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FCC and United States, 117 F.3d 555 (D.C. Cir. 1997).  (Payphone Compensation  yO-Order).   X -  9.` ` Branding requirements that the Commission adopted in response to TOCSIA   currently require an OSP to "[i]dentify itself, audibly and distinctly, to the consumer at the  Xy-  beginning of each telephone call and before the consumer incurs any charge for the call."XyW yO -  1. 1. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a)Í 47 C.F.R.  64.703(a)(1); see Policy and Rules Concerning Operator Service Providers, 6 FCC Rcd at 2756 yO -  i57. In this connection, under our rules, OSPs also must identify themselves to both parties of a collect call.  47 C.F.R.  64.708(d) (definition of consumer includes both parties to a collect call). This   identification is intended to notify consumers of the identity of the presubscribed OSP before they  XK-  purchase service from that OSP.0 KW yO$-   1. 1. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a)ÍSee Policies and Rules Concerning Operator Service Providers, 5 FCC Rcd 4630, 463132 (1990) (citing  yO%-TRAC Order, supra, 4 FCC Rcd at 2159).0 Consumer education initiatives by the industry, government,   jand the media appear to have helped produce a favorable downward trend over recent years in"4P ,-(-(ZZH"   the number of complaints received by the Commission about high OSP rates. Nevertheless, more   Kthan five years after enactment of TOCSIA, the high rates of many OSPs and surcharges imposed  X-  jby aggregators continue to be a concern.$!@W yOK- ԍSee, e.g., Letter from Honorable Strom Thurmond to Reed E. Hundt (February 12, 1996), File No. IC96  00963 (urging prompt FCC action to protect the American public from excessive rates charged by some OSPs); letter   from Honorable John Edward Porter to Reed E. Hundt (February 9, 1996), File No. IC9600866 (inquiring about   constituent concerns over high rates charged by Oncor Communications, Inc.). Some OSPs charge up to 10 times  yOk-  ,the AT&T rate. Penny Loeb, Watch that Pay Phone or Risk Getting Charged Far Above the Usual Rate for Long yO3-  =distance Calls, U.S. News & World Rep., June 26, 1995, at 60, available in 1995 WL 3114002. See also Don  yO-  Oldenburg, Long Di$tance; PayPhone Charges Can Burn the Unwary, Wash. Post, June 8, 1995, at D05, available  yO -in 1995 WL 2097640. $ In 1995, the second largest category of complaints   -processed by the Commission's Common Carrier Bureau consisted of complaints directed against   OSPs, and the vast majority of these concerned rates and charges that consumers thought were  X-  \excessive.""XW yO- ԍThe Bureau processed 4,487 written OSP complaints in 1995. This represented 17.6% of the total   complaints processed. Common Carrier Scorecard, Federal Communications Commission, Fall 1996 edition, at 1415. " In 1996, the Commission processed 4,132 written complaints about the level of  Xv-  /interstate rates and services of OSPs. #v W yO- ԍCommon Carrier Scorecard, Federal Communications Commission, Dec. 1997 edition, at 22. This represented 11.87% of total complaints processed in 1996. Accordingly, we examine in the next sections what additional steps we can and should take to foster greater competition by OSPs.   X -  III. ADDITIONAL ORAL BRANDING ă  X -A.Background  X -   10.` ` In our OSP Reform Notice, we sought comment on the benefits and costs   associated with imposing a pricedisclosure requirement on all 0+ calls. We noted that while   consumers generally are informed about the prices that they will be charged for the individual   1+ calls that they make from their homes, they may not be aware that 0+ calls from outside the   home may be more expensive than such 1+ calls. We asked commenters to evaluate whether the   benefits of requiring disclosure of the price for each 0+ call before a call is completed, including   calls priced at levels that consumers expect, would exceed the costs of such disclosure. We   indicated that such a requirement would further a procompetitive, proconsumer environment and obviate Commission regulation of particular nondominant carriers' prices.  X-B.Comments  X-   11.` ` Many commenters agree with our observation that the problem of consumers often   being billed charges much higher than expected stems from a lack of adequate information for"H #,-(-(ZZ"  X-  1callers to make an informed choice.g$W yOy-ԍSee OSP Reform Notice, 11 FCC Rcd at 7282.g Several commenters attribute this problem to a   misconception among many consumers that if they use a LEC calling card to charge the call, the   ?call will be handled by that LEC or at least at rates comparable to those charged by their  X-  residential or business presubscribed carrier or the LEC's rates.m%XW yO- 1. 1. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a)Í Id.m In fact, these calls are typically   [billed at the presubscribed OSP's rates and the aggregator's surcharge. Consumers, relying on   their mistaken impression, however, do not discover their error until they receive bills for their calls some time later.  X_-  XH-   12.` ` The commenters disagree on whether a new price disclosure rule would be in the  X1-  [public interest.U&1W yO -ԍSee Appendix C at paras. 123.U Several commenters contend that a universal rate disclosure requirement will   Monly operate to increase the price of 0+ calls and burden an entire industry with additional,   xunnecessary costs. Some argue that to the extent that current rules may be insufficient to protect   consumers, the challenge is primarily in the area of consumer education. Others contend that a   juniversal rate requirement will distress consumers that expect a payphone call to be connected   quickly without unnecessary delay. One commenter states that it has no current technology in place to quote rates and that there is no mechanized system for realtime quotation for 0+ calls.  Xy-  P 13.` ` Other commenters assert that the Commission's proposal to impose a requirement   on all OSPs to disclose orally their rates to consumers when a call is placed could immediately   jaddress many of the concerns prompting the consideration of BPP and at a much lower cost to   jconsumers and carriers. CompTel proposes that, before a customer may incur any charges for   lany interstate 0+calls from an aggregator location, the presubscribed carrier serving that   aggregator phone be required to provide an audible disclosure immediately after its carrier brand.   Such disclosure would inform the customer how to obtain a rate quote without having to redial   a second number. A number of state commissions and the Attorneys General support adoption   .of rules requiring universal rate disclosure to the paying party, believing that option would be   administratively simpler, more informative, and fairer than a benchmark system, and lead to more competitive pricing.  X|-  Xe-C.Discussion   X7-   14.` ` Insofar as ultimate consumers are concerned, we disagree with suggestions that the   ZCommission should adopt regulations requiring OSPs to provide consumers with less, rather than   more, information about the prices of their services and any related per call surcharge that an   OSP permits in order to be selected by an aggregator to be its PIC. As noted previously, OSPs   <generally compete to receive 0+ traffic by offering commissions to payphone or premises owners,   or allowing surcharges to be placed, on all 0+ calls from a public phone in exchange for being" x&,-(-(ZZ"  X-  chosen by the premises owners as the PIC serving their phones at that aggregator location.'XW yOy- ԍOur Payphone Compensation Order, requiring providers of payphones at aggregator locations to be   compensated for dialaround calls, should serve to alleviate, if not eliminate, any need for OSPs to pay high  yO -commissions or to permit high aggregator surcharges. See supra note 30. The   KNorth Dakota Commission, Sprint, and other commenters correctly note that competition between   OSPs in this segment of the market for aggregator customers historically has driven prices to  X-  consumers up, rather than down, in order to finance such commissions and gain 0+ business.E(W yOT- ԍSee Letter from Susan E. Wefald, President, Bruce Hagen, Commissioner, and Leo M. Reinbold,  yO -  Commissioner, to Secretary, Federal Communications Commission (July 3, 1996); Sprint Comments at 9; Florida   ,Commission Comments at 8 ("competition exists among OSPs to serve payphone owners, not to serve end users");  yO -  Daniel Pearl, Costly Talk: Why PayPhone Calls Can Get So Expensive And Spark Complaints, Some LongDistance  yOt -  Carriers Reward Shops to Sign Up and Then Soak Callers, Wall St. J., May 30, 1995, at A1, available in  1995 WL yO< -WSJ 8715335 ("[c]ompetition over pay phones has made prices soar"). E  X-  Q15.` ` We cannot find that existing measures that are designed to protect consumers   against excessive prices for 0+ payphone calls are adequate. Although current statutory dial X_-  jaround, branding and posting requirements,D)_` W yOp-ԍ47 U.S.C.  226.D the Commission's implementing rules,O*_ W yO-ԍ47 C.F.R.  64.703708.O industry  XH-  yprint, radio and television advertisements,+XH W yOy- kԍSee, e.g.  , Daniel Pearl, Costly Talk: Why PayPhone Calls Can Get So Expensive and Spark Complaints,  yOA-  Ysupra, Wall St. J., May 30, 1995, at A6. (AT&T and MCI commercials urge callers to dial their special 800 numbers  yO -when making collect calls).Ĭ other industry, governmental and media consumer  X1-  education initiatives,, 1W yO- 0ԍSee, e.g., "Public Phone Users Beware," Consumer News, Federal Communications Commission (June  yOJ-  1996); Common Carrier Scorecard, Federal Communications Commission , Fall 1996 edition at 1415; Jane Adler,  yO-  Dialing Up for Dollars: Biz Owners Say Beware of Pay Phone Scams, Crain's Chi. Bus., July 18, 1994, at 23,  yO-available in 1994 WL 3009472. marketplace competition, and the Commission's complaint and enforcement   procedures provide important assistance to consumers, the large number of complaints concerning   OSP rates we continue to receive indicates that these measures are not sufficient. Accordingly,   Lwe disagree with those commenters who contend that no additional rules are necessary at this  X -  Ntime.-x W yO!- ԍAny complainant alleging that a nondominant carrier's rates are unreasonably high in violation of Section   201(b) has a heavy burden to overcome the presumption of lawfulness of rates of nondominant carriers and that a  yO"-  hcarrier without market power cannot long survive if it sets its rates at a supracompetitive level. See Policy and Rules  yOf#-  Concerning Rates for Competitive Common Carrier Services and Facilities Authorizations, First Report and Order,   CC Docket No. 79252, 85 FCC 2d 1 (1981) (applying current regulatory procedures to nondominant carriers   ximposes unnecessary and counterproductive regulatory constraints upon a marketplace that can satisfy consumer  yO%-demand without government intervention). IJ As the New York State Consumer Protection Board (NYSCPB) observed, current   -branding and posting requirements are insufficient notification to prevent consumer surprise and" -,-(-(ZZ "   Kdissatisfaction because they provide no indication of what consumers will be charged for 0+ calls  X-  from an aggregator site.M.XW yOb- ԍNYSCPB Comments at 3,7. Unless otherwise indicated, all citations to comments and reply comments of   ;record in this proceeding are to comments or reply comments filed, or which were due to be filed, on July 17, 1996, and August 16, 1996, respectively.M We agree with its view that the high rate of complaints and inquiries,   at both the federal and state levels, regarding excessive OSP charges demonstrates that stronger  X-  .consumer safeguards are needed.A/W yOT-ԍId. at 4. A Some commenters rely on the Commission's findings and  X-  conclusions in its Final TOCSIA Report to support their claims that the market is sufficiently   .competitive and that all that is needed are targeted ad hoc enforcement proceedings or further  Xv-  Lconsumer educational initiatives, not new rules.0vxW yO -ԍSee, e.g., US WEST Reply Comments, filed December 3, 1996, at 2. ĉ The Commission there found that informed   Mconsumer choice "is the best means of ensuring that the rates consumers pay for interstate  XH-  operator service calls are just and reasonable."1HW yO- ԍFinal Report of the Federal Communications Commission, pursuant to the Telephone Operator Consumer  yO-Services Improvement Avt of 1990, November 13, 1992, Final TOCSIA Report at 2. We concluded that, especially because of the   Zavailability and growing use of the dialaround option by consumers, market forces were securing  X -  rates for consumers that, "overall, are just and reasonable."2 ` W yO+- {ԍId. at 32. As required by TOCSIA, the Commission there concluded a "rate compliance" proceeding,  yO-which it had initiated as Phase II of CC Docket No. 90313. Id. at 1. Accordingly, we found that   \"conditions in the operator services marketplace are such that we need not initiate a further  X -  Zproceeding to prescribe regulations concerning rates for operator services at this time."Z3 W yOU-ԍId. at 2 (emphasis added). Z Despite   <these conclusions regarding the operator services marketplace as a whole, the Commission noted   that some OSPs "still charge rates that are substantially above the industry mean and these rates  X -may warrant further action by the Commission."b4 H W yO-ԍId. at 3 (footnote omitted).hh,b  Xy-  %16.` ` Based on our experience following release of the Final TOCSIA Report, we   conclude that, although many OSPs compete for the business of aggregators, such competition   in this segment of the interstate, domestic interexchange market has not ensured that OSP charges   and aggregator surcharges are not excessive insofar as ultimate consumers are concerned. Indeed,   yACTEL, a payphone service provider (PSP) and OSP operating throughout New Jersey, readily   conceded, that in the absence of adequate compensation for all dialaround and tollfree subscriber   800 and 888 calls, the rates for operatorassisted calls placed from its public pay telephones have" 4,-(-(ZZ "  X-  been "too high."p5XW yOy- zԍACTEL response, received July 8, 1996, at 3 . See Payphone Compensation Order, supra, 11 FCC Rcd at  yOA-   20549 n.35 (Term "Subscriber 800 calls" includes other sequences of numbers that FCC may deem in future the equivalent, such as 888).p Also, additional consumer educational initiatives, while necessary and   appropriate to further consumers' awareness of their options and enable them to make an   informed or better informed choice, have proven insufficient, and are unlikely to be sufficient,   in and of themselves, to protect thousands of consumers who have not availed themselves of dial  around options. Nor has our overall experience with targeted ad hoc rate proceedings proven to   be an efficient and effective means of ensuring just and reasonable charges in the OSP marketplace.  XH-  o17.` ` Under the rules adopted herein, before a 0+ interstate, domestic, interexchange   call from an aggregator location may be connected by an OSP, the OSP must orally advise the   .caller how to proceed to receive a rate quote, such as by pressing the # key or some other key  X -  .or keys, but no more than two, or by simply staying on the line.E6 W yO- ԍWe are not aware of any technical reason why more than a one or twodigit keypad entry would be  yOd-  ynecessary. See ex parte letter from Steven A. Augustino, counsel for CompTel, to William F. Caton, Acting   Secretary, Federal Communications Commission (April 4, 1997) at page 1; ex parte letter from Mason Harris,   YPresident, Robin Technologies, Inc., to Paul F. Gallant, Legal Advisor to Commissioner Tristani (January 22, 1998) at page 2.E This message must precede   yany further oral information advising the caller what to do to complete the call, such as to enter   the caller's calling card number. Thus, under our rule, OSPs may require affirmative action by   kthe consumer in order to receive a rate quote. The rule applies to all calls from payphone or   other aggregator locations, including those from storeandforward payphones or "smart"   jtelephones. Potential OSP customers, after hearing an OSP's message, may waive their right to   obtain specific rate quotes for the call they wish to make by choosing not to press the key  Xb-  [specified in the OSP's message to receive such information or by hanging up.7 bW yO- ԍCallers, of course, would also avoid the delay due to disclosure rules regarding prices when calling via an  Xs-  access code rather than making a 0+ call.#Xj\  P6G;ynXP# #X\  P6G;ɒP#The new disclosure requirement is not applicable when a caller dials  Jaround the presubscribed OSP by dialing another carrier's 800, 10XXX, or similar identification or access code. The  yO$-  requirement also is inapplicable to calls to local and long distance operators, i.e.,0 and 00 calls, where callers who wish to make interstate calls already have the opportunity to obtain rate quotes. Therefore, it is   quite unlikely that all calls would entail costs associated with the intervention of a live operator.   Further, the additional time for consumers to make 0+ calls and for OSPs' call setup process for   Msuch calls should not be significant, given the brief language that OSPs are required to add   .following their audible identification brand. Just as now, consumers may bypass their right to   <receive rate quotes by proceeding to enter their credit card number. And OSPs may proceed with   call setup at the same time that the oral message required by our rules is being delivered. Of   course, as currently mandated by TOCSIA and our rules, OSPs must continue to afford   consumers a reasonable opportunity to terminate the telephone call at no charge before the call" i 7,-(-(ZZ4"  X-  zis connected.8W yOy- jԍ47 C.F.R.  64.703(a)(2) (OSPs "shall . . . permit the consumer to terminate the telephone call at no charge before the call is connected."). OSPs may proceed with call setup whether they require callers either to act   jaffirmatively to receive rate quotes or merely to remain on the line to receive such quotes. We   conclude that the information disclosure requirements adopted herein are sufficient to enable   Lconsumers to make informed business decisions in the marketplace. Such disclosure also is in  X-  accord with the dual purpose and policy objectives of TOCSIA, i.e., (1) "[protecting] consumers   Lfrom unfair and deceptive practices relating to their use of operator services to place interstate   telephone calls;" and (2) providing sufficient information to "ensure that consumers have the  X_-  [opportunity to make informed choices in making such calls."o9_ W yO0 -ԍ47 U.S.C.  226(d)(1);  see  226(d)(1)(A).o This disclosure requirement will   better ensure that consumers do not unintentionally use carriers that charge unexpectedly high   rates for interstate calls, or use such carriers only because they are unaware that they have other   Loptions. We conclude that the rules adopted herein will serve to place downward pressure on   \prices charged in excess of competitive rates, and could save consumers part, if not all, of a  X -previously estimated quarter of a billion dollars per year.: W yOM- ÍSee OSP Reform Notice, 11 FCC Rcd at 729394 (commenters have estimated that prices in excess of competitive rates cost consumers approximately a quarter of a billion dollars per year).  X -  18.` ` The proper allocation of resources in our free enterprise system requires that  X -  consumer decisions be intelligent and well informed.; W yO`-ԍVirginia State Bd. of Pharmacy v. Virginia Citizens Consumer Council, Inc., 425 U.S. 748,765(1976). In a competitive market, people will tend   to search for the cheapest product or service when other factors are comparable. Accurate price   information at the point of purchase is therefore important for commercial choices in a market   .economy. Especially, as here, when an OSP may not have established longterm relationships   /with potential customers, the absence of price information at the point of purchase inhibits   Kcompetition from driving prices down and requires consumers, provided that they are so inclined,   to spend more time to find the best or a lower price. OSP and aggregator practices that are   designed to keep, or have the effect of keeping, callers ignorant of all applicable charges for a   k0+ call from that particular aggregator location facilitates undue manipulation of consumers' choices in this segment of the interstate, domestic interexchange market.  X-  @19.` ` We agree with the assessments of the Attorneys General and other commenters that   =rules requiring universal rate disclosure to the paying party would be administratively simpler,   more informative, and fairer than our benchmark proposal and that "a complete and accurate   {universal rate disclosure requirement will increase consumer awareness and lead to more  XN-  Mcompetitive pricing."]<NW yO%-ԍAttorneys General Comments at 8.] In further implementation of our responsibilities under TOCSIA "to   zensure that consumers have the opportunity to make informed choices in making [interstate"7 ( <,-(-(ZZ"  X-  operator services telephone] calls,"S=W yOy-Í47 U.S.C.  226(d)(1)(B).S we shall require all OSPs to make additional oral disclosure   at the point of purchase of 0+ calls. This will better enable consumers to be aware of, and have   the option of, exercising their legal rights. We believe consumers need to have sufficient   jinformation, prior to being charged for an interstate call, to be fully aware of their right to know   Lthe cost of a 0+ call, including any applicable PIF or aggregator surcharge, and of their right to   obtain rate quotes of the applicable OSP charges for the initial rate period and each subsequent   rate period. Consistent with the intent of Congress when it enacted TOCSIA, we conclude that   the price quoted for the call must include either the cost of the specific applicable surcharge, or  XH-  the maximum surcharge that could be billed at that aggregator location.{>HXW yOQ - ԍSee H.R. Rep. No. 101213, 101st Cong., 1st Sess. 14 (1992) (OSPs can meet filing requirement to specify   aggregator surcharges by filing the range of surcharges collected on behalf of call aggregators). Unlike aggregator   surcharges, which Congress allowed OSPs to express as a range in their information tariffs, OSPs' own charges must  yO -  be specifically disclosed in their informational tariffs. See Policies and Rules Concerning Operator Service Providers, 6 FCC Rcd at 2757.{ We believe that these   additional upfront oral disclosures will prove to be a more effective and efficient means of   jproviding consumers the information they need to make fully informed decisions regarding the   @choice of an OSP than (a) various other messages that have been proposed by some  X -  Kcommentatorsj? W yO-ԍSee OSP Reform Notice, 11 FCC Rcd at 729193.j or (b) requiring carriers that are not bound by our accounting and cost allocation rules to file cost data in support of their charges.  X -  20.` ` Several commenters, including Sprint, oppose adoption of a universal prior price   disclosure requirement to address the problem of high OSP charges and related PIFs. These   commenters maintain that such a requirement will lead to increased costs and delayed call  Xb-  completion.@bW yO- ԍSprint Reply Comments, filed December 3, 1996, at 1; see, e,g., Reply Comments, filed December 3, 1996, of APCC, AT&T, CCOS, Intellicall, and Pacific Telesis. Sprint continues to maintain that "the only way to mitigate, if not eliminate, the  XK-  market power of premises owners is to require the implementation of [BPP]."iAK W yO-ԍSprint Reply Comments, filed December 3, 1996, at 5 n.2.i No one has   denied, however, that to implement BPP would entail a considerable period of time and even   \greater costs. The cost of implementing BPP has been estimated at around a billion dollars,   ywhereas the estimated costs of implementing the oral disclosure requirement are much less and  X-  will accomplish many of the same objectives.B W {O #- {ԍAs CompTel notes, the approach that we adopt herein is simple, direct and less costly than BPP. See CompTel Comments filed November 13,1996 at 25. Insofar as delayed call completion is concerned,   <the California Commission has concluded, on the basis of its experience from its 900 proceedings,  X-  |that "price disclosure prior to call completion will not create an unacceptable delay to"B,-(-(ZZ"  X-  Zconsumers."CW yOy-ԍCalifornia Commission Comments, filed November 13, 1996, at 5 (emphasis in original). Pacific Telesis disagrees with the California Commission, contending that, because   900 rates are postalized and the disclosure is on the terminating line of the call, "the disclosures  X-  involved are so dissimilar as to be irrelevant."oDXW yO-ԍPacific Telesis Reply Comments, filed December 3, 1996, at 3. o Pacific Telesis does not explain, however, why   the disclosure apparatus for 0+ calls from a particular aggregator site could not be sited on a   particular originating, rather than terminating, number or line. It also fails to take into account   that, as market segments become more competitive, current industry trends are toward postalized  Xv-  .or flat rates, irrespective of such factors as mileage, time of day, and other specifics of a call.iEvW yO - ԍMark Rockwell, GTE Introduces Flatrate Pricing, Communications Week, Feb. 3, 1997, at T33, available  yO -  ,in  1997 WL 7691446 (GTE rolled out a flatrate longdistance calling plan for consumers, to complement its flat yO -  rate plan for businesses); How to Keep 'Em on the Loop, Telemedia News & Views, Apr. 1, 1996 (A rouster of   "low fare" longdistance carriers, led by Sprint Long Distance and several second tier carriers offering "postalized"  yO/-  flat $0.10a minute rates); Telco Communications Adding Internet to Commercial Long Distance, M2 Presswire, Dec.  yO-  10, 1996, available in 1996 WL 14655722 (Prime Business Select II offers one simple flat rate for both intrastate  yO-  and interstate calls); Sprint, MCI Announce New LongDistance Plan, Orlando Sentinel, Jan. 7, 1995, at C10,  yO-  Zavailable in 1995 WL 6401982 (Sprint offering flat rates for residential longdistance calls); Kevin Petrie, Small  yOO-Competitors Roll Out Flatrate Phone Plans, Denv. Bus. J., Nov. 24, 1995, at 4, available in 1995 WL 11627775.i  XH-  21.` ` Further, requiring OSPs to disclose price information about their services does not   infringe on their First Amendment commercial speech rights. The United States Supreme Court   <has stated that when the government "regulates commercial messages to protect consumers from   Mmisleading, deceptive, or aggressive sales practices, or requires the disclosure of beneficial   consumer information, the purpose of its regulation is consistent with the reasons for according  X -  constitutional protection to commercial speech and therefore justifies less than strict review."F W yO>-ԍ44 Liquormart, Inc. v. Rhode Island, 116 S. Ct. 1495, 1506 (1996).  đ In commercial speech cases, the Supreme Court has used a fourprong analysis:   f` ` At the outset, we must determine whether the expression is   )protected by the First Amendment. For commercial speech to   scome within that provision, it at least must concern lawful activity   and not be misleading. Next, we ask whether the asserted   governmental interest is substantial. If both inquires yield positive   uanswers, we must determine whether the regulation directly   advances the governmental interest asserted, and whether it is not  X-more extensive than is necessary to serve that interest.GH W yO#-ԍId. citing Central Hudson Gas & Elec. Corp. v. Public Serv. Comm'n of N.Y., 447 U.S. 557, 566 (1980).x` "G,-(-(ZZ"Ԍ X-  ~22.` ` Requiring OSPs to disclose the price of a 0+ call does not compel them to make  X-  [misleading or confusing commercial speech, contrary to a commenter's suggestion,cHW yOb-ԍSee AMNEX Comments at 89 n.22. c and does   not contravene their First Amendment rights. The Commission previously has imposed a similar  X-  requirement to disclose rates on providers of 900 service.IXW yO-ԍPolicies and Rules Concerning Interstate 900 Telecommunications Services, 6 FCC Rcd 6166 (1991). No common carriers, including OSPs,   kmay lawfully provide interstate telecommunications service, except at rates that are just and  X-  xreasonable.J W yO& - ԍ47 U.S.C.  201(b) provides that "[a]ll charges, practices, classifications, and regulations for and in   iconnection with [interstate or foreign communication by wire or radio common carrier] service, shall be just and   [reasonable, and any such charge, practice, classification, or regulation that is unjust or unreasonable is hereby declared to be unlawful . . . . " Assuming, arguendo, that an OSP's charges and any applicable PIF associated with   =an interstate 0+ call are neither unreasonable nor misleading, then a governmental requirement  X_-  that the OSP must disclose such charges at the point of purchase, i.e., mandating commercial   speech that is not misleading concerning lawful activity, is not inconsistent with the first part of the fourprong analysis.   X -  o23.` ` With respect to the second prong of the analysis, the rules adopted herein will  X -  directly advance a substantial governmental interest, i.e., protecting consumers from unfair and   deceptive practices or possible rate gouging. We have received thousands of complaints annually   over the past several years, directly from consumers, or from Congressional offices, alleging that   /callers from payphone and other aggregator locations have been billed excessive rates and   >charges. These represent the third largest category of complaints that our Common Carrier   ZBureau has processed over recent years. With respect to the third prong of the analysis, our new   rules are tailored to advance directly "the asserted governmental interest" in this proceeding and   are not more extensive than what we believe is necessary to serve that interest. For example, we   do not require OSPs automatically to disclose the rate for every call. Instead, we require such   disclosure only upon affirmative request of the caller. Indeed, we believe other regulatory   .alternatives we have considered would not advance as well our goals of fostering a more fully   competitive OSP marketplace and ensuring that awayfromhome callers have sufficient   information at the point of purchase to make an informed decision whether or not to place a call   through a particular OSP. Such alternative regulatory options we considered include: mandating   BPP; prohibiting PIFs; conducting a rulemaking to prescribe appropriate accounting, cost   jallocation, and cost support rules with respect to charges of nondominant carriers; prescribing   caps on charges of OSPs and aggregators; establishing benchmark rates; and engaging in other   jprice regulation of nondominant carriers' retail charges. As we discussed above, each of these   options would have been more burdensome, and possibly less effective, than what is necessary to serve the public interest.  X -  24.` ` MCI erroneously maintains that OSPs should not be required to include PIFs in   any rate disclosure required by Commission rule because PIFs are not part of the carrier's tariffed"J,-(-(ZZ<"  X-  rate.CKW yOy-ԍMCI Comments at 4.C To the contrary, all OSPs, including MCI or its OSP affiliate, are required currently under  X-  =TOCSIA to include PIFs in their Section 226 informational tariffs.LXW yO- zԍ 47 U.S.C.  226(h)(1)(A). (Every OSP informational tariff must include any surcharges and fees collected from consumers). Only PIFs that an OSP has   specified or permitted in its PIC agreement with a particular aggregator must be reflected in such   .tariffs. Our information disclosure rules similarly require a nondominant OSP to disclose only   Ksuch aggregator surcharges and PIFs, if any, that it has permitted in the applicable PIC agreement with an aggregator.  X_-  25.` ` The rules adopted herein provide OSPs and potential OSP competitors a level   playing field in that they apply equally to all OSPs and, unlike benchmark proposals based on  X1-  the rates of AT&T, MCI, and Sprint, do not establish two classes of OSP competitors (i.e., "the   iBig Three" and all smaller carriers). Accordingly, we need not address contentions that proposed   benchmark policies and rules based on such classes are arbitrary, discriminatory and, if adopted,   would deny smaller carriers "equal protection" of the law in contravention of their Fifth  X -Amendment rights.vM W yO6-ԍSee, e.g., AMNEX Comments at 3; CompTel comments at 14. v  X -  B26.` ` We are cognizant of the remarks of those who have commented that exact rate   disclosure is technically infeasible to implement for storeandforward payphones, and would  Xy-  <necessitate the forced retirement of existing equipment.Ny@W yOj- zԍSee, e.g., Joint Reply Comments of Intellicall and NOSI at 18. A storeandforward or "smart" payphone is essentially an automated operator system contained in the payphone itself.  Other commenters, such as GTE, assert   that, while it may be possible to enhance mechanized equipment to quote exact rates prior to the   call, this likely would require significant capital outlays and take several years lead time to   accomplish. In our 1991 order implementing TOCSIA, we stated that, "with regard to automated   technology only, the provision of rate and other information via the use of a separate tollfree  X-  number is a reasonable method of compliance with [Section 64.703(a) of our rules]."OW yOO-ԍPolicies and Rules Concerning Operator Service Providers, 6 FCC Rcd at 2757. We   Zcautioned, however, that "as technology is developed that eliminated the necessity for a separate  X-  -number, the use of that number should also be eliminated.";P( W yO!-ԍId. ; OSPs have had more than six years   to adapt to, and come into full compliance with, our rules that implemented TOCSIA in 1991.   Under such rules, OSPs currently must provide oral rate quotes to prospective customers on   request. The rules, as amended herein, require that such rate quotes be furnished at no charge   to the caller and without the caller having to hang up and dial a separate number to obtain them. "| P,-(-(ZZP"  X-  =We also stated that "any rates quoted by an OSP must be exact rather than approximate.":QW yOy-ԍId.: In   ?computing the price of any given 0+ call that OSPs disclose mechanically under Section   64.703(a), as amended herein, OSPs may, at their option, use the maximum cost, including any   Maggregator surcharge, for the initial and additional minutes, in lieu of using the actual rates,   xincluding any surcharges, for the call. We decline, however, to adopt proposals that would afford   OSPs the additional flexibility to quote average charges that the caller could be billed. We agree   zwith the views expressed by some commenters that consumers could easily be misled by an   yaverage rate disclosure as to the level of the applicable charges for the particular call they wish to make.   X -  27.` ` We deny requests to exempt currently embedded storeandforward equipment,   even when such "smart" telephones are not capable of being retrofitted to comply with the new   Zdisclosure rules. The record does not provide a sufficient basis to justify such a broad exemption   from our rules. We shall, however, allow 15 months after the effective date of our rules before   such embedded equipment must be modified or replaced. That should provide more than   jsufficient time for parties to come into compliance with the rules. In particular, we are prepared   to consider waiver requests on a specific factual showing of good cause. Such showing should   specify, for example, the number of embedded phones for which waiver is sought, whether   significant numbers of complaints emanate for calls from such phones, and whether the pay phone   \provider is willing to offer other meaningful efforts to increase consumer awareness of their   options. Intellicall, Inc., a provider of "smart" pay telephones to the customerowned pay  X-  Ztelephone service industry,KRXW yO&-ԍIntellicall Comments at 2.K has requested that its ULTRATEL storeandforward payphones be   required only to advise callers how to obtain rate quotes and to be exempt from the requirement  X-  yto provide such quotes without callers having to dial a second number.SW yO- ԍEx parte Letter from Judith St. LedgerRoty, counsel for Intellicall, Inc., to William A. Caton, Acting Secretary, Federal Communications Commission (Mar. 21, 1997) at 4. Intellicall, Inc. states   that its ULTRATEL payphones can be retrofitted within four to six months to provide verbal   iinstructions advising callers on how to obtain a rate quote on each call by hanging up and dialing  X-  two digits, i.e., *0 (starzero).T @W yO- ԍId. OSPs, including those that provide service from storeandforward payphones, have been on notice for  yOc -  more than a year that they could be made subject to proposed price disclosure requirements of record in this   iproceeding and that we expected them "to begin to take the actions necessary to be able to implement them in a  yO!-timely manner." OSP Reform Notice, 11 FCC Rcd at 7294. We deny such request. It is within an OSP's discretion what   rate information it will disclose and how it will do so, not the decision of an equipment provider.   Although Intellicall, Inc.'s subsidiary company, Intellicall Operator Services, Inc., provides   networkbased operator and prepaid services throughout the United States from aggregator  XP-  locations,:UP( W yO)'-ԍId.: the request before us is on behalf of the equipment manufacturer, not its OSP"P U,-(-(ZZ"   subsidiary. Moreover, while it appears that Intellicall, Inc. has sold over 200,000 pay telephones  X-  for use in fortysix states, of which over 60,000 use storeandforward technology,CVW yOb-ԍId.` ` C its request   ifails to specify how many of its payphones cannot be retrofitted to comply with the rules adopted   herein and otherwise lacks the specificity necessary to justify a blanket exemption from the rate   [disclosure requirement. We have determined that disclosure of rate information at the point of   purchase will better enable consumers to make informed decisions and also further competition   Min the OSP marketplace. Intellicall, Inc. has not made a sufficient showing of good cause to   warrant exempting calls from any of its payphones at aggregator locations from the requirement   that OSPs, including its subsidiary OSP, disclose the cost thereof if requested by prospective customers.  X -  28.` ` In summary, OSPs' informational tariffs, our open entry policies, and current   competition in the OSP marketplace have not been sufficient to ensure that the charges for all   OSP calls are just and reasonable. The price of an interstate 0+ call from an aggregator location   Zis generally higher, and, in some cases, substantially higher, than consumers pay for 0+ calls from   their regular home or business location. Consumers making such awayfromhome calls often   jdo not have any longterm business relationship or familiarity with the presubscribed OSP that   the aggregator has selected to provide operator services at its site. The policies and oral   information disclosure rules we adopt herein require OSPs to provide accurate information about   -the price of their services to consumers, particularly prospective new customers whom they have   knever served, if callers exercise their right to receive a rate quote. The rules require OSPs to   zdisclose to consumers the true cost of placing a call through them, including any applicable   aggregator surcharge, or the maximum possible such charge, that they permit. Such surcharges   are a principal, if not the principal, reason for consumer complaints about OSP rates and charges.   The rules provide transient callers with the information necessary to maximize their awareness   of their options and to make informed decisions with respect to payphone calls. The rules, thus,   [are not only proconsumer, but also procompetitive in furthering marketplace decisions based on options available to an informed consumer.  X|-  XN- IV. FCC RATE BENCHMARK OR PRICE REGULATION ă  X -A.Background  X-  29.` ` In the OSP Reform Notice, we invited comment on our tentative conclusion that   <we should require OSPs to disclose rates when they exceed consumers' expectations. To achieve   jthis, we tentatively concluded that OSPs that charge rates, or allow related PIFs, whose total is   jgreater than a given percentage above a composite of the 0+ rates charged by the three largest  X"-  <IXCs be required to disclose the cost of the call orally to consumers, before connecting the call.]W"XW yO&-ԍOSP Reform Notice, 11 FCC Rcd at 7294.] ""W,-(-(ZZ!"   We also sought suggestions for alternative disclosure requirements that would more effectively   and efficiently provide consumers with the information that they need to make fully informed  X-decisions regarding the choice of an OSP.FXW yOK-ԍId.F "XX,-(-(ZZ"  X-B. Discussion  X-  3 30.` ` For reasons set forth below, we decline to adopt benchmark rules. Instead, as   previously discussed, we are requiring OSPs to disclose to consumers orally how to obtain rate   zquotes or the price of a call to a specific terminating location, to enable them to make a more  Xv-  >informed decision at the point of purchase.`YvW yO-ԍSee supra paras. 1428.` This course of action will best serve the dual   zobjectives of TOCSIA, further our goal of fostering a more fully competitive marketplace for   operator services from payphones and other aggregator locations, help ensure a level playing field   =for all OSP competitors, and better serve the public interest than would the use of benchmarks  X -as tentatively proposed in the OSP Reform Notice.  X -   31.` ` Commenters were divided in terms of support for the use of benchmarks and   whether such benchmarks should be based upon consumer expectations and tied to the rates of  X -  jthe three largest carriers (e.g., based on some percentage of the average of those rates or some  X -  set flat increase over such rates).VZ XW yO-ԍSee Appendix C at paras. 2442.V After considering the alternatives to benchmarks and   Lexamining the record before us, we agree with those commenters who believe that benchmarks   would not be the best alternative for addressing the problem. We believe that the imposition of   jprice controls or benchmarks upon the entire industry, in order to curtail rate gouging by some  XK-  carriers and aggregators, would be overly regulatory and could even stifle rate competition (e.g.,  X4-if it results in carriers migrating their rates to the benchmark, or only slightly below it).[ 4W yO- ԍSee, e.g., Letter from Susan E. Wedfald, President, Bruce Hagen, Commissioner, and Leo M. Reinbold,   Commissioner, North Dakota Public Service Commission, to Secretary, Federal Communications Commission (July   3, 1996) (The North Dakota Commission's experience is that benchmarks will not have the intended result of motivating operator services providers to keep rates low).  X-  32.` ` In addition, commenters submit that many consumers would not expect OSP   charges and aggregator surcharges at even the levels that would be allowed under CompTel's   Lbenchmark proposal of 115% of the weighted average of the largest three carriers' rates. Such   charges are perceived as excessive not only by some consumers, but public officials, regulators,  X-  and, according to the state Attorneys General, even many OSPs.h\xW yO+!- 0ԍSee, e.g., Attorneys General Comments at 4 ("Many OSPs agree with our assessment that CompTel's   proposed benchmarks are too high"); NARUC Comments at 1 (CompTel's proposed rate benchmarks of $3.75 and   h$4.75 are "excessively high"); NYSCPB Comments at 6 (benchmarks proposed by CompTel, Bell Atlantic, NYNEX   and others are "far too high"); Pennsylvania Commission Reply Comments, filed May 5, 1995, at 46 (CompTel's   proposed benchmarks are "excessive," agreeing with comments to that effect filed on or about April 12, 1995 by the   Colorado Commission Staff, Ameritech, Sprint and the National Association of Attorneys General, Telecommunications Subcommittee of the Consumer Protection Committee).h We also agree with   <commenters that establishing benchmarks based on the average of rates of the three largest IXCs"\,-(-(ZZ3"   or their OSP affiliates, could arguably constitute a denial of the equal protection of the law to all other OSPs.  X-   33.` ` Moreover, even if benchmarks were not based on a separate class of carriers,   Ksetting benchmarks at the level initially proposed by CompTel could be anticompetitive and anti  consumer. If such presumed reasonable or "safe harbor" benchmarks were adopted, we believe   those OSPs whose rates currently are below those levels would have an incentive to increase their   yrates to those levels. Also, it could be argued that express or implied Commission forbearance   from regulating tariffed rates that did not exceed the levels proposed by CompTel, constitutes federal agency approval of collusive pricefixing by OSP competitors.  X -  X -   !34.` ` Accordingly, we are persuaded by the comments of those opposed to our   benchmark proposal that such a price regulatory approach is not the best answer to the problem   zof consumers being billed unexpectedly high charges for 0+ services. The anomalies in this   segment of the interstate telecommunications market are directly attributable to consumers lacking   .sufficient information of the cost of service at the point of purchase. We believe that the oral   disclosure requirements that we adopt today will help to ensure that consumers have the   .information they need to make informed decisions concerning whether they wish to make a 0+   call through a particular carrier or to place the call through one of hundreds of other OSPs   competing in this market. We therefore find that the oral disclosure requirement adopted above   -will not only more readily achieve our goal of protecting consumers, but by providing consumers   Lwith access to information necessary to make informed choices, also accomplishes this goal in a manner more consistent with the procompetitive goals of the 1996 Act.  X-  V. BILLED PARTY PREFERENCE    X-A.Background  Xe-  P"35.` ` Under BPP, operatorassisted longdistance traffic would be carried automatically  XN-  by the OSP preselected by the party being billed for the call.`]NW yO-ԍFurther Notice, 9 FCC Rcd at 3320.` This would be done by   permitting a person signing up for a calling card to select the OSP that would carry that   customer's interstate payphone traffic whenever that customer used the calling card. The network   xwould be able to identify that OSP by checking a database listing the chosen OSP associated with   each calling card. Based on the comments filed by parties in 1993, the Commission estimated   kthat the cost of implementing BPP would be on the order of $420 million in amortized annual  X -  ?costs.C^ XW yO$-ԍId. at 3325.C This is based on an estimate of LEC costs of $1.1 billion in nonrecurring costs   (including approximately $500 million for end office software) plus $60 million in recurring costs   j(most of which would be due to increased expenses for training and employing operators), and""^,-(-(ZZ!"  X-  recurring OSP costs of about $35 million per year.F_W yOy-ԍId. at 332526.F Given the estimated cost of BPP, the  X-  Commission sought proposals for less costly alternatives.a`XW yO-ÍId. at 3325.a We stated that we would mandate BPP   >only if its benefits outweighed its costs, and those benefits could not be achieved through  X-  alternative, less costly, means.:aW yOT-ԍId.:  Two years later, we noted that, while the record indicated that   the cost of BPP "would likely be quite substantial," local number portability was mandated by   lthe 1996 Act and we intended to give further consideration to BPP as number portability  Xv-  .developed.]bvxW yO -ԍOSP Reform Notice, 11 FCC Rcd at 7277.] We remarked that "[i]f local exchange carriers are required to install the facilities   <needed to perform database queries for number portability purposes for each call, the incremental   cost to query the database for the customer's preferred OSP might well be less than the  X1-incremental benefits that BPP would provide."Fc1W yO-ԍId. at 727778.F  X -B.Discussion  X -  }#36.` ` We decline to adopt BPP. As detailed in Appendix C, only a few parties continue  X -  to support BPP.Vd W yO-ԍSee Appendix C at paras. 4344.V Moreover, there is no convincing evidence that the benefits of BPP outweigh  X -  its costs, and that those benefits can not be achieved through alternative, less costly, means._e ( W yO-ԍFurther Notice, 9 FCC Rcd at 3325._   Thus, we decline to require this expensive change to the network as a means of reducing   -customer dissatisfaction with OSP rates. Rather, the increased consumer disclosures required by   this Order will meet our objectives, including protecting consumers, and fostering rate competition, in a less burdensome manner.  X-  $37.` ` In the OSP Reform Notice, we noted that the 1996 Act mandates local number   portability and that we intended to give further consideration to BPP as number portability   developed. We requested comment on our suggestion that "[i]f local exchange carriers are   jrequired, thus to install the facilities needed to perform database queries for number portability   .purposes for each call, the incremental cost to query the database for the customer's preferred  X-  OSP might well be less than the incremental benefits that BPP would provide."ff W yO%-ԍOSP Reform Notice, 11 FCC Rcd at 727778.f Based on the   -updated record, we cannot conclude that the implementation of local number portability will have this effect. In the absence of firm data that shows a favorable cost/benefit ratio, we are not "|H f,-(-(ZZ"Ԍ  willing to mandate BPP, and the proponents have not provided us with such data. No one has   challenged the LECs' assertions that implementation of number portability will not render BPP  X-  ]more economically feasible to implement.gW yOK-ԍSee, e.g., BA/BS/NYNEX Comments at 9; SWBT Comments at 2; U S WEST Comments at 1214. The fact that local number portability [LNP]   databases will not exist in all areas also militates against reliance on LNP as a basis for  X-  mandatory BPP.RhXW yO-ԍSee Appendix C at para. 45.R Moreover, as some commenters argue, the increased advertisement and use   /of dialaround will yield the same result as BPP at no cost to upgrade the network. We are   cognizant of assertions that to continue to leave open the possibility of BPP as a possible long X_-  term solution to the problem of high OSP rates is harming OSPs in the capital markets.ri_W yO -ԍSee, e.g., CompTel Comments at 22.r We   also agree that it would be unwise to implement BPP in the inmate calling environment, given  X1-the need for special security measures there.j1xW yOZ- mԍInmate Calling Services Providers Coalition Comments at 7.  See also Gateway Technologies, Inc. Comments at 4 (Commission cannot legitimately provide for carrier choice in the inmate services environment).  X -  %38.` ` Equally as important, and as discussed in detail in the previous sections, we find   <that the oral price disclosure requirement will achieve the same benefits, at significantly less cost,   and in a manner consistent with the procompetitive goals of the 1996 Act. Accordingly, we   decline to adopt BPP to redress the problem of high rates of OSPs and providers of operator services to prison inmate phones.  X-#o\  PCynXP#  Xy-  Xb- VI. FORBEARANCE FROM APPLYING SECTION 226 TARIFF FILING  XK-` ` REQUIREMENTS  X4-  X-A.Background  X-  X-  &39.` ` Under the 1996 Act, we must forbear from applying any regulation or provision   Kof the Communications Act if we determine that such forbearance is consistent with the statutory  X-  /criteria listed in Section 10(a) therein.k@W yOB -ԍ The 1996 Act enacted new Section 10(a) of the Communications Act which provides as follows:   XX` ` REGULATORY FLEXIBILITY. Notwithstanding section 332(c)(1)(A) of this   Act, the Commission shall forbear from applying any regulation or any provision   of this Act to a telecommunications carrier or telecommunications service, or   Eclass of telecommunications carriers or telecommunications services, in any or some of its or their geographic markets, if the Commission determines that x` ` `  (1) enforcement of such regulation or provision is not ` ` necessary to ensure that the charges, practices, classifications,  yOJ'- ` ` or regulations by, for, or in connection with that telecommunications"J'j,-(-('"Ԍ` ` carrier or telecommunications service are just and reasonable and ` ` are not unjustly or unreasonably discriminatory; ` `  (2) enforcement of such regulation or provision is not (#` ` ` necessary for the protection of consumers; and ` `  (3) forbearance from applying such provision or regulation is  yOx-` ` consistent with the public interest.V 1996 Act at  401 (adding Section 10(a), 47 U.S.C.  160(a)). In our OSP Reform Notice, we sought comment on"k,-(-(ZZq"   [whether we should forbear from applying Section 226 tariff filing requirements to nondominant   Zinterexchange OSPs if they either provide an audible disclosure of the applicable rate and charges   prior to connecting any interstate 0+ call from a payphone location, or certify that they will not   xcharge more than FCCestablished benchmarks for such calls. We noted that TOCSIA authorizes   us to waive the requirement for informational tariffs if we determine that such tariffs no longer   are necessary to: (1) protect consumers from unfair and deceptive practices relating to their use   of operator services to place interstate telephone calls; and (2) ensure that consumers have the  X_-  opportunity to make informed choices in making such calls.l_W yO-Í OSP Reform Notice, 11 FCC Rcd at 7296, citing 47 U.S.C.  226(h)(1)(B). We tentatively concluded that a   [requirement that OSPs disclose the specific price of a call to the consumer before connecting a   call would better protect consumers from unexpectedly high charges than the filing of   "informational" tariffs, which are effective without prior notice and provide very limited  X -  Lprotection at the time of purchase.Hm  ` W yO- ԍUnlike the effective date of rates in tariffs filed pursuant to Section 203 of the Act, which the Commission   may suspend, rates and surcharges in informational tariffs filed pursuant to Section 226 are effective without prior  yO-  Ynotice to the public and the Commission. See Section 226(h)(1)(A) ("changes in [informational tariff] rates, terms, or conditions shall be filed no later than the first day on which the changed rates, terms, or conditions are in effect.")H Based on this analysis, we sought comment on whether   ]the most effective longterm solution for protecting consumers is to provide them with a   mechanism for exercising choice, such as by entering into a longterm relationship with carriers,   -by having an audible brand stating the price of any call before the call is connected, or additional  X -branding stating the price of any call that would exceed benchmarks that we might establish.hn H W yO-ԍOSP Reform Notice,11 FCC Rcd at 7297.h  Xy-  '40.` ` We also sought comment on whether price information at the point of purchase,   zrather than the availability of pricing and other material information from the public tariffs of   rivals, is more likely to allow consumers to exercise rational purchasing decisions, encourage   \OSPs to initiate price reductions and other competitive programs, and impose marketbased  X-discipline on abusive OSPs.CoW yO#-ԍId.` ` C  X- "ho,-(-(ZZ"  X-B.Comments  X-  (41.` ` The commenters disagree on whether we should forbear from applying the Section  X-  226 tariff filing requirement.XpW yO-ԍSee Appendix C at paras. 5664. X Some support a complete detariffing policy and assert that   <informational tariffs are not necessary to protect consumers against unfair or deceptive practices.   Others urge us to make the finding specified in that section for waiving such requirement.   AT&T maintains that the Commission should apply the same tariff forbearance rules to its   =operator services as it applies to its other interstate services. Another commenter supporting   forbearance with regard to the requirement to file informational tariffs asserts that OSPs have misinformed consumers about the purpose of informational tariffs.  X -  )42.` ` Other commenters are opposed to complete detariffing, believing that informational   tariffs ensure that OSP charges and practices are just and reasonable and are an important   =consumer safeguard. Some commenters contend that it is premature to remove the tariff filing   =requirement and that informational tariffs are needed as a tripwire to enable the Commission to determine whether further investigation is necessary.  Xy-  Xb-C.Discussion   X4-  A*43.` ` We are not prepared to conclude at this time that Section 226 informational tariffs   no longer are necessary to protect consumers and that we should either waive or forbear from   requiring such tariffs. We continue to receive thousands of consumer complaints each year about   OSP rates and related aggregator surcharges or PIFs. We amend our rules to increase the   usefulness of informational tariffs by requiring that such tariffs include specific rates expressed   in dollars and cents as well as applicable percall aggregator surcharges or other percall fees, if  X-  any, that are collected from consumers.FqXW yO-ԍSee Appendix A.F The continued filing of these tariffs will allow the   Commission to monitor OSPs' rates and any related surcharges after the rules adopted herein   jbecome effective. We will revisit whether informational tariffs by nondominant carriers still are   needed if our rules achieve the anticipated results. We conclude that requiring OSPs to disclose   .how to obtain the price of a call to prospective customers at the point of purchase, in addition   to the availability of pricing and other material information from the public tariffs of rivals, will   \allow consumers to exercise rational purchasing decisions, encourage OSPs to initiate price   Zreductions and other competitive programs, and impose marketbased discipline on OSPs. Under   TOCSIA, the rates and related surcharges or fees in OSPs' informational tariffs may be changed   without prior notice to consumers or to this Commission. As noted above, we have authority to   waive the statutory requirement for such tariffs if we determine that our rules adequately protect   .consumers from unfair and deceptive practices and ensure their opportunity to make informed"!q,-(-(ZZ "   lchoices in making 0+ calls from payphones or other aggregator sites such that tariffs are  X-unnecessary.VrW yOb-ԍSee supra para. 34.V   X(#  X- {VII. PETITIONS FOR RECONSIDERATION OF THE 1992 PHASE I ORDER  X-t (0+ PUBLIC DOMAIN PROPOSAL) ă  Xv-  X_-A.Background  X1-  `+44.` ` In 1992, the Commission considered the need to address competitive problems  X -  resulting from the use of AT&T proprietary calling cards with the 0+ form of access.s XW yO# - ԍPhase I Order, 7 FCC Rcd 7714. Proprietary calling cards are calling cards that are valid only for calls  yO -handled by the carrier that issued the card.   yAlthough the Commission planned to examine a wide range of issues related to the OSP market  X -  segment, we decided to take immediate action in response to parties' concerns and proposals.:t W yOM-ԍId.:  X -  kMCI first proposed restriction of proprietary IXC cards with 0+ access in April 1991.Qu @W yO-ԍSee id. at 7714 n.1.Q MCI   then proposed that the Commission should mandate 0+ dialing as being in the "public domain,"   so that all carriers issuing calling cards with instructions to use 0+ as the access method would   be required to permit access by other OSPs to billing and validation information for these cards,  Xy-  [so that other OSPs would be able to handle and bill for 0+ calls by such card holders.LvyW yO-ԍSee id. L Under  Xb-  <that proposal, carriers that wished to issue proprietary cards, in other words, not make billing and   Mvalidation information available to other OSPs, would be required to establish an 800 or 950  X4-  yaccess method instead of using 0+.Kw4` W yOE-ԍSee id. K In addition, MCI advocated that the Commission require   -that any OSP completing a calling card call using 0+ access, where feasible, not charge more than   the applicable rates of the carrier issuing the card, so that consumers would not be assessed  X-  ?unexpectedly high rates.Jx W yO!-ԍSee id. J This concept was ultimately termed the "0+ Public Domain"  X-proposal.Dy W yO $-ԍSee id.D "y,-(-(ZZ"Ԍ X-  ,45.` ` The Commission received expressions of concern that the 0+ public domain  X-  proposal could undermine AT&T's card issuer identification (CIID) cards,z W yOb- ԍThe CIID card is proprietary because AT&T does not permit other OSPs to access and use the data   -necessary to validate calls billed to this card. The lack of OSP access to AT&T's CIID card database was alleged   ;to contribute to consumer confusion and frustration when 0+ calls could not be completed due to the OSP's inability to validate the card information. which in 1992 were  X-  jused by more than 20 million people.x{XW yO3- \ԍSee, e.g., Letter from Honorable Bud Cramer, Member of Congress, to Alfred C. Sikes, Chairman, Federal   JCommunications Commission (June 12, 1992) (requesting that 0+ public domain be carefully evaluated for its effect on consumers and rejected if not beneficial to consuming public). x Conversely, some of AT&T's competitors claimed that   their inability to accept calls made with these cards seriously handicapped them in the operator  X-  =services marketplace.|W yO% - ԍSee Letter from Alfred C. Sikes, Chairman, Federal Communications Commission, to Honorable Bud Cramer, Member of Congress (June 29, 1992). In taking certain steps to protect consumers and mitigate competitive   problems that resulted from the use of proprietary IXC calling cards with 0+ access, the  Xv-Commission released its Phase I Order.^}v( W yOO-ԍPhase 1 Order, 7 FCC Rcd at 7726, 7714.^  X_-  XH-  -46.` ` In its Phase I Order, the Commission considered the competitive problems resulting   from the use of AT&T proprietary calling cards with the 0+ form of access in the presubscription   environment, wherein an OSP other than AT&T could be the presubscribed OSP for aggregator  X -  phones.C~ W yOl-ԍId. at 7719.C The Commission considered arguments which urged that adoption of a system of 0+   -access for calling cards with open validation databases was essential to preserving a competitive  X -  market segment for operator services.C H W yO-ԍId. at 7721.C The Commission also considered arguments that the 0+  X -  public domain proposal would create confusion and inconvenience for IXC customers.C W yOG-ԍId. at 7722.C   {Consistent with its paramount concern for consumer welfare, and in order to mitigate the   competitive problems that result from the use of proprietary IXC calling cards with 0+ access,   ithe Commission required AT&T to change its practices by revising its access instructions to card  Xb-  holders.EbhW yO{"-ԍId. at 7714, .E Specifically, the Commission directed AT&T to (1) educate its cardholders to check   payphone notices and to use 0+ access only at public phones identified as presubscribed to   AT&T; (2) provide clear and accurate access code dialing instructions on every proprietary card  X-  issued; and (3) make its 800 access code number easier to use.FW yO&-ԍId. at 772425.F The Commission found that",-(-(ZZe"   !consumer education was the interim remedy best suited to the immediate consumer and   icompetitive concerns caused by AT&T's dialing instructions, and declined to adopt the 0+ public  X-  domain proposal or other alternative interim remedies proffered by AT&T's competitors.:W yOK-ԍId.: Eight  X-parties (petitioners) filed petitions for reconsideration of that decision.]XW yO-ԍSee Appendix B at 5; Appendix C at 32.]  X-  ".47.` ` Petitioners advance various arguments in support of their requests: the Commission   failed to take appropriate action to eliminate anticompetitive problems posed by the CIID  X_-  =program;^_W yO -ԍSee, e.g., CompTel petition at 8.^ the Commission's promise to consider BPP as a solution was inappropriate in light  XH-  of "immediate competitive problem(s);"PHxW yOq-ԍId. at 9, 1112. P the Commission failed to recognize that the CIID card  X1-  is not a common proprietary IXC card;~1W yO-ԍId. at 15; LDDS Petition at 5; PhoneTel Reply to Opp. to Petition at 4.~ the Commission acquiesced to AT&T's "threat" that   lit would require access codes for its cardholders, thereby perpetuating a "monopolistic"  X -  ?environment; W yOL-ԍLDDS Petition at 56; ITI Petition at 4; Polar Petition at 3; see also MCI Petition at 45. the CIID card is not truly proprietary; and the Commission's actions are  X -  inconsistent with its requirement of nondiscriminatory access to LEC validation data.I ( W yO-ԍLDDS Petition at 1013. I Thus,   petitioners argue, the Commission should adopt the 0+ public domain proposal and require AT&T   Zto open its billing and validation database. In this section, we address these issues and conclude that the petitions for reconsideration should be denied.  Xy-B.Discussion  Xb-  XK-  /48.` ` As an initial matter, we conclude that petitioners restate arguments that they  X4-  previously raised and which the Commission fully considered in reaching its Phase I Order.x4 W yO-ԍSee AT&T Opp. Petition at 3; AT&T Reply in Opp. to Petition at 2.x   Because petitioners have offered no new facts or legal arguments in support of their petitions, as   discussed below, we find no basis to reconsider the Commission's decision not to adopt the 0+  X-  LPublic Domain proposal in the Phase I Order. We also note that AT&T has been dropping its   calling card billing agreements with LECs, reportedly as part of its strategy to handle all calls on  X-  its own network rather than sharing billing information with LECs.H W yO%- =ԍSee Communications Daily, May 28, 1997, at 9 ("AT&T Ending Practice of Allowing its Customers to Use AT&T Calling Card when Dialing Long Distance, Forcing Its Customers to Use 800CALLATT Bypass Service"). AT&T's cancellation of",-(-(ZZ"   its billing agreements with LECs has rendered, or in the foreseeable future should render,   -petitioners' concerns in this regard largely moot. Thus, we deny the petitions for reconsideration  X-of the Phase I Order.  X-  049.` ` LDDS argues that because AT&T permits shared access to its CIID card database   by "virtually any company that jointly provided long distance service with AT&T prior to  Xv-  zdivestiture," the Commission was incorrect in considering the database to be proprietary.DvW yO-ԍLDDS Petition at 7.D   kLDDS maintains that AT&T should be required to permit access to its database by all other   carriers, not just LECs. This argument, however, ignores the fact that AT&T nonetheless  X1-  exercises control over access to its database. Nothing in the record suggests that any entity other   than AT&T has control over its CIID card validation database. The fact that AT&T chooses to   share access to its database with certain other carriers (e.g., LECs) does not mean that it has   [relinquished dominion over the database or that the card is not proprietary to AT&T's system.   The Commission did consider the option of requiring AT&T to open its card validation database  X -  to all carriers.^ XW yO-ԍPhase I Order, 7 FCC Rcd at 7721, 7723.^ The Commission noted, however, that AT&T clearly stated that it would not   open its database for its competitors' use and would implement a system of strict access code  X-calling.FW yO)-ԍId. at 772324.F The Commission found that to force this result would not serve the public interest.OxW yO-ԍId. at 7723. O  Xb-  n150.` ` In its Phase I Order, the Commission attempted to address the issues of consumer   [costs and a competitive OSP calling environment through the remedy of a mandated consumer  X4-  yeducation program.O4W yO-ԍId. at 7724. O CompTel asserts that "the record shows that the instance of misdirected   yattempts by MCI or Sprint proprietary card holders is negligible because these carriers educate  X-  Ktheir customers to use the card in conjunction with an access code."NW yOO-ԍCompTel Petition at 15, n.36.N The Commission adopted   Kthe consumer education requirement, finding that any costs to AT&T of carrying out this remedy  X-  <were far outweighed by the gains in consumer convenience and competition.X( W yO!-ԍPhase I Order, 7 FCC Rcd at 7725.X The Commission   further noted that "[i]f AT&T educates all of its customers to check public phone signage before   -dialing, and to dial 0+ only where AT&T is identified as the presubscribed carrier, its competitors  X-  !should receive significantly fewer misdirected calls."; W yO%-ԍId. ; Some petitioners argue that the   .Commission should order an alternative remedy such as the recall and reissuance of 25 million"|H ,-(-(ZZn"  X-  AT&T CIID cards.rW yOy-ԍPhoneTel Petition at 89; see LDDS Petition at 1516.r We believe, however, that such a remedy would be even less effective   ybecause it would create even greater customer confusion and market disturbances than existed   prior to the Commission's consumer education order. The Commission's mandated customer   |education program attempts to reduce the instances of unbillable CIID calls while not   unreasonably disturbing the dialing habits of AT&T cardholders. This remedy is less burdensome   <and more consistent with the public interest than the proposed recall and reissuance of all AT&T   CIID cards. The Commission's choice of a narrowly tailored remedy has proven effective, in   jlight of a fouryear period in which consumers have used the CIID card in accord with AT&T's  XH-new instructionsIXHXW yOQ - /ԍIn 1993, the Common Carrier Bureau reviewed and approved AT&T's plan for consumer education. See   ,Letter from Cheryl A. Tritt, Chief, Common Carrier Bureau, to Robert H. Castellano, Director, Federal Regulation, AT&T, dated February 4, 1993. I and hundreds of OSPs continue to operate in this market segment.HxW yOq-ԍ As of August 19, 1997, approximately 630 OSPs had informational tariffs on file with the Commission. Ĝ  X -  251.` ` In October 1995, the Commission took note of the competitive concerns, including   AT&T's use of its proprietary CIID card, that petitioners had raised more than three years earlier  X -  when they sought reconsideration of the Commission's Phase I Order. In AT&T Reclassification  X -  Order, the Commission found that AT&T's competitive position in the provision of calling card   and other operator services had not created market power in the overall interstate, domestic,  X -  xinterexchange telecommunications market.; W yO`- MԍMotion of AT&T to be Reclassified as a NonDominant Carrier, Order, 11 FCC Rcd 3271, 3323 (1995),  yO(-petitions for reconsideration denied, 62 FR 56,111 (October 8, 1997) (AT&T Reclassification Order).; The Commission noted that because of requirements  X-  adopted in the Phase I Order in the instant proceeding, AT&T no longer marketed its proprietary  Xy-  card using a 0+ message to gain a competitive advantage with public phone presubscriptions.Hy` W yO-ԍId. at 332324. H   The Commission further noted that, by 1992, MCI and Sprint, together, had issued over 32  XK-  zmillion proprietary cards.CK W yO-ԍId. at 3324.C The Commission stated that it, "has closely monitored operator   services in recent years, and [that] the primary problems that we have observed in this market  X-  ysegment have not involved AT&T"N W yON!-ԍId. (footnote omitted).N and that ". . . to the extent that there are problems in this  X-market segment, they do not appear attributable to AT&T."DW yO#-ԍId. at 3325. D ",-(-(ZZ "  X- VIII. INTRASTATE OPERATOR SERVICES ă  X-A.Background  X-  ԋ352.` ` We note that with respect to operator service providers that compete with LECs   0to provide operator services from aggregator locations, state regulation has varied from   prohibiting competitive operator services altogether (no longer permissible under Section 253 of  XH-  the Communications Act)H yO - |ԍSection 253(a) provides that "[n]o State or local statute or regulation, or other State or local legal   irequirement, may prohibit or have the effect of prohibiting the ability of any entity to provide any interstate or  yOQ -  intrastate telecommunications service." (emphasis supplied), 47 U.S.C.  253(a).  See Classic Telephone, Inc., 11  yO -  FCC Rcd 13082 (1996) (cities' decisions denying franchise applications preempted) , appealed sub nom. City of  yO -  Bogue, Kansas v. FCC, No. 961432 (D.C. Cir.) emergency petition denied and appeal ordered held in abeyance  yO -  hpending further order of the court, 1997 WL 68331 (D.C. Cir.) Jan. 14, 1997; New England Public Communications  yOq-  Council, 11 FCC Rcd 19713 (1996) (overturning Conn. Dept. of Public Utility Control's decision that had prohibited  yO9-  >independent pay phone providers and other nonLECs from offering pay phone service in Connecticut),  yO- reconsideration denied,  12 FCC Rcd 5215 (1997) .   Ă to allowing such services on an unregulated basis.6XH yO- ԍSee NARUC Compilation of Utility Regulatory Policy 19951996, Table 164, at 362; C.U.R.E. Reply   Comments at Attachment 1(Summary of State Survey Regarding Rate Restrictions on InterLata, Intrastate Inmate Telephone Rates).6 More than  X1-  [thirty states regulate longdistance charges for intrastate calls made through OSPs.X1  yO- ԍNARUC Compilation of Utility Regulatory Policy 19951996, Table 164, at 362I. See also Penny Loeb,  yOb-  -Watch that Pay Phone or Risk Getting Charged Far Above the Usual Rate for Longdistance Calls, U.S. News &  yO*-World Rep., June 26, 1995, at 60, available in 1995 WL 3114002. Illinois,   jfor example, permits a surcharge of no more than $2.50 and requires that perminute rates be no  X -higher than those of the dominant provider.  yO- ԍ Penny Loeb, Watch that Pay Phone or Risk Getting Charged Far Above the Usual Rate for Longdistance  yOT-Calls, U.S. News & World Rep., June 26, 1995, at 60, available in 1995 WL 3114002.  X -B. Comments  X -  453.` ` Although we did not invite comment on this issue, NARUC and the NYCPB   Zrequest that we make clear that states are not precluded from adopting greater safeguards or more   Kstringent rules regarding OSP services and aggregator practices with regard to intrastate operator  Xb-  <services than those that we have adopted herein for interstate services.b0 yOC#- ԍLetter from James Bradford Ramsay, Deputy Assistant General Counsel, NARUC, to William F. Caton,  yO $-Acting Secretary, Federal Communications Commission (July 16, 1996) at 1 ; NYCPB Comments at 7. The Ohio Commission,   iwhich supports adoption of oral disclosure rules as suggested by the Colorado Commission staff,   zurges that, regardless of our decision regarding additional oral branding requirements, "any"4 ,-(-(ZZ "  X-  posting requirements, either mandated by the FCC or by the individual states, be maintained."O yOy-ԍOhio Commission Comments at 4.O  X-  Z Other state regulatory agencies similarly oppose adoption of any rules that would preclude states   from adopting more safeguards or more stringent rules regarding OSPs and providers of operator  X-  .services to correctional institutions. ?XXF yO- LԍSee, e.g., jointly filed Reply Comments of the State of Maine Public Utilities Commission, State of Montana   Public Service Commission, New Mexico State Corporation Commission, and State of Vermont Department of Public Service.? Such state agencies assert that OSPs and providers of   operator services to correctional institutions should be prohibited from charging rates in excess   =of absolute rate caps on all operator service calls and, if they are not, that any oral information   required to be given by OSPs be provided audibly and distinctly, in both English, and in the   predominant second language, if any, of the residents of the wire center served by the  XH-  aggregator's telephone.@Hx yOq-ԍId. at 2.@ In addition, the oral information should also provide the consumer with   directions how to reach and use a carrier whose rates are less than FCC established  X -  <benchmarks.:  yO-ԍId.: The agencies suggest adoption of a rule that would not require customers to pay   <any charges that exceeded any FCC established price cap or benchmark if the required notice had  X -  =not been given.:  yO5-ԍId.: The Florida Commission is concerned that the use of forbearance authority  X -to eliminate interstate tariff requirements might have repercussions at the state level.S (  yO-ԍFlorida Commission Comments at 7. S  X -C.Discussion  Xy-  aԊ554.` ` While we continue to receive many complaints about high rates for 0+ calls   involving both interstate and intrastate services from payphones, the policies and rules adopted  XK-  herein are applicable only to interstate services.K W yO- 0ԍSection 226 is concerned with interstate, domestic, interexchange operator services. See 47 U.S.C.   yO|-  g 226(a)(7) ("The term operator services means any interstate telecommunications service initiated from an aggregator   location . . . ") (emphasis added). Providers of operator services from the United States to foreign points are subject   to the tariff filing requirements of Section 203, and our rules and policies applicable to international telecommunications services. As requested by NARUC and the NYCPB,   Lwe clarify that the states are not precluded from adopting greater safeguards or more stringent   rules regarding OSP services and aggregator practices with regard to intrastate operator services   than those that we have adopted herein for interstate services. Any such state statute, regulation,  X-  or legal requirement, however, may not violate Section 253 (a) of the Communications Act,UhW yO'-ԍSee supra n. 156.U"!,-(-(ZZ"  X-  must not be preempted under Section 276(c) of the Communications Act,BXW yOy- ԍAny state requirements inconsistent with the Commission's regulations concerning the provision of payphone   service in implementation of Section 276 of the Communications Act are preempted under subsection (c) thereof, 47 U.S.C.  276(c). B and must not   contravene any other provision of the Communications Act, or any Commission regulation or   jorder. We stress that we are adopting minimum requirements that are not intended to preempt   state requirements or safeguards. We note, for example, that the New York State Department of   Public Service (NYDPS), which urged this Commission to set benchmarks for OSPs' interstate rates, has rules that:  Xallow the tariffs of operator services providers [which are required to be filed by  bthe New York State Public Service Commission] to take effect unless the  2maximum rates charged by such providers exceed the highest rates authorized by  the commission for a local exchange telephone corporation or a dominant  interexchange telephone corporation in the state for similar kinds of operator  X -assisted telephone calls.I W yO-ԍNYDPS Comments at 2 n.1.I   X -  P655.` ` The policies and rules we adopt herein do not preclude, for example, state actions   Lthat prohibit aggregator surcharges or other PIFs for intrastate calls, or that cap OSP rates and   related PIFs, such as the rate cap in Florida tied to AT&T's rates that the Florida Commission  Xy-  adopted\yxW yO-ԍSee Florida Commission Comments at 6.\ and the Pennsylvania Commission's proposed $1.00 cap on location surcharges on  Xb-  intrastate OSP calls in Pennsylvania.bW yO-ԍSee Pennsylvania Commission Initial Comments, late filed July 25, 1996, at 3. As requested by Citizens United for Rehabilitation of  XK-  Errants (C.U.R.E.) with regard to intrastate rates for collect calls from prisons,NKW yO-ԍC.U.R.E. Reply Comments at 6.N we also make   clear that our action herein similarly does not preempt state rate caps that may be lower than any   rate benchmark proposals for interstate operator services considered, but not adopted in this   iproceeding. We note, however, that some commenters believe that interstate telecommunications   .services ratepayers should subsidize providers of operator services whose intrastate operator   service rates and surcharges have been capped by a state at a level that is alleged to be "unfair"  X-  [or which precludes recovery of the carrier's alleged "reasonable" costs and profit.( W yO"-ԍSee, e.g., InVision Comments at 8; Coalition Reply Comments at 8. Any such   ysubsidy or crosssubsidization would inhibit competition at the intrastate level, contrary to our   policies encouraging competition in all telecommunications markets. We are unaware of any"" ,-(-(ZZo"   .public policy reason why users of interstate operator services should be required to subsidize  X-users of intrastate operator services.\XW yOb- ԍSee also Comments of APCC in CC Docket No. 96128, July 1, 1996, at 9 (FCC prescription of a fair,   juniform payphone fee applicable to every call will end "the forced dependence on interstate 0+ subsidies that destabilizes the entire payphone industry.").\  X- ` `  IX. 0+ CALLS BY PRISON INMATES  Xv- A.Background  X_-  XH-  Q756.` ` In our OSP Reform Notice, we considered calls from inmateonly telephones in   .prisons, jails and other correctional or similar institutions (hereinafter prisons) separately from 0+ calls from aggregator locations for two primary reasons.  XFirst, neither TOCSIA nor our rules require telephones for use only by prison  inmates to be unblocked. Thus, callers from these facilities are generally unable  to select the carrier of their choice; ordinarily they are limited to the carrier  }selected by the prison. A disclosure requirement can not directly aid such callers.  $Second, prisons often install and maintain security equipment for a number of  legitimate reasons involving security and other government prerogatives. Given  2that prisons would likely seek to recover the cost of any equipment employed for  legitimate security reasons, we would expect that competitive prices for inmate only telephone calls from prisons could be higher than the rates of calls from  nordinary locations. The record in this proceeding indicates, however, that at least  one prison carrier, Gateway, has stated that it is willing and able to provide calls  `from prisons as well as the standard security equipment at rates comparable to  X-those charged by AT&T, MCI and other large carriers.rW yOq-ԍ OSP Reform Notice, 11 FCC Rcd at 7301 (footnotes omitted).r    ZWe invited comment on whether the public interest would be better served by some remedy other   kthan BPP for prison inmate calling, including requiring oral full price disclosure to the called  X|-party before connecting the inmate call.  XN-B.Discussion   X -  857.` ` We are persuaded by comments of the United States Attorney General, other   federal officials, and nearly all who have commented on this issue that implementation of BPP   for outgoing calls by prison inmates should not be adopted. With regard to such calls, it has   generally been the practice of prison authorities at both the federal and state levels, including state   political subdivisions, to grant an outbound calling monopoly to a single IXC serving the   particular prison. This approach appears to recognize the special security requirements applicable"!#x,-(-(ZZ "   to inmate calls. Moreover, requiring BPP for inmate calls in the absence of BPP for 0+ calls   /might place the cost of implementation on the recipient of such calls, thus exacerbating the   problem of highcost calls. Finally, as the Florida Commission noted, prisons may allow inmates   yto place calls to preapproved 800 numbers of their families and legal counsel, or, as the Florida  X-  Commission has done, allow them to use prepaid debit cards.\W yO-ԍFlorida Commission Comments at 11.V\ Such options would exert   downward pressure on high interstate rates for 0+ calls from inmate phones, diminish the ability   of a prison and its PIC to set supracompetitive rates, and thus lessen or obviate the need for further federal regulations concerning 0+ rates in this submarket.  X1-  958.` ` The Commission has concluded that the definition of aggregator "does not apply  X -  to correctional institutions in situations in which they provide inmateonly phones." XW yO# -ԍSee OSP Reform Notice, 11 FCC Rcd at 7300 n.122, quoting TOCSIA Order. It does not   necessarily follow, however, that we should not adopt consumer protection rules similar to those   applicable to providers of 0+ service at aggregator locations. The Commission continues to   receive complaints about inmate service providers' practices that result in excessive charges being  X -collected from consumers for interstate collect calls.;  W yOW- .ԍSee, e.g., informal complaint File No. 9724317 (complaint alleging MCI Telecommunications Corporation   Yovercharged for interstate collect calls from prison inmate phone); File No. 9720961 (complaint alleging AT&T's   practices and charges for interstate collect calls from inmate phones are unreasonable); File No. 9724319 (complaint  yO-about InVision Telecom's monopoly, practices, and high 0+ intrastate and interstate toll rates) . ;  X-  o:59.` ` For the reasons set forth in Section IV above, however, we decline to establish   price benchmarks or rate caps. Although, prison authorities have considerable power to ensure   ithat rates are just and reasonable by virtue of the monopoly contracts they confer, they also have   the power and the incentive to contract with OSPs that will give them the largest revenues from   inmate phones. If we set caps or benchmarks, carriers would have little incentive to contract to   offer services at a lower rate. Rather, because rates must be filed with the Commission and must   Lconform to the just and reasonable requirements of Section 201 of the Act, we believe that it is   ymore efficient and less intrusive to proceed on a casebycase basis, should the rules we adopt herein not lead to reasonable rates for calls from inmate phones.  X-  o;60.` ` Although we do not require BPP or benchmarks, we do agree with commenters   that consumers, in this case the recipients of collect calls from inmates, require additional   safeguards to avoid being charged excessive rates from a monopoly provider. We conclude,   therefore, that we should require all providers of operator services from inmateonly telephones   to identify orally themselves to the party to be billed for any interstate call and orally disclose   <to such party how, without having to dial a separate number, it may obtain the charge for the first   minute of the call and the charge for additional minutes, prior to billing for any interstate call   from such a telephone. Just as OSPs may give the party to be billed for an interstate call the   Loption to bypass receiving such rate information, providers of operator services for interstate"$,-(-(ZZ<"   Lcalls initiated by a prison inmate similarly may give the party to be billed the option to bypass  X-  receiving rate information. Even if, arguendo, restrictions on all dialaround calls can still be   justified for inmateonly telephones, rules requiring providers to identify orally themselves to both   parties to a collect call and to disclose to the party to be billed how to obtain specific rate   Ninformation without charge, can eliminate some of the abusive practices that have led to   Lcomplaints. Specifically, the billed party can decide whether to accept the call and can limit the length of the call.  XH-  2<61.` ` Finally, just as it would be contrary to our policies encouraging competition in all   telecommunication markets to have intrastate operator services from aggregator locations  X -  <subsidized by interstate service ratepayers,P W yO -ԍSee supra para. 55. P it would similarly be an undue burden on interstate   commerce to have costs of providing intrastate service to prison inmates crosssubsidized by   interstate service ratepayers. We note that most calls by prison inmates appear to be intrastate  X -rather than interstate. XW yO-ԍSee C.U.R.E. Reply Comments at 5 ("the vast majority of inmate calling traffic is intrastate").  X -  X- X X. PROCEDURAL MATTERS  Xb- A. Final Regulatory Flexibility Analysis  XK-   X4-   =62.` ` As required by the Regulatory Flexibility Act (RFA),W4W yO-ЍSee 5 U.S.C.  603.W an Initial Regulatory  X-  zFlexibility Analysis (IRFA) was incorporated in the OSP Reform Notice.gxW yOF-ЍOSP Reform Notice, 11 FCC Rcd at 7302.g The Commission  X-  sought written public comments on the proposals in the OSP Reform Notice, including on the  X-  IRFA.MW yO-ЍId. at 7303.M The Commission's Final Regulatory Flexibility Analysis (FRFA) in this Order conforms   .to the RFA, as amended by the Contract With America Advancement Act of 1996 (CWAAA),  X-  /Pub.L. No. 104121, 110 Stat. 847 (1996).W yO !- Ѝ Title II of the CWAAA is "The Small Business Regulatory Enforcement Fairness Act of 1996" (SBREFA),  yO!-codified at 5 U.S.C.  601 et seq.  The Commission is issuing this Order to protect   consumers from excessive charges in connection with interstate 0+ operator services for payphone   Kand prison inmate calls by ensuring that they are aware of their right to ascertain the specific cost for such calls so that they may hang up before incurring any charge that they believe is excessive. "e% ,-(-(ZZ1"  X-  1.Need for and Objectives of this Report and Order and the Rules Adopted Herein  X-  >63.` ` In the 1996 Act, Congress sought to establish "a procompetitive, deregulatory  X-  national policy framework" for the United States telecommunications industry.^W yO-ЍJoint Explanatory Statement at 113.^ One of the   yprincipal goals of the telephony provisions of the 1996 Act is promoting increased competition   ?in all telecommunications markets, including those that are already open to competition, particularly longdistance services markets.  X1-  4?64.` ` In this Second Report and Order, we adopt rules requiring carriers to orally   disclose to consumers how to obtain the cost of operator services for interstate calls from  X -  kaggregator locations and from prison inmateonly telephones.R XW yO -ԍSee Appendix A. R The objective of the rules   0adopted in this Order is to implement as quickly and effectively as possible the national   telecommunications policies embodied in the 1996 Act and to promote the development of   competitive, deregulated markets envisioned by Congress. In doing so, we are mindful of the   balance that Congress struck between this goal of bringing the benefits of competition to all  X-consumers and its concern for the impact of the 1996 Act on small business entities.KXW yO)- [Ѝ In this Order, we also consider, but decline to adopt, proposals to establish, price caps, benchmarks, or other   Kprice regulation of OSP charges and aggregator surcharges, 0+ in the public domain, and a billed party preference system.K  Xb-  2.Summary of Significant Issues Raised by the Public Comments in Response to the IRFA  X-   @65.` ` In the OSP Reform Notice, the Commission performed an IRFA.mW yO-ЍOSP Reform Notice, 11 FCC Rcd at 7302 .m In the IRFA,   the Commission found that the rules it proposed to adopt in this proceeding may have an impact  X-  zon small business entities as defined by section 601(3) of the RFA.JW yO8-ЍId. J In addition, the IRFA   solicited comment on alternatives to the proposed rules that would minimize the impact on small  X-entities consistent with the objectives of this proceeding.M( W yO"-ЍId. at 7303.M  X- 3.Comments on the IRFA  Xe-  A66.` ` Only one comment specifically addressed the Commission's IRFA. ACTA, a   jnational trade association representing interexchange carriers, strongly supports adoption of a"N& ,-(-(ZZ"   price disclosure requirement for all 0+ calls to provide consumers with the information necessary   to make informed choices, thus doing away with the need for alternative proposals setting  X-  Lbenchmark rates to trigger oral disclosure requirements.W yOK- ԍInitial Regulatory Flexibility Act Analysis, Comments of America's Carriers Telecommunication Association, filed July 17, 1996, at 1. ACTA asserts that adoption of the   alternative benchmark proposal would lead to anticompetitive and discriminatory results and  X-therefore does not comply with the RFA.: W yOu-ԍId.:  Xv-  B67.` ` In support thereof, ACTA asserts: that basing benchmarks on the rates of the three   largest IXCs (the Big Three) is unsound because it ignores greater underlying costs borne by   smaller carriers and economic disparities which exist between the Big Three carriers and all other   OSPs; that the Big Three may recover their costs through crosssubsidization and arbitrary cost   allocations that are possible because of their multimarket operations, whereas small providers can   Konly recover their costs directly through rates charged consumers; that because all or most small   carriers will be required to make oral disclosures, the public will be conditioned to associate small   providers with excessive rates; that OSPs will be forced to charge rates below the Big Three and   below their own costs, plus a reasonable profit, to get consumers to use their services; that the   benchmark proposal thus has a confiscatory effect; and, accordingly, the already competitively   ydisadvantaged smaller OSPs will not be able to sustain themselves in the marketplace, contrary   to broad general policies seeking greater participation by smaller companies in competing in the  Xb-OSP market, and the more specific policy that the Commission must apply in its RFA analysis.KbW yO-ԍId. at 23. K  X4-  PC68.` ` Further, ACTA contends that proposed benchmark rate elements such as time of   day and distance do not affect underlying costs, are contrary to the industry's growing reliance   on nationwide flat rates, and are inappropriate and unduly burdensome on small businesses.   Moreover, ACTA contends that the list of characteristics proposed by the Commission does not   take into account actual costs necessary to compete in the OSP marketplace such as PIFs and   commissions, further skewing the competitive environment adversely to small businesses.   According to ACTA, a benchmark margin of two to three times that of the Big Three benchmark   [carriers is needed to cover differences in underlying costs, not the 15 percent margin on which   the Commission sought comment. ACTA also contends that the proposed benchmark   -methodology provides the benchmark carriers with the opportunity to engage in anticompetitive  XN-conduct and predatory pricing.KN@W yO?#-ԍId. at 45.K "7',-(-(ZZ"Ԍ X-  D69.` ` Although not specifically filing an IRFA analysis, other commenters oppose  X-  adoption of rules that would unduly burden small businesses.]W yOb-ԍSee, e.g., NTCA Comments at 23.] Cleartel/ConQuest assert,  X-  -arguendo, that even if a rate benchmark could be justified on the basis of consumer expectations,   -any standard disclosure that only applies to the smaller OSPs, and not to the three largest, would   \be arbitrary and discriminatory, would place an uneven burden on smaller OSPs, and would  X-  Mstigmatize all carriers other than the big three for the traveling public.TXW yO-ԍCleartel/ConQuest Comments at 710.T NTCA asserts that   Kindustrywide mandated BPP deployment is not economically feasible and would adversely affect  X_-small and rural LECs.J_W yO -ԍNTCA Reply Comments at 2.J  XH-  X1-4.Discussion  X -  2 E70.` ` We agree with ACTA's views in regard to our IRFA and have concluded that the   .minimum rules adopted herein are necessary to protect consumers and will not unduly burden   small OSPs or other small business entities. Such rules will aid consumers, including small   zbusiness entities, avoid incurring excessive charges for 0+ operator services. The rules also   provide OSPs and potential OSP competitors, including small business firms, a level playing field   zin that they apply equally to all OSPs, and, unlike benchmark proposals, do not discriminate   against smaller OSP companies. Further, we are terminating our inquiry into BPP as urged by   =NTCA on behalf of small and rural LECs. Moreover, as urged by many commenters, including   small business entities, we have not adopted various benchmark proposals or other price control   rules set forth in this proceeding. Based on the record in this proceeding, we conclude that,  X-  contrary to the initial tentative conclusion in OSP Reform Notice, for the Commission to engage   ?in price regulation of OSPs' rates, including benchmark regulation, would involve micro  =managing the rates of nondominant carriers, including hundreds of small business companies.   [Such regulation would be the antithesis of the deregulatory thrust of the Regulatory Flexibility Act and the 1996 Act.  X-  X- ,5.Description and Estimates of the Number of Small Entities to Which the Rules Will  X|-Apply  XN-  F71.` ` The rules adopted require that hundreds of nondominant interexchange carriers   [implement certain information disclosure procedures regarding their rates, and any related fees   of the owners of the premises where the telephone instrument is located. Small entities may   feel some economic impact in additional message production, recording costs, and equipment   retrofitting or replacement costs due to the policies and rules adopted. Small providers of   <operator services also may experience greater live operator costs initially until automated terminal   Nequipment and network systems are modified to replace the need for intervention of live operators."!(x,-(-(ZZ "Ԍ X-  ԙG72.` ` For the purposes of this analysis, we examine the relevant definition of "small   entity" or "small business" and apply this definition to identify those entities that may be affected   by the rules adopted in this Second Report and Order. The RFA defines a "small business" to be   the same as a "small business concern" under the Small Business Act, 15 U.S.C.  632, unless  X-  the Commission has developed one or more definitions that are appropriate to its activities.W yO- MЍSee 5 U.S.C.  601(3) (incorporating by reference the definition of "small business concern" in 15 U.S.C.   632). Pursuant to 5 U.S.C.  601(3), the statutory definition of a small business applies "unless an agency after   -consultation with the Office of Advocacy of the Small Business Administration and after opportunity for public   comment, establishes one or more definitions of such term which are appropriate to the activities of the agency and publishes such definition(s) in the Federal Register."   A "small business concern" is one that: (1) is independently owned and operated; (2) is not   [dominant in its field of operation; and (3) meets any additional criteria established by the Small  X_-  kBusiness Administration (the SBA).t_xW yO -Ѝ Small Business Act, 15 U.S.C.  632 (1996).t The SBA has defined a small business for Standard   2Industrial Classification (SIC) category 4813 (Telephone Communications, Except  X1-  Radiotelephone) to be small entities when they have fewer than 1,500 employees.R1W yO-Ѝ13 C.F.R.  121.201.R We first   xdiscuss generally the total number of telephone companies falling within this SIC category. Then,   we refine further those estimates and discuss the number of carriers falling within relevant subcategories.  X -  H73.` ` Total Number of Telephone Companies Affected. The United States Bureau of  X -  {the Census ("the Census Bureau") reports that, at the end of 1992, there were 3,497 firms  X-  xengaged in providing telephone services, as defined therein, for at least one year.6W yO- ЍUnited States Department of Commerce, Bureau of the Census, 1992 Census of Transportation,  yO-Communications, and Utilities: Establishment and Firm Size, at Firm Size 1-123 (1995) (1992 Census). 6 This number   contains a variety of different categories of carriers, including local exchange carriers,   interexchange carriers, competitive access providers, cellular carriers, operator service providers,   pay telephone operators, personal communications service (PCS) providers, covered specialized   mobile radio (SMR) providers, and resellers. It seems certain that some of those 3,497 telephone   service firms may not qualify as small entities, small interexchange carriers, or resellers of  X-  \interexchange services, because they are not "independently owned and operated."T W yO -Ѝ15 U.S.C.  632(a)(1).T For   example, a PCS provider that is affiliated with an interexchange carrier having more than 1,500   yemployees would not meet the definition of a small business. It seems reasonable to conclude,   =therefore, that fewer than 3,497 telephone service firms are small entity telephone service firms that may be affected by this Order.  X|-  I74.` ` Wireline Carriers and Service Providers. The SBA has developed a definition of   small entities for telecommunications companies other than radiotelephone (wireless) companies"e) ,-(-(ZZ"   (Telephone Communications, Except Radiotelephone). The Census Bureau reports that there were  X-  2,321 such telephone companies in operation for at least one year at the end of 1992.`W yOb-Ѝ1992 Census at Firm Size 1123.`  X-  O According to the SBA's definition, a small business telephone company other than a  X-  Lradiotelephone company is one employing fewer than 1,500 persons.cXW yO-Ѝ13 C.F.R.  121.201, SIC Code 4812. c All but 26 of the 2,321   [nonradiotelephone companies listed by the Census Bureau, 2,295 companies were reported to   Lhave fewer than 1,000 employees. Thus, even if all 26 of those companies had more than 1500   employees, there would still be 2,295 nonradiotelephone companies that might qualify as small   entities based on these employment statistics. Because it seems certain, however, that some of   these carriers are not independently owned and operated, this figure necessarily overstates the   xactual number of nonradiotelephone companies that would qualify as "small business concerns"   under the SBA's definition. Consequently, we estimate using this methodology that there are   [fewer than 2,295 small entity telephone communications companies (other than radiotelephone companies) that may be affected by the decisions and rules adopted in this Order.  X -  BJ75.` ` Interexchange Carriers. Neither the Commission nor the SBA has developed a   definition of small entities specifically applicable to providers of interexchange services (IXCs).   LThe closest applicable definition under SBA rules is for telephone communications companies   {other than radiotelephone (wireless) companies. The most reliable source of information   regarding the number of interexchange carriers nationwide of which we are aware appears to be  XK-  the data that the Commission collects annually in connection with the TRS Worksheet.  X4-  According to our most recent data, 130 companies reported that they were engaged in the  X-  provision of interexchange services.hXW yO-ЍFederal Communications Commission, CCB, Industry Analysis Division, Telecommunications Industry  yO~-Revenue: TRS Fund Worksheet Data, Tbl. 1 (Average Total Telecommunications Revenue Reported by Class of  yOF-Carrier) (Dec. 1996) (TRS Worksheet).h Although it seems certain that some of these carriers are   Knot independently owned and operated, or have more than 1,500 employees, we are unable at this   time to estimate with greater precision the number of interexchange carriers that would qualify   as small business concerns under SBA's definition. Consequently, we estimate that there are   fewer than 130 small entity interexchange carriers that may be affected by the decisions and rules  X-adopted in this Order.  X-  X|-  K76.` ` Resellers. Neither the Commission nor SBA has developed a definition of small   entities specifically applicable to resellers. The closest applicable definition under SBA rules is   for all telephone communications companies. The most reliable source of information regarding   the number of resellers nationwide of which we are aware appears to be the data that we collect  X -  annually in connection with the TRS Worksheet. According to our most recent data, 260  X -  j companies reported that they were engaged in the resale of telephone services.E W yO&-ЍId. E Although it" *,-(-(ZZ["   seems certain that some of these carriers are not independently owned and operated, or have more   than 1,500 employees, we are unable at this time to estimate with greater precision the number   Kof resellers that would qualify as small business concerns under SBA's definition. Consequently,   we estimate that there are fewer than 260 small entity resellers that may be affected by the decisions and rules adopted in this Order.  Xv-  L77.` ` Operator Service Providers. Carriers engaged in providing interstate operator   services from aggregator locations (OSPs) currently are required under Section 226 of the   Communications Act to file and maintain informational tariffs at the Commission. The number   of such tariffs on file thus appears to be the most reliable source of information of which we are   aware regarding the number of OSPs nationwide, including small business concerns, that will be   affected by decisions and rules adopted in this Order. As of August 19, 1997, approximately 630  X -  carriers had informational tariffs on file at the Commission. Although it seems certain that some   of these carriers are not independently owned and operated, or have more than 1,500 employees,   >we are unable at this time to estimate with greater precision the number of OSPs that would   -qualify as small business concerns under SBA's definition. Consequently, we estimate that there   are fewer than 630 small entity OSPs that may be affected by the decisions and rules adopted in this Order.  XK-  M78.` ` Local Exchange Carriers. Consistent with our prior practice, we shall continue to   exclude small incumbent providers of local exchange services (LECs) from the definition of   "small entity" and "small business concerns" for the purpose of this FRFA. Because any small   incumbent LECs that may be subject to these rules are either dominant in their field of operations   or are not independently owned and operated, consistent with our prior practice, they are excluded  X-  from the definition of "small entity" and "small business concerns."# W yOQ- yԍSee Local Competition First Report and Order, 11 FCC Rcd 161445 at paras. 132830, 16150 at para. 1342   (1996). Because LECs generally are subject to regulation as dominant carriers, many LECs have formed separate   ;IXC subsidiaries for their interstate, domestic, interexchange service offerings, presumably to facilitate competition  yO-with nondominant IXCs subject to less regulatory constraints. # Accordingly, our use of   the terms "small entities" and "small businesses" does not encompass small incumbent LECs. Out   iof an abundance of caution, however, for regulatory flexibility analysis purposes, we will consider   [small incumbent LECs within this analysis and use the term "small incumbent LECs" to refer to  X|-  any incumbent LECs that arguably might be defined by the SBA as "small business concerns."J|W yO-ԍSee id.J  Xe-  XN-  ~N79.` ` Neither the Commission nor the SBA has developed a definition of small LECs.   LThe closest applicable definition under SBA rules is for telephone communications companies   other than radiotelephone (wireless) companies (SIC 4813) (Telephone Communications, Except  X -  Radiotelephone) as previously detailed above. Our alternative method for estimation utilizes the  X-  data that we collect annually in connection with the TRS Worksheet. This data provides us with   zthe most reliable source of information of which we are aware regarding the number of LECs   xnationwide. According to our most recent data, 1,347 companies reported that they were engaged" +@,-(-(ZZ"  X-  zin the provision of local exchange services.XW yOy-#C\  P6QɒP#ЍFederal Communications Commission, CCB, Industry Analysis Division, Telecommunications Industry  yOA-Revenue: TRS Fund Worksheet Data, Tbl. 1 (Average Total Telecommunications Revenue Reported by Class of  yO -Carrier) (Dec. 1996) (TRS Worksheet). Although it seems certain that some of these   ycarriers are not independently owned and operated, or have more than 1,500 employees, we are   yunable at this time to estimate with greater precision the number of incumbent LECs that would   -qualify as small business concerns under SBA's definition. Consequently, we estimate that there   are fewer than 1,347 small LECs (including small incumbent LECs) that may be affected by the  X-rules adopted in this Order.  X_-  O80.` ` In addition, the rules adopted in this Order may affect companies that analyze   information contained in OSPs' tariffs. The SBA has not developed a definition of small entities   specifically applicable to companies that analyze tariff information. The closest applicable   definition under SBA rules is for Information Retrieval Services (SIC Category 7375). The  X -  !Census Bureau reports that, at the end of 1992, there were approximately 618 such firms  X -  classified as small entities.=X W yO- ЍU.S. Small Business Administration 1992 Economic Census Industry and Enterprise Report, Table 2D, SIC   Code 7375 (Bureau of the Census data adapted by the Office of Advocacy of the U.S. Small Business Administration).= This number contains a variety of different types of companies,   only some of which analyze tariff information. We are unable at this time to estimate with   greater precision the number of such companies and those that would qualify as small business   concerns under SBA's definition. Consequently, we estimate that there are fewer than 618 such small entity companies that may be affected by the decisions and rules adopted in this Order.  Xb-  6.Description of Projected Reporting, Recordkeeping, and Other Compliance  XK-Requirements  X-  }P81.` ` The rules adopted require carriers to disclose audibly to consumers how to obtain   jthe price of a call before it is connected. In this section of the FRFA, we analyze the projected   reporting, recordkeeping, and other compliance requirements that may apply to small entities as  X-  a result of this Order.]W yO-ЍSee 5 U.S.C.  604(a)(4).] As a part of this discussion, we mention some of the types of skills that  X-will be needed to meet the new requirements.  X-  X-  #Q82.` ` Nondominant interexchange carriers, including small nondominant interexchange   carriers, will be required to provide oral information to awayfromhome callers, advising them   [how to obtain the cost of an interstate 0+ call, and similarly to disclose to the party to be billed   for collect calls from telephones set aside for use by prison inmates how to obtain the cost of the   call before they could be billed for such calls. This change in the manner of conducting their business may require the use of technical, operational, accounting, billing, and legal skills. " ,,-(-(ZZ["Ԍ X-  7.Significant Alternatives and Steps Taken to Minimize Significant Economic Impact  X-on a Substantial Number of Small Entities Consistent with Stated Objectives  X-    X-  oR83.` ` In this section, we describe the steps taken to minimize the economic impact of   your decisions on small entities and small incumbent IXCs, including the significant alternatives  X-  -considered and rejected.aW yO-ЍSee id. at  604(a)(5).a To the extent that any statement contained in this FRFA is perceived   as creating ambiguity with respect to our rules or statements made in preceding sections of this Order, the rules and statements set forth in those preceding sections shall be controlling.   X1-  S84.` ` We believe that our action requiring carriers to orally disclose how to obtain the   price of their interstate 0+ operator services up front at the point of purchase will facilitate the   development of increased competition in the interstate, domestic, interexchange market, thereby  X -  [benefitting all consumers, some of which are small business entities.  Specifically, we find that   >the rules adopted herein with respect to interstate, domestic, interexchange 0+ services will   enhance competition among OSPs, promote competitive market conditions, and achieve other   kobjectives that are in the public interest, including establishing market conditions that more   closely resemble an unregulated environment. The decision not to require detariffing of OSP   yinformational tariffs will also allow businesses, including small business entities, that audit and analyze information contained in tariffs to continue.  X4-  T85.` ` We have rejected several alternatives to the additional oral disclosure requirements   and rules adopted herein, including proposals (1) to establish a costly billed party preference   ksystem for 0+ calls from aggregator and prison locations; (2) to micromanage nondominant   <carriers' prices for such calls, including proposals to cap rates, establish annual FCC benchmarks,   iand to require cost justification for rates that exceed such benchmarks; (3) requiring oral warnings   to prospective consumers comparing a carrier's rates with lower rates of the largest carriers; and  X-  (4) mandating 0+ in the public domain. Rejection of these alternatives helps to ensure that small  X-  carriers will not be unnecessarily burdened.  The rules adopted herein are applicable only to   limited interexchange 0+ calls from payphones, or other aggregator locations, and from inmate   phones in correctional institutions. They are not applicable to international calls, intrastate calls,   and interstate 0+ calls made by callers from their regular home or business. The rules also are   inapplicable to calls that are initiated by dialing an access code prefix, such as 10333 or 1800  8778000, whereby callers may circumvent placing the call through the longdistance carrier that is presubscribed for that line.  X- 8.Report to Congress  X!-  U86.` ` The Commission shall send a copy of this Final Regulatory Flexibility Act   -Analysis, along with this Second Report and Order, in a report to Congress pursuant to the Small   Business Regulatory 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."h$-X,-(-(ZZF#"Ԍ  X- B. Final Paperwork Reduction Act of 1995 Regulatory Analysis  X-  3V87.` ` This Second Report and Order contains a modified information collection. As  X-  ]required by the Paperwork Reduction Act of 1995, Pub. L. No. 10413,gW yO-Ѝ44 U.S.C.  3501 et seq. g the OSP Reform  X-  Notice invited the general public and the Office of Management and Budget (OMB) to comment   on proposed changes to the Commission's information collection requirements contained  X_-  -therein.g_XW yOh -ЍOSP Reform Notice, 11 FCC Rcd at 7303.g The changes to our information collection requirements on which we sought comment  XH-  in the OSP Reform Notice included: (1) the elimination of tariff filings by nondominant   interexchange carriers for interstate, domestic, interexchange operator services from aggregator  X -  locations;M W yO-ЍId. at 7297.M and (2) requiring such carriers to disclose the cost of a call to consumers if the call  X -was made using that carrier.L xW yO,-ԍId. at 7298. L  X -  AW88.` ` On September 8, 1996, OMB approved, with comments, the proposed changes to  X -  our information collection requirements contained in OSP Reform Notice, in accordance with  X -  the Paperwork Reduction Act. W yO`-ԍNotice of Office of Management and Budget Action, OMB No. 30600717 (September 8, 1996). OMB asked us to address whether the consumer would not be   ybetter served by requiring all OSPs to inform the caller of the cost of the call "regardless of any  Xy-  zbenchmark." @yW yO-ԍId. at 2.@ Because we have concluded that we should adopt a disclosure requirement  Xb-  xapplicable to all OSPs, and not a disclosure rule based on benchmark rates,Xb( W yO;-ԍSee supra para. Ĭ30.X concerns that OMB  XK-expressed in this regard have been met or rendered moot.( K W yO- /ԍIn asking how consumers would be informed of the benchmark charge, OMB stated that the Commission   Zshould not assume that members of the public would know such benchmark cost and that "[t]heir knowledge will,  yOD -  in general, be limited to the cost of services provided by their interlata carrier of choice." Notice of Office of  yO !-Management and Budget Action, OMB No. 30600717, supra at 2.(  X-  2X89.` ` OMB also stated that we should calculate and include, as a cost burden, the cost  X-  kof installing the systems that will inform the consumer of the cost of a call :W yOW%-ԍId.: Although we   yinvited comment on the costs and benefits of requiring all OSPs to disclose their rates on all 0+   Ocalls from aggregator locations, the cost information we received was generally quite ".0,-(-(ZZ&"  X-  Zconclusionary rather than specific in nature.<@W yOy- ԍSee, e.g., GTE Comments at 7 (Average work time per call to determine and quote cost prior to call   xcompletion would "likely double, increasing the operator surcharge per call accordingly"). "For both mechanized   and operatorhandled 0+calls, quoting the call cost to consumers would significantly increase call holding time and  yO-  .necessitate additional trunking facilities.") Id. Because call costs would have to be quoted to the billed party,   Y"additional equipment would be required for processing mechanized calls and additional operators, operator positions  yOa-  and building space for operatorhandled calls." Id. at 78. Developing an automated system that can quote a rate   at the point the call is made "will significantly increase the OSP's cost." MCI Comments at 4. Price disclosure "on each call is extremely costly." Pacific Telesis Comments at 3.<  The specific cost data filed by some parties vary.   Intellicall states that its ULTRATEL storeandforward payphones have no internal memory left  X-  to accommodate additional functionalities, let alone voluminous rate structures [and] cannot be  X-  Nretrofitted . . . to increase their memory capacity."W yO< - ԍLetter from Judith St. LedgerRoty, counsel for Intellicall, Inc., to William A. Caton, Acting Secretary, Federal Communications Commission (March 21, 1997) at 3. With respect to its new generation   ASTRATEL storeandforward payphones, Intellicall estimates that "it would cost approximately   $200,000 and would require between eight and fourteen months, barring unforeseen circumstances   Kto, among other things, develop, test, and debug the computer software necessary to install the   rate structures into the payphone memory, and import the rate structures into the payphone  XH-  memory."@H( W yO!-ԍId. at 4.@ GTE states that "[m]echanized equipment could possibly be enhanced to quote rates   prior to the call connection, but this would require significant capital outlays and would involve  X -  several years lead time to accomplish."C W yO-ԍGTE Comments at 7.C GTE further states that its "current mechanized   equipment (costing approximately $22 million in 1993) would most likely require a complete  X -  replacement for such a modification.": H W yO-ԍId.: MCI estimates that it would cost an additional $0.40  X -  per call if all calls have to be sent to a live operator in the near term.E W yO^-ԍMCI Comments at 34.E Sprint estimates that the  X -  labor cost of a rate disclosure would approximate $0.35 per call.J hW yO-ԍSprint Comments at 4 n.3.J U S WEST estimates that   to mechanize a system that "would allow for a data base dip for every 0+/ call" would add about  X-  K$0.50 to each call.HW yO9"-ԍUS WEST Comments at 10.H Thus, specific cost data of record is sparse and cost estimates of those who have commented vary considerably.  XK-  oY90.` ` The new rules adopted herein require OSPs to orally advise consumers of their   current right to obtain rate quotes at the time of purchase on interstate, domestic, interexchange   0+ calls. The rules are inapplicable to 0 calls. Further, we are not requiring real time rate"/,-(-(ZZe"   -quotes on every 0+ call, only when callers request such price information at the time of purchase.  X-   Most if not all who have commented agree with our conclusion that the cost of installing the   systems necessary to implement the rules adopted herein should prove to be much less than the   foregoing estimates and much less than the estimated one billion dollar cost of implementing an  X-alternative billed party preference routing system for OSP interstate calls.  Xv-  }Z91.` ` In this Order, we adopt certain changes to our information collection requirements  X_-  on which we sought comment in the OSP Reform Notice. Specifically, we have adopted rules   governing the filing of informational tariffs by OSPs for their interstate, domestic, interexchange  X1-  0+ services.b1W yO -ЍSee Appendix A. b Implementation of these requirements will be subject to approval by OMB as  X -prescribed by the Paperwork Reduction Act.  X -  X -l à /}XI. CONCLUSION X -lU  X -   [92.` ` We conclude that we should amend our rules to require OSPs to provide additional   oral information to awayfromhome callers, disclosing the cost of a call, including any   Laggregator surcharge for a 0+ interstate call from that aggregator location, before such a call is   connected, at the consumer's option whether to receive such cost information. We also amend   our rules to require carriers providing interstate service to prison inmates to orally disclose their   identity to the party to be billed for such calls and, if such party elects to receive rate quotes for   the call, to orally disclose the charges for the call before connecting the call. Finally, we deny  X-  petitions for reconsideration of the Phase I Order in this proceeding and terminate this proceeding.  X- XII. ORDERING CLAUSES  X-lU  X-  R\93.` ` Accordingly, IT IS ORDERED, pursuant to Sections 1, 4(i), 4(j), 10, 201205,   ]215, 218, 226, and 254 of the Communications Act of 1934, as amended, 47 U.S.C.  151,   154(i), 154(j), 160, 201205, 215, 218, 226, 254, that the policies, rules, and requirements set  XN-forth herein ARE ADOPTED.   X -  C]94.` ` IT IS FURTHER ORDERED that 47 C.F.R. Part 64, Subpart G IS AMENDED   as set forth in Appendix A, effective July 1, 1998, except that the effectiveness of Section   64.703(a)(4) and Section 64.710 is stayed with respect to embedded storeandforward telephone equipment until fifteen months thereafter.  X!-  ^95.` ` IT IS FURTHER ORDERED that the request by Intellicall, Inc., filed March 21,   1997, seeking exemption of its ULTRATEL payphones from the rules adopted herein IS DENIED. "h$0X,-(-(ZZF#"Ԍ X-  _96.` ` IT IS FURTHER ORDERED that the petitions for reconsideration of the  X-  OCommission's Phase I Order in this docket, filed by Competitive Telecommunications   Association, International Telecharge Incorporated, LDDS Communications, Inc., MCI   Telecommunications Corp., PhoneTel Technologies, Inc., Polar Communications Corporation, Southwestern Bell Telephone Company, and ValueAdded Communications ARE DENIED.   Xv-  `97.` ` IT IS FURTHER ORDERED that the Office of Public Affairs, Reference   !Operations Division, shall mail a copy of this Report and Order to the Chief Counsel for   Advocacy of the Small Business Administration, in accordance with section 603(a) of the   Regulatory Flexibility Act, 5 U.S.C.  603(a)(1981). The Secretary shall cause a summary of  X -this Order to appear in the Federal Register. X` hp x (#%'0*,.8135@8:require expensive development and high continuing costs (e.g. access charges) and would not provide  S-commensurate consumer benefits.": e yO$-ԍId.:  SP-  `2.` ` Other commenters similarly contend that a universal rate disclosure requirement would   "penalize the service quality of the good actors in the industry who already are charging rates that are in"(;H ,))ZZ"  S-  [line with consumer expectations."a yOh-ԍPeoples Comments, filed November 13, 1996, at 2.a They assert that such a requirement will only operate to increase the   price of 0+ calls and burden an entire industry with "additional, totally unnecessary" costs, and that such   >a "total industry/total market" approach to the problem of pricegouging "is simply not in the public  S-interest."cX yO-ԍU S WEST Comments, filed November 13, 1996, at 4.c  S8-  B3.` ` GTE maintains that current Operator Service System (OSS) call rating systems cannot   "rate quote the specific calls in question" and that none of the 0+ calls of its domestic telephone   companies handled on a mechanized basis (about 80%) or on a typical operatorhandled basis are currently  S-  rated by the OSS.U  yOH -ԍGTE Comments at 7.VppU GTE further maintains that, while it may be possible to enhance mechanized   equipment to quote rates prior to the call, this likely would require significant capital outlays and take   jseveral years lead time to accomplish; and that its current mechanized equipment (costing approximately  SH -  $22 million in 1993) would most likely require a complete replacement for such a modification.C H x yO`-ԍId.` ` C GTE   asserts that for calls handled by an operator, the average work time per call to determine and quote cost   prior to call completion would likely double, increasing the operator surcharge per call accordingly; and   ]that for both mechanized and operatorhandled 0+ calls, quoting the call cost to consumers would  S -  0significantly increase call holding time and necessitate additional trunking facilities.C  yOP-ԍId.` ` C GTE further   maintains that, because call costs would have to be quoted to the billed party, the process would be further   zcomplicated, requiring additional equipment for processing mechanized calls and additional operators,  S0-  operator positions and building space for operatorhandled calls.: 0 yOh-ԍId.: GTE believes most other OSPs would   report similar situations when assessing their equipment for enhancement to quote such call costs and that  S-  ythere would be little or no public benefit if these costs were mandated to all OSPs. @ (  yO-ԍId. at 8.@ If disclosure of rate   information is required, quoting rates for maximum or average duration might have no relation to the call   being placed and thus would distort the customer's perspective. Accordingly, GTE maintains that any  Sh-mandated disclosures should quote the rate for the first minute and additional minutes, not average rates.:h  yO -ԍId.:  S-  4.` ` The Metropolitan Washington Airports Authority (Airports Authority) states that the   problem of excessive payphone charges does not exist at Washington National and Dulles airports because   zit "has not and would not accept a bid for payphone services at rates that exceed established industry  S-  norms."oH  yO&-ԍComments of Airports Authority, filed November 13, 1996, at 4.o The Airports Authority maintains that a system of ondemand call rating would serve, in most"<,-(-(ZZ"  S-  cases, merely to make payphone service less convenient and less efficient at both airports.B yOh-ԍId. at 34.B The view of the New York State Consumer Protection Board (NYSCPB) is that establishing   [benchmarks at levels no higher than the highest rates charged by AT&T, MCI and Sprint is preferable to  S-requiring companies charging competitive rates to automatically disclose such prices to all consumers.HX yO-ԍNYSCPB Comments at 56.H  S8-  5.` ` Intellicall asserts that the significant associated costs and administrative burdens imposed   upon the manufacturers and payphone providers "strongly militate against imposing any specific granular  S-  requirement on these entities."L yOp -ԍIntellicall Comments at 12.L According to Intellicall, in addition to being operationally burdensome  S-  and costly, universal rate disclosure is impractical and technically infeasible.jx yO -ԍIntellicall Reply Comments, filed December 3, 1996, at 2.j Intellicall asserts that the   costs of implementing a mandatory, realtime exact audible rate disclosure requirement would be  Sp-  [prohibitive with respect to both storeandforward and networkbased payphones.@p yO-ԍId. at 3.@ If the Commission  SH -  kshould require some form of rate disclosure, Intellicall urges a less granular approach, e.g., quoting the   maximum rate (initial and additional periods) for a particular destination class of calls, which alternative   is more readily implementable from a technical perspective and would avoid stranding investment in store S -  andforward pay telephones.mX  yO- ԍIntellicall Comments at 15. See also Joint Reply Comments of Intellicall and Network Operator Services,   ,Inc. at 20 (Disclosure of maximum rates for initial and subsequent minutes of use approach provides "unique benefit in that existing equipment need not be replaced.").m Intellicall's view, however, is that "given the wide variation in rates for   different call types and the prevalence of distancesensitive rates, it would be impossible to provide an  S -  [averageor maximum quote that is both accurate and informative to the caller."  yO- ԍLetter from Steven A. Augustino, counsel for Intellicall, to William F. Caton, Secretary, Federal Communications Commission, June 12, 1997, at 2. In addition, Intellicall   asserts that such information "would have to be provided on every call including 0+ intraLATA and  S0-0+ local calls which could be even more misleading to callers.":0 yO-ԍId.:  S-  6.` ` American Public Communications Counsel (APCC) states that "[m]anufacturers indicate   jthat providing a complete set of rate tables for operator assisted calls within each payphone would place   such huge demands on available memory capacity that the cost of such an implementation at storeand Sh-  forward payphones would be prohibitive for new payphones as well as for the installed base."`h yO$-ԍAPCC Comments, filed November 13, 1996, at 34.` Pacific   .Telesis agrees with "the near unanimous view that currently no technology exists that would provide on"@=0,-(-(ZZ"  S-  demand call rating information."n yOh-ԍPacific Telesis Reply Comments, filed December 3, 1996, at 2.n MCI concurs in this assessment and states that "[t]he only current  S-method of providing information on demand is through a live operator."]X yO-ԍMCI Comments, filed November 13, 1996, at 3.]  S-  7.` ` US WEST maintains that, to the extent that the current rules may be insufficient to protect  S`-  consumers, the challenge is primarily in the area of consumer education, not further regulatory mandates.^` yO-ԍReply Comments, filed December 3, 1996, at 2.^   U S WEST opposes the imposition of mandatory rate disclosures on all 0+ calls and maintains that "[t]he  S-  yCommission should deal with malcreants in this market . . . through enforcement activities."@x yO( -ԍId. at 6.@ U S WEST   maintains that any mandate that ubiquitous rate information disclosures be made of every 0+ call from   any aggregator station is not supported by general market demand, logic, or sound public policy theory   and asserts that carriers should not be expected to expend substantial sums of money to remedy persistent  Sp-  consumer "head in the sand" behavior.cp yO-ԍU S WEST Comments, filed November 13, 1996, at 22.c If, the Commission adopts rules requiring ubiquitous rate  SH -  disclosure message s, U S WEST asserts that such messages should be required to do no more than provide   <the consumer the opportunity to stay on the line to secure rate information; that the particular presentation   of the rate information should be left up to the OSP providing the service; that this model is capable of   yfairly easy implementation, access and use, and represents the most targeted model and, thus, "the model  S -  ]most in the public interest."D  yO-ԍId. at 2223.D If a caller was not interested in rate quotes, the caller could bypass  S -receiving any rate information by proceeding with the call through either an automated or live process.g (  yOH-ԍU S WEST Reply Comments, filed December 3, 1996, at 1.g  S0-  n8.` ` AMNEX contends that "given the costs and complexity associated with implementing per  S-  call pricing announcements," the Commission's proposal "is not practical."_   yO`-ԍAMNEX Comments, filed November 13, 1996, at 3._ AMNEX, echoing the   >comments of other parties, asserts that "[t]he Commission's proposal would require the creation and   maintenance of a very expensive, very large, dedicated database processor" that would require daily  S-  updating to account for rate changes, although such a database does not currently exist.!H  yOx!-ԍId. at 2; see also BA/BS/NYNEX Comments, filed November 13, 1996, at 4. BA/BS/NYNEX   -contend that "[t]here is no indication that consumers want percall price disclosure or that they would view  S@-it as an improvement to existing 0+ call services."e"@ yO$-ԍBA/BS/NYNEX Comments, filed November 13, 1996, at 4.e  S-  _9.` ` The IPTA contends that any rate disclosure on operator service calls would have to apply   to all operator service calls, including 10XXX, 950, and 1800 access code calls, and not solely">h",-(-(ZZQ"  S-  \presubscribed 0+ calls.]# yOh-ԍIPTA Comments, received July 18, 1996, at 6.] The IPTA further argues that because OSPs would be unable to distinguish   between an access code call and a 0+ call, the imposition of a mandated rate quote on 0+ calls would   =require OSPs to state the applicable rate on every call, increase call setup time, and provide unnecessary  S-  /information to callers that dial access code operator service calls.:$X yO-ԍId.: InVision Telecom, Inc. (InVision)   states that it "does not believe that it would be in the public interest to force consumers to listen to a price  S8-  disclosure they have no desire to hear."b%8 yO -ԍInVision Comments, filed November 13, 1996, at 5.b InVision further contends that, "[s]pecifically, in the inmate   {environment consumers typically receive multiple calls from the same inmate, making a rate quote  S-preceding each call repetitive and unnecessary.":&x yO -ԍId.:  S-   10.` ` A number of commenters allege that a significant barrier to the imposition of an oral rate  Sp-  branding requirement is the dialing delay.8'p yO- ԍSee, e.g., MCI Comments, filed November 13, 1996, at 34 ("c ustomers indicated that the number one  yO-reason for dissatisfaction with 0+ operator services was that the call takes too long to set up.") Id. at 4.8 Peoples argues that "[a]ny requirement for mandatory price   disclosure of prices that already are in line with consumer expectations, prior to connecting these calls,   will only cause greater distress for the consumer that expects a payphone call to be connected quickly  S -  ywithout any unnecessary delay."a( `  yO-ԍPeoples Comments, filed November 13, 1996, at 3.a AMNEX argues that the necessary development of a database which   Lwould contain various call rates would "add from ten to fifteen seconds to the duration of the call, which   Lwould tie up trunks longer, increase access costs and require a higher number of trunks to serve the same  S -  number of calls."_)  yO-ԍAMNEX Comments, filed November 13, 1996, at 4._ Oncor argues, that it is "highly unlikely that OSP rate disclosures could be provided  SX-in a manner which would increase call completion time by only 1.5 to 3 seconds."_*X  yOx-ԍOncor Comments, filed November 13, 1996, at 5._  S-   11.` ` In response to the Common Carrier Bureau's request for further comment on whether there  S-  are any industries in which price disclosure to consumers at the point of purchase is not the normal   practice, Sprint, BA/BS/NYNEX, and MCI cite the electric, gas, and water utility services as applicable  S-  examples.+ yO@"- ԍSprint Comments, filed November 13, 1996, at 1, 3; BA/BS/NYNEX Comments, filed November 13, 1996 at 1; MCI Comments, filed November 13, 1996, at 2. Sprint further cites the examples of auto and appliance repair shops and grocery stores which  Sh-  use scanners to register sales.e,hh yOp%-ԍSprint Comments, filed November 13, 1996, at 1, 34.e Citing provisions of TOCSIA, Oncor states that none of the referenced"h?,,-(-(ZZ"   industries is "subject to more comprehensive requirements to ensure consumers' rights to price information  S-at the time of service than the interstate 0+ calling industry."_- yO@-ԍOncor Comments, filed November 13, 1996, at 3._  S-   12. ` ` With respect to the Bureau's inquiry regarding whether there are any telecommunications   markets outside of the U.S. that already make use of price disclosure prior to call completion, the majority  S8-  .of parties either declined to answer this question .8X yO0-  ԍSee APCC Comments, filed November 13, 1996, at 4; see generally Peoples Comments, filed November 13, 1996; AMNEX Comments, filed November 13, 1996 (commenters did not address the question). , or were unaware of any instances of price disclosure  S-  [prior to call completion./ yO` -ԍSee Sprint Comments, filed November 13, 1996, at 1; MCI Comments, filed November 13, 1996, at 3. BA/BS/NYNEX state that "as far as we have been able to determine . . . there  S-  are no communications markets that use price disclosure prior to completion of 0+ calls."e0@ yO -ԍBA/BS/NYNEX Comments, filed November 13, 1996, at 3.e U S WEST   does acknowledge that there are "smart payphones [which] contain a type of device that allows callers  S-  making certain types of calls (i.e.; cash or telephone debit cards) to know that the monetary value of their  Sp-  =cash deposit or debit card is being used up."c1p yO-ԍU S WEST Comments, filed November 13, 1996, at 15.c U S WEST argues that this type of technology is present   in other markets, including the United Kingdom, and that beyond these technological innovations, it is  S -  unaware of any additional technologies supporting ondemand call rating information.D2 `  yO -ԍId. at 1516.D Southwestern Bell   Telephone Company (SWBT) contends that although "[i]f a customer calls the operator and requests a   jrate, the technology is in place within SWBT to quote the SWBT rate for any call within the serving area  S -. . . there is no mechanized system for realtime quotation for 0+ calls."^3  yO8-ԍSWBT Comments, filed November 13, 1996, at 3.^  SX-  _ 13. ` ` APCC contends that, "[i]f the Commission decides to impose a ratedisclosureon demand  S0-  requirement on all 0+ calls, regardless of the applicable rate, then those [payphone service providers] that  S-  provide storeandforward operator services could incur crippling cost burdens."u4  yO(-ԍAPCC Comments, filed November 13, 1996, at 8 (emphasis in original).u APCC suggests that   jthe Commission should mitigate the financial impact of universal rate disclosure, through the adoption of  S-  a requirement for disclosure on demand rather than automatic disclosure of rates.@5 yOh!-ԍId.@ Teltrust   Communications Services, Inc. (Teltrust) agrees with this assertion, arguing that its switch vendor, "has   stated that implementation of realtime audible rate disclosure would require a major software upgrade,"  S@-  which would "result in significant cost to Teltrust and other carriers."b6@ yO%-ԍTeltrust Comments, filed November 13, 1996, at 3.b Other commenters agree, that,   especially with respect to "storeandforward payphones", rate disclosures would be technically infeasible"@06,-(-(ZZ"  S-  and necessitate forced retirement of existing equipment.L7 yOh-ԍIntellicall Reply at 1718.L USOC contends that its "embedded base   0equipment at hotel locations is not capable of providing rates on a realtime basis. . . [i]n order to  S-  /implement realtime rate quotes on all calls, site equipment would have to be changed completely."^8X yO-ԍUSOC Comments, filed November 13, 1996, at 6.^   MIntellicall requests that its ULTRATEL storeandforward payphones be exempted from a proposed   requirement that rate quotes be provided to callers, without their having to redial a second number,  S8-asserting that such payphones lack sufficient internal memory to be retrofitted to do so.98 yO - ԍLetter from Judith St. LedgerRoty, Counsel for Intellicall, Inc., to William A. Caton, Acting Secretary, Federal Communications Commission (March 21, 1997).   S-Commenters Supporting Universal Oral Rate Branding  S-   14. ` ` Opticom asserts that the Commission's proposal to impose a requirement on all OSPs to   disclose orally their rates to consumers when a call is placed could immediately address many of the  SH -  concerns prompting the consideration of BPP and at a much lower cost to consumers and carriers.L:H @ yO(-ԍOpticom Comments at 8 n.31.L   Moreover, according, to Opticom, the costs associated with a disclosure requirement would be minimal   and most OSPs already have the technology to allow for full disclosure when a call is made and prior to  S -  kthe time charges are incurred.:;  yO@-ԍId.: Opticom asserts that: the concept of cost is fundamental to a healthy   marketplace; access to cost information prior to purchase is expected by members of the consuming   public; and that there are two technological systems currently capable of providing ondemand cost  SX-  Linformation to consumers purchasing operator services.q<X`  yOX-ԍSee Opticom Comments, filed November 13, 1996, at Summary.q Opticom states that it currently uses voice file   technology to brand its operator service calls; that such technology would not require the purchase of any   new hardware or software but that various voice files would have to be developed for each ondemand   rate at an approximate cost of $500 per voice file; that such technology could be developed and   =implemented in less than 7 months but that most OSPs have rating complexities, such as mileage or time  S-  [of day sensitivity, that exceed such technology's capabilities.A=  yO -ԍId. at 2. A Opticom also identified a second type of   >technology system which it states is "fairly mature and well suited for the purpose of providing on S@-  demand call rating information," i.e., voice annunciators or texttospeech converters, the same technology  S-  used for annunciating numbers at the end of a directory assistance call.:>  yO8#-ԍId.: Opticom estimates that it would   take approximately two people working between eight and eighteen months or "two man years" to develop  S-  the necessary software.H? yOx&-ԍId. at 34.H Opticom asserts that both types of rating systems thus can be implemented timely"A?,-(-(ZZ3"  S-  yand at a reasonable cost to OSPs.@@ yOh-ԍId. at 3.@ Moreover, according to Opticom, ondemand call rating would create   only a minimal delay in call processing, approximately 12 seconds, and the technology could be developed  S-  to allow consumers to voluntarily bypass this rate information.:AX yO-ԍId.: For these reasons, Opticom concludes,   ythe Commission should adopt regulations requiring OSPs to provide ondemand rate information prior to  S`-call completion.FB` yO-ԍId. at Summary.F  S-  P15.` ` In its response to the Bureau's Public Notice, CompTel recommends that the Commission   adopt an alternative audible disclosure requirement that it now proposes instead of the disclosure described  S-  in OSP Reform Notice. CompTel asserts that its proposed disclosure requirement would not only be  S-  Mhelpful to consumers but avoid what it regards as "the legal pitfalls of the Commission's proposal."_Cx yO-ԍCompTel comments, filed Nov. 13, 1996, at 25._   Specifically, CompTel now proposes that, before a customer may incur any charges for any interstate 0+   calls from an aggregator location, the presubscribed carrier serving that aggregator phone be required to   Nprovide an audible disclosure immediately after its carrier brand. Under CompTel's proposal, the  S -  customer would be instructed to press a key, e.g., the # key, to obtain a rate quote or assistance.   Alternatively, at the option of the OSP, customers would be advised that they need only remain on the   line to obtain rate quotes or assistance. Under CompTel's proposal, an OSP would not be permitted to  S -  require a caller to redial a second number to obtain a quote of its rates.BD  yO(-ԍId. at 3. B According to CompTel, the disclosure should be substantially in one of the following forms:  S-Option 1   BONG: "Thank you for using _____________ . For assistance or a rate quote, please press the ___ key. To complete your call, please enter your calling card number now."  Sh-Option 2   BONG: "Thank you for using _____________ . For assistance or a rate quote, please stay on the line.  S-To complete your call, please enter your calling card number now."<E yOP-ԍId. <  S-  216. ` ` Because the disclosure it proposes is simple, direct, and consistent on each call, CompTel   claims carriers could implement it with minimal expense, integrating it with the audible brand they already  Sx-  are required to provide.@Fx(  yO@$-ԍId. at 5.@ CompTel contends that the overwhelming majority of OSPs would be able to   provide the message it proposes if they were given the option of choosing among four methods for callers"PB F,-(-(ZZ"  S-  [to obtain a rate quote, i.e, (1) "time out" (stay on the line) to a live operator, (2) press "0", (3) press "#",  S-or (4) press "*X" where X is a specified digit on the keypad.G yO@- ԍLetter from Steven A. Augustino, Counsel for CompTel, to William F. Caton, Secretary, Federal Communications Commission, April 4, 1997, at 1.   S-  17. ` ` The National Association of Attorneys General (the Attorneys General) support adoption   of rules requiring universal rate disclosure to the paying party, believing that option "would be  S8-  administratively simpler, more informative, and fair"RH8  yO-ԍ Attorneys General Comments at 4.R than a benchmark system, and that "a complete and   accurate universal rate disclosure requirement will increase consumer awareness and lead to more  S-competitive pricing."@I yO8 -ԍId. at 8.@  S-  18. ` ` The People of the State of California and the Public Utilities Commission of the State of   California (the California Commission) argues that "disclosure on all calls will better serve to reduce  SH -  Zcustomer confusion."UJH @ yO(-ԍCalifornia Commission Comments at 5.U The California Commission, which strongly advocates BPP as the preferred solution   to OSP pricing abuses, supports price disclosure by OSPs for all 0+ calls "because, in the interim, the full   disclosure alternative would appear to provide many of the benefits of BPP at little, if any, cost to  S -  consumers."@K  yO@-ԍId. at 3.@ It asserts that disclosure of OSP rates prior to the customer's use of the service is "a   reasonable minimal protection," which should be afforded the OSP customer, and "believes that this   yexpedient safeguard will significantly deter pricing abuses, and may result in a substantially lowered level  SX-  =of consumer complaints."@LX`  yOX-ԍId. at 4.@ The California Commission favors disclosure of both the initial minute rate,  S0-including any operator or other surcharges, and subsequent minute rates, but not an averaged rate.:M0  yO-ԍId.:  S-  }19. ` ` The North Dakota Public Service Commission (North Dakota Commission) favors the oral   disclosure of rates on all OSP calls over any benchmark approach because it "will contribute to a better   consumer awareness of OSP pricing practices" which in turn "will enhance customers' ability to make true  Sh-  [choices."Nh  yO!- ԍLetter from Susan E. Wefald, President, Bruce Hagen, Commissioner, and Leo M. Reinbold, Commissioner, to Secretary, Federal Communications Commission (July 3, 1996). The North Dakota Commission states that, in its experience, operator service providers will   \increase their rates "to meet the competition" and that in such an environment, it does not believe the  S-  jalternative benchmark proposal will have the intended result of motivating providers to keep rates low.:O yO%-ԍId.: "ChO,-(-(ZZq"   In addition, it believes "the benchmark alternative will be harder for companies to implement, harder for  S-the FCC to enforce, and harder for customers to understand.":P yO@-ԍId.:  S-  20. ` ` In lieu of the imposition of a benchmark system, USLD "implores that any branding   requirement . . . be imposed in a nondiscriminatory manner, ubiquitously across all carriers regardless  S8-  of their individual end user rates."Q8X yO0- ԍUSLD Comments, filed November 13, 1996, at 13. (conversely, USLD contends that customers will have  yO-a negative response to additional call delay as a result of price disclosure. Id. at 10.) Oncor reiterates its previously stated position that if the Commission   yorders rate disclosures, the requirements "should be applicable to all providers of 0+ services, and should  S-not be keyed to some arbitrarily established rate cap or rate benchmark set by the Commission . . . ."R yO8 -ԍOncor Comments, filed November 13, 1996, at 1; see also Oncor Comments at 34.  S-  21. ` ` The Attorneys General express their support for universal rate disclosure, arguing "[t]he   zmost obvious benefit of universal rate disclosure is that OSPs charging outrageous rates will no longer   be able to surprise customers with a staggering bill weeks or months after the call in question. Rather,   consumers, after hearing the rate disclosure, will be able to decide whether to incur the quoted cost or to  S -access another provider."QS @ yO-ԍAttorneys General Comments at 5.Q  S -  `22. ` ` Omniphone, in response to the Bureau's requests for further information contends that   "[a]ll smart technology manufactured by Omniphone today has the ability to provide ondemand rate   quotes to the calling party on all 0+ and 1+ calls . . . this includes public payphones and inmate  S0-  phones."T0 yO-ԍLetter from Les Barnett, President, Omniphone, Inc. to the Commission (October 29, 1996), at 1. Omniphone states that, in response to TOCSIA, it developed software that enabled its public   payphone technology to provide accurate rate quotes for the specific call in question, "upon request, to  S-  [the calling party for coin, calling card, and collect calls."BU`  yO-ԍId. at 23.B Omniphone argues that "the smart technology  S-used by that coin payphone could just as easily quote 0+ rates if they do not now."@V  yOH-ԍId. at 1.@  Sh-  23. ` ` The Pennsylvania Commission recommends, among other things, that OSPs be required   Mto disclose, immediately following their oral identification brand, the specific aggregator surcharge for  X-  calls handled by that OSP.WX  yO8#- yԍPennsylvania Commission Reply Comments, filed May 5, 1995, at 11. In addition to supporting the NAAG   proposal for a voice over on OSP calls to allow consumers to avoid the aggregator surcharge, the PaPUC has urged  yO$-the Commission to cap OSP rates and to establish a $1.00 cap on aggregator surcharges. Id. at 1011.# XP\  P6QynXP# The Pennsylvania Commission contends that a disclosure   requirement for 0+ calls could eliminate prices charged in excess of competitive rates and should"DW,-(-(ZZR"  X-  save consumers money.Xj yOy- ԍPennsylvania Commission Comments at 5 (The Pennsylvania Commission maintains its position that  yOA-regulatory oversight of OSP rates through the use of benchmarks is necessary. Id. at 56. The Pennsylvania Commission, in addition to supporting oral rate   Ldisclosure, also recommends that the Attorneys General's proposed disclosure requirement be   imodified to include the amount of the surcharge over and above the underlying carrier's rates that  X-  [the end user will be assessed.dY j yO-ԍPennsylvania Commission Reply Comments at 10.d The Pennsylvania Commission argues that, "it would be more   [useful to the customer to know exactly what the surcharge will be on the call than to just know  X-in general that they may be charged at a rate higher than that charged by their regular carrier."DZj yO -ԍId. at 1011.D  XH- B. COMMENTS ON RATE BENCHMARK OR PRICE REGULATION  X -Commenters in Favor of Proposed FCC Rate Benchmark Rules   X -  24. ` ` Ameritech submits in its comments "that undoubtedly there should be such  X -  =benchmarking, and that the three largest IXCs are the best yardstick."I[ @j yO-ԍAmeritech Comments at 4.I Ameritech claims that   i"each of those carriers, [AT&T, MCI, & Sprint] besides providing operator services at aggregator  X -  \locations, also serves a vast base of nonĩaggregator (i.e., ordinary residence and business)  X-  locations."b\j yO-ԍId. (emphasis and parentheses in original).b Ameritech asserts that the three largest IXCs have operated in a competitive  X{-  environment and serve as "something of a benchmark for the same carriers' rates that apply at  Xf-  .aggregator telephones."B]f` j yOw-ԍId. at 45.B Ameritech further asserts that "specialized carriers who only serve   aggregators have never been in a ballot campaign competing directly for the presubscription  X8-  choices of end users so their charges never had to face the rigors of competition."@^8 j yO-ԍId. at 5.@ Accordingly,   Ameritech maintains that, "[s]ince those carriers thus have no internal competitivelyestablished   benchmark against which their aggregator rates can be compared, it is entirely appropriate, in the   =interests of protecting consumers, to compare their aggregator rates to the benchmark rates of  X-AT&T, MCI, or Sprint, which long have had to stand against competitive challenge.":_ j yO $-ԍId.:  X-  25.` ` The IPTA argues that the Commission should use its authority to adopt rate  X-  benchmarks " which are tied to the Commission's actions taken in the Payphone Compensation"E_,-(-(ZZ"  X-  Order."D`j yOy-ԍIPTA Comments at 5.D The IPTA argues that "[a]fter the Commission eliminates the subsidies to local exchange   carrier payphone providers (as required by Section 276 of the Telecommunications Act of 1996),   and after the Commissions [sic] sets a fair rate of compensation (which at a minimum exceeds   costs) for access code calls and subscriber 1800 calls, then the Commission could set rate caps  X-which are acceptable to consumers."UaXj yO-ԍId. (parentheses in original).U  Xv-  26.` ` Sprint states that "[a]s a corporation that participates in both tiers of the market,  X_-  Sprint fully supports the benchmark concept proposed" by the Commission.Fb_j yO -ԍSprint Comments at 4.F It agrees that "[t]he   requirement to disclose rates that exceed the benchmark level will create a powerful inducement  X1-to moderate the changes in the highrate tier of the market.":c1xj yOZ-ԍId.:   X -  27. ` ` Certain commenters argue that a benchmark rate system has merit, subject to  X -  Lcertain modifications. The Virginia Commission proposes that benchmark rates be established   utilizing "the AT&T dominant carrier tariff rate schedule, plus a flat increase (as opposed to a  X -  zpercentage increase) of, say, $.50 per call."Sd j yOw-ԍVirginia Commission Comments at 3.S The Virginia Commission argues that such an   {approach would be simple to administer and would "meet the FCC objective of reflecting  X-  consumers' expectations.":ej yO-ԍId.: Sprint supports a benchmark rate of 115% of the weighted average  Xy-  operator service charges imposed by Sprint, AT&T and MCI.f y( j yOR- >ԍSprint Comments at 5. Sprint, however, in anticipation of deliberate actions by other OSPs to avoid the   spirit of the benchmark disclosure requirements, suggests, "the benchmarks should be revised quarterly, rather than   iannually. . . with a much shorter lag than the proposed six months between the date on which rates are based and  yO-the date on which they begin to apply." Id. at 56. Sprint further contends that   <there "is no demonstrated need to impose the benchmark and disclosure requirements on 0+ calls  XK-  -made from business and residential phones."@gKj yO !-ԍId. at 6.@ U S WEST suggests that "the benchmark or rate   ceiling should be as targeted and remedial as possible, focusing on those rates/prices where it is  X-  predictable that consumer complaints will be generated."Nhj yOn$-ԍUS WEST Reply Comments at 14.N US WEST further urges that "[t]he"F0h,-(-(ZZe"   benchmark should not necessarily try to emulate presumed just and reasonable rates or to  X-conform to speculative customer expectations.":ij yOb-ԍId.:  X-  28.` ` NTCA states that ["it] is not opposed to the use of benchmarks for 0+ interstate   .calls, so long as the plan does not place the burden of monitoring and enforcement on its LEC  X-  members."FjXj yO-ԍNTCA Comments at 45.F Further, NTCA submits that the proposal to set a benchmark by approximating the   \average price charged by AT&T, MCI and Sprint is reasonable. Pacific Telesis asserts that   "setting a benchmark level for operator service rates will help to curb some of the abuses present   in the marketplace", and that a "useful benchmark would be based on the average price charged  X1-  by AT&T, MCI and Sprint."Ok1j yO -ԍPacific Telesis Comments at 3.O Pacific Telesis supports oral disclosure of rates which exceed the   benchmark, on the ground that "disclosing the actual price of the call is the only disclosure that  X -will address the problem these rules are trying to solve."@l xj yO,-ԍId. at 6.@  X -  X -Commenters Opposed to Proposed FCC Benchmark Rules   X -  29. ` ` AMNEX and CompTel contend that the use of the rates assessed by AT&T, MCI,   \and Sprint to define consumer expectations violates the Equal Protection Clause of the U.S.  Xy-  MConstitution.myj yO2- ԍAMNEX Comments at 3; CompTel Comments at 1415. As noted by one commenter, the Equal Protection   Clause directs that "all persons [individuals and corporations] similarly circumstanced shall be treated alike." Peoples  yO-  Reply Comments at 10 n.28 (quoting F.S. Royster Guano Co. v. Virginia, 253 U.S. 412, 415, (1920)). The  yO-  fourteenth amendment to the U.S. Constitution provides, inter alia, that no state shall "deny to any person within its jurisdiction the equal protection of the laws." U.S. Const. amend. XIV. According to AMNEX, the benchmark does not apply equally to all OSPs   because, absent a precipitous increase in their own rates, which although legal have not been  XK-  found to be just and reasonable, AT&T, MCI, and Sprint by definition would be excluded.EnK j yO-ԍAMNEX Comments at 3.E   CompTel states that under the proposed benchmark, AT&T could raise its surcharge from $2.25   to $3.75 on thirdparty, operator station rates (an increase of over 67%) and still fall within the   ]benchmark rate, which would increase to $3.76, all other factors being equal. Relying on   Supreme Court cases, CompTel contends that "the Commission may not grant preferences to   preferred classes of carriers, and penalize others, simply based upon a hostility toward the  X-  disfavored class."oH j yO%- NԍCompTel Comments at 14, (citing Romer v. Evans, 116 S. Ct. 1620, 1628 (1995) (quoting Dep't of  yO&-Agriculture v. Moreno, 413 U.S. 528 (1973)). CompTel further argues that a disclosure requirement based on the rates of"Go,-(-(ZZ"   the Big Three would be arbitrary and discriminatory and deny all other OSPs equal protection  X-  of the laws.Dpj yOb-ԍId. at 1415.D CompTel states that because AT&T, MCI and Sprint permit but do not offer to   bill and collect PIFs for aggregators such as hotels that presubscribe to them, these fees are not   included in calculating the benchmark, even though they are part of the total charges for which   consumers would be liable. CompTel contends that this arbitrarily penalizes those OSPs that   Mcollect PIFs on behalf of aggregators that presubscribe to them and that such distinction is  Xv-  arbitrary and capricious.AqvXj yO -ԍId. at 15.A Cleartel/ConQuest contend that any standard disclosure that only   applies to the smaller OSPs, and not to the three largest carriers, would be arbitrary and  XH-discriminatory.TrHj yO -ԍCleartel/ConQuest Comments at 710.T  X -  Q30. ` ` Noting that OSPs have many different classes of automated and liveoperator  assisted calls as well as a variety of rates based on such factors as location, the jurisdictional   knature of the call, and the distance of the call, AMNEX contends that if the FCC opted for a   lesser disclosure regulation, such as the disclosure of its highest or average rate for a seven  minute domestic call, the requirement would in many cases only serve to confuse or mislead  X -  customers about the rates they actually would be charged.Ns xj yO-ԍAMNEX Comments at 89, n. 22.N AMNEX further contends that   z"alternative proposals . . . would compel affected OSPs to make commercial speech that was  Xy-  misleading or confusing.":tyj yO2-ԍId.: AMNEX states that, "[b]ecause such speech would not directly   advance the FCC's and [Congress' goal of allowing] consumers to make informed choices when   making operator services calls, and could even serve instead to frustrate that purpose, such a  X4-regulation would contravene the First Amendment protection afforded commercial speech."u 4j yO}- kԍId. (citing Zauderer v. Office of Disciplinary Council, 105 S. Ct. 2265, 2275, 2278, (1995) (regulation of   ,commercial speech must serve a substantial governmental interest and be tailored to directly advance that interest).  yO -  The first amendment provides, inter alia, that "Congress shall make no law ... abridging the freedom of speech ...." U.S. Const. amend. I).   X-   X-  A31. ` ` AMNEX and CompTel contend that TOCSIA does not authorize the Commission  X-  to require OSPs to quote their exact charges on each call.^v j yO #-ԍAMNEX Comments at 58; CompTel Comments at 7.^ According to CompTel, Section   226(h)(2) allows the Commission only to require OSPs to state that rates are available on request   and that "the Commission is not free to circumvent the OSP branding requirement by using it as"Hv,-(-(ZZ"  X-  ]a vehicle to bootstrap any information disclosure the Commission desires."Iwj yOy-ԍCompTel Comments at 78.I Similarly,   xAMNEX contends that TOCSIA expressly delineates the authority the Commission has to impose   Ka preconnection disclosure requirement and "limits" that authority to information concerning the  X-  availability of rates, not the rates themselves.ExXj yO-ԍAMNEX Comments at 5.E AMNEX further contends that "if carrier   <identification is to be equated with disclosure of rates," a conclusion that AMNEX finds illogical,  X-  "then all OSPs, including AT&T, MCI and Sprint, must disclose their rates prior to call  Xx-connection, and the benchmarkrelated disclosure requirement is indefensible."Wyxj yO -ԍId. at 6 (emphasis in original).W  XJ-  32. ` ` AMNEX and CompTel contend that the Commission lacks authority to adopt its   benchmark price disclosure proposal, not only under Section 226(h)(2) of the Act, but also under  X -  iother sections of the Act._z xj yOE-ԍId. at 38; CompTel Comments at 511. _ AMNEX contends that adoption of a benchmark as proposed would   constitute ratemaking that would not be in compliance with the Commission's authority to  X -  jprescribe rates.G{ j yO-ԍAMNEX Comments at 34.G According to AMNEX, "rates consumers are willing to pay have never been   relevant to a determination to reasonableness" and because the proposed benchmark is not based   upon a record inquiry into the costs of providing operator services, the benchmark cannot be  X -  justified as just and reasonable.@| j yO-ԍId. at 4.@ Finally, AMNEX contends that the general provisions   governing the Commission's rulemaking authority contained in Sections 4(i) and 226(d)(1) of the  X{-  Act do not authorize the Commission to adopt its benchmark price disclosure proposal.}{( j yOT- zԍId. at 6. Section 4(i) provides that "[t]he Commission may perform any and all acts, make such rules and   regulations, and issue such orders, not inconsistent with this Act, as may be necessary in the execution of its  yO-  functions." 47 U.S.C.  154(i). Section 226(d)(1) requires, inter alia, that the Commission prescribe regulations to   "ensure that consumers have the opportunity to make informed choices in making [interstate operator services  yOt-telephone] calls." 47 U.S.C.  226(d)(1)(B).   -Similarly, CompTel contends that, for all practical purposes, the proposal would "prescribe" rates   and the absence of any Commission finding, based on record evidence, that the prescribed rate   ]is just and reasonable is "fatal to the Commission's exercise of its benchmark ratemaking  X-  authority under Section 205(a)."~xj yO#-ԍCompTel Comments at 910. Section 205(a) provides that:   ` ` [w]henever, after full opportunity for hearing, upon a complaint or under an   Vorder for investigation and hearing made by the Commission on its own   initiative, the Commission shall be of opinion that any charge, classification,"&},-(-(&"   rregulation,. or practice of any carrier or carriers is or will be in violation of any   'of the provisions of this Act, the Commission is authorized and empowered to   determine and prescribe what will be the just and reasonable charge or charges   to be thereafter observed, and what classification, regulation, or practice is or will be just, fair, and reasonable, to be thereafter followed . . .x` 47 U.S.C. 205(a). CompTel further contends that the proposal cannot be"I~,-(-(ZZG"   justified under provisions of the Act that require carrierspecific hearings before prescribing a   -"hard" rate, which it defines as that which a carrier may not exceed under any circumstances, and   Kthat the affected carriers have not been afforded the "full opportunity for hearing" required under  X-  Section 205 of the Act for adoption of benchmark rates other than those that it has proposed.Qj yOt -ԍCompTel Comments at 10.VQ  Xv-   33. ` ` Cleartel/ConQuest assert that an FCC rate benchmark is the "functional equivalent   of an FCCprescribed OSP rate, even if the effect of exceeding the benchmark is only a trigger  XH-  Kfor ratedisclosure announcements.QHj yO-ԍCleartel/ConQuest Comments at 7.Q While they concede that setting a benchmark rate level for  X1-  OSP rate disclosures "is not per se ratemaking," they state that "it effectively establishes an   industrywide rate, because OSPs with rates exceeding this level will be driven to set rates at or  X -below the benchmark level to avoid announcement burdens."U ( j yO-ԍId. at 78 (footnote omitted).U  X -  2!34. ` ` CompTel asserts that the Commission's proposal to rely on "vague" conceptions   of consumer "expectations" as the rationale for the proposed benchmark is legally and factually  X -  insufficient.K j yO-ԍCompTel Comments at 1112.K In its view, rates that consumers expect to pay for "away from home" calling are  X-  not a valid legal basis for prescribing carrier rates.IH j yO-ԍId.` ` I CompTel also argues that even if it is   assumed that AT&T, MCI and Sprint's rates apply to the majority of minutes from aggregator  Xb-  telephones, this does not define consumer expectations in all operator service contexts.tbj yO - lԍId. at 13. CompTel states for example that a survey it took "found that a number of major hotels in  yO!-  Washington, D.C. charged 40 percent or more in excess of AT&T's daytime rates, even where AT&T was the  yO{"-  hpresubscribed OSP for the telephone." (emphasis in original, footnote omitted) id. at 12. CompTel notes that, even   though debit cards avoid substantial costs otherwise associated with a calling card call, such as a thirdparty   Yvalidation, billing and collection, and live operator expenses, a 10minute call with a Sprint debit card "would exceed  yO$-the Commission's proposed customer dialed calling card charge by over $1." id. at 13 (footnote omitted).t   xAMNEX notes that FCC reports indicate that more consumers have complaints about AT&T than"KJP,-(-(ZZg"   any other OSP, which "suggests that many persons simply are unaware of the high rates for operator services in general compared to those for direct dialed 1+ calls   . . . " and, accordingly, that "customer willingness to pay is a fickle matter and certainly not a  X-  sound basis upon which to base a ratemaking."Tj yO4-ԍAMNEX Comments at 34 n.8.VT Cleartel/ConQuest agree with CompTel's view   that expectations of consumers is an invalid standard for ratesetting. Further, they contend that,   even if a rate benchmark could be justified on the basis of consumer expectations, the choice of   1the three largest OSPs is "an administrative shortcut lacking in rational public policy   justification," is "entirely arbitrary," is discriminatory "by definition," places an uneven burden   ]on smaller OSPs, "would stigmatize all carriers other than AT&T, MCI and Sprint for the  X1-traveling public," and "creates a significant opportunity for anticompetitive pricing."S1Xj yO: -ԍCleartel/ConQuest Comments at 89.S  X -  "35. ` ` ClearTel/ConQuest also argue that the OSP Reform Notice's benchmark and   disclosure proposal would result in excessive regulations that impose burdensome and misleading  X -  =requirements on OSPs and consumers alike.@ j yOn-ԍId. at 4.@ USOC contends that "[n]either benchmark nor  X -  oral notification of rates are supported by any evidence."D xj yO-ԍUSOC Comments at 7.D HCI argues that the additional time   Lit will take to process and disclose the information "will cause many otherwisesatisfied callers  X-to hang up and go elsewhere even before the rate is delivered."Cj yOI-ԍHCI Comments at 1.C  Xy-    Xb-  @#36. ` ` ACTA submits that the Commission's benchmark proposals cannot pass Regulatory   Flexibility Act (RFA) muster and that "a price disclosure requirement for all 0+ calls would   provide consumers with the information necessary to make informed choices, and do away with  X-  {the need for benchmark rates and oral disclosure requirements."Dj yOf-ԍACTA Comments at 1.D ACTA considers the   Commission's tentative conclusion to rely on the Big Three's rates to establish publicly   xacceptable rates as "simply unsound" because it "ignores the different underlying costs borne by  X-  =smaller carriers and the economic disparities which exist between the Big Three carriers and all  X-  other OSPs."W( j yO"-ԍId. at 2 (emphasis in original).W ACTA asserts that OSPs will be forced to charge rates below the Big Three   benchmark rates to get consumers to use their services, and that such rates will not allow these  X-  carriers to recover their costs and a reasonable profit.@ j yO%-ԍId. at 3.@ Accordingly, such proposal "has a   confiscatory effect and the already disadvantaged smaller OSPs will be unable to sustain"|KH ,-(-(ZZ"   =themselves in the marketplace . . . [contrary to] both the broad general policies seeking greater   .participation by smaller companies in competing in the OSP market, and with the more specific  X-  policy the Commission must apply in terms of its RFA analysis."@j yOK-ԍId.@ Moreover, consideration of   the several characteristics or rate elements in the Commission's benchmark proposal "is contrary  X-  =to the industry's growing reliance on nationwide flat rates."@Xj yO-ԍId. at 4.@ In addition, ACTA asserts that   ."the formula underlying the proposal will provide the benchmark carriers with the opportunity  Xv-  /to engage in anticompetitive conduct and predatory pricing.":vj yO -ԍId.: ACTA contends that the   -Commission's proposal ignores economic facts and "leaps to the assumption that the rates of the   xBig Three represent those rates that consumers would expect to pay for operator services . . . [and  X1-  as such] is but a selffulfilling prophecy."S1xj yOZ-ԍId. at 5 (footnote omitted).S ACTA argues that "[s]uch circuitous reasoning   [creates the antithesis of maintaining competition and of avoiding regulation which unduly and  X -unfairly burdens small businesses.": j yO-ԍId.:  X -  _$37. ` ` BA/BS/NYNEX argue that the Commission should not base benchmarks on what   /consumers pay the Big Three for a 1+ call because "these prices are lower than those same  X -  =carriers' prices for 0+ calls and may bear no particular, predictable relationship to 0+ prices."L j yO-ԍBA/BS/NYNEX Comments at 10.L   USOC and HCI both argue that the difference between the hospitality and payphone industries  Xy-  zare different enough to warrant separate regulatory treatment by the Commission.Zy( j yOR-ԍUSOC Comments at 8; HCI Comments at 45.Z USOC   ;contends that guest phones should be considered in the eligibility pool for payphone compensation  XK-or any implementation of benchmark rates should apply only to payphones.K j yO- ԍUSOC Comments at 3. Such compensation issues are beyond this proceeding, as well as our Payphone  yO|-Compensation Order in CC Docket No. 96128.  X-  %38. ` ` Opticom argues that the Commission has failed to provide support for the   conclusion that consumers generally expect rate levels to be within a comparable range of rates  X-  kcharged by the three largest carriers.Gj yO$-ԍOpticom Comments at 8.G Opticom further argues that even if such rates were   reasonable, "the Commission has not proposed any safeguards to ensure that such rates remain "L,-(-(ZZ&"  X-  =reasonable.":j yOy-ԍId.: Opticom continues, stating that "[l]arge OSPs such as AT&T, MCI and Sprint   Zhave wide latitude in setting their rates due to their large market share and other service offerings.   Consequently, these carriers could engage in predatory pricing by reducing the cost of calls so  X-dramatically as to destroy the ability of other OSPs to compete in the marketplace.":Xj yO-ԍId.:  X-  }&39. ` ` Oncor similarly contends that, "the proposal to base the rate benchmarks on the   rates of the three leading operator service providers all of whom are considered to be non  dominant would result in three companies whose rates are virtually unregulated becoming the   de facto rate regulators of 500 other companies, the totality of which compromise a minuscule  X1-  market share."J1j yO -ԍOncor Comments at iiiii.J OSC asserts that "[a] benchmark rate must take into consideration the costs of  X -  providing service, yet no cost data has been provided to make this determination."C xj yOC-ԍOSC Comments at 4.C AT&T does   not support the establishment of benchmark rates based upon the charges of any specific carrier   or small group of carriers because such carriers' rates may not be reflective of the costs of other  X -  [carriers.W j yO-ԍSee AT&T Comments at 2.VW Noting that because OSP rate structures vary, GTE contends that trying to force all  X -to comply with a benchmark based on a fixed set of criteria could stifle innovative offerings.C j yO-ԍGTE Comments at 4.C  X-  '40. ` ` MCI, which continues to urge BPP as "the best way to protect the public, promote   Mtrue competition in this market and end the need for a neverending series of administrative  Xb-  proceedings," notes that "[s]o long as OSPs compete to be the presubscribed carrier at a location   by offering commission payments to premise owners, they may charge the calling public high   rates in order to pay those commissions and profit . . . [and] aggregators will have the incentive  X-  to try to force consumers to use the presubscribed carrier to increase those payments."C( j yO-ԍMCI Comments at 2.C Arguing   that the proposed benchmark and disclosure rule is not needed in light of current rule Section  X-  j64.703(a)(3), j yOX"- ԍSection 64.703(a)(3) requires, inter alia, that each OSP disclose immediately to the consumer, upon request and at no charge to the consumer, a quotation of its rates or charges for the call. MCI contends that such a requirement "would significantly increase the burden   on OSPs by requiring rate disclosure on all calls, even when consumers already know and accept   [the rates, without significantly improving the protection afforded consumers under the current"M,-(-(ZZ"  X-  jrule.Cj yOy-ԍMCI Comments at 3.C MCI further contends that "[a]ll calls may have to be sent to a live operator, in the near   term, in order to disclose the rates for a call . . . [and] estimates that it would cost an additional  X-$0.40 per call to do this."BXj yO-ԍId. at 34.B  X-  (41. ` ` Intellicall state that the use of benchmarking would not reduce the cost of   complying with a Commission order because, "as a manufacturer, Intellicall must offer a product   -that could be used by all carriers, including those that wish to charge above benchmark rates" so   -that "every storeandforward payphone it manufactured would have to have this capability (and   Labsent grandfathering, all embedded equipment would need to be retrofitted, even if the buyer  X1-of the product intended to charge less than the benchmark rates."1j yO - ԍLetter from Steven A. Augustino, counsel for Intellicall, to William F. Caton, Secretary, Federal Communications Commission, June 12, 1997, at 2.  X -   X -)42. ` ` The Office of Management and Budget (OMB), in commenting on our  X -benchmark proposal in OSP Reform Notice, states: XThere are some fundamental questions that the FCC must answer with this proposed rule and collection. First, how will consumers be informed what the benchmark is? Would the consumer be better served by requiring the OSP to inform the caller of the cost of the call, regardless of any benchmark? The FCC should also calculate and include, as a cost burden, the cost of installing the systems that will inform the consumer of the cost of call [sic] (or if the cost exceeds the benchmark.) It should not be assumed by the FCC that members of the public will know what a benchmark cost is. Their knowledge will, in general, be limited to the cost of services provided by their interlata carrier of  X-choice.@j yO-ԍNotice of Office of Management and Budget Action, No. 3060070 (September 8, 1996).    X- C. COMMENTS ON BILLED PARTY PREFERENCE  X|-Commenters Opposed to Ending Consideration of BPP   XN-  *43. ` ` Ameritech, in a manner similar to MCI and Sprint, expresses its regret that the   KCommission announced its tentative conclusion to not consider BPP at this time, and encourages  X -  jthe Commission to continue to consider the idea in the future. j yO&-ЍAmeritech Comments at 12; MCI Comments at 23; Sprint Reply Comments at 2. Ameritech disagrees with the" N` ,-(-(ZZ"   jCommission, stating that it does not believe the deployment of Local Number Portability (LNP)  X-  will lessen the incremental cost of BPP.Dj yOb-ЍId.D It, nevertheless, continues to support BPP as the best   Zlongrun solution to customer satisfaction issues regarding calling card, collect, and thirdnumber  X-  calling.RXj yO-ЍAmeritech Comments 12.R MCI argues that BPP will provide an incentive for OSPs to compete for consumers'   <business on the basis of cost and service quality, which MCI contends is the best way to protect  X-  the public, and promote true competition in the market.Oj yO& -ЍMCI Comments at 23.O Sprint agrees that adoption of BPP   would make all OSPs compete for call traffic by offering highquality services to consumers at  X_-the lowest possible price.P_xj yO -ЍSprint Comments at 3.P  X1-  +44. ` ` NARUC and the California Commission express their continued support for the   OBPP concept and encourage the Commission to act expeditiously to determine if BPP  X -  implementation is justified in light of the costs and jurisdictional issues.t j yO-ЍNARUC Comments at 1; California Commission Comments at 2.t The California   Commission agrees with the Commission's observation that if local exchange carriers (LECs) are   required to install the facilities needed to perform database queries for number portability   .purposes for each call, the incremental cost to query the database for the customer's preferred  X -  OSP may be less than customer benefits from BPP._ j yO-ЍCalifornia Commission Comments at 2._ The NYCPB also supports the   .Commission's further consideration of BPP, especially as LNP develops, as the NYCPB shares  Xy-California Commission's belief regarding lower incremental costs.Oy( j yOR-ЍNYCPB Comments at 7.O  XK-Commenters In Favor of Ending Consideration of BPP  X4-  X-  ,45. ` ` APCC, citing the opinions of many other parties, maintains that the record is  X-  "overwhelmingly" in favor of terminating consideration of BPP.T j yOo!-ЍAPCC Reply Comments at 9.T APCC states that of the LECs  X-  which previously supported BPP, all except one, now do not support BPP.AH j yO#-ԍId. A APCC notes that   SWBT, which strongly supported BPP, now believes that the time for implementation of BPP has   ipassed and that GTE, "another erstwhile diehard supporter, states that adoption of BPP has been"O,-(-(ZZ"  X-  frustrated by high capital costs and resultant cost recovery impacts on OSP rates.":j yOy-ԍId.: APCC   further notes that Ameritech, the only LEC still declaring support for BPP, states unequivocally   lthat deployment of LNP databases as required by the 1996 Act is not likely to lessen the  X-  incremental cost of BPP.MXj yO-ЍId. at 910.M BA/BS/NYNEX similarly contend that the record illustrates that   technology and the market have overtaken BPP, and accordingly, the Commission should  X-  terminate this proceeding.Yj yO& -ЍBA/BS/NYNEX Comments at 1112.Y Like APCC, they note that even SWBT, perhaps BPP's most ardent   <supporter, has concluded that "the time for BPP has come and gone and the issue should now be  X_-  closed".[_xj yO -ЍBA/BS/NYNEX Reply Comments at 4.[ BA/BS/NYNEX state that "[t]here is no factual support in the comments for the   .Commission's suggestion that number portability will put BPP back in the running again, even  X1-  from those who continue to support BPP as a long range option."O1j yO-ԍId. (footnotes omitted).O Finally, BA/BS/NYNEX   state that U S WEST has demonstrated in detail why BPP cannot "piggyback" on number   portability; and that Ameritech has also concluded that number portability is not likely to lessen  X -  Mthe incremental cost of BPP.X j yO5-ЍId. at 4 n.11,12.X U S WEST asserts that LNP does not provide an alternative  X -  solution because LNP databases will only exist in limited geographic areas.U ( j yO-ЍUS WEST Comments at 1214.U As such, LECs   /will have to interconnect their Line Information Databases (LIDB) to the LNP database and   xconsequently incur excessive costs for the investment in OSS7 switching and additional signaling  X-capacity.E j yO-ЍId. E   Xb-  -46. ` ` Other parties urge the Commission to cease consideration of BPP. CCI argues that   for several years, consumers have been assured of reaching their preferred long distance carrier   kat payphones as required by TOCSIA, which is the key benefit of BPP, through dialaround   calling. CCI argues, therefore, that a need for BPP has been eliminated and implementation  X-would impose extreme and unnecessary costs on the payphone industry.OH j yO"-ЍCCI Comments at 34.O "P,-(-(ZZE"Ԍ X-  .47. ` ` In addition to CompTel's assertion that the record establishes that BPP is not in  X-  .the public interest,j yOb- \ЍCompTel Comments at 2023. (CompTel presents numerous arguments to support its belief that BPP is   Kundesirable, including: (i) BPP would cost $2 billion or more to implement; (ii) BPP would make national dialing   uniformity worse, not better; (iii) BPP would inconvenience callers by increasing call setup times and requiring   many callers to repeat information for two separate operators; (iv) BPP would alter the routing of fewer than 20   -percent of all operator assisted calls; and (v) BPP would strand millions of dollars invested in "smart" payphone  yOJ-technology.) Id. at 21. other parties suggest that the costs of BPP implementation outweigh the  X-  benefits.@j yO -ЍIntellicall Comments at i; Opticom at Comments 1; NTCA Comments at 2. APCC argues that, based on the Commission's own assumptions, implementing BPP   would cost $1.5 billion per year and would not produce benefits worth more than $221 million  X-  jper year.Rj yO% -ЍAPCC Comments at 1718.R Intellicall and Teltrust state that they explicitly support the Commission's tentative  X-  <conclusion that the "costs of implementing BPP significantly outweigh its purported benefits."r` j yO-ЍIntellicall Comments at i; Teltrust Reply Comments 12.r   jIntellicall continues, stating that imposing "the economic costs of BPP upon consumers would   have substantially raised the rates for operator services, and substantially decreased the number  XH-  of providers and the diversity of services."rH j yO-ЍIntellicall Comments at i; Teltrust Reply Comments 12.r NTCA agrees, specifically contending that the   -record has shown that industrywide mandated BPP deployment is not economically feasible and  X -  would adversely affect small and rural LECs.T j yOK-ЍNTCA Reply Comments at 2.T ACTA echoes the arguments of other parties in   stating that it and many competitive IXCs, have argued that the costs of BPP substantially  X -  outweigh any potential benefit to customers.m j yO-ЍACTA Initial Regulatory Flexibility Comments at 2.m Oncor, in accord with other parties, such as the   KPennsylvania Commission and Peoples, cites numerous problems with BPP, including the extreme   jexpense, and the inability of OSPs and LECs to implement the system in a manner which would  X -  Mresult in categories of calls being routed to the billed parties' preferred carriers. j yO- ЍOncor Comments at 2; NTCA Reply Comments at 12; GTE Reply Comments at 3. Pennsylvania   ;Commission Comments at 2. (The Pennsylvania Commission, although recognizing the benefits of BPP in theory,   concludes that "given the estimated $1 billion price tag to implement BPP, the costs of implementing BPP appear   wto greatly exceed the benefits at this time."), Peoples Reply Comments at 12. (Peoples states that the questionable   effectiveness of the BPP scheme, coupled with its prohibitively expensive cost, prevent it from serving as an adequate mechanism to address operator services rate issues.) It is also   claimed that BPP would have relatively little impact on the routing of interexchange calls because   a majority of public phones are presubscribed to the same carrier that is the preferred carrier for  Xb-  a substantial majority of billed parties.Zbj yO+'-ԍOncor Comments at 2.V Z Oncor asserts that in light of the rapid proliferation"bQ,-(-(ZZ"   of dialaround calling by consumers to reach their preferred carriers, the implementation of   TOCSIA, the Commission's regulations, and general consumer education, the need for BPP has  X-dissipated.xj yOK-ЍId; see also Opticom Comments at 12.x  X-  c/48. ` ` GTE and Intellicall assert that the "time has come to terminate further  X-  Zconsideration of BPP" and that the Commission should "put billed party preference behind us."nXj yO-ЍGTE Reply Comments at 3; Intellicall Comments at i.n   MPacific Telesis expresses its agreement that, in light of changes that have taken place in the  X_-  industry, BPP is not the appropriate solution "today that it may have been years ago."[_j yO -ЍPacific Telesis Comments at 12.[ USOC   contends that the operator services industry has changed significantly since the original   discussions on BPP, including increased dialaround traffic and competition in the industry and,  X -as such, the Commission no longer need consider BPP.Q xj yOC-ЍUSOC Comments at 1, 5.Q  X -  049. ` ` Certain parties, in their opposition to BPP, propose alternative pricing mechanisms.   The Pennsylvania Commission supports the establishment of a modified ceiling on interstate   domestic operator service rates in accord with the CompTel benchmark proposal, combined with  X -  kthe disclosure requirements outlined in the Attorneys General proposal.U j yO`- Ѝ Pennsylvania Commission Comments at 23. The Pennsylvania Commission notes that while it supports   the establishment of ceilings on interstate domestic operator service rates, it contends the CompTel Proposal requires   ksignificant modifications, such as: (i) establishment of rate ceilings more in line with underlying costs; (ii)   Yestablishment of more substantive OSP obligations; and (iii) placement of enforcement actions upon the OSP rather than the LEC or FCC.U GTE and SWBT   kpropose that, in place of BPP, the Commission should allow market forces to operate for the  Xy-protection of consumers and the elimination of unscrupulous carriers.iy j yO-ЍGTE Reply Comments at 5; SWBT Comments at 56.i  XK-  ~150. ` ` The Attorneys General contend that, despite BPP's benefit of preventing OSPs   from billing unsuspecting consumers at excessive rates, the BPP system's cost appears substantial  X-  and, the Attorneys General note, many reservations had been voiced against its adoption.[H j yO"-ЍAttorneys General Comments at 2.[ As   such, the Attorneys General propose an alternative that would require OSPs to provide consumers   with an oral disclosure, prior to connecting the call, warning of the potential for higher rates than  X-charged by the consumer's regular carrier.Dj yOa&-ЍId.D "Rh,-(-(ZZ"Ԍ X-  D251. ` ` Other parties argue that deployment of LNP data bases will not result in  X-  jdevelopment of network capabilities that will significantly reduce BPP implementation costs.rj yOb-ЍGTE Reply Comments at 3; Pacific Telesis Comments at 2.r   zSWBT argues that LNP and BPP would use separate data bases and would require different  X-  network upgrades.fXj yO-ЍSWBT Comments 12; SWBT Reply Comments 34.f Thus, according to SWBT, LNP implementation will not aid BPP   Zdeployment. SWBT further contends that the time in which OSPs and LECs could have deployed   zBPP efficiently has passed and deployment of BPP would now take years, particularly if it is  Xv-  attempted as a retrofit into a number portability design.evj yO -ԍSWBT Comments at 12; SWBT Reply Comments 34.e GTE contends that information for   BPP is provided through LIDB, and as such, may require an OSP to access the LNP database on  XH-  every call.IHxj yOq-ԍGTE Reply Comments at 3.I GTE continues, stating that the LIDB is only designed for storage of information   necessary to route the call to the terminating location, not to the preferred OSP. Thus, argues  X -  GTE, this factor, among other network costs, renders BPP prohibitively expensive.#X\  P6G;ɒP#B  yO-ԍId. at 34.B#Xj\  P6G;ynXP# Pacific   -Telesis supports this conclusion by cautioning that the database being developed for LNP could  X -  znot accommodate the information necessary to perform the BPP function.U j yO5-ԍPacific Telesis Comments at 2, n. 1.U Pacific Telesis  X -maintains its belief that BPP should not be required during implementation of LNP.V ( j yO-ԍPacific Telesis Reply Comments at 20.V  X -  352. ` ` NTCA reiterates its concern that, in implementing a solution to OSP pricing, no   undue burdens are imposed on small and rural carriers in efforts to simplify access to the  Xy-  network.Fy j yO-ԍNTCA Comments at 23.F NTCA urges the Commission to eliminate BPP as an alternative in addressing  Xb-  Loperator service rate issues in the payphone services marketplace.VbH j yO[-ԍ Id.; NTCA Reply Comments at 2.V NTCA further urges the   Commission to reject BPP as an appropriate mechanism by which to induce more effective   competition, lower prices and improved services for customers who prefer not to use access  X-codes.Jj yO#-ԍNTCA Reply Comments at 2.J   X-  453. ` ` The Ohio Commission agrees with the Commission's tentative conclusion that it   would not be economical to institute BPP at the present time, since such a requirement would   require the building of duplicate systems which would be capable of providing virtually identical"Sh,-(-(ZZ"  X-  functionalities.Oj yOy-ԍOhio Commission Comments at 2.O The Ohio Commission, however, contends that the Commission should only   0defer its implementation of a BPP system until such time as number portability has been  X-established.BXj yO-ԍId. at 45.B   X-  554. ` ` TRA echoes its previous comments before the Commission, arguing that immediate   deployment of BPP will not result in an increase to consumer protection commensurate with the  Xv-  technical and financial burdens necessary to implement the system.Evj yO -ԍTRA Comments at 23.E TRA does acknowledge   =its belief that the emergence of LNP may eventually lessen the costs of implementing BPP, but   agrees with the Commission's tentative conclusion that, at the present, costs continue to outweigh  X1-the benefits BPP would provide consumers.@1xj yOZ-ԍId. at 3.@  X -  655. ` ` APCC and CompTel assert that the lingering existence of the BPP docket continues   to harm OSPs by making it more difficult for them to access capital and by increasing aggregator  X -demands for accelerated commissions to recoup their investments.{X j yO- ЍAPCC Reply Comments at 910; CompTel Comments at 2122.  See Teltrust Reply Comments at 8 (It is   difficult to raise capital when potential investors are informed that a pending regulatory proceeding "could have an extremely negative impact on your ability to compete."){  X -   X-  y D. COMMENTS ON FORBEARANCE FROM APPLYING SECTION 226 TARIFF  Xy-FILING REQUIREMENTS  XK-Commenters Supporting Complete Detariffing   X-  A756. ` ` Oncor maintains that informational tariffs are not necessary to protect consumers   against unfair or deceptive practices, or to ensure that consumers have the opportunity to make   informed choices when placing a 0+ call from an aggregator location. Therefore, Oncor believes   that the informational tariff requirement may be waived under Section 226, irrespective of Section   10(a) of the Act. Oncor maintains, however, that the Commission should not adopt rate  X-  ibenchmark proposals, which Oncor maintains are inconsistent with such waiver or forbearance.I( j yO#-ԍOncor Comments at 1618.I   Oncor further maintains that tariff forbearance for nondominant carriers, both under Section 226   jand Section 10 of the Act, will have many procompetitive public interest benefits, and that the   Commission should not sacrifice its ability to take that deregulatory step simply to implement an"eT ,-(-(ZZ1"   iunnecessary and illadvised rate benchmark/rate disclosure requirement for nondominant carriers  X-providing 0+ services.Aj yOb-ԍId. at 18.A  X-  857. ` ` Opticom supports a complete detariffing policy with regard to informational tariffs,   agreeing with the Commission's conclusion that such tariffs are ineffective because they cannot  X-  provide information at the time of purchase.HXj yO-ԍOpticom Comments at 10.H Instead, Opticom supports the Commission's   alternative proposal of a mandatory price disclosure as the best longterm solution for protecting  X_-consumers, particularly transient callers making 0+ calls from aggregator locations.D_j yO -ԍId. at 1011.D  X1-  958. ` ` AT&T maintains that the Commission should apply the same tariff forbearance  X -  xrules to its operator services as it applies to its other interstate services.D xj yOC-ԍAT&T Comments at 5.D BA/BS/NYNEX believe   jthat Section 10(a) of the Act requires the Commission to forbear from applying all OSP tariffing   requirements, those imposed by both Section 203 and Section 226 of the Act, and that either an   .audible disclosure of charges before connecting the call or a certification that the OSP will not   charge more than FCCestablished benchmarks will be far more effective in ensuring reasonable  X -rates and protecting consumers than a complete tariff filing requirement.M j yO`-ԍBA/BS/NYNEX Comments at 89.M  Xy-  :59. ` ` Pacific Telesis maintains that tariffs will not, and can not, protect consumers at the   Lpoint of purchase; that the benefits of such tariffs are outweighed by their costs; and that oral  XK-  disclosure is a much better tool for ensuring consumer protection.kKj yO-ԍPacific Telesis Comments at 67; Reply Comments at 2223.k SWBT states that the one   tool with which consumers may protect themselves, namely, access code dialing, already exists;   and that informational tariffs will not aid consumers in determining whether to use a particular  X-  -OSP because a consumer using a payphone does not have ready access to the tariffs.]( j yO-ԍSWBT Comments at 5; Reply Comments at 2223.] SWBT   -asserts, however, that in a market as competitive as operator services, all OSPs must be regulated   equally, so that complete detariffing of nondominant OSPs, without detariffing all competitors,  X-fails to meet the Commission's procompetitive goals.O j yO*$-ԍSWBT Comments at 56.VO @@ "UH ,-(-(ZZ"Ԍ X-  };60. ` ` The OCC supports forbearance with regard to the requirement to file informational   tariffs "[b]ecause OSPs have misinformed consumers about the purpose of informational  X-tariffs."j yOb-ԍSummary of The Office of the Ohio Consumers' Counsel's Initial Comments (July 16, 1996) at 1.  X-Commenters Opposed to Complete Detariffing  Xv-  <61. ` ` The Telecommunications Subcommittee of the Consumer Protection Committee   =of the Attorneys General urge the Commission to maintain informational tariffing requirements   Zfor OSPs as a consumer protection measure and to ensure that OSP charges and practices are just  X1-  and reasonable.X1oj yOQ -ԍ Attorneys General Comments at 1012. X They recommend that OSP rates and charges, in addition to being available  X -  Zfor public inspection at the FCC, also be accessible on line to the general public.A j yO -ԍId. at 12.A The California   Commission strongly opposes forbearance of Section 226 tariff filing requirements applicable to   Nnondominant interexchange OSPs. It believes that the filing requirement is an important   ksafeguard that helps prevent arbitrary and discriminatory pricing, as well as an enforcement   mechanism that may assist this Commission in determining whether an OSP's rates exceed its  X -  disclosure statement, or whether an OSP has violated or complied with FCC rules.U j yO-ԍCalifornia Commission Comments at 5.U The   iFlorida Commission does not support the use of forbearance authority to eliminate interstate tariff  Xy-  requirements because of possible repercussions at the state level.7yj yOI- ԍ Florida Commission Comments at 7. The Florida Commission states that the decision to use tariffs at the  yO-state level is based on "a somewhat different set of considerations than might apply at the federal level." Id. at 8. 7 If, however, the Commission   should eliminate requirements for informational tariffs by nondominant OSPs, the Florida   <Commission asserts that OSPs should be required to maintain, at their premises, price and service   ]information and billing records at a designated location for inspection by regulators and  X-  consumers.Bwj yOE-ԍId. at 89.B The Florida Commission further maintains that this information should be subject  X-  to a minimum retention period.@ j yO-ԍId. at 9.@ Similarly, the IPTA, which also urges that the Commission   >continue to require OSPs to file tariffs, states that "[i]t is important that all OSPs . . . be on  X-record somewhere of what rates they are charging for their services."^ j yO #-ԍIPTA Comments, received July 18, 1996, at 13.^  X-  =62. ` ` ACTA does not support complete detariffing of any service offerings, including   Section 203 tariffs. It contends that the rates of AT&T, MCI and Sprint should be published and   readily available, given their tendency to act in their own vested interests, and further contends"|V' ,-(-(ZZ"   that informational tariffs are the only means by which consumers, competitors and regulatory   bodies have sufficient information about OSP rates being charged and to control unscrupulous  X-  operators that give inadequate or intentionally misleading price disclosures.Fj yOK-ԍACTA Comments at 89.F APCC contends   that: it is premature to remove the tariff filing requirement, not only of Section 226 but also of   Section 203; benchmarks could be used as a criterion for when carriers should be required to file   Section 203 tariffs; such filings should be on sufficient notice to prevent new abovebenchmark   rate filings from taking effect before they were found to be just and reasonable; and either   Section 203 or Section 226 tariffs would enable the Commission to identify OSPs with above XH-  benchmark rates for purposes of checking compliance with disclosure requirements.LHXj yOQ -ԍAPCC Reply Comments at 89.L APCC   recommends that the Commission retain Section 203 authority with respect to OSP tariffs,   establish a longer notice period before abovebenchmark rates could take effect, and require  X -  detailed cost support information to be filed in support of such rates.O j yO-ԍSee APCC Comments at 11.O CompTel submits that   lthe Commission should permit the filing of informational tariffs and that such permissive   detariffing should apply equally to all nondominant OSPs, regardless of the rates that they  X -  <charge.H xj yO-ԍCompTel Comments at 23.HUSOC takes the position that all OSPs should be required to file tariffs containing exact  X -rates and rate plans in order to understand industry actuals and resolve consumer complaints.D j yO`-ԍUSOC Comments at 3.D  Xy-  >63. ` ` MCI maintains that, if the Commission determines that tariffs are not required to   {protect the public interest, there can be no justification for an informational tariff and the  XK-  Commission should forbear from applying this requirement.DKj yO-ԍMCI Comments at 5. D MCI further maintains, however,   ythat the Commission should not require complete detariffing for interstate operator services for  X-  zall the reasons presented in CC Docket No. 9691.;( j yO-ԍ Id.; Sprint believes that all OSPs should be   required to file tariffs for 0+ calls from public phone and other aggregator locations; that the   Commission should prohibit rangeofrate tariff filings and require OSPs to file their tariffs  X-  kpursuant to Section 203 of the Act.F j yOA#-ԍSprint Comments at 8.F Sprint argues that competition in this segment of the   market does not work to drive prices down but instead drives prices up in order to finance  X-  commissions to aggregators to gain the 0+ business.@H j yO&-ԍId. at 9.@ Sprint maintains that tariffs are needed"W,-(-(ZZ"   yas a tripwire to enable the Commission to determine whether further investigation is necessary.   Even if proposed benchmark/disclosure requirements are adopted, Sprint maintains that tariffs can   khave important consumer protection functions. For example, if a benchmark is based on an   assumed average call length, Sprint states that an OSP could charge belowbenchmark rates for   that particular call length, so as not to have to disclose its rates to customers, but charge higher   rates for calls of shorter or longer duration. Sprint further states that tariffs also perform a useful   function for OSPs. Where there is no preestablished relationship between the carrier and the   party paying for the call, Sprint maintains that a tariff is necessary to form a contract between   the carrier and casual users of its services and to protect the carrier from unscrupulous consumers   yof its services. In any event, even if the Commission forbears from requiring OSP tariffs, Sprint   zfinds no warrant for complete detariffing. According to Sprint, OSP competitors have every   incentive to raise their rates, and whatever collusive effect the filing of tariffs may have in other  X -market segments is totally absent here.C j yOe -ԍId. at 911.C  X -  ?64. ` ` GTE, which favors benchmark rate regulation directed against the limited number   Nof abusing OSP carriers, contends that forbearance from OSP tariff filing requirements is  X-  <inconsistent with such regulation and inappropriate at this time.CXj yO-ԍGTE Comments at 9.C NTCA believes, as it did with   respect to the Section 203 tariff filing requirement, that a decision not to rely on tariffs would   be premature; but that any decision made in this docket should be consistent with that reached  XK-in CC Docket No. 9661. Kj yO- jԍAs previously noted at footnote 22 of this Order, the Commission determined that the statutory forbearance   criteria in Section 10 of the Communications Act are met for it to no longer require or allow nondominant   Yinterexchange carriers to file tariffs pursuant to Section 203 of the Act for their interstate, domestic, interexchange services.   X-   E. COMMENTS ON PETITIONS FOR RECONSIDERATION OF THE PHASE I ORDER  X-(0+ IN THE PUBLIC DOMAIN )  X-Petitions Seeking Reconsideration of the 1992 Phase I Order  X-  p@65. ` ` CompTel, Polar Communications Corporation (Polar), LinkUSA Corporation  X|-  (LinkUSA), Capital Network System, Inc. (CNS), and International Telecharge Incorporated (ITI)   <collectively contend that the Commission has acted arbitrarily, capriciously, and in contravention   =to the record which, according to these parties, supports the argument that AT&T's CIID card  X7-  kprogram causes competitive harm to the OSP industry.7j yO%- \ԍCompTel Petition at 9; ITI Petition at 1,3; Polar Petition at 1; LinkUSA Comments at 2; CNS Reply to AT&T Opp. at 23. (ITI, Polar, and LinkUSA state their full support for CompTel's Petition for reconsideration). CNS argues that the Commission"7X( ,-(-(ZZ"   "improperly and unlawfully failed to establish regulations that would eliminate [the]  X-  anticompetitive problems" posed by the CIID program.Mj yOb-ԍCNS Reply to AT&T Opp. at 2.M ITI and Polar contend that the   0Commission failed to adequately assess the costs and benefits of the O+ public domain  X-  proposal.ZXj yO-ԍITI Petition at 1,3; Polar Petition at 1.Z Intellicall and LinkUSA express their support of CompTel's Petition for   kReconsideration, and urge the Commission to adopt a 0+ public domain policy that requires   AT&T to open its validation database to all carriers, or require AT&T to use its proprietary CIID  Xv-  xcard in conjunction with an access code.vj yO -ԍIntellicall Comments, filed March 19, 1993, at 2; LinkUSA Comments, filed March 19, 1993, at 2. Ė Opticom also supports CompTel's position, but urges   the Commission to further modify the proposal to require AT&T to open its CIID database to   ZOSPs regardless of whether AT&T requires CIID customers to access its network through access  X1-codes.d1xj yOZ-ԍOpticom Comments, filed March 22, 1995, at 5. d  X -  BA66. ` ` CompTel argues that although the Commission recognized that in 1992 AT&T  X -  =accounted for the majority of OSP minutes,I j yO-ԍCompTel Petition at 67.I it failed to adopt an effective solution. CompTel   presents four points in support of its Petition: (i) the record before the Commission demonstrates  X -  that AT&T's introduction of its CIID card created competitive harms;: j yO-ԍId.: (ii) the Phase I Order   concluded an "immediate competitive problem" existed due to the requirement by other OSP  X-  providers to devote their "facilities to uncompletable calls";G( j yOi-ԍId. at 9, 1112.G (iii) despite recognizing these   harms, the Commission failed to act in accord with its findings and instead promised to consider  Xb-  BPP as a solution and examine a compensation mechanism for CIID calls misdirected to OSPs;Db j yO-ԍId. at 1617.D   and (iv) the Commission's cost/benefit analysis of 0+ public domain was erroneous because it   increased the costs of the proposal based upon AT&T's statement that it would require access  X-  codes for its cardholders.DH j yO"-ԍId. at 1620.D CompTel ultimately argues that the Commission's Phase I Order   Zfailed to assess properly the relative costs and benefits of the 0+ public domain proposal because  X-  its failed to recognize the unique nature of the CIID card in the 0+ dialing environment.Dj yOx%-ԍId. at 1920.D   CompTel concludes that AT&T's CIID card will continue to confuse callers as long as it is"Yh,-(-(ZZD"   .permitted to blur the longestablished separation between proprietary calling cards and the 0+  X-dialing method.gj yOb-ԍCompTel Reply to Comments, filed March 29, 1993, at 5.g  X-  B67. ` ` MCI claims that the Commission's Phase I Order failed to address AT&T's  X-  "anticompetitive and discriminatory" behavior in connection with AT&T's CIID card.EXj yO-ԍMCI Petition at 13.E MCI   contends that although the Commission recognizes that AT&T's behavior was improper, the  Xv-  Commission's Phase I Order allows AT&T to benefit from an unfair competitive advantage in  X_-  the OSP market.@_j yO -ԍId. at 3.@ MCI further contends that the Commission inappropriately dismissed the issue   Lof allowing LECs to validate its CIID card, but not OSPs, and thus, ignored further evidence of  X1-  AT&T anticompetitive behavior.:1xj yOZ-ԍId.: MCI claims that the Commission is incorrect in stating an   uncertainty regarding whether the 0+ public domain alternative would substantially aid OSP  X -  competition for presubscribed locations.B j yO-ԍId. at 45.B Indeed, MCI contends that a competitive benefit   zwould exist if AT&T no longer issued a 0+ card or if AT&T issued a 0+ card and opened its  X -database.@ j yO-ԍId. at 5.@  X -  QC68. ` ` ValueAdded Communications (VAC) contends that the Commission's Phase I  X-  Order is in derogation of past Commission precedent and the public interest.C( j yOi-ԍVAC Petition at 1.C VAC argues that   the issuance of AT&T's proprietary CIID card represents an attempt by AT&T to remonopolize  Xb-  the OSP industry.:b j yO-ԍId.: VAC urges the Commission to subject CIID cards to validation sharing   jrequirements because, as VAC argues, "AT&T's status as a dominant carrier makes it unlawful   for AT&T to provide validation functions for intraLATA usage of its cards" to some but not all  X-  icompeting OSPs.BH j yO"-ԍId. at 45.B PhoneTel Technologies, Inc. (PhoneTel) also asks the Commission to require   .the opening of AT&T's database, contending that AT&T chooses to allow certain companies   access to its database, while denying others access, and thus concludes that the CIID cards are  X-  not truly proprietary.Jj yOa&-ԍPhoneTel Petition at 34.J PhoneTel contends that AT&T's establishment of "voluntary relationships"Zh,-(-(ZZ&"  X-  with its former partners" is further evidence that AT&T's CIID card is not truly proprietary.Yj yOy-ԍPhoneTel Reply to Opp. to Petition at 4.Y PhoneTel argues the CIID card is not proprietary because "use of a CIID  X-  card neither ensures the cardholder AT&T service nor AT&T rates.":Xj yO-ԍId.: LDDS Communications,   Inc. (LDDS) concurs in this conclusion, stating that AT&T's calling card may be validated by   virtually any company that jointly provided long distance telephone service with AT&T prior to  X-  divestiture.D j yO& -ԍLDDS Petition at 5.D LDDS contends that "since the entire predivestiture long distance telephone   partnership has access to that data base, the cards are not proprietary cards; they are integrated  X_-  <monopoly cards.": _xj yO -ԍId.: LDDS further argues that under prior Commission decisions, "once AT&T   held out the availability of access to its CIID card data base to some carriers, it became obligated  X1-as a common carrier to make that access available on a nondiscriminatory basis to all carriers.U 1j yO-ԍLDDS Reply to Opp. to Petition at 3.U  X -  D69. ` ` The petitioners also present arguments against the Commission's consumer  X -  education mandate. LDDS argues that the Phase I Order remedy allows AT&T to continue to   benefit from the very conduct which gave rise to the Commission's competitive concerns, and   consumers as well as competitors will continue to suffer the adverse consequences of that  X -  conduct.g  j yO-ԍSee, e.g., LDDS Petition at 3. g APCC argues that by requiring AT&T to "cease discriminatory validation," AT&T   would then have the option of preserving its cards as true proprietary cards which cannot be  Xy-  validated by any other carrier.T y( j yOR-ԍAPCC Reply to Opp. Petition at 23.T Thus, APCC argues, AT&T cards are placed "on the same  Xb-  footing as other IXC proprietary cards.":b j yO-ԍId.: MCI, in addition to CompTel, and LDDS, argues that   the Commission's proposed customer education solution will "do nothing to reduce AT&T's   dominant position" in the OSP industry because of AT&T's ability to offer a 0+ card, and will  X-  fail to end consumer confusion and frustration.nH j yO"-ԍCompTel Petition at 7; LDDS Petition at 2; MCI Petition at 7.n LDDS argues that there is no basis to support   the Commission's conclusion in this proceeding that customer education will be sufficient to  X-  change twentyfive million CIID card holders' dialing practices.Ej yOx%-ԍLDDS Petition at 15.E PhoneTel urges the   yCommission to modify its customer education requirement by directing AT&T to recall all CIID"[h,-(-(ZZD"  X-  Kcards and issue replacement cards with correct dialing instructions.j yOy-ԍPhoneTel Petition at 89; see also LDDS Petition at 1516 regarding recall of AT&T Calling Cards. SWBT argues that, unless   jmodified, the Commission's present instructions will require customers to dial calls with access  X-  Kcodes and without "the convenient use of 0+".TXj yO-ԍSWBT Reply to Opp. Petition at 34.T SWBT further contends that the Commission's   yinstructions to AT&T will "create confusion for customers who receive conflicting information   Lfrom SWBT service personnel in response to questions about use of AT&T cards on SWBT's  X-  [network."@j yO& -ԍId. at 4.@ SWBT recommends that the Commission, in reconsideration of its Phase I Order,   [order AT&T to inform customers that calls can be completed on a 0+ basis when they hear the  X_-  announcement of AT&T or a LEC.D_xj yO -ԍSWBT Petition at 4.D SWBT and Intellicall contend that informing customers   ythat 0+ dialing is readily available will reduce confusion and inconvenience because customers  X1-may dial 0+ and complete the call over the LEC's network.1j yO- ԍId. at 34; Intellicall Petition at 34. (Although Intellicall agrees with SWBT's description, Intellicall urges  yO-the Commission to deny SWBT's Petition. See Intellicall Comments at 8.)  X -Opposition to Reconsideration of the 1992 Phase I Order  X -  E70. ` ` AT&T argues that none of the OSPs offers any new facts or presents any valid   -reason why the Commission should now reverse its course and impose the costs of the 0+ public  X -  domain proposal upon millions of consumers.n ` j yO-ԍAT&T Opp. Petition at 3; AT&T Reply in Opp. to Petition at 2.n AT&T contends that the Phase I Order's  X-  remedies are supported by the record.K j yO1-ԍAT&T Opp. Petition at 34.K AT&T disputes CompTel's claims that 0+ dialing is  Xy-  inconsistent with proprietary cards.@y j yO-ԍId. at 4.@ AT&T further argues that, unlike the LECs who have   independent nondiscrimination obligations to all IXCs because they provide monopoly access   <service, AT&T owes no such obligations to its OSP competitors. In reply to the OSPs' petitions,   AT&T points to CompTel's statement that "industry experience shows that with accurate and   /understandable dialing instructions, customers have little problem using access codes and  X-  Zproprietary cards."nj yO#-ԍAT&T Opp. Petition at 6, citing CompTel Petition at 19.n AT&T argues that the adoption of the 0+ public domain concept purely for   the sake of "increasing parity in the operator services market," is not consistent with the role of"\,-(-(ZZE"   1the Commission, and in all events, would "simply handicap AT&T for the sake of its  X-competitors."@j yOb-ԍId. at 8.@  X-  2F71. ` ` AT&T further disputes PhoneTel and LDDS' arguments that AT&T should make   =its validation database accessible to OSP competitors, arguing that the defining attribute of all   proprietary assets, including AT&T's proprietary card validation system, is the owner's right to   control the use of those assets. Thus, AT&T argues, the proprietary nature of AT&T's card   validation system is not affected by the voluntary relationships AT&T has established for the use  XH-  of that system.DHXj yOQ -ԍId. at 1112.D AT&T notes that the issues raised by SWBT relate solely to competition for  X1-  intrastate calls and the potential impact of AT&T's marketing messages on the LECs.D1j yO -ԍId. at 1314.D AT&T   contends that these issues were ruled beyond the scope of this proceeding and, with respect to  X -the intrastate competition issues, were beyond the scope of the Commission's jurisdiction.A xj yO,-ԍId. at 14.A  X -  G72. ` ` Sprint, opposes reconsideration of the Phase I Order, in part, because it believes  X -  that BPP is the optimal solution to the imbalances that exist in the OSP market._ j yOw-ԍSprint Opposition, filed March 19, 1993, at 2._ SWBT   expresses its agreement with Sprint on this point, arguing that the technology required for   jimplementation of 0+ public domain is not yet available, as 0+ public domain requires signaling   technology which is a component required for implementation of BPP, and as such, is not   =expected to be available before the other required technology components needed for BPP are  XK-  ialso available.cKj yO-ԍSWBT Comments, filed March 10, 1993, at 23. c SWBT argues that 0+ public domain would require specially designed Signaling   <System Seven (SS7) technology between LEC endoffices and IXC operator services switches for  X-  processing of operator services calls.B ( j yO-ԍId. at 23.B Such signaling would be necessary so that IXCs could  X-  know how the customer dialed the call (i.e., 0+ vs. access code).:! j yOo!-ԍId.: SWBT contends that unless   this intelligence was passed to the IXCs, all 0+ interLATA calls would have to be blocked at the  X-end office, which, SWBT asserts is not in anyone's interest.:"H j yO$-ԍId.: "]",-(-(ZZ"Ԍ X-  H73. ` ` Sprint also opposes reconsideration of the Phase I Order because certain OSPs   /define 0+ public domain so broadly as to affect practices of other carriers, including Sprint,  X-  ywhich Sprint contends are not part of the problem with CIID card use._#j yOK-ԍSprint Opposition, filed March 19, 1993, at 2._ Sprint argues that the   current technology does not allow proprietary calling card issuers to block the use of 0+ without  X-  <also blocking the access code.B$Xj yO-ԍId. at 23.B Sprint further contends that the effect of a broadly defined "0+   jpublic domain" proposal would require Sprint and other IXCs to abandon 10XXX as an access  Xv-  [method for calling card calls.a%vj yO -ԍId.#X PɒP#a Sprint argues that it, and other similarly situated IXCs, should  X_-not be forced to bear the brunt of solving "a problem that is of AT&T's making".:&_xj yO -ԍId.:  X - F. COMMENTS ON 0+ CALLS BY PRISON INMATES  X -  nI74. ` ` In addressing the issue of BPP for inmateonly telephones, C.U.R.E. notes that for  X -  over three years it has urged the Commission to adopt a BPP scheme for inmate calling.R' j yO-ЍC.U.R.E. Comments at 2.R   kC.U.R.E. expressed its continuing support for BPP as the best available means of promoting   zlower rates and improved services for families and friends of inmates and acknowledged the   lCommission's indication that BPP would be given further consideration in relation to the   implementation of number portability. C.U.R.E. urged the Commission to implement mandatory,  Xb-selfexecuting ratecaps and other operational measures as interim alternatives to BPP.^(bj yO-ԍId. at 3; C.U.R.E. Reply Comments at 2.^  X4-  BJ75. ` ` The Florida Commission states that requiring full price disclosure to the called   jparty before the call is completed would not be an effective way to prohibit unreasonable rates   on collect calls placed by prison inmates because the called party cannot choose another carrier  X-  to complete the call.T)( j yO -ԍFlorida Commission Comments at 10. T Instead, the Florida Commission supports imposition of an absolute rate  X-  cap on such calls, as it does on OSP rates.;* j yOA#-ԍId. ; The Florida Commission notes that inmates'   families and legal counsel can be protected from excessive charges if inmates may place calls to  X-personal 800 numbers.D+H j yO&-ԍId. at 1011.D As it explains, the use of 800 numbers allows the called party to:"^+,-(-(ZZ"Ԍ ԙXuse whatever IXC he prefers and . . . retain control of the rates he is billed. The  correctional facility can still retain control over the numbers the inmate calls as it  _has the ability, through [customerpremises equipment], to prohibit calls to all but  previously authorized numbers, blocking all other numbers so that the inmate  X-cannot dial around.;,j yO-ԍId. ;    Similarly, prisons could allow inmates to use debit cards that they purchased, or their families   jpurchased on their behalf, and screen access numbers inmates would use to place a call before  XH-  jallowing them to use such cards.M-HXj yOQ -ԍId. at 11.M The Florida Commission recognizes that administration of   such a system might be a burden on prisons that currently rely on providers of operator services   to maintain fraud control systems "in return for an outbound calling monopoly" and also could  X -  result in reduced "commission payments" to such prisons.;. j yO-ԍId. ; It believes, however, that because   customerpremises equipment (CPE) solutions to control fraud in prisons are now readily   available, "it is appropriate to review the justification for restricting all inmate outbound calls to  X -a single provider.":/ xj yO-ԍId.:  X-  K76. ` ` The Coalition proposes that any inmate calling services provider charging in excess   of FCCbenchmark rates for inmate calls be subject to dominant carrier tariff filing procedures,  Xb-  Kincluding the requirement that it costjustify its rates.J0bj yO-ԍCoalition Comments at 11.J The Coalition further proposes that any   such carrier should also be required to file individual tariffs for every facility where it charged   rates over the FCCbenchmark for inmate calls (except interstate calls from states that have  X-  capped intrastate rates below "compensatory levels"). 1 j yOf- =ԍ Coalition Reply Comments at 8. As previously noted (supra n.22), the Commission subsequently determined  yO.-   that the statutory forbearance criteria in Section 10 of the Communications Act had been met for it to no longer   require or allow nondominant interexchange carriers to file tariffs pursuant to Section 203 of the Act for their interstate, domestic, interexchange services.  The Coalition urges the Commission   to require quotes ondemand rather than as a mandatory rate disclosure to maximize the utility  X-  of rate information.e2 j yO #-ԍCoalition Comments, filed November 13, 1996, at 45.e The Coalition contends that disclosure notices should apply to called   lparties, because it argues, "[a] price disclosure message will also trigger called parties to  X-  investigate what they believe to be excessive rates."J3j yO&-ԍCoalition Comments at 12.J The Coalition argues that, especially in the"_3,-(-(ZZ"   [case of inmates, who, "repeatedly call the same small circle of friends and family", a mandatory  X-  iprice rate quote could have a "numbing effect on consumers."k4j yOb-ԍCoalition Comments, filed November 13, 1996, at 45.k C.U.R.E. believes that, to ensure   that ratepayers and their representatives are able to monitor inmate provider billing rates, the   Commission should require inmate service providers to: file informational tariffs with the FCC;   mmake copies available for public inspection in a file maintained on the premises of the   correctional facility to whom the provider offers service; and provide copies to interested parties  Xv-on request.H5vXj yO -ԍC.U.R.E. Comments at 8.H` `  XH-  CL77. ` ` Both the Federal Bureau of Prisons and the Office for Victims of Crime, two   -agencies within the Department of Justice, have expressed concern that BPP in the prison setting   might jeopardize the current capability of correctional agencies or prisons to control and monitor  X -  inmate telephone use.6 j yO-  ԍSee letter from Janet Reno, Attorney General of the United States, to Reed E. Hundt, Chairman, Federal Communications Commission, October 31, 1994. Because of these concerns, the Attorney General of the United States   zhas urged that BPP not be applied to prison inmate telephones, noting that the capability to   [control and monitor inmate telephone use "is crucial in maintaining the security of correctional   facilities, the safety of the general public, and special protections for victims and witnesses of  X -crime.":7 @j yO-ԍId.:   Xy-  M78. ` ` The Coalition asserts that it would be "a gross mistake" to implement BPP in the   inmate calling environment, because it would be tremendously expensive; lead to a marked   !decrease in the security of confinement facilities; lead to a drastic increase in telephone   harassment, fraudulent calling and other criminal activity by inmates; drastically reduce the access   of inmates to calling opportunities; and because it could result in an increase in inmate calling  X-  rates, rather than "its only possible benefit a reduction" in such rates.M8j yO-ԍCoalition Comments at 7, 14.M Indeed, the Coalition   Kargues that due to the enormous cost of instituting BPP in the inmate environment, it is likely that   the recipients of inmate collect calls would incur that cost, through a BPP charge added to the  X-  krates for such calls to pay for BPP implementation.L9` j yO!-ЍId. at 67.L The Coalition asserts that not a single   <commenter continues to advocate BPP in the inmate environment, and that "even C.U.R.E., which   khas long been a highly vocal proponent of BPP, concedes that BPP is not currently a viable  X|-  option."_:| j yO&-ЍCoalition Reply Comments at 2._ Gateway asserts that inmate service providers face significant security and fraud   prevention needs that can only be satisfied through call blocking and restricting inmate services"e` :,-(-(ZZO"   kto collect calls and, accordingly, that the Commission cannot legitimately provide for carrier  X-choice or BPP in the inmate services environment.I;j yOb-ԍGateway Comments at 34.I  X-  N79. ` ` Gateway believes that targeted Commission enforcement efforts against inmate   \operator service providers charging excessive rates are preferable, for both policy and legal  X-  xreasons, to an FCCmandated rate cap.@<Xj yO-ԍId. at 3.@ Gateway recognizes, however, that the only information   =useful to recipients of inmate calls is rate information provided in real time, prior to acceptance  X_-  of the call.A=_j yO -ԍId. at 10.A Accordingly, Gateway asserts that establishing a rebuttable rate ceiling for inmate   service rates, at the average inmate service rates of the three leading IXCs, and requiring full rate   disclosure, in real time, by inmate service providers is "the best alternative to BPP for the inmate  X -  Lservices market."@> xj yOC-ԍId. at 3.@ GTE, specifically argues that application of BPP is unnecessary in light of   the Commission's acknowledgement in CC Docket No. 94158 of many commenters' assertions   xthat inmate service rates had been brought under control during the previous fiveyear period and  X -that the market was highly competitive.?  j yO- yЍGTE Comments at 10, referring to Amendment of Policies and Rules Concerning Operator Service Providers  yOV-  .and Call Aggregators, 11 FCC Rcd 4532, 4548 (1996). The Commission did not reach any conclusion there   regarding the reasonableness of inmate service rates and the competitiveness of those services but determined that the issue of inmate rates should be dealt with in the instant proceeding. " a ?,-(-(ZZ "  X- Separate Statement of Commissioner Gloria Tristani #Xj\  P6G;ynXP#у ` ` Vpppppppppppp  V-` ` Vpp Re: Billed Party Preference for InterLATA 0+ Calls, Second Report and Order and Order on  V_-ReconsiderationV The Commission continues to receive thousands of complaints every year about high rates charged by Operator Service Providers (OSPs). Today's Order greatly simplifies the way payphone users can learn the OSP's rates for a 0+ call prior to placing the call. I hope that our action today will eliminate the "sticker shock" often experienced by consumers when they use OSPs to place long distance calls.  X-However, we should be clear about what today's Order does not do it does not automatically eliminate high OSP rates. It merely enables payphone users who dial 0+ for a long distance call to know the rate before making the call. If the rate quoted is too high, the caller can choose not to make the call using 0+ dialing. Unfortunately, operator services from payphones are a rare example of competition  X-leading to higher prices for consumers. When more OSPs compete for the right to serve a particular location, they must pay higher commissions to the location owner. OSPs often recover those higher commissions from consumers in the form of higher calling charges. For that reason, we will continue to monitor OSP rates through tariff filings and through the complaint process. If the "bad actor" OSPs continue to generate a significant volume of complaints at the Commission, I would support more direct action to protect payphone users, such as capping the rates that OSPs can charge. ` ` Vpppppp# # #