NOTICE ********************************************************* NOTICE ********************************************************* This document was originally prepared in Word Perfect. If the original document contained-- * Footnotes * Boldface & Italics --this information is missing in this version The document format (spacing, margins, tabs, etc.) is changed too. If you need the complete document, download the Word Perfect version. For information about downloading documents (FTP) see file how2ftp. File how2ftp (.txt & .wp) is in directory /pub/Bureaus/Miscellaneous/Public_Notices/ ***************************************************************** ******** Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 In the Matter of ) FCC 96-253 ) Billed Party Preference for ) CC Docket No. 92-77 InterLATA 0+ Calls ) SECOND FURTHER NOTICE OF PROPOSED RULEMAKING Adopted: June 4, 1996; Released: June 6, 1996 Comment Date: 30 days after date of publication of Federal Register notice Reply Comment Date: 60 days after date of Federal Register notice By the Commission: TABLE OF CONTENTS Paragraph No. I. INTRODUCTION..................................................... .................................... .......................1-4 II. BACKGROUND....................................................... ..................................... ...................5-12 III. ISSUES........................................................... ............................................... .....................13 A. Disclosure of Price on All Operator Service Calls............................................15 B. Setting a Benchmark 1. Appropriate Level of Benchmarks....................................................... ..16 a.CompTel's Proposed Benchmark................................................17 b. Largest Carriers' Prices.........................................................18 -20 2. Other Benchmark Issues a. Further Disaggregation................................................... ............21 b. Periodic Adjustments in Rate Levels..........................................22 c. Discussion....................................................... .......................23-28 C. Consequences of Exceeding the Benchmark 1. Regulatory Options.......................................................... .......................29 a. Cost Support.......................................................... .....................30 b. Warning Message.......................................................... ........31-33 c. Disclosure of Price............................................................ ........34 2. Discussion....................................................... ..................................35-37 D. Forbearance from Applying Informational Tariff Filing Requirements........38-44 E. Range of Rates Informational Tariffs.......................................................... .45-47 F. Inmate-Only Phones in Correctional Institutions..........................................48-49 IV. Procedural Matters A. Ex Parte Presentations.................................................... ...................................50 B. Initial Regulatory Flexibility Analysis......................................................... .....51 C. Initial Paperwork Reduction Act of 1995 Analysis ..........................................52 V. Conclusion ................................................................. ..................................................53 VI. Ordering Clauses ................................................................. ..................................54-59 Appendix A Parties Commenting on BPP Alternatives Proposed by NAAG and CompTel Coalition Appendix B Proposed Rule Amendments Appendix B-1 Public Notice (May 1, 1992) Appendix C CompTel Coalition's Proposed Benchmark Ceilings Appendix D Benchmark Data Appendix E Benchmark Tables I. INTRODUCTION 1. In enacting the Telecommunications Act of 1996 (1996 Act), Congress sought to establish "a pro-competitive, de-regulatory national policy framework" for the United States telecommunications industry. The statute requires, within nine months of its enactment, that the Commission prescribe regulations to promote competition among payphone service providers, including promulgating regulations by which payphone owners are compensated for "each and every completed intrastate and interstate call using their payphone...." The Commission is addressing payphone compensation, public interest payphone, and related issues in a comprehensive manner in another proceeding. The instant proceeding is concerned with narrower issues related to the provision of operator services from payphones. 2. In May 1994, the Commission tentatively concluded that the implementation of a "billed party preference" (BPP) system for 0+ interLATA payphone traffic and for other types of operator-assisted interLATA traffic would serve the public interest. Under BPP, operator- assisted long-distance traffic would be carried automatically by the operator services provider (OSP) preselected by the party being billed for the call. Given the estimated cost of BPP, calculated in the neighborhood of $1 billion as of 1993, and the approximate year-old age of much of the data of record on which this tentative conclusion was based, however, we sought further comment. We asked for confirmation of, or adjustments to, our data and analysis and also for proposals for less costly alternatives to BPP. We stated that we would mandate BPP only if its benefits outweighed its costs, and those benefits could not be achieved through alternative, less costly, means. 3. In this Second Further Notice of Proposed Rulemaking, we find that the record supports the conclusion that we should adopt the modified combination of proposed alternatives to BPP discussed below. We tentatively conclude that we should: (1) establish benchmarks for OSPs' consumer rates and associated charges that reflect what consumers expect to pay and (2) require OSPs that charge rates and/or allow related premises-owner fees whose total is greater than a given percentage above a composite of the 0+ rates charged by the three largest interstate, interexchange carriers to disclose the applicable charges for the call to consumers orally before connecting a call. Alternatively, we seek comment on requiring all OSPs to disclose their rates on all 0+ calls. We also solicit comment on proposed rules with respect to the filing of informational tariffs for interstate operator services and under what circumstances we may or must forbear from enforcing tariff-filing requirements applicable to OSPs. Further, we solicit comment on whether the public interest would be better served by some alternative remedy than BPP for calls from inmate-only telephones in prisons. 4. While we continue to believe that BPP would generate significant benefits for consumers, the record indicates that the cost of BPP would likely be quite substantial. Given this cost, we seek comment on whether, at this time, it is in the public interest to adopt our disclosure alternative now. In the alternative, we seek comment on the cost of requiring all OSPs to disclose their rates for each 0+ call from a public payphone. We note, however, that we intend to give further consideration to BPP as local number portability develops, which is mandated under Section 251(b)(2) of the 1996 Act. If local exchange carriers are required to install the facilities needed to perform database queries for number portability purposes for each call, the incremental cost to query the database for the customer's preferred OSP might well be less than the incremental benefits that BPP would provide. In the interim, however, this disclosure alternative would appear to provide many of the benefits of BPP at little, if any, cost to consumers. II. BACKGROUND 5. Interstate 0+ calls from payphones, hotels, motels, and other aggregator locations are routed today to the OSP chosen by the premises or payphone owner. OSPs generally compete with each other and with the traditional carriers to receive such traffic by offering commissions to payphone or premises owners on all 0+ calls from a public phone in exchange for being chosen by the premises owners as the "presubscribed" carrier serving their phones. Many OSPs have chosen to compete with a strategy of charging very high rates and then paying very high commissions to both premises owners and sales agents who sign up those premises owners. While this has proven to be beneficial to the premises owners and sales agents, it forces callers to pay exceptionally high rates. Therefore, in response, more sophisticated callers began to use access codes to avoid the payphone's high-priced presubscribed OSP by "dialing around" that OSP. Because payphone owners and other aggregators do not earn any commissions on "dial around" calls, and since some also experienced fraud due to access code-like dialing, many aggregators blocked the use of access codes from their phones. 6. Congress responded to payphone blocking by enacting the Telephone Operator Consumer Services Improvement Act of 1990 (TOCSIA), which directed the Commission to promulgate regulations to "protect consumers from unfair and deceptive practices relating to their use of operator services to place interstate telephone calls ... [and to] ensure that consumers have the opportunity to make informed choices in making such calls." Among the regulations that we have issued pursuant to that mandate is a requirement that payphone providers and other aggregators permit callers to use 10XXX, 1-800 and 950 access codes to reach their preferred carriers. We also issued regulations prescribing compensation to aggregators for access code calls. 7. In November 1992, it was thought that market forces would ensure that rates and charges would be just and reasonable, and, to date, our unblocking and consumer information requirements have, for the most part, resulted in greatly enhanced consumer choice in the operator services market. One problematic aspect of the pre-TOCSIA operator services environment has remained, however. Many aggregators continue to base their presubscription decisions on the commissions that OSPs will pay them rather than on the rates and services that OSPs offer to callers. As a result, many callers who are unwilling, unable or not readily able to use access codes are forced to pay high charges to the OSPs that are offering corresponding high commissions to aggregators. Such callers may also face high charges if the OSP, or some other billing entity, is including aggregator surcharges in the total charges billed to the consumer for the call. While the Commission's orders pursuant to TOCSIA have addressed some of the most serious problems presented by a presubscription system of equal access for public phones, we have observed that other problems remain. In particular, the Commission noted that many callers find dialing around for operator service calls to be burdensome and confusing. Therefore, in April 1992, the Commission initiated this rulemaking proceeding to consider BPP. 8. The current branding requirements the Commission adopted in response to TOCSIA require an OSP to "[i]dentify itself, audibly and distinctly, to the consumer at the beginning of each telephone call and before the consumer incurs any charge for the call." This identification is intended to notify consumers before they purchase service from a carrier that it might not be their primary interexchange carrier (PIC). While the existing branding rule may be effective in many cases, the large number of complaints received by the Commission and state regulators suggests that it is inadequate notice to prevent consumer surprise and dissatisfaction for a substantial number of calls. 9. While BPP is certainly one option we have considered to supplement our rules, in our Further Notice, we encouraged parties to suggest alternatives to BPP and asked that any such alternatives be described "with specificity so that we may adequately assess their costs, benefits, and feasibility in relation to BPP." We asked for alternatives because the record indicated that the cost of BPP was likely to be more than a billion dollars. A number of parties offered general comments in 1994 in support of rate caps but it was not until February and March of 1995 that two groups of commenters offered specific, detailed alternative proposals. 10. On February 9, 1995, the Telecommunications Subcommittee of the Consumer Protection Committee of the National Association of Attorneys General (NAAG) and the Attorneys General of 23 states petitioned the Commission to impose an additional disclosure requirement on OSPs. The NAAG petition asserts that additional disclosures by OSPs are necessary to prevent unfair and deceptive practices and to improve the opportunity for consumers to make informed choices in accordance with TOCSIA. In particular, NAAG strongly urges the Commission to require those OSPs whose rates and related surcharges are higher than "dominant carrier rates" to provide consumers an oral warning message after the carrier-identification brand. NAAG asks that the Commission adopt the proposed disclosure as an interim protective measure for consumers, while the Commission evaluates BPP or other approaches, and that the proposed disclosure requirement be maintained should the Commission not ultimately adopt BPP. 11. On March 8, 1995, a group of commenters proposed another alternative to BPP. The Competitive Telecommunications Association (CompTel), the American Public Communications Council (APCC), Bell Atlantic, BellSouth Telecommunications, MFS Communications, NYNEX, Teleport Communications Group, and US West (CompTel Coalition) filed an ex parte proposal for a rate "ceiling" on 0+ operator service calls (the CompTel Proposal). The CompTel Coalition urged us to identify a rate level that would be deemed presumptively lawful and thus subject generally to regulatory tolerance. Only OSPs whose rates exceeded such "safe harbor" benchmarks would be subject to regulatory scrutiny, as well as sanctions should their rates be found unjust or unreasonable under Section 201(b) of the Communications Act of 1934, as amended (Communications Act). The CompTel Coalition urged that the Commission set the benchmark rate ceilings on a simple per-minute basis, without regard to time-of-day, distance, or whether the call was handled on an automated basis, made with a calling card, or collect. It proposed benchmark ceilings of $3.75 for the first minute, $7.00 for a nine-minute call, and 35 cents for each minute above nine minutes. CompTel states that its proposed rate-ceiling was set below the general threshold rate level that prompted "virtually all complaints" in a "representative sampling of complaints to the FCC about operator service charges". 12. On March 13, 1995, the Common Carrier Bureau (Bureau) released a Public Notice soliciting comments on both the NAAG petition and the CompTel Proposal. More than thirty parties filed comments or reply comments in response to that Notice. A number of these commenters suggested variations to these proposals. After the comment cycle closed, the National Association of Regulatory Utility Commissioners (NARUC) passed a resolution addressing issues raised by the NAAG and CompTel proposals. NARUC requested that the Commission carefully consider and implement the following views:  NARUC continues to support the BPP concept and encourages the FCC to act expeditiously to determine if BPP implementation is justified in light of the costs and jurisdictional issues;  NARUC does not support the proposed [CompTel] rates of $3.75 and $4.75 because they are "excessively high," but does "support the concept of an effective rate cap on interstate "0+" calls and expanding branding requirements (rate disclosure), as an interim measure only;" and  NARUC opposes FCC rules precluding States from adopting more safeguards and/or more stringent rules regarding OSPs. III. ISSUES 13. The vast majority of those commenting on the NAAG and CompTel proposals support the concept of a benchmark to distinguish between OSP calls priced at rates that do not appear to raise any customer concerns and OSP calls priced at rates for which some additional regulatory oversight would appear to be appropriate. Many recognize that the problem stems from a lack of adequate information for callers to make an informed choice. Several commenters characterize the problem as many consumers' misconception that if they use their local exchange carrier (LEC) calling card, the call will be handled by that LEC or at least at rates comparable to their presubscribed carrier's or the LEC's rates. These consumers do not discover that their calls have not been carried by an OSP with rates comparable to those charged by their LECs until they receive bills for their calls some time later. 14. Commenters suggest a number of different options for dealing with this lack of adequate information with respect to calls that are priced above a level that consumers generally expect to pay. Some suggest that the Commission should require that OSPs provide additional information audibly, before connecting the call, such as the price of the call, a representative price of the call, the phone number to call to get the price of the call, or some warning that the rates charged may be higher than the consumer expects. Others suggest that the Commission should require that OSPs provide cost support for prices above the benchmark and still others suggest that the benchmark should serve as an absolute ceiling or rate cap so that any rate above that hard cap would be unlawful. Commenters also disagree on where the benchmark should be set. We now review these options for price disclosure for all calls, where and how to set a benchmark, and how to treat calls priced above a benchmark. We then review requirements with respect to OSPs' informational tariffs and whether we must or should forbear from enforcing such requirements. Finally, we review special circumstances relative to inmate-only telephones in correctional institutions. A. Disclosure of Price on All Operator Service Calls 15. As an initial matter, we seek comment on benefits and costs associated with imposing a price-disclosure requirement on all 0+ calls. We note that while consumers are generally informed about the prices that they will be charged for the individual 1+ calls that they make from their homes, consumers may be unaware that 0+ calls from outside the home may be more expensive than the 1+ calls that consumers make from their homes. We ask commenters to evaluate whether the benefits of a price disclosure for each call, or disclosure of the price of a representative call, before connecting a call, would exceed the costs of such disclosures even for 0+ calls that are priced at or below the levels at which consumers expect them to be priced. We also seek comment on whether such a requirement may obviate the need to establish any benchmark-level requirements. B. Setting a Benchmark 1. Appropriate Level of Benchmarks 16. While there is a general consensus among most of the commenters that benchmarks should be established to address the problem of excessive OSP rates and related premises-imposed fees (PIFs) or surcharges for calls from payphones, their views differ substantially as to the appropriate structure and level at which such benchmarks should be set. 17. CompTel's Proposed Benchmark. Proponents of the CompTel Coalition's proposed benchmarks (set forth in Appendix C) explain that CompTel designed its benchmarks to discourage rates at levels that prompted almost 95 percent of a sampling of 101 complaints filed at the Commission against OSP rates. Public sector commenters uniformly criticize the benchmarks as still too high, as do Ameritech, Pacific, and Sprint. NAAG observes that "there is undoubtedly a huge difference between competitive rates and the level of excessive rates which triggers the filing of a consumer complaint with the FCC." The National Association of State Utility Consumer Advocates (NASUCA) agrees that the benchmarks would affect only the most egregious price gouging. Ameritech states that "the number of consumer complaints that a rate precipitates is an inappropriate benchmark for implementing this mandate. Indeed, rates that are so high as to result in large numbers of consumer complaints are likely to be well above the level that is properly presumed just and reasonable." Meanwhile, the Colorado PUC Staff states that 30 percent of the complaints it received about OSP rates during the previous two years concerned calls with rates below the CompTel benchmark. 18. Largest Carriers' Prices. In addition to NAAG's proposed benchmark at "dominant carrier rates," other parties suggest variations on that benchmark based on the rates charged by the largest carriers and thus paid by the vast majority of 0+ callers. NASUCA suggests that the benchmark might be set at the highest rates charged from among the three largest carriers. The Colorado PUC Staff suggests that the benchmark be set at an average of the predominant players, i.e., the four largest OSPs, over different times of day, distances, and call durations to yield an average price per minute, plus the lesser of either five percent or two standard deviations from that average. The PaPUC would cap surcharges at $1 above the highest daytime tariffed rate of any facilities- based carrier, and would also support the Colorado PUC Staff option. Ameritech suggests that the benchmark be set at 120 percent of the highest among the rates of AT&T, MCI, and Sprint. The Pacific Companies support Ameritech's levels, but also propose their own cap of $.35 per minute plus a first minute charge of $1.20, $2.75, $3.75, or $4.75, depending upon five categories of calls. The Pacific Companies also propose their rates as an absolute cap, rather than a mere benchmark. 19. Many OSPs and aggregators criticize a benchmark based on the rates of the largest carriers as an arbitrary and unfair level for triggering a punitive requirement, arguing that rates above the predominant level may be just and reasonable due to the higher costs faced by smaller OSPs. CompTel declares that neither Ameritech nor the Pacific Companies explain why their proposed benchmarks are consistent with costs. On the other hand, the Colorado PUC Staff maintains that its cost studies show that Tier 1 carriers' (MCI, AT&T, Sprint) rates comfortably exceed the cost of providing service, other than commissions and pass- through surcharges. 20. Two parties take the position that benchmarks need not be based on costs -- assuming that they are not absolute rate caps -- but rather should reflect consumer expectations. As APCC observes: Under its general Title II authority, and specifically Section 201, the FCC has previously utilized consumer expectations as a basis to impose a message notice requirement. . . . In regulating 900 services, the FCC promulgated rules requiring carriers to disclose the price of the call and a description of the product, information or service provided. However, the FCC did not require a preamble for 900 services with charges below a certain level. Furthermore, Sprint contends that a 1983 opinion of the United States Court of Appeals for the District of Columbia Circuit, concerning an overall rate of return that the Commission had prescribed for AT&T's interstate and international services, recognized that from the consumer's point of view, reasonable rates are those "which are as low as possible, but still allow the industry to provide 'adequate and efficient service' . . . ." APCC's concern about establishing a benchmark level that triggers a warning is that the warning not be triggered for "rates well within consumer expectations" or else consumers will hear the message too often and tune it out. 2. Other Benchmark Issues 21. Further disaggregation. The Industry Coalition urges that the benchmarks be simple so as to minimize the monitoring burden on LECs and the FCC, but other commenters propose more complicated benchmarks. A few OSPs contend that any benchmark should conform to the general industry two-part pricing structure of a fixed per-call charge plus a per-minute charge. Ameritech and NASUCA advocate disaggregating rate schedules to recognize different call types, the time of day, and mileage bands, arguing that the increased simplicity is not worth the loss in precision. The Pacific Companies state that they do not see the need for mileage bands, while the PaPUC's chief concern is that capping automated calls at the same level as non-automated calls denies consumers a significant savings on automated calls. Arguing against increased complexity, Bell Atlantic asks whether: (1) an OSP would be considered above the benchmark if its rate for a specific call was above the benchmark, but its average rates were below the benchmark; (2) AT&T could be considered above the benchmark for intraLATA toll calls; and (3) the OSP or LEC would be responsible for answering the consumers' questions. 22. Periodic adjustments in rate levels. Some commenters express concern that a benchmark that "floated" based on the largest carriers' rates would be a costly administrative "nightmare" for OSPs and the Commission. A number of parties, therefore, contend that any benchmark should be adjusted annually. Ameritech notes that if the benchmark was set at AT&T's rates, then only AT&T would be able to raise rates without fear of exceeding the benchmark. Discussion 23. Based on all of the comments we have received, we find that the record supports the conclusion that we should establish benchmarks, based on the reasonable expectations of consumers, for OSPs' interstate rates and associated charges that consumers must pay for operator services. The vast majority of consumers use residential presubscribed lines or a calling card of one of the three largest interexchange carriers in terms of annual toll revenues and therefore they generally expect rate levels to be within a comparable range of the rates charged by the three largest carriers. Therefore, we tentatively conclude that the most useful benchmark for protecting consumers against unexpectedly high OSP prices would be one set at a level approximating the average price charged by AT&T, MCI, and Sprint. We note that our proposed benchmark methodology (see Appendices D and E) would be based only on rates charged by those three carriers and not on the combined data of the four largest OSPs. We find that incorporating the fourth largest OSP's rates into our proposed benchmark methodology, as the Colorado PUC staff suggests, would not be possible because LDDS Worldcom's rates are not readily ascertainable due to the fact that they are filed as a "range of rates" rather than a specified rate. 24. While NAAG and NASUCA support a benchmark at approximately the average rates of those carriers, we request comment on whether we should set benchmarks for OSP rates at some level, such as 115 percent, of the average of the three largest OSPs, a variation of the Ameritech proposal. First, we recognize that different OSPs will likely average their prices over different distances or service categories. Thus, an OSP whose average rates are at or below the level of the largest carriers may, nevertheless, have rates for some types of calls that exceed those of the largest OSPs. Second, this extra price-variance margin may be beneficial to competition in the long run, because it would enable smaller new entrant OSPs, with lesser economies of scale, to escape additional regulatory burdens before they have become able to cut their costs and thus price at the level of the largest OSPs. We seek comment on our tentative conclusion that we should set benchmarks at a level reflecting consumer expectations, and that the 0+ rates charged by the three largest OSPs reasonably reflect consumer expectations, and on whether an additional price margin, such as 15 percent, is reasonable and justifiable. If an additional margin is justified, we seek comment at what the level of such margin should be. We also seek comment on benchmarks set at the average of the rates charged by the three largest carriers, at the level proposed by Ameritech, and the level proposed by the CompTel Coalition. 25. Furthermore, we propose two qualifications to the benchmark that would make it administratively easier for OSPs to comply with it. First, to protect OSPs from the potential burden of needing to match immediately every rate cut made by any of the three largest OSPs, we tentatively conclude that the benchmark should be set at the average of the rates charged by the three largest carriers as of January 1 of each year plus some percent and that the benchmark (see, e.g., Appendices D and E) would apply for each period from July 1 to June 30 of the year following that month. This would allow an OSP to set its rates at or below the benchmark at the beginning of a year and leave them unchanged despite any subsequent rate cuts by the three largest OSPs. On the other hand, if industry costs were to rise and lead the largest OSPs to raise their rates, an OSP would be able to raise its rates to match rate increases of the largest OSPs. We seek comment on the reasonableness of this protection against repeated rate changes. We also seek comment on the reasonableness of a six-month lag time for OSPs to revise their rates at or below benchmarks or whether such period should be reduced to three months or some shorter period. 26. The second qualification we propose is to use a benchmark that significantly truncates the number of different rates that OSPs must consider if they seek to avoid exceeding the benchmark. As illustrated in Appendices D and E, the proposed benchmark structure would recognize six characteristics of a 0+ call that might lead rates to vary: (1) how much live or automated operator assistance it requires; (2) whether the called number is entered by the caller; (3) the time of day; (4) whether it lasted for the initial minute only or whether it included subsequent minutes; (5) the distance covered; and (6) whose credit card is used. The permutations of these variations could create a maximum of about 528 different rates, although, in practice, many of those rates would be identical. The single-benchmark would be set at some specified percentage above the average of the highest rates the three largest OSPs charged for calls in any of the six above-mentioned characteristics. We seek comment on both this general proposal to truncate the benchmark of rates employed and on the particular choices of characteristics we propose for the benchmark. 27. We believe that all competitors in a competitive market already expend resources to keep track of their competitors' prices so as to retain customers by matching competitors' price cuts. Nevertheless, we seek comment on what additional administrative costs OSPs would face to maintain prices at or below the benchmark, i.e., costs that they would not have incurred in the absence of the imposition of this benchmark. In this vein, although we tentatively conclude that we should not require OSPs charging rates below the benchmark to make additional rate disclosures, we seek empirical data to support or refute our assumption that the cost of such disclosures to consumers and OSPs, in terms of time and other burdens, would exceed the benefit that the disclosures would provide by giving consumers additional information. 28. We recognize that, as noted by Digital Network Services, Inc., no single set of rate ceilings may be appropriate in all cases and that some OSP services, e.g., those not driven by commissions and other payments to premises owners or other third persons, may nevertheless be subject to unusual but unavoidable costs, such as 0-Transfer trunk and other costs. While we tentatively conclude that the initial OSP benchmark rates for all OSPs should be set at levels that reflect the average rates charged by the largest OSPs (i.e., AT&T, MCI, and Sprint, plus 15 or some other percent), we intend to delegate to the Bureau authority to reformulate the calculation of these benchmarks by (a) adding carriers to or deleting carriers from this benchmark group, or (b) making such other changes in the calculation of these benchmarks as the Bureau deems necessary to effectuate the policies established in this docket. D. Consequences of Exceeding the Benchmark 1. Regulatory Options 29. As NAAG and APCC explain, a benchmark need not necessarily serve as an absolute ceiling on rates. It might simply be used to differentiate the rates that consumers can be expected to find reasonable without further information from those rates that require further attention from regulators or consumers before it is clear that they are reasonable. Thus, commenters propose three somewhat different types of consequences for OSPs that desire to charge rates above the chosen benchmark. These options require those OSPs to provide: (1) cost support for such rates; (2) a message warning callers that their rates may be higher than expected; or (3) the price of the call. The NYDPS and PaPUC also express support for a prohibition on LEC billing for OSPs whose rates exceed the benchmark unless the Commission has found those rates to be reasonable. 30. Cost Support. CompTel states that if the rate were above the benchmark, the burden would be on the carrier to justify that the proposed rate was reasonable, based on seven categories of costs it identifies. Opticom objects to limiting costs to seven categories, and OSC insists that OSPs must have ample opportunity to justify rates that are above the benchmark. The former advocates a quick process for justifying rates above the benchmark and for the recognition of a category of intangible costs. Ameritech and NASUCA propose that rates above the benchmark should be filed on 120-days' notice, accompanied by detailed cost support, and Ameritech advocates imposing an extremely high hurdle to justify such rates. NAAG expresses concern that CompTel's benchmark would only expose OSPs exceeding it to an expedited paper hearing, much less thorough, with less public participation, than traditional rate-setting. According to NAAG, the inevitable result would be that many OSP tariffs in excess of the proposed benchmark would remain in effect after limited review of the OSPs' cost justifications. 31. Warning Message. NAAG proposes that OSPs charging rates above the benchmark be required to provide the following audible message: This may not be your regular telephone company and you may be charged more than your regular telephone company would charge for this call. To find out how to contact your regular telephone company, call 1-800-555-1212. Some commenters charge that the reference in this warning to one's "regular" telephone company is confusing. Others find it confusing in other ways, and still others complain that the required reference to competitors is unfair. The APCC states that the proposal is equivalent to requiring a small business that sells consumer products with higher prices than a large national retail chain to disclose to its customers that its prices are higher than that chain's prices. AT&T concludes that NAAG's message would slow call processing and would have no impact on OSP rates. CompTel and OSC state that there is no evidence that consumers would understand the warning or that the added delay would be worth the benefit of the warning. Furthermore, CompTel charges that NAAG improperly assumes that consumers who remain connected to an OSP after the bong tone do not consider the carrier to be acceptable. It notes that the NAAG proposal could yield three calls in place of one, which would be counter to simplifying the process. 32. APCC and NYNEX oppose the NAAG warning, but agree that customers should be notified when rates are unexpectedly high. NYNEX contends that the NAAG proposal would burden LECs with the duty of providing directory assistance for consumers who want alternative carriers. Thus, it would modify NAAG's warning to direct callers to check the posted information that TOCSIA requires to be placed on or near every public phone. APCC, declaring that "consumers should be alerted that they are about to incur such unusually high charges," offers an alternative message for any OSP charging an above-benchmark rate after a certain date: "The rates charged by this provider exceed benchmarks established by the government. Check the information posted on or near the telephone for the toll-free number to obtain rate information before placing your call." According to APCC, the Industry Coalition warning would apply if any rate is above the benchmark, on a phone-by-phone basis. 33. NAAG responds that NYNEX's reference to a posted rate would be less effective than an audible warning because experience shows that postings are "often either out of date, missing, vandalized, or otherwise unavailable to consumers using those phones." US West alleges that the APCC message is also unsatisfactory, and Ameritech avers that the APCC and NYNEX voice-overs are more confusing than NAAG's. CompTel responds that all the messages are confusing and "assume that all rates above a dominant carrier's rates are 'bad'." It also states that the APCC warning above the benchmark is unfair, because it would apply to "reasonable" rates, and "differential" treatment of carriers offering reasonable rates is inappropriate. US West adds that certain OSPs would not be able to price below the largest carriers' rates because of their cost structures, and GTE argues that double-branding plus OSP self- reporting of rates makes this unnecessary. NAAG warns that whatever additional disclosure the FCC requires should be strictly prescribed, since the Attorneys General's experience with pay-per-call disclosures indicates that varying disclosures could confuse consumers, e.g., with double- negatives. 34. Disclosure of Price. Colorado PUC Staff proposes that instead of any specific warning, that OSPs with rates above the benchmark be required to disclose the actual price they will charge for the call dialed -- both the charge for the initial period (including surcharges) as well as the subsequent period charges. The Colorado PUC Staff states that "disclosure of prices prior to consummation of a transaction is a basic tenet of our economic system. . . . If new entrants cannot, or choose not to compete on price, then government should not institutionalize inefficiency, anti-competitive behaviors, or guaranteed revenue stream through artificially high rate caps." Colorado PUC Staff further states that it is "convinced that most, if not all, [OSPs] have the capability of accessing a data base that provides specific rates for the specific call in question. . . . Any proclamation by the industry that such disclosure would require extensive cost outlays should be thoroughly scrutinized." NAAG, NASUCA, and the PaPUC all support this proposal, and the latter notes that no carrier has complained that the cost of setting up the warning would be prohibitive. 2. Discussion 35. We tentatively conclude that the Commission should adopt oral disclosure rules as suggested by the Colorado PUC Staff. We find that the record provides strong support for requiring OSPs to inform consumers of the total charges for which they would be liable for the initial rate period and each subsequent rate period if those charges, including any and all surcharges, exceed the benchmark, and thus consumers' expectations, discussed above. Alternatively, we believe that consumers might receive adequate information for identifying an OSP if that OSP orally disclosed the highest amount that it might charge the caller for a domestic call lasting seven minutes (which appears to be the average length of a 0+ call). If the OSP believed that this highest rate would unfairly mislead callers, it could also inform the caller of its average rate for a seven- minute call. Thus, OSPs could be permitted to use a price averaged over all time periods and mileage bands (appropriately weighted to reflect actual traffic patterns). The OSP could calculate that average price by simply dividing its total 0+ gross revenues over the most recent period for which it had data by the total 0+ minutes it carried during the period, and adjust that average to reflect any subsequent price changes. We believe that either of these price-disclosure requirements would be more effective in achieving our goal of providing callers with an "opportunity to make informed choices in making operator services calls" than the messages proposed by NAAG, NYNEX, and APCC or a requirement that we evaluate the cost support provided by OSPs. 36. This disclosure requirement is consistent with TOCSIA's directive that we require OSPs to identify themselves, because we believe that few consumers can truly distinguish smaller OSPs from larger, better known OSPs, other than by price. We believe that either of these disclosure requirements would ensure that consumers do not unintentionally or inadvertently use carriers that charge unexpected high rates for interstate calls or use such carriers only because they are unaware that they have other options. We believe that this disclosure requirement can eliminate prices charged in excess of competitive rates and save what commenters have estimated costs consumers approximately a quarter of a billion dollars per year. At the same time, we do not believe that this disclosure requirement would necessarily harm those OSPs that charge relatively high rates, if they also offer superior services, e.g., higher quality lines for better fax results or language translation services, that justified higher prices. Callers who preferred such high- priced OSPs would also be able to avoid the delay due to price disclosures by calling via an access code rather than making a 0+ call. 37. We invite comment on the costs and benefits of the two alternative price disclosure requirements and on the costs and benefits of requiring all OSPs to disclose their rates on all 0+ calls. We also seek suggestions for alternative disclosure requirements that would represent more effective and efficient means for providing consumers with the information that they need to make fully informed decisions regarding the choice of an OSP. We expect those OSPs that would be subject to the price disclosure requirements discussed above to begin to take the actions necessary to be able to implement them in a timely manner. E. Forbearance from Applying Informational Tariff Filing Requirements 38. Under the 1996 Act, we must forbear from applying any regulation or provision of the Communications Act if we determine that such forbearance is consistent with the statutory criteria listed in Section 10(a). The 1996 Act enacted new Section 10(a) of the Communications Act which provides as follows: REGULATORY FLEXIBILITY. -- Notwithstanding section 332(c)(1)(A) of this Act, the Commission shall forbear from applying any regulation or any provision of this Act to a telecommunications carrier or telecommunications service, or class of telecommunications carriers or telecommunications services, in any or some of its or their geographic markets, if the Commission determines that -- (1) enforcement of such regulation or provision is not necessary to ensure that the charges, practices, classifications, or regulations by, for, or in connection with that telecommunications carrier or telecommunications service are just and reasonable and are not unjustly or unreasonably discriminatory; (2) enforcement of such regulation or provision is not necessary for the protection of consumers; and (3) forbearance from applying such provision or regulation is consistent with the public interest. In determining whether forbearance from applying a particular provision of the Communications Act or regulation is in the public interest, the Commission must consider whether forbearance will promote competitive market conditions, including the extent to which such forbearance will enhance competition among providers of telecommunications services. 39. Section 226 of the Communications Act, added by TOCSIA, requires OSPs to file informational tariffs "specifying rates, terms, and conditions" for their operator services offerings. We recently sought comment on our tentative conclusion that we are required by the 1996 Act to forbear from applying the Section 203 tariff filing requirement to non- dominant interexchange carriers for domestic interexchange services. We did not, however, there address whether we should exercise forbearance authority with respect to Section 226 of the Communications Act, which requires OSPs to file informational tariffs of rates for their domestic interstate interexchange telecommunications services. 40. We seek comment on whether enforcement of the Section 226 tariffing requirements with respect to non-dominant interexchange OSPs: (1) is unnecessary to ensure that non-dominant interexchange carriers' charges, practices, or classifications are just and reasonable, and are not unjustly or unreasonably discriminatory; (2) is unnecessary for the protection of consumers; and (3) if so, under what circumstances forbearance from applying the requirement for informational tariffs would be consistent with the public interest. Specifically, we seek comment on whether we should forbear from applying Section 226 tariff filing requirements to non-dominant interexchange OSPs if they either provide an audible disclosure of the applicable rate and charges prior to connecting any interstate 0+ call from a payphone location, or certify that they will not charge more than FCC-established benchmarks for such calls. We note that TOCSIA authorizes us to waive the requirement for informational tariffs if we determine that such tariffs no longer are necessary to: (1) protect consumers from unfair and deceptive practices relating to their use of operator services to place interstate telephone calls; and (2) ensure that consumers have the opportunity to make informed choices in making such calls. 41. In seeking comment on whether to enforce the Section 226 tariffing requirements, we note that the filing of informational tariffs by non-dominant interexchange OSPs may not be the optimum or even a necessary mechanism to ensure that their charges and practices for domestic, interexchange operator services are just and reasonable and are not unjustly or unreasonably discriminatory. Unlike tariffs filed under Section 203 by the largest OSPs, informational tariffs that other OSPs file under Section 226 of the Communications Act for their interstate operator services are effective without notice upon filing and often include substantial surcharges of payphone owners and other aggregators. Our experience has been that such tariffs have not always been adequate to ensure that charges, surcharges and practices for domestic, interexchange operator services are just and reasonable. Because the rates and charges in informational tariffs, unlike those of the largest carriers, are not subject to suspension and investigation before they are effective, mechanisms other than informational tariffs may better serve to ensure that OSPs' charges and practices and related aggregator surcharges are reasonable and not unjustly or unreasonably discriminatory. 42. The volume of complaints we receive concerning the level of rates and charges in informational tariffs indicates that such tariffs may be ineffective in ensuring that consumers placing 0+ calls from aggregator locations are not billed for charges higher than they are willing to pay. We note that there is a significant difference in the transactional nature of 0+ calls from public payphones. Unlike consumer expectations for IXC services generally, where consumer price expectations are set prior to the purchase of a service by presubscription arrangements, the 0+ calls from aggregator locations do not have similar ex-ante mechanisms and thereby create opportunities for rate abuses. In most instances, consumers that make 0+ payphone calls are in transit limiting their ability to forge a long- term relationship, and the attendant benefits of such a relationship, with an OSP. In addition, the absence of price disclosure at the point of purchase for operator services virtually eliminates the consumer's ability to negotiate with some bargaining power. These two conditions -- the transient status of the caller and the lack of price disclosure at the point of purchase -- provide OSPs with the opportunity to increase profitability by providing an otherwise competitive product at above-market rates. We believe that a requirement that OSPs disclose the specific price of a call to the consumer before connecting a call would better protect consumers from unexpectedly high charges than the filing of "informational" tariffs, which are effective without prior notice and provide very limited protection at the time of purchase. Based on this analysis, we seek comment on whether the most effective long-term solution for protecting consumers is to provide them with a mechanism for exercising choice, such as by entering into a long-term relationship with carriers, by having an audible brand stating the price of any call before the call is connected, or additional branding stating the price of any call that would exceed established benchmarks. 43. We also seek comment on whether forbearance from requiring tariff filings for non-dominant interexchange OSPs will promote competition and deter price coordination. We have previously found in the Sixth Report and Order in the Competitive Carrier proceeding that "requiring non-dominant carriers to file tariffs can: (1) take away carriers' ability to make rapid, efficient responses to changes in demand and cost; (2) impede and remove incentives for competitive price discounting; and (3) impose costs on carriers that attempt to make new offerings. We also concluded that continuing to require non-dominant carriers to file tariffs presents an opportunity for collusive pricing by competing carriers because carriers can ascertain their competitors' existing rates and keep track of any changes by reviewing filed tariffs. The Commission indicated that this may encourage carriers to maintain rates at artificially high levels. Specifically, we seek comment on whether price information at the point of purchase, rather than the availability of pricing and other material information from the public tariffs of rivals, is more likely to allow consumers to exercise rational purchasing decisions, encourage OSPs to initiate price reductions and other competitive programs, and impose market-based discipline on abusive OSPs. 44. Finally, in IXC Tariff Forbearance NPRM, we tentatively concluded that forbearance from requiring non-dominant interexchange carriers to file tariffs should be implemented on a mandatory basis in order to establish a more market-based environment that will help prevent certain possible anti-competitive practices and better protect consumers. We also tentatively concluded that, if we adopt a mandatory detariffing policy, non-dominant carriers should be required to maintain at their premises price and service information regarding their interstate, interexchange operator service offerings, that they can submit to the Commission upon request. We noted that, in adopting its prior mandatory detariffing policy, the Commission required affected carriers to maintain such information at whatever company location they desired. We seek comment on whether, if we find that we should forbear from applying the requirements for informational tariffs by non- dominant OSPs, we should similarly adopt a mandatory detariffing policy for their domestic operator services and require them to maintain at their premises price and service information regarding their interstate, interexchange offerings, that they can submit to the Commission upon request. We also solicit comment as to how long carriers should be required to retain records of their rates, and any applicable aggregator surcharge, for interstate 0+ calls from aggregator locations. F. Range of Rates Informational Tariffs 45. If, based on the comments, we conclude that we should not forbear from enforcing the informational tariff-filings required of OSPs under Section 226 of the Communications Act, we believe that we should establish rules to guide OSPs regarding specific tariff-filing requirements. Unlike Part 61 of our rules, which applies to tariffs filed pursuant to Section 203(a) of the Communications Act, we have not adopted rules specifically addressing procedures for filing tariffs pursuant to Section 226 of the Communications Act. The Bureau, however, has issued two public notices specifying filing procedures for OSP informational tariffs. In particular, the Bureau has specified, inter alia, that "[c]harges should be stated in dollars and cents and should not include cross-references to any other document" and, in dicta, that "if an OSP's informational tariff states its rates as a range of rates (as TOCSIA permits OSPs to do), that OSP's rate compilation should also contain a range of rates." 46. Apparently relying on the Bureau's OSP Order, a number of OSPs have denoted a range of rates in their informational tariffs in lieu of specific charges. We have reviewed this practice in light of two significant and apparently related developments since the enactment of TOCSIA in 1990. First, hundreds of OSPs now compete with AT&T, MCI, and Sprint in the operator services marketplace, compared to approximately the three dozen competitors that existed when Congress enacted TOCSIA. Second, a large number of consumers have filed complaints with the Commission about excessive OSP rates, often under circumstances in which the consumers had no knowledge, prior to receiving a bill, that they had used the particular OSP's services. It is clear that the presence of numerous competitors has not resulted in the benefits of reduced rates, which generally would be expected in a fully competitive market. Indeed, our review of numerous consumer complaints, along with OSP- tariff filings, shows that most OSPs' rates have not decreased and are generally at levels greater than those of AT&T, MCI and Sprint. We understand that consumers who complain about OSP rates that they perceive to be excessive often are told that the rates are contained in tariffs filed with the Commission and have been "approved" by the Commission, which is false. Many consumers, consumer advocates, and regulatory agencies perceive the charges and surcharges that many OSPs bill consumers to be the result of the OSPs' informational tariff structures that are perceived to allow direct or indirect price-gouging. This apparent "limited market failure" or "marginal market dysfunction" persuades us that range-of-rate tariff filings have served to frustrate rather than promote the achievement of TOCSIA's goals of (1) protecting consumers from unfair and deceptive practices, and (2) ensuring that consumers have the opportunity to make informed choices. 47. We take notice that thousands of complaints about OSP rates have been filed at the Commission, many of which have been referred to state regulators because they concerned intrastate service. We believe that consumers have the right to make fully informed decisions at the time of making a call. In order to remove all doubt as to their proper application, all informational tariffs must contain clear and explicit explanatory statements regarding the rates, i.e., the tariff price per unit of service, and the regulations governing the offering of service in that tariff. In light of the foregoing, we invite comment on a proposed rule that if we decide not to forbear from enforcing the informational tariff-filing requirement, we would require all OSPs to include in tariffs filed pursuant to Section 226 of the Communications Act specific and discernible rates and charges rather than a range of rates. We also solicit comment on the proposed rules in Appendix B that would require the OSPs to adhere to certain tariff-filing procedural guidelines set out in the Bureau's 1992 Public Notice. Further, should we adopt benchmarks for 0+ calls, we seek comment on whether we should adopt a policy of waiving the need for an individual OSP to file and maintain an informational tariff at this Commission pursuant to Section 226 of the Communications Act upon its certification to the Commission that it will not connect any call that would cost a consumer more than the benchmark established by the Commission (or by the Bureau under delegated authority) for that type of call. So long as an OSP certified that its rates and any applicable aggregator surcharge or PIF did not exceed FCC benchmarks, we believe that waiving the requirement for an informational tariff, and a substitute tariff every time an OSP revised its rates, would spur greater price competition among OSPs and additional, innovative service offerings to the benefit of consumers. G. Inmate-Only Phones in Correctional Institutions 48. Although a prison or other correctional institution, to the extent it makes telephones available for inmate use only, may not be an aggregator within the meaning of the TOCSIA definition, some commenters in this proceeding have suggested that we could require a BPP system, or alternatively, rate caps, to remedy high charges to the billed party for collect calls initiated by prison inmates. We consider calls from inmate-only telephones in prisons, jails and other correctional or similar institutions (hereinafter prisons) separately for two primary reasons. First, neither TOCSIA nor our rules require telephones for use only by prison inmates to be unblocked. Thus, callers from these facilities are generally unable to select the carrier of their choice; ordinarily they are limited to the carrier selected by the prison. A disclosure requirement can not directly aid such callers. Second, prisons often install and maintain security equipment for a number of legitimate reasons involving security and other government prerogatives. Given that prisons would likely seek to recover the cost of any equipment employed for legitimate security reasons, we would expect that competitive prices for inmate-only telephone calls from prisons could be higher than the rates of calls from ordinary locations. The record in this proceeding indicates, however, that at least one prison carrier, Gateway, has stated that it is willing and able to provide calls from prisons as well as the standard security equipment at rates comparable to those charged by AT&T, MCI and other large carriers. 49. The additional disclosure requirement proposed above would not be particularly helpful for interstate calls initiated by prison inmates, because prisons currently block inmate access to carriers other than the one chosen by the prison administration. Thus, inmates would not be able to choose an alternative carrier. We have already received comment on applying BPP to interstate calls originated by prison inmates, so as to remedy the problem of unnecessarily high rates charged by some carriers. We now invite comment on whether the public interest would be better served by some alternative remedy for prison inmate calling, including but not limited to requiring full price disclosure to the party to be billed for a collect call before connecting the call for inmate calls. IV. PROCEDURAL MATTERS A. EX PARTE PRESENTATIONS 50. This is a non-restricted notice and comment rule making proceeding. Ex parte presentations are permitted, except during the Sunshine Agenda period, provided they are disclosed as provided in Commission rules. B. INITIAL REGULATORY FLEXIBILITY ANALYSIS Reason for action. 51. The Commission is issuing this Second Further Notice of Proposed Rule Making to consider alternatives to the implementation of Billed Party Preference by local exchange carriers, to protect consumers from excessive charges in connection with interstate operator services, and to help ensure that consumers are aware of the price of a long distance operator service call before incurring charges. Objectives. The objective of this Second Further Notice of Proposed Rule Making is to propose requirements regarding charges and surcharges applicable to interstate operator services and to provide an opportunity for public comment thereon. Legal Basis. Sections 1, 4(i), 4(j), 201-205, 226 and 228 of the Communications Act of 1934, as amended, 47 U.S.C.  151, 154(i), 154(j), 201-205, 226, 228. Description, potential impact, and number of small entities affected. The proposed rules will require that interexchange carriers' Informational Tariffs, filed pursuant to Section 226 of the Communications Act, contain specific rates for their operator services. Hundreds of small operator services companies may have to file substitute tariffs and will have to implement other information disclosure requirements if their rates, and related payphone premises-owners' fees or aggregator surcharges, substantially exceed the rates charged by AT&T, MCI and Sprint. Small entities may feel some economic impact in additional printing costs, message production and recording costs due to these requirements. Reporting, record-keeping, and other compliance requirements. The proposed rules would require carriers charging rates above an established benchmark to provide audibly to consumers the price, or maximum price, of the call before connecting a call. Federal rules that overlap, duplicate, or conflict with the Commission's proposal. None. Any significant alternatives minimizing impact on small entities and consistent with stated objectives. None apparent at this time. Comments are solicited. We request written comments on this Initial Regulatory Flexibility Analysis. These comments must be filed in accordance with the same filing deadlines set for comments on the other issues in this Second Further Notice of Proposed Rule Making, but they must have a separate and distinct heading designating them as responses to this Regulatory Flexibility Analysis. The Secretary shall send a copy of the Notice to the Chief Counsel for Advocacy of the Small Business Administration in accordance with Section 603(a) of the Regulatory Flexibility Act. See 5 U.S.C.  601, et seq. C. Initial Paperwork Reduction Act of 1995 Analysis 52. This NPRM contains either a proposed or modified information collection. As part of its continuing effort to reduce paperwork burdens, we invite the general public and the Office of Management and Budget (OMB) to take this opportunity to comment on the information collections contained in this NPRM, as required by the Paperwork Reduction Act of 1995, Pub. L. No. 104-13. Public and agency comments are due at the same time as other comments on this NPRM; OMB comments are due 60 days from date of publication of this NPRM in the Federal Register. Comments should address: (a) whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; (b) the accuracy of the Commission's burden estimates; (c) ways to enhance the quality, utility, and clarity of the information collected; and (d) ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology. V. CONCLUSION 53. In this Second Further Notice of Proposed Rulemaking, we tentatively conclude that we should: (1) establish benchmarks for OSPs' rates and associated charges that reflect consumers' expectations; and (2) require OSPs whose charges and related aggregator surcharges or premises-owner fees exceed such benchmarks to disclose orally to consumers, before connecting a call, the total charges for which consumers would be liable. In the alternative, we seek comment on whether we should require OSPs to give a specific rate brand for all 0+ calls. We also solicit comment on proposed rules with respect to the filing of informational tariffs for interstate operator services and the extent to which we must or may forbear from enforcing the requirements for such tariffs. Finally, we solicit comment whether the public interest would be better served by alternative remedies than BPP for high rates charged by some carriers serving prisons. VI. ORDERING CLAUSES 54. Accordingly, IT IS ORDERED, pursuant to Sections 1, 4(i), 4(j), 10, 201-205, 218 and 226 of the Communications Act of 1934, as amended, 47 U.S.C.  151, 154(i), 154(j), 160, 201-205, 218, 226, that a SECOND FURTHER NOTICE OF PROPOSED RULE MAKING IS ISSUED, proposing the amendment of 47 C.F.R. Part 64 as set forth in Appendix B. 55. IT IS FURTHER ORDERED that, pursuant to applicable procedures set forth in Sections 1.415 and 1.419 of the Commission's Rules, 47 C.F.R.  1.415, 1.419, comments SHALL BE FILED with the Secretary, Federal Communications Commission, Washington, D.C. 20554 on or before 30 days after date of publication of notice in the Federal Register. Reply comments should be filed no later than 60 days after date of publication of notice in the Federal Register. To file formally in this proceeding, participants must file an original and six copies of all comments, reply comments, and supporting comments. If participants want each Commissioner to receive a personal copy of their comments, an original plus nine copies must be filed. In addition, parties should file two copies of any such pleadings with the Enforcement Division, Common Carrier Bureau, Room 6008, 2025 M Street N.W., Washington, D.C. 20554. Parties should also file one copy of any documents filed in this docket with the Commission's copy contractor, International Transcription Services, Room 140, 2100 M Street, N.W., Washington, D.C. 20037. Comments and reply comments will be available for public inspection during regular business hours in the FCC Reference Center (Room 239) of the Federal Communications Commission, 1919 M Street, N.W., Washington, D.C. 20554. 56. IT IS FURTHER ORDERED that, in order to facilitate review of comments and reply comments, both by parties and by Commission staff, we require that comments and reply comments include a summary of the substantive arguments raised in the pleading. Parties are also asked to submit comments and reply comments on diskette. Such diskette submissions would be in addition to the formal filing requirements addressed above. Parties submitting diskettes should submit them to Adrien Auger of the Common Carrier Bureau, 2025 M Street, N.W., Room 6120, Washington, D.C. 20554. Such submission should be on a 3.5 inch diskette formatted in an IBM compatible form using MS DOS 5.0 and WordPerfect 5.1 software. The diskette should be submitted in "read only" mode. The diskette should be clearly labelled with the party's name, proceeding, type of pleading (comment or reply comments) and date of submission. The diskette should be accompanied by a cover letter. 57. IT IS FURTHER ORDERED that any written comments by the public, as provided for in the Paper Reduction Act of 1995, on the proposed and/or modified information collections are due 30 days after date of publication of notice in the Federal Register. Written comments must be submitted by the Office of Management and Budget on the proposed and/or modified information collections on or before 60 days after date of publication in the Federal Register. In addition to filing comments with the Secretary, a copy of any comments on the information collections contained herein should be submitted to Dorothy Conway, Federal Communications Commission, Room 234, 1919 M Street, N.W., Washington, DC 20554, or via the Internet to dconway@fcc.gov and to Timothy Fain, OMB Desk Officer, 10236 NEOB, 725 - 17th Street, N.W., Washington, DC 20503 or via the Internet to fain_t@al.eop.gov. 58. IT IS FURTHER ORDERED, that the Chief of the Common Carrier Bureau is delegated authority to require the submission of additional information, make further inquiries, and modify the dates and procedures in this docket if necessary to provide for a more complete record and a more efficient proceeding. 59. IT IS FURTHER ORDERED, that the Secretary shall mail a copy of this Second Further Notice of Proposed Rule Making to the Chief Counsel for Advocacy of the Small Business Administration, in accordance with section 603(a) of the Regulatory Flexibility Act, 5 U.S.C.  603(a)(1981). The Secretary shall also cause a summary of this Notice to appear in the Federal Register. FEDERAL COMMUNICATIONS COMMISSION William F. Caton Acting Secretary APPENDIX A Parties Commenting on BPP Alternatives Proposed by NAAG and CompTel Coali tion America's Carriers Telecommunications Association(ACTA) American Public Communications Council (APCC) Ameritech Operating Companies (Ameritech) AT&T Corp. (AT&T) Bell Atlantic Telephone Companies (Bell Atlantic) Capital Network System, Inc. (CNS) Citizens United for Rehabilitation of Errants (CURE) Colorado Public Utilities Commission Staff (Colorado PUC Staff) Competitive Telecommunications Association (CompTel) CompTel Coalition CompTel Bell Atlantic NYNEX US West American Public Communications Council (CompTel Coalition) Florida Public Service Commission (FPSC) Frontier Communications International Inc. (Frontier International) Gateway Technologies, Inc. (Gateway) GTE Service Corporation (GTE) Industry Coalition Bell Atlantic Companies BellSouth Telecommunications, Inc. NYNEX Telephone Companies U S West Communications, Inc. American Public Communications Counsel The Competitive Telecommunications Association MFS Communications Co., Inc. (Industry Coalition) Inmate Calling Services Providers Task Force (ICSPTF) Intellicall, Inc. and Intellicall Operator Services, Inc. (Interllicall Companies) MCI Telecommunications Corporation (MCI) MessagePhone, Inc. (MessagePhone) National Association of Attorneys General Consumer Protection Committee Telecommunications Subcommittee (NAAG) National Association of State Utility Consumer Advocates (NASUCA) National Telephone Cooperative Association (NTCA) New York Department of Public Service (NYDPS) APPENDIX A Parties Commenting, continued NYNEX Telephone Companies (NYNEX) Oncor Communications, Inc. (Oncor) One Call Communications, Inc. dba Opticom (Opticom) Operator Service Company (OSC) Pacific Bell and Nevada Bell (Pacific Companies) Southwestern Bell Telephone Company (SWBT) Sprint Corporation (Sprint) Teltrust, Inc., Teltrust Communications Services, Inc. and Teltrust Phones, Inc. (Teltrust) United States Telephone Association (USTA) U.S. Long Distance, Inc. (USLD) U.S. Osiris Corporation (USOC) U S WEST Communications, Inc. (U S WEST) Other Commenters Filing Late or Ex Parte * Cochran, Fox & Co., Inc. Digital Network Services, Inc. National Association of Regulatory Utility Commissioners (NARUC) Pennsylvania Public Utility Commission (PaPUC) Sacramento County Sheriff's Department * Not inclusive APPENDIX B Proposed Rule Amendments PART 64 - MISCELLANEOUS RULES RELATING TO COMMON CARRIERS It is proposed that Part 64 of Title 47 of the Code of Federal Regulations be amended as follows: 1. The authority citation for Part 64 continues to read as follows: AUTHORITY: Sec. 4, 48 Stat. 1066, as amended; 47 U.S.C. 154, unless otherwise noted. Interpret or apply secs. 201, 218, 226, 228, 48 Stat. 1070, as amended, 1077; 47 U.S.C. 201, 218, 226, 228, unless otherwise noted. 2. Part 64, Subpart G, is proposed to be amended by substituting the following for Section 64.703(c):  64.703(c) Information disclosure. (1) Informational tariffs filed pursuant to 47 U.S.C.  226(h)(1)(A) shall contain specific rates expressed in dollars and cents for all interstate operator services of the carrier and shall also contain applicable surcharges, if any, billed on behalf of aggregators by the carrier or another billing agent. (2) Surcharges billed on behalf of aggregators, if any, shall be specified in informational tariffs in dollars and cents. (3) In order to remove all doubt as to their proper application, all informational tariffs must contain clear and explicit explanatory statements regarding the rates, i.e., the tariffed price per unit of service, and the regulations governing the offering of service in that tariff. (4) Operator services providers whose charges and any applicable aggregator surcharge for any call exceed any benchmark established by the Commission, or exceed benchmarks established by the Commission for the initial minute or additional minutes, shall provide, at no charge before the call is connected, either the specific charges, including any aggregator surcharge or premises owner fee, applicable to that call, or the maximum charges, including any aggregator surcharge or premises owner fee, that the consumer may be billed for that call. (5) Informational tariffs shall be accompanied by a cover letter, addressed to the Secretary of the Commission, explaining the purpose of the filing. (i) The original of the cover letter shall be submitted to the Secretary without attachments, along with FCC Form 159, and the appropriate fee to the Mellon Bank, Pittsburgh, Pennsylvania. (ii) Copies of the cover letter and the attachments shall be submitted to the Secretary's Office, the Commission's contractor for public records duplication, and the Chief, Tariff Review Branch. (6) Any changes to the tariff shall be submitted under a new cover letter with a complete copy of the tariff, including changes. (i) Changes to a tariff shall be explained in the cover letter but need not be symbolized on the tariff pages. (ii) Revised tariffs shall be filed pursuant to the procedures specified in subsection 64.703(c)(5). APPENDIX B-1 This page was intentionally left blank. APPENDIX C CompTel Coalition's Proposed Benchmark Ceilings Maximum charges to end users, including all surcharges, premises imposed fees and other charges: Collect, Calling Card, Person-to-Person and Third Party 1 Minute = $3.75 $4.75 2 Minutes = $4.25 $5.25 3 Minutes = $4.75 $5.75 4 Minutes = $5.25 $6.25 5 Minutes = $5.50 $6.50 6 Minutes = $5.95 $6.95 7 Minutes = $6.20 $7.20 8 Minutes = $6.65 $7.65 9 Minutes = $7.00 $8.00 10 Minutes and each additional minute = $0.35/minute APPENDIX D This page was intentionally left blank. APPENDIX D (continued) CALCULATION OF RELATIVE WEIGHTED AVERAGE OPERATOR SERVICE RATES FOR THE PURPOSES OF COMMISSION BENCHMARKS IN CC DOCKET 92-77 Background. Analysis of interstate tariffs filed by AT&T, MCI, and Sprint ("big three") showed that most of their tariffed interstate operator service rates were the same in the fall of 1995 ("common rates"). In those instances where there was some variation in the operator service rates charged by the "big three," we calculated a relative weighted average of the rates charged by the "big three" carriers ("weighted rates"). To prepare Appendices D and E, we added fifteen (15) percent to the common and weighted rates. Assumptions. For the calculation of "weighted rates," we assume, first, that the "big three" were the only operator service providers in the market ("hypothetical market") and, second, that their respective rates should be weighted based upon their relative shares of that hypothetical market. Methodology. 1. As there is no public information that provides a direct measure of the AT&T, MCI, and Sprint shares of the interstate operator services market, we used a surrogate. For that surrogate, we chose to use our best estimate of each carrier's share of the interstate toll service market, on the assumption that each carrier's share of the interstate toll service market provided the most reasonable estimate of that carrier's share of the interstate operator services market. 2. We estimated interstate toll service revenues by subtracting estimates of intrastate and international toll revenues from the total toll service revenues published in the Commission's "Long Distance Market Share, 1995" (Table 5). We explain these elimination procedures below. a. International Traffic. To eliminate international traffic from each carrier's total toll revenues, we used the Commission's "Preliminary 1994 Section 43.61 International Telecommunications Data (Table 8)" as follows (in millions of dollars): Facility Pure Total Based Resale International Revenues Revenues Toll Revenues (1) AT&T 5752 -0- 5752 (2) MCI 2793 56 2849 (3) Sprint 854 57 911 b. Intrastate Traffic. To eliminate the intrastate traffic, we obtained from Table 11 of the Telecommunications Industry Revenue, TRS Fund Worksheet Data (1993) the "big 4 carriers'" overall percentage of total toll revenues attributable to intrastate services. We found that figure to be about 23 percent. Applying that percentage to each carrier's total toll service revenues, we calculated each carrier's intrastate toll service traffic revenue as follows (in millions of dollars): Total Intrastate Intrastate Toll Revenue Revenue Revenue Percentage Amounts (1) AT&T 37166 23% 8548 (2) MCI 11715 23% 2694 (3) Sprint 8805 23% 1565 c. Interstate Traffic. By elimination of the international and intrastate traffic from the interexchange traffic data, we arrive at the following interstate revenue figures (in millions of dollars): Big Three Carriers 1994 Toll Service Revenues (Para.2.b) Less:Inter- national Revenues (Para.2.a) Less:Intra- state Revenues (Para.2.b) Interstate Toll Service Revenues AT&T 37166 (5752) (8548) 22,866 MCI 11715 (2849) (2694) 6,172 Sprint 6805 (911) (1565) 4,329 d. Relative Weights. From each carrier's portion of the interstate toll service revenues, we calculated their respective relative weights as percentages of the hypothetical interstate toll service market. Revenues are shown in millions of dollars. Name of Carrier Interstate Revenue Relative Weights AT&T $ 22,866 69% MCI 6,172 18% Sprint 4,329 13% Only "big three" 33,367 100% e. Relative Weighted Rates. We then employed those weights to combine the disparate rates of AT&T, MCI, and Sprint. For example, these carriers had the following respective service charges on third-party, operator station calls: AT&T and MCI each charged $2.25 while Sprint charged $2.20. Applying the above relative weights to those rates, we calculated a weighted rate of $2.24 for this service charge as follows: Carrier Tariffed Rate Relative Percentage Weighted Rate AT&T $2.25 69% $1.55 MCI 2.25 18% .40 Sprint 2.20 13% .29 Weighted Rate n/a 100% $2.24 APPENDIX E This page was i ntentionally left blank. NOTES PERTAININ G TO TABLES A THROUGH H Note 1: Rates in the tables in Appendix E were developed using rate information from Appendix D, which is based on AT&T, MCI and Sprint usage rates, Operator Service Charges, and Operator Dialed Surcharges. Table A - Person-to-Person, Customer Dials: Rates are applicable when the person originating the call specifies the particular party to be reached by the operator. The specified party may be a person, or a station, department, extension or office through a PBX attendant. Table B - Person-to-Person, Operator Dials: Rates are applicable when the person originating the call specifies the particular party to be reached by the operator, and the operator dials the called number. Table C - Calling Card, Customer Dials: Rates are applicable when (a) the customer dials the appropriate access code plus the telephone number desired and completes the call without the assistance of an operator or automated operator system, and the call is billed to a calling card, (b) the customer dials the appropriate access code plus the telephone number desired and operator assistance is limited to recording the calling card number for billing purposes, or (c) the customer dials the appropriate access code plus the desired telephone number and limitations of the local exchange carrier's equipment preclude the customer from completing the call without the assistance of an operator and the call is billed to the customer's calling card. Table D - Calling Card, Operator Dials: Rates are applicable when (a) the customer dials the appropriate access code, does not enter the called number and is transferred to a live operator or automated operator system, and the completed call is billed to a calling card, or (b) the customer dials a designated number for completion of a customer-dialed calling card call, but fails to respond to system prompts and must be transferred to an operator, and the completed call is billed to a calling card. Table E - Operator Station, Collect, Customer Dials: Rates are applicable when a call is completed with the assistance of an operator, and the charges are billed to the called station's telephone number. Table F - Operator Station, Collect, Operator Dials: Rates are applicable when a call is completed with the assistance of an operator, and the charges are billed to the called station's telephone number, and the operator dials the called number. Table G - Operator Station, Third Party Billed, Customer Dials: Rates are applicable when a call is completed with the assistance of an operator, and the charges are billed to a number that is different from the calling number or the called number. Table H - Operator Station, Third Party Billed, Operator Dials: Rates are applicable when a call is completed with the assistance of an operator, and the charges are billed to a number that is different from the calling number or the called number, and the operator dials the called number. Note 2: Where the value of a given rate varied significantly among the three carriers, for example, in the area of Operator Service Charges, a weighted average of the three rates was taken and increased by fifteen (15) percent to produce a single blended rate. Note 3: Where rate structures among the three carriers differed significantly, for example, in the area of mileage bands, the rate structure was simplified to make the resulting benchmarks easier to understand and apply.