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Under the rules we propose herein, an LOA could also indicate that a  "V particular carrier has been selected as the preferred carrier for other telecommunications services, such as local exchange.(#w must fully translate their  xLOAs into the same language(s) as their associated promotional materials or oral descriptions and  xinstructions. Second, we modify Section 64.1150(e)(4) to incorporate the terms interLATA and  S' xintraLATA,v+ S ' " ԍ#X\  P6G;qP#XThe term "LATA," or local access and transport area, is generally defined as a contiguous geographic area  " established by a Bell operating company such that no exchange area includes points within more than one  {OT ' " metropolitan statistical area or State. See 47 U.S.C.  153(25). The Act defines "interLATA service" as  "g "telecommunications between a point located in a local access and transport area and a point located outside  X 4 " such area.#Xj\  P6G;߈XP#"#X\  P6G;qP# 47 U.S.C.  153(21). IntraLATA service is telecommunications between two points located  X 4within the same local access and transport area.#Xj\  P6G;߈XP# (#ƪ as well as interstate and intrastate, in order to remove possible confusion or uncertainty about  xthe scope of our rules, which are generally relevant to all jurisdictions. Third, we modify Section  x64.1100(a) to clarify that carriers must confirm orders for long distance service generated by telemarketing  xpusing only one of the four verification options. Aside from these modifications and seeking further  xcomment in the Further Notice of Proposed Rule Making as noted above, we otherwise decline to adopt the positions urged by petitioners.  Sp' CII. BACKGROUND Đ\  S ' e q3.` ` Section 258 of the Act makes it unlawful for any telecommunications carrier P X v+ S' " ԍX#X\  P6G;qP#The Act defines "telecommunications carrier" in pertinent part as "any provider of telecommunications  " services, except that such term does not include aggregators of telecommunications services (as defined in  "~ section 226)." 47 U.S.C.  153(44). "Telecommunications service" is defined as "the offering of  " telecommunications for a fee directly to the public, or to such classes of users as to be effectively available  " directly to the public, regardless of the facilities used." 47 U.S.C.  153(46). The Act also defines  " "telecommunications" as "the transmission, between or among points specified by the user, of information  " of the user's choosing, without change in the form or content of the information as sent and received." 47  yO'U.S.C.  153(43).#Xj\  P6G;߈XP#(# to "submit  xor execute a change in a subscriber's selection of a provider of telephone exchange service or telephone  S ' xtoll service except in accordance with such verification procedures as the Commission shall prescribe." pv+ S'ԍX#X\  P6G;qP#47 U.S.C.  258(a).#Xj\  P6G;߈XP#(#Ɲ The section further provides that:  X[a]ny telecommunications carrier that violates the verification procedures described in  =subsection (a) and that collects charges for telephone exchange service or telephone toll  service from a subscriber shall be liable to the carrier previously selected by the  S'subscriber in an amount equal to all charges paid by such subscriber after such violation. v+ S&'ԍX#X PqP#47 U.S.C.  258(b). #X PqP#(#ƞ  " ,')')qq."Ԍ S' e B4.` ` A subscriber may authorize a change of his or her telecommunications carrier by  xgrequesting the change directly from his or her local exchange carrier (LEC), or by authorizing the new  S' xcarrier to request a change on his or her behalf in response to a written or telemarketing v+ S'ԍ#X\  P6G;qP#XTelemarketing solicitations may be inbound (i.e., consumerinitiated), or outbound.(#ƻ solicitation, or  S' xan advertisement. hv+ S' " ԍ#X\  P6G;qP#XFor example, subscribers may contact either the incumbent LEC or the new LEC to change their local exchange service. (# Section 258 reflects Congressional recognition that unauthorized changes in  xsubscriber's carrier selections, a practice commonly known as "slamming," is a significant consumer  S8' xJproblem.;8v+ S ' " ԍX#X\  P6G;qP#Joint Explanatory Statement at 1. The 1996 Act does not define slamming, but the Joint Explanatory  " Statement states that the conference agreement adopted the House provision, which refers to slamming as  " "illegal changes in subscriber selections." Joint Explanatory Statement at 136. Prior to the Act, the  " Commission defined slamming as the unauthorized conversion of a consumer's interexchange carrier (IXC)  "c by another IXC, an interexchange resale carrier, or a subcontractor telemarketer. Cherry Communications,  X4Inc., Consent Decree, 9 FCC Rcd 2086, 2087 (1994).#Xj\  P6G;߈XP# (#; Slamming has become prevalent because of developments in technology and  xtelecommunications economics. Developments in technology enable carriers to make a large number of  S' xprimary interexchange carrier (PIC) changes from one carrier's network to another with relative ease.y v+ S' "< ԍX#X PqP#For example, in its petition, the National Association of Attorneys General (NAAG) describes allegations  "3 by the states that Sonic Communications, Inc. (SCI) "just switched the long distance service of those whose  "E names and telephone numbers it obtained from a data source." NAAG Petition at 4 (referring to SCI's  "} submission of changes electronically). States claim that, after switching 300,000 consumers, SCI collected  {O1'approximately $13 million. Id.(#Ƈ  xIn addition, available automatic numbering identification (ANI) technology enables carriers to identify the  xtelephone number associated with inbound calling consumers. Carriers can then access other databases  Sp' xand map the ANI with other information such as social security numbers,p;v+ SK' " ԍX#X PqP#See, e.g., Letter from Thomas N. Maze, International Network Communications to John Muleta, FCC (Aug. 13, 1996).(# allowing them to gain access  xto the data necessary to make unauthorized changes. Carriers have an economic incentive to slam because  x"they have high fixed costs for network equipment and low marginal costs for providing service to  x*additional consumers. Thus, providing service to additional consumers, even without authorization, adds  S ' xto a carrier's cash flow with little additional cost. v+ S' "t ԍ#X PqP#XSee, e.g., "Slamming Scourge: Stealing of Customers Spreads With Resellers of Telephone Service," Gautam Naik, The Wall Street Journal (Jul. 26, 1995). (# Moreover, carriers may provide service to slammed  S ' xconsumers for a considerable time before the consumers become aware of the unauthorized PIC change.l v+ SS"' " ԍX#X PqP##X\  P6G;qP#Many consumers are not aware of an unauthorized PIC change for at least one billing cycle. See 1995  {O+#'Report and Order, 10 FCC Rcd at 9580#X\  P6G;qP#. (#l  xHence, slamming distorts telecommunications markets by enabling companies engaged in misleading  SX'practices to increase their customer bases, revenues and profitability through illegal means..Xuv+ Sm&' " ԍX#X PqP#Revenues are increased by carrying the traffic of the consumers who have been switched, and profitability is increased because these revenues exceed the incremental cost of serving the consumer.(#. "0,')')qq"Ԍ S' e 5.` ` The Commission established safeguards to deter slamming when equal access was  S' ximplemented in 1985.lv+ S@' " ԍX#X PqP#Allocation Order, 101 FCC 2d 911 (1985), recon. denied, 102 FCC 2d 503 (1985); Investigation of Access  {O'and Divestiture Related Tariffs, 101 FCC 2d 935 (1985) (Waiver Order).#Xj P߈XP#(#l The Commission's original safeguards against slamming recognized the need for  x@flexibility as carriers moved from a monopoly to a competitive market for long distance interexchange  xservices. Additional safeguards to deter slamming were needed, however, as the interexchange market  xgbecame more competitive due to an increase in the number of interexchange carriers (IXCs) providing  xservice. In 1992, in response to a petition by AT&T and MCI, the Commission adopted procedures for  S' xverification of outbound (i.e., carrierinitiated) telemarketing sales of long distance services.2v+ S ' " ԍX#X PqP#See generally American Telephone and Telegraph Company, Petition for Rule Making, CC Docket No. 91 {O ' "E 64, Notice of Proposed #X\  P6G;qP#Rule M#X\  P6G;qP#aking, 6 FCC Rcd 1689 (1991) (PIC Change NPRM); Policies and Rules  " Concerning Changing Long Distance Carriers, CC Docket No. 9164, Report and Order, 7 FCC Rcd 1038  {OL ' "p (1992) (PIC Verification Order), recon. denied, 8 FCC Rcd 3215 (1993) (PIC Verification Reconsideration  {O 'Order).(# That Order  x^required IXCs to implement one of four procedures to verify PICchange orders for long distance service  S' xgenerated by telemarketing.Rv+ SZ' "h ԍX#X\  P6G;qP#The four alternatives are: (1) obtain an LOA from the subscriber; (2) receive confirmation from the  " subscriber via a tollfree number provided exclusively for the purpose of confirming change orders  "  electronically; (3) use an independent third party to verify the subscriber's order; or, (4) send an information  "M package that includes a postpaid postcard which the subscriber can use to deny, cancel, or confirm a service  {O' "c order, and wait 14 days after mailing the packet before submitting the PIC change order. PIC Verification  {OT'Order, 7 FCC Rcd at 1039; PIC Verification Reconsideration Order, 8 FCC Rcd at 321516. (#R In 1994, the Commission on its own motion and in response to continuing  xcomplaints from consumers regarding slamming by IXCs, instituted a rule making and adopted rules  Sr'establishing further antislamming safeguards to deter misleading LOAs.pjr v+ S' " ԍX#X PqP#See generally Policies and Rules Concerning Unauthorized Changes of Consumers' Long Distance Carriers,  {On' " Notice of Proposed Rule Making, 9 FCC Rcd 6885 (1994) (NPRM); 1995 Report and Order, 10 FCC Rcd 9560.(#p   S" ' e W6.` ` With the enactment of Section 258, we again need to reexamine our rules. Today, there  xare over 500 firms providing long distance service and offering a wide variety of prices and support  S ' xRservices to consumers. v+ S(' " ԍX#X PqP#See Federal Communications Commission, CCB, Industry Analysis Division, Telecommunications Industry  {O' "/ Revenue: TRS Fund Worksheet Data, Tbl. 1 (Number of Carriers Reporting by Type of Carrier and 'Type  "_ of Revenue) (Dec. 1996). Table 1 indicates that 445 entities identified themselves as providers of long  "p distance, or toll service; such entites include IXCs, Operator Service Providers (OSPs), Toll Resellers, and  "& "Other" Toll Carriers. Our estimate of over 500 long distance service providers takes into account that some  " providers of long distance service did not submit information for this report, and that some entities not identified as toll carriers also provide long distance service. (#ơ This increase in the number of IXCs providing service, coupled with  xtechnological advances in telecommunications markets have created opportunities for unscrupulous carriers  xor their marketing agents to use deceptive practices to convert large numbers of consumers to their service" ,')')qqA "  S' xto reap economic benefits. The Commission received 11,278 slamming complaints in 1995,*0v+ Sh' " ԍX#X PqP#Internal Audit, Enforcement Division, Common Carrier Bureau. NAAG, representing the attorneys general  "@ of twentythree states, indicates in its petition that states have continued to devote "increasing resources to  "< stop the misleading, deceptive, and fraudulent practices and the outright theft perpetrated by slammers."  yO'NAAG Petition at 3.#Xj P߈XP#(#* a sixfold  x increase over the number of such complaints received in 1993. The number of slamming complaints  S'received in 1996 is over 16,000.v+ S' "+ ԍX#X\  P6G;qP#Internal Audit, Enforcement Division, Common Carrier Bureau. The Commission has recently taken a  {O' " number of enforcement actions against IXCs for slamming.  See, e.g., Heartline Communications, Inc., 11  "I FCC Rcd 18487 (1996) (Notice of Apparent Liability); MCI Telecommunications Corporation, 11 FCC Rcd  " 12630 (Com. Car. Bur. 1996) (Consent Decree); Excel Telecommunications, Inc., 10 FCC Rcd 10880 (Com.  yOB 'Car. Bur. 1995) (Forfeiture Order). #Xj\  P6G;߈XP#(#ƭ  S`' e 7.` ` The 1996 Act is intended to encourage competition in the local exchange area and further  x3enhance competition in the long distance market. As a result of competition, consumers will have the  S' xkability to choose one or several carriers to provide all of their telecommunications services. v+ S2'ԍX#X\  P6G;qP#See, e.g., Letter from H. Richard Juhnke, Sprint general attorney, to John B. Muleta, FCC (Nov. 7, 1995).#Xj\  P6G;߈XP#(# Competition  x7will also fundamentally change the role of the LECs, which traditionally have been viewed as neutral third  xparties charged with implementing a subscriber's preferred long distance carrier choice in accordance with  xour equal access rules. Not only will LECs become competitors in the long distance business, IXCs and  x other carriers will compete with LECs to provide of local exchange service. Under the 1996 Act, the  xslamming rules apply to all telecommunications carriers; thus, we must assess whether existing safeguards  S ' xagainst slamming2 " v+ S' "' ԍX#X PqP#The Commission's current rules and orders require that IXCs either obtain a signed LOA from the  "y consumer, or, in the case of telemarketing solicitations, complete one of four telemarketing verification  {O'procedures before submitting PICchange requests to LECs on behalf of consumers. See 47 C.F.R.(# X 64.1100, 64.1150.(# are adequate in a marketplace in which carriers can compete for local as well as long  xdistance service customers, and where there may no longer be an independent third party executing changes in subscribers' telecommunications carriers.  S 'p  III. FURTHER NOTICE OF PROPOSED RULE MAKING Đ\  S0' e 08.` ` Our continuing efforts to deter and punish slamming by IXCs reflect the serious impact  x*of slamming on consumers. Slammed consumers are unable to use their preferred long distance service,  xmay be overcharged, cannot use calling cards in emergencies or while travelling, and lose premiums  S' xprovided by their properly authorized carrier.2v+ St"' " ԍX#X PqP#See, e.g., Letter from Mary T. Rossello to FCC (Mar. 4, 1996); Letter from Jian Zhao to AT&T (Dec. 4,  yOL#' " 1995); Letter from Joy Kaston to FCC (Mar. 5, 1996); Letter from Frank Barbarino to FCC (Dec. 5, 1995).#X\  P6G;qP#  yO$' " "Premiums" are additional products or services o#X\  P6G;qP#ffered to customers for subscribing to a carrier's  {O$'telecommunications service. See discussion at para. 30, infra. #Xj\  P6G;߈XP#(#ƿ Consumers continue to complain to the Commission that  xtheir accounts are "pirated" or "hijacked" through slamming and that they are "abused, cheated, and",')')qq."  S' xirreversibly exploited" by the offending carriers.+v+ Sh' "u ԍX#X PqP#See Letter from Joy Kaston to FCC (Mar. 5, 1996); Letter from Lisa and George A. Kenney to Frank  yO@'Panarisi, AT&T (May 9, 1996).#Xj P߈XP#(#+ Some consumers have complained that slamming  S' xcpractices of certain IXCs are "fraudulent," "deceitful," "illegal," and "an invasion of privacy."p0v+ S' " ԍX#X PqP#Letter from Joe N. Eto, Soil and Environmental Testing Service, Inc., to FCC (Nov. 11, 1995); Letter from  yO'Mary T. Rossello to FCC (Mar. 4, 1996); Letter from Mathew F. Sipowicz to FCC (Dec. 1, 1995). #Xj P߈XP#(#p The  S' x&numerous complaints filed with the Commissionx v+ S'ԍ#X\  P6G;qP#XSee supra para. 6.(#x reflect that consumers that have been slammed are incensed at the loss of control over their choice of telecommunications carriers.  S8' e 9.` ` Until now, our efforts to deter slamming have been concentrated on enhancing the  xverification of PIC changes. Through Section 258, Congress has substantially bolstered our continuing  xefforts to deter, punish and, ultimately, eliminate slamming. Section 258 has added an economic  xdisincentive for carriers to slam because it requires an unauthorized carrier that violates our verification  S' xprocedures to pay the charges it collects from a slammed consumer to the properly authorized carrier.!8v+ Sp'ԍX#X PqP#47 U.S.C.  258(b).#Xj P߈XP#(#Ɲ  xCarriers that violate our verification procedures will be required to forfeit revenues they have heretofore  SH ' xbeen able to keep."lH v+ S' "I ԍX#X PqP#Under the Commission's current policy, a carrier that has slammed a consumer is permitted to collect from  {O' "/ the consumer the amount that the consumer's properly authorized carrier would have charged. See 1995  {Ob'Report and Order, 10 FCC Rcd at 9579. #Xj P߈XP#(# Our verification procedures, coupled with the economic disincentives embodied in  xESection 258 and the rules that we propose today, will provide a twopronged approach to deter  S ' xslamming.i# v+ S' " ԍX#X PqP#Section 258(a) also provides that it does not preclude states from enforcing "such procedures with respect  yO|'to intrastate services." #X PqP#47 U.S.C.  258(a).#Xj P߈XP#(#i We tentatively conclude that our current rules, with the additions and modifications described  x*below, will best implement the statutory prohibition against slamming by any telecommunications carrier,  x}protect the right of consumers to be free of deceptive and misleading marketing practices, and help  xpromote full and fair competition among telecommunications carriers in the marketplace by ensuring that consumers' choices are honored.  S' e \ 10.` ` The verification procedures discussed herein are also important for ensuring that  S' xunauthorized access to a consumer's proprietary network information (CPNI)$tv+ S ' " ԍX#X PqP#Section 222(f)(1) defines CPNI as "information that relates to the quantity, technical configuration, type,  " destination, and amount of use of a telecommunications service subscribed to by any customer of a  " telecommunications carrier, and that is made available to the carrier by the customer solely by virtue of the  {O\#' " carriercustomer relationship." 47 U.S.C.  222(f)(1)(A). See Implementation of the Telecommunications  " Act of 1996: Telecommunications Carriers' Use of Customer Proprietary Network Information and Other  "" Customer Information, CC Docket No. 96115, Notice of Proposed Rule Making, 11 FCC Rcd 12513 (1996)  X%4(CPNI NPRM)#Xj P߈XP#.(#Ɵ is not obtained through  xslamming. Carriers that slam consumers may be able to obtain access to the CPNI of those consumers,  x<while they would not have been able to absent the slamming. In Section 222 of the Act, Congress  xrecognized the consumer's privacy interests in CPNI, and limited carriers' ability to use, disclose or permit"h$,')')qq "  S' xtaccess to CPNI.%v+ Sh' "d ԍX#X PqP#47 U.S.C.  222(c). In the CPNI NPRM the Commission tentatively concluded that Section 222  " requirements can be interpreted to require that a telecommunications carrier must obtain authorization from  " a customer before using that customer's CPNI, which it obtained in providing one traditional  "} telecommunications service (e.g., long distance), to market another traditional telecommunications service  {O'(e.g., local exchange). See CPNI NPRM, 11 FCC Rcd at 1252324.#Xj P߈XP#(# The verification procedures proposed in this proceeding give effect to the statutory  x^prohibition against slamming and in so doing, will have the secondary effect of also protecting consumers from unauthorized access to CPNI.  S`' A.XSection 258(a) (Prohibition)(#  S8'  S'Application of the Verification Rules to All Telecommunications Carriers  S' e   11.` ` The PICchange verification procedures set forth in our current rules were specifically  xdeveloped to address slamming and associated deceptive and misleading marketing practices by IXCs in  Sp' xthe interexchange marketplace.>&pv+ S' " ԍX#X\  P6G;qP#A detailed history of the evolution of our PICchange verification rules is set forth in our 1995 Report and  Xr4Order, 10 FCC Rcd at 956163.#Xj\  P6G;߈XP# (#> We emphasized in our 1995 Report and Order that for any competitive  xQmarket to work efficiently, consumers must have information about their possible market choices and the  S" ' xopportunity to make choices about the products and services they buy.'" v+ S'ԍX#X\  P6G;qP#1995 Report and Order, 10 FCC Rcd at 9564.#Xj\  P6G;߈XP#(#Ʒ We determined that slamming  xtakes away those choices from consumers and distorts the long distance competitive market because it  xrewards companies that engage in deceptive and misleading practices by unfairly increasing their customer  S ' x@base at the expense of those companies that market in a fair and informative manner.( v+ S'ԍX#X\  P6G;qP#Id.#Xj\  P6G;߈XP#(#Ɛ The 1996 Act  x expands the scope of the Commission's authority to address slamming by all carriers that "submit" or  SZ' x"execute" preferred carrier (PC) changes.t)0ZS v+ SM' " ԍ#X\  P6G;qP#XWe use the term "preferred carrier" or PC to describe the subscriber's properly authorized or primary  " carrier(s) (a subscriber may have multiple PCs one for local exchange service and one for long distance  yO' " service), as contemplated by the Act. Where appropriate, we will continue to use the term "PIC" to  yO'describe a subscriber's primary interexchange carrier prior to the 1996 Act. #Xj P߈XP#(#t We seek comment on whether our current verification rules  x*are adequate in light of this expansion to all carriers. We also seek comment on whether our rules would  xkhave consumer protection and procompetition effects in the local market and whether they can or should be applied to the local market in whole or in part.  S' e  12.` ` We propose to incorporate the specific language of Section 258(a) of the Act into Part 64  xof our rules to reflect the statutory prohibition of slamming by any telecommunications carrier, not just  SB' xIXCs as is the case under our current rules.{*BKv+ S-%'ԍX#X PqP#See Appendix C.(#{ Mirroring the language in Section 258, proposed Section  S' x64.1160(a) would state that no telecommunications carrier shall submit or execute a change in a" *,')')qq"  S' xVsubscriber's selection of a provider of telecommunications service+v+ Sh'ԍ#X\  P6G;qP#X"Telecommunications service" includes both telephone exchange and telephone toll service.(#ƹ except in accordance with the  xCommission's verification procedures. We propose to increase the scope of Sections 64.1100 and 64.1150  xtof our rules by expanding them to include all telecommunications carriers. We also propose to modify  xSection 64.1100 to use the term "subscriber" in place of "customer." This proposed modification is  S`' xconsistent with the use of the term "subscriber" in Section 258.S,`hv+ Sh' "lԍXThe term "subscriber" is also appropriate in this context, because the only individual qualified to  S@' "authorize a preferred carrier change is the telephone line subscriber. See 1995 Report and Order, 10 FCC Rcd 9560, 9564 n.16.(#S We also propose other modifications  S8' x*to Sections 64.1100 and 64.1150 of our rules for clarification purposes.-8v+ S 'ԍ#X\  P6G;qP#XSee Appendix C, proposed  64.1100(b),(d);  64.1150(b),(d),(e)(2).(#Ư Section 258 and our proposed  xrules significantly expand the application of our PICchange requirements to cover all "telecommunications  S' x&carriers" that "submit or execute" PC changes on behalf of telecommunications service subscribers..0Zv+ S' "Z ԍX#X PqP#The 1995 Report and Order adopted rules and procedures for changing a consumer's PIC. The Act expands  " the scope of those entities and services that may be affected by the Commission's "carrier selection" rules  " to include a subscriber's selection of any "telephone exchange service or telephone toll service." 47 U.S.C.  258. (#  S' xThus, LECs are also subject to Section 258(a) of the Act if they "submit or execute" a change in a  S'subscriber's selection of a preferred carrier.  SJ ' e v 13.` ` The Act does not define "submitting" and "executing" carriers. Under our current  xxverification procedures, the submitting carrier is the IXC that requests on behalf of a consumer that a PIC  xchange be made, and the executing carrier is the LEC that effects the PIC change. Under our proposed  xrules, submitting and executing carriers may be IXCs or LECs, or both. Moreover, the same carrier could  xserve as both submitting and executing carrier for a particular PC change. To ensure that our proposed  x/verification procedures will apply to all carriers involved in PCchange transactions, we tentatively  xconclude that a submitting carrier is any carrier that requests that a consumer's telecommunications carrier  xxbe changed, and that an executing carrier is any carrier that effects such a request. We seek comment on  xthese definitions, and on whether they are sufficiently broad in scope to hold accountable all carriers involved in PCchange transactions.  S' e 9 14.` ` We believe that, with the modifications and clarifications discussed elsewhere in this  x&Further Notice, the verification procedures under our existing rules are sufficient as they pertain to all  x"submitting" telecommunications carriers under the Act. The application of our verification procedures  xDto "executing" telecommunications carriers is more complex, however. We believe that Section 258 does  xnot require that an executing telecommunications carrier duplicate the PCchange verification efforts of  S' xthe submitting telecommunications carrier./R v+ S#' "  ԍ#X\  P6G;qP#XThat is, we believe that Section 258 does not impose an independent requirement on executing carriers (e.g.,  {O$' " LECs) to verify a PCchange request submitted by another carrier (e.g., an IXC). Because the submitting  " carrier, not the executing carrier, is guilty of slamming in most instances, we believe requiring that both  " the submitting and executing carriers verify PC changes would not likely lessen the number of slamming  yO&'instances.#Xj\  P6G;߈XP#(#Ʈ In fact, requiring independent verification by an executing  xcarrier in all instances could have the effect of doubling the transaction costs associated with a subscriber's" /,')')qq"  xtselection of a primary carrier. In most cases, the submitting carrier's compliance with our verification  x7rules should facilitate timely and accurate execution of the PC change to the benefit of the subscriber and  xsubmitting carrier. We seek comment on this tentative conclusion and invite interested parties to identify  x+and describe specific additional or separate verification procedures, if any, that should apply to  x*telecommunications carriers that "execute" PC changes within the meaning of Section 258. Commenters  x^suggesting additional or separate verification procedures for telecommunications carriers that execute PC  xlchanges should address the effects on competition and on consumer protection, if any, of such  S' xprocedures.K0v+ SP' "` ԍ#X\  P6G;qP#XUnder Section 258 (a), we could impose separate verification procedures upon "executing"  yO( 'telecommunications carriers, but the statute does not compel us to do so.#X\  P6G;qP# (#K In doing so, commenters should bear in mind the different interests and functions of  xsubmitting and executing carriers, and should consider that the same telecommunications carrier could be both the submitting and the executing carrier for purposes of Section 258.  SH ' e 15.` ` Commenters should also address whether incumbent LECs should be subject to different  xrequirements and prohibitions because of any advantages that their incumbency gives them compared to  S ' xcarriers that are seeking to enter the local exchange markets.812 0v+ S' " ԍ#X\  P6G;qP#XIncumbent LECs arguably have an enhanced ability to make unauthorized PC changes on their own behalf  " without detection because of their established relationship with local customers. For example, by soliciting  "/ PC freezes from their local exchange customers, incumbent LECs may be able to erect an entry barrier for  {O0'carriers seeking to enter the local market. See paras. 2223, infra. (#8 Under the current approach, an incumbent  xLEC would be responsible for executing PCchange requests for local service from competing carriers,  xwhich will result in a loss of business for the incumbent LEC. To avoid losing local customers, the  xincumbent LEC could potentially delay or refuse to process PCchange requests from local exchange  SX' xQservice competitors.p2hX*v+ S"' " ԍ#X\  P6G;qP#XOn the other hand, heightened scrutiny of PCchange orders by incumbent LECs seeking to avoid unlawful  " PC changes to their detriment may have the positive effect of lessening or eliminating the occurrence of unauthorized PC changes. (#p A related concern is that a PC change may lead a carrier to engage in conduct that  xblurs the distinction between its role as executing carrier and its objectives as a marketplace competitor.  xtFor example, an incumbent LEC may send to its subscriber who has chosen a new LEC a promotional  S' xletter in an attempt to change the subscriber's decision to switch to another carrier.3jZ v+ S' "  ԍ#X\  P6G;qP#XSuch letters may contain elements of verification (e.g.,"we just want to make sure that you meant to change  {O' " to a new carrier") as well as promotional elements (e.g., "we'd love to keep you as a customer, and we'll give you a free month of service if you stay").(#ƞ We seek comment  x&on whether such a letter would violate our verification rule prohibiting carriers from combining LOAs  S' xwith inducements of any kind on the same document,4 v+ S!' " ԍ#X\  P6G;qP#X47 C.F.R.  64.1150(c); see also 47 C.F.R.  64.1150(b) (providing that the LOA must be a separate or an easily separable document).(# and on whether such a practice would be otherwise  xinconsistent with the Act's consumer protection and procompetition goals. We also seek comment on  xkwhether LECs serving as both submitting carrier and executing carrier for changes in telecommunications  S' x*service,5jv+ S&' "" ԍX#X\  P6G;qP#This might occur where a LEC offers bundled services. Commenters have addressed the similar instance  " in which LECs may have a conflict of interest between their role as executing carrier and their role as an  {OL('affiliate of a submitting carrier (e.g., IXC). See n.103, infra.(#ƾ whether offering interexchange and local exchange service or just local exchange service, have" &5,')')qq"  xan enhanced ability or incentive to make unauthorized PC changes on their own behalf without detection,  S'and thus should be limited to verification by an independent, thirdparty.\6hv+ S@' "h ԍ#X\  P6G;qP#XWhile such anticompetitive behavior could be addressed in the context of a Section 208 complaint  " proceeding, we encourage commenters to discuss the need for additional safeguards in our rules to prevent such occurrences.(#\  S'  S' Viability of the "Welcome Package" Verification Option  S8' e 16.` ` As discussed above, Section 64.1100 of the Commission's rules requires IXCs to institute  x@one of four confirmation procedures before submitting to LECs their PICchange orders generated by  xtelemarketing. The fourth confirmation procedure, set forth in Section 64.1100(d), requires the IXC to  S' x send each new customer an information package, including, inter alia, a prepaid postcard, which the  xcustomer can use to deny, cancel, or confirm the change order. This option is sometimes referred to as the "welcome package" verification option. Section 64.1100(d)(8) provides that the package must contain:  XA clear statement that if the customer does not return the postcard the customer's long  distance service will be switched within 14 days after the date the information package was mailed to [name of soliciting carrier].    S ' e 17.` ` In its petition for reconsideration of our 1995 Report and Order, NAAG proposed that  xwe revise the negativeoption aspect of this provision by eliminating the automatic switching of consumers  S4' xwho do not return a postcard to the IXC within the 14day period prescribed by the provision.w74v+ S'ԍ#X\  P6G;qP#XNAAG Petition at 1617.(#w NAAG  S ' xasserts that such an amendment will bring these provisions into conformity with the Commission's 1995  S' xkReport and Order and new Section 64.1150(f), which prohibits "negativeoption" LOAs.p8v+ S'ԍX#X PqP#Id. at 17.(#p Several parties  xoppose NAAG's petition on this issue, arguing that this verification option is unlike a negativeoption  xDLOA in that consumers have already given their oral agreement during a telemarketing call to change their  Sp'service.9p8v+ SH'ԍ#X\  P6G;qP#XSee para. 63, infra.(#ƌ  S ' e J18.` ` A negativeoption LOA requires a consumer to take some action to avoid a PIC change.  xINearly every entity choosing to comment on the matter supported the Commission's prohibition of  S' xnegativeoption LOAs.:v+ SJ!'ԍ#X\  P6G;qP#XSee 1995 Report and Order, 10 FCC Rcd at 9565.(#Ɣ In adopting the prohibition against negativeoption LOAs, we found that such  S' xxLOAs impose an unreasonable burden on consumers who do not desire to change their PICs.o;x v+ S#'ԍ#X PqP#XId.(#o However,  xas stated above, not all carriers agree with NAAG that the "welcome package" option operates the same  xas a negativeoption LOA. We do not yet have enough information in the record to determine the effect  S2' xof eliminating this verification option,<2 v+ S''ԍ#X\  P6G;qP#XSee para. 64, infra.(#ƌ but we are inclined to agree with NAAG that it could be used in"2 <,')')qq"  xthe same manner as a negativeoption LOA. Accordingly, we tentatively conclude that the "welcome  S'package" verification option should be eliminated, and seek comment on this tentative conclusion.  S'  Application of the Verification Rules to InBound Calls  S8' e 19.` ` We concluded in our 1995 Report and Order that we should extend our verification  S' xprocedures to consumerinitiated "inbound" calls.=v+ Sz' " ԍ#X\  P6G;qP#X1995 Report and Order, 10 FCC Rcd at 9560. The Commission, on its own motion, stayed its 1995 Report  {OR' " and Order insofar as it extends the PICchange verification requirements set forth in Section 64.1100 of the  "/ Commission's rules to consumerinitiated calls. Policies and Rules Concerning Unauthorized Changes of  {O ' " Consumers' Long Distance Carriers, Order, 11 FCC Rcd 856 (1995) (Inbound Stay Order). The stay was  {O ' "_ imposed before the effective date of the 1995 Report and Order. The consumerinitiated or inbound  " telemarketing provision is the only component of its new slamming rules that the Commission stayed. The stay of this provision of the Order remains in effect.(# We remain convinced that it serves the public interest  xto offer consumers who place calls to carrier sales or marketing centers the same protection under our  S' xverification rules as those consumers who are contacted by carriers.>v+ S'ԍ#X\  P6G;qP#XSee discussion at para. 51, infra.(#Ǝ Moreover, with the Section 258  xDextension of slamming restrictions to all telecommunications carriers, and the potential for a single carrier  xto offer local exchange and interexchange service, it is likely that problems with inbound calling will be  xof even greater significance. Without any requirement for verification of inbound calls, carriers may be  S" ' xmotivated to use the call to switch a consumer to other telecommunications services they provide (i.e.,  S ' xlocal or long distance service).? v+ SZ' "E ԍX#X PqP#See, e.g., Letter from Marilyn Diamond to AT&T (Mar. 29, 1996), forwarded to the Commission by the  "E State of New York Department of Public Service (May 9, 1996) (alleging that AT&T changed the local  " provider without authorization); Letter from Jeffrey S. Stevens to New York Telephone (Apr. 5, 1996)  "u (alleging that AT&T made an unauthorized local provider change); Letter from Michael Cammer to  " NYNEX and MCI Telecommunications (May 11, 1996) (alleging that MCI made an unauthorized local  yOR'provider change). #Xj P߈XP#(# We tentatively conclude that verification of inbound calls is necessary  xto deter slamming, and seek further comment on the volume of inbound calls received by carriers, and  xthe perconsumer costs for verification using the Commission's requirements versus alternative verification techniques.  S4' e =20.` ` Section 258 applies only if a carrier violates our verification procedures.@4Fv+ S' " ԍX#X\  P6G;qP#Section 258(a) provides, in pertinent part, that "[n]o telecommunications carrier shall submit or execute a  {O' " change . . . except in accordance with such verification procedures as the Commission shall prescribe." 47  yO ' " U.S.C.  258(a) (emphasis added). Section 258(b) provides in pertinent part that "[a]ny telecommunications  {O!' " carrier that violates the verification procedures described in subsection (a). . . ." 47 U.S.C.  258(b)  yON"'(emphasis added).#Xj\  P6G;߈XP#(# Commenters  xwho disagree with applying the Commission's verification procedures to inbound calls should consider  xkthe implications under Section 258 of "exempting" inbound calls from our verification rules. Would such  S' xan exemption undermine both the letter and spirit of Section 258? We also encourage commenters to  xconsider whether, without inbound verification requirements, carriers' contests and sweepstakes  x advertisements could potentially be used to induce consumers to call the carriers' inbound marketing  xcenters, and possibly switch the consumer to another carrier, either through deceptive practices or through  xthe use of electronic information now widely available, such as ANI. Would such a practice place an" @,')')qq"  xunfair burden on consumers to prove that an unauthorized conversion occurred? With inbound  xptelemarketing, the consumer and the Commission might not have any record of the transaction that  S' xQresulted in the carrier change;Av+ S' " ԍ#X\  P6G;qP#XWith outbound calls, the "record" of the transaction would be the LOA or other proof of verification as prescribed in our rules.(# the lack of a record would make it difficult to ascertain the facts involved  xin any inbound slamming dispute. We also encourage commenters to consider the case of bundled  xservice offerings. Entities would be able to generate inbound calls to marketing centers that accept  xservice orders for affiliate carriers, thereby facilitating slamming by carriers that are not directly contacted  S' xby the consumer.&B0v+ S ' " ԍX#X\  P6G;qP#For example, XYZ Cable Co. generates an inbound call and as part of the transaction, the consumer agrees  " to take long distance service from XYZ Long Distance Co. either because the representative for XYZ Cable  " slammed the consumer or there was a misunderstanding as to what service the consumer wanted. Even  {OH ' " though there are rules to prevent carriers from using CPNI in this manner, see supra para. 10 (regarding  "V the restrictions on the use of CPNI to market a different traditional telecommunications service), requiring verification of inbound calls would offer an extra measure of protection. (#& None of these scenarios is desirable, and commenters are urged to suggest appropriate  xgmechanisms to guard against such abuses. Commenters should provide specific information to justify exemption of inbound calling from the PICchange verification requirements.  Sp'  Verification and Preferred Carrier Freezes  S ' e 21.` ` We also seek comment on whether our PICchange verification procedures should be  S ' xtextended to PCfreezewC v+ SR'ԍ#X\  P6G;qP#XSee supra note 4.(#w solicitations. Although neither the Act, nor the Commission's rules and orders  S ' x7specifically address carrier PCfreeze solicitation practices,zD Z v+ S' "p ԍX#X\  P6G;qP#We note, however, that the Common Carrier Bureau Enforcement Division's staff has previously reviewed  " certain PICfreeze change practices and found them to be consistent with the Act and the Commission's  {Oj' "A rules and orders. See, e.g., Staff Interpretive Ruling Regarding Preemptive Effect of Commission's  " Regulations Governing Changes of Consumers' Primary Interexchange Carriers and the Communications  "y Act of 1934, As Amended, On Particular Enforcement Action Initiated by the California Public Utilities  {O' "_ Commission, DA 961077 (Jul. 3, 1996); see also Letter, Elliot Burg, Esq., Asst. Attorney General, State of Vermont, 11 FCC Rcd 1899 (1995). (#z concerns about PCfreeze solicitations have  S ' x7been raised with the Commission.E v+ S' " ԍ#X\  P6G;qP#XSee, e.g., Letter from Donald F. Evans, MCI Telecommunications Corporation to John Muleta, FCC (Jul. 31, 1996).(# Moreover, MCI filed a Petition for Rule Making on March 18, 1997,  x&requesting that the Commission institute a rule making to regulate the solicitation, by any carrier or its  xagent, of PIC freezes or other carrier restrictions on a consumer's ability to switch its choice of  S0'interexchange (interLATA or intraLATA toll) and local exchange carrier.>F20v+ S#' " ԍ#X\  P6G;qP#XMCI Petition for Rule Making, RM9085 (filed Mar. 18, 1997). AT&T has indicated that it "strongly  "/ supports" MCI's petition to establish regulations governing PC freezes. Letter from Mark C. Rosenblum,  " AT&T Corp. to Regina M. Keeney, FCC (Apr. 9, 1997). The Commission has established a pleading cycle  {ON&'for comments regarding MCI's petition. See Public Notice, DA 97942 (rel. May 5, 1997). (#> We have determined that it "F,')')qq"  x&is appropriate to consider MCI's petition in the instant notice and comment proceeding. We therefore  S'incorporate MCI's petition and all responsive pleadings into the record of this proceeding.uGv+ S@'ԍ#X\  P6G;qP#XSee Appendix A.(#u  S' e 22.` ` PC freezes are designed to offer consumers protection against slamming by preventing  xgcarriers from effecting carrier changes on their behalves. They may also, however, have the effect of  xlimiting competition among carriers. Enabling carriers to request PC changes on behalf of consumers that  xauthorize such changes saves consumers time and effort. Once the consumer gives a carrier its  xauthorization to submit a PC change order, the carrier can submit the change order on behalf of the  xconsumer, and the change can be effected without further effort by the consumer. With a PC freeze in  xplace, a carrier cannot submit the request on the consumer's behalf. The consumer must advise the carrier  xfrom whom he or she requested the freeze to lift the freeze before a change can be effected. Not all  xconsumers are willing to take this additional, affirmative step, even when they have agreed to take a  xcompeting carrier's service. Hence, PC freezes may increase the burden of competing carriers in securing  xknew customers. We seek comment on how best to reconcile the competing strains of providing adequate consumer protection and facilitating competition among carriers.  S ' e 23.` ` We tentatively conclude that a carrier that mails to a subscriber (a) an explanation of a  xDPC freeze, (b) an explanation of the subscriber's right to request such a freeze for its telecommunications  xxservice, and (c) advice on how the subscriber can obtain a PC freeze, would be acting consistent with the  S' xggoals and policies of the Act and the Commission's rules and orders.Hhhv+ S' " ԍX#X\  P6G;qP#Such a mailing would serve to inform and educate the subscriber without requiring or soliciting a particular  " action or response that could be used to effect a PC freeze in circumstances in which the subscriber may  yO'not have expressly authorized it.#Xj\  P6G;߈XP#(#Ʋ In contrast, a carrier that mails  x3to a subscriber a package that includes information and/or promotional materials regarding PC freezes  xalong with a "response form" that the subscriber is asked to sign and return to the carrier to effect a freeze  xcould involve marketing solicitations designed to enhance the competitive position of the incumbent carrier  xDin a manner that may be at odds with the requirements of the Act and the Commission's rules and orders.  x@For example, to the extent that an IXC soliciting a PC freeze is also the subscriber's LEC, the practice  x&could be designed to, or have the effect of, giving the IXC/LEC an unfair advantage in the toll service  xand local exchange markets. This practice might also foster widespread confusion and dissatisfaction  S' xamong consumers if, e.g.: (1) it is unclear from a carrier's solicitation materials whether the PC freeze  x relates to the consumer's local service, long distance service, or both; (2) the identity of the soliciting  xcarrier is unclear or somehow misrepresented, or (3) the solicitation contains an inaccurate explanation  xof a consumer's rights to cancel the PC freeze. Another practice that might raise concerns about  xanticompetitive behavior would be a LEC's imposition of terms and conditions for processing PCfreeze  S'requests of nonaffiliated IXCs different from those required of affiliated IXCs.I0v+ S:"' "< ԍ#X\  P6G;qP#XSuch a practice by a Bell operating company (BOC) would violate Section 272 of the Act, which provides  "R in part that a BOC "may not discriminate between that company or affiliate and any other entity in the  " provision or procurement of goods, services, facilities and information, or in the establishment of standards . . . ." 47 U.S.C.  272(c)(1).(#  S' e [24.` ` Commenters should address whether we should extend our current PICchange verification  x*procedures to PCfreeze solicitations, as well as what alternative verification procedures might be applied  xto PCfreeze solicitations. We encourage commenters to describe any benefits to consumers that might"b I,')')qqg"  xresult from either such action. In particular, we seek comment on what practices would promote both  xVcompetition and consumer protection. For example, commenters should address whether, when a  xconsumer that has "frozen" his or her IXC selection switches LECs, the consumer must request another  xPC freeze, or whether the new LEC must automatically establish the same PC freeze on the consumer's  xbehalf. We also seek comment on what factors we should consider in assessing the lawfulness of a  S8' xparticular PCfreeze solicitation practice in a Section 208 complaint proceeding.3J8v+ S' " ԍX#X\  P6G;qP#47 U.S.C.  208; see also the Commission's rules governing Section 208 complaint proceedings, 47 C.F.R.  yOx' 1.7201.735.#Xj\  P6G;߈XP#(#3 We tentatively conclude  xQthat such factors may include: (1) the degree of certainty that the PC freeze was obtained through lawful  xmeans and the extent to which circumstances suggest the existence of deception or fraud; (2) whether the  xsolicitation practice at issue is unreasonable, unreasonably discriminatory, or anticompetitive in purpose  xor effect; and (3) the impact of the solicitation practice on consumers, including whether the consumer  xis fully and accurately informed of the nature of the solicitation and the effect of a PC freeze, is clearly  xgiven the option of selecting or declining the PC freeze, and is informed of his or her right to cancel the  S 'PC freeze and select a different PC at any time.  S '   S 'B.Section 258(b) (Liability) Đ S '\  S ' Liability of Subscribers to Carriers   S0' e =25.` ` When a subscriber pays charges assessed by an unauthorized carrier, Section 258(b) of  xMthe Act makes it clear that the unauthorized carrier is not entitled to keep such revenue gained through  S' xslamming.K0v+ S'ԍX#X PqP#47 U.S.C.  258(b). #X PqP#(#ƞ The Act does not, however, address whether subscribers must pay any unpaid charges  S' xassessed by an unauthorized carrier to the properly authorizedLv+ S('ԍX#X PqP#The terms "properly authorized" and "preferred" may be used interchangeably throughout this rule making.(# carrier, or whether charges collected from the unauthorized carrier should be returned to the subscriber who has been slammed.  S@' e J26.` ` In the Notice of Proposed Rulemaking preceding our 1995 Report and Order we sought  xcomment on whether any adjustments to long distance charges should be made for consumers who are the  xxvictims of unauthorized PIC changes. Specifically, we asked for comment on whether consumers should  xbe liable for: (a) the total billed amount from the unauthorized IXC; (b) the amount the consumer would  S' xghave paid if the PIC had never been changed; or (c) nothing at all.~Mpv+ S'ԍ#X\  P6G;qP#XNPRM, 9 FCC Rcd at 6888.(#~ We concluded in the 1995 Report  S|' xand Order that "the equities tend to favor the [remedy]" of option (b)."N|v+ S,"' "+ ԍ#X\  P6G;qP#X1995 Report and Order, 10 FCC Rcd at 9579 (concluding that "the slammed consumer does receive a service, even though the service is being provided by an unauthorized entity.").(#" NAAG, in its petition for  SV' xreconsideration of our 1995 Report and Order, urges the Commission to absolve slammed consumers of  S0' xall liability for the toll charges assessed by unauthorized IXCs.uO0x v+ SH&'ԍX#X PqP#NAAG Petition at 5. (#u Citing the Commission's own"0 O,')')qq"  S' xreservations about the efficacy of its chosen "remedy" to the consumer liability problem,Pv+ Sh'ԍX#X PqP#Id. (citing 1995 Report and Order, 10 FCC Rcd at 9579). (#Ʀ NAAG argues  xthat "to reward the wrongdoer by allowing it to receive any benefit from its wrongful actions is contrary  S' xcto long established equitable principles and would encourage, rather than deter further slamming."sQhv+ S'ԍ#X\  P6G;qP#XNAAG Petition at 5.(#s  S' x^Section 258(b) of the Act, however, appears to mitigate those concerns by ensuring that the unauthorized  xDcarrier is liable to the properly authorized carrier for all charges it collects from the subscriber for service rendered by that unauthorized carrier.  S' e 27.` ` Although the 1996 Act removes the economic incentive for carriers to slam, we believe  xthat additional measures may be appropriate in light of the consumer protection goals and policies of the  xAct and the Commission's rules. Under Section 258(b), the liability between properly authorized and  Sp' x*unauthorized carriers exists only to the extent that the unauthorized carrier actually collects charges from  SH ' xa slammed subscriber.>RH v+ S' "I ԍ#X\  P6G;qP#XTo the extent that a subscriber does in fact pay the charges to the unauthorized carrier, the liability of the unauthorized carrier to the properly authorized carrier, and to the subscriber, is discussed below.(#> Therefore, we seek comment on whether slammed consumers should have the  xoption of refusing to pay charges assessed by an unauthorized carrier. We recognize that if subscribers  xZare absolved of all liability for charges assessed after being slammed, as NAAG proposes, the properly  S ' xauthorized carrier would be deprived of foregone revenue.[Sh pv+ S' " ԍ#X\  P6G;qP#XThe legislative history of Section 258 supports the view that carriers violating our verification procedures  " "must reimburse the [properly authorized] carrier for forgone revenues." Joint Explanatory Statement at 136.(#[ Thus, we seek comment on the impact to  xproperly authorized carriers that would result if slammed subscribers are absolved of liability for unpaid  xcharges. We recognize that, by establishing a rule that absolves slammed subscribers of liability for  xcharges assessed by an unauthorized carrier, we may create an incentive for subscribers to delay reporting  xthat they have been slammed. We also recognize the potential for subscribers to fraudulently claim that  xpthey have been slammed to avoid payment for telecommunications service that they may both have  xrequested and received. Therefore, we also invite comment on whether we should limit the time during  xwhich a subscriber would not be liable for charges, and seek recommendations regarding what that time  S' x&should be.T v+ S' " ԍ#X\  P6G;qP#XFor example, the New York Public Service Commission has proposed a rule providing that carriers violating  "V their slamming rules "shall refund to the end user the entire amount of such end user's telephone charges  {Op' "l attributable to intrastate telephone service from the carrier for up to four months of such unauthorized  " service." Unauthorized Switching of Telephone Customers From One Telephone Carrier to Another  "/ Through the Practice Known as "Slamming," Notice Soliciting Comments, Case 95C0806 (Dec. 13, 1996) (attaching Proposed New York Slamming Rules) (emphasis added).(# Although we decline at this time to grant NAAG's proposal that the Commission absolve  Sh' xslammed consumers of all liability for toll charges assessed by unauthorized IXCs,Uh*v+ S2$'ԍ#X\  P6G;qP#XSee para. 65, infra.(#Ɔ we seek comment  xon the advantages and disadvantages of absolving subscribers of liability for unpaid charges. We also urge  xcommenters to consider the desirability of NAAG's proposal in the broader context of both local exchange and interexchange service. "U,')')qq>"Ԍ S'  Liability of Unauthorized Carriers to Properly Authorized Carriers   S' e 28.` ` We propose to amend our rules to provide in Section 64.1160(b) that "[a]ny  xtelecommunications carrier that violates [the Commission's verification procedures] and that collects  xcharges for telecommunications service from a subscriber shall be liable to the subscriber's properly  S8' xauthorized carrier in an amount equal to all charges paid by such subscriber after such violation."uV8v+ S'ԍ#X\  P6G;qP#XSee Appendix C.(#u Our  xproposal mirrors Section 258(b) of the Act by requiring that a carrier in violation of our verification  S' xMprocedures remit to the properly authorized carrier all charges paid from the time the slam occurred.W0hv+ S ' " ԍ#]\  PCqP#XOf course, a carrier accused of slamming may demonstrate to the properly authorized carrier that the PC  " change was in fact authorized by providing an LOA signed by the subscriber that complies with Section  "' 64.1150 or other reliable evidence that the PCchange order was confirmed in accordance with the Commission's verification procedures.(#  xWe seek comment on this proposed rule and on whether the unauthorized carrier should also be liable to the properly authorized carrier for expenses incurred to collect such charges.  SH 'Liability of Carriers to Subscribers  S ' e 29.` ` While Section 258(b) addresses the liability of the unauthorized carrier to the properly  S ' xauthorized carrier, it does not specifically address the liability of either carrier to the subscriber. We  xIbelieve that a slammed subscriber should receive prompt and full reparation for harm suffered as a  xconsequence of unauthorized PC changes. The legislative history of Section 258 is in accord with this  SX' x*view, stating that "the Commission's rules should also provide that consumers are made whole."XX`v+ SX' " ԍ#X\  P6G;qP#XJoint Explanatory Statement at 136#X\  P6G;qP#. However, neither the language in Section 258(b), nor the legislative  yO0'history specifically addresses ca#X\  P6G;qP#rriertoconsumer liability.#Xj\  P6G;߈XP#(#Ƣ Thus,  xwe seek comment on the duties and obligations of both the unauthorized carrier and the properly  xauthorized carrier with regard to making slammed subscribers whole, and on what steps should be taken  S' xDto "make whole" the subscriber victimized by an unauthorized PC change.2Yv+ SH' " ԍ#X\  P6G;qP#XFor example, we believe that one aspect of making the consumer whole is restoring his or her service to that of the preferred carrier upon notification that an unauthorized PC change has occurred. (#2 Commenters should address  xspecifically whether, in the event that a subscriber pays charges assessed by an unauthorized carrier  x(perhaps because the subscriber is unaware that he or she was slammed), a properly authorized carrier  xcollecting charges paid by the subscriber to the unauthorized carrier, must then reimburse the slammed subscriber.  S' e 30.` ` The legislative history of Section 258 supports the view that restoration of premiums that  xsubscribers would have earned if they had not been slammed, such as travel bonuses, are part of making  S' xDsubscribers whole.Z00 v+ Sp$' " ԍ#X\  P6G;qP#X Congress stated that "the Commission's rules should require that carriers guilty of 'slamming' should be  " liable for premiums, including travel bonuses, that would otherwise have been earned by telephone  " subscribers but were not earned due to the violation of the Commission's rules. . . ." Joint Explanatory  yO&'Statement at 136. #Xj P߈XP#(# Premiums are additional products or services offered to consumers for subscribing  x^to a carrier's telecommunications service. While premiums may include products and services not related"x(Z,')')qq"  xto telecommunications service, they may also include telecommunications servicerelated benefits, such  xgas volume discounts or free service minutes. Thus, we seek comment on what types of products and  xservices offered by telecommunications carriers should be restored to slammed subscribers. In light of  xxCongress' apparent intent to hold slamming carriers liable for premiums, we propose that the unauthorized  xcarrier remit to the properly authorized carrier an amount equal to the value of such premiums, as  S8' xreasonably determined by the properly authorized carrier.[8v+ S'ԍ#X\  P6G;qP#XSee Appendix C, proposed  64.1170(b).(#Ə Under our proposal, upon receiving the value  x&of such premiums from the unauthorized carrier, the properly authorized carrier must then provide or  xkrestore to the subscriber any premiums to which the subscriber would have been entitled if the subscriber  S' xVhad not been slammed.\hv+ S 'ԍ#X\  P6G;qP#XSee Appendix C, proposed  64.1170(c). (#Ɠ We believe that placing responsibility on the preferred carrier to make its  xIsubscriber whole by restoring lost premiums (after receiving the value of such premiums from the  xZunauthorized carrier) would fairly and reasonably balance the interests of all parties involved and is the  SH ' x3most administratively feasible.t]hH v+ S' " ԍ#X\  P6G;qP#XIn other words, the properly authorized carrier is in the best position to take prompt and effective action  " to make sure that a consumer is "made whole" because that carrier and the consumer will have a continuing carriercustomer relationship.(#t We seek comment on our proposed rule on this aspect of our "make  x*whole" approach. We also seek comment on whether carriers should be required to restore premiums to  x<subscribers who have not paid charges assessed by an unauthorized carrier. Interested parties are  xkencouraged to identify, in detail, any alternative proposals that would accomplish our goal of ensuring that  xQsubscribers victimized by slamming practices receive full reparations for harm suffered as a consequence  S 'of such practices.u^h 8v+ SX' "& ԍ#X\  P6G;qP#XFor example, commenters should consider whether the properly authorized carrier should be required to give  " the consumer a "make whole" equivalent premium or dollar amount where the properly authorized carrier cannot restore a particular premium.(#u  S0'Dispute Resolution  S' e 31.` ` We also propose to require that, in the event of disputes between carriers under these  xliability provisions, the carriers involved in such disputes must pursue private settlement negotiations  xregarding the transfer of charges and the value of lost premiums from the unauthorized carrier to the  Sh' xproperly authorized carrier prior to petitioning the Commission to make a determination._hh v+ Sp'ԍ#X\  P6G;qP#XSee Appendix C, proposed  64.1170(d).(#Ə The statutory  xmandate is clear that the unauthorized carrier must remit to the authorized carrier those "charges paid by  x[a] subscriber after [a] violation" of our PCchange rules. Because the charges recoverable from the  xMunauthorized carrier are so defined, we tentatively conclude that private negotiations are appropriate in  xthis situation. It would appear that any dispute regarding, for example, the method or timing of payment  x"between carriers, could best be resolved by the carriers involved through negotiations. Under this  xapproach, we would entertain a request for enforcement of proposed Section 64.1170(a) only after the  xcparties have certified that they have undertaken private negotiations and that, following these steps,"P _,')')qq"  S' x*unresolved issues remained.`hv+ Sh' " ԍ#X\  P6G;qP#XBy requiring private negotiations, we do not intend to mandate formal dispute resolution procedures such  "< as arbitration. Carriers that attempt in good faith to resolve any disputes and certify that they have done so would be in compliance with this requirement.(#Ɔ We propose to establish this prerequisite to requesting enforcement action  xpursuant to our general discretion under Section 258 to adopt procedures associated with PC changes. We  x^seek comment on these proposals and our tentative conclusions underlying them. We also seek comment on procedures for implementing these requirements.  S8'  Liability Between Carriers   S'  S' e 32.` ` Section 258 requires both the submitting and executing telecommunications carriers to  x*ensure that a PC change comports with procedures established by the Commission to protect consumers  xand promote fair competition. Hence, to the extent that a submission or execution fails to comport with  xestablished procedures, the Act contemplates that either or both telecommunications carriers could be liable  xfor an unauthorized change in a subscriber's telecommunications service. Therefore, the verification duties  xQand obligations of the submitting and executing carriers should be delineated in order to avoid or minimize  xkdisputes over the source or cause of unauthorized PC changes, or over liability for such PC changes. We  x/also believe it is appropriate to establish a mechanism that can be used to determine reasonably the  xliability between submitting and executing carriers if the facts suggest some wrongdoing or malfeasance  xQon the part of both carriers involved in a PCchange transaction. The Commission would address liability  xbetween submitting and executing carriers only if the carriers are unable to resolve the dispute between  S0'themselves.a0v+ S'ԍ#X\  P6G;qP#XSee Appendix C, proposed  64.1160(a)(3); see also supra note 96.  (#ƿ  S' e  33.` ` In deciding the appropriate liability test to apply when reviewing unauthorized PCchange  xcomplaints by consumers, we considered tests traditionally applied in the tort liability context. The "but xfor" test, generally applicable to determine causation in fact, asks whether a plaintiff would not have  Sh' xsuffered injury "but for" the action of the defendant.bhv+ S'ԍX#X PqP#See Price Waterhouse v. Hopkins, 490 U.S. 228, 240, 109 S.Ct. 1775, 1785 (1989).(#Ƽ The "substantial factor" test, generally applicable  S@' xto determine legal or proximate causation,cl@8v+ S' "" ԍX#X\  P6G;qP#Legal, or proximate cause is distinguishable from cause in fact. To be a legal cause, an act must not only  {O' " be an actual cause (i.e., cause in fact), it must also be a substantial factor in bringing about the plaintiff's  {O'injury. See generally Restatement (Second) of Torts  431 cmt. a (1965).#Xj\  P6G;߈XP#(# asks whether the defendant's actions were a substantial factor in bringing about the plaintiff's harm.  S' e #!34.` ` Because we are primarily concerned with establishing the actual liability of each carrier,  xwe tentatively conclude that we should apply a "but for" test to determine the liability of submitting and  xexecuting carriers. The "but for" approach to determining liability to the subscriber that we propose would  xoperate as follows: (1) where the submitting carrier submits a PCchange request that fails to comply with  xthe requirements of Section 64.1160 and the executing carrier performs the change in accordance with the  x^submission, the submitting carrier is liable; (2) where the submitting carrier submits a change request that  xconforms with the requirements of Section 64.1160 and the executing carrier fails to execute the change  xin conformance with the submission, the executing carrier is liable; and (3) finally, where the submitting  xcarrier submits a PCchange request that fails to comply with the requirements of Section 64.1160 and"l c,')')qq"  xthe executing carrier fails to perform the change in accordance with the submission, the submitting carrier  S'is liable.dhv+ S@' " ԍX#X\  P6G;qP#See Appendix C, proposed  64.1160(a)(1)(3). As a practical matter, a PCchange request submission  " should always precede a PCchange execution; thus, the liability of an executing carrier for unauthorized PC changes would only be addressed after the actions of the submitting carrier are considered. (#Ƽ  S' e "35.` ` Although we believe that executing carriers are not subject to independent verification  S`' xrequirements,ye`v+ S'ԍ#X\  P6G;qP#XSee supra note 47. (#y the "but for" test recognizes that executing carriers may, in some instances, be liable for  xxunauthorized carrier changes. For example, liability may attach to the executing carrier under Section 258  xQwhere the executing carrier changes the PC selection of the wrong subscriber, converts the subscriber to  xthe wrong carrier, or fails to perform the PC change in a timely manner, thus depriving the subscriber and  xIthe authorized carrier of benefits. Hence, our use of the "but for" test would not preclude us from  xQexamining the actions of the executing carrier where the facts suggest wrongdoing or malfeasance on the  xpart of the executing carrier. We seek comment on alternative mechanisms for executing PC changes,  x such as the use of an independent third party to execute PC changes neutrally, that might reduce PC S ' xchange disputes.f v+ SX' "y ԍ#X PqP#XSome carriers are concerned that as the competitive marketplace changes, LECs may have a conflict of  {O0' " interest between their role as LEC and their role as an affiliate of an interexchange competitor. See, e.g.,  {O' " Letter from Bruce K. Cox, AT&T to John Muleta, FCC, CC Dkt No. 94129 (Sept. 27, 1996) (ex parte).  " AT&T suggests that "to avoid the inherent conflict of interest between competing carriers, serious  " consideration should be given to establishing procedures under which neutral third parties administer PIC  {OT'protection."  Id. (# Commenters should address how such mechanisms would operate, the costs of  ximplementation and operation, and how these costs should be funded. Commenters should also describe the benefits to consumers, if any, of any proposed alternative(s).  S ' " C.XEvidentiary Standard Related to Lawfulness of a Resale Carrier's Change in Underlying  SX'Network Provider (#  S' e ~#36.` ` The Telecommunications Resellers Association (TRA) filed a Petition for Clarification on  S' xDecember 11, 1995 that requests clarification of the circumstances under which resale carriers must notify  S' x}their subscribers of a change in their underlying network provider.PgT& v+ S~' "R ԍX   #X\  P6G;qP#See generally TRA Petition for Clarification of File No. ENF9405 (filed Dec. 11, 1995) (TRA Petition).  " In an effort to eliminate consumer confusion about the facilitiesbased IXC with whom reselling IXCs have  {O ' "p contracted to obtain service in resale situations, we mandated in our LOA Order that only the name of the  {O ' "E "ratesetting" IXC may lawfully appear on an LOA. LOA Order, 10 FCC Rcd at 9575. Thus, if an end " user executes and delivers an LOA designating a resale carrier as its PIC, the name of the resale carrier's  " underlying network provider must not appear on the LOA if the resale carrier sets the enduser's rates. The  " scope of TRA's Petition and our discussion below do not extend to modifying or clarifying this  yO $'requirement. #Xj\  P6G;߈XP#(#P We have determined that it is  xappropriate to consider TRA's petition, which asks us to issue a generally applicable clarification related"Bg,')')qq."  S' xDto our PCchange verification rules and orders, in the instant notice and comment proceeding.hjv+ Sh' " ԍX#X PqP# TRA states that it has no objection to the initiation of a rule making proceeding to define in more detail  "I those circumstances in which a resale carrier's failure to notify endusers of a change in network provider  {O'would violate Section 201(b) of the Act. See TRA Reply at 67. #Xj P߈XP#(# We are,  S'therefore, incorporating TRA's petition, and all responsive pleadings, into the record of this proceeding.{iv+ Sr'ԍX#X PqP# See Appendix A.(#{  S' e J$37.` ` TRA filed its petition in response to a 1995 Common Carrier Bureau (Bureau) ruling that  S`' x7a resale carrier violated Section 201(b) of the Actjj`v+ S ' " ԍX#X PqP# 47 U.S.C.  201(b). Section 201(b) provides, in pertinent part, that "[a]ll charges, practices, classifications,  " and regulations for and in connection with [interstate] communication service shall be just and reasonable  {O: '. . . ." Id. #Xj P߈XP#(#Ʒ by unjustly and unreasonably changing its underlying  S8' xnetwork provider.kj8v+ S' "l ԍ X#X PqP#See WATS International Corporation v. Group Long Distance (USA), Inc., Memorandum Opinion and  {O|' "4 Order, 11 FCC Rcd 3720 (Com. Car. Bur. 1995) (Bureau Order), app. for rev. denied, Memorandum  yOF'Opinion and Order, FCC 9718 (rel. Feb. 4, 1997). #Xj P߈XP#(# The Bureau's ruling was based on the evidence presented in an adjudicatory  S' xDproceeding.lj v+ S' "l ԍX#X PqP# The Bureau Order responded to a request for declaratory ruling, filed by the parties to a pending U.S.  "Z District Court proceeding, as to whether any of the defendants thereto had violated the Communications Act  {ON'as the plaintiff alleged. Id.(#Ɯ Based on the record, the Bureau found that: (1) a change in the resale carrier's underlying  S' x*network was a material fact visavis the reseller's subscribers;mj0v+ S' " ԍX #X\  P6G;qP#The Bureau found that the network change was a material fact because, among other things, marketing  " material had induced endusers to subscribe to the resale carrier with the understanding that their traffic  {OX'would be carried on a particular facilitiesbased IXC's network. See Bureau Order, 11 FCC Rcd at 3729. #Xj\  P6G;߈XP#(# and (2) the resale carrier did not notify  S'its subscribers of its network change despite having the means and opportunity to do so.onbv+ S' "< ԍX #X\  P6G;qP#The Bureau noted the resale carrier's apparently deliberate omission of this material fact in a letter sent to  {O'each enduser customer around the same date as its network change. See id. #Xj\  P6G;߈XP#(#o  Sr' e 0%38.` ` TRA proposes that, instead of determining when subscriber notification is required on a  xkcasebycase basis, we establish a "brightline" test under which subscriber notification would be required  xonly if a resale carrier either: (1) identified its underlying network provider to its subscribers and  xDcommitted to those subscribers in writing that it would not switch networks; or (2) identified its network  xprovider on a bill or other correspondence to its subscribers within six months prior to the change in  xnetwork provider. If neither of these two circumstances exists, then under TRA's proposal, a resale carrier  xcould lawfully change its underlying network provider without notifying its subscribers. TRA states that  xits "brightline" test would offer the consumer safeguards now provided by the current casebycase  xapproach, while minimizing the regulatory burden on small to midsized carriers and the adverse impact  S ' xon competition.oh  v+ Sv&' " ԍX #X\  P6G;qP#TRA Petition at 56 (citing PIC Verification Order, 7 FCC Rcd at 1045). Specifically, TRA states that its  " proposal would provide resale carriers needed certainty by delineating the circumstances under which a  "c change in their underlying network provider would be considered a material fact. According to TRA, this"(n,')')("  " clarification is needed because the unpredictability of the casebycase approach essentially requires resale  " carriers either to (1) notify their customers each time they change network provider, or (2) bear the risk that  " the change might be found unlawful afterthefact. TRA Petition at 68 (adding that undue customer  yO'notification can also lead to customer confusion where none previously existed). #Xj\  P6G;߈XP#(# TRA also states that establishing a brightline test would enhance competition by" o,')')qq"  xproviding clear guidance as to the circumstances that make the identity of the underlying network provider  xa material fact. This guidance is particularly needed, according to TRA, by those resale carriers that  xemphasize their independent status and "brand" identity as fullfledged carriers in their marketing and  S' xkpromotional material.pv+ S' " ԍX#X PqP# TRA Petition at 67. TRA states that as the longdistance industry has matured, "branding" and name  " identification have become an increasingly important part of a successful longterm business strategy.  yOx ' "3 Customer notification can hinder this competitive strategy because, according to TRA, it sends the message  " that the resale carrier is not the "real" carrier and instead reinforces the brand recognition of the underlying  {O 'facilitiesbased carrier. Id. at 7. #Xj P߈XP#(# TRA also notes that resale carriers are prohibited under the terms of some tariffs,  x3or contracts with facilitiesbased carriers, from disclosing the facilitiesbased carrier's identity to their customers.  S' e &39.` ` TRA asks that we delineate all of the circumstances under which we would consider a  xxnetwork change to be a material fact. While we agree with TRA that establishing a "brightline" test could  xZenhance competition by providing resale carriers with more certainty "beforethefact" than is possible  xunder a casebycase approach, we are not convinced that "materiality" is the proper standard for such a  xtest. We tentatively conclude that any test established to determine when a resale carrier must disclose  x<to its subscribers a change in its underlying carrier should be based on the subscribers' reliance on  xkstatements by the resale carrier that it either (1) would provide service to its subscribers using a particular  x+underlying carrier, or (2) would not change its underlying carrier (with or without notifying its  S 'subscribers).qh r v+ S' "< ԍ#X\  P6G;qP#XFor example, an obvious case in which a reselling carrier must inform its subscribers of the identity of the  yO' " underlying network provider would be if #X PqP#the resale carrier has expressly agreed, in a legally binding  yOZ'instrument, to carry the customer's traffic over a particular network.  (#  SX' e '40.` ` In view of the foregoing, we tentatively conclude that establishing a brightline test to  xdetermine whether a consumer has relied on a resale carrier's identification of a particular underlying  xcarrier would best serve the public interest by providing both certainty for carriers and protection to  xkconsumers from misleading or deceptive practices by carriers. We seek comment on what criteria would  xZmake possible substantially all of the benefits that TRA refers to in its petition, but without diminishing  x&the consumer safeguards now provided by the casebycase approach. Commenters should consider  xgwhether any test established should provide for a presumption (conclusive, rebuttable or otherwise) of  S@' xtreliance where a resale carrier publicly commits not to change its underlying network provider, e.g., in  xDadvertisements, promotions, or telemarketing. Commenters should also consider whether reliance should  xbe presumed where the resale carrier has identified its network provider in correspondence to its customers  xtwithin six months prior to a change, or whether reliance should always be presumed, regardless of the timing of the customer correspondence.  SR' "R q,')')qqz"  S4PIV. MEMORANDUM OPINION AND ORDER ON RECONSIDERATION OF 1995 REPORT  R4[AND ORDER  Đ\  S' e (41.` ` The consumer protection mechanisms we adopted in our 1995 Report and Order were  xdesigned to curb what we found to be widespread instances of slamming and associated deceptive or  S;' xMmisleading marketing practices by many long distance carriers.rj;v+ S' "_ ԍ#X\  P6G;qP#XThe 1995 Report and Order stated that the Commission took further action against slamming, in part,  "I because of the tens of thousands of additional complaints received by LECs and state regulatory bodies.  {OC'1995 Report and Order,10 FCC Rcd at 9560. (#ƣ Specifically, we: (1) prescribed the  x/general form and content of LOAs used by IXCs to obtain subscribers' permission to change their  xdesignated PIC; (2) prohibited the use of "negativeoption" LOAs that require some affirmative action by  xa consumer to prevent a PIC change; (3) required LOAs to contain the appropriate language translations  xgif they employ more than one language; and (4) extended the PICchange verification requirements for  Ss' xPICchange requests generated through telemarketing salesssv+ S ' "" ԍX#X\  P6G;qP#Specifically, Section 64.1100 requires IXCs to institute one of the following four confirmation procedures  " before submitting to a LEC PICchange orders generated by telemarketing: (1) obtain the consumer's written  " authorization; (2) obtain the consumer's electronic authorization by use of an 800 number; (3) have the  "/ consumer's oral authorization verified by an independent third party; or (4) send an information package,  " including a prepaid, returnable postcard, within three days of the consumer's request for a PIC change, and  "" wait 14 days before submitting the consumer's order to the LEC, so that the consumer has sufficient time  yO'to return the postcard denying, cancelling, or confirming the change order. 47 C.F.R.  64.1100.#Xj\  P6G;߈XP#(# to consumerinitiated "inbound" calls to an  SK 'IXC.tK J v+ S5'ԍX#X\  P6G;qP#The Commission has stayed this portion of its verification requirements. See supra note 61. #Xj\  P6G;߈XP#(#  S# '  S ' e , )42.` ` Six parties filed petitions for reconsideration of the 1995 Report and Order.u v+ S'ԍX#X PqP#Allnet, AT&T, Frontier, MCI, NAAG, and Sprint filed petitions for reconsideration.#Xj P߈XP#(# Allnet  xkseeks clarification or, in the alternative, reconsideration of the language in Section 64.1150(e)(4) to reflect  S ' xZthe terms "interLATA" and "intraLATA" instead of "interstate" and "intrastate," respectively.#v v+ S'ԍX#X PqP#Allnet maintains that 47 C.F.R. 64.1150(e)(4) should read as follows:(#  e [ ` ` (4) That the subscriber understands that only one interexchange carrier may be designated as the  e  subscriber's interLATA primary interexchange carrier for any one telephone number. To the extent  e ` that a jurisdiction allows the selection of additional primary interexchange carriers (e.g., for  e  intraLATA or international calling), the letter of agency must contain separate statements regarding  e  those choices. Any carrier designated as a primary interexchange carrier must be the carrier  e  directly setting the rates for the subscriber. One interexchange carrier can be both a subscriber's  e 0 interLATA primary interexchange carrier and a subscriber's intraLATA primary interexchange carrier.(#` XAllnet Petition at 1.(## AT&T,  x@MCI and Sprint seek reconsideration and reversal of the Commission's decision to extend PICchange  S]' xEverification requirements to customerinitiated calling.w]2v+ S/&'ԍX#X PqP#AT&T Petition at 1; MCI Petition at 2; Sprint Petition at 1.(#Ɯ MCI also seeks reconsideration of the"]w,')')qq8"  S' xCommission's decision to permit the use of LOAs that double as checks.sxv+ Sh'ԍX#X PqP#MCI Petition at 10.(#s Frontier seeks reconsideration  S' xMof the Commission's LOA rules, and maintains that the rules should not apply to consumers who have  S' x*executed written contracts to obtain an IXC's services.wyhv+ S'ԍX#X PqP#Frontier Petition at 1.(#w Finally, NAAG seeks reconsideration of several  xaspects of the Order. Specifically, NAAG urges the Commission: (1) to eliminate, as a general rule, any  xliability for consumers if the switching IXC cannot document that the consumer authorized the switch in  xaccordance with the law; (2) to modify Section 64.1150 to require that: (a) LOAs be on a document  xtseparate from any promotional material, not just separable by a perforation; (b) combined check/LOAs  xbe prohibited, unless additional safeguards are required; (c) if an LOA is provided in connection with any  x*promotion, all or part of which is in a language other than English, the LOA must also be provided in that  xother language; and (d) any promotion in which any inducements to switch long distance service are in  xa language other than English, must contain a full explanation and make all disclosures in each language  xused to make the inducements; and (3) to modify Section 64.1100(d)(8) to eliminate the negative option  S 'in accordance with paragraph 11 of the 1995 Report and Order and Section 64.1150(f).sz v+ S'ԍ#X PqP#XNAAG Petition at 2.(#s  S ' e *43.` ` Because these petitions seek clarification or reconsideration of the 1995 Report and Order,  xwe address them in the context of our current rules. Hence, the modifications adopted herein apply only  S ' xto interexchange service.{ v+ S' " ԍ#X\  P6G;qP#XModifications to extend the slamming rules to local exchange service are proposed in the Further Notice portion of this order.(# We nevertheless also consider these petitions in the context of the Section 258  xcextension of our slamming restrictions to all telecommunications carriers, and, as appropriate, seek  xcomment in the Further Notice portion of this order. With the anticipated increase in local competition,  S ' xZthe consumer protection and competitive goals and policies underlying the 1995 Report and Order will  x3be equally important in both local and long distance markets. As such, our analyses take into account whether the rules will be practical and effective in local as well as long distance markets.  Sn' A.Application of Verification Rules to InBound Calls  S' e q+44.  ` ` In the 1995 Report and Order, we extended our verification procedures for PIC change  S' xMrequests generated through telemarketing sales to consumerinitiated, inbound calls to an IXC.8|v+ S' " ԍX#X PqP#See supra note 61 regarding our stay of the PICchange verification requirements set forth in Section  X 464.1100 for consumerinitiated calls#Xj P߈XP#.(#8 We  xfound that consumers, in response to advertisements or other promotional materials, frequently call IXC  xtelemarketing centers to request general information about the IXC or in response to the IXC's media  xadvertisement. In many cases, consumers placing calls to IXCs do not intend to initiate a PIC change and  xmay be susceptible to the same types of deceptive and misleading marketing practices associated with out xbound telemarketing calls. Our decision to extend the PICchange verification procedures to PICchange  xrequests generated by consumer initiated inbound calls was driven by our desire to ensure that these consumers were afforded the same protection from deceptive and misleading marketing practices " |,')')qq"  xassociated with telemarketing calls initiated by IXCs or their marketing agents. We found that extending  S'the verification rules to inbound calls was the least burdensome method of protecting consumers.}v+ S@'ԍX#X\  P6G;qP#1995 Report and Order, 10 FCC Rcd at 9564. #Xj\  P6G;߈XP#(#Ƹ  S' e ,45.` ` AT&T, MCI and Sprint filed petitions seeking reconsideration of the Commission's  S`' xQdecision to extend the PICverification rules to inbound calls.~h`hv+ Sh' " ԍX#X PqP#General Communication, Inc. (GCI), Airtouch and CompTel later filed comments supporting AT&T, MCI  yO@' "} and Sprint's position that the PICchange verification rules should not be extended to inbound calls.#X PqP# GCI  yO 'Comments at 2.; AirTouch Comments at 1; CompTel Comments at 36.#Xj P߈XP#(# Petitioners state that complying with this  xprovision will cost them millions of dollars in startup and annuallyrecurring costs without concomitant  S' xIpublic benefits.v+ SH 'ԍ#X PqP#XAT&T Petition at 10; Sprint Petition at 10; MCI Petition at 8. See note 132, infra.(# Petitioners claim that the relatively few consumer complaints regarding inbound  S' x&slamming do not justify the cost of the remedy adopted by the Commission.8v+ S'ԍX#X PqP#AT&T Petition at 1112; MCI Petition at 810; Sprint Petition at 1316.(#ƨ MCI later reversed its  x^position on this issue and now "no longer opposes the imposition of such a requirement on sales involving  S' xDresidential and small business consumers."hv+ S' " ԍX#X PqP#See Letter from Donald F. Evans, Vice President, Federal Regulatory Affairs, MCI Telecommunications  " Corporation to William F. Caton, Secretary, FCC (Feb. 13, 1996) (filed with a letter from Donald J. Elardo, MCI, to John Muleta, FCC (May 30, 1996)).(# Moreover, MCI recently agreed to use an independent third  Sp'party to verify nearly 100 percent of all residential and small business orders generated through LOAs.p v+ S' " ԍX#X PqP#MCI Telecommunications Corp., Consent Decree, DA 961010 (Com. Car. Bur. Jun. 21, 1996). In a  " separate letter to the Commission, MCI also indicated its support for mandatory independent thirdparty  " verification for residential and small business consumers, unless the consumers directly contact their LECs  " to change their service providers. Letter from Mary J. Sisak, MCI Telecommunications Corp. to William  {OH'Caton, FCC, CC Docket No. 94129 (Jan. 13, 1997) (ex parte).(#Ƙ  S ' e -46.` ` The petitioners' analyses of the costs and benefits of the inbound PICchange verification  xZrequirement offer little to counter our earlier conclusion that the requirement offers the most practical,  xcosteffective means of protecting inbound callers against slamming by unscrupulous IXCs. The crux  xkof the petitioners' arguments is that the costs to IXCs to implement the inbound verification requirements  S ' xare too high and the public benefits are too low. v+ S'ԍ#X PqP#XSee, e.g., AT&T Petition at 7.(#Ƅ Each petitioner claims that its costs for startup and  xxrecurring maintenance of an inbound verification program would be measured in the millions and perhaps  S0' xtens of millions of dollars.0jv+ S:#' " ԍX#X PqP#For example, AT&T estimates that inbound verification could cost up to $36.5 million annually (with start {O$' " up costs of as much as $3.1 million). AT&T Petition at 10. Cf. MCI Petition at 8 (estimating the cost to  " be as much as $10 million the first year, with $1.5 million for capital expenses and $6.3 million for  " operational costs); Sprint Petition at 12 (estimating firstyear costs to be $10.1 million, and annual recurring costs to be $8.9 million).(#Ƈ The cost figures petitioners cite, however, appear to include cost estimates  xof instituting and maintaining a full (inbound and outbound) PICchange verification program. Despite  x&the fact that all IXC telemarketers are already required to verify outbound PIC changes, no petitioner",,')')qq"  xgexplains why its cost estimates focus on full startup costs and not the incremental costs of adding in x&bound calls to the existing verification process. In estimating the additional time required to verify in xQbound PIC changes, some petitioners also include the cost of revenues foregone because of the additional  xtime involved in obtaining verification. However, any revenues lost because of delays caused by  xZverification of new customer PIC changes would be offset by revenues gained because of the delay in switching existing customers to other PICs.  S' e .47.` ` In addition, petitioners fail to provide call volume or perconsumer cost information in  x7their oppositions. While volume estimates, combined with cost estimates, could be a relevant method for  xconsidering the costs and benefits associated with extending the verification rules to inbound calls, the  xgpetitioners have failed to provide any information that could be used in such an analysis. For example,  xnone of the petitioners identified over how many inbound calls its estimated costs are spread. We also  S ' xnote that we received three widely varying cost estimates from three different companies,o v+ S 'ԍX#X\  P6G;qP#Id.(#o which cannot be reconciled without some indication of their respective business strategies or projected call volumes.  S ' e /48.` ` Nor are we persuaded by petitioners' claims that few consumers have actually lodged  xcomplaints with the Commission regarding instances of slamming as a result of inbound calls to IXCs.  xAT&T and Sprint argue that information obtained from the Commission indicates that there are few  x&complaints of inbound slamming. Petitioners do not provide any specific information to support that  xclaim; rather, the pleadings provided by the petitioners are anecdotal. Even if there are presently only a  xcsmall number of inbound slamming complaints, that number will no doubt rise if local competition  xZdevelops and triggers increased marketing. We believe that application of our PICverification rules to  xinbound calls is the most costeffective way to deal with this projected increase in inbound slamming complaints.  S' e 4049.` ` AT&T also asserts that inbound verification is burdensome for consumers. AT&T claims  xthat "[r]esidential consumers who place calls to an IXC's inbound telemarketing or call servicing center  x7requesting a change in their long distance carrier expect those orders to be implemented conveniently and  S' xIpromptly by the IXC, without further involvement by the consumer."whv+ S'ԍX#X PqP#AT&T Petition at 1011.(#w AT&T has not, however,  xconvinced us that inbound callers are any more burdened by PIC verification than consumers receiving  xcoutbound calls. AT&T's petition does not address whether consumers would find such additional  xprotective steps valuable, nor does any petitioner or commenter cite to any relevant market research  xMsupporting their claims of consumer indifference or opposition to such safeguards. Sprint argues that  xconsumers making inbound calls are more focused on their long distance service needs than consumers  S' xreceiving outbound calls.v+ SX"'ԍX#X PqP#Sprint Petition at ii. #Xj P߈XP#(#ƞ Of course, a consumer's focus could depend on whether it was making a  xservice request call or responding to incentive advertising. Based on the limited information provided by  xthe petitioners in this regard, we are not convinced that there is sufficient difference between the two modes of telemarketing to justify such vastly different treatment. " ,')')qq"  S' "150. Moreover, the cost concerns raised by petitioners must be balanced against the interests of  S' x}consumers in deciding whether verification procedures should apply to inbound calls.v+ S@'ԍ#X PqP#See supra paras. 47.#Xj P߈XP#Ѡ Important  x^questions to be considered are "what level of privacy protection adequately balances the legitimate interest  xof individuals and service providers" and whether current regulations provide the desired level of  S`' xprotection.v`hv+ Sh' " ԍX#X PqP#Privacy and the NII: Safeguarding TelecommunicationsRelated Personal Information, U.S. Dept. of  X@4Commerce, Nat'l Telecommunications Info. Admin., at 7 (Oct. 1995) (NTIA Privacy Report).#Xj P߈XP# (#v Developments in technology have enabled telecommunications carriers to obtain calling  S8' xinformation about inbound calling consumers.x8v+ S 'ԍ#X\  P6G;qP#XSee supra para. 4.(#x We believe that access to such information may provide  S' x7increased incentive and opportunity for IXCs to "submit or execute"vv+ SA 'ԍ#X\  P6G;qP#X47 U.S.C.  258(a).(#v unauthorized changes. Moreover,  xMgiven the frequency and extent of slamming evidenced over the past few years, it appears likely that if  xinbound calls were exempted from the Commission's verification procedures, inbound calling could be  xused as an alternative to compliance with the Commission's verification procedures. Consumers could  xcontinue to be subjected to deceptive and misleading practices associated with slamming. Therefore, it  xis important that the Commission's verification requirements apply to inbound calls to safeguard consumers' privacy.  S ' e 251.` ` We continue to believe that consumers who place calls to a carrier's sales or marketing  xcenter should receive the same protection as consumers who are contacted by the carrier. With the  xavailability of consumer information provided as part of an inbound call, protecting consumer rights to  xkprivacy and control of their telecommunications service is in the public interest. If we did not extend PIC  x3verification to inbound calls, we believe that some "IXCs may switch from mailing inducementladen  xLOAs to mailing marketing pieces in which a consumer is urged to call a business number in order to  S' xreceive a promised inducement"1v+ S'ԍX#X PqP#See NPRM Comments of Consumer Action at 34.(#ƞ where "[a]n unauthorized conversion could easily take place on such  S' xa call."i v+ S)'ԍX#X PqP#Id.(#i Therefore, we deny the petitions for reconsideration insofar as they request that we do not  S' xextend our PICchange verification requirements to inbound calls.q v+ S'ԍ#X\  P6G;qP#XSee supra paras. 1920.(#ƃ We seek further comment, however,  Sh' xin our Further Notice of Proposed Rule Making, supra, on the volume of inbound calls received by carriers, and on the perconsumer costs for verification.  S' B. LOAs Combined with Checks (Section 64.1150(d))  S' e d 352.` ` In the 1995 Report and Order, we found that much of the abuse, misrepresentation, and  xconsumer confusion concerning LOAs occurred when an inducement and an LOA are combined in the  x7same document in a deceptive or misleading manner. The LOA slamming complaints generally described  x3deceptive marketing practices in which consumers were induced to sign form documents that did not  xclearly advise the consumers that they were authorizing a change in their PICs. We determined that the" ,')')qqh"  xonly way to ensure that the consumer can always make a truly informed choice was to require that the LOA be a separate or severable document.  S' e 453.` ` We also decided, however, that a limited exception should be made for checks that  xauthorize PIC changes. Although some IXCs had used checks combined with LOAs to mislead and  x"deceive consumers, we recognized that most IXCs use checks in their marketing campaigns in an  xappropriate and nonmisleading manner, resulting in few consumer complaints. To ensure that such  xchecks do not mislead or confuse consumers, we instituted certain safeguards. We required that a valid  xQLOA check contain only the required LOA language and the necessary information to make it a negotiable  xtinstrument, and that the check not contain any promotional language or material. Further, we required  xcarriers to continue to place the required LOA language near the signature line on the back of the check.  xgIn addition, we required that carriers print, in easily readable, boldface type on the front of the check, a notice that the consumer is authorizing a PIC change by signing the check.  S ' e 554.` ` In its petition for limited reconsideration, MCI urges the Commission to prohibit IXCs  S ' xfrom combining LOAs with checks in all instances.v v+ S'ԍX#X PqP#MCI Petition at 1015.(#v Citing Commission concerns expressed in the 1995  S ' xReport and Order, MCI states that it found the Commission's rationale for permitting LOA/checks difficult  S\' xto understand.v\hv+ Sd'ԍX#X PqP#Id. at 11.(#v MCI contends that LOA/checks represent a significant portion of the complaints received  S4' xby the Commission with regard to unauthorized conversions.i4v+ S'ԍX#X PqP#Id.(#i MCI cites a December 30, 1994 response  S ' xby the Commission to a FreedomofInformation Act (FOIA) request.y v+ ST'ԍX#X PqP#Id. at 1112.(#y MCI contends that the  x7Commission "indicates that, from a representative sample of 430 complaints, 47 of those involved alleged  S' x unauthorized conversions due to problems with checks."pHv+ S'ԍX#X PqP#Id. at 12.(#p Further, MCI cites numerous newspaper  S' xarticles describing the nationwide slamming problem, including a Newsday article concerning Sonic  Sl' xCommunications and the LOA/checks it used to market its services in a deceptive manner.ilv+ S'ԍX#X PqP#Id.(#i Although  xMCI concedes that it has used LOA/checks as part of its strategy to acquire new consumers, it argues that,  S' x"on balance, the better approach would be to forbid their use by all carriers." v+ SD!'ԍX#X PqP#Id. at 15.#X PqP# (#ƞ Making a similar  S' xargument, NAAG, in its petition, also urges the Commission to prohibit combined check/LOAs.( v+ S#'ԍ#X PqP#XNAAG Petition at 2.#Xj P߈XP#(#ƚ GCI  S'supports both MCI and NAAG on this issue.r v+ S4&'ԍX#X PqP#GCI Petition at 6.(#r  S|' e =655.` ` AT&T opposes both petitions. AT&T argues that the Commission decision allowing the"|h,')')qq"  xLOA/check exception to the "separate or severable document" requirement "properly balances the need  xfor consumer protection from slamming against the public interest in preserving vigorous competition in  S' xMthe long distance marketplace."uv+ S'ԍX#X PqP#AT&T Opposition at 2.(#u AT&T further argues that "MCI's reconsideration petition proceeds  x*from the erroneous premise that all IXCs should be precluded from using nondeceptive check/LOAs for  xlegitimate marketing purposes, simply because some unethical carriers may employ such documents (albeit  S8'without Commissionprescribed disclosures) to mislead long distance consumers."q8hv+ S@'ԍX#X PqP#Id. at 78.(#q  S' e S756.` ` We are not persuaded that we should further revise the rules to prohibit all combined  xtchecks/LOAs. A full record was developed on the issue of separate and severable documents, and the  xkLOA/check exception. The petitioners and commenters add no new information or arguments that would  x&persuade us to reverse our determination on this issue. With regard to the complaints identified in the  xCommission's response to the FOIA request, MCI fails to mention that all of the 47 complaints were  xtagainst one former IXC. We have instituted significant safeguards to protect consumers from abuses,  x3including requiring carriers to print the required LOA language in easily readable boldface type on the  S ' xfront of the check and requiring that no promotional material be included on the check. In our 1995  S ' xReport and Order, we described the kind of LOA/check we believed to be acceptable. v+ SR'ԍ#X\  P6G;qP#X1995 Report and Order, 10 FCC Rcd at 957374.(#Ɠ Furthermore,  xQalthough we have received large numbers of complaints regarding the use of LOAs and other promotional  x*materials, as stated above, we have received relatively few complaints alleging that LOA/checks were the  S4' xbasis of an unauthorized PIC change. For the foregoing reasons, we will continue to permit the use of LOAs combined with checks.  S' C.Separable LOAs (Section 64.1150(b))  Sl' e  857.` ` As stated above, we have required that the LOA be a separate or separable document.  xAlthough we initially sought comment on whether LOAs and promotional materials should always be  xphysically separate and not merely separable, we were persuaded by commenters that a separable LOA  xMbe allowed to permit more flexibility in their marketing efforts. In order to provide for both consumer  S' xpprotection and marketing flexibility, we decided to require that LOAs be separable (i.e., "ultimately"  xseparate) from all promotional material. Further, we prescribed the minimum requirements for LOAs so that the potential slamming abuses described by commenters would be eliminated or severely reduced.  S.' e 5958.` ` NAAG, in its petition, argues that all LOAs should be physically separate from all  S' xtpromotional materials and not merely separable.wv+ SN"'ԍX#X PqP#NAAG Petition at 1112.(#w NAAG avers that the current Commission rules will  S' x&result in consumer frustration and confusion.iHv+ S$'ԍX#X PqP#Id.(#i MCI, Sprint, and TRA have offered opposing views,  S'citing much of the Commission's original rationale for allowing separable as well as separate LOAs.v+ S>''ԍX#X PqP#MCI Opposition at 34; Sprint Opposition at 5; and TRA Comments at 910. (#ƪ " ,')')qq"Ԍ S' e :59.` ` Requiring that LOA language and promotional material be physically separate would be  xthe most extreme demarcation between the two that we could establish. We continue to believe that the  xDlesser requirement that the two be separable reasonably balances the informational interests of consumers  S' x&and the marketing flexibility of the industry. Because this issue was fully explored in the 1995 Report  Sb' xand Order and because the petitioners and commenters have raised no new facts or issues, we deny the petitions for reconsideration and continue to allow "separable" LOAs.  S'  S' D.Consistency of Translation Between LOAs and Promotional Materials (Section  64.1150(g))  S' e  ;60.` ` In the 1995 Report and Order, we recognized that the nonEnglish speaking population  xrepresents a growing market in this country that IXCs are targeting for domestic and international business.  xSome of these consumers have alleged that the nonEnglish versions of the LOA do not contain all of the  xtext of the English versions of the LOA. As a result, material portions of the LOA are in only one  xglanguage, typically English, which the nonEnglish speaking consumers may not fully understand. We  S ' xasked whether we should require all parts of an LOA to be translated if any part were translated. Supported by the overwhelming majority of commenters, we adopted such a rule.  S`' e B<61.` ` In its petition, NAAG argues that our LOA rules should require that if an "LOA is  xprovided in connection with any promotion, all or part of which is in a language other than English, the  S' xLOA must also be provided in that other language."sv+ Sx'ԍX#X PqP#NAAG Petition at 2.(#s Such a requirement, NAAG contends, "would  xforeclose such abuses as the use of allEnglish LOAs in connection with a face to face or telemarketing  S' xpromotional campaign conducted in a language other than English."phv+ S'ԍX#X PqP#Id. at 15.(#p NAAG suggests that although we  x<correctly require that LOAs provide full disclosure in any language used on an LOA, the applicable  xRprovision is "silent as to the use of more than one language in the interexchange advertising and  SH'promotional materials."pHv+ S'ԍX#X PqP#Id. at 16.(#p NAAG argues:  S' " Xoversight could lead to multilingual promotions in which the claims made to motivate consumers  "to choose an interexchange carrier would differ depending on what language is used . . . . Unless  "the FCC amends section 64.1150(g), an LOA used in connection with a multilingual promotional  S'campaign might be entirely in English.jv+ S'ԍX#X PqP#Id. (#j (#  xNAAG recommends that "any promotion, in which any inducements to switch long distance service are  xin a language other than English, must contain a full explanation and make all disclosures in each  S'language used."iHv+ S$'ԍX#X PqP#Id.(#i No oppositions or comments were filed on this aspect of NAAG's petition.  S' e  =62.` ` Consistent with the approach we took in the 1995 Report and Order, we are persuaded  xby NAAG's arguments that the LOA should be fully translated into the same language as the associated  SB' xZwritten promotional materials or oral claims and instructions. While we did not in the 1995 Report and"B,')')qq^"  S' xkOrder, and do not now, prescribe requirements for promotional materials, we do not intend to allow IXCs  x8to provide promotional materials, oral descriptions or instructions in one language that instruct  xunsuspecting consumers to fill out and sign an LOA that is entirely in another language. Therefore, we  S' xwill require IXCs to fully translate their LOAs into the same language(s) as their associated promotional materials, oral descriptions and instructions.  S' E."Welcome Package" Verification Option  S'  S' e  >63.` ` In its reconsideration petition, NAAG argues that the "welcome package" option of  x^Sections 64.1100(d)(7) and (8) should be amended to eliminate the "negativeoption" aspect of these PIC Sr' xchange verification rules.srv+ S 'ԍX#X PqP#Id. at 1617.(#s NAAG asserts that the provisions need to be revised to eliminate the  xQautomatic switching of a consumer, if the consumer does not return a postcard to the IXC within the 14 S" ' xday period prescribed by the provision.i" hv+ S*'ԍX#X PqP#Id.(#i AirTouch Communications, AT&T, MCI, and Sprint oppose  x3NAAG's petition on this issue. These opponents argue that NAAG confuses the negativeoption LOAs  xwith one of the PIC verification procedures IXCs use to provide notice to consumers of an already S ' xauthorized service change. v+ SR'ԍX#X PqP#See, e.g., Sprint Opposition at 5.(#ƈ The important distinction, the parties claim, is that in the latter, consumers  x<have already made their choice orally during a telemarketing call and the followup communication  x(consumerinformation package with return postcard) is provided as additional notice and confirmation  S2' x@of the pending service change.2v+ Sz'ԍX#X PqP#See, e.g., MCI Opposition at 8.(#ƅ The opponents state that the former case, the negativeoption LOA,  S 'purports to authorize a service change in and of itself, without any prior oral agreement.z Hv+ S'ԍX#X PqP#See, e.g., id.(#z  S' e ,?64.` ` We agree with these latter commenters regarding the distinction between a postsale  xverification pursuant to Section 64.1100(d) and negativeoption LOAs, which are prohibited by Section  x764.1150(f). We also agree with NAAG, however, that in practice, this distinction may be blurred. While  SB' xxSection 64.1100(d) was intended as a postésale verification option, it could be used to switch a subscriber  x who has not actually previously consented to a PC change in the following manner: an unscrupulous  xxtelemarketer sends to a subscriber who has not consented to a PC change a post card designed to be used  xby the subscriber to deny, cancel, or confirm a PCchange order. Under the current rule, if the subscriber  xkdoes not return the post card, the carrier may execute the PC change after 14 days, even if the subscriber  xdoes not return the post card. We are concerned that such activity could have the practical effect of  xoperating like a negative option LOA, to the detriment of the consumer. Because we do not have  xsufficient information in the record to assess the potential effect of eliminating the "negativeoption" aspect  xof this verification option, we decline to adopt NAAG's proposal at this time. However, we invite  S' x_additional comment in our Further Notice of Proposed Rule Making, supra, on whether Section  x64.1100(d), to the extent that it may be used to circumvent our prohibition of negativeoption LOAs under  S'Section 64.1150(f), should be eliminated in whole or in part.v+ S('ԍ#X\  P6G;qP#XSee supra paras. 1618.(#Ɖ " ,')')qq"Ԍ S'ԙ F.Consumer Liability to Unauthorized Carriers  S' e F@65.` ` NAAG, in its petition for reconsideration, urges the Commission to absolve slammed  S' x}subscribers of all liability for charges assessed by unauthorized IXCs.v+ S'ԍ#X\  P6G;qP#XNAAG Petition at 5. See supra para. 26.(#Ơ We do not have sufficient  xinformation in the record to determine whether total forgiveness of charges would further deter IXCs from  xslamming. Therefore, we decline to adopt NAAG's petition at this time. However, we invite commenters,  S' xin our Further Notice of Proposed Rule Making, supra, to consider whether a subscriber whose carrier  xkselection has been changed without authorization should be liable for charges assessed by an unauthorized  S'carrier in the contexts of both local and interexchange service.hv+ S 'ԍ#X\  P6G;qP#XSee supra para. 27.(#ƅ  Sr' G.Interstate/Intrastate vs. InterLATA/IntraLATA (Section 64.1150(e)(4))  S" ' e  A66.` ` Section 64.1150(e)(4) provides, in part, that, "[t]o the extent that a jurisdiction allows the  S ' xselection of additional primary exchange carriers (e.g., for intrastate or international calling), the letter of  S ' xagency must contain separate statements regarding those choices."} v+ S|'ԍ#X\  P6G;qP#X47 U.S.C.  64.1150(e)(4).(#} Allnet, in its petition, urges the  xxCommission, "in order to avoid any unnecessary confusion," to clarify Section 64.1150(e)(4) by using the  S ' xterms "interLATA" and "intraLATA"w v+ S'ԍ#X\  P6G;qP#XSee supra note 8.(#w instead of the terms "interstate" and "intrastate."j Hv+ Sl' "" ԍX#X PqP#Allnet Petition at 1.#X\  P6G;qP# Allnet seeks this modification because consumers in some jurisdictions may choose  "c separate carriers for their interLATA and intraLATA toll service, but there is no evidence that consumers  {O 'anywhere in the country may select separate interstate vs. intrastate interexchange carriers. Id. (# Sprint  S\' xsubsequently filed comments in support of Allnet's position.{\z v+ Sv'ԍX#X PqP#Sprint Opposition at 2. (#{ MCI and GCI disagree, and note that  S4' xLATAs were not established in either Alaska or Hawaii,4 v+ S'ԍX#X PqP#See, e.g., GCI comments at 2.(#ƃ and urge the Commission to amend Section  xF64.1150(e)(4) so that both sets of terms are allowed, namely interstate/intrastate and  S'interLATA/intraLATA.t v+ S> 'ԍX#X PqP#GCI Comments at 34.(#t  S' e B67.` ` We used "interstate/intrastate" in the 1995 Report and Order in order to adopt rules that  xwould be generally relevant to all jurisdictions. GCI correctly states that LATAs were created as a result  SF' xof the divestiture of the Bell System, and that this action did not create LATAs in Alaska or Hawaii.iFZv+ S@%'ԍX#X PqP#Id.(#i  xIn order to accommodate the concerns raised by the parties, and to remove possible confusion or  x8uncertainty about the scope of our rules, we will modify Section 64.1150(e)(4) to use both the  S'interstate/intrastate and interLATA/intraLATA terms. "!,')')qqr"Ԍ S' ÙH.Service Contracts and the Commission's LOA Rules (Section 64.1150)  S' e  C68.` ` Frontier argues that the Commission's rules concerning the format of an LOA should not  S' x7apply to consumers who have executed written contracts to obtain an IXC's services.wv+ S'ԍX#X PqP#Frontier Petition at 1.(#w Notwithstanding  xits position, however, Frontier states that it would not object to a requirement that written contracts contain  S8' xno promotional materials or be severable from such materials.w8hv+ S@'ԍX#X PqP#Frontier Petition at 2.(#w SWBT disagrees with Frontier and  S'argues that a contract should contain language that adheres to the Commission's LOA requirements.pv+ S 'ԍX#X PqP#SWBT Reply at 3.(#p  S' e `D69.` ` We agree with SWBT that, to the extent a telecommunications services contract also  xauthorizes a change in a business or residential PIC, that contract should be consistent with our LOA  xrequirements. We believe that this clarification of our rules will ensure that business consumers and  x+industry alike will be clearly informed as to what will be expected to authorize a change of that  xZconsumer's long distance telephone service. We have applied this rule to all other LOAs that authorize  xPIC changes. We see no meaningful distinction that would lead us to depart from this approach for contracts that serve as LOAs.  S ' I.Clarification of Verification Procedures  S0' e 'E70.` ` Section 64.1100 of our rules lists four options from which carriers may choose to confirm  xPICchange orders generated by telemarketing. The Commission first adopted this provision in 1992 in  S' xtits PIC Verification Order, which required IXCs who submit PICchange orders to LECs on behalf of  S' xQcustomers to implement one of four procedures to verify such orders.v+ S'ԍ#X\  P6G;qP#XPIC Verification Order, 7 FCC Rcd. at 1045.(#Ƒ When this rule was modified by  S' xour 1995 Report and Order, the word "or" was inadvertently deleted after option (a) of the revised rule.  xThe Commission has always intended to require that only one of the four verification options be used to  SD' xverify subscriber PICchange orders.lDHv+ S,' "u ԍ#X\  P6G;qP#XSee, e.g., PIC Verification Reconsideration Order, 8 FCC Rcd at 321516 ("we required [in the PIC  {O' "" Verification Order] IXCs that submit PIC change orders on behalf of customers to LECs to institute one  {O'of four confirmation procedures . . .") (emphasis added).(#ƴ Thus, we amend the rule by adding "or" after option (a).vD| v+ S` 'ԍ#X\  P6G;qP#XSee Appendix B. (#v We  xfind the correction of this inadvertent omission to be good cause for amending the rule; hence, we adopt  S'this rule change without prior notice pursuant to our authority under Section 1.412(c) of our rules.h v+ S#' "y ԍX#X\  P6G;qP#47 C.F.R.  1.412(c) ("Rule changes may in addition be adopted without prior notice in any situation in  "Z which the Commission for good cause finds that notice and public procedure are impracticable, unnecessary,  yOP%'or contrary to the public interest.").#&a\  P6G;/&P#(#Ʒ  S' Ã""L,')')qqX"  S' V. PROCEDURAL MATTERS Đ S'\  S4A. Ex Parte Presentations  Sa' e F71.` ` This Further Notice is a permitbutdisclose rule making proceeding. Ex parte  xQpresentations are permitted, in accordance with the Commission rules, provided that they are disclosed as  S'required.v+ S{'ԍX#X\  P6G;qP#See generally 47 C.F.R.  1.1200, 1.1202, 1.1204, 1.1206.#&a\  P6G;/&P#(#  S' B. Initial Regulatory Flexibility Analysis  Ss' e 0G72.` ` As required by the Regulatory Flexibility Act (RFA),shv+ S{ 'ԍX#X PqP#5 U.S.C.  603.#Xj P߈XP#(#ƙ the Commission has prepared an  x/Initial Regulatory Flexibility Analysis (IRFA) of the expected significant economic impact on small  S# ' x}entities by the policies and rules proposed in the Implementation of the Subscriber Carrier Selection  xtChanges Provisions of the Telecommunications Act of 1996, Further Notice of Proposed Rule Making  S ' xt(Further NPRM). Written public comments are requested on the IRFA. Comments must be identified  xas responses to the IRFA and must be filed by the deadlines for comments on the Further NPRM provided  xin paragraph 109. The Secretary shall send a copy of this Notice to the Chief Counsel for Advocacy of  S]'the Small Business Administration (SBA) in accordance with the RFA.m]v+ S'ԍ#X\  P6G;qP#5 U.S.C.  603(a).m  S ' 1.` `  Need for and Objectives of the Proposed Rules(#`  S'  S' e mH73.` ` The Commission, in its efforts to protect consumers from unauthorized switching of  xpreferred carriers, and to implement provisions of the Telecommunications Act of 1996 pertaining to  xillegal changes in subscriber carrier selections, is issuing this Further NPRM to propose specific  xverification requirements for all carriers and to seek comments regarding the liability of (1) slammed  xconsumers to carriers, (2) unauthorized carriers to properly authorized carriers, and (3) carriers to slammed consumers.  S' 2.` ` Legal Basis(#`  S}'  SU' e I74.` ` This Further NPRM is adopted pursuant to Sections 1, 4(i), 4(j), 201205, 258, and 303(r) of the Communications Act of 1934, as amended, 47 U.S.C.  151, 154(i), 154(j), 201205, 258, 303(r).  S' 3.` ` Description and Number of Small Entities Which May be Affected(#`  S'  S' e J75.` ` As set forth above, the Commission is seeking comment on rules regarding subscriber  xcarrier selection changes in its specific efforts to prevent illegal changes in subscribers' properly  x^authorized carriers. Specifically, the Commission is: (1) seeking comment on the applicability of Sections  x*64.1100 and 64.1150 of our verification rules, 47 C.F.R.  64.1100, 64.1150, to all telecommunications  xcarriers; (2) seeking comment on the applicability of our verification rules when carriers solicit consumers  x^regarding preferred carrier freezes; (3) seeking comment on whether the "welcome package" described in  xSection 64.1100(d) continues to be a viable and necessary carrier change verification alternative, and""#,')')qq!"  xwhether consumers may derive any benefits from this option; (4) seeking comment on the quantity of costs  x!and benefits associated with inbound verification procedures; (5) seeking comment regarding consumerto xtcarrier, carriertocarrier, and carriertoconsumer liability in light of the Act's new provisions; and (6)  xseeking comment on whether to establish a "brightline" evidentiary standard for determining whether a  xconsumer has relied on a resale carrier's identity of its underlying, facilitiesbased network provider, hence  xkrequiring that the resale carrier notify the consumer if the underlying network provider is changed. Under  xthe Act and proposed rules, small entities that violate the Commission's PCchange verification rules by  xslamming consumers shall be liable to the consumer's properly authorized carrier for all charges paid by  xthe slammed consumer and for the value of any premiums to which the consumer would have been entitled if the slam had not occurred.  SH ' e K76.` ` For the purposes of this analysis, we examined the relevant definition of "small entity"  xor "small business" and applied this definition to identify those entities that may be affected by the rules  xadopted in this Further NPRM. The RFA defines a "small business" to be the same as a "small business  xconcern" under the Small Business Act, 15 U.S.C.  632, unless the Commission has developed one or  S ' xmore definitions that are appropriate to its activities.! v+ S'ЍX#X\  P6G;qP#See 5 U.S.C.  601(3) (incorporating by reference the definition of "small business concern" in 5 U.S.C.  yO' 632).#Xj\  P6G;߈XP#(#! Under the Small Business Act, a "small business  xconcern" is one that: (1) is independently owned and operated; (2) is not dominant in its field of  SX' xQoperation; and (3) meets any additional criteria established by the SBA.X0v+ S('ЍX#X\  P6G;qP#15 U.S.C.  632.#Xj\  P6G;߈XP#(#Ƥ Moreover, the SBA has defined  xa small business for Standard Industrial Classification (SIC) categories 4812 (Radiotelephone  xCommunications) and 4813 (Telephone Communications, Except Radiotelephone) to be small entities  S' xwhen they have fewer than 1,500 employees.v+ SP'ԍX#X\  P6G;qP#13 C.F.R.  121.201.#Xj\  P6G;߈XP#(#ƞ We first discuss generally the total number of small  xtelephone companies falling within both of these categories. Then, we discuss the number of small  xbusinesses within other categories, and attempt to refine further those estimates to correspond with the categories of telephone companies that are commonly used under our rules.  S' e JL77.` ` As discussed supra, and consistent with our prior practice, we shall continue to exclude  xDsmall incumbent LECs from the definition of "small entity" and "small business concerns" for the purpose  xof this IRFA. Because the small incumbent LECs subject to these rules are either dominant in their field  xof operations or are not independently owned and operated, consistent with our prior practice, they are  Sz' xexcluded from the definition of "small entity" and "small business concerns." zpv+ S ' " ԍ#X\  P6G;qP#XSee Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, First  " Report and Order, CC Docket No. 9698, FCC 96325, 11 FCC Rcd 15499, 61 Fed. Reg. 45476 at paras.  {O*"' " 132830, 1342 (rel. Aug. 8, 1996) (Local Competition First Report and Order). We note that the U.S.  {O"' " Court of Appeals for the Eighth Circuit has stayed the pricing rules developed in the Local Competition  {O#' " First Report and Order, pending review on the merits. Iowa Utilities Board v. FCC, No. 963321 (8th Cir., Oct. 15, 1996).(#  Accordingly, our use of  xthe terms "small entities" and "small businesses" does not encompass small incumbent LECs. Out of an  x<abundance of caution, however, for regulatory flexibility analysis purposes, we will consider small  xincumbent LECs within this analysis and use the term "small incumbent LECs" to refer to any incumbent LECs that arguably might be defined by SBA as "small business concerns." "$ ,')')qq"Ԍ S'ٙ ` ` Telephone Companies (SIC 4813)  S' e M78.` ` Total Number of Telephone Companies Affected. The decisions and rules adopted herein  x^may have a significant effect on a substantial number of small telephone companies identified by the SBA.  xThe United States Bureau of the Census (Census Bureau) reports that, at the end of 1992, there were 3,497  S:' x@firms engaged in providing telephone service, as defined therein, for at least one year.H:v+ S' "  ԍ#X\  P6G;qP#XUnited States Department of Census, Bureau of the Census, 1992 Census of Transportation,  {Oz'Communications, and Utilities: Establishment and Firm Size, Firm Size 1123 (1995) ("1992 Census").(#H This number  xcontains a variety of different categories of carriers, including local exchange carriers, interexchange  xcarriers, competitive access providers, cellular carriers, mobile service carriers, operator service providers,  xpay telephone operators, PCS providers, covered SMR providers, and resellers. It seems certain that some  xQof those 3,497 telephone service firms may not qualify as small entities or small incumbent LECs because  Sr' xthey are not "independently owned and operated."yr2v+ SD 'ԍ#X\  P6G;qP#X15 U.S.C.  632(a)(1).(#y For example, a PCS provider that is affiliated with  xan interexchange carrier having more than 1,500 employees would not meet the definition of a small  xbusiness. It seems reasonable to conclude, therefore, that fewer than 3,497 telephone service firms are small entity telephone service firms or small incumbent LECs that may be affected by this Further NPRM.  S ' e N79.` ` Wireline Carriers and Service Providers. The SBA has developed a definition of small  xMentities for telecommunications companies other than radiotelephone (wireless) companies (Telephone  xVCommunications, Except Radiotelephone). The Census Bureau reports that there were 2,321 such  S4' xctelephone companies in operation for at least one year at the end of 1992.4v+ S'ԍ#X\  P6G;qP#X1992 Census at Firm Size 1123.(#ƅ According to the SBA  x3definition, a small business telephone company other than a radiotelephone company is one employing  S' xtfewer than 1,500 persons.rv+ S'ԍ#X\  P6G;qP#13 C.F.R.  121.201 (SIC Code 4812).#X\  P6G;qP#Ѧ Of the 2,321 nonradiotelephone companies listed by the Census Bureau,  x^2,295 companies (or, all but 26) were reported to have fewer than 1,000 employees. Thus, at least 2,295  x3nonradiotelephone companies might qualify as small incumbent LECs or small entities based on these  xemployment statistics. However, because it seems certain that some of these carriers are not independently  xowned and operated, this figure necessarily overstates the actual number of nonradiotelephone companies  x&that would qualify as "small business concerns" under the SBA definition. Consequently, we estimate  xDusing this methodology that there are fewer than 2,295 small entity telephone communications companies  x(other than radiotelephone companies) that may be affected by the proposed decisions and rules and we seek comment on this conclusion.  ST' e  O80.` ` Local Exchange Carriers. Although neither the Commission nor the SBA has developed  xa definition of small providers of local exchange services, we have two methodologies available to us for  x making these estimates. The closest applicable definition under SBA rules is for telephone  xcommunications companies other than radiotelephone (wireless) companies (SIC 4813) (Telephone  S' x}Communications, Except Radiotelephone) as previously detailed, supra. Our alternative method for  xestimation utilizes the data that we collect annually in connection with the Telecommunications Relay  xService (TRS). This data provides us with the most reliable source of information of which we are aware  xkregarding the number of LECs nationwide. According to our most recent data, 1,347 companies reported"@%,')')qqQ"  S' xthat they were engaged in the provision of local exchange services.lv+ Sh'Ѝ#X\  P6G;qP#XFederal Communications Commission, CCB, Industry Analysis Division, Telecommunications Industry  {O@'Revenue: TRS Fund Worksheet Data, Tbl. 1 (Number of Carriers Reporting by Type of Carrier and  {O 'Type of Revenue) (Dec. 1996) ("TRS Worksheet").(#Ƌ Although it seems certain that some  xof these carriers are not independently owned and operated, or have more than 1,500 employees, we are  xunable at this time to estimate with greater precision the number of incumbent LECs that would qualify  xas small business concerns under SBA's definition. Consequently, we estimate that there are fewer than  x1,347 small LECs (including small incumbent LECs) that may be affected by the actions proposed in this  S8'Further NPRM.  S' e P81.` ` NonLEC Wireline Carriers. We next estimate the number of nonLEC wireline carriers,  xincluding interexchange carriers (IXCs), competitive access providers (CAPs), Operator Service Providers  x*(OSPs), Pay Telephone Operators, and resellers that may be affected by these rules. Because neither the  xcCommission nor the SBA has developed definitions for small entities specifically applicable to these  xwireline service types, the closest applicable definition under the SBA rules for all these service types is  xfor telephone communications companies other than radiotelephone (wireless) companies. However, the  x*TRS data provides an alternative source of information regarding the number of IXCs, CAPs, OSPs, Pay  xpTelephone Operators, and resellers nationwide. According to our most recent data: 130 companies  xxreported that they are engaged in the provision of interexchange services; 57 companies reported that they  xDare engaged in the provision of competitive access services; 25 companies reported that they are engaged  xgin the provision of operator services; 271 companies reported that they are engaged in the provision of  xpay telephone services; and 260 companies reported that they are engaged in the resale of telephone  S ' xcservices and 30 reported being "other" toll carriers. v+ S'Ѝ#X\  P6G;qP#XTRS Worksheet at Tbl. 1 (Number of Carriers Reporting by Type of Carrier and Type of Revenue).(# Although it seems certain that some of these  xcarriers are not independently owned and operated, or have more than 1,500 employees, we are unable  xat this time to estimate with greater precision the number of IXCs, CAPs, OSPs, Pay Telephone Operators,  S' x and resellers that would qualify as small business concerns under SBA's definition. Firms filing TRS  Sn' xWorksheets are asked to select a single category that best describes their operation. As a result, some long  xdistance carriers describe themselves as resellers, some as OSPs, some as "other," and some simply as  xIXCs. Consequently, we estimate that there are fewer than 130 small entity IXCs; 57 small entity CAPs;  x325 small entity OSPs; 271 small entity pay telephone service providers; and 260 small entity providers  x of resale telephone service; and 30 "other" toll carriers that might be affected by the actions and rules  S'adopted in this Further NPRM.  SX' e ~Q82.` ` Radiotelephone (Wireless) Carriers. The SBA has developed a definition of small entities  xfor Wireless (Radiotelephone) Carriers. The Census Bureau reports that there were 1,176 such companies  S ' xin operation for at least one year at the end of 1992. v+ SF"'Ѝ#X\  P6G;qP#X1992 Census at Firm Size 1123.(#Ə According to the SBA's definition, a small  S' x^business radiotelephone company is one employing fewer than 1,500 persons.<v+ S$'Ѝ#X\  P6G;qP#X13 C.F.R.  121.201 (SIC Code 4812).(#Ƒ The Census Bureau also  xreported that 1,164 of those radiotelephone companies had fewer than 1,000 employees. Thus, even if  xall of the remaining 12 companies had more than 1,500 employees, there would still be 1,164  xradiotelephone companies that might qualify as small entities if they are independently owned and  xoperated. Although it seems certain that some of these carriers are not independently owned and operated,"B&,')')qqD"  x"we are unable to estimate with greater precision the number of radiotelephone carriers and service  S' xproviders that would both qualify as small business concerns under SBA's definition. Consequently, we  xestimate that there are fewer than 1,164 small entity radiotelephone companies that might be affected by  S'the actions and rules adopted in this Further NPRM.  S8' e R83.` ` Cellular and Mobile Service Carriers. In an effort to further refine our calculation of the  xnumber of radiotelephone companies affected by the rules adopted herein, we consider the categories of  xradiotelephone carriers, Cellular Service Carriers and Mobile Service Carriers. Neither the Commission  xnor the SBA has developed a definition of small entities specifically applicable to Cellular Service Carriers  x*and to Mobile Service Carriers. The closest applicable definition under SBA rules for both services is for  x"telephone companies other than radiotelephone (wireless) companies. The most reliable source of  xMinformation regarding the number of Cellular Service Carriers and Mobile Service Carriers nationwide  xcof which we are aware appears to be the data that we collect annually in connection with the TRS.  xAccording to our most recent data, 792 companies reported that they are engaged in the provision of  S ' x7cellular services and 138 companies reported that they are engaged in the provision of mobile services. v+ S:'Ѝ#X\  P6G;qP#XTRS Worksheet at Tbl. 1 (Number of Carriers Reporting by Type of Carrier and Type of Revenue).(#  xAlthough it seems certain that some of these carriers are not independently owned and operated, or have  xmore than 1,500 employees, we are unable at this time to estimate with greater precision the number of  xQCellular Service Carriers and Mobile Service Carriers that would qualify as small business concerns under  xSBA's definition. Consequently, we estimate that there are fewer than 792 small entity Cellular Service  xkCarriers and fewer than 138 small entity Mobile Service Carriers that might be affected by the actions and rules adopted in this Further NPRM.  S' e S84.` ` Broadband PCS Licensees. In an effort to further refine our calculation of the number  xof radiotelephone companies affected by the rules adopted herein, we consider the category of  xradiotelephone carriers, Broadband PCS Licensees. The broadband PCS spectrum is divided into six  xtfrequency blocks designated A through F. As set forth in 47 C.F.R. 24.720(b), the Commission has  xQdefined "small entity" in the auctions for Blocks C and F as a firm that had average gross revenues of less  xthan $40 million in the three previous calendar years. For Block F, an additional classification for "very  xsmall business" was added and is defined as an entity that, together with its affiliates, has average gross  S|' xxrevenues of not more than $15 million for the preceding three calendar years.j|hv+ S' "& ԍ#X\  P6G;qP#XSee Amendment of Parts 20 and 24 of the Commission's Rules Broadband PCS Competitive Bidding and  {O\' "p the Commercial Mobile Radio Service Spectrum Cap, Report and Order, FCC 96278, WT Docket No. 9659, para. 60 (1996), 61 FR 33859 (Jul. 1, 1996).(#Ƈ Our definition of a "small  ST' xZentity" in the context of broadband PCS auctions has been approved by SBA.Tv+ S ' "g ԍ#X\  P6G;qP#XSee Implementation of Section 309(j) of the Communications Act Competitive Bidding, PP Docket No.93253, Fifth Report & Order, 9 FCC Rcd 5532, 558184 (1994).(# The Commission has  xauctioned broadband PCS licenses in Blocks A through F. We do not have sufficient data to determine  xMhow many small businesses bid successfully for licenses in Blocks A and B. There were 183 winning  xbidders that qualified as small entities in the Blocks C, D, E, and F auctions. Based on this information,  S' xwe conclude that the number of broadband PCS licensees affected by the decisions in the Infrastructure  S' xSharing Report & Order includes, at a minimum, the 183 winning bidders that qualified as small entities in the Blocks C through F broadband PCS auctions. " ',')')qq"  S' e 'T85.` ` SMR Licensees. Pursuant to 47 C.F.R.  90.814(b)(1), the Commission has defined "small  xentity" in auctions for geographic area 800 MHz and 900 MHz SMR licenses as a firm that had average  xannual gross revenues of less than $15 million in the three previous calendar years. This definition of a  S' xQ"small entity" in the context of 800 MHz and 900 MHz SMR has been approved by the SBA.v+ S' "E ԍX#X PqP#See Amendment of Parts 2 and 90 of the Commission's Rules to Provide for the Use of 200 Channels  " Outside the Designated Filing Areas in the 896901 MHz and the 935940 MHz Bands Allotted to the  {O' " Specialized Mobile Radio Pool, PR Docket No. 89583, Second Order on Reconsideration and Seventh  {O\' " Report and Order, 11 FCC Rcd 2639, 2693702 (1995); Amendment of Part 90 of the Commission's Rules  {O&' "  to Facilitate Future Development of SMR Systems in the 800 MHz Frequency Band, PR Docket No. 93144,  "} First Report and Order, Eighth Report and Order, and Second Further Notice of Proposed Rule Making, 11  yO 'FCC Rcd 1463 (1995).#Xj P߈XP#(#ƹ The rules  xgproposed in this Further NPRM may apply to SMR providers in the 800 MHz and 900 MHz bands that  xeither hold geographic area licenses or have obtained extended implementation authorizations. We do not  xDknow how many firms provide 800 MHz or 900 MHz geographic area SMR service pursuant to extended  ximplementation authorizations, nor how many of these providers have annual revenues of less than $15  x@million. We assume, for purposes of this IRFA, that all of the extended implementation authorizations may be held by small entities, which may be affected by the rules proposed in this Further NPRM.  SJ ' e  U86.` ` Potential SMR Licensees. The Commission completed its auctions for geographic area  xlicenses in the 900 MHz SMR band on April 15, 1996. There were 60 winning bidders who qualified as  xsmall entities in the 900 MHz auction. Based on this information, we conclude that the number of  x&geographic area SMR licensees affected by the rule proposed in this Further NPRM includes these 60  xtsmall entities. No auctions have been held for 800 MHz geographic area SMR licenses. Therefore, no  xsmall entities currently hold these licenses. A total of 525 licenses will be awarded for the upper 200  x_channels in the 800 MHz geographic area SMR auction. However, the Commission has not yet  xtdetermined how many licenses will be awarded for the lower 230 channels in the 800 MHz geographic  xarea SMR auction. There is no basis, moreover, on which to estimate how many small entities will win  xthese licenses. Given that nearly all radiotelephone companies have fewer than 1,000 employees and that  xIno reliable estimate of the number of prospective 800 MHz licensees can be made, we assume, for  xpurposes of this IRFA, that all of the licenses may be awarded to small entities who, thus, may be affected by the rules proposed in this Further NPRM.  S' e  V87.` ` Cable Systems. SBA has developed a definition of small entities for cable and other pay  xtelevision services, which includes all such companies generating less than $11 million in revenue  xcannually. This definition includes cable systems operators, closed circuit television services, direct  xbroadcast satellite services, multipoint distribution systems, satellite master antenna systems and  x7subscription television services. According to the Census Bureau, there were 1,423 such cable and other  xpay television services generating less than $11 million in revenue that were in operation for at least one  S.'year at the end of 1992..v+ S"'ԍX#X PqP#1992 Census at Firm Size1-123.#Xj P߈XP#(#Ƹ  S' e a)` ` The Commission has developed its own definition of a small cable system operator  e OXX` ` for the purposes of rate regulation. Under the Commission's rules, a "small cable"(,')')qq"  S' e company," is one serving fewer than 400,000 subscribers nationwide.:4v+ Sh' "" ԍX#X PqP#47 C.F.R.  76.901(e). The Commission developed this definition based on its determinations that a small  {O@' "/ cable system operator is one with annual revenues of $100 million or less.  Implementation of Sections of  {O ' " the 1992 Cable Act: Rate Regulation, Sixth Report and Order and Eleventh Order on Reconsideration, 10  yO'FCC Rcd 7393. #Xj P߈XP#(#: Based on our  e ~most recent information, we estimate that there were 1,439 cable operators that qualified  S' e \as small cable system operators at the end of 1995.v+ S'ԍX#X PqP#Paul Kagan Associates, Inc., Cable TV Investor, Feb. 29, 1996 (based on figures for Dec. 30, 1995).#Xj P߈XP#(# Since then, some of those  e companies may have grown to serve over 400,000 subscribers, and others may have been  e `involved in transactions that caused them to be combined with other cable operators.  e Consequently, we estimate that there are fewer than 1,439 small entity cable system operators that may be affected by the rules proposed in this Further NPRM.(#`  S' e Sb)` ` The Communications Act also contains a definition of a small cable system operator,  e which is "a cable operator that, directly or through an affiliate, serves in the aggregate  e 0fewer than 1 percent of all subscribers in the United States and is not affiliated with any  SJ ' e qentity or entities whose gross annual revenues in the aggregate exceed $250,000,000."J dv+ SN'ԍX#X PqP#47 U.S.C. 543(m)(2).#Xj P߈XP#(#Ơ  e The Commission has determined that there are 61,700,000 subscribers in the United  e 'States. Therefore, we found that an operator serving fewer than 617,000 subscribers shall  e =be deemed a small operator, if its annual revenues, when combined with the total annual  S ' e =revenues of all of its affiliates, do not exceed $250 million in the aggregate. v+ SN'ԍX#X PqP#47 C.F.R.  76.1403(b).#Xj P߈XP#(#ơ Based on  e available data, we find that the number of cable operators serving 617,000 subscribers or  SZ' e Wless totals 1,450.Z v+ S'ԍX#X PqP#Paul Kagan Associates, Inc., Cable TV Investor, Feb. 29, 1996 (based on figures for Dec. 30, 1995).#Xj P߈XP#(# Although it seems certain that some of these cable system operators  e zare affiliated with entities whose gross annual revenues exceed $250,000,000, we are  e unable at this time to estimate with greater precision the number of cable system operators  e that would qualify as small cable operators under the definition in the Communications Act.(#`  Sj' e 4 4.` `  Summary of Projected Reporting, Recordkeeping, and Other Compliance  SB'Requirements (#`  S' e  W88.` ` The proposed rules would impose verification and disclosure requirements upon  xtelecommunications carriers that wish to submit or execute a change in a subscriber's selection of a  xQprovider of telecommunications service. Both submitting and executing telecommunications carriers may  xbe required to ensure that a carrier change comports with the verification requirements of 47 C.F.R.   x64.1100 and 64.1150 established by the Commission. Furthermore, if a subscriber is a victim of  xMslamming, the unauthorized carrier would be required to remit to the properly authorized carrier (1) all  xZcharges paid by the subscriber from the time the slam occurred, and (2) the value of any premiums to  xwhich the subscriber would have been entitled if the slam had not occurred. The properly authorized  xcarrier would be required to request such payments from the unauthorized carrier within ten days of")D ,')')qq"  x*notification from the subscriber that an unauthorized carrier change has occurred. Upon notification that  xthe subscriber has been slammed, the unauthorized carrier must remit such payments to the properly  xauthorized carrier. The subscriber's preferred telecommunications carrier would then be responsible for  xDmaking its subscriber whole by restoring any premiums to which the subscriber would have been entitled  xhad the slam not occurred. In the event of disputes between carriers regarding the transfer of charges and  xkthe value of lost premiums, the carriers would be required to pursue private settlement negotiations before instituting proceedings before the Commission to resolve such disputes.  S' e  5.` `  Significant Alternatives to Proposed Rules Which Minimize the Significant Economic  e _Impact on Small Entities and Small Incumbent LECs and Accomplish Stated  Sp'Objectives (#`  S ' e X89.` ` The Commission has considered proposing no rule changes beyond those specifically  xkrequired by the Act. Therefore, as discussed above, we are proposing very limited rule changes from our  xexisting rules which, given that slamming is becoming an increasingly prevalent practice, we believe are  x&minimally intrusive steps necessary to discourage possible evasion of the Subscriber Carrier Selection  xxChange requirements contained in Section 258 of the Communications Act. We propose that, in the event  xof a dispute between carriers under this liability provision, the carriers involved in such disputes must  xtpursue private settlement negotiations regarding the transfer of charges and the value of lost premiums  xfrom the unauthorized carrier to the properly authorized carrier. We believe that the adoption of such a  xgdispute mechanism will lessen the economic impact of a dispute on small entities. Under the proposed  x7rules, telecommunications carriers, including small entities, that violate the Commission's PIC verification  xrules and slam consumers would be liable to the consumer's properly authorized carrier in an amount  xequal to all charges paid by the "slammed" consumer plus the value of premiums to which a slammed  xconsumer would have been entitled had the slam not occurred. We invite parties commenting on this  xDregulatory analysis to provide information as to the number of small businesses that would be affected by  x^our proposed regulations and identify alternatives that would reduce the burden on these entities while still ensuring that consumers' telecommunications carrier selections are not changed without their authorization.  Sx' e  Y90.` ` Although we proposed no rule regarding the circumstances under which resale carriers  xmust notify their subscribers of a change in their underlying network provider, we received a request for  S(' xDclarification of this issue from TRA.(v+ S'ԍ#X\  P6G;qP#XSee Further NPRM, supra, paras. 3640.(#Ƙ TRA proposes that, instead of determining the materiality of such  xchanges on a casebycase basis, we establish a "brightline" test that would offer the consumer safeguards  xnow provided by the current casebycase approach, while minimizing the regulatory burden on small to  S' xmidsized carriers.<2hv+ S ' " ԍ#X\  P6G;qP#XTRA proposes that customer notification be required only if a resale carrier either: (1) identified its  " underlying network provider to its customers and committed to those customers in writing that it would not  " switch networks; or (2) identified its network provider on a bill or other correspondence to its customers  {O #'within six months prior to the change in network provider. See supra para. 37.(#< According to TRA, the unpredictability of the casebycase approach is unduly  xburdensome on small to midsized resale carriers, and thus diminishes competition. We invite parties to  xcomment on whether the current casebycase approach has a significant economic impact on small  xentities, and on whether our proposal to establish a brightline test for determining whether a consumer  xhas relied on a resale carrier's identity of its underlying facilitiesbased network provider, hence requiring that the resale carrier notify the consumer if the underlying network provider is changed, would minimize " *b,')')qq"  xany significant economic impact. We also seek comment on alternatives that would reduce the burden on these entities without diminishing consumer safeguards now in place.  S' 6.` `  Federal Rules that May Overlap, Duplicate, or Conflict with the Proposed Rules (#`  S8'Z91.` ` None.  X' C#Xj P߈XP#.X Final Regulatory Flexibility Analysis (#  X4 e ([92.` ` As required by Section 603 of the Regulatory Flexibility Act (RFA), 5 U.S.C.  x[603, an Initial Regulatory Flexibility Analysis (IRFA) was incorporated in the Notice of  xProposed Rule Making (NPRM) in the Policies and Rules Concerning Unauthorized Changes of  Xu 4 xConsumers' Long Distance Carrier.u  S 'ԍ#c P6rP# X#X PqP#NPRM, 9 FCC Rcd. 6885 (1994). #c P6rP#(# The Commission sought written public comment on the  X^ 4 xproposals in the NPRM, including on the IRFA.^ h Sw'ԍ#X PqP#NPRM paras. 2027.#c P6rP#ї The Commission's Final Regulatory  x Flexibility Analysis (FRFA) in this Memorandum Opinion and Order on Reconsideration  x}conforms to the RFA, as amended by the Small Business Regulatory Enforcement Fairness Act  X4of 1996 (SBREFA), Pub. L. 104121, 110 Stat. 847 (1996). S' " ԍ#X\  P6G;qP#XSBREFA was codified as Title II of the Contract With America Advancement Act of 1996 (CWAAA), 5  {O'U.S.C.  601 et seq.(#  X' e  1.` ` Need for and Objectives of this Memorandum Opinion and Order on  X'Reconsideration and the Rules Adopted Herein (#`  X4 e O\93.` ` The Commission adopts in this Order on Reconsideration rules that: (1) modify  xSection 64.1150(g) to clarify that interexchange carriers (IXCs) using LOAs must fully translate  xtheir LOAs into the same language(s) as their associated promotional materials, oral descriptions  x+and instructions; (2) modify Section 64.1150(e)(4) to incorporate the terms "interLATA and  xintraLATA," as well as "interstate and intrastate"; and (3) modify Section 64.1100(a) to clarify  xthat IXCs must employ only one of the four verification options in Section 64.1100 to verify  xsubscriber change orders generated by telemarketing. The objectives of the rules adopted in this  xhOrder on Reconsideration are to provide adequate safeguards to protect consumers from  x/unauthorized switching of their long distance carriers and to encourage full and fair competition among telecommunications carriers in the marketplace.  X'  X' e 2.` ` Summary and Analysis of the Significant Issues Raised by the Public  X'Comments in Response to the IRFA (#`  Xd4 e ]94.` ` In the IRFA, the Commission found that the rules it proposed to adopt in this  xproceeding may have a significant impact on a substantial number of small businesses as defined  xlby section 601(3) of the RFA. Specifically, small entities may feel some economic impact in"6!+r,')')qq"  xadditional printing costs due to the new requirement that IXCs must fully translate their LOAs  xNinto the same language(s) as their associated promotional materials, oral descriptions and  xinstructions under Section 64.1150(g). The IRFA solicited comment on alternatives to our  xproposed rules that would minimize the impact on small entities consistent with the objectives  xof this proceeding. Although the Commission has requested further comment on a number of  xthese rules, the Commission received no comment(s) on the potential impact on small business  Xv4entities with respect to the rules we adopt today.   XH' e E 3.` ` Description and Estimates of the Number of Small Entities to Which the  e IRules adopted in the Memorandum Order and Opinion on Reconsideration  X 'in CC Docket No. 94129 Will Apply (#`  X 4 e B^95.` ` For the purposes of this analysis, we examined the relevant definition of "small  x4entity" or "small business" and applied this definition to identify those entities that may be  xaffected by the rules adopted in this Order on Reconsideration. The RFA defines a "small  xbusiness" to be the same as a "small business concern" under the Small Business Act, 15 U.S.C.  x 632, unless the Commission has developed one or more definitions that are appropriate to its  Xy4 xhactivities.y S'Ѝ#X\  P6G;qP#XSee 5 U.S.C.  601(3) (incorporating by reference the definition of "small business concern" in 5 U.S.C.  632).(# Under the Small Business Act, a "small business concern" is one that: (1) is  xindependently owned and operated; (2) is not dominant in its field of operation; and (3) meets  XK4 xany additional criteria established by the Small Business Administration (SBA).}K0 S,'Ѝ#X\  P6G;qP#X15 U.S.C.  632.(#} Moreover, the  xSBA has defined a small business for Standard Industrial Classification (SIC) categories 4812  x9(Radiotelephone Communications) and 4813 (Telephone Communications, Except  X4Radiotelephone) to be small entities when they have fewer than 1,500 employees.w S'ԍ#X\  P6G;qP#X13 C.F.R.  121.201.(#w   X'` ` Telephone Companies (SIC 4813)  X4 e W_96.` ` Total Number of Telephone Companies Affected. The decisions and rules adopted  xherein may have a significant effect on a substantial number of small telephone companies  x"identified by the SBA. The United States Bureau of the Census (Census Bureau) reports that,  xat the end of 1992, there were 3,497 firms engaged in providing telephone service, as defined  XP4 x therein, for at least one year.Pp Sq#'ԍ#X\  P6G;qP#X1992 Census at Firm Size 1123.(#ƅ This number contains a variety of different categories of carriers,  xincluding local exchange carriers (LECs), IXCs, competitive access providers (CAPs), cellular  x&carriers, mobile service carriers, operator service providers (OSPs), pay telephone operators, PCS  x+providers, covered SMR providers, and resellers. It seems certain that some of those 3,497  xtelephone service firms are not IXCs, or may not qualify as small entities because they are not",,')')qq"  X4 x"independently owned and operated."y Sy'ԍ#X\  P6G;qP#X15 U.S.C.  632(a)(1).(#y For example, a PCS provider that is affiliated with an  x_IXC having more than 1,500 employees would not meet the definition of a small business. It  xseems reasonable to conclude, therefore, that fewer than 3,497 telephone service firms are small entity IXCs that may be affected by this Order on Reconsideration.  X4 e `97.` ` Wireline Carriers and Service Providers. The SBA has developed a definition of  x}small entities for telecommunications companies other than radiotelephone (wireless) companies  x(Telephone Communications, Except Radiotelephone). The Census Bureau reports that there were  XJ4 x2,321 such telephone companies in operation for at least one year at the end of 1992.Jh Sc 'ԍ#X\  P6G;qP#X1992 Census at Firm Size 1123.(#ƅ  xAccording to the SBA definition, a small business telephone company other than a radiotelephone  X 4 x[company is one employing fewer than 1,500 persons.  S'ԍ#X\  P6G;qP#X13 C.F.R.  121.201 (SIC Code 4812).(#Ƈ Of the 2,321 nonradiotelephone  x"companies listed by the Census Bureau, 2,295 companies (or, all but 26) were reported to have  xfewer than 1,000 employees. Thus, at least 2,295 nonradiotelephone companies might qualify  xas small incumbent LECs or small entities based on these employment statistics. However,  xpbecause it seems certain that some of these carriers are not independently owned and operated,  xthis figure necessarily overstates the actual number of nonradiotelephone companies that would  x_qualify as "small business concerns" under the SBA definition. Moreover, although the rules  xadopted herein apply only to IXCs, this figure includes entities other than IXCs. Consequently,  xwe estimate using this methodology that there are fewer than 2,295 small entity telephone  x"communications companies (other than radiotelephone companies) that may be affected by the proposed decisions and rules and we seek comment on this conclusion.  X4 e Sa98.` ` NonLEC wireline carriers. We next estimate the number of nonLEC wireline  xcarriers, including IXCs, CAPs, OSPs, Pay Telephone Operators, and resellers that may be  xaffected by these rules. Because neither the Commission nor the SBA has developed definitions  x_for small entities specifically applicable to these wireline service types, the closest applicable  xdefinition under the SBA rules for all these service types is for telephone communications  xcompanies other than radiotelephone (wireless) companies. However, the TRS data provides an  xalternative source of information regarding the number of IXCs, CAPs, OSPs, Pay Telephone  xOperators, and resellers nationwide. According to our most recent data: 130 companies reported  xthat they are engaged in the provision of interexchange services; 57 companies reported that they  xare engaged in the provision of competitive access services; 25 companies reported that they are  x/engaged in the provision of operator services; 271 companies reported that they are engaged in  xthe provision of pay telephone services; and 260 companies reported that they are engaged in the  X4 xlresale of telephone services and 30 reported being "other" toll carriers. SO&'Ѝ#X\  P6G;qP#XTRS Worksheet at Tbl. 1 (Number of Carriers Reporting by Type of Carrier and Type of Revenue).(# Although it seems  xcertain that some of these carriers are not independently owned and operated, or have more than  xl1,500 employees, we are unable at this time to estimate with greater precision the number of" -H,')')qq|"  xIXCs, CAPs, OSPs, Pay Telephone Operators, and resellers that would qualify as small business  X4 xconcerns under SBA's definition. Firms filing TRS Worksheets are asked to select a single  xcategory that best describes their operation. As a result, some long distance carriers describe  xMthemselves as resellers, some as OSPs, some as "other," and some simply as IXCs. Consequently,  xlwe estimate that there are fewer than 130 small entity IXCs; 57 small entity CAPs; 25 small  x<entity OSPs; 271 small entity pay telephone service providers; and 260 small entity providers of  xresale telephone service; and 30 "other" toll carriers that might be affected by the rules proposed  Xa4in this Order on Reconsideration.  X34 e b99.` ` Radiotelephone (Wireless) Carriers. The SBA has developed a definition of small  x@entities for Wireless (Radiotelephone) Carriers. The Census Bureau reports that there were 1,176  X 4 x/such companies in operation for at least one year at the end of 1992.  S 'Ѝ#X\  P6G;qP##X\  P6G;qP#X1992 Census at Firm Size 1123.(#ƶ According to the SBA  xdefinition, a small business radiotelephone company is one employing fewer than 1,500  X 4 x}persons. h S'Ѝ#X\  P6G;qP#X13 C.F.R.  121.201 (SIC Code 4812).(#Ƒ The Census Bureau also reported that 1,164 of those radiotelephone companies had  xyfewer than 1,000 employees. Thus, even if all of the remaining 12 companies had more than  xp1,500 employees, there would still be 1,164 radiotelephone companies that might qualify as small  xentities if they are independently owned and operated. Although it seems certain that some of  xthese carriers are not independently owned and operated, we are unable to estimate with greater  x precision the number of Radiotelephone Carriers and service providers that would qualify as small  xbusiness concerns under SBA's definition. We are also unable to estimate how many of these  xentities are IXCs. Consequently, we estimate that there are fewer than 1,164 small entity  X!4 xradiotelephone companies that might be affected by the rules proposed in this Order on Reconsideration.   X4 e Wc100.` ` Cellular and Mobile Service Carriers. In an effort to further refine our calculation  xof the number of radiotelephone companies affected by the rules adopted herein, we consider the  x_categories of radiotelephone carriers, Cellular Service Carriers and Mobile Service Carriers.  xRNeither the Commission nor the SBA has developed a definition of small entities specifically  xapplicable to Cellular Service Carriers and to Mobile Service Carriers. The closest applicable  xdefinition under SBA rules for both services is for telephone companies other than radiotelephone  x(wireless) companies. The most reliable source of information regarding the number of Cellular  x<Service Carriers and Mobile Service Carriers nationwide of which we are aware appears to be  xthe data that we collect annually in connection with the TRS. According to our most recent data,  x792 companies reported that they are engaged in the provision of cellular services and 138  X4 x_companies reported that they are engaged in the provision of mobile services. S$'Ѝ#X\  P6G;qP#XTRS Worksheet at Tbl. 1 (Number of Carriers Reporting by Type of Carrier and Type of Revenue).(# Although it  xgseems certain that some of these carriers are not independently owned and operated, or have more  xthan 1,500 employees, we are unable at this time to estimate with greater precision the number  xof Cellular Service Carriers and Mobile Service Carriers that would qualify as small business"!.,')')qq? "  xconcerns under SBA's definition. We are also unable to estimate how many of these entities are  xIXCs. Consequently, we estimate that there are fewer than 792 small entity Cellular Service  xCarriers and fewer than 138 small entity Mobile Service Carriers that might be affected by the rules proposed in this Order on Reconsideration.   X4 e d101.` ` Broadband PCS Licensees. In an effort to further refine our calculation of the  xnumber of radiotelephone companies affected by the rules adopted herein, we consider the  xccategory of radiotelephone carriers, Broadband PCS Licensees. The broadband PCS spectrum  x~is divided into six frequency blocks designated A through F. As set forth in 47 C.F.R.  x24.720(b), the Commission has defined "small entity" in the auctions for Blocks C and F as a  x firm that had average gross revenues of less than $40 million in the three previous calendar years.  xFor Block F, an additional classification for "very small business" was added and is defined as  xan entity that, together with its affiliates, has average gross revenues of not more than $15 million  X 4 xEfor the preceding three calendar years.j  SP' "p ԍ#X\  P6G;qP#XSee Amendment of Parts 20 and 24 of the Commission's Rules Broadband PCS Competitive Bidding and  {O(' " the Commercial Mobile Radio Service Spectrum Cap, Report and Order, FCC 96278, WT Docket No. 9659, para. 60 (1996), 61 FR 33859 (July 1, 1996).(#ƍ Our definition of a "small entity" in the context of  X 4 xNbroadband PCS auctions has been approved by SBA.  Sk' " ԍ#X\  P6G;qP#XSee Implementation of Section 309(j) of the Communications Act Competitive Bidding, PP Docket No.93253, Fifth Report & Order, 9 FCC Rcd 5532, 558184 (1994).(# The Commission has auctioned  xbroadband PCS licenses in Blocks A through F. We do not have sufficient data to determine how  xmany small businesses bid successfully for licenses in Blocks A and B. There were 183 winning  xbidders that qualified as small entities in the Blocks C, D, E, and F auctions. We are unable to  xVestimate how many of these entities are IXCs. Based on this information, we conclude that the  xnumber of broadband PCS licensees in Blocks C through F that might be affected by the rules  xNproposed in this Order on Reconsideration includes, at most, the 183 winning bidders that qualified as small entities in the Blocks C through F broadband PCS auctions.  X4 e #e102.` ` SMR Licensees. Pursuant to 47 C.F.R.  90.814(b)(1), the Commission has defined  x"small entity" in auctions for geographic area 800 MHz and 900 MHz SMR licenses as a firm  xthat had average annual gross revenues of less than $15 million in the three previous calendar  xRyears. This definition of a "small entity" in the context of 800 MHz and 900 MHz SMR has  X4 xbeen approved by the SBA.b S ' " ԍ#X PqP#See Amendment of Parts 2 and 90 of the Commission's Rules to Provide for the Use of 200 Channels  " XOutside the Designated Filing Areas in the 896901 MHz and the 935940 MHz Bands Allotted to the  "R Specialized Mobile Radio Pool, PR Docket No. 89583, Second Order on Reconsideration and Seventh  yO#' " Report and Order, 11 FCC Rcd 2639, 2693702 (1995); Amendment of Part 90 of the Commission's Rules  " to Facilitate Future Development of SMR Systems in the 800 MHz Frequency Band, PR Docket No. 93144,  "} First Report and Order, Eighth Report and Order, and Second Further Notice of Proposed Rule Making, 11  yOj%'FCC Rcd 1463 (1995).#c P6rP#(#Ɵ The rules adopted in this Order on Reconsideration may apply to  x}SMR providers in the 800 MHz and 900 MHz bands that either hold geographic area licenses or  xhave obtained extended implementation authorizations. We do not know how many IXCs provide  x800 MHz or 900 MHz geographic area SMR service pursuant to extended implementation"R/ ,')')qq4"  xauthorizations, nor how many of these providers have annual revenues of less than $15 million.  xWe assume, for purposes of this FRFA, that all of the extended implementation authorizations  xmay be held by IXCs that are small entities, which may be affected by the decisions and rules adopted in this Order on Reconsideration.   X4 ( if103.` ` The Commission completed its auctions for geographic area licenses in the 900  !MHz SMR band on April 15, 1996. There were 60 winning bidders who qualified as small  !entities in the 900 MHz auction. We are unable to estimate how many of these entities are IXCs.  !VBased on this information, we conclude that the number of geographic area SMR licensees that  !may be affected by the rules adopted in this Order on Reconsideration includes, at most, these  !60 small entities. No auctions have been held for 800 MHz geographic area SMR licenses.  !Therefore, no small entities currently hold these licenses. A total of 525 licenses will be awarded  !for the upper 200 channels in the 800 MHz geographic area SMR auction. However, the  !Commission has not yet determined how many licenses will be awarded for the lower 230  !cchannels in the 800 MHz geographic area SMR auction. There is no basis, moreover, on which  !to estimate how many small entities will win these licenses, or how many of these entities will  !cbe IXCs. Given that nearly all radiotelephone companies have fewer than 1,000 employees and  !that no reliable estimate of the number of prospective 800 MHz licensees can be made, we  !&assume, for purposes of this FRFA, that all of the licenses may be awarded to IXCs that are small entities which, thus, may be affected by the decisions in this Order on Reconsideration.  X' ( + 4.` `  Summary of Projected Reporting, Recordkeeping and other Compliance  X'Requirements (#`  X4 ( g104.` ` The Commission, by this Order on Reconsideration, (1) directs carriers that use  !LOAs to fully translate their LOAs into the same language(s) as their associated promotional  !materials, oral descriptions and instructions; (2) rules that it will modify Section 64.1150(e)(4)  !to incorporate the terms "interLATA" and "intraLATA," as well as "interstate" and "intrastate"  !in the statutory language; and (3) clarifies that IXCs must employ only one of the four options  !in Section 64.1100(a) to verify subscriber change orders generated by telemarketing. The  !Commission has determined that compliance with these provisions may require carriers to modify their marketing and advertising materials.  X 4  X ' (  5.` ` Steps Taken to Minimize the Significant Economic Impact of This  ( _Memorandum Opinion and Order on Small Entities and Small Incumbent LECs, Including the Significant Alternatives Considered and Rejected(#`  X 4  X!4 ( h105.` ` After consideration of potential alternatives, the Commission determined that the  !requirement that carriers translate LOAs into the same language as their associated promotional  !+materials or oral descriptions and instructions may have a significant impact on a substantial  !}number of small businesses as defined by section 601(3) of the RFA. Specifically, small entities  !may feel some economic impact in additional printing costs due to the new requirement under  !ESection 64.1150(g). Nevertheless, the overwhelming majority of commenters supported our  !adoption of this rule, without providing specific comment regarding the economic impact to small  !entities or alternatives to lessen the economic impact. Since IXCs are already required by statute" (0,')')qq%"  !+to comply with the Commission's PICchange verification procedures, this new requirement  !mregarding the use of LOAs would not have a significant economic impact on those  !telecommunications carriers that employ other verification options. Moreover, because the rules  !will not take effect for one hundred fifty (150) days, we believe all IXCs, large and small, will  !phave sufficient advance time to revise and print new LOAs, if necessary. By enacting this rule,  !Nthe Commission is only requiring that IXCs using LOAs ensure that the language of their  !Ipromotional material matches that which authorizes a change in subscriber service. Even if the  !economic impact is significant to some small entities, the benefit of protecting nonEnglish  !speaking consumers from being mislead by language that they may not fully understand is consistent with the stated objectives, and thus justifies any increase in printing costs.  X 4  X 4 ( `i106.` ` The Commission determined that the rule incorporating the terms "interLATA and  !}intraLATA" as well as "interstate and intrastate" contained in this Order on Reconsideration will  !not impose any additional requirements on IXCs. These terms were incorporated only to remove  !lpossible confusion or uncertainty as to the scope of our rules as pertaining to all jurisdictions.  !Likewise, the rule clarifying that IXCs must employ only one verification option will not impose  !Vany additional requirements on IXCs. Therefore, adoption of these rules should have little or no  !}economic impact on small entities. Because we conclude that adoption of these rules will cause  !little or no economic impact on small entities, we have identified no significant alternatives, nor were any offered by parties commenting on the IRFA.  X' 6.` ` Report to Congress  X4  X4 ( \j107.` ` The Commission shall send a copy of this FRFA, along with this Memorandum  !Opinion and Order on Reconsideration, in a report to Congress pursuant to the Small Business  !VRegulatory Enforcement Fairness Act of 1996, 5 U.S.C.  801(a)(1)(A). A copy of this FRFA will also be published in the Federal Register.  X4#Xj P߈XP##Xw PWXP#  X|'#Xj P߈XP#D. Initial Paperwork Reduction Act of 1995 Analysis  XN4 ( S k108.` ` This Further 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 comment on the information collections contained  !in this Further NPRM, as required by the Paperwork Reduction Act of 1995, Pub. L. No. 10413.  !3Public and agency comments are due at the same time as other comments on this Further NPRM;  !<OMB comments are due 60 days from date of publication of this Further 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;  X#4 !"(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#'' "#'1,')')qq9%"  X'E.Comment Filing Procedures  X4 ( l109.` ` 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, interested parties may file comments on or before  X4 !  [30 days from Federal Register publication] , and reply comments on or before [45 days from  X4 !kFederal Register publication] . To file formally in this proceeding, you must file an original and  !four copies of all comments, reply comments, and supporting comments. If you want each  !Commissioner to receive a personal copy of your comments, you must file an original and eleven  !copies. Comments and reply comments should be sent to Office of the Secretary, Federal  !ICommunications Commission, 1919 M Street, N.W., Room 222, Washington, D.C. 20554, with  !a copy to Cathy Seidel of the Common Carrier Bureau, 2025 M Street, N.W., Washington, D.C.  !20554. In addition, parties should file two copies of any such pleadings with the Formal  !'Complaints Branch, Enforcement Division, Common Carrier Bureau, Mail Stop 1600A1,  X 4 !#P/P##Xj P߈XP#Washington, D.C. 20554. Parties should also file one copy of any documents filed in this docket  !8with the Commission's copy contractor, International Transcription Services, Inc., 1231 20th Street, N.W., Washington, D.C. 20037.  Xy4 ( Om110.` ` Parties may also file informal comments or an exact copy of formal comments  !electronically via the Internet to http://gullfoss.fcc.gov/cgibin/comment/comment.hts, or via e !Vmail to slamming@comments.fcc.gov. Only one copy of electronicallyfiled comments must be  !submitted. Parties must put the docket number of this proceeding in the subject line if comments  !are sent via email (see the caption at the beginning of this Notice), or in the body of the text if  !by Internet. Parties must note whether an electronic submission is an exact copy of formal  !comments on the subject line. Parties also must include their full name and Postal Service mailing address in the electronic submission.  X4 ( `n111.` ` 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 along with their formal filings to the Office of  !}the Secretary, and to Cathy Seidel of the Common Carrier Bureau, 2025 M Street, N.W., Room  !6120, Washington, D.C. 20554. Such submission should be on 3.5 inch diskettes formatted in  !3an IBM compatible form using MS DOS 5.0 and WordPerfect 5.1 software. The diskettes should  !be submitted in "read only" mode. The diskettes should be clearly labelled with the party's name,  !proceeding, type of pleading (comment or reply comments), Docket or Rule Making number, and  !date of submission. The diskette should be accompanied by a cover letter. Comments and reply  !hcomments will be available for public inspection during regular business hours in the FCC  !Reference Center, 1919 M Street, N.W., Room 239, Washington, D.C. 20554. Electronically filed comments will be placed on the Commission's Internet server.  X#4 ( o112.` ` Written comments by the public on the proposed and/or modified information  Xh$4 !collections are due [30 days] from Federal Register publication. Written comments must be  !submitted by the Office of Management and Budget (OMB) on the proposed and/or modified  !linformation 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  !4collections contained herein should be submitted to Judy Boley, Federal Communications" (2,')')qq#&"  !Commission, Room 234, 1919 M Street, N.W., Washington, DC 20554, or via the Internet to  !jboley@fcc.gov, and to Timothy Fain, OMB Desk Officer, 10236 NEOB, 725 17th Street, N.W.,  X4Washington, DC 20503 or via the Internet to fain_t@al.eop.gov.  X'   X'_}VI. CONCLUSION Đc  Xv4 ( p113.` ` We seek comment on the foregoing issues regarding implementation of Section 258  !"of the 1996 Act and PCchange verification procedures to deter slamming as discussed herein.  !Any party disagreeing with our tentative conclusions should explain its position with specificity  !in terms of costs and benefits. We also reaffirm, with minor modifications, our verification  X 4procedures adopted in the 1995 Report and Order. #Xw PWXP#  X 4  X 4>#Xj P߈XP#VII. ORDERING CLAUSES ă  X 4 ( q114.` ` Accordingly, IT IS ORDERED that, pursuant to Sections 1, 4, 201205, 215, 218,  !I220 and 258 of the Communications Act of 1934, as amended, 47 U.S.C.  151, 154, 201205,  !215, 218, 220, and 258, the Petitions for Reconsideration of Allnet Communication Services, Inc.,  !AT&T Corporation, Frontier Communications International, Inc., MCI Telecommunications  !Corporation, National Association of Attorneys General, and Sprint Communications Company ARE GRANTED to the extent described herein and ARE DENIED in all other respects.  X4 (  r115.` ` IT IS FURTHER ORDERED that the Petition for Rule Making filed by MCI  !_Telecommunications Corporation on March 18, 1997, RM9085, and all responsive pleadings ARE INCORPORATED and made a part of the record of the captioned proceeding.  X4 ( K s116.` ` IT IS FURTHER ORDERED that the Petition for Clarification filed by the  !<Telecommunications Resellers Association, on December 11, 1995, in File No. ENF9405, and  ! all responsive pleadings, ARE INCORPORATED and made a part of the record of the captioned  X~4proceeding.  Xg4  XP4 ( t117.` ` IT IS FURTHER ORDERED that the Petition for Clarification of the  !}Telecommunications Resellers Association IS GRANTED to the extent described herein and IS DENIED in all other respects.  X4 ( u118.` ` IT IS FURTHER ORDERED that 47 C.F.R. Part 64 is amended as set forth in the Appendix B.  X!4 ( `v119.` ` IT IS FURTHER ORDERED that the policies, rules and requirements set forth in  !Mthis MEMORANDUM OPINION AND ORDER are effective one hundred fifty (150) days after  !publication in the Federal Register, except for the collections of information which are contingent upon approval by the Office of Management and Budget.  X<&4 ( w120.` ` IT IS FURTHER ORDERED that a FURTHER NOTICE OF PROPOSED RULE  !MAKING IS ISSUED, proposing the amendment of 47 C.F.R. Part 64 as set forth in the Appendix C."(3,')')qq0&"Ԍ X4 ( ԙx121.` ` IT IS FURTHER ORDERED that the Chief of the Common Carrier Bureau is  !delegated authority to require the submission of additional information, make further inquiries,  !and modify the dates and procedures if necessary to provide for a fuller record and a more efficient proceeding.  X4 ( y122.` ` IT IS FURTHER ORDERED that the Secretary shall send a copy of this  !FURTHER NOTICE OF PROPOSED RULE MAKING, including the Initial Regulatory  !Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration,  XH4 !/in accordance with paragraph 603(a) of the Regulatory Flexibility Act, 5 U.S.C.  601 et seq. (1981). ` `  ,hh]FEDERAL COMMUNICATIONS COMMISSION ` `  ,hh]William F. Caton  X{4` `  ,hh]Acting Secretary#Xw PWXP#"{4,')')qq"  S'}#p PP# #&a\  P6G;/&P#Appendix A   S'^  PARTIES FILING PETITIONS FOR RECONSIDERATION AND  S'JnRESPONSIVE PLEADINGS  S`'Q CC DOCKET NO. 94129 c  S' Petitioners  Allnet Communication Services, Inc. (Allnet) AT&T Corporation (AT&T) Frontier Communications International, Inc. (Frontier) MCI Telecommunications Corporation (MCI) National Association of Attorneys General (NAAG) Sprint Communications Company (Sprint)  S ' Parties Filing Responsive Pleadings Airtouch Communications (Airtouch) AT&T Corporation Competitive Telecommunications Association (CompTel) General Communication, Inc. (GCI) GTE Service Corporation (GTE) MCI Telecommunications Corporation Southwestern Bell Telephone Company (SWBT) Sprint Communications Company Telecommunications Resellers Association (TRA)  S'  PARTIES FILING PETITIONS FOR CLARIFICATION AND  RESPONSIVE PLEADINGS RELATING TO  S']mFILE NO. ENF9405 Đc  Sx' Petitioners  Telecommunications Resellers Association  S' Parties Filing Responsive Pleadings AT&T WATS International Corporation (WIC) Telecommunications Resellers Association  S8'  PARTIES FILING PETITIONS FOR RULEMAKING AND  S 'F1RESPONSIVE PLEADINGS   S!'c Petitioners  MCI Telecommunications Corporation""5,')')qq""  S'w APPENDIX B   S'h RULES AMENDED Đc  !Part 64 of the Commission's Rules and Regulations, Chapter I of Title 47 of the Code of Federal Regulations, is amended as follows:  S'1.The authority citation for Part 64 continues to read as follows:  SH ' x AUTHORITY: Sec. 4, 48 Stat. 1066, as amended; 47 U.S.C. 154, unless otherwise noted.  !5$Interpret or apply secs. 201, 218, 226, 228, 48 Stat. 1070, as amended, 1077; 47 U.S.C. 201, 218, 226,  S '228, unless otherwise noted.  S '2.Part 64, Subpart K, is amended by amending Section 64.1100(a) to read as follows:  SX'  64.1100 Verification of orders for long distance service generated by telemarketing. *****  x(a) The IXC has obtained the customer's written authorization in a form that meets the requirements of  64.1150; or *****  S'3.Part 64, Subpart K, is amended by amending Section 64.1150(e)(4) to read as follows:  S'  64.1150 Letter of Agency Form and Content *****  x(4) That the subscriber understands that only one interexchange carrier may be designated as the  !Dsubscriber's interstate or interLATA primary interexchange carrier for any one telephone number. To the  !"extent that a jurisdiction allows the selection of additional primary interexchange carriers (e.g., for  !pintrastate, intraLATA or international calling), the letter of agency must contain separate statements  !regarding those choices. Any carrier designated as a primary interexchange carrier must be the carrier  !directly setting the rates for the subscriber. One interexchange carrier can be both a subscriber's interstate  !8or interLATA primary interexchange carrier and a subscriber's intrastate or intraLATA primary interexchange carrier; and *****  SH$'4.Part 64, Subpart K, is amended by amending Section 64.1150(g) to read as follows:  S%'  64.1150 Letter of Agency Form and Content *****"'6,')')qq&"Ԍ S' ( ԙ(g)` ` If any portion of a letter of agency is translated into another language, then all portions  !of the letter of agency must be translated into that language. Every letter of agency must be translated  !into the same language as any promotional materials, oral descriptions or instructions provided with the letter of agency. ` `  ,hh]pp&  Xxx *****"87,')')qq"  S'y APPENDIX C   S'B PROPOSED RULE CHANGES   !cPart 64 of the Commission's Rules and Regulations, Chapter I of Title 47 of the Code of Federal Regulations, is proposed to be amended as follows: 1. The authority citation for Part 64 continues to read as follows:  Sp' x XAUTHORITY: Sec. 4, 48 Stat. 1066, as amended; 47 U.S.C. 154, unless otherwise noted.  x Interpret or apply secs. 201, 218, 226, 228, 258, 48 Stat. 1070, as amended, 1077; 47 U.S.C.  S '201, 218, 226, 228, 258, unless otherwise noted. (# 2. The title of Part 64, Subpart K, is proposed to be amended to read as follows:  SX'X Subpart K Verification of Changes in Telecommunications Service(#  S0'  !3. Part 64, Subpart K, is further proposed to be amended by modifying Section 64.1100 to read as follows:  S' X64.1100 Verification of orders for telecommunications service generated by telemarketing. (#  xJXNo telecommunications carrier shall submit a primary carrier change order generated by  xtelemarketing unless and until the order has first been confirmed in accordance with the following procedures:(#  xX(a) The telecommunications carrier has obtained the subscriber's written authorization in a form that meets the requirements of  64.1150; or(#  xX(b) The telecommunications carrier has obtained the subscriber's electronic authorization, placed  xfrom the telephone number(s) on which the primary carrier is to be changed, to submit the order  xcthat confirms the information required in paragraph (a) of this section to confirm the authorization.  xRTelecommunications carriers electing to confirm sales electronically shall establish one or more  x8tollfree telephone numbers exclusively for that purpose. Calls to the number(s) will connect a  xRsubscriber to a voice response unit, or similar mechanism that records the required information  xregarding the primary carrier change, including automatically recording the originating automatic numbering identification; or(#  xEX(c) An appropriately qualified independent third party operating in a location physically separate  x+from the telemarketing representative has obtained the subscriber's oral authorization to submit  x"the primary carrier change order that confirms and includes appropriate verification data (e.g., the subscriber's date of birth or social security number); or(#  x'X(d) Within three business days of the subscriber's request for a primary carrier change, the  x_telecommunications carrier must send the subscriber an information package by first class mail containing at least the following information concerning the requested change:(#"'8,')')qq&"Ԍ ( `ԙ` ` (1) An explanation that the information is being sent to confirm a telemarketing order placed by the subscriber within the previous week;(#` ` ` (2) The name of the subscriber's current carrier;(#` ` ` (3) The name of the newlyrequested carrier;(#` ` ` (4) A description of any terms, conditions, or charges that will be incurred;(#` ` ` (5) The name of the person ordering the change;(#`  ( ` ` (6) The name, address, and telephone number of both the subscriber and the soliciting carrier;(#`  (  ` ` (7) A postpaid postcard which the subscriber can use to deny, cancel or confirm a service order;(#`  ( =` ` (8) A clear statement that if the subscriber does not return the postcard the subscriber's  ( long distance service will be switched within 14 days after the date the information package was mailed by [name of soliciting carrier];(#`  ( ` ` (9) The name, address, and telephone number of a contact point at the Commission for consumer complaints; and(#`  ( ` ` (10) Carriers must wait 14 days after the form is mailed to subscribers before submitting  ( their primary carrier change orders. If subscribers have cancelled their orders during the waiting period, carriers cannot submit the subscribers' orders.(#`  !4. Part 64, Subpart K, is further proposed to be amended by modifying Section 64.1150 to read as follows:  S' X64.1150 Letter of agency form and content. (#  xlX(a) A telecommunications carrier relying on a written authorization for a primary carrier change  xmust obtain a letter of agency as specified in this section. Any letter of agency that does not conform with this section is invalid.(#  xIX(b) The letter of agency shall be a separate document (or an easily separable document) containing  xEonly the authorizing language described in paragraph (e) of this section having the sole purpose  xof authorizing a telecommunications carrier to initiate a primary carrier change. The letter of  xagency must be signed and dated by the subscriber to the telephone line(s) requesting the primary carrier change.(#  xRX(c) The letter of agency shall not be combined on the same document with inducements of any kind.(#  xX(d) Notwithstanding paragraphs (b) and (c) of this section, the letter of agency may be combined  x8with checks that contain only the required letter of agency language as prescribed in paragraph  x(e) of this section and the necessary information to make the check a negotiable instrument. The  x4letter of agency check shall not contain any promotional language or material. The letter of  xRagency check shall contain in easily readable, boldface type on the front of the check, a notice  xthat the consumer is authorizing a primary carrier change by signing the check. The letter of agency language shall be placed near the signature line on the back of the check.(#  xX(e) At a minimum, the letter of agency must be printed with a type of sufficient size and readable type to be clearly legible and must contain clear and unambiguous language that confirms:(# "'9,')')qq=&"Ԍ x+X(1) The subscriber's billing name and address and each telephone number to be covered by the primary carrier change order;(#  xX(2) The decision to change the primary carrier from the current telecommunications carrier to the soliciting telecommunications carrier;(#  xIX(3) That the subscriber designates [name of submitting carrier] to act as the subscriber's agent for the primary carrier change;(#  xX(4) That the subscriber understands that only one telecommunications carrier may be designated  xEas the subscriber's interstate or interLATA primary interexchange carrier for any one telephone  xnumber. To the extent that a jurisdiction allows the selection of additional primary interexchange  xcarriers (e.g., for intrastate, intraLATA or international calling), the letter of agency must contain  xhseparate statements regarding those choices. One telecommunications carrier can be both a  x+subscriber's interstate or interLATA primary interexchange carrier and a subscriber's intrastate or intraLATA primary interexchange carrier; and(#  x<X(5) That the subscriber understands that any primary carrier selection the subscriber chooses may involve a charge to the subscriber for changing the subscriber's primary carrier.(#  xRX(f) Any carrier designated in a letter of agency as a primary carrier must be the carrier directly setting the rates for the subscriber. (#  xEX(g) Letters of agency shall not suggest or require that a subscriber take some action in order to retain the subscriber's current telecommunications carrier.(#  xX(h) If any portion of a letter of agency is translated into another language then all portions of the  xletter of agency must be translated into that language. Every letter of agency must be translated  xinto the same language as any promotional materials, oral descriptions or instructions provided  Sx'with the letter of agency. (#  !Z5. Part 64, Subpart K, is proposed to be amended by adding Sections 64.1160 and 64.1170 to read as follows:  S'X  64.1160 Changes in Subscriber Carrier Selections (#  xX(a) Prohibition. No telecommunications carrier shall submit or execute a change in a subscriber's  xselection of a provider of telecommunications service except in accordance with the verification  xpprocedures prescribed in this Subpart. Nothing in this section shall preclude any State commission from enforcing these procedures with respect to intrastate services.(#  xX(1) Where the submitting carrier submits a verification that fails to comply with  64.1160(a), the  xexecuting carrier will be liable where there has been some wrongdoing or malfeasance on the part  xof the executing carrier; otherwise the submitting carrier will be solely liable for violating  64.1160(a).(#  x X(2) Where the submitting carrier has complied with  64.1160(a), but the executing carrier  xpexecutes the change inconsistent with the subscriber carrier change selection, the executing carrier"':,')')qq=&" will be solely liable for violating  64.1160(a).(#  xEX(3) When a dispute arises between the submitting and executing carriers regarding liability, the  x[carriers must pursue private settlement negotiations prior to requesting that the Commission institute proceedings to resolve any such dispute.(#  xX(b) Carrier Liability for Charges. Any telecommunications carrier that violates the verification  xprocedures prescribed by the Commission and that collects charges for telecommunications service  xfrom a subscriber shall be liable to the subscriber's properly authorized carrier in an amount equal  xto all charges paid by such subscriber after such violation. The remedies provided by this subsection are in addition to any other remedies available by law.(# X (#  S '  64.1170 Reimbursement Procedures  S '  xX(a) Upon receiving notification from the subscriber that the subscriber's carrier selection was  x<changed without authorization, the properly authorized carrier must, within ten days, request from the unauthorized carrier the following:(# X(1) An amount equal to the charges paid by the subscriber to the unauthorized carrier; and,(#  xX(2) An amount equal to the value of any premiums to which the subscriber would have been entitled if the subscriber's selection had not been changed.(#  xyXWhere a subscriber notifies the unauthorized carrier, rather than the properly authorized carrier,  xof an unauthorized subscriber carrier selection change, the unauthorized carrier must, within ten days, notify the properly authorized carrier.(#  xX(b) Upon notification of a violation of  64.1160(a), the unauthorized carrier must remit to the  xaffected subscriber's properly authorized carrier the total charges collected from the subscriber and  x8the value of any premiums to which the subscriber would have been entitled if the subscriber's selection had not been changed.(#  x8X(c) Restoration of Premium Programs. Upon receiving from the unauthorized carrier the value  x+of premiums to which the subscriber would have been entitled if the subscriber's selection had  xRnot been changed, the properly authorized carrier must provide or restore to the subscriber any  xypremiums to which the subscriber would have been entitled if the subscriber's selection had not  x+been changed. Where a particular premium cannot be restored, the properly authorized carrier  xmay substitute an equivalent premium or dollar amount as reasonably determined by the properly authorized carrier.(#  xVX(d) Dispute Resolution. Carriers must pursue private settlement negotiations regarding the transfer  xIof charges and the value of lost premiums from the unauthorized carrier to the properly authorized  xcarrier prior to requesting that the Commission institute proceedings to resolve any dispute regarding such transfer of charges and the value of lost premiums.(#   X%4#Xj\  P6G;߈XP#