authorization was tantamount to holding submitting 
carriers to a strict liability standard, but that no such standard was 
contained in section 258 of the Act. The LEC Petitioners point to the 
court's statement that the customer's local exchange carrier ``might be 
able to verify the subscriber's identity by consulting its own customer 
records,'' to support their proposition that they should not have to 
presume that any name submitted in connection with a carrier change 
order is authorized by the subscriber. The Commission disagrees. In 
AT&T v. FCC, the court reviewed the Commission's enforcement action 
imposing forfeiture against AT&T for slamming. That decision concerned 
only the obligations of a submitting carrier; it did not address the 
rights or obligations of LECs. The specific language cited by the LEC 
Petitioners occurs in the context of the court's explanation of why the 
Commission exceeded its statutory authority in creating an ``actual 
authorization from the subscriber'' requirement and enforcing it 
against AT&T.
    The Bureau cited several examples (provided by the LEC Petitioners) 
of situations in which a LEC could, under the Commission's rules, 
legitimately reject a submitting carrier's change request, such as when 
a customer is already subscribed to the submitting carrier, when a 
customer has a PIC freeze in place, or when PIC changes are not 
permitted (e.g., certain college dormitory rooms). The LEC Petitioners

[[Page 6446]]

argue that rejection of a carrier change for the reasons at issue here 
cannot be disallowed if it is in fact permissible for a LEC to utilize 
its records when processing a carrier change request, as in the 
examples described above. The Commission disagrees. The Commission 
reiterates that carriers may access account information in the course 
of effectuating carrier changes, and we do not believe that, under the 
limited circumstances described above, an executing carrier's return of 
a carrier change to the submitting carrier constitutes re-verification 
in violation of the Commission's rules. The Commission's objection to 
the LEC actions at issue here is not related to their consulting 
account information per se during the course of executing a carrier 
change. Rather, it violates Commission rules for executing carriers to 
make an independent determination with respect to the ability of a 
person to authorize a carrier change based on such information.
    Executing carriers have means (other than re-verification) of 
protecting their customers that do not interfere with competition or 
undermine consumer choice. Executing carriers can, for example, alert 
customers to preferred carrier changes, such as by highlighting changes 
to customers' accounts in customer billings, and can offer a preferred 
carrier freeze option to customers who are concerned about slamming. 
However, as the Commission expressed in the past, re-verification by 
executing carriers could function as a de facto preferred carrier 
freeze in situations where a subscriber has not requested such a 
freeze. The Commission emphasized that the imposition of a preferred 
carrier freeze must be authorized by the consumer to minimize any 
anticompetitive effects and to maintain flexibility for consumers. 
While preferred carrier freezes can provide consumers with extra 
protection from slamming, freezes by their very nature impose 
additional burdens on subscribers, and as such should only be enacted 
as a result of consumer choice. In the declaratory ruling, the Bureau 
reiterated this concern with respect to the LEC Petitioners' actions. 
The LEC actions at issue here serve to restrict consumer control by 
eliminating the consumer's ability to designate someone (such as a 
spouse) as authorized to change telecommunications service without 
first contacting the local carrier, thereby increasing the ability of 
the executing carrier to act in an anti-competitive manner. Endorsement 
of the LEC Petitioners' policies would result in inconvenience and 
delays for customers. The Commission continues to believe that the 
actions of the LEC Petitioners can, and do, result in de facto 
preferred carrier freezes where the customer has not requested such a 
freeze.
    Finally, the Commission notes that IUB and NASUCA commented in 
support of the LEC Petitioners. While the Commission declines to grant 
the LEC Petitioners' request to reverse the Bureau's finding in the 
declaratory ruling, the Commission recognizes that state authorities 
may have verification requirements for matters within their 
jurisdiction that are stricter than those of the Commission. As the 
Commission recognized in the Third Report and Order, FCC 00-255, 
published at 66 FR 12877 (March 1, 2001), states have valuable insight 
into the slamming problems experienced by consumers in their respective 
locales. Accordingly, the Commission declined to require that ``states 
* * * limit their verification requirements so that they are no more 
stringent than those promulgated by this Commission.'' As was noted in 
the declaratory ruling, the Commission's decision here concerns the 
question of permissible actions by private companies, not actions by a 
state regulatory agency.

Congressional Review Act

    The Commission will not send a copy of document FCC 07-222 pursuant 
to the Congressional Review Act, see 5 U.S.C. 801(a)(1)(A), because no 
new rules were adopted in the document.

Ordering Clauses

    Pursuant to the authority contained in sections 1, 2, 4(i), and 258 
of the Communications Act of 1934, as amended, 47 U.S.C. 151, 152, 
154(i), and 258, and sections 1.115 and 64.1120(a)(2) of the 
Commission's rules, 47 CFR 1.115 and 64.1120(a)(2), document FCC 07-222 
is adopted.
    Pursuant to the authority contained in sections 1, 2, 4(i), and 258 
of the Communications Act, of 1934, as amended, 47 U.S.C. 151, 152, 
154(i), and 258, and sections 1.115 and 64.1120(a)(2) of the 
Commission's rules, 47 CFR 1.115 and 64.1120(a)(2), the LEC 
Petitioners' Application for Review is denied.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.
 [FR Doc. E8-1980 Filed 2-1-08; 8:45 am]
BILLING CODE 6712-01-P