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Before the
Federal Communications Commission
Washington, D.C. 20554
In the Matter of )
) File No. EB-03-TC-056
Sprint Communications Company, ) NAL/Acct. No. 200532170004
LP ) FRN: 0004056636
)
Verification of Orders for )
Telecommunications Services
ORDER
Adopted: March 10, 2005 Released:
March 11, 2005
By the Commission:
1. In this Order, we adopt the attached Consent Decree
entered into between the Federal Communications Commission (``the
Commission'') and Sprint Communications Company, LP (``Sprint'').
The Consent Decree terminates an investigation into possible
violations by Sprint of sections 201(b) and 258 of the
Communications Act of 1934, as amended (the ``Act''),1 and
section 64.1120 of the Commission's rules.2
2. The Commission and Sprint have negotiated the terms of
a Consent Decree that would terminate the investigation. A copy
of the Consent Decree is attached hereto and incorporated by
reference.
3. We have reviewed the terms of the Consent Decree and
evaluated the facts before us. We find that the public interest
would be served by approving the Consent Decree and terminating
the investigation. We also conclude that, in the absence of
material new information not previously disclosed to the
Commission, the matters raised in the investigation do not raise
any substantial and material questions of fact regarding Sprint's
qualifications to be a Commission licensee.
4. Accordingly, IT IS ORDERED, pursuant to section 4(i) of
the Communications Act, 47 U.S.C. § 154(i), that the attached
Consent Decree is hereby ADOPTED.
5. IT IS FURTHER ORDERED that the Secretary SHALL SIGN the
Consent Decree on behalf of the Commission.
6. IT IS FURTHER ORDERED that the above captioned
investigation is TERMINATED.
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
Secretary Before the
Federal Communications Commission
Washington, D.C. 20554
In the Matter of )
) File No. EB-03-TC-056
Sprint Communications Company ) NAL/Acct. No.: 0004056636
L.P. ) FRN: 0004056636
)
Verification of Orders for )
Telecommunications Services
CONSENT DECREE
I. INTRODUCTION
1. The Federal Communications Commission (the ``FCC'' or
``Commission'') and Sprint Communications Company L.P.
(``Sprint'' or the ``Company''), by their authorized
representatives, hereby enter into this Consent Decree to resolve
an investigation by the Commission regarding possible non-
compliance with the requirements of sections 201(b) and 258 of
the Communications Act of 1934, as amended (the ``Act''), and
section 64.1120 of the Commission's rules.3
2. The Commission initiated this investigation based on
consumer complaints filed with the Commission and state agencies4
and later included within the investigation complaints raised
directly with Sprint by consumers. In a number of instances, the
complaints alleged that after consumers conducted transactions in
Sprint PCS retail stores, the consumers' intraLATA, interLATA,
international, and in some cases, local exchange services were
changed to Sprint allegedly without the consumers' authorization.
The investigation subsequently disclosed that Sprint is unable to
produce records in a number of instances to prove that the
Company followed the Commission's verification procedures prior
to submitting preferred carrier changes on behalf of consumers.
The vast majority of those instances involved complaints made
directly with Sprint.
II. DEFINITIONS
3. For purposes of this Consent Decree, the following
definitions shall apply:
a. ``Adopting Order'' means an Order of the Commission
adopting the terms and conditions of this Consent
Decree without change, addition, or modification,
and formally terminating the above-captioned
Investigation.
b. ``Bureau'' means the Enforcement Bureau of the Federal
Communications Commission.
c. The ``FCC'' or the ``Commission'' means the Federal
Communications Commission and all Commissions and
Offices of the Commission, including the Enforcement
Bureau.
d. ``Effective Date'' means the date on which the
Commission adopts the Adopting Order.
e. ``Investigation'' means the investigation commenced by
the Enforcement Bureau's Letter of Inquiry dated
October 6, 2003,5 and includes all complaints filed
against Sprint alleging that Sprint violated
sections 201(b) or 258 of the Act or section 64.1120
of the Commission's rules by engaging in conduct at
Retail Stores through the Effective Date that
resulted in unauthorized changes in the subscribers'
preferred carrier for Residential Wireline Long
Distance Services.
f. ``Operational Audit'' means an audit conducted on-site
at a Sprint PCS store by finance personnel and
includes the examination of whether store managers
and sales representatives are complying with
Sprint's methods and procedures governing sales of
Sprint products and services at such stores.
g. ``Parties'' means Sprint and the Commission.
h. ``Residential Wireline Long Distance Services'' means
residential wireline long distance services
currently sold at Retail Stores. Residential
Wireline Long Distance Services do not include VoIP
or other, similar services not previously offered in
Retail Stores.
i. ``Retail Stores'' means the following retail stores
that sell Residential Wireline Long Distance
Services in conjunction with Sprint PCS services:
Sprint PCS, PCS affiliate, and RadioShack stores.
j. ``Sprint'' or the ``Company'' means directors,
officers, employees, agents or any other person
acting under, by, through, or on behalf of Sprint
Communications Company L.P., directly or indirectly,
or through any corporate or other device, including
any subsidiaries, affiliates, and successors.
k. ``Sales Representative'' means an individual that
markets services on behalf of Sprint in Retail
Stores.
III. AGREEMENT
4. Sprint agrees that the Commission has jurisdiction over
it and the subject matter contained in this Consent Decree and
the authority to enter into and adopt this Consent Decree and
settle the Investigation in its entirety. The Consent Decree
covers the sale of Residential Wireline Long Distance Services
through (except where otherwise noted) Sprint PCS retail stores
on and after the Effective Date.
5. The Parties agree and acknowledge that this Consent
Decree shall constitute a full and final settlement of the
Investigation. The commitments undertaken herein have been or
will be effectuated pursuant to the terms of the Consent Decree.
In express reliance on the covenants and representations
contained herein, and in order to avoid the further expenditure
of scarce public resources, the Commission agrees to terminate
the Investigation. In consideration of the termination of this
Investigation and in accordance with the terms of this Consent
Decree, Sprint agrees to the terms, conditions, and procedures
contained herein, without further recourse to a trial de novo.
The Commission agrees that, in the absence of new material
evidence not previously disclosed to the Commission, (1) the
matters raised in the Investigation do not raise any substantial
and material questions of fact regarding Sprint's qualifications
to be a Commission licensee; and (2) the Commission will not on
its own motion initiate any inquiries, investigations, forfeiture
proceedings, hearings, or other actions, formal or informal,
against Sprint concerning matters that were the subject of this
Investigation, or seek on its own motion any administrative or
other penalties from Sprint based on this Investigation. The
Commission also agrees that it will not use the facts developed
in this Investigation to take any action on its own motion
against Sprint with respect to its basic qualifications,
including its character qualifications, to be a Commission
licensee. Consistent with the foregoing, nothing in this Consent
Decree limits the Commission's authority to consider and
adjudicate any complaint that may be filed pursuant to section
208 of the Act6 and to take any action otherwise authorized by
the Act.
6. The Parties agree that this Consent Decree does not
constitute either an adjudication on the merits or a factual or
legal finding or determination regarding any compliance or non-
compliance by Sprint with the requirements of the Act and the
Commission's rules. The Parties agree that this Consent Decree
is for settlement purposes only and that by agreeing to this
Consent Decree, Sprint does not admit or deny liability for
violating the Act or the Commission's rules in connection with
the matters that are the subject of this Consent Decree.
7. In consideration of the termination of this
Investigation and in accordance with the terms of this Consent
Decree, Sprint agrees to the terms, conditions, and procedures
contained herein, which concern the sale of Residential Wireline
Long Distance Services in Sprint PCS retail stores and where
explicitly indicated below in all Retail Stores.7 Unless
otherwise noted, beginning 60 days after the Effective Date of
the Consent Decree, Sprint agrees to implement the Compliance
Plan delineated below. Nothing in this Compliance Plan shall
alter Sprint's obligation to comply otherwise with the Act and
the Commission's rules and orders, subject to paragraph 13 below.
Accordingly, Sprint agrees to:
a. Payment - Make a voluntary contribution to the
United States Treasury in the amount of four million
dollars ($4,000,000). The payment shall be made within
thirty (30) calendar days after the Effective Date.
The payment shall be made by check, wire transfer, or
money order drawn to the order of the Federal
Communications Commission, and each check, wire
transfer, or money order must refer to the NAL Acct.
No. and FRN No. identified above. If Sprint makes this
payment by check or money order, it must mail the check
or money order to: Forfeiture Collection Section,
Finance Branch, Federal Communications Commission, P.O.
Box 73482, Chicago, IL, 60673-7482. Payment by
overnight mail may be sent to Bank One/LB 73482, 525
West Monroe, 8th Floor Mailroom, Chicago, IL 60661. If
Sprint chooses to make this payment by wire transfer,
payment may be made to ABA Number 071000013, receiving
bank Bank One, and account number 1165259;
b. Marketing - In Retail Stores, implement and/or
maintain a process change to include a confirmation
card that will be given to consumers at the time the
transaction occurs in order to clearly inform them that
signing a Letter of Agency (``LOA'') or completing a
third party verification call (``TPV'') to change a
subscriber's Residential Wireline Long Distance Service
will mean that the wireline long distance service(s)
will be changed to Sprint for any residential wireline
telephone number(s) provided by the consumer. The
confirmation card will state that the service in
question is for ``home long distance service'' and not
PCS wireless service. The confirmation card will be
provided in sales training materials. If TPV is used
for verification, a consumer also will be notified and
requested to confirm during the TPV that the service at
issue is for ``home long distance service.'' Sprint
further agrees that within thirty (30) days after the
Effective Date, the Company will submit to the
Commission copies of the language to be used in the
confirmation card and TPVs;
c. Employee Training - Ensure that new Sales
Representatives employed in the Sprint PCS stores will
complete training regarding selling Residential
Wireline Long Distance Services within thirty (30) days
of beginning their employment. The training will
include Sprint's sales procedures and emphasize
Sprint's prohibitions regarding deceptive marketing
practices and unauthorized switches of preferred
carriers; guidelines for ethical behavior in making
retail sales; and Commission rules regarding procedures
carriers must follow prior to submitting or executing a
change in a consumer's preferred long distance service
provider. Sprint also agrees to require Sales
Representatives employed by Sprint to complete
refresher training on Sprint's sales procedures and
guidelines for ethical sales behavior, including
information on using the Sprint Ethics Helpline as a
means of reporting conduct that may violate Sprint's
sales procedures, at least twice a year;
d. Training of Sales Representatives not employed by
Sprint - For those Retail Stores not owned by Sprint,
provide sales training materials which shall include
Sprint's sales procedures and emphasize Sprint's zero-
tolerance policy for slamming and deceptive marketing
practices. The training materials shall also include
the notification language in the confirmation card
referenced in Paragraph 7(b) above and an overview of
Sprint's guidelines for ethical behavior in making
retail sales. Sprint further agrees to use its
commercially reasonable best efforts to include a
training requirement in new contracts with any retailer
selling Sprint's Residential Wireline Long Distance
Services in conjunction with its PCS services. The
training requirement shall provide that, at a minimum,
agents are to make the training materials available to
Sales Representatives and disclose that Sprint monitors
compliance with the Company's policies;
e. Third Party Verification/LOAs - For Retail Stores,
implement and/or maintain a process under which a PIC
change order for Residential Wireline Long Distance
Services purchased in a Retail Store will not be
submitted unless either (a) there is TPV of the sale;
or (b) the written (paper or electronic) LOA has been
submitted to a centralized verification organization
for review and approval. On all sales except those in
Hawaii, the verification will include an affirmative
statement confirming the subscriber's understanding
that by agreeing to change his home long distance
service to Sprint, Sprint will also become the
subscriber's provider of international services.
f. Record Retention - Unless or until all Residential
Wireline Long Distance Services sales purchased in a
Retail Store are confirmed by TPV, maintain a process
under which all LOAs that will be used to demonstrate
compliance with verification procedures will be stored
at a centralized location or repository managed by
Sprint. TPVs will be stored by each TPV verifier as is
customary;
g. Sales Process -Implement and/or maintain a sales
process designed to enable Sales Representatives to
place subscribers on the appropriate domestic and
international calling plans when selling Residential
Wireline Long Distance Services in Retail Stores;
h. Post Sales Confirmation - Upon a sale of its
Residential Wireline Long Distance Service(s) in a
Retail Store, confirm authorization of Sprint as the
subscriber's preferred carrier by sending to each
customer a ``welcome kit'' that identifies the
subscriber of record for the Sprint account, the
service plan(s) selected by the subscriber, the
services selected, the customer service telephone
number, terms and conditions of the service(s), and
information regarding what to do in the event of an
unauthorized preferred carrier change;
i. Sprint Call Center Complaint Resolution - Maintain a
specially trained group of employees to handle consumer
calls alleging that an unauthorized preferred carrier
change has occurred. Upon receiving such calls, Sprint
will transfer them to this specially trained group.
These subject matter experts will research the
customer's account during the customer's call whenever
feasible, and when not feasible, will arrange to call
the customer back. Where LOAs or TPVs are not found
within 30 days of receipt of the complaint, all charges
billed to the account during the first thirty days
after the unauthorized change will be absolved; if the
subscriber was billed directly by Sprint and has paid
the charges a refund shall be issued, and where the
charges are unpaid or the charges were paid but were
billed on Sprint's behalf by the subscriber's local
telephone company, a credit shall be applied to the
account. Where LOAs or TPVs are found, credits may be
provided to customers based on factors such as the time
that has elapsed between the customer's switch and the
registry of his or her complaint, the amount due, and
the customer's payment history. The system used by the
subject matter experts will allow Sprint to record
relevant information provided by the customer, such as
transaction location (e.g., Sprint PCS or other
retailer), any allegations of fraud (e.g., forgery or
identity theft), and/or deceptive marketing, without
regard to the merits of the allegations made. Sprint
shall compile this information received from customer
calls on a monthly basis to identify any problems that
may require retraining, an Operational Audit at a
Sprint PCS retail store, or other proactive measures to
ensure future compliance with the Company's policies;
j. Complaint Resolution Process - Send written
correspondence to consumers who file complaints with a
relevant governmental agency detailing the Company's
findings regarding the complaint and any actions taken
by the Company as a result of the account research
conducted by Sprint. For such complaints, Sprint will
issue credits and refunds in accordance with the
Commission's and any relevant state commission's
slamming rules. Irrespective of how Sprint receives a
consumer's complaint (whether via the Sprint Call
Center described above or via a relevant governmental
agency), where an LOA or TPV is found and Sprint has
credible evidence that the preferred carrier change was
verified as a result of fraud, Sprint shall also
absolve the subscriber of all charges billed as a
result of the unauthorized change and terminate the
account at the consumer's request; refunds shall be
issued to the subscriber, if billed directly by Sprint,
for any charges paid; and credits shall be issued for
unpaid charges billed to the account or for paid
charges in the case of subscribers billed on behalf of
Sprint by the subscriber's local telephone company. In
cases where Sprint has submitted adverse information to
a credit bureau based on an unauthorized preferred
carrier change as determined by a relevant governmental
agency or fraudulent verification as demonstrated by
credible evidence, Sprint shall submit information to
the credit bureau to correct the adverse report and
notify the affected consumer that it has done so;
k. Compliance Review - Compile reports on a monthly
basis concerning complaints alleging unauthorized
preferred carrier changes and deceptive marketing
complaints received by Sprint either through the
customer calls described in paragraph (i) or via a
relevant governmental agency, without regard to the
merits of the complaints made, based on wireline
preferred carrier changes effectuated as a result of
transactions conducted at Sprint PCS retail stores.
Sprint will compile the monthly reports by employee,
store, market, and area and will furnish the reports to
a sales executive at an officer level on a monthly
basis. The store managers will discuss each
transaction and complaint with the Sales Representative
involved in the transaction, including recommending
additional training or disciplinary action, where
appropriate;
l. Compliance Review of PCS Affiliates and RadioShack -
Compute on a monthly basis the number of complaints
alleging (without regard to the merits of the
complaints) that there was an unauthorized preferred
carrier change or that the customer was misled in
signing up for Residential Wireline Long Distance
Services, as a percentage of sales, for each PCS
affiliate, each affiliate store, and each RadioShack
store. Sprint will target each PCS affiliate,
affiliate store, and RadioShack store whose complaint
percentage exceeds the average by one standard
deviation for review and discussion of corrective
action, where appropriate, with appropriate affiliate
and/or RadioShack personnel; and,
m. Store Audits - Sprint will conduct an Operational
Audit of each Sprint PCS store at least every six
months. For any Sprint PCS store whose Complaint Rate,
as defined below, exceeds the average for all Sprint
PCS stores by more than one standard deviation in any
calendar month following its last Operational Audit,
that store's next Operational Audit shall include a
review of that store's adherence to Sprint's procedures
for selling Residential Wireline Long Distance
Services. Such audit will include a randomly selected,
unannounced observation at the subject store of the
store's selling methods and adherence to Sprint's sales
procedures and principles of business conduct. If the
audit discloses any material departure from Sprint's
sales procedures and principles of business conduct, a
written report that includes recommendations to the
store manager for an action plan for the store to
improve its compliance will be prepared within one
month of the Operational Audit and will be furnished to
the store manager and his or her supervisor. For
purposes of this paragraph, ``Complaint Rate'' means
the number of complaints (defined in paragraph (k)
above and without regard to the merits of the
complaints) received by Sprint associated with sales at
the store divided by the number of Residential Wireline
Long Distance Services sales by the store.
8. Sprint will provide a written report (``Compliance
Report'') to the Commission six (6) months from the Effective
Date describing its compliance with this Consent Decree. The
Compliance Report shall describe in detail Sprint's compliance
with this Consent Decree and include information concerning the
complaint levels at Retail Stores, use of TPV for Residential
Wireline Long Distance Services sales at Retail Stores, material
findings of systemic process failures from Operational Audits and
any settlements with the states regarding unauthorized preferred
carrier changes resulting from sales at Retail Stores. Sprint
shall submit Compliance Reports to the Commission twelve (12)
months and twenty four (24) months from the Effective Date, and,
thereafter, upon written request from the Commission until
expiration of this Consent Decree. All Compliance Reports should
be submitted to the Commission via e-mail and US mail to the
attention of the Chief, Telecommunications Consumers Division,
Enforcement Bureau, Federal Communications Commission,
Washington, D.C. 20554.
9. Sprint agrees to maintain and make available to the
Commission, within 20 business days of receipt of any written
request from the Commission (unless the time is extended with the
consent of the Commission), business records demonstrating
compliance with the terms and provisions of this Consent Decree.
10. Sprint waives any and all rights it may have to seek
administrative or judicial reconsideration, review, appeal or
stay, or to otherwise challenge or contest the validity of this
Consent Decree and the Order adopting this Consent Decree,
provided the Order adopts the Consent Decree without change,
addition, or modification.
11. Sprint's agreement to enter into this Consent Decree is
expressly contingent upon the issuance of an Order by the
Commission that is consistent with this Consent Decree, and which
adopts the Consent Decree without change, addition, or
modification.
12. In the event that this Consent Decree is rendered
invalid by any court of competent jurisdiction, it shall become
null and void and may not be used in any manner in any legal
proceeding.
13. The Parties agree that if any provision of the Consent
Decree conflicts with any subsequent rule or order adopted by the
Commission, where compliance with the provision would result in a
violation, that provision will be superseded by such Commission
rule or order.
14. By this Consent Decree, Sprint does not waive or alter
its right to assert and seek protection from disclosure of any
privileged or otherwise confidential and protected documents and
information, or to seek appropriate safeguards of confidentiality
for any competitively sensitive or proprietary information. The
status of materials prepared for, reviews made and discussions
held in the preparation for, and implementation of Sprint's
compliance efforts under this Consent Decree, which would
otherwise be privileged or confidential, are not altered by the
execution or implementation of the terms of this Consent Decree,
and no waiver of such privileges is made by this Consent Decree.
15. If either party (or the United States on behalf of the
Commission) brings a judicial action to enforce the terms of the
Adopting Order, neither Sprint nor the Commission will contest
the validity of the Consent Decree or Adopting Order, and Sprint
and the Commission will waive any statutory right to a trial de
novo with respect to any matter upon which the Adopting Order is
based, and shall consent to a judgment incorporating the terms of
this Consent Decree.
16. Sprint agrees that any violation of the Consent Decree
or the Adopting Order will constitute a separate violation of a
Commission order, entitling the Commission to exercise any rights
or remedies attendant to the enforcement of a Commission order.
17. The Parties agree that this Consent Decree shall expire
three (3) years after the Effective Date. Unless otherwise
specified, all commitments made by Sprint herein shall continue
until the expiration of this Consent Decree.
18. This Consent Decree may be signed in counterparts.
For the Commission For Sprint Communications
Company L.P.
By:_____________________________
By:____________________________________
Marlene H. Dortch Vonya
McCann
Secretary Senior Vice
President, Federal External Affairs
_______________________________
________________________________________
Date Date
_________________________
1 47 U.S.C. §§ 201(b) and 258.
2 See 47 C.F.R. §§ 64.1120(a)(1)(ii), (c)(3)(iv).
3 47 U.S.C. §§ 201(b), 258; 47 C.F.R. § 64.1120.
4 The states include Massachusetts, Minnesota, Nevada, New
Jersey, and Ohio.
5 Letter from Colleen K. Heitkamp, Chief, Telecommunications
Consumers Division, Enforcement Bureau, FCC, to Norina T. Moy,
Director, Federal Regulatory Policy and Coordination, Sprint
Communications Company, L.P. (October 6, 2003) . See also Letter
from Colleen K. Heitkamp, Chief, Telecommunications Consumers
Division, Enforcement Bureau, FCC to Norina T. Moy, Director,
Federal Regulatory Policy and Coordination, Sprint Communications
Company, L.P. (December 11, 2003); Letter from Colleen K.
Heitkamp, Chief, Telecommunications Consumers Division,
Enforcement Bureau, FCC to Michael B. Fingerhut, General
Attorney, Federal Regulatory Policy and Coordination, Sprint
Communications Company, L.P. (April 29, 2004) (collectively
referred to as the ``Bureau's LOIs to Sprint'').
6 47 U.S.C. § 208.
7 For Retail Stores located in the areas where Sprint is the
incumbent local exchange carrier, this Consent Decree only
relates to the sale of Residential Wireline Long Distance Service
products that are also sold in Sprint PCS stores located outside
such areas.