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A.  a7DocumentgDocument Style StyleyXX` ` (#` 209t6L7 7 8BibliogrphyBibliography:X (# a1Right ParRight-Aligned Paragraph Numbers:`S@ I.  X(# a2Right ParRight-Aligned Paragraph Numbers C @` A. ` ` (#` a3DocumentgDocument Style Style B b  ?  1.  2J< b9 : :;a3Right ParRight-Aligned Paragraph Numbers L! ` ` @P 1. ` `  (# a4Right ParRight-Aligned Paragraph Numbers Uj` `  @ a. ` (# a5Right ParRight-Aligned Paragraph Numbers _o` `  @h(1)  hh#(#h a6Right ParRight-Aligned Paragraph Numbersh` `  hh#@$(a) hh#((# 2?|<L=%>%?a7Right ParRight-Aligned Paragraph NumberspfJ` `  hh#(@*i) (h-(# a8Right ParRight-Aligned Paragraph NumbersyW"3!` `  hh#(-@p/a) -pp2(#p Tech InitInitialize Technical Style. k I. A. 1. a.(1)(a) i) a) 1 .1 .1 .1 .1 .1 .1 .1 Technicala1DocumentgDocument Style Style\s0  zN8F I. ׃  2B'@@5AAa5TechnicalTechnical Document Style)WD (1) . a6TechnicalTechnical Document Style)D (a) . a2TechnicalTechnical Document Style<6  ?  A.   a3TechnicalTechnical Document Style9Wg  2  1.   20EBbC$DDa4TechnicalTechnical Document Style8bv{ 2  a.   a1TechnicalTechnical Document StyleF!<  ?  I.   a7TechnicalTechnical Document Style(@D i) . a8TechnicalTechnical Document Style(D a) . 2~K3bEFeJJDoc InitInitialize Document Stylez   0*0*0*  I. A. 1. a.(1)(a) i) a) I. 1. A. a.(1)(a) i) a)DocumentgPleadingHeader for Numbered Pleading PaperE!n    X X` hp x (#%'0*,.8135@8:around" calls, and since some also experienced fraud due to access codelike dialing, many aggregators blocked the use of access codes from their phones.  X- 6. Congress responded to payphone blocking by enacting the Telephone Operator  X-  Consumer Services Improvement Act of 1990 (TOCSIA),  yO)'-Í Pub. L. No. 101435, 104 Stat. 986 (1990) (codified at 47 U.S.C.  226). which directed the Commission to"0 ,=(=(JJr"   ipromulgate 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  X-  =the opportunity to make informed choices in making such calls."c  yOK-Í See 47 U.S.C.  226(d)(1).c 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, 1800 and 950 access codes to reach their preferred  X-  -carriers.X yO-  I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a)ÍSee 47 C.F.R.  64.704. The Commission has required unblocking of all payphones. Other aggregator   ;phones must also be unblocked, except for equipment that was manufactured or imported before April 17, 1992 and   which cannot be modified to permit access code dialing, without creating a significant danger of toll fraud, for less   xthan fifteen dollars per line. Commission rules do not require these phones to be unblocked until April 17, 1997.  yO -See 47 C.F.R.  64.704(c)(5). İ We also issued regulations prescribing compensation to aggregators for access code  Xv-calls.'v yO/- \Í  The United States Court of Appeals for the District of Columbia Circuit reversed and remanded an earlier   finding of the Commission in CC Docket No. 9135 that subscriber 800 calls were not within the class of calls for  yO-  which Congress intended the Commission to consider prescribing compensation under TOCSIA. Florida Public  yO-  Telecommunications Association, Inc. v. FCC, 54 F.3d 857 (D.C. Cir. 1995). The court directed the Commission   to consider whether competitive payphone owners should be compensated for originating subscriber 800 calls from   their payphones. In recognition of arguments raised by the competitive payphone industry about their continued   viability in light of the developments fostered by this proceeding and, by the general increase in nonrevenue  Jgenerating calls from competitive payphones, we will act on the remand in conjunction with the implementation of  yOo-  xthe 1996 Act, which requires that payphone owners be compensated for all calls. See para. 1, supra; 1996 Act at  276(b)(1)(A).'   XH- 7. #Xj P XP#In November 1992, it was thought that market forces would ensure that rates and  X1-  charges would be just and reasonable,1 yO- .ÍFinal Report of the FCC Pursuant to the Telephone Operator Services Improvement Act of 1990, Nov. 13,  yOJ-1992 (TOCSIA Report) at 33. 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 preTOCSIA 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   zcallers. 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   jbilling 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  XK-  serious problems presented by a presubscription system of equal access for public phones, K yO$-  I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a)ÍSee, e.g., Policies and Rules Concerning Operator Service Providers, Report and Order, CC Docket No. 90 yO%-  Z313, 6 FCC Rcd 2744 (1991) (TOCSIA Order). In the TOCSIA Report, the Commission found that the level of   compliance with various of our TOCSIA consumer protection requirements per number of telephones surveyed  yOL'-  ranged from 64 percent to 96 percent as of July 1992. TOCSIA Report at 1516. We concluded that these"L',=(=(y'"   requirements were effective in providing consumers the opportunity to reach their carrier of choice through access   <codes and thereby avoid the high rates charged by some OSPs. We recognized, however, that some calls are still   routed to carriers that charge high rates. We also found that these rates are, in many cases, driven by higher costs  yO-  and, in particular, the higher commissions these carriers pay to aggregators under a presubscription system of equal  yO-access.   TOCSIA Report at 3233; see also Further Notice, 9 FCC Rcd at 3321 n.5. Ě we"Kx,=(=(JJ+"   -have observed that other problems remain. In particular, the Commission noted that many callers  X-  =find dialing around for operator service calls to be burdensome and confusing.x yO- z I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a)ÍBilled Party Preference for 0+ InterLATA Calls, Notice of Proposed Rulemaking, CC Docket No. 9277,  yO-  7 FCC Rcd 3027, 3030 (1992) (Notice). See Ex Parte letter from Leonard S. Sawicki, Director FCC Affairs, MCI  yO -  Telecommunications Corporation, to William F. Caton (Nov. 7, 1995); Communications Daily, (Nov. 3, 1995) at  yOj -  i56 (Customers prefer to dial fewer numbers to reach their preferred long distance carrier, according to February 1994 and October 1995 Gallop surveys commissioned by MCI). Therefore, in  X-April 1992, the Commission initiated this rulemaking proceeding to consider BPP.(  yO - I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a)ÍSee Notice, 7 FCC Rcd at 3027.  X- !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  Xv-  <each telephone call and before the consumer incurs any charge for the call."v  yO- I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a)Í 47 C.F.R.  64.703(a)(1); see TOCSIA Order, 6 FCC Rcd at 275657. This identification   jis intended to notify consumers before they purchase service from a carrier that it might not be  XH-  their primary interexchange carrier (PIC).XHH  yOA-   I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a)ÍSee Policies and Rules Concerning Operator Service Providers, 5 FCC Rcd 4630, 463132 (1990) (citing  yO -  Telecommunications Research and Action Center v. Central Corporation, 4 FCC Rcd 2157, 2159 (Com. Car. Bur. 1989)). While the existing branding rule may be effective   in many cases, the large number of complaints received by the Commission and state regulators   Msuggests that it is inadequate notice to prevent consumer surprise and dissatisfaction for a  X -substantial number of calls.  h yO- yÍ I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) The Commission received more than 4160 complaints about OSPs' interstate rates and 880 complaints about   their intrastate rates between August 1, 1994 and August 31, 1995. The rate of such complaints appears to be   increasing. More than 525 complaints about OSPs' interstate rates and more than 115 complaints about their  yOt-intrastate rates were received in August of 1995. ġ  X - {9. While BPP is certainly one option we have considered to supplement our rules, in our  X -  LFurther Notice, we encouraged parties to suggest alternatives to BPP and asked that any such   Zalternatives be described "with specificity so that we may adequately assess their costs, benefits,  X-  and feasibility in relation to BPP."P yO$- I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a)ÍFurther Notice, 9 FCC Rcd at 3320. We asked for alternatives because the record indicated that  Xy-  the cost of BPP was likely to be more than a billion dollars. A number of parties offered general  Xb-   comments in 1994 in support of rate caps but it was not until February and March of 1995 that  XK-two groups of commenters offered specific, detailed alternative proposals. "K,=(=(JJg"Ԍ X- P ę 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  X-  requirement on OSPs.X yO4-  I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a)Í Petition of the National Association of Attorneys General Telecommunications Subcommittee for Rules to   wRequire Additional Disclosures by Operator Service Providers of Public Phones, RM8606, filed Feb. 9, 1995. Three additional state attorneys general subsequently joined in the NAAG petition.  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   KCommission to require those OSPs whose rates and related surcharges are higher than "dominant   carrier rates" to provide consumers an oral warning message after the carrieridentification  XH-  brand.H yO - >ÍNAAG Petition at 4. NAAG proposes specific language for such message, which is quoted, infra, at para. 31. 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  X -BPP.t @ yO- I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a)ÍNAAG Petition at 5.t  X - l 11. On March 8, 1995, a group of commenters proposed another alternative to BPP. The   Competitive Telecommunications Association (CompTel), the American Public Communications   yCouncil (APCC), Bell Atlantic, BellSouth Telecommunications, MFS Communications, NYNEX,  X-  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  X-  amended (Communications Act) . yO- I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a)Í47 U.S.C.  201(b) prohibits communications rates that are unjust or unreasonable. The CompTel Coalition urged that the Commission set the   benchmark rate ceilings on a simple perminute basis, without regard to timeofday, 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 nineminute call, and 35  X-  cents for each minute above nine minutes.`  yO"- I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a)ÍThe ceilings urged in the CompTel Proposal are set forth in Appendix C. CompTel states that its proposed rateceiling was   set below the general threshold rate level that prompted "virtually all complaints" in a  X|-"representative sampling of complaints to the FCC about operator service charges".U|  yO&-ÍXCompTel Proposal at 7.(#U "e ,=(=(JJ1"Ԍ X-  12. On March 13, 1995, the Common Carrier Bureau (Bureau) released a Public Notice  X-  soliciting comments on both the NAAG petition and the CompTel Proposal. yOb- I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a)Í Public Notice, 10 FCC Rcd 5022 (Com. Car. Bur. 1995). Ĥ More than thirty  X-  parties filed comments or reply comments in response to that Notice. X yO-  I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a)ÍThe parties filing comments or reply comments are listed in Appendix A. The Pennsylvania Public Utility   JCommission (PaPUC), by motion dated May 2, 1995, requested leave to submit latefiled reply comments tendered   therewith. Because there appeared to be good cause for the late filing, the PaPUC's reply comments have been made part of the record of this proceeding. 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  X-  addressing issues raised by the NAAG and CompTel proposals. @ yO~ -Í Resolution on Rate Caps and Branding For Operator Service Providers, adopted July 26, l995. NARUC requested that the  Xv-Commission carefully consider and implement the following views:  XH-  #RX ` ` 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;   X -  #RX  ` ` 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  Rrate cap on interstate "0+" calls and expanding branding requirements (rate disclosure), as an interim measure only;" and   Xy-  #X  ` ` NARUC opposes FCC rules precluding States from adopting more  Xb-safeguards and/or more stringent rules regarding OSPs.F!Xb yO- Í(emphasis deleted) Letter from James Bradford Ramsey, Deputy Assistant General Counsel, NARUC, to   YKathie Levitz, Deputy Chief, Common Carrier Bureau, FCC (Nov. 9, 1995) at 2 (attaching a copy of NARUC's July 26, 1995 resolution).F   X- FIII. ISSUES  X-  X-  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"e !,=(=(JJ"  X-  to their presubscribed carrier's or the LEC's rates." yOy- I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a)Í NAAG Reply Comments at 2; PaPUC Reply Comments at 1011.  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.  X-  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  X1-  rates charged may be higher than the consumer expects.#1X yO: -ÍSee, e.g., Colorado PUC Staff Comments at 6; APCC Comments at 13, 1516; NAAG Comments at 4. Others suggest that the Commission  X -  should require that OSPs provide cost support for prices above the benchmark$  yO- ÍSee, e.g., CompTel Reply Comments at 7; Comments of One Call Communications, Inc. d/b/a Opticom at 11. and still others   isuggest that the benchmark should serve as an absolute ceiling or rate cap so that any rate above  X -  [that hard cap would be unlawful.% @ yO-Í  See, e.g., Pacific Companies Comments at 2; PaPUC Reply Comments at 56. 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 inmateonly telephones in correctional institutions.  X4- A. Disclosure of Price on All Operator Service Calls  X-  X- 15. As an initial matter, we seek comment on benefits and costs associated with imposing   a pricedisclosure 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 benchmarklevel requirements. "  %,=(=(JJ"  X- B. Setting a Benchmark  X-   X- 1. Appropriate Level of Benchmarks  Xv- ]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 premisesimposed   \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.  X - 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  X -  ]at the Commission against OSP rates.5&  yO7- Í   See "Analysis of 101 Operator Service Rate Complaints Filed at the FCC Between May 1, 1994 and August  yO-15, 1994," APCC Comments, Attachment 1 at 1011;  CompTel Comments at 78.5 Public sector commenters uniformly criticize the  X -  benchmarks as still too high, as do Ameritech, Pacific, and Sprint.`'X  yOx- / I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a)Í Ameritech Comments at 12, Reply Comments at 67; Colorado PUC Staff Comments at 1112; NAAG   Comments at 56; NYDPS Reply Comments at 2; PaPUC Reply Comments at 4; Sprint Comments at 78; Pacific Companies Comments at 2. ` NAAG observes that "there   is undoubtedly a huge difference between competitive rates and the level of excessive rates which  Xy-  jtriggers the filing of a consumer complaint with the FCC."w(y@ yOj- I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a)Í NAAG Comments at 5.w The National Association of State   Utility Consumer Advocates (NASUCA) agrees that the benchmarks would affect only the most  XK-  egregious price gouging.[)XK yO- lÍ NASUCA is an association of 42 consumer advocate offices in 38 states and the District of Columbia   xwhose members are designated by state law to represent the interests of utility consumers before state and federal regulatory agencies and the courts.[ 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  X-  <that is properly presumed just and reasonable."*  yO - I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a)Í Ameritech Reply Comments at 67. Meanwhile, the Colorado PUC Staff states that   i30 percent of the complaints it received about OSP rates during the previous two years concerned  X-calls with rates below the CompTel benchmark.+  yO $- I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a)Í Colorado PUC Staff Reply Comments at 4.  X- 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" +,=(=(JJo"   the largest carriers and thus paid by the vast majority of 0+ callers. NASUCA suggests that the  X-  benchmark might be set at the highest rates charged from among the three largest carriers., yOb- I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a)Í NASUCA Reply Comments at 5. The   iColorado PUC Staff suggests that the benchmark be set at an average of the predominant players,  X-  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  X-  [that average.-XX yO- \ I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a)Í Colorado PUC Staff Comments at 10. The four largest OSPs in terms of annual telecommunications toll  yO^ -  revenues are AT&T, MCI, Sprint and LDDS WorldCom, in that order. Long Distance Market Shares, Fourth Quarter  yO& -1995, Industry Analysis Division, Common Carrier Bureau, FCC (Mar. 1996) at Table 5.  The PaPUC would cap surcharges at $1 above the highest daytime tariffed rate  Xv-  !of any facilitiesbased carrier, and would also support the Colorado PUC Staff option..vx yO -  I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a)Í PaPUC Reply Comments at 56. PaPUC would also permit a surcharge to be imposed for enhanced services.   yAmeritech suggests that the benchmark be set at 120 percent of the highest among the rates of  XH-  AT&T, MCI, and Sprint.~/H yO- I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a)Í Ameritech Comments at 13.~ The Pacific Companies support Ameritech's levels, but also propose   Ntheir 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  X -absolute cap, rather than a mere benchmark.0 `  yO- I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a)Í Pacific Companies Comments at 2; Reply Comments at 3.  X - 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  X-  =OSPs.1  yO1-  I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a)Í APCC Comments at 13; AT&T Comments at 5; Industry Coalition Reply Comments at 15; Intellicall Comments at 57; OSC Comments at 8. CompTel declares that neither Ameritech nor the Pacific Companies explain why their  Xy-  =proposed benchmarks are consistent with costs.}2yH  yOr- I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a)ÍCompTel Reply Comments at 9.} On the other hand, the Colorado PUC Staff   ymaintains that its cost studies show that Tier 1 carriers' (MCI, AT&T, Sprint) rates comfortably  XK-exceed the cost of providing service, other than commissions and passthrough surcharges.3K yO!- I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a)ÍColorado PUC Staff Reply Comments at 4.  X- >20. Two parties take the position that benchmarks need not be based on costs assuming   ithat they are not absolute rate caps but rather should reflect consumer expectations. As APCC observes: " h3,=(=(JJ"Ԍ XUnder its general Title II authority, and specifically Section 201, the FCC has  previously utilized consumer expectations as a basis to impose a message notice  X- requirement. . . .  In regulating 900 services, the FCC promulgated rules requiring  Scarriers to disclose the price of the call and a description of the product,  Binformation or service provided. However, the FCC did not require a preamble  X-for 900 services with charges below a certain level.4 yO- l I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a)ÍAPCC Comments at 1718 (citing Policies and Rules Concerning Interstate 900 Telecommunications  yO-Services, 6 FCC Rcd 6166 (1991)).     jFurthermore, 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   xpoint of view, reasonable rates are those "which are as low as possible, but still allow the industry  X -  0to provide 'adequate and efficient service' . . . ."5  yO- I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a)ÍSprint Reply Comments at 89 (citing US v. FCC, 707 F.2d 610, 612 n.4 (1983)). APCC's concern about establishing a   benchmark level that triggers a warning is that the warning not be triggered for "rates well within  X -consumer expectations" or else consumers will hear the message too often and tune it out.z6  yO6- I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a)ÍAPCC Reply Comments at 7.z  Xy- 2. Other Benchmark Issues  Xb-  XK- 21. Further disaggregation. The Industry Coalition urges that the benchmarks be simple  X4-  so as to minimize the monitoring burden on LECs and the FCC,74@ yO%- I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a)ÍIndustry Coalition Reply Comments at 1315. but other commenters propose   more complicated benchmarks. A few OSPs contend that any benchmark should conform to the  X-  general industry twopart pricing structure of a fixed percall charge plus a perminute charge.8X yO-  I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a)ÍAT&T Reply Comments at 7 (citing OSC Comments at 56, Pacific Companies Comments at 2); OSC   Comments at 46: (supporting fixed rates of $3.75 for stationtostation and $4.75 for persontoperson, and a $.35 perminute rate); Opticom Reply Comments at 8; USOC Comments at 810.   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  X-  precision.9  yOb#- I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a)ÍAmeritech Comments at 13; Reply Comments at 8; NASUCA Reply Comments at 5. 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 nonautomated  X-  .calls denies consumers a significant savings on automated calls.:  yO&- I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a)ÍPacific Companies Reply Comments at 3; PaPUC Reply Comments at 5. Arguing against increased" :,=(=(JJo"   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   Lbenchmark; (2) AT&T could be considered above the benchmark for intraLATA toll calls; and  X-(3) the OSP or LEC would be responsible for answering the consumers' questions.}; yO4- I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a)ÍBell Atlantic Comments at 2.}  X-  X- #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  X_-  y"nightmare" for OSPs and the Commission.<_X yOh - I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a)ÍIndustry Coalition Reply Comments at 15; OSC Comments at 8. A number of parties, therefore, contend that any  XH-  benchmark should be adjusted annually.=H yO -  I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a)ÍAmeritech Comments at 13; AT&T Comments at 4; NASUCA Reply Comments at 5; OSC Comments at 4; Opticom Comments at 12. 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  X -benchmark.> @ yO - I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a)ÍAmeritech Reply Comments at 7.  X -Discussion  X - {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  XK-  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  X-  largest carriers.? yO-ÍAT&T, MCI, and Sprint had the greatest toll revenues in 1995. See note 45, supra. Therefore, we tentatively conclude that the most useful benchmark for   0protecting 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  X-  those three carriers and not on the combined data of the four largest OSPs.@`  yO!-ÍLDDS Worldcom is the fourth largest IXC in terms of annual toll revenues. Id. We find that   jincorporating 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   Zreadily ascertainable due to the fact that they are filed as a "range of rates" rather than a specified  Xe-rate. "N @,=(=(JJ"Ԍ X- 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  X-  some level, such as 115 percent, of the average of the three largest OSPs, a variation of the  X-  <Ameritech proposal .vAX; yO4- Í Under Ameritech's approach the benchmarks would be set at 120 percent of the highest of the three largest   carriers' rates, rather than at the relative, weighted average of the largest carriers' rates methodology used in  yO-Appendices D & E. v 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   ilevel of the largest carriers may, nevertheless, have rates for some types of calls that exceed those  Xv-  of the largest OSPs. Second, this extra pricevariance 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  X -  additional price margin, such as 15 percent, is reasonable and justifiable.wBX  yO- Í Parties are free to comment on, or to supplement their comments on, any proposals that are already part   Jof the record in this proceeding. Parties may also incorporate by reference comments filed pursuant to the Bureau's  yO-March 13, l995 public notice. w If an additional   [margin is justified, we seek comment at what the level of such margin should be. We also seek   jcomment 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.  Xy- ^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  X-  the three largest carriers as of January 1 of each year plus some percent and that the benchmark  X-  (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   Lalso seek comment on the reasonableness of a sixmonth lag time for OSPs to revise their rates   zat or below benchmarks or whether such period should be reduced to three months or some shorter period.  X - >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  X-  benchmark. As illustrated in Appendices D and E, the proposed benchmark structure would  X-recognize six characteristics of a 0+ call that might lead rates to vary:"B,=(=(JJ"Ԍ   (1) how much live or automated operator assistance it requires; (2) whether the called number   kis 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  X-  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 singlebenchmark would be   [set at some specified percentage above the average of the highest rates the three largest OSPs  Xv-  charged for calls in any of the six abovementioned 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.  X - !27. We believe that all competitors in a competitive market already expend resources to   Lkeep 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  X -  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   Nwe 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   Kdisclosures 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.  X4- 28. We recognize that, as noted by Digital Network Services, Inc., no single set of rate  X-  ceilings may be appropriate in all cases and that some OSP services, e.g., those not driven by   Zcommissions and other payments to premises owners or other third persons, may nevertheless be  X-  subject to unusual but unavoidable costs, such as 0Transfer trunk and other costs.pC yOh- ÍSee Ex Parte letter from Mitchell F. Brecher, counsel for Digital Network Services, Inc., to William A.  yO0-  KCaton (April 27, 1995); Ex Parte letter from Mitchell F. Brecher to William A. Caton (May 18, 1995). LECs   generally provide operator transfer service (0 Transfer) whereby a LEC operator who receives a 0 call from a party   seeking to place an interstate call transfers that call directly to the interexchange carrier (IXC) selected by that party.  yO-   0 Transfer services also are offered by certain LECs that do not offer interexchange services (i.e., by dialing 0 to an interexchange carrier operator who arranges for billing and completion of the call). p While we   tentatively conclude that the initial OSP benchmark rates for all OSPs should be set at levels that  X-  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. "N@C,=(=(JJ|"  X- D. Consequences of Exceeding the Benchmark   X-  X- 1. Regulatory Options  X- 29. As NAAG and APCC explain, a benchmark need not necessarily serve as an absolute  Xv-  ceiling on rates.dDv yO-ÍNAAG Reply Comments at 4; APCC Comments at 4.d It might simply be used to differentiate the rates that consumers can be   kexpected 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   icharge rates above the chosen benchmark. These options require those OSPs to provide: (1) cost   isupport 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  X -rates to be reasonable.sE X yO-ÍNYDPS Reply Comments at 2; Pa PUC Reply Comments at 9.s  X- 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  Xb-  xof costs it identifies.SFb yO-ÍCompTel Reply Comments at 7.S 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  X-  <category of intangible costs.lGx yOF-ÍOSC Comments at 34; Opticom Reply Comments at 1314.l Ameritech and NASUCA propose that rates above the benchmark   should be filed on 120days' notice, accompanied by detailed cost support, and Ameritech  X-  advocates imposing an extremely high hurdle to justify such rates.mH yO-ÍAmeritech Comments at 13; NASUCA Reply Comments at 5.m 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 ratesetting. According to   <NAAG, the inevitable result would be that many OSP tariffs in excess of the proposed benchmark  X-would remain in effect after limited review of the OSPs' cost justifications.LI yO"-ÍNAAG Comments at 67.L "|( I,=(=(JJP"  X- 31. Warning Message. NAAG proposes that OSPs charging rates above the benchmark be required to provide the following audible message:  XThis may not be your regular telephone company and you may be charged more  Pthan your regular telephone company would charge for this call. To find out how  Xv-to contact your regular telephone company, call 18005551212.PJv yO-ÍNAAG Petition at 4.P    ZSome commenters charge that the reference in this warning to one's "regular" telephone company  X1-  is confusing.K1X yO: - LÍAPCC Comments at 14; OSC Comments at 78; Opticom Reply Comments at 14; SWBT Comments at 34; USW Reply Comments at 29. Others find it confusing in other ways,LX1 yO- MÍCompTel Comments at 11 (unspecified possibilities that the charge "may" be "more" than the consumer  yOZ-  might otherwise pay); NYNEX Comments at 4 (customers may assume they will be connected directly to their  yO"-carrier of choice). Ā and still others complain that the required  X -  reference to competitors is unfair.eM  yO-ÍAPCC Comments at 13; USW Reply Comments at 27.e 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  X -  to disclose to its customers that its prices are higher than that chain's prices.XN `  yO-Í  APCC Comments at 13. X AT&T concludes  X -  that NAAG's message would slow call processing and would have no impact on OSP rates.PO  yOv-ÍAT&T Reply Comments at 9.P   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  Xb-could yield three calls in place of one, which would be counter to simplifying the process.aPb  yO-ÍCompTel Comments at 11; OSC Comments at 7.a X(#  X4- ?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   mcarriers. Thus, it would modify NAAG's warning to direct callers to check the posted  X-  0information that TOCSIA requires to be placed on or near every public phone.Q yO%- MÍ NYNEX Comments at 34; see 47 U.S.C.  226(c)(1) (aggregators must post certain information about a presubscribed OSP's rates on or near the telephone instrument, in plain view of consumers). APCC,   declaring that "consumers should be alerted that they are about to incur such unusually high"hQ,=(=(JJ"   =charges," offers an alternative message for any OSP charging an abovebenchmark rate after a   ?certain date: "The rates charged by this provider exceed benchmarks established by the   jgovernment. Check the information posted on or near the telephone for the tollfree number to   obtain rate information before placing your call." According to APCC, the Industry Coalition  X-warning would apply if any rate is above the benchmark, on a phonebyphone basis.dR yO-ÍAPCC Comments at 1516; Reply Comments at 9.d  Xv- m 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,  XH-  missing, vandalized, or otherwise unavailable to consumers using those phones."PSHX yOQ -ÍNAAG Reply Comments at 3.P US West  X1-  alleges that the APCC message is also unsatisfactory,VT1 yO -Í U S West Reply Comments at 29.V and Ameritech avers that the APCC and  X -  NNYNEX voiceovers are more confusing than NAAG's.VU x yOC-ÍAmeritech Reply Comments at 10.V CompTel responds that all the   messages are confusing and "assume that all rates above a dominant carrier's rates are 'bad'."   LIt 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  X -  inappropriate.XV  yOw-Í CompTel Reply Comments at 1820.X US West adds that certain OSPs would not be able to price below the largest   Lcarriers' rates because of their cost structures, and GTE argues that doublebranding plus OSP  X-  selfreporting of rates makes this unnecessary.nW yO-ÍU S West Reply Comments at 28; GTE Reply Comments at 6.n NAAG warns that whatever additional disclosure   ithe FCC requires should be strictly prescribed, since the Attorneys General's experience with pay Xb-  percall disclosures indicates that varying disclosures could confuse consumers, e.g., with double XK-negatives.QXK(  yO$-Í NAAG Reply Comments at 3.Q  X4-  X- n!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  X-  xwell as the subsequent period charges.YY  yOA#-Í Colorado PUC Staff Comments at 6.Y 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  X-  entrants cannot, or choose not to compete on price, then government should not institutionalize   jinefficiency, anticompetitive behaviors, or guaranteed revenue stream through artificially high"H Y,=(=(JJ"  X-  rate caps."pZ yOy-Í  Id. at 6, 13  (emphasis in original).p 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  X-  cost outlays should be thoroughly scrutinized."J[X yO-Í Id. at 910.J NAAG, NASUCA, and the PaPUC all support   ythis proposal, and the latter notes that no carrier has complained that the cost of setting up the  X-warning would be prohibitive.\ yO& -ÍNAAG Reply Comments at 3; NASUCA Reply Comments at 5; PaPUC Reply Comments at 1011.  X_-2. Discussion  X1- !"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.   jAlternatively, 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 sevenminute 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   ythe 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   pricedisclosure requirements would be more effective in achieving our goal of providing callers  X-  with an "opportunity to make informed choices in making operator services calls"S]x yO-Í47 U.S.C.  226(d)(1)(B).S than the   .messages proposed by NAAG, NYNEX, and APCC or a requirement that we evaluate the cost support provided by OSPs.   X|- #36. This disclosure requirement is consistent with TOCSIA's directive that we require   iOSPs 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   idisclosure requirements would ensure that consumers do not unintentionally or inadvertently use  X -  carriers that charge unexpected high rates for interstate calls]^  yO%-ÍCf. id.  226(d)(1)(A).] or use such carriers only because   they are unaware that they have other options. We believe that this disclosure requirement can" ^,=(=(JJ"   Keliminate prices charged in excess of competitive rates and save what commenters have estimated  X-  costs consumers approximately a quarter of a billion dollars per year.<_  yOb- ÍSee Further Notice, 9 FCC Rcd at 3323, n.24. While some parties who filed additional comments in  yO*-  response to the Further Notice believe that our $260 million/year consumer savings estimate was either greatly   underestimated or greatly overstated, we believe on the basis of the entire record that our quarter billion dollars  yO-annual savings estimate is reasonable. < At the same time, we do   znot believe that this disclosure requirement would necessarily harm those OSPs that charge  X-  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   .highpriced 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.  XH- ? $37. We invite comment on the costs and benefits of the two alternative price disclosure  X1-  requirements and on the costs and benefits of requiring all OSPs to disclose their rates on all 0+   calls. We also seek suggestions for alternative disclosure requirements that would represent more   effective and efficient means for providing consumers with the information that they need to  X -  make fully informed decisions regarding the choice of an OSP.  We expect those OSPs that   would be subject to the price disclosure requirements discussed above to begin to take the actions necessary to be able to implement them in a timely manner.  X - XX  U 1 "" 1  XX  3'3'Standard3'3'StandardrJet 4M (PCL)M$հX #Xj P XP#  Xy- E. Forbearance from Applying Informational Tariff Filing Requirements  XK- %38. Under the 1996 Act, we must forbear from applying any regulation or provision of   ythe 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:   XX` ` REGULATORY FLEXIBILITY. Notwithstanding section   9332(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   dof telecommunications carriers or telecommunications services, in   (any or some of its or their geographic markets, if the Commission  XN-determines that x` ` `  (1) enforcement of such regulation or provision is not ` ` necessary to ensure that the charges, practices, classifications,  X - ` ` 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; ` ` X (2) enforcement of such regulation or provision is not ` ` necessary for the protection of consumers; and ` `  (3) forbearance from applying such provision or (# ""_,=(=(JJ!"Ԍ X-` ` regulation is consistent with the public interest.z`M yOy-Í1996 Act at  401 (adding Section 10(a), 47 U.S.C.  160(a)).z   In determining whether forbearance from applying a particular provision of the Communications   KAct or regulation is in the public interest, the Commission must consider whether forbearance will   Mpromote competitive market conditions, including the extent to which such forbearance will  X-enhance competition among providers of telecommunications services.a` XM yO- The 1996 Act provides, in relevant part, that:   rXX` ` In making the determination under subsection [10](a)(3), the Commission shall   consider whether forbearance from enforcing the provision or regulation will   promote competitive market conditions, including the extent to which such   Sforbearance will enhance competition among the providers of telecommunications   dservices. If the Commission determines that such forbearance will promote   &competition among providers of telecommunications services, that determination   (may be the basis for a Commission finding that forbearance is in the public interest. x`  yO.-Id. (adding new Section 10(b), to be codified at 47 U.S.C.  160(b)).  X_- &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  X1-  iofferings.b1 M yOb- /Í47 U.S.C.  226(h)(1)(A). Unlike proposed rates filed under Section 203(a) of the Communications Act  yO*-  that are subject to suspension, rates in tariffs filed under Section 226 may be effective upon filing. See id. (changes  yO-  in such rates shall be filed no later than the first day on which the changed rates are in effect); see also H.R. Rep.   No. 213, 101st Cong., 1st Sess. 14 (1989) (rates need only to be filed within a reasonable time after becoming effective).  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 nondominant  X -  -interexchange carriers for domestic interexchange services.cX 0M yO- ÍIn the Matter of Policy and Rules Concerning the Interstate, Interexchange Marketplace, Implementation  yO-  of Section 254(g) of the Communications Act of 1934, as Amended, Notice of Proposed Rulemaking, FCC 96123  yOt-(released March 25, 1996), CC Docket No. 9691 at paras. 19, 32 (IXC Tariff Forbearance NPRM). We did not, however, there address  X -  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  X -interstate interexchange telecommunications services.d PM yO"- ÍId. at para. 20 (issue of forbearance from applying Section 226 of the Communications Act "will be  yO#-addressed in a separate upcoming proceeding.").   X- l'40. We seek comment on whether enforcement of the Section 226 tariffing requirements   with respect to nondominant interexchange OSPs: (1) is unnecessary to ensure that non  Zdominant interexchange carriers' charges, practices, or classifications are just and reasonable, and"bd,=(=(JJh"   are not unjustly or unreasonably discriminatory; (2) is unnecessary for the protection of   jconsumers; 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   nondominant interexchange OSPs if they either provide an audible disclosure of the applicable   jrate and charges prior to connecting any interstate 0+ call from a payphone location, or certify   =that they will not charge more than FCCestablished benchmarks for such calls. We note that   zTOCSIA 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   Lrelating to their use of operator services to place interstate telephone calls; and (2) ensure that  X -consumers have the opportunity to make informed choices in making such calls.^e M yO -Í See 47 U.S.C.  226(h)(1)(B).^  X - N(41. In seeking comment on whether to enforce the Section 226 tariffing requirements, we   note that the filing of informational tariffs by nondominant 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  X-  discriminatory. Unlike tariffs filed under Section 203 by the largest OSPs,fXM yO- yÍThe largest carriers have filed their tariffed rates for their interstate as well as international operator services pursuant to Section 203. 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'   zcharges and practices and related aggregator surcharges are reasonable and not unjustly or unreasonably discriminatory.  X- )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  X -  .0+ calls from aggregator locations do not have similar exante mechanisms and thereby create   opportunities for rate abuses. In most instances, consumers that make 0+ payphone calls are in   jtransit limiting their ability to forge a longterm 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""f,=(=(JJ!"   at the point of purchase provide OSPs with the opportunity to increase profitability by   providing an otherwise competitive product at abovemarket 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   iprotection at the time of purchase. Based on this analysis, we seek comment on whether the most   .effective longterm solution for protecting consumers is to provide them with a mechanism for   =exercising choice, such as by entering into a longterm 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.  X - *43. We also seek comment on whether forbearance from requiring tariff filings for non  ydominant interexchange OSPs will promote competition and deter price coordination. We have  X -  previously found in the Sixth Report and Order in the Competitive Carrier proceeding that  X -  ="requiring nondominant 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  Xy-  =offerings. gyM yO- yÍSixth Report and Order, 99 FCC 2d 1020, 1030 (1995), vacated on other grounds, MCI Telecommunications  yO-Corp. v. FCC, 765 F.2d 1186 (D.C. Cir. 1985).  We also concluded that continuing to require nondominant carriers to file tariffs   Zpresents an opportunity for collusive pricing by competing carriers because carriers can ascertain  XK-  their competitors' existing rates and keep track of any changes by reviewing filed tariffs.@hK M yO-ÍId.@ The   Commission indicated that this may encourage carriers to maintain rates at artificially high  X-  [levels.@iM yO~-ÍId.@ Specifically, we seek comment on whether price information at the point of purchase,   zrather 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 marketbased discipline on abusive OSPs.  X- ]+44. Finally, in IXC Tariff Forbearance NPRM, we tentatively concluded that forbearance   from requiring nondominant interexchange carriers to file tariffs should be implemented on a   mandatory basis in order to establish a more marketbased environment that will help prevent  XN-  certain possible anticompetitive practices and better protect consumers.kjN@M yO?#-ÍIXC Tariff Forbearance NPRM at para. 34.k We also tentatively   concluded that, if we adopt a mandatory detariffing policy, nondominant carriers should be   required to maintain at their premises price and service information regarding their interstate," j,=(=(JJ"  X-  xinterexchange operator service offerings, that they can submit to the Commission upon request.OkM yOy-ÍId. at para. 36. O   We noted that, in adopting its prior mandatory detariffing policy, the Commission required  X-  affected carriers to maintain such information at whatever company location they desired.lXM yO-ÍId. at n. 91,  citing Sixth Report and Order, 99 FCC Rcd at 1034. We   yseek comment on whether, if we find that we should forbear from applying the requirements for   yinformational tariffs by nondominant 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.  X - F. Range of Rates Informational Tariffs  X -    ,45. If, based on the comments, we conclude that we should not forbear from enforcing   .the informational tarifffilings required of OSPs under Section 226 of the Communications Act,   we believe that we should establish rules to guide OSPs regarding specific tarifffiling   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  X4-  issued two public notices specifying filing procedures for OSP informational tariffs.m4M yO-  Public Notice, 5 FCC Rcd 7444 (Com. Car. Bur. 1990); Public Notice, 7 FCC Rcd 3335 (Com. Car. Bur. 1992). In  X-  particular, the Bureau has specified, inter alia, that "[c]harges should be stated in dollars and cents  X-  <and should not include crossreferences to any other document"[n@M yO-ÍPublic Notice, 7 FCC Rcd 3335.[ and, in dicta, that "if an OSP's  X-  >informational tariff states its rates as a range of rates (as TOCSIA permits OSPs to do), that  X-OSP's rate compilation should also contain a range of rates."oM yOY- kÍPolicies and Rules Concerning Operator Service Providers, 6 FCC Rcd 2314, 2316 (Com. Car. Bur. 1992)  yO! -(OSP Order).  X-  -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   kTOCSIA in 1990. First, hundreds of OSPs now compete with AT&T, MCI, and Sprint in the  XN-  operator services marketplace,bpN( M yO''-Í See Sprint Comments at 11.b compared to approximately the three dozen competitors that"N p,=(=(JJ"  X-  existed when Congress enacted TOCSIA.qM yOy-Í See id. at 11 n.19 (citing H.R. Rep. No. 213, 101st Cong., 1st Sess. 2 (1989)). Second, a large number of consumers have filed   complaints with the Commission about excessive OSP rates, often under circumstances in which   Kthe consumers had no knowledge, prior to receiving a bill, that they had used the particular OSP's  X-  services.WrXM yO-Í See note 22, supra.W It is clear that the presence of numerous competitors has not resulted in the benefits   Lof 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'   Zrates have not decreased and are generally at levels greater than those of AT&T, MCI and Sprint.   KWe 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  X1-  y"approved" by the Commission, which is false. s 1M yO - ÍSee, e.g., letter from Dorotha M. Schmitz (received Aug. 28, 1995) File No. IC9526121 (OSP's billing   agent told consumer that FCC had approved rates that were more than triple those of AT&T); letter from Rhonda   iLloyd (received August 31, 1995) (OSP's billing agent told consumer that FCC had approved the OSP rates about which she had inquired, including a $10.22 charge for a 3minute call).  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  X -  Mpricegouging.7t M yOm- jÍBecause many OSPs include in their tariff a range of rates rather than specific charges, consumers often have no way of ascertaining these OSPs' specific rate schedules until they receive bills from an OSP or its billing agent. 7 This apparent "limited market failure" or "marginal market dysfunction"u ( M yO-Í  See U S West Reply Comments at 10, 20; see also Sprint Reply Comments at 7.   persuades us that rangeofrate tariff filings have served to frustrate rather than promote the   achievement of TOCSIA's goals of (1) protecting consumers from unfair and deceptive practices,  X -and (2) ensuring that consumers have the opportunity to make informed choices.Zv M yO-ÍSee 47 U.S.C.  226(d)(1).Z  Xy- N .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,  X-  i.e., the tariff price per unit of service, and the regulations governing the offering of service in  X-  that tariff.lwH M yO#-ÍCf. 47 C.F.R.  61.2, 61.3(z), (cc).l In light of the foregoing, we invite comment on a proposed rule that if we decide   \not to forbear from enforcing the informational tarifffiling requirement, we would require all   yOSPs to include in tariffs filed pursuant to Section 226 of the Communications Act specific and"w,=(=(JJ"  X-  discernible rates and charges rather than a range of rates.MxM yOy-Í See Appendix B.M We also solicit comment on the   proposed rules in Appendix B that would require the OSPs to adhere to certain tarifffiling  X-  procedural guidelines set out in the Bureau's 1992 Public Notice.oyXM yO-ÍA copy of the Public Notice is attached as Appendix B1.o Further, should we adopt   ybenchmarks 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.  X - Ġ  X - G. InmateOnly Phones in Correctional Institutions  X- l/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  Xb-  [definition,z bM yO- >ÍAs previously noted (see note 10, supra), the term "aggregator" is defined in the Communications Act as  yO-  "any person that, in the ordinary course of its operations, makes telephones available to the public or to transient  yO-  Yusers of its premises, for interstate telephone calls using a provider of operator services." (emphasis added) 47 U.S.C  yOS-  x 226(a)(2). In the 1991 TOCSIA Order, the Commission concluded that the definition of aggregator "does not   apply to correctional institutions in situations in which they provide inmateonly phones." 6 FCC Rcd at 2749. More   recently, we solicited comment on whether the definition of "aggregator" should be expanded to apply to correctional   institutions and what, if any, changes should be made in our treatment of entities that provide interstate  yOs-  telecommunications services to prisons and other correctional facilities.  Amendment of Policies and Rules  yO;-  Concerning Operator Service Providers and Call Aggregators, CC Docket No. 94158, Notice of Proposed Rule   Making and Notice of Inquiry, 10 FCC Rcd 1533, 153435 (1995). We concluded that action to modify our rules   so as to treat inmateonly phones in correctional institutions as aggregator locations was not supported by the current   record in that proceeding and stated that the issue of inmate rates should be dealt with in the context of the instant  yO[-  OSP Reform proceeding.  Report and Order and Further Notice of Proposed Rule Making, FCC 9675 (rel. Mar. 5, 1996), CC Docket No. 94158, at 17. 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  X4-  iinitiated by prison inmates.{4M yO#- NÍThe Commission continues to receive complaints about high rates for interstate calls from phones in  yOM$-  correctional institutions that are for use of inmates. See, e.g., letter from Vicki Buchanan to Federal Communications   Commission (received Aug. 14, 1995) File No. IC9526656 (noting hourly rate of $46.33); letter from Kathy Nevell   to the Commission (received Aug. 25, 1995) File No. IC9527426 (complaining of nearly $650 worth of collect calls   billed on behalf of Inmate Communication); letter from Lewis Jake Miller to Commission (received Jul. 27, 1995)   File No. IC9524160; letter from Robert Felder (received Nov. 21, 1994) File No. IC9503399; letter from Robert"m'z,=(=('"  yO-Sher (received Dec. 20, 1994) File IC9505111.  We consider calls from inmateonly telephones in prisons, jails and"4X{,=(=(JJ"  X-  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  X-  unblocked.x|XM yO-Í TOCSIA Order, 6 FCC Rcd at 274952. x 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  X-  zfor a number of legitimate reasons involving security and other government prerogatives.}M yO& - Í For example, prisons may need to block inmate calls to judges, jurors, witnesses, or others. In fact, prisons   -may need to limit inmate calls to a set of preapproved numbers. Prisons may also attempt to ration the use of   telephones by limiting the length of any call or the total duration of all calls by any single inmate in a day or week  yO~ -  Kor month. Prisons may also need to be able to monitor calls and even tape them. See Comments of the Inmate  yOF -  Calling Services Providers Task Force at 910 and sources cited therein (filed Aug. 1, 1994 in response to Further  yO-Notice).    0Given that prisons would likely seek to recover the cost of any equipment employed for   Llegitimate security reasons, we would expect that competitive prices for inmateonly telephone  XH-  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  X -comparable to those charged by AT&T, MCI and other large carriers.~X ` M yO- [ÍEx parte letter from Glenn B. Manishin, counsel for Gateway, to William F. Caton, Federal Communications   wCommission (May 5, 1995) (Gateway and most major providers of collectonly inmate telecommunications services charge rates that are comparable to those of AT&T, MCI and other large carriers).  X -  X - @049. 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   xto 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   jbe better served by some alternative remedy for prison inmate calling, including but not limited   jto requiring full price disclosure to the party to be billed for a collect call before connecting the call for inmate calls.   " ~,=(=(JJ"  X- T IV. PROCEDURAL MATTERS  X-A. EX PARTE PRESENTATIONS  X-150. This is a nonrestricted notice and comment rule making proceeding. Ex parte presentations are permitted, except during the Sunshine Agenda period, provided they are  X_-disclosed as provided in Commission rules.z_M yO-ԍSee, generally, 47 C.F.R.  1.1202, 1.1203, 1.1206(a).z  X - B. INITIAL REGULATORY FLEXIBILITY ANALYSIS  X - Reason for action.   X - ! 251. 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   kto help ensure that consumers are aware of the price of a long distance operator service call  Xb-before incurring charges.  X4-   Objectives. The objective of this Second Further Notice of Proposed Rule Making is to   ipropose requirements regarding charges and surcharges applicable to interstate operator services and to provide an opportunity for public comment thereon.  X-   Legal Basis. Sections 1, 4(i), 4(j), 201205, 226 and 228 of the Communications Act of 1934, as amended, 47 U.S.C.  151, 154(i), 154(j), 201205, 226, 228.  X-   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 premisesowners' fees   or aggregator surcharges, substantially exceed the rates charged by AT&T, MCI and Sprint.   LSmall entities may feel some economic impact in additional printing costs, message production  X-and recording costs due to these requirements.  X -   Reporting, recordkeeping, 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.  Xh$-  Federal rules that overlap, duplicate, or conflict with the Commission's proposal. None."h$X,=(=(JJF#"Ԍ X-  ԙ  Any significant alternatives minimizing impact on small entities and consistent with stated  X-objectives. None apparent at this time.  X-    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   Zset for comments on the other issues in this Second Further Notice of Proposed Rule Making, but   Zthey must have a separate and distinct heading designating them as responses to this Regulatory   MFlexibility 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  X1-Regulatory Flexibility Act. See 5 U.S.C.  601, et seq.  X -   ` `  X - C.   Initial Paperwork Reduction Act of 1995 Analysis  X -  X - 352. 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   jcollections contained in this NPRM, as required by the Paperwork Reduction Act of 1995, Pub.   L. No. 10413. 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.  X- 2V. CONCLUSION  XN- l 453. 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   Linterstate operator services and the extent to which we must or may forbear from enforcing the   jrequirements 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. ":&,=(=(JJ$"  X-1 VI. ORDERING CLAUSES  X-l  X- lU 554. Accordingly, IT IS ORDERED, pursuant to Sections 1, 4(i), 4(j), 10, 201205, 218   >and 226 of the Communications Act of 1934, as amended, 47 U.S.C.  151, 154(i), 154(j), 160,   201205, 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.  XH- 655. 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   LRegister. 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.  X-  756. 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  X-  comments include a summary of the substantive arguments raised in the pleading.M yO#- ԍComments and reply comments must also comply with section 1.49 and all other applicable sections of the  yO-Commission's Rules. See 47 C.F.R.  1.49. 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   ydiskette 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  X-submission. The diskette should be accompanied by a cover letter.  X - |857. 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   Lmust be submitted by the Office of Management and Budget on the proposed and/or modified"# ,=(=(JJe""   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.  X_- 958. IT IS FURTHER ORDERED, that the Chief of the Common Carrier Bureau is  XH-  Ldelegated 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.  X - :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  X-the Federal Register. X` h (#%'0*,.8135@8: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):  XK-` `  64.703(c)  Information disclosure.  X-  3` ` (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  XN-  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. ` `   $` ` (4) Operator services providers whose charges and any applicable aggregator   !surcharge for any call exceed any benchmark established by the Commission, or exceed   benchmarks established by the Commission for the initial minute or additional minutes, shall   zprovide, at no charge before the call is connected, either the specific charges, including any   aggregator surcharge or premises owner fee, applicable to that call, or the maximum charges,   jincluding any aggregator surcharge or premises owner fee, that the consumer may be billed for that call. "h$#,))JJ(#"   ` ` (5) Informational tariffs shall be accompanied by a cover letter, addressed to the Secretary of the Commission, explaining the purpose of the filing.  6` `  (i) The original of the cover letter shall be submitted to the Secretary   kwithout attachments, along with FCC Form 159, and the appropriate fee to the Mellon Bank, Pittsburgh, Pennsylvania.  4` `  (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. ` `   o` ` (6) Any changes to the tariff shall be submitted under a new cover letter with a complete copy of the tariff, including changes.   5` `  (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). "4$,=(=(JJ" ` `  X- 1;APPENDIX B1 ă ` `  This page was intentionally left blank."%,))JJ"     X-A APPENDIX C ĐlU  bv< f CompTel Coalition's Proposed Benchmark Ceilings ă  b<#Xj P XP#  b< Maximum charges to end users, including all surcharges, premises imposed fees and other charges:  b < ` `  b < Collect, Calling Card,V  ppPersonto Person   X - and Third Party  Vpppp    X- 1 Minute = $3.75Vpppppp$4.75  X-2 Minutes = $4.25Vpppppp$5.25  Xt-3 Minutes = $4.75Vpppppp$5.75  XF-4 Minutes = $5.25Vpppppp$6.25  X-5 Minutes = $5.50Vpppppp$6.50  X-6 Minutes = $5.95Vpppppp$6.95  X-7 Minutes = $6.20Vpppppp$7.20  X-8 Minutes = $6.65Vpppppp$7.65  X`-9 Minutes = $7.00Vpppppp$8.00  X!-` ` 10 Minutes and each additional minute = $0.35/minute #Xj P XP#"!&,))JJ "  X-   ` `  X-AAPPENDIX D ă ` `  This page was intentionally left blank."',))JJ"  X-      X-  X-PAPPENDIX D (continued) CALCULATION OF RELATIVE WEIGHTED AVERAGE OPERATOR SERVICE RATES FOR THE PURPOSES OF COMMISSION BENCHMARKS IN CC DOCKET 9277  XH-  X1-  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   i("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.  X-  -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.  X4-Methodology.   1. As there is no public information that provides a direct measure of the AT&T, MCI, and  X-  Sprint shares of the interstate operator services market, we used a surrogate. For that surrogate,  X-  Zwe 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.  X|-  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   y"Long Distance Market Share, 1995" (Table 5). We explain these elimination procedures below. " (,** "  X-  ` ` 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  X-Telecommunications Data (Table 8)" as follows (in millions of dollars): ` `  Vpppppp  X-` `  V ` `  ` ` VFacilityppppPure  Total  X-` `  VBasedppppResale  International  Xv-` `  VRevenuesppppRevenues  Toll Revenues  XH-` ` (1) AT&TV 5752pppp0\\  5752  X -` ` (2) MCIV 2793pppp56888888 2849  X -` ` (3) SprintV 854 pppp57 911  X -  o` ` 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  Xy-  jcarriers'" 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  XK-  revenues, we calculated each carrier's intrastate toll service traffic revenue as follows (in millions of dollars): ` `  VTotal Intrastate Intrastate  X-` `  VToll Revenue rr Revenue Z!Z!Z!Z!Z!Z!Z!Z!Z!Z!Z!Z! ` `  VRevenue Percentage Amounts  X-` ` (1) AT&TV37166 pp23% 8548  X|-` ` (2) MCIV11715 pp23% 2694  XN-` ` (3) SprintV 8805pp23% 1565 " ),** "   X-  ` ` c. Interstate Traffic.VBy elimination of the international and intrastate   traffic from the interexchange traffic data, we arrive at the following interstate revenue figures (in millions of dollars): ^ ddx !ddxv* ^  L  )  Big Three Carriers H 1994 Toll Service Revenues (Para.2.b) ) Less:Inter national Revenues (Para.2.a) ) Less:Intra state Revenues (Para.2.b) ) Interstate Toll Service RevenuesL q v )h  AT&T3 h  371663 h  (5752)3 h (8548)3 h  22,866q q   MCI h  11715  h  (2849) h (2694)  h  6,172q   3  h  SprintE  6805E  (911) E (1565) E  4,329      X- ` ` d. Relative Weights. From each carrier's portion of the interstate toll service   zrevenues, we calculated their respective relative weights as percentages of the hypothetical interstate toll service market. Revenues are shown in millions of dollars. ^ !ddxv* Addx*( ( ( ^       Name of CarrierL Interstate RevenueL Relative Weights q  h  AT&Th $ 22,866h  69%q q L MCI.h  6,172.h  18% q q  Sprinth  4,329h  13%q   . h  Only "big three"@  33,367@  100%    X)- a` ` 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   jrespective service charges on thirdparty, operator station calls: AT&T and MCI each charged $2.25 while Sprint charged $2.20. Applying the above"*,**"  X-  relative weights to those rates, we calculated a weighted rate of $2.24 for this service charge as follows: ` `  Y Addx*( ( ( addx+ Y    z  g  Carrier5 Tariffed Rateg Relative Percentageg Weighted Ratez q  gh  AT&Th $2.25h  69%h $1.55q q  MCI h  2.25 h  18% h  .40q q  Sprintq h  2.20q h  13%q h  .29q     h  Weighted Rate   n/a  100%   X - $2.24  q  X - " +,** # "  X-     #XP P XP# l   X-BAPPENDIX E l  This page was intentionally left blank.",,))JJ# " l   l  X-  NOTES PERTAINING TO TABLES A THROUGH H l   lUNote 1: Rates in the tables in Appendix E were developed using rate information from   wAppendix D, which is based on AT&T, MCI and Sprint usage rates, Operator Service Charges, and Operator Dialed Surcharges.  XH-  |` ` Table A PersontoPerson, 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,  X -extension or office through a PBX attendant. (#`  X -  @` ` Table B PersontoPerson, Operator Dials: Rates are applicable when the   person originating the call specifies the particular party to be reached by the  X -operator, and the operator dials the called number. (#`  Xy-  ` ` Table C Calling Card, Customer Dials: Rates are applicable when (a) the   customer dials the appropriate access code plus the telephone number desired and   ocompletes 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   Oappropriate 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.(#`  X-  X|-  ` ` Table D Calling Card, Operator Dials: Rates are applicable when (a) the   Pcustomer 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 customerdialed calling card call, but fails to respond to system   prompts and must be transferred to an operator, and the completed call is billed  X-to a calling card. (#`  X -  @` ` 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.(#`  X#-  Xh$-  ` ` 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.(#`  X#'- "#'-,**%# "   X-  0` ` Table G Operator Station, Third Party Billed, Customer Dials: Rates are   Qapplicable 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.(#`  X-  Xv-  ` ` Table H Operator Station, Third Party Billed, Operator Dials: Rates are   Qapplicable 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  X1-called number, and the operator dials the called number. (#`  X -  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.  X -  X -  -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  Xy-to understand and apply.#IPP#