******************************************************** NOTICE ******************************************************** This document was converted from WordPerfect or Word to ASCII Text format. Content from the original version of the document such as headers, footers, footnotes, endnotes, graphics, and page numbers will not show up in this text version. All text attributes such as bold, italic, underlining, etc. from the original document will not show up in this text version. Features of the original document layout such as columns, tables, line and letter spacing, pagination, and margins will not be preserved in the text version. If you need the complete document, download the Word or WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 In the Matter of ) ) EXCEL TELECOMMUNICATIONS, INC. ) File No. EB-99-TC-012 ) NAL/Acct. No. X3217-004 ) CONSENT DECREE 1. The Enforcement Bureau of the Federal Communications Commission (``Bureau'') and Excel Telecommunications, Inc. (``Excel''), by their attorneys or authorized representatives, hereby enter into a voluntary Consent Decree regarding possible violations of the Commission's policies and rules regarding primary interexchange carrier (``PIC'') conversions. Excel is a common carrier that provides interstate and international interexchange telecommunications services pursuant to tariffs on file with the Commission. Excel markets its presubscribed long distance services primarily through a network of independent representatives. 2. On December 1, 1999, Excel initiated a meeting with the Bureau in which Excel outlined revisions to its internal policies that were designed to reduce incidences of slamming. Excel sought this meeting in response to an increase in complaints against the company in the months immediately preceding the meeting, but prior to being informed of any planned enforcement action by the Bureau. Excel affirmed its commitment to lawful PIC conversions and to complying with the rules and regulations of the Commission and the provisions of the Communications Act. In consideration for the termination by the Bureau of its investigation into whether Excel has committed rule violations, and in accordance with the terms of this Consent Decree, Excel agrees to the following terms, conditions, and procedures for PIC changes. 3. For the purposes of this Consent Decree the following definitions shall apply: · a. ``Commission'' or ``FCC'' means the Federal Communications Commission; b. ``Bureau'' means the Enforcement Bureau of the Federal Communications Commission; c. ``Division'' means the Telecommunications Consumers Division of the Enforcement Bureau; d. ``Excel'' means Excel Telecommunications, Inc., its successors and assigns; e. ``Parties'' means Excel and the Bureau; f. ``Adopting Order'' means an Order of the Bureau adopting the terms and conditions of this Consent Decree; g. ``PIC Change'' is an order or request transmitted by an interexchange carrier to a local exchange carrier (``LEC'') requesting a change of a customer's primary interexchange and/or intraLATA carrier (``PIC''); h. ``Letter of Agency'' or ``LOA'' means a written authorization signed by the customer authorizing a PIC change; i. ``Informal Complaint'' or ``Customer Complaint'' means a complaint filed under 47 C.F.R. §§ 1.711-1.717. j. ``Formal Complaint'' means a complaint filed under 47 C.F.R. §§ 1.720-1.735. 4. The Parties agree that the provisions of this voluntary Consent Decree shall be subject to final approval by the Bureau by incorporation of such provisions by reference in an Adopting Order of the Bureau. 5. The Parties agree that this Consent Decree shall become effective on the date on which the Bureau releases the Adopting Order. Upon release, the Adopting Order and this Consent Decree shall have the same force and effect as any other Order of the Commission and any violation of the terms of this Consent Decree shall constitute a violation of a Commission Order entitling the Commission to exercise any and all rights and to seek any and all remedies authorized by law for the enforcement of a Commission Order. 6. Excel admits the jurisdiction of the Commission for purposes of this Consent Decree and any Order. 7. Excel waives any rights that it may have to further procedural steps and any rights it may have to seek judicial review or otherwise challenge or contest the validity of the Adopting Order or this Consent Decree. 8. Excel waives any rights it may have under any provision of the Equal Access to Justice Act, 5 U.S.C. § 504. 9. The Parties agree that this Consent Decree is for settlement purposes and that Excel does not admit any alleged violation or liability for the specific acts described in any informal or formal complaints received by the Commission on or before the effective date of this Consent Decree. 10. Excel shall make a voluntary contribution to the United States Treasury in the amount of four hundred thousand dollars ($400,000) within 30 days of the effective date of this Consent Decree. Such contribution shall be made, without further protest or recourse, by certified check, cashier's check, or money order drawn to the order of the Federal Communications Commission, and shall be mailed to the Federal Communications Commission, P.O. Box 73482, Chicago, Illinois 60673-7482, reflecting account number X-3217-004. 11. Excel agrees that it shall not knowingly submit to any LEC any PIC-change request unless Excel has complied with all Commission rules and orders in effect, or as they may be hereafter modified or amended, concerning PIC changes. 12. Excel affirms that it has voluntarily converted to a process utilizing independent third party verification (``TPV'') of all residential PIC change requests nationwide,1 including those initially received by signed LOA, with the exception of PIC change requests made directly by the consumer to a LEC. It had implemented TPV in eight states as of January 2000, and affirms that it has implemented TPV nationwide as of February 14, 2000. The TPV of all residential PIC change requests will be conducted in accordance with the procedures set forth in 47 C.F.R. § 64.1150(c) or (d). 13. Excel agrees to continue to employ TPV for all residential orders as set forth in the preceding paragraph for at least two years. If Excel thereafter ceases or limits its employment of TPV, it will provide written notice to the Bureau at least 30 days prior to such action. 14. For all PIC change requests received via an in-bound call to Excel, Excel will transfer the customer to the TPV vendor for verification in real time and will perform a social security number cross-check to verify the consumer's identity in all instances where the inbound call is not generated from the billing telephone number (BTN) to be switched. The above- described methods of order processing and verification provide additional meaningful safeguards against slamming. First, the in-bound portion of the contact provides some level of assurance that the consumer on the line is actually who s/he represents herself to be, as the ANI is captured or Excel performs the additional social security number crosscheck. In addition, Excel's in-bound script shall continue to confirm not only the consumer's relevant verification information and desire to select Excel, but also the rate plan chosen and the rates for 1+ calling and monthly service fee (if applicable). Excel's stand-alone toll free service rates shall also be provided during the in- bound portion of the call to customers who are interested in obtaining that service. Except for orders placed directly with a LEC, the consumer's information, including rate plan chosen, will then be verified by the TPV vendor both to verify the customer's choices and to ensure that there is an audio tape (captured by an independent party) in the event of a complaint. 15. As part of its verification of its independent representatives' applications, Excel affirms that it will make reasonable efforts to verify the social security number and/or tax identification number on all of those applications to help ensure the accuracy and legitimacy of all such applications. Excel agrees that if it ceases to use this form of verification for independent representative applications, it will provide written notice to the Bureau within 30 days of doing so and will promptly implement reasonably available substitute measures. 16. Excel shall terminate promptly its relationship (contractual or otherwise) with independent representatives who are found to have engaged in improper or illegal conduct, including but not limited to slamming. Excel will continue to investigate all complaints, allegations, and information indicating possible improper or illegal conduct in order to determine whether other such relationships with independent representatives should be terminated. Where appropriate, Excel will take additional steps against independent representatives, such as civil action and/or referral to other law enforcement agencies. In addition, where reasonably practicable, Excel will ``charge back'' bonuses and/or revenues it has paid to independent representatives based on long distance usage, when customers have indicated that Excel's services were not requested. Excel will also charge back revenues to "up line" independent representatives under such circumstances. Excel's efforts to minimize the opportunity for independent representatives to derive financial benefit from improper conduct make clear the Company's disapproval of any such conduct. 17. Excel agrees that it will increase education and training of all independent representatives with respect to telecommunications, slamming and regulatory requirements, and business ethics as part of a general review and revamping of its education and training materials over the next year. Excel agrees to provide a summary of relevant portions of its revised training materials to the Bureau within sixty days of adoption of this Decree. 18. Excel affirms that it has modified its compensation system so that no compensation or bonuses are triggered merely by receipt of a customer service order. Under Excel's modified policy, which it agrees to continue, all residential service orders received via an in- bound call to Excel must be third party verified before any form of independent representative compensation will be payable. Further, Excel agrees that its modified independent representative compensation structure will further emphasize customer retention and the use of Excel's products and services. Independent representatives will be rewarded for creating and maintaining lasting relationships with customers, and are prohibited from attempting to achieve short-term financial gain by engaging in slamming or other improper activities. 19. Excel affirms that it has put in place a ``service not requested group'' (SNRG) of employees within its customer service center to address the particular concerns associated with potential unauthorized transfer allegations. Calls to customer service that indicate an allegation of slamming will be referred to the SNRG in order to ensure that such matters are handled expeditiously and that appropriate credits/refunds are issued where warranted by the circumstances, without necessarily reaching any determination regarding the validity of the allegations. 20. Excel agrees that it will provide appropriate refunds or credits to customers when such customers timely and reasonably allege that Excel instituted an unauthorized conversion of that customer's PIC, and such allegation is not contradicted by evidence of authorization for the conversion from the third party verification vendor. Such customers will, at a minimum, (1) have any and all PIC-change fees resulting from the alleged unauthorized conversions (including return to their preferred PIC) refunded to them or otherwise credited through the LEC (2) for customers who send re-rating documentation as necessary to Excel, have all calls billed by Excel re-rated to reflect no more than the lesser of the amount billed by Excel or the amount that would have been billed by the customers' preferred PIC, or (3) provide a credit mechanism for consumers who are not able to provide documentation. Notwithstanding anything to the contrary in this Decree, at such time as the Commission's slamming liability rules in Docket 94-129 become effective, those rules will govern Excel's credit and refund practices. Nothing in this subsection shall be construed to limit any customer's right under any applicable federal or state law, rule or regulation, or limit Excel's obligations under any applicable state or federal law, rule, or regulation. 21. Excel affirms that it has adopted and disseminated strong prohibitions against illegal activity, and specifically slamming, in its independent representative procedures and manuals, excerpts of which have been provided to the Bureau. In addition, Excel has issued statements regarding slamming to its independent representatives through a variety of communications mediums, including its private satellite-delivered video service Excelevision, in the form of brochures (Let's Slam the Door on Slamming), and published articles in its magazine for independent representatives, The Communicator. Excel agrees that it will continue to publish anti-slamming literature to its independent representatives and will publish a minimum of three articles on slamming within one year of adoption of the Consent Decree. Excel agrees to provide copies of such articles to the Bureau within 30 days of publication. 22. During the period in which this Decree is in effect, Excel shall continue its current practice of sending a welcome letter to new customers upon receipt of a PIC change order. Excel's welcome letter shall state clearly that Excel has received a request from the customer for service and shall provide a toll free number for customer inquiries. If the welcome letter is going to an Excel long distance customer, the letter shall provide information regarding the PIC change immediately in the first paragraph, in an effort to reduce the risk that the letter might be mistaken as ``junk mail'' and disregarded by the customer. In addition, the letter shall be sent via the postal service or by electronic mail to a named individual (as opposed to ``resident'' or ``occupant''). 23. Excel agrees to continue its policy of offering a 90 day customer satisfaction guarantee. The guarantee provides that Excel will pay any customer's PIC fee to switch away from Excel if he is dissatisfied with Excel's service, for any reason, within 90 days of signing up for Excel service. Excel agrees to continue its 90 day customer satisfaction guarantee for a period of one year. 24. For two (2) years beginning on the effective date of this Consent Decree, Excel agrees to maintain and make available to the Bureau, within thirty (30) calendar days of the receipt of a written request from the Bureau, business records demonstrating compliance with the terms and provisions of this Consent Decree, including, but not limited to, advertisements, customer service scripts or training materials, manuals or presentations, written advisories to independent representatives and agents and required responses to those advisories, Letters of Agency, TPV tapes, PIC-change records, billing records, and consumer complaints regarding unauthorized conversions filed against Excel in any local, state, or federal agencies. The record of consumer complaints shall include the name, address and telephone number of each complainant, Excel's response, and the final disposition of each complaint. 25. Excel agrees that it shall notify the Chief, Telecommunications Consumers Division, Enforcement Bureau, Federal Communications Commission, Washington, D.C. 20554, at least thirty (30) days prior to the effective date of any material change in Excel's legal status, or corporate structure that may materially affect its obligations hereunder, including but not limited to, merger, incorporation, dissolution, assignment, or any other change that may materially affect Excel's obligations under this Consent Decree. Nothing in this Consent Decree shall be deemed to be an obligation on Excel to disclose to the Bureau ``material inside information'', as that term is defined in applicable securities laws and regulations. 26. The Parties agree and acknowledge that this Consent Decree shall constitute a final settlement of the Inquiry. The Bureau will not initiate on its own motion any other enforcement action against Excel, or seek on its own motion any administrative or other penalties from Excel, based on any informal complaint (as defined in 47 C.F.R. §1.716 et seq.), or any claim or allegation arising out of purportedly unauthorized preferred carrier changes that allegedly occurred prior to the Effective Date. 27. The Parties agree that the terms and conditions of this Consent Decree shall remain in effect for two (2) years from the date of the Adopting Order unless a longer period is specified herein. The Parties also agree that any provision of the Consent Decree, except for the provisions concerning TPV, which conflicts with any subsequent rule or order adopted by the Commission, will be superseded by such Commission rule or order. 28. If this Consent Decree is not signed by both parties, is not adopted by the Bureau, or is otherwise rendered invalid by any court of competent jurisdiction, it shall become null and void and shall not become part of the record in these enforcement proceedings nor may it be used in any fashion by any party in a legal proceeding. The parties agree, however, that except for Excel's financial obligations herein or except as otherwise ordered by any court of competent jurisdiction, the parties will comply with this Consent Decree during the pendency of any proceeding initiated by a third party seeking to nullify, void, or otherwise modify the Consent Decree or the Order. 29. The parties further agree that this Consent Decree shall become effective on the date of the release of the Order. 30. This Consent Decree may be signed in counterparts. FOR THE FEDERAL COMMUNICATIONS FOR EXCEL COMMISSION TELECOMMUNICATIONS, INC. __________________________________ ________________________________ David H. Solomon James M. Smith Chief, Enforcement Bureau Vice President, Law and Public Policy _________________________ 1 Excel currently provides presubscribed long distance services in all States except for Alaska. Excel intends to utilize TPV when it offers presubscribed long distance service in Alaska.