**Before the**

**FEDERAL COMMUNICATIONS COMMISSION**

**Washington, D.C. 20554**

In the Matter of )

)

Implementation of the Subscriber Carrier )

Selection Changes Provisions of the )

Telecommunications Act of 1996 )

) CC Docket No. 94-129

Policies and Rules Concerning )

Unauthorized Changes of Consumers )

Long Distance Carriers )

**CORRECTED VERSION**

**FIRST ORDER ON RECONSIDERATION**

Adopted: April 13, 2000 Released: May 3, 2000

By the Commission: Commissioner Furchtgott-Roth approving in part,
dissenting in part, and issuing a statement; Commissioner Powell issuing
a statement.

I.  **INTRODUCTION**

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1.  In our Second Report and Order and Further Notice of Proposed
    Rulemaking (*Section 258 Order*),[^1] we adopted rules to implement
    section 258 of the Communications Act of 1934 (Act), as amended by
    the Telecommunications Act of 1996 (1996 Act).[^2] The goal of
    section 258 is to eliminate the practice of \"slamming,\" which is
    the unauthorized change of a subscriber\'s preferred carrier. In the
    *Section 258 Order*, we adopted various rules addressing
    verification of preferred carrier changes and preferred carrier
    freezes. We also adopted liability rules designed to take the profit
    out of slamming. In this First Order on Reconsideration (*Order*),
    we amend certain of our liability rules, granting in part petitions
    for reconsideration of our *Section 258 Order*. Specifically, the
    revised rules provide for slamming disputes between consumers and
    carriers to be brought before appropriate state commissions, or this
    Commission in cases where the state has not opted to administer our
    rules, rather than to authorized carriers. In light of this
    decision, we deny a petition filed by several long distance carriers
    seeking waiver of the slamming liability rules and proposing an
    industry-sponsored slamming liability administrator.[^3] In this
    order, we also modify the liability rules that apply when a consumer
    has paid charges to a slamming carrier. In such instances, our new
    rules require slamming carriers to pay out 150% of the collected
    charges to the authorized carrier, which, in turn, will pay to the
    consumer 50% of his or her original payment. Finally, the order sets
    forth certain notification requirements to facilitate carriers'
    compliance with the liability rules. We believe these modifications
    will strengthen the ability of our rules to deter slamming, while
    addressing concerns raised with respect to our previous
    administrative procedures.

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II. **BACKGROUND**

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2.  In the *Section 258 Order*, we strengthened the procedures by which
    carriers must obtain customer verification of preferred carrier
    change requests. We broadened the scope of these verification
    procedures to apply to changes to local as well as long distance
    carriers. Additionally, the *Section 258 Order* set forth rules
    governing preferred carrier freezes, which prohibit carriers from
    changing a consumer\'s preferred carrier without that consumer\'s
    express authorization to \"lift the freeze.\"

3.  Recognizing that our previous rules had failed to deter carriers
    from engaging in slamming, we also adopted more aggressive new rules
    to take the profit out of slamming by absolving subscribers of
    liability for some slamming charges. These new liability rules were
    designed to ensure that carriers cannot profit from slamming
    activities, as well as to compensate subscribers for the
    inconvenience and confusion experienced due to slamming. The new
    rules absolve a subscriber of liability for all calls made within
    the first 30 days after being slammed. Under these rules, any
    charges for calls made beyond the 30-day limit must be paid by the
    subscriber to the authorized carrier at the authorized carrier\'s
    rates. If the subscriber has paid his or her bill to the
    unauthorized carrier, however, section 258(b) requires the
    unauthorized carrier to remit this payment to the authorized
    carrier. Upon receipt of this amount, the rules adopted in the
    *Section 258 Order* require the authorized carrier to provide the
    subscriber with a refund or credit of any amount the subscriber paid
    in excess of the authorized carrier\'s rates. The rules adopted in
    the *Section 258 Order* also require the authorized carrier to
    conduct investigations to provide an alleged unauthorized carrier
    with the opportunity to prove that it did not slam the customer.[^4]

4.  Although the majority of our new slamming rules took effect on April
    27, 1999, the new liability rules were stayed by the United States
    Court of Appeals for the District of Columbia Circuit (D.C. Circuit)
    at the request of MCI WorldCom, Inc.[^5] These liability rules were,
    however, at the core of the Commission\'s renewed efforts to
    eliminate slamming by giving consumers meaningful redress and by
    preventing carriers from profiting from this practice. Indeed, we
    saw a decline in slamming complaints during the period immediately
    prior to the May 1999 stay of these rules that may well have been
    attributable to carriers' recognition that the new liability rules
    would make it costly to continue slamming. In May 1999, the Common
    Carrier Bureau's Enforcement Division received only 840 slamming
    complaints, a sharp decrease from the 1,355 slamming complaints it
    received in April 1999.[^6] Local telephone companies have reported
    similar declines in the number of complaints they have received. For
    example, SBC's records show that in May 1999 is received 15,271
    slamming complaints, compared to 23,484 slamming complaints received
    in April 1999.[^7] Similarly, Bell Atlantic's records reveal that in
    May 1999 it received 15,951 slamming complaints, down from the
    19,263 slamming complaints it received in April 1999 and the 35,556
    slamming complaints it received in March 1999.[^8]

5.  Twelve entities filed petitions for reconsideration and/or
    clarification of the rules adopted in the *Section 258 Order*,[^9]
    and many parties filed comments in response to the petitions.
    Although the petitions raise a broad range of issues relating to the
    slamming rules, this *Order* addresses only those issues relating to
    the liability rules stayed by the D.C. Circuit. We will address the
    remaining reconsideration and clarification issues in a subsequent
    order.

6.  In this *Order* we reaffirm our decision to provide limited
    absolution of charges to consumers who are slammed. However, we
    modify the liability rules that apply when a consumer has paid
    charges to a slamming carrier. In addition, we grant, in part,
    several of the petitions requesting that we modify the obligations
    and procedures set forth in the *Section 258 Order* for
    administering these liability rules. These modifications are
    intended to resolve concerns raised in this proceeding and in the
    petitions for stay filed both with this Commission and with the D.C.
    Circuit.[^10] In support of certain issues in their petitions for
    reconsideration, several petitioners make arguments that are the
    same as or substantially similar to those we previously addressed in
    the *Section 258 Order*. Most of these petitioners do not offer new
    information to persuade us that our decisions on these issues in the
    *Section 258 Order* were erroneous. After reaffirming the importance
    of absolution to consumer protection, therefore, we address, with
    respect to the liability rules, only those new arguments raised in
    the petitions for reconsideration that we have not already
    considered and rejected.[^11] In this *Order* we also deny the
    Waiver Petition because we conclude that it is not in the public
    interest.

**III. DISCUSSION**

**A. Absolution**

**1. Retaining Limited Absolution**

7.  We restate our conviction that the limited absolution of consumer
    charges ordered by our slamming rules is essential to deterring
    slamming. By depriving unauthorized carriers of slamming revenues in
    the first instance, absolution takes the profit out of this illegal
    practice. Several petitioners and commenters, including all of the
    groups representing consumer and state interests, agree that
    absolution is \"a reasonable and practical extension of the
    statutory intent reflected in section 258 that the slamming carrier
    not be allowed to keep any of its ill-gotten gains.\"[^12] The only
    commenters who oppose absolution are carriers that would be subject
    to the more stringent liability created by these rules.[^13]

8.  As detailed in the *Section 258 Order,* we concluded that more
    aggressive slamming liability rules are essential because our
    previous rules had failed to stem the growth of slamming.[^14] As we
    summarized in that order:

> . . . our experience in this area leads us to the inescapable
> conclusion that slamming has become a profitable business for many
> carriers. For this reason, the rules we adopt in this *Order* not only
> seek to strengthen the existing verification rules, but are more
> broadly designed to prevent carriers from making any profits when they
> slam consumers . . . the strongest incentive for such carriers to
> implement strictly our verification rules is to know that failure to
> comply may mean that they will not get paid or any services rendered
> after such an unauthorized switch.[^15]

Accordingly, we reject the arguments of those long distance carriers
that assert we failed to explain our departure from the slamming
liability policies adopted in the *1995 Order*.[^16] Under those
previous rules, consumers remained obligated to pay charges to their
slamming carriers in the amount they would have paid their authorized
carriers absent the unauthorized change.[^17] Several commenters quote
piecemeal from the *1995 Order* to support their argument that our
current approach to slamming liability is inexplicably
inconsistent.[^18] We note, however, that those commenters fail to
include in their filings the cautionary language in that order. In
particular, the Commission there specifically warned that absolution
might be an appropriate rule if the prior rules failed to abate the
growth of slamming:

> Despite the compelling arguments of those favoring total absolution of
> all toll charges from unauthorized IXCs, we are not convinced that we
> should, *as a policy matter*, adopt that option *at this time*. . . We
> recognize, however, that \[liability limited to re-rating\] may not be
> the best deterrent against slamming. Some IXCs engaging in slamming
> may not be deterred unless all revenue gained through slamming is
> denied them. *At this time*, we believe that the equities tend to
> favor the "make whole" remedy and therefore support the policy of
> allowing unauthorized IXCs to collect from the consumer the amount of
> toll charges the consumer would have paid if the PIC had never been
> changed. . *. However, we recognize that if "slamming" continues
> unabated* -- perhaps through abuses in areas other than the use of the
> LOA -- *we may have to revisit this question at a later date*.[^19]

As noted above, the number of slamming complaints processed by this
Commission have more than doubled since adoption of the *1995 Order*.
The state commissions, which cumulatively receive a larger share of
slamming complaints than this Commission, have seen a similar
growth.[^20] Thus, consistent with our previous warning, and in light of
the need for stronger and more effective deterrents to slamming, we are
convinced that absolving consumers of liability for charges incurred
over a limited time-period is now the appropriate policy. We point out
that consumer groups and states support absolution from slamming charges
as an effective method of deterring slamming.[^21] Indeed, many states
have adopted absolution as a remedy for their own consumers.[^22]

9.  As we stated in the *Section 258 Order*, absolution minimizes
    slamming carriers' physical control over slamming revenues, and
    thereby minimizes the incentive to slam consumers. The Commission
    has seen several cases in which slamming carriers went out of
    business or declared bankruptcy after the Commission or state
    enforcement agencies detected their illegal activities. Such evasion
    has made it difficult to provide restitution to injured consumers.
    Accordingly, it is important to deprive a slamming carrier of
    slamming revenues in the first instance.

10. Our absolution rules also place appropriate incentives on both
    consumers and carriers. They encourage consumers to scrutinize their
    telephone bills immediately and carefully. In doing so, absolution
    engages the general public in detecting slamming. Absolution also
    provides carriers with the incentive to verify all carrier changes
    properly, in order to protect themselves against any possible
    inappropriate consumer claims of slamming. The rules will motivate
    carriers not only to comply strictly with our verification
    procedures, but also to use methods that provide convincing proof of
    a subscriber\'s authorization.

11. Finally, limited absolution compensates a slammed subscriber, at
    least in part, for the inconvenience and frustration that results
    from an unauthorized change. In our extensive experience handling
    slamming complaints since the *1995 Order*, it has become evident
    that consumers often experience a high level of confusion upon being
    slammed. After discovering the unauthorized change, consumers
    frequently have great difficulty in returning to their authorized
    carriers and in getting their telephone bills adjusted correctly.
    Indeed, as long as slamming carriers continue to receive payment,
    they have little incentive to be responsive to consumer complaints.
    Therefore, absolution also furthers Congress\' desire to \"provide
    that consumers are made whole.\"[^23]

12. As stated previously, the only parties that oppose the concept of
    absolution are the carriers themselves. States and consumer groups
    overwhelmingly support absolution as the best method to deter
    slamming. We are unpersuaded by the arguments of TRA and others that
    our absolution rule is inconsistent with the provisions of section
    258 requiring slamming carriers to reimburse authorized carriers for
    forgone revenue.[^24] As we explained in the *Section 258 Order*, we
    believe that our absolution remedies are complementary to the
    congressional scheme and not inconsistent. The language of section
    258 does not mandate that slammed consumers pay either the
    authorized or the unauthorized carrier. Rather, by its terms,
    section 258(b) applies only when a consumer in fact has made a
    payment. Furthermore, section 258 specifically states that its
    remedies are "in addition to any other remedies available by
    law."[^25] We emphasized in the *Section 258 Order* that the
    authorized carrier is free to seek compensation for lost profits or
    other damages in proceedings against the slamming carrier before the
    Commission or in a state or federal court.[^26] Furthermore, our
    rules do not deprive the authorized carrier of all charges incurred
    by the subscriber. The subscriber only receives absolution for
    service provided during the first 30 days after being slammed. The
    authorized carrier is entitled to collect charges for service
    provided after the first 30 days, even though that service was
    provided by the slamming carrier.

**2. Time Period for Absolution**

13. We decline to extend the absolution period beyond the 30-day limit,
    as suggested by several petitioners,[^27] because we find that the
    30-day limit strikes a reasonable balance between the interests of
    consumers and carriers. We find that the period of absolution should
    be limited in order to give consumers the incentive to look at their
    bills promptly and not to delay reporting slams.[^28] We also find
    that the time limitation should be tied to an event that is
    verifiable and easily tracked, such as the date a slam occurs,
    rather than an event that is not verifiable, such as the date the
    consumer notices an unauthorized change.[^29] Accordingly, we retain
    the limitation that absolution is only available for charges
    incurred within the first 30 days after the unauthorized change.

14. Furthermore, as explained in the *Section 258 Order*, we will grant
    waivers where special circumstances warrant a longer period of
    absolution, such as where the subscriber\'s telephone bill does not
    provide reasonable notice of a carrier change.[^30] We disagree with
    NTCA\'s contention that we should extend the time period for
    absolution because the waiver process is not a practical solution
    for consumers.[^31] NTCA\'s viewpoint appears to be based on the
    assumption that large numbers of consumers will be unable to detect
    carrier changes on their telephone bills. We acknowledged in the
    Truth-In-Billing proceeding that unclear telephone bills can prevent
    customers from recognizing that their carrier of choice has been
    switched.[^32] The principles adopted in that order address these
    concerns by requiring telephone bills to highlight when a consumer's
    preferred interLATA or intraLATA carrier has been changed. Our
    Truth-In-Billing Order also requires that telephone bills contain
    clear and conspicuous disclosure of consumer inquiry information,
    enabling consumers to report slamming and begin the process of
    returning to their authorized carrier.[^33] Accordingly, in the
    future, consumers should be better-equipped to detect and respond to
    unauthorized carrier changes. We also note that deliberate efforts
    by a carrier to conceal an unauthorized carrier switch may be the
    basis for extending the 30-day limit[^34], and may also warrant
    additional enforcement action by the Commission.

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B.  **Liability Where Consumer Has Paid Unauthorized Carrier**

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15. Frontier has requested reconsideration of the requirement in the
    *Section 258 Order* that an authorized carrier that collects
    slamming proceeds from an unauthorized carrier remit to the
    subscriber the difference between what the subscriber paid the
    unauthorized carrier and what he would have paid the authorized
    carrier absent a slam. Frontier asserts that this "re-rating"
    requirement is inconsistent with the specific statutory language of
    section 258, which mandates that the unauthorized carrier "shall be
    liable to the carrier previously selected by the subscriber in an
    amount equal to all charges paid by such subscriber after such
    violation."[^35]

16. In the *Section 258 Order*, we concluded that requiring authorized
    carriers to remit to the subscriber amounts in excess of what they
    would have received but for the slam was consistent with the statute
    and the Congressional intent underlying section 258.[^36] Pointing
    to the language of the legislative history specifically directing
    that the Commission's rules implementing section 258 "should also
    provide that consumers be made whole,"[^37] we concluded that
    Congress intended that subscribers who pay for slamming charges
    should pay no more than they would have paid their authorized
    carrier for the same service had they not been slammed.[^38] We also
    noted in the *Section 258 Order* that such a rule was consistent
    with existing Commission policy requiring slamming carriers to
    refund to subscribers amounts in excess of what the subscriber would
    have paid its preferred carrier; while the interpretation proffered
    by Frontier on reconsideration would leave consumers worse off than
    before passage of the legislation.[^39]

17. On reconsideration of this issue, we have considered comments filed
    in response to the Further Notice of Proposed Rulemaking (FNPRM) in
    this proceeding. Among the issues raised in the FNPRM, we asked
    whether we had authority under section 258 or other provisions of
    the Act to require the unauthorized carrier to pay to the authorized
    carrier double the amount of charges paid by the subscriber during
    the first 30 days after a slam, with the authorized carrier then
    remitting one-half that amount back to the subscriber.[^40] The
    modified liability approach we adopt here is a variation on that
    proposal in that it requires unauthorized carriers to disgorge more
    than the amount collected from the subscriber in order to compensate
    both the subscriber and the authorized carrier. In light of the
    comments received on the FNPRM and petitions for reconsideration, we
    now adopt a different liability scheme, for cases where the
    subscriber has paid charges to the unauthorized carrier, that we
    conclude more fully implements the congressional intent underlying
    section 258. Specifically, we now establish a remedy that both
    allows the authorized carrier to retain an amount of money equal to
    "all charges paid by the subscriber" to the unauthorized carrier,
    and also ensures that subscribers are "made whole" by reimbursing
    them the amount they paid in excess of what they would have paid
    their preferred carrier absent the slam (or a proxy for such
    amount). Thus, once a state commission or the FCC has made a finding
    that a slam has occurred,[^41] the unauthorized carrier will be
    required to disgorge to the authorized carrier an amount adequate to
    satisfy both of these obligations. As discussed below, we find that
    an appropriate proxy for this harm is 150% of the amounts collected
    by the unauthorized carrier from the subscriber following a slam.
    Upon receipt of this money, the authorized carrier will then be
    required to remit one-third of this amount (*i.e.,* 50% of what the
    subscriber paid to the unauthorized carrier) to the injured
    subscriber.

18. We specifically reject Frontier's petition to the extent it asserts
    that *any* re-rating of the consumers' bill would be inconsistent
    with the statute. To the contrary, Frontier's interpretation would
    completely ignore the congressional intent that consumers be "made
    whole," by leaving consumers that pay money to an unauthorized
    carrier having paid more than they would have paid absent the slam.
    Even setting aside any time and expense incurred by the consumer in
    remedying the slam, such an approach cannot be considered making the
    subscriber "whole" in any meaningful sense. We note, in particular,
    that many of the long distance carriers favoring reconsideration of
    the absolution requirement apparently agree that the dual
    Congressional intent of section 258 mandates that slammed consumers
    should pay no more than they would have paid absent the slam.[^42]

19. We conclude that the approach we adopt here is both authorized by
    section 258, and is the most appropriate method for satisfying the
    dual congressional purposes reflected in the legislative history.
    The specific language of section 258 provides that the unauthorized
    carrier shall be liable to the authorized carrier for all amounts
    collected from the subscriber.[^43] As Frontier asserts, a
    reasonable interpretation of this language is that Congress intended
    for the authorized carrier to retain all such amounts, even though
    they likely will be more than the authorized carrier would have
    received from the subscriber absent a slam.[^44] Such a bonus may
    serve as additional incentive for the authorized carrier to go after
    the unauthorized carrier to collect these amounts, thereby acting as
    an additional disincentive to slamming. Section 258 also
    specifically provides that this remedy is "in addition to any other
    remedies available at law."[^45] One such remedy that assuredly is
    available is the ability of consumers to bring a claim to the
    Commission or in federal court, or where allowed under state law to
    the state commissions, for damages due to slamming. For example,
    pursuant to sections 206-208 of the Act, a consumer bringing a
    complaint is entitled to actual and consequential damages following
    a finding of a slam.[^46] Indeed, prior to the *Section 258 Order*,
    Commission orders compensated slammed consumers by requiring
    slamming carriers, pursuant to sections 201(b) and 208 of the Act,
    to refund to the subscriber any amounts paid to the slamming carrier
    in excess of what he would have paid his preferred carrier absent
    the slam.[^47] Our modified liability requirements thus satisfy the
    congressional mandate of making consumers "whole," by retaining the
    availability of other existing remedies to ensure that subscribers
    pay no more for service than they would have but for being slammed.
    Accordingly, we find that the modifications to our liability rules
    adopted here most fully satisfy the dual congressional mandate of
    section 258. Thus, our decision to require the slamming carrier to
    disgorge 150% of the amount paid to it by the subscriber relies on
    our section 258 authority only with respect to that provision's
    express permission for the Commission to use "any other remedies
    available by law."[^48]

20. We note that, in response to the FNPRM, some carriers assert that we
    do not have jurisdiction to require the unauthorized carrier to
    disgorge more than it collected from the subscriber because this
    would result in punitive damages not authorized by the Act. We
    disagree. Even if such damages can be considered punitive, rather
    than purely compensatory,[^49] any punitive aspect arises from the
    specific statutory provision providing that the authorized carrier
    is entitled to amounts over and above what it would have collected
    if the slam had not occurred. The amount going to the subscriber, on
    the other hand, is no more than compensatory, and well within the
    range of relief authorized in other statutory provisions.[^50] As
    the statute specifically authorizes this additional liability to the
    authorized carrier, we find that it is clearly within our
    jurisdiction.

21. Finally, as noted above, we find that 50% of the amount collected
    from the subscriber by the unauthorized carrier is an appropriate
    proxy for re-rating that also responds to concerns raised by the
    carriers that actual re-rating is administratively difficult and
    expensive. Frontier, for example, argues that obtaining the
    necessary call detail from the offending carrier, collecting the
    revenues from the offending carrier, re-rating calls, and remitting
    the difference to affected customers is a time-consuming, manual and
    expensive process. [^51] Other long-distance carriers similarly
    argue that administrative systems (such as electronic interfaces
    between carriers) would have to be developed to allow for accurate
    re-rating, imposing costs on the authorized carrier that has not
    been accused of slamming.[^52] In response to this perceived
    difficulty, the long-distance carriers themselves (including
    Frontier and MCI) have argued in conjunction with the Joint Waiver
    Petition that the Commission should provide carriers the option of
    refunding 50% to the subscriber, rather than requiring them to
    engage in an actual calculation of the amount paid by the subscriber
    in excess what he would have paid his preferred carrier. These
    carriers assert that such a proxy fully compensates the subscriber
    while not requiring the carriers to engage in a difficult and
    expensive comparison of rates of other carriers.[^53] As discussed
    more thoroughly below, we agree that this is an appropriate remedy
    for these purposes and will significantly simplify the flow of money
    from the unauthorized carrier to the authorized carrier and
    subscriber.[^54]

**C. Administration of the Slamming Liability Rules**

C.  

**1. Overview**.

22. We find that the record supports modifications to the administrative
    processes set forth in the *Section 258 Order*. As discussed below,
    the modified rules we adopt in this *Order* provide that disputes
    between alleged slamming carriers, authorized carriers, and
    subscribers now will be brought before an appropriate state
    commission, or this Commission in cases where the state has not
    elected to administer these rules, rather than to the authorized
    carriers, as adopted in the *Section 258 Order.*[^55] We make this
    change to ensure that the slamming dispute is brought before a
    neutral entity, as well as to remove administrative burdens from the
    authorized carrier. We also provide authorized carriers the option
    of either re-rating customer overcharges or using a 50% proxy for
    excess overcharges. The rule adopted in the *Section 258 Order*
    required the authorized carrier to provide actual re-rating in every
    instance to determine the amount of charges to be collected from a
    subscriber for calls made outside the 30-day absolution window.[^56]
    We have revised this rule in response to contentions from the
    carriers that requiring the authorized carrier to re-rate the
    charges imposed by another carrier is time-consuming and
    expensive.[^57] We also recognize that similar industry concerns
    were raised in the MCI Motion for Stay.[^58] Accordingly, these
    modifications are intended, in part, to address some of the issues
    that may have been considered by the D.C. Circuit in granting the
    stay.[^59]

**2. Forum for Administration of Slamming Liability Rules.**

23. In the *Section 258 Order*, we set forth rules that imposed on
    authorized carriers certain responsibilities for resolving disputes
    between subscribers and allegedly unauthorized carriers. Recognizing
    that other alternatives might better serve consumer interests under
    our slamming liability scheme, however, we agreed to entertain
    requests for waiver of our rules if carriers implemented an
    independent third party administrator to discharge carrier
    obligations for resolving slamming disputes. We specified that such
    a proposal should give consumers a single point of contact to
    resolve slamming problems and provide consumers with a neutral forum
    for resolving disputes regarding slamming liability.[^60] On March
    30, 1999, a coalition of interexchange carriers filed a Waiver
    Petition proposing a plan for an industry-funded third party to
    administer our slamming liability rules.[^61] On April 20, 1999,
    state commissions, through the National Association of Regulatory
    Utilities Commissions (NARUC), filed a letter asserting that they
    are well-equipped to handle slamming complaints and requesting that
    the Commission consider allowing them to be the primary adjudicators
    of slamming disputes.[^62] NARUC argues that the state commissions
    are more appropriate than the industry's proposed third-party
    administrator to execute our slamming liability provisions because
    the states have existing, neutral, and comprehensive mechanisms to
    handle slamming disputes.[^63]

24. We conclude that it is in the public interest to have state
    commissions,[^64] rather than a third party designated by carriers,
    perform the *primary* administrative functions of our slamming
    liability rules. In fact, it appears to be both appropriate and
    effective to establish this type of alliance with the states. The
    language of Section 258 itself contemplates a state and federal
    partnership to deter slamming.[^65] In addition, the states and the
    Commission have been working together for some time to share
    information and develop new and creative solutions to combat
    slamming. For example, the State and National Action Plan (SNAP),
    comprising staff from NARUC, the FCC, and the National Regulatory
    Research Institute, regularly meet to develop joint public
    information strategies to increase awareness of telecommunications
    issues affecting consumers, coordinate enforcement actions to
    protect consumers against abuses in the telecommunications
    marketplace, and coordinate regulatory initiatives.[^66] Joint
    state-federal activities have been very effective in protecting
    consumers against various types of telecommunications fraud. It is
    imperative that the states and the FCC continue to cooperate, and
    expand their interaction, in order to eradicate slamming.

25. We also find that the state commissions are, for several reasons,
    more appropriate for resolving slamming disputes than the
    administrator proposed by the long distance carriers. We agree with
    NARUC that the states are particularly well-equipped to handle
    complaints because they are close to the consumers and familiar with
    carrier trends in their region. As NARUC describes, establishing the
    state commissions as the primary administrators of slamming
    liability issues will ensure that "consumers have realistic access
    to the full panoply of relief options available under both state and
    federal law. . . .\"[^67] Moreover, state commissions have extensive
    experience in handling and resolving consumer complaints against
    carriers, particularly those involving slamming. In fact, the
    General Accounting Office (GAO) has reported that all state
    commissions have procedures in place for handling slamming
    complaints, and that those procedures have been effective in
    resolving such complaints.[^68] We specifically note that at present
    more than 35 states have committed to provide the resources
    necessary to resolve slamming disputes in a timely and fair
    manner.[^69]

26. Based upon these representations and the proven track record of
    customer satisfaction, we conclude that state commissions have the
    ability and desire to provide prompt and appropriate resolution of
    slamming disputes between consumers and carriers in a manner
    consistent with the rules adopted by this Commission. In most
    situations, state commissions will be able to provide consumers with
    a single point of contact for each state, thereby enabling slammed
    consumers to rectify their situations, receive refunds, and get
    appropriate relief with one phone call. State commissions also will
    be able to provide consumers and carriers with timely processing of
    slamming disputes. Finally, but of critical importance, states will
    provide a neutral forum for the resolution of slamming disputes. As
    noted above, this was one of the essential criteria we set forth for
    the approval of a slamming liability administrator. We do not
    conclude here that an industry-sponsored administrator could not act
    as a "neutral" adjudicator of disputes between carriers and
    consumers. Nonetheless, we are troubled by the concerns raised by
    several consumer groups that such an entity would be perceived by
    consumers as biased in favor of carriers. The slamming liability
    rules are intended to protect consumers, and the effectiveness of
    any administrative mechanism we select will be dependent upon
    consumers having confidence in the fairness and impartiality of the
    process. We agree with the arguments of NARUC that state commissions
    will be perceived by consumers as more "neutral" adjudicators of
    disputes than the third-party administrator proposed by the
    interexchange carriers.[^70]

27. We recognize, however, that not all states have the resources to
    resolve these slamming complaints, or may choose not to take on this
    primary responsibility. Consumers in these states accordingly may
    seek resolution of their slamming disputes by filing a complaint
    with this Commission. To provide consumers who opt to file
    complaints with this Commission the full complement of rights and
    remedies contemplated by this order,[^71] we are amending our own
    rules for the adjudication of slamming complaints.[^72]

28. Our conclusion that states should have primary responsibility for
    administering our slamming liability rules shall not preclude a
    consumer from electing to file a slamming complaint with this
    Commission. In cases where the state has indicated it will
    administer our rules, however, this Commission will refer informal
    complaints to the appropriate state commission for resolution,
    unless the complainant expressly indicates it wishes to have the
    matter resolved by this Commission. This Commission will not
    adjudicate a complaint based on an allegation of slamming while the
    complainant has a complaint arising from the same set of facts
    pending before a state commission that has opted to administer our
    slamming rules. Additionally, these rules do not preclude the filing
    of a petition for declaratory ruling alleging that a state has
    improperly implemented our verification or liability rules.[^73]
    Finally, nothing in these procedures is intended to abrogate any
    party's right to pursue relief for a slamming violation in state or
    federal court.

**3. Administrative Procedures.**

**a. State Notification of Participation in Adjudication of
Complaints.**

29. To ensure full and seamless administration of complaints among this
    Commission and the states, each state commission that chooses to
    take on the primary responsibility for resolving consumer slamming
    complaints must notify this Commission of the procedures it will use
    to adjudicate individual slamming complaints on the effective date
    of these revised rules.[^74] Each state commission's notification
    should explain how consumers may file complaints (including where
    the complaint is to be filed, what if any filing fees a consumer
    must pay, and what documentation a consumer must provide in its
    complaint), any and all deadlines parties must adhere to that are
    shorter than those explicitly stated in these rules, what safeguards
    exist to ensure procedural fairness to consumers and carriers, and
    what rights parties have to appeal an initial decision.[^75]

30. If, after the effective date of these rules, additional states opt
    to administer complaints under the rules, they may do so by filing
    such notification in the above-captioned docket and sending a copy
    to the Chief of the FCC Consumer Information Bureau.[^76] In
    addition, state notification of an intention to discontinue
    administering complaints under the rules shall be filed in the
    above-captioned docket, with a copy of such notification provided to
    the Chief of the FCC Consumer Information Bureau.[^77]

**b. Preliminary Consumer Relief is Granted upon Slamming Allegation.**

31. We retain the requirement that an alleged unauthorized carrier must
    remove all charges assessed for the first 30 days of services from a
    subscriber\'s bill upon the subscriber\'s allegation that he or she
    was slammed.[^78] Several carriers state that the allegation of a
    slam should not trigger preliminary relief because many slamming
    complaints will turn out to be invalid or fraudulent.[^79] As we
    explained in the *Section 258 Order*, the fact that a subscriber can
    only be absolved of liability if he or she has in fact been slammed
    minimizes our concerns about fraud by consumers.[^80] In accordance
    with the revised rules described above, if a carrier is able to
    produce proof of verification, it is entitled to receive full
    payment from the subscriber for all services provided. Our rules
    will motivate carriers to comply strictly with our verification
    procedures to protect themselves from inappropriate claims of
    slamming. We also explained in the *Section 258 Order* that the
    absolution remedy we adopted provides an easily administered remedy
    for consumers who have been slammed. The absolution remedy would not
    be as effective if the consumer had to pay for slamming charges in
    the first instance; we have emphasized repeatedly how essential it
    is to minimize the opportunity for unauthorized carriers to
    physically take control of slamming profits for any period of
    time.[^81] Accordingly, our rules will continue to require that,
    upon an allegation of a slam, the alleged unauthorized carrier must
    remove all charges assessed for the first 30 days of service
    immediately from the subscriber\'s bill.

32. Our retention of the requirement that an alleged unauthorized
    carrier must remove all charges assessed for the first 30 days of
    service from a subscriber\'s bill upon the subscriber\'s allegation
    that he or she was slammed, along with our modification of the
    administration procedures, creates the need for an additional
    administrative rule. Specifically, because the subscriber receives
    preliminary relief pending a final determination of whether or not a
    slam occurred, our rules need to ensure that the subscriber
    benefiting from the relief promptly files a complaint with the state
    commission (or the FCC), thus giving the alleged unauthorized
    carrier an opportunity to provide proof of verification. Therefore,
    we modify our rules to require that the allegedly unauthorized
    carrier notify the subscriber that it must file a complaint with the
    appropriate state commission (or the FCC) within 30 days of the date
    it notifies the allegedly unauthorized carrier that a slam occurred,
    or be subject to re-billing for charges incurred.[^82] The allowance
    of such re-billing does not, however, prohibit the subscriber from
    subsequently filing a complaint alleging that a slam occurred with
    the state commission (or the FCC) and proceeding in accordance with
    the Commission's rules.

**c. General procedures.**

33. As discussed above, when an allegedly unauthorized carrier is
    informed by a subscriber of an alleged slam, that carrier is
    required to remove charges for the first 30 days of service from the
    subscriber's bill.[^83] The subscriber must then file a complaint
    with a state commission (or the FCC) seeking a factual determination
    that a slam occurred.[^84] We recognize that some carriers may
    choose to make it their practice not to challenge allegations of
    slamming and to provide subscribers who allege a slam has occurred
    with all the relief to which they would be entitled under our
    rules.[^85] We do not intend for these rules to discourage carriers
    from providing subscribers with the most expedient relief possible.
    Accordingly, where an allegedly unauthorized carrier chooses to not
    challenge the allegation of a slam and provides the subscriber
    alleging that a slam occurred with all the relief to which the
    subscriber would be entitled pursuant to our rules, had the
    subscriber prevailed on a slamming complaint, the allegedly
    unauthorized carrier shall inform the subscriber of the remedies our
    rules provide and that the subscriber has the option of filing a
    complaint with the appropriate state commission (or the FCC) if the
    subscriber is not satisfied with the resolution of its dispute with
    the carrier.[^86]

34. We require any carrier that is informed by a subscriber of a slam to
    direct each unsatisfied subscriber[^87] to the proper state
    commission (or the FCC) for resolution of the slamming problem and
    inform such unsatisfied subscriber of all the relevant filing
    requirements.[^88] We conclude that this will achieve one of our
    objectives for a slamming liability administrator set forth in the
    *Section 258 Order* \-- minimizing the effort consumers must expend
    to resolve slamming disputes.[^89] We also expect that the states
    that have sufficient resources will launch public information
    campaigns to inform consumers of their rights and responsibilities
    with regard to slamming liability. We anticipate a productive state
    and federal partnership in this effort. Additionally, in order to
    fulfill our responsibilities under section 258 of the Act and to
    assist our enforcement efforts, we will require states that choose
    to administer the Commission's rules to regularly file information
    with the Commission that details slamming activity in their regions.
    Such filings should identify the number of slamming complaints
    handled, including data on the number of valid complaints per
    carrier; the identity of top slamming carriers; slamming trends; and
    other relevant information.[^90] Such reports will help the
    Commission to identify appropriate targets for slamming enforcement
    actions, such as forfeiture or section 214 revocation
    proceedings.[^91]

35. We also revise our rules to add a notification requirement to
    facilitate the administration of long distance slamming
    complaints.[^92] SBC, AT&T, and Sprint state that, because our rules
    lack a notification requirement that would enable carriers to learn
    each others\' identity, the carriers involved in a slamming incident
    might not be able to take appropriate action against each
    other.[^93] Furthermore, this notification issue was also raised in
    the MCI WorldCom Motion for Stay filed with the D.C. Circuit.[^94]
    We will require an executing carrier[^95] who is informed of a slam
    by the subscriber to immediately notify both the authorized and
    alleged unauthorized carriers of the incident, including the
    identity of each carrier involved.[^96] We note that the industry
    has already taken steps to facilitate the transfer of this
    information between carriers.[^97] We agree that a notification
    requirement is important to the correct functioning of the liability
    mechanism. Requiring the LEC to notify both the authorized and the
    alleged unauthorized carriers of the other's identity in a slamming
    incident will enable the unauthorized carrier to forward appropriate
    amounts collected from the subscriber if it is determined that a
    slam occurred. This will also enable the authorized carrier to bring
    appropriate actions, such as a complaint before a state commission
    (or the FCC), against the unauthorized carrier should the
    unauthorized carrier fail to fulfill its responsibilities to the
    authorized carrier.

36. Upon receipt of a slamming complaint, the state commission (or this
    Commission if the complainant is from a non-participating state or
    has expressly indicated that it wants this Commission to resolve its
    complaint) will notify the allegedly unauthorized carrier of the
    slamming complaint and ensure that the carrier removes immediately
    all unpaid charges from the subscriber\'s bill, if it has not done
    so already.[^98] Within 30 days after notification of the slamming
    complaint, or such lesser time as required by the state commission,
    the alleged unauthorized carrier shall provide to the state
    commission (or the FCC) a copy of the valid proof of verification of
    the carrier change.[^99] This proof of verification should contain
    clear and convincing evidence that the subscriber knowingly
    authorized the carrier change, such as a written Letter of Agency
    (LOA) or an audiotape of an independent third party
    verification.[^100] The state commission (or the FCC) will make a
    determination on whether a slam occurred using proof supplied by the
    allegedly unauthorized carrier and any evidence supplied by the
    subscriber.[^101]

37. The following review procedures apply when a state commission has
    resolved a slamming complaint. Challenges to the factual
    determinations made by a state commission applying our rules shall
    be made in accordance with the relevant review provisions that are
    applicable to each state commission. Challenges to whether a state
    commission's process for resolving slamming complaints are
    consistent with this order must be brought to the FCC in the form of
    a petition for declaratory ruling. The following review procedures
    apply when the staff of this Commission has resolved a slamming
    complaint. A subscriber seeking to challenge the FCC staff's
    determination of whether a slam occurred may file a formal complaint
    against the allegedly unauthorized carrier in accordance with our
    formal complaint rules.[^102] An allegedly unauthorized carrier
    seeking to challenge the FCC staff's determination of whether a slam
    occurred may file a petition for declaratory ruling with this
    Commission.

**d. Where the subscriber has not paid charges.**

38. The following procedures shall apply when the subscriber has not
    paid charges to the allegedly unauthorized carrier.[^103] If the
    state commission (or the FCC) determines that the carrier change was
    authorized, the carrier may re-bill the subscriber for charges
    incurred.[^104] If the state commission (or the FCC) determines that
    the subscriber was slammed, then the subscriber is entitled to
    absolution from the charges incurred during the first 30 days after
    the slam occurred, and the carrier may not pursue any collection
    actions against the subscriber to recover these charges.[^105]

39. If the subscriber has incurred charges for more than 30 days after
    the slam occurred, then the unauthorized carrier shall forward to
    the authorized carrier the billing information for service provided
    from the 31^st^ day after the slam occurred through the date the
    unauthorized carrier stopped providing service.[^106] The authorized
    carrier has the option of billing the subscriber for calls made
    after the first 30 days after the slam at the rates the subscriber
    would have paid the authorized carrier absent the slam.[^107] After
    receiving billing information from the unauthorized carrier, the
    authorized carrier may re-rate such service according to its own
    rates and then bill the subscriber for such service.[^108] If the
    authorized carrier so chooses, rather than actually re-rating the
    service provided by the unauthorized carrier, it may bill the
    subscriber in accordance with a 50% proxy rate.[^109] In other
    words, it may bill the subscriber for 50% of the rate the
    unauthorized carrier would have charged. If the subscriber believes,
    however, that paying 50% results in a greater charge than re-rating
    to the authorized carrier\'s rates, at the request of the
    subscriber, the authorized carrier shall perform actual
    re-rating.[^110]

40. We note that we do not necessarily agree with the carriers'
    assessment of the administrative difficulty of re-rating. Although
    the carriers admit that the only information needed for re-rating is
    the length and time of the call, they fail to explain why the
    re-rating process, as described in the *Section 258 Order*, would
    require \"electronic systems that interconnect with other carrier\'s
    billing and usage systems, so that they can exchange relevant price
    and call data electronically.\"[^111] Indeed, the carriers admit
    that manual re-rating can be easily accomplished for any particular
    complainant.[^112] Nevertheless, we permit authorized carriers to
    have the option of using a 50% proxy because the carriers assert
    that re-rating is an administrative burden, and because we are
    persuaded that a 50% proxy will generally yield a reasonable and
    fair result for the subscriber.[^113] Giving carriers this option
    will ensure that, in most cases, the authorized carrier is able to
    collect charges without having to perform re-rating and that the
    subscriber will receive adequate compensation.

**e. Where the subscriber has paid charges.**

41. The following procedures shall apply when the subscriber does not
    discover a slam until after he or she has already paid charges to
    the alleged unauthorized carrier.[^114] As explained in the *Section
    258 Order*, section 258 requires the unauthorized carrier to pay the
    authorized carrier any charges collected following an unauthorized
    switch. We concluded in that order that this provision of the
    statute prevents us from providing absolution to slammed subscribers
    who have already paid charges to their unauthorized carriers.[^115]

42. As explained above, however, we have herein modified the liability
    rules applicable in cases where the consumer has paid charges to the
    unauthorized carrier in order to more fully implement the dual goals
    of section 258 of compensating both the subscriber and the
    authorized carrier.[^116] Pursuant to this modified liability
    scheme, a carrier found to have slammed will be required to disgorge
    to the authorized carrier 150% of the amounts collected by that
    slamming carrier from the subscriber. Accordingly, when the state
    commission (or the FCC) determines that the alleged unauthorized
    carrier did slam the consumer, then it shall direct such carrier to
    forward to the authorized carrier 150% of (or one and one-half
    times) all amounts collected from the subscriber, as well as a copy
    of the customer's bill for the amounts paid.[^117] Upon receipt of
    these charges from the unauthorized carrier, the authorized carrier
    shall remit (either directly or through bill credits) one-third of
    this amount to the subscriber.[^118] As explained above, this
    amount, which equals 50% of the charges paid by the subscriber to
    the unauthorized carrier, constitutes a reasonable proxy for the
    damages sustained by the subscriber, while not requiring the
    authorized carrier to engage in the arguably difficult and expensive
    task of actually re-rating the subscriber's bill. The authorized
    carrier shall also notify the state commission (or the FCC) that it
    has paid this amount to the subscriber.[^119] If the subscriber is
    failed to be made whole by the 50% proxy, the subscriber may ask the
    authorized carrier to re-rate the unauthorized carrier's charges
    based on the rates of the authorized carrier and, on behalf of the
    subscriber, seek an additional refund from the unauthorized carrier,
    to the extent that the re-rated amount exceeds the 50% of all
    charges paid by the subscriber to the unauthorized carrier.[^120]

43. Finally, we note that if the authorized carrier does not collect any
    amounts from the unauthorized carrier, the authorized carrier is not
    responsible for providing refunds or credits to the
    subscriber.[^121] As explained in the *Section 258 Order*, the
    authorized carrier should not be, in effect, penalized for the
    wrongdoing of another carrier by having to pay a refund out of its
    own pocket.[^122] In such cases, of course, both the subscriber and
    the authorized carrier retain any other existing avenues to obtain
    relief from the unauthorized carrier.

**D. Waiver Petition**

44. As explained above, petitioners filed a Waiver Petition setting
    forth a proposal for a third-party administrator to administer the
    liability aspects of the slamming rules.[^123] Petitioners seek a
    waiver of the following liability rules for those carriers electing
    to participate in the proposed third-party administrator plan:
    section 64.1100(c); section 64.1100(d); section 64.1170; and section
    64.1180.[^124] On April 8, 1999, the Commission issued a public
    notice seeking comment on the third-party administrator
    proposal.[^125] Because we believe that it is in the public interest
    for state commissions to undertake the responsibilities envisioned
    for the third-party administrator, we deny the waiver request.[^126]

45. Waiver of the Commission\'s rules is appropriate only if special
    circumstances warrant a deviation from the general rule, and such a
    deviation will serve the public interest. A waiver of the
    Commission\'s general rules may only be granted if such waiver would
    not undermine the policy underlying that general rule.[^127]
    Petitioners have failed to demonstrate that the third party
    administrator proposal is in the public interest. In evaluating
    whether a waiver of these rules is in the public interest, our
    overriding criterion is whether a waiver would further the policy
    goals of section 258 and our implementing rules: to protect the
    rights of consumers who are slammed and, ultimately, to eliminate
    this type of fraud.

46. We find that adopting the third-party administrator proposal would
    not be in the public interest because, as described above, we have
    revised our rules to address many of the concerns that prompted the
    filing of the waiver petition. The Waiver Petition sets forth an
    alternative administration scheme that would place a neutral,
    industry-endorsed entity in the role of resolving disputes between
    alleged slamming carriers and subscribers.[^128]

47. In addition to the fact that the state commissions (or the FCC) will
    better serve the public interest in administering the slamming
    liability rules, the record demonstrates that segments of the
    industry have failed to reach consensus on the operation and
    administration of a third-party administrator. The local exchange
    and long distance carriers disagree strongly on many important
    aspects of the third-party administrator proposal.[^129] In inviting
    the industry to submit proposals for a third-party administrator,
    the Commission did not anticipate that the third-party administrator
    would be a mandatory requirement for all carriers. We did
    contemplate, however, that a workable third-party slamming liability
    administrator would have broad acceptance among different segments
    of the industry as well as the states and consumer interest groups.
    As reflected in the comments, the proposal put forth by the
    petitioning long distance carriers has not engendered such broad
    support, particularly among state and consumer interest
    representatives.[^130] We find this discord troubling. Despite many
    months of discussion between the local exchange and long distance
    carriers, and despite input from consumer groups and the states, the
    Commission has seen these various groups settle more firmly into
    their disparate positions rather than moving closer to resolution.

48. This lack of comprehensive industry participation and consumer group
    support undermines several important potential benefits of the
    third-party administrator proposal. We find that the lack of
    consensus will prevent the third-party administrator from being the
    single point of contact for the consumer.[^131] Without local
    exchange carrier participation and support of the third-party
    administrator mechanism, we are concerned that local exchange
    carriers will have no incentive to refer consumers to the
    third-party administrator. Accordingly, consumers may continue to
    call several entities in order to resolve their slamming disputes,
    undermining one of the primary benefits of a third-party
    administrator identified in the *Section 258 Order* -- providing a
    single point of contact for slammed subscribers. We have additional
    concerns that, if a substantial portion of the industry does not
    participate in the third party administrator process, the
    non-participants may be able to derail the time limits and other
    procedures set by the third-party administrator, resulting in the
    delayed resolution of slamming complaints.

49. We believe that our revised rules address the concerns raised in the
    Waiver Petition in a manner that more fully satisfies the criteria
    set forth in the *Section 258 Order*. Our revised rules provide for
    state commissions (or the FCC) to handle administration of our
    slamming liability rules, rather than imposing burdens on authorized
    carriers, as originally provided in the *Section 258 Order*.
    Furthermore, authorized carriers now have the option of using a 50 %
    proxy to calculate refunds and subscriber charges, rather than
    performing actual re-rating, as was prescribed in the *Section 258
    Order*.

50. In sum, we conclude that our revised rules will protect consumers
    more effectively than the third-party administrator proposed by the
    long distance industry. Consumer interest groups disagree with many
    aspects of the third-party administrator proposal, contending that
    the administrator will not be neutral towards consumers.[^132]
    Accordingly, the revised rules provide that state commissions (or
    the FCC) will resolve slamming disputes, thereby alleviating any
    neutrality concerns. Based on the states' representations discussed
    above, we find that the majority of states have the resources and
    knowledge to provide prompt and effective resolution of slamming
    disputes. For these reasons, the public interest favors adoption of
    the revised rules, which utilize appropriate state commissions as
    reliable, timely, and neutral dispute-resolution forums, rather than
    the proposed industry-sponsored third-party administrator.

**IV. CONCLUSION**

51. In this *Order*, we grant in part and deny in part petitions for
    reconsideration or clarification of the slamming liability rules
    adopted in the *Section 258 Order*. We emphasize that eliminating
    the profitability of slamming by absolving consumers of certain
    charges incurred after being slammed is essential to eliminating
    slamming itself. Absolution deprives unscrupulous carriers of access
    to slamming revenues, thereby preventing them from profiting from
    slamming activities. Absolution provides appropriate incentives for
    consumers to examine their telephone bills carefully, as well as
    motivating carriers to comply strictly with our verification
    procedures. Finally, absolution provides necessary compensation to
    consumers who experience confusion, frustration, and wasted time as
    a result of being slammed. Our experience to date convinces us that
    adoption of rules absolving consumers from paying these charges is
    the most effective way to significantly reduce the ever-growing
    number of slamming incidents.

52. We also revise our rules to place primary responsibility for
    resolving slamming disputes on state commissions. We find that state
    commissions have the resources and the necessary experience to give
    slammed consumers a single point of contact, a neutral forum for
    dispute resolution, and timely relief. Where state commissions
    choose not to take on this primary responsibility, we revise our
    rules to provide consumers in such states the full complement of
    rights and remedies contemplated by this order.[^133] We also deny
    the Waiver Petition filed by certain interexchange carriers because
    it is not in the public interest to grant the waiver. Finally, we
    make nonsubstantive modifications to our rules to reorder these
    rules where necessary and otherwise simplify these rules.[^134]

####  V. PROCEDURAL ISSUES

**A. Supplemental Regulatory Flexibility Analysis.**

A.  

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53. As required by the Regulatory Flexibility Act (RFA),[^135] an
    Initial Regulatory Flexibility Analysis (IRFA)[^136] was
    incorporated in the First Further Notice of Proposed Rulemaking and
    Memorandum Opinion and Order and Order on Reconsideration*.*[^137]
    The Commission sought written public comment on the proposals in the
    *Further Notice and Order*, including comment on the IRFA. Based on
    comments received in the *Further Notice and Order*, a Final
    Regulatory Flexibility Analysis (FRFA)[^138] was incorporated in the
    Second Report and Order and Further Notice of Proposed
    Rulemaking.[^139] Petitions for Reconsideration and a Joint Petition
    for waiver of certain rules were filed in response to the rules
    adopted in the *Section 258 Order*. This present Supplemental Final
    Regulatory Flexibility Analysis (SFRFA) conforms to the RFA.

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1.  **Need for and Objectives of this *Order* and the Rules Adopted
    Herein**

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54. The goal of Section 258 of the Act is to eliminate the illegal
    practice of slamming -- the unauthorized change of a subscriber's
    preferred carrier.[^140] Faced with over 20,000 slamming complaints
    a year from individuals and small businesses, the Commission created
    a comprehensive framework for combating slamming in the *Section 258
    Order* by adopting rules to implement section 258 and strengthening
    existing anti-slamming rules.[^141] The cornerstone of that
    framework was a set of aggressive liability rules designed to take
    the profit out of slamming.[^142] In this *Order*, we make certain
    modifications to our liability rules, granting in part petitions for
    reconsideration of the *Section 258 Order*. The modifications are
    intended to resolve concerns raised in this proceeding and in the
    petitions for stay filed both with this Commission and with the D.C.
    Circuit.[^143]

55. Specifically, in this *Order*, we retain our policy of limited
    absolution of consumer charges, where the consumer has not paid the
    slammer, but we modify the liability rules that apply when a
    consumer has paid charges to a slamming carrier. The revised rules
    provide that a slamming carrier must pay 150% of the collected
    charges to the authorized carrier, which, in turn, must pay the
    consumer 50% of the consumer's original payment. This modified
    remedy increases penalties for slamming and increases incentives for
    authorized carriers to go after slammers, while ensuring that
    slammed consumers receive compensation.[^144] In this *Order*, we
    also modify the administration of consumer slamming complaints, to
    ensure that such complaints are addressed in the most expedient and
    equitable manner. To this end, we relieve authorized carriers of the
    obligation to administer the liability rules and accept the
    proposal, proffered by NARUC, that state commissions serve as the
    primary administrators of most slamming disputes.[^145] In addition,
    we adopt certain notification requirements to facilitate carriers'
    compliance with the liability rules. These include a requirement
    that, when an executing carrier (typically, the LEC that effects a
    carrier change) learns about an alleged slam, it must immediately
    notify both the authorized and alleged unauthorized carriers of the
    slamming allegation and the identities of the carriers involved.
    [^146] The objectives of the modified rules adopted in this *Order*
    are to implement section 258 by reducing incidents of slamming and
    ensuring that authorized carriers and slammed consumers are
    compensated, and to address concerns raised with respect to our
    previous administrative procedures.

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2.  **Summary of Significant Issues Raised by Public Comments.**

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56. We received no petitions for reconsideration directly addressing
    issues in the previous FRFA.

57. *Re-Rating Rules*. Commenters contend that requiring each authorized
    carrier to perform a re-rating to determine the size of the refund
    to each slammed subscriber would place a complex and costly
    administrative burden on them.[^147] Although we do not necessarily
    agree with carriers about the dimensions of this burden, we believe
    that the 50% proxy that authorized carriers propose to give to their
    slammed subscribers will benefit consumers in most cases. In those
    instances where a subscriber does not believe that it will benefit
    from the 50% proxy, the subscriber may request an actual re-rating.
    In most circumstances, however, authorized carriers will be able to
    avoid the alleged burden.[^148]

58. *Creation of an industry-sponsored third-party administrator*. As
    discussed in this *Order*,[^149] some commenters proposed that
    slamming complaints be adjudicated by an industry-funded third-party
    administrator. These commenters aver that the third-party
    administrator would benefit consumers and industry alike by creating
    a single point of contact to resolve slamming complaints and
    simplifying the complaint process.[^150] We reject this proposal,
    and instead conclude that state commissions should perform the
    primary function in administering our slamming liability rules.

59. The benefit claimed by proponents of the third-party administrator
    was belied by the fact that no workable proposal was offered.
    Various industry segments disagreed on the form and workings of the
    proposed third-party administrator, and states and consumer groups
    expressed their disapproval of, and lack of confidence in, the
    idea.[^151] The absence of consensus, and the accompanying
    possibility that a substantial portion of the industry would not
    participate in the third-party administrator, could result in
    greater confusion for consumers and authorized carriers. The system
    we adopt, which requires all carriers to forward complaints they
    receive to the appropriate governmental agency (in most cases, the
    state commission) will provide a more efficient and comprehensive
    mechanism for all parties, including small entities. Moreover, the
    experience, neutrality, and resources of state commissions make them
    well-equipped forums for resolving slamming complaints.

> **3. Description and Estimate of the Number of Small Entities To Which
> the Proposed Rules Will Apply.**

60. The RFA directs agencies to provide a description of and, where
    feasible, an estimate of the number of small entities that may be
    affected by the proposed rules, if adopted.[^152] The RFA generally
    defines the term \"small entity\" as having the same meaning as the
    terms \"small business,\" \"small organization,\" "small
    governmental jurisdiction," and \"small business concern\" under
    Section 3 of the Small Business Act.[^153] A small business concern
    is one which: (1) is independently owned and operated; (2) is not
    dominant in its field of operation; and (3) satisfies any additional
    criteria established by the Small Business Administration
    (SBA).[^154] A small organization is generally \"any not-for-profit
    enterprise which is independently owned and operated and is not
    dominant in its field.\"[^155] Nationwide, as of 1992, there were
    approximately 275,801 small organizations.[^156] \"Small
    governmental jurisdiction\"[^157] generally means \"governments of
    cities, counties, towns, townships, villages, school districts, or
    special districts, with a population of less than 50,000.\"[^158] As
    of 1992, there were approximately 85,006 such jurisdictions in the
    United States.[^159] This number includes 38,978 counties, cities,
    and towns; of these, 37,566, or 96 percent, have populations of
    fewer than 50,000.[^160] The Census Bureau estimates that this ratio
    is approximately accurate for all governmental entities. Thus, of
    the 85,006 governmental entities, we estimate that 81,600 (96
    percent) are small entities. According to SBA reporting data, there
    were 4.44 million small business firms nationwide in 1992.[^161]
    Below, we further describe and estimate the number of small entity
    licensees and regulatees that may be affected by the proposed rules,
    if adopted.

61. The most reliable source of information regarding the total numbers
    of certain common carrier and related providers nationwide, as well
    as the number of commercial wireless entities, appears to be data
    the Commission publishes in its *Trends in Telephone Service*
    report.[^162] In a recent news release, the Commission indicated
    that there are 4,144 interstate carriers.[^163] These carriers
    include, *inter alia*, local exchange carriers, wireline carriers
    and service providers, interexchange carriers, competitive access
    providers, operator service providers, pay telephone operators,
    providers of telephone service, providers of telephone exchange
    service, and resellers.

62. The SBA has defined establishments engaged in providing
    \"Radiotelephone Communications\" and \"Telephone Communications,
    Except Radiotelephone\" to be small businesses when they have no
    more than 1,500 employees.[^164] Below, we discuss the total
    estimated number of telephone companies falling within the two
    categories and the number of small businesses in each, and we then
    attempt to refine further those estimates to correspond with the
    categories of telephone companies that are commonly used under our
    rules.

63. We have included small incumbent LECs in this present RFA analysis.
    As noted above, a \"small business\" under the RFA is one that,
    *inter alia*, meets the pertinent small business size standard
    (*e.g.*, a telephone communications business having 1,500 or fewer
    employees), and \"is not dominant in its field of operation.\"[^165]
    The SBA\'s Office of Advocacy contends that, for RFA purposes, small
    incumbent LECs are not dominant in their field of operation because
    any such dominance is not \"national\" in scope.[^166] We have
    therefore included small incumbent LECs in this RFA analysis,
    although we emphasize that this RFA action has no effect on FCC
    analyses and determinations in other, non-RFA contexts.

64. Total Number of Telephone Companies Affected. The U.S. Bureau of the
    Census (\"Census Bureau\") reports that, at the end of 1992, there
    were 3,497 firms engaged in providing telephone services, as defined
    therein, for at least one year.[^167] This number contains a variety
    of different categories of carriers, including local exchange
    carriers, interexchange carriers, competitive access providers,
    cellular carriers, mobile service carriers, operator service
    providers, pay telephone operators, covered specialized mobile radio
    providers, and resellers. It seems certain that some of these 3,497
    telephone service firms may not qualify as small entities or small
    ILECs because they are not \"independently owned and
    operated.\"[^168] For example, a PCS provider that is affiliated
    with an interexchange carrier having more than 1,500 employees would
    not meet the definition of a small business. It is reasonable to
    conclude that fewer than 3,497 telephone service firms are small
    entity telephone service firms or small ILECs that may be affected
    by the new rules.

65. Wireline Carriers and Service Providers. The SBA has developed a
    definition of small entities for telephone communications companies
    except radiotelephone (wireless) companies. The Census Bureau
    reports that there were 2,321 such telephone companies in operation
    for at least one year at the end of 1992.[^169] According to the
    SBA\'s definition, a small business telephone company other than a
    radiotelephone company is one employing no more than 1,500
    persons.[^170] All but 26 of the 2,321 non-radiotelephone companies
    listed by the Census Bureau were reported to have fewer than 1,000
    employees. Thus, even if all 26 of those companies had more than
    1,500 employees, there would still be 2,295 non‑radiotelephone
    companies that might qualify as small entities or small ILECs. We do
    not have data specifying the number of these carriers
    tha[t]{.underline} are not independently owned and operated, and
    thus are unable at this time to estimate with greater precision the
    number of wireline carriers and service providers that would qualify
    as small business concerns under the SBA\'s definition.
    Consequently, we estimate that fewer than 2,295 small telephone
    communications companies other than radiotelephone companies are
    small entities or small ILECs that may be affected by the new rules.

66. Local Exchange Carriers. Neither the Commission nor the SBA has
    developed a definition for small providers of local exchange
    services (LECs). The closest applicable definition under the SBA
    rules is for telephone communications companies other than
    radiotelephone (wireless) companies.[^171] According to the most
    recent *Telecommunications Industry Revenue* data, 1,348 incumbent
    carriers reported that they were engaged in the provision of local
    exchange services.[^172] We do not have data specifying the number
    of these carriers that are either dominant in their field of
    operations, are not independently owned and operated, or have more
    than 1,500 employees, and thus are unable at this time to estimate
    with greater precision the number of LECs that would qualify as
    small business concerns under the SBA\'s definition. Consequently,
    we estimate that fewer than 1,348 providers of local exchange
    service are small entities or small ILECs that may be affected by
    the new rules.

67. Interexchange Carriers. Neither the Commission nor the SBA has
    developed a definition of small entities specifically applicable to
    providers of interexchange services (IXCs). The closest applicable
    definition under the SBA rules is for telephone communications
    companies other than radiotelephone (wireless) companies.[^173]
    According to the most recent *Trends in Telephone Service* data, 171
    carriers reported that they were engaged in the provision of
    interexchange services.[^174] We do not have data specifying the
    number of these carriers that are not independently owned and
    operated or have more than 1,500 employees, and thus are unable at
    this time to estimate with greater precision the number of IXCs that
    would qualify as small business concerns under the SBA\'s
    definition. Consequently, we estimate that there are fewer than 171
    small entity IXCs that may be affected by the new rules.

68. Competitive Access Providers. Neither the Commission nor the SBA has
    developed a definition of small entities specifically applicable to
    competitive access services providers (CAPs). The closest applicable
    definition under the SBA rules is for telephone communications
    companies other than radiotelephone (wireless) companies.[^175]
    According to the most recent *Trends in Telephone Service* data, 212
    CAP/CLECs carriers and 10 other LECs reported that they were engaged
    in the provision of competitive local exchange services.[^176] We do
    not have data specifying the number of these carriers that are not
    independently owned and operated, or have more than 1,500 employees,
    and thus are unable at this time to estimate with greater precision
    the number of CAPs that would qualify as small business concerns
    under the SBA\'s definition. Consequently, we estimate that there
    are fewer than 212 small entity CAPs and 10 other LECs that may be
    affected by the new rules.

69. Operator Service Providers. Neither the Commission nor the SBA has
    developed a definition of small entities specifically applicable to
    providers of operator services. The closest applicable definition
    under the SBA rules is for telephone communications companies other
    than radiotelephone (wireless) companies.[^177] According to the
    most recent *Trends in Telephone Service* data, 24 carriers reported
    that they were engaged in the provision of operator services.[^178]
    We do not have data specifying the number of these carriers that are
    not independently owned and operated or have more than 1,500
    employees, and thus are unable at this time to estimate with greater
    precision the number of operator service providers that would
    qualify as small business concerns under the SBA\'s definition.
    Consequently, we estimate that there are fewer than 24 small entity
    operator service providers that may be affected by the new rules.

70. Pay Telephone Operators. Neither the Commission nor the SBA has
    developed a definition of small entities specifically applicable to
    pay telephone operators. The closest applicable definition under SBA
    rules is for telephone communications companies other than
    radiotelephone (wireless) companies.[^179] According to the most
    recent *Trends in Telephone Service* data, 615 carriers reported
    that they were engaged in the provision of pay telephone
    services.[^180] We do not have data specifying the number of these
    carriers that are not independently owned and operated or have more
    than 1,500 employees, and thus are unable at this time to estimate
    with greater precision the number of pay telephone operators that
    would qualify as small business concerns under the SBA\'s
    definition. Consequently, we estimate that there are fewer than 615
    small entity pay telephone operators that may be affected by the new
    rules.

71. Resellers (including debit card providers). Neither the Commission
    nor the SBA has developed a definition of small entities
    specifically applicable to resellers. The closest applicable SBA
    definition for a reseller is a telephone communications company
    other than radiotelephone (wireless) companies.[^181] According to
    the most recent *Trends in Telephone Service* data, 388 toll and 54
    local entities reported that they were engaged in the resale of
    telephone service.[^182] We do not have data specifying the number
    of these carriers that are not independently owned and operated or
    have more than 1,500 employees, and thus are unable at this time to
    estimate with greater precision the number of resellers that would
    qualify as small business concerns under the SBA\'s definition.
    Consequently, we estimate that there are fewer than 388 small toll
    entity resellers and 54 small local entity resellers that may be
    affected by the new rules.

72. Toll-Free 800 and 800-Like Service Subscribers.[^183] Neither the
    Commission nor the SBA has developed a definition of small entities
    specifically applicable to 800 and 800-like service (\"toll free\")
    subscribers. The most reliable source of information regarding the
    number of these service subscribers appears to be data the
    Commission collects on the 800, 888, and 877 numbers in use.[^184]
    According to our most recent data, at the end of January 1999, the
    number of 800 numbers assigned was 7,692,955; the number of 888
    numbers that had been assigned was 7,706,393; and the number of 877
    numbers assigned was 1,946,538. We do not have data specifying the
    number of these subscribers that are not independently owned and
    operated or have more than 1,500 employees, and thus are unable at
    this time to estimate with greater precision the number of toll free
    subscribers that would qualify as small business concerns under the
    SBA\'s definition. Consequently, we estimate that there are fewer
    than 7,692,955 small entity 800 subscribers, fewer than 7,706,393
    small entity 888 subscribers, and fewer than 1,946,538 small entity
    877 subscribers may be affected by the new rules.

73. Cellular Licensees. Neither the Commission nor the SBA has developed
    a definition of small entities applicable to cellular licensees.
    Therefore, the applicable definition of small entity is the
    definition under the SBA rules applicable to radiotelephone
    (wireless) companies. This provides that a small entity is a
    radiotelephone company employing no more than 1,500 persons.[^185]
    According to the Census Bureau, only twelve radiotelephone firms
    from a total of 1,178 such firms which operated during 1992 had
    1,000 or more employees.[^186] Therefore, even if all twelve of
    these firms were cellular telephone companies, nearly all cellular
    carriers were small businesses under the SBA\'s definition. In
    addition, we note that there are 1,758 cellular licenses; however, a
    cellular licensee may own several licenses. In addition, according
    to the most recent *Telecommunications Industry Revenue* data, 808
    carriers reported that they were engaged in the provision of either
    cellular service or Personal Communications Service (PCS) services,
    which are placed together in the data.[^187] We do not have data
    specifying the number of these carriers that are not independently
    owned and operated or have more than 1,500 employees, and thus are
    unable at this time to estimate with greater precision the number of
    cellular service carriers that would qualify as small business
    concerns under the SBA\'s definition. Consequently, we estimate that
    there are fewer than 808 small cellular service carriers that may be
    affected by the new rules.

> 4\. Summary of Projected Reporting, Recordkeeping, and Other
> Compliance Requirements

74. Below, we analyze the projected reporting, recordkeeping, and other
    compliance requirements that may affect small entities.

75. *Liability Rules That Apply When a Subscriber Has Not Paid Charges*.
    Our liability rules retain the requirement that, upon allegation of
    a slam, the unauthorized carrier must absolve the subscriber of
    charges for up to thirty days following the slam, where the
    subscriber has not paid the unauthorized carrier. If the relevant
    governmental agency ultimately determines that the carrier change
    was authorized, and the limited absolution granted to the subscriber
    was therefore unwarranted, the carrier may re-bill the subscriber
    for charges incurred. The carrier has the option of re-rating the
    subscriber's calls from the unauthorized carrier's rates to the
    authorized carrier's rates using a 50% proxy, that is, reducing what
    the subscriber would have been billed by the unauthorized carrier by
    50%. If, however, the subscriber would prefer an actual re-rating of
    the calls to the authorized carrier's rates, it can require that of
    the authorized carrier.

76. *Liability Rules That Apply When a Subscriber Has Paid Charges*. The
    revised liability rules require that, where the subscriber has paid
    the unauthorized carrier, the unauthorized carrier must forward 150%
    of the charges it collected from the subscriber to the authorized
    carrier. The authorized carrier will pay the subscriber one-third of
    that amount (50% of the original payment) and retain the remainder
    of the money received from the unauthorized carrier. Use of this
    proxy will reduce administrative burdens on carriers and, we
    believe, will adequately compensate most subscribers. When a
    subscriber believes that the 50% proxy refund or credit of the
    charges it paid is too low, it may request an actual re-rating from
    the authorized carrier and the authorized carrier may seek any
    additional money owed as a result of this actual re-rating from the
    unauthorized carrier.

77. *State Resolution of Most Slamming Complaints*. Designating
    appropriate state commissions, or this Commission, as the primary
    administrators of the slamming liability rules, rather than
    authorized carriers, is likely to reduce significantly the
    administrative burdens on carriers associated with these rules.
    Under this scheme, carriers must comply with certain notification
    requirements, listed below. In addition, a carrier that is the
    subject of a slamming complaint must respond to the complaints filed
    with the relevant governmental agency, either the appropriate state
    commission or this Commission. If the carrier denies the alleged
    slam, it must provide the relevant governmental agency with evidence
    to refute the allegation, such as a valid carrier change
    authorization from the subscriber.

78. *Notification Requirements.* We revise our rules in this *Order* to
    add certain notification requirements to facilitate the resolution
    of slamming complaints. These include a requirement that, when an
    executing carrier (typically, the LEC that effects a carrier change)
    learns about an alleged slam, it must immediately notify both the
    authorized and alleged unauthorized carriers of the slamming
    allegation and the identities of the carriers involved. Requiring
    the LECS to notify the authorized and alleged unauthorized carriers
    of each others' identities will enable the unauthorized carrier to
    forward to the authorized carrier all amounts needed to satisfy the
    remedies this *Order* requires.

79. The revised rules also add a requirement that an allegedly
    unauthorized carrier that chooses not to challenge the allegation of
    a slam and provides the subscriber with all the relief to which the
    subscriber would be entitled pursuant to our rules, had the
    subscriber prevailed on a slamming complaint, must inform the
    subscriber of the remedies our rules provide. In addition, that
    carrier must inform the subscriber that it has the option to file a
    complaint with the appropriate state commission, or this Commission,
    if the subscriber is not satisfied with the resolution of its
    dispute with the carrier.

80. Under the revised rules, any carrier that is informed by a
    subscriber of a slam must direct each unsatisfied subscriber to the
    proper state commission, or this Commission, for resolution of the
    slamming problem and inform such unsatisfied subscriber of all the
    relevant filing requirements. To execute this notification
    requirement, carriers will be obligated to periodically request from
    this Commission a list of states that have opted to administer
    federal slamming rules. This modest notification requirement will
    help achieve an important objective: minimizing the effort consumers
    must expend to resolve slamming disputes.

> **5. Steps Taken to Minimize the Significant Economic Impact of This
> *Order* on Small Entities, Including the Significant Alternatives
> Considered.**

81. *Liability Rules That Apply When a Subscriber Has Not Paid Charges*.
    Our liability rules retain the requirement that, upon allegation of
    a slam, the unauthorized carrier must absolve the subscriber of
    charges for up to thirty days following the slam, where the
    subscriber has not paid the unauthorized carrier. If the relevant
    governmental agency ultimately determines that the carrier change
    was authorized, and the limited absolution granted to the subscriber
    was therefore unwarranted, the carrier may re-bill the subscriber
    for charges incurred. The carrier has the option of re-rating the
    subscriber's calls from the unauthorized carrier's rates to the
    authorized carrier's rates using a 50% proxy, that is, reducing what
    the subscriber would have been billed by the unauthorized carrier by
    50%. If, however, the subscriber would prefer an actual re-rating of
    the calls to the authorized carrier's rates, it can require that of
    the authorized carrier.

82. *Liability Rules that Apply When a Subscriber Has Paid Charges*. The
    new requirement, under the revised liability rules, that an
    unauthorized carrier forward 150% of the charges collected from the
    subscriber to the authorized carrier is more advantageous to
    authorized carriers than the remedy provided under the old rules.
    The authorized carrier generally will pay the subscriber one-third
    of that amount (50% of the original payment) and retain the
    remainder of the money received from the unauthorized carrier. When
    a subscriber believes that the 50% proxy refund or credit of the
    charges it paid is too low, it may request an actual re-rating from
    the authorized carrier and the authorized carrier may seek any
    additional money owed as a result of this actual re-rating from the
    unauthorized carrier. This modification of the Commission's
    liability scheme will alleviate some problems of lost revenues that
    authorized carriers, including small carriers, face when slammed and
    will make slamming even more unprofitable for unauthorized carriers.

83. *Re-rating.* Several authorized carriers raised concerns about the
    administrative burden that re-rating may place on them. Although we
    do not necessarily agree with carriers about the dimensions of this
    burden, we revise our rules to address these concerns. The revision
    allows the authorized carrier to provide a refund or credit to the
    subscriber of one-third of the payment the unauthorized carrier must
    make to the authorized carrier, which is prescribed to be 150% of
    the charges collected from the subscriber. Only when a subscriber
    believes that the 50% proxy refund or credit of the charges it paid
    is too low, and requests an actual re-rating, must the authorized
    carrier provide such re-rating.

84. *State Resolution of Most Slamming Complaints*. The modifications we
    adopt in this Order provide that disputes between alleged slamming
    carriers and subscribers now will be brought before an appropriate
    state commission, or this Commission in cases where the state has
    not elected to administer these rules, rather than to the authorized
    carriers, as provided in the *Section 258 Order*. Although we
    considered the third-party administrator alternative proposed by
    certain carriers, the lack of a consensus among industry, state
    regulators, and consumer groups left the Commission with concerns
    about the efficacy of such a plan. Designating states as the primary
    adjudicators of slamming complaints, rather than authorized
    carriers, lessens the administrative burden on authorized carriers,
    including small carriers. By placing these disputes before a neutral
    arbiter with experience in resolving slamming complaints and
    resources to do so expeditiously, the new administrative scheme will
    benefit carriers and subscribers, both groups that include small
    businesses.

85. *Notification Requirements.* We believe that the modest notification
    requirements we have adopted in this *Order* are necessary to ensure
    the seamless administration of slamming complaints under this scheme
    and will not impose an undue burden on carriers who are small
    businesses. These include a requirement that, when an executing
    carrier (typically, the LEC that effects a carrier change) learns
    about an alleged slam, it must immediately notify both the
    authorized and alleged unauthorized carriers of the slamming
    allegation and the identities of the carriers involved. This
    requirement, as pointed out in comments and in the petition for stay
    filed in the D.C. Circuit, is important to the functioning of the
    liability mechanism.[^188] With this information, the unauthorized
    carrier will be able to forward to the authorized carrier all
    amounts needed to satisfy the remedies this *Order* requires, and
    the authorized carrier will be able to bring appropriate action
    against the unauthorized carrier, if necessary. The industry has
    already taken steps to facilitate the transfer of this information
    between carriers.[^189]

86. The revised rules also add a requirement that an allegedly
    unauthorized carrier that chooses not to challenge the allegation of
    a slam and provides the subscriber with all the relief to which the
    subscriber would be entitled pursuant to our rules, had the
    subscriber prevailed on a slamming complaint, must inform the
    subscriber of the remedies our rules provide. This requirement will
    ensure that the rules do not discourage carriers from providing
    subscribers with the most expedient relief possible. In addition,
    the unauthorized carrier in this situation must inform the
    subscriber of the subscriber's ability to file a complaint with the
    appropriate state commission, or this Commission, if it is
    unsatisfied with the resolution of its dispute with the carrier.

87. Under the revised rules, any carrier that is informed by a
    subscriber of a slam must direct each unsatisfied subscriber to the
    proper state commission, or this Commission, for resolution of the
    slamming problem and inform such unsatisfied subscriber of all the
    relevant filing requirements. To execute this modest notification
    requirement, carriers will be obligated to periodically request from
    this Commission a list of states that have opted to administer
    federal slamming rules. This notification requirement will achieve
    an important objective: minimizing the effort consumers must expend
    to resolve slamming disputes.

**6. Report to Congress.**

88. The Commission will send a copy of the *Order,* including this
    SFRFA, in a report to Congress pursuant to the Small Business
    Regulatory Enforcement Fairness Act of 1996.[^190] In addition, the
    Commission will send a copy of the *Order*, including the SFRFA, to
    the Chief Counsel for Advocacy of the Small Business Administration.
    A copy of the *Order* and SFRFA (or summaries thereof) will also be
    published in the Federal Register.[^191]

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B.  **Final Paperwork Reduction Act Analysis.**

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89. The action contained herein has been analyzed with respect to the
    Paperwork Reduction Act of 1995 and found to impose new or modified
    reporting and recordkeeping requirements or burdens on the public.
    Implementation of these new or modified reporting and recordkeeping
    requirements will be subject to approval by the Office of Management
    and Budget (OMB) as prescribed by the Act, and will go into effect
    upon announcement in the Federal Register of OMB approval.

**VI. ORDERING CLAUSES**

90. Accordingly, IT IS ORDERED, pursuant to sections 1, 4(i), 4(j), 206,
    207, 208, and 258 of the Communications Act of 1934, as amended, 47
    U.S.C. §§ 151, 154(i), 154(j), 206, 207, 208, 258 and section 1.429
    of the Commission\'s rules, 47 C.F.R. § 1.429, that the petitions
    for reconsideration or clarification filed by AT&T Corp., Excel
    Telecommunications, Inc., Frontier Corp., GTE Service Corp.,
    MediaOne Group, National Association of State Utility Consumer
    Advocates, National Telephone Cooperative Association, New York
    State Consumer Protection Board Petition for Reconsideration, RCN
    Telecom Services, Inc., Rural LECs, SBC Communications, Inc., and
    Sprint Corp. ARE GRANTED IN PART AND DENIED IN PART to the extent
    discussed above.

91. IT IS FURTHER ORDERED that the provisions of sections 0.141,
    64.1100, 64.1150, 64.1160, 64.1170, and 64.1180 ARE AMENDED in
    accordance with our discussion above and as described in Appendix A,
    and that such rules shall be effective 30 days from publication of a
    summary of the text in the Federal Register or on the date when the
    requirements adopted in the Second Report and Order and Further
    Notice of Proposed Rulemaking in this proceeding become effective,
    whichever is later. The collections of information contained in
    sections 64.1150, 64.1160, and 64.1170 are contingent upon approval
    by the Office of Management and Budget. The procedures and relief
    described in these sections shall only be available to complainants
    who allege that the unauthorized carrier change occurred on or after
    the effective date of these sections.

92. IT IS FURTHER ORDERED that sections 1.719, 64.1110, 64.1120,
    64.1140, and 64.1160 ARE ENACTED in accordance with our discussion
    above, and that these rules are effective 30 days from publication
    of a summary of the text in the Federal Register or on the date when
    the requirements adopted in the Second Report and Order and Further
    Notice of Proposed Rulemaking in this proceeding become effective,
    whichever is later. The collections of information contained in
    sections 1.719, 64.1110, and 64.1140 are contingent upon approval by
    the Office of Management and Budget. The procedures and relief
    described in section 1.719 shall only be available to complainants
    who allege that the unauthorized carrier change occurred on or after
    the effective date of this section.

93. IT IS FURTHER ORDERED, pursuant to authority contained in Sections
    1, 4, and 258, of the Communications Act of 1934, as amended, 47
    U.S.C. §§ 151, 154, 258, that the waiver request filed by AT&T
    Corp., MCI WorldCom, Inc., Sprint Corp., Competitive
    Telecommunications Assn., Telecommunications Resellers Assn., Excel
    Telecommunications, Inc., Qwest Communications Corp., and Frontier
    Corp. on March 30, 1999 IS DENIED.

94. IT IS FURTHER ORDERED that the Commission's Consumer Information
    Bureau, Reference Information Center, SHALL SEND a copy of this
    *Order*, including the Supplemental Final Regulatory Flexibility
    Analysis, to the Chief Counsel for Advocacy of the Small Business
    Administration.

95. IT IS FURTHER ORDERED that the Joint Parties\' Motion for Extension
    of the Effective Date of the Rules or, In the Alternative, For a
    Stay, is DENIED.

FEDERAL COMMUNICATIONS COMMISSION

Magalie Roman Salas

Secretary

**APPENDIX A**

**RULES AMENDED**

Part 0 of the Commission's Rules and Regulations, Chapter 1 of Title 47
of the Code of Federal Regulations, is amended as follows:

1\. Part 0, Subpart A, is amended by adding paragraph (b)(1)(iii) to
read as follows:

(b) \* \* \*

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(1) \* \* \*

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(i) \* \* \*

\(iii\) Resolve certain classes of informal complaints, as specified by
the Commission, through findings of fact and issuance of orders.

Part 64 of the Commission's Rules and Regulations, Chapter 1 of Title 47
of the Code of Federal Regulations, is amended as follows:

1.  Part 64, Subpart K, is amended by redesignating section 64.1160 as
    section 64.1130.

2.  Part 64, Subpart K, is further amended by modifying section 64.1100
    to read as follows:

**§ 64.1100 Definitions**

(a) The term *submitting carrier* is generally any telecommunications
    carrier that requests on the behalf of a subscriber that the
    subscriber's telecommunications carrier be changed, and seeks to
    provide retail services to the end user subscriber. A carrier may be
    treated as a submitting carrier, however, if it is responsible for
    any unreasonable delays in the submission of carrier change requests
    or for the submission of unauthorized carrier change requests,
    including fraudulent authorizations.

(b) The term *executing carrier* is generally any telecommunications
    carrier that effects a request that a subscriber's
    telecommunications carrier be changed. A carrier may be treated as
    an executing carrier, however, if it is responsible for any
    unreasonable delays in the execution of carrier changes or for the
    execution of unauthorized carrier changes, including fraudulent
    authorizations.

(c) The term *authorized carrier* is generally any telecommunications
    carrier that submits a change, on behalf of a subscriber, in the
    subscriber's selection of a provider of telecommunications service
    with the subscriber's authorization verified in accordance with the
    procedures specified in this part.

(d) The term *unauthorized carrier* is generally any telecommunications
    carrier that submits a change, on behalf of a subscriber, in the
    subscriber's selection of a provider of telecommunications service
    but fails to obtain the subscriber's authorization verified in
    accordance with the procedures specified in this part.

(e) The term *unauthorized change* is a change in a subscriber's
    selection of a provider of telecommunications service that was made
    without authorization verified in accordance with the verification
    procedures specified in this part.

(f) The term *state commission* shall include any state entity with the
    state-designated authority to resolve the complaints of such state's
    residents arising out of an allegation that an unauthorized change
    of a telecommunication service provider has occurred that has
    elected, in accordance with the requirements of § 64.1110(a) of this
    part, to administer the Federal Communications Commission's slamming
    rules and remedies, as enumerated in §§ 64-1100-1190.

(g) The term *relevant governmental agency* shall be the state
    commission if the complainant files a complaint with the state
    commission or if the complaint is forwarded to the state commission
    by the Federal Communications Commission, and the Federal
    Communications Commission if the complainant files a complaint with
    the Federal Communications Commission, and the complaint is not
    forwarded to a state commission.

3\. Part 64, Subpart K, is further amended by adding sections 64.1110 to
read as follows:

**§ 64.1110 State Notification of Election to Administer FCC Rules.**

(a) *Initial Notification*. State notification of an intention to
    administer the Federal Communication Commission's unauthorized
    carrier change rules and remedies, as enumerated in §§ 64.1100-1190,
    shall be filed with the Commission Secretary in CC Docket No. 94-129
    with a copy of such notification provided to the Consumer
    Information Bureau Chief. Such notification shall contain, at a
    minimum, information on where consumers should file complaints, the
    type of documentation, if any, that must accompany a complaint, and
    the procedures the state will use to adjudicate complaints.

(b) *Withdrawal of Notification.* State notification of an intention to
    discontinue administering the Federal Communication Commission's
    unauthorized carrier change rules and remedies, as enumerated in §§
    64.1100-1190, shall be filed with the Commission Secretary in CC
    Docket No. 94-129 with a copy of such amended notification provided
    to the Consumer Information Bureau Chief. Such discontinuance shall
    become effective 60 days after the Commission's receipt of the
    state's letter.

4\. Part 64, Subpart K, is further amended by adding sections 64.1120 to
read as follows:

§ 64.1120 Verification of Orders for Telecommunications Service.

(a) No telecommunications carrier shall submit or execute a change on
    the behalf of a subscriber in the subscriber's selection of a
    provider of telecommunications service except in accordance with the
    procedures prescribed in this part. Nothing in this section shall
    preclude any State commission from enforcing these procedures with
    respect to intrastate services.

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(1) No submitting carrier shall submit a change on the behalf of a
    subscriber in the subscriber's selection of a provider of
    telecommunications service prior to obtaining:

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(i) Authorization from the subscriber, and

(ii) Verification of that authorization in accordance with the
     procedures prescribed in this section. The submitting carrier shall
     maintain and preserve records of verification of subscriber
     authorization for a minimum period of two years after obtaining
     such verification.

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(2) An executing carrier shall not verify the submission of a change in
    a subscriber's selection of a provider of telecommunications service
    received from a submitting carrier. For an executing carrier,
    compliance with the procedures described in this part shall be
    defined as prompt execution, without any unreasonable delay, of
    changes that have been verified by a submitting carrier.

(3) Commercial mobile radio services (CMRS) providers shall be excluded
    from the verification requirements of this part as long as they are
    not required to provide equal access to common carriers for the
    provision of telephone toll services, in accordance with 47 U.S.C. §
    332(c)(8).

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(b) Where a telecommunications carrier is selling more than one type of
    telecommunications service (*e.g.*, local exchange,
    intraLATA/intrastate toll, interLATA/interstate toll, and
    international toll) that carrier must obtain separate authorization
    from the subscriber for each service sold, although the
    authorizations may be made within the same solicitation. Each
    authorization must be verified separately from any other
    authorizations obtained in the same solicitation. Each authorization
    must be verified in accordance with the verification procedures
    prescribed in this part.

(c) No telecommunications carrier shall submit a preferred carrier
    change order unless and until the order has been confirmed in
    accordance with one of the following procedures:

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(1) The telecommunications carrier has obtained the subscriber's written
    authorization in a form that meets the requirements of § 64.1130; or

(2) The telecommunications carrier has obtained the subscriber's
    electronic authorization to submit the preferred carrier change
    order. Such authorization must be placed from the telephone
    number(s) on which the preferred carrier is to be changed and must
    confirm the information in paragraph (1) of this subsection.
    Telecommunications carriers electing to confirm sales electronically
    shall establish one or more toll-free telephone numbers exclusively
    for that purpose. Calls to the number(s) will connect a subscriber
    to a voice response unit, or similar mechanism, that records the
    required information regarding the preferred carrier change,
    including automatically recording the originating automatic number
    identification; or

(3) An appropriately qualified independent third party has obtained the
    subscriber's oral authorization to submit he preferred carrier
    change order that confirms and includes appropriate verification
    data (*e.g.* the subscriber's date of birth or social security
    number). The independent third party must not be owned, managed,
    controlled, or directed by the carrier or the carrier's marketing
    agent; must not have any financial incentive to confirm preferred
    carrier change orders for the carrier or the carrier's marketing
    agent; and must operate in a location physically separate from the
    carrier or the carrier's marketing agent. The content of the
    verification must include clear and conspicuous confirmation that
    the subscriber has authorized a preferred carrier change; or

(4) Any State-enacted verification procedures applicable to intrastate
    preferred carrier change orders only.

5\. Part 64, Subpart K, is further amended by adding sections 64.1140 to
read as follows:

**§ 64.1140 Carrier Liability for Slamming.**

\(a\) *Carrier Liability for Charges.* Any submitting telecommunications
carrier that fails to comply with the procedures prescribed in this part
shall be liable to the subscriber's properly authorized carrier in an
amount equal to 150% of all charges paid to the submitting
telecommunications carrier by such subscriber after such violation, as
well as for additional amounts as prescribed in § 64.1170 of this part.
The remedies provided in this part are in addition to any other remedies
available by law.

\(b\) *Subscriber Liability for Charges*. Any subscriber whose selection
of telecommunications services provider is changed without authorization
verified in accordance with the procedures set for in this part is
liable for charges as follows:

(1) If the subscriber has not already paid charges to the unauthorized
    carrier, the subscriber is absolved of liability for charges imposed
    by the unauthorized carrier for service provided during the first 30
    days after the unauthorized change. Upon being informed by a
    subscriber that an unauthorized change has occurred, the authorized
    carrier, the unauthorized carrier, or the executing carrier shall
    inform the subscriber of this 30-day absolution period. Any charges
    imposed by the unauthorized carrier on the subscriber for service
    provided after this 30-day period shall be paid by the subscriber to
    the authorized carrier at the rates the subscriber was paying to the
    authorized carrier at the time of the unauthorized change in
    accordance with the provisions of § 64.1160(e) of this part.

(2) If the subscriber has already paid charges to the unauthorized
    carrier, and the authorized carrier receives payment from the
    unauthorized carrier as provided for in paragraph (a) of this
    section, the authorized carrier shall refund or credit to the
    subscriber any amounts determined in accordance with the provisions
    of § 64.1170(c) of this part.

(3) If the subscriber has been absolved of liability as prescribed by
    this section, the unauthorized carrier shall also be liable to the
    subscriber for any charge required to return the subscriber to his
    or her properly authorized carrier, if applicable.

6\. Part 64, Subpart K, is further amended by revising section 64.1150
to read as follows:

**§ 64.1150 Procedures For Resolution of Unauthorized Changes in
Preferred Carrier**

(a) *Notification of Alleged Unauthorized Carrier Change.* Executing
    carriers who are informed of an unauthorized carrier change by a
    subscriber must immediately notify both the authorized and allegedly
    unauthorized carrier of the incident. This notification must include
    the identity of both carriers.

(b) *Referral of Complaint.* Any carrier, executing, authorized, or
    allegedly unauthorized, that is informed by a subscriber or an
    executing carrier of an unauthorized carrier change shall direct
    that subscriber either to the state commission or, where the state
    commission has not opted to administer these rules, to the Federal
    Communications Commission's Consumer Information Bureau, for
    resolution of the complaint.

(c) *Notification of Receipt of Complaint.* Upon receipt of an
    unauthorized carrier change complaint, the relevant governmental
    agency will notify the allegedly unauthorized carrier of the
    complaint and order that the carrier remove all unpaid charges for
    the first 30 days after the slam from the subscriber's bill pending
    a determination of whether an unauthorized change, as defined by §
    64.1100(e) of this part, has occurred, if it has not already done
    so.

(d) *Proof of Verification.* Not more than 30 days after notification of
    the complaint, or such lesser time as is required by the state
    commission if a matter is brought before a state commission, the
    alleged unauthorized carrier shall provide to the relevant
    government agency a copy of any valid proof of verification of the
    carrier change. This proof of verification must contain clear and
    convincing evidence of a valid authorized carrier change, as that
    term is defined in §§ 64.1150-1160 of this part. The relevant
    governmental agency will determine whether an unauthorized change,
    as defined by § 64.1100(e) of this part, has occurred using such
    proof and any evidence supplied by the subscriber. Failure by the
    carrier to respond or provide proof of verification will be presumed
    to be clear and convincing evidence of a violation.

(e) *Election of Forum.* The Federal Communications Commission will not
    adjudicate a complaint filed pursuant to § 1.719 or §§ 1.720-736*,*
    involving an alleged unauthorized change, as defined by § 64.1100(e)
    of this part, while a complaint based on the same set of facts is
    pending with a state commission.

7\. Part 64, Subpart K, is further amended by adding section 64.1160 to
read as follows:

**§ 64.1160 Absolution Procedures Where the Subscriber Has Not Paid
Charges**

(a) This section shall only apply after a subscriber has determined that
    an unauthorized change, as defined by § 64.1100(e) of this part, has
    occurred and the subscriber has not paid charges to the allegedly
    unauthorized carrier for service provided for 30 days, or a portion
    thereof, after the unauthorized change occurred.

(b) An allegedly unauthorized carrier shall remove all charges incurred
    for service provided during the first 30 days after the alleged
    unauthorized change occurred, as defined by § 64.1100(e) of this
    part, from a subscriber's bill upon notification that such
    unauthorized change is alleged to have occurred.

(c) An allegedly unauthorized carrier may challenge a subscriber's
    allegation that an unauthorized change, as defined by § 64.1100(e)
    of this part, occurred. An allegedly unauthorized carrier choosing
    to challenge such allegation *shall* immediately notify the
    complaining subscriber that: (1) the complaining subscriber must
    file a complaint with a state commission that has opted to
    administer the FCC's rules, pursuant to § 64.1110 of this part, or
    the FCC within 30 days of either (i) the date of removal of charges
    from the complaining subscriber's bill in accordance with
    paragraph (b) of this section or (ii) the date the allegedly
    unauthorized carrier notifies the complaining subscriber of the
    requirements of this paragraph, whichever is later; and (2) a
    failure to file such a complaint within this 30-day time period will
    result in the charges removed pursuant to paragraph (b) of this
    section being reinstated on the subscriber's bill and, consequently,
    the complaining subscriber's will only be entitled to remedies for
    the alleged unauthorized change other than those provided for in §
    64.1140(b)(1) of this part. No allegedly unauthorized carrier shall
    reinstate charges to a subscriber's bill pursuant to the provisions
    of this paragraph without first providing such subscriber with a
    reasonable opportunity to demonstrate that the requisite complaint
    was timely filed within the 30-day period described in this
    paragraph.

(d) If the relevant governmental agency determines after reasonable
    investigation that an unauthorized change, as defined by §
    64.1100(e) of this part, has occurred, an order shall be issued
    providing that the subscriber is entitled to absolution from the
    charges incurred during the first 30 days after the unauthorized
    carrier change occurred, and neither the authorized or unauthorized
    carrier may pursue any collection against the subscriber for those
    charges.

(e) If the subscriber has incurred charges for more than 30 days after
    the unauthorized carrier change, the unauthorized carrier must
    forward the billing information for such services to the authorized
    carrier, which may bill the subscriber for such services using
    either of the following means:

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(1) The amount of the charge may be determined by a re-rating of the
    services provided based on what the authorized carrier would have
    charged the subscriber for the same services had an unauthorized
    change, as described in § 64.1100(e), not occurred; or

(2) The amount of the charge may be determined using a 50 % Proxy Rate
    as follows: Upon receipt of billing information from the
    unauthorized carrier, the authorized carrier may bill the subscriber
    for 50% of the rate the unauthorized carrier would have charged the
    subscriber for the services provided. However, the subscriber shall
    have the right to reject use of this 50% proxy method and require
    that the authorized carrier perform a re-rating of the services
    provided, as described in paragraph (e)(1) of this section.

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(f) If the unauthorized carrier received payment from the subscriber for
    services provided after the first 30 days after the unauthorized
    change occurred, the obligations for payments and refunds provided
    for in § 64.1170 of this part shall apply to those payments.

(g) If the relevant governmental agency determines after reasonable
    investigation that the carrier change was authorized, the carrier
    may re-bill the subscriber for charges incurred.

8\. Part 64, Subpart K, is further amended by revising section 64.1170
to read as follows:

**§ 64.1170 Reimbursement Procedures Where the Subscriber Has Paid
Charges**

(a) The procedures in this subsection shall only apply after a
    subscriber has determined that an unauthorized change, as defined by
    § 64.1100(e) of this part, has occurred and the subscriber has paid
    charges to an allegedly unauthorized carrier.

(b) If the relevant governmental agency determines after reasonable
    investigation that an unauthorized change, as defined by §
    64.1100(e) of this part, has occurred, it shall issue an order
    directing the unauthorized carrier to forward to the authorized
    carrier the following, in addition to any appropriate state
    remedies:

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(1) An amount equal to 150% of all charges paid by the subscriber to the
    unauthorized carrier; and

(2) Copies of any telephone bills issued from the unauthorized carrier
    to the subscriber.

This order shall be sent to the subscriber, the unauthorized carrier,
and the authorized carrier.

(c) Within ten days of receipt of the amount provided for in paragraph
    (b)(1) of this section, the authorized carrier shall provide a
    refund or credit to the subscriber in the amount of 50% of all
    charges paid by the subscriber to the unauthorized carrier. The
    subscriber has the option of asking the authorized carrier to
    re-rate the unauthorized carrier's charges based on the rates of the
    authorized carrier and, on behalf of the subscriber, seek an
    additional refund from the unauthorized carrier, to the extent that
    the re-rated amount exceeds the 50% of all charges paid by the
    subscriber to the unauthorized carrier. The authorized carrier shall
    also send notice to the relevant governmental agency that it has
    given a refund or credit to the subscriber.

(d) If an authorized carrier incurs billing and collection expenses in
    collecting charges from the unauthorized carrier, the unauthorized
    carrier shall reimburse the authorized carrier for reasonable
    expenses.

(e) If the authorized carrier has not received payment from the
    unauthorized carrier as required by paragraph (c) of this section,
    the authorized carrier is not required to provide any refund or
    credit to the subscriber. The authorized carrier must, within 45
    days of receiving an order as described in paragraph (b) of this
    section, inform the subscriber and the relevant governmental agency
    that issued the order if the unauthorized carrier has failed to
    forward to it the appropriate charges, and also inform the
    subscriber of his or her right to pursue a claim against the
    unauthorized carrier for a refund of all charges paid to the
    unauthorized carrier.

(f) Where possible, the properly authorized carrier must reinstate the
    subscriber in any premium program in which that subscriber was
    enrolled prior to the unauthorized change, if the subscriber's
    participation in that program was terminated because of the
    unauthorized change. If the subscriber has paid charges to the
    unauthorized carrier, the properly authorized carrier shall also
    provide or restore to the subscriber any premiums to which the
    subscriber would have been entitled had the unauthorized change not
    occurred. The authorized carrier must comply with the requirements
    of this section regardless of whether it is able to recover from the
    unauthorized carrier any charges that were paid by the subscriber.

9\. Part 64, Subpart K, is further amended by revising section 64.1180
to read as follows:

**§ 64.1180 \[Reserved\]**

**RULES ADDED**

**Part 1 of the Commission's Rules and Regulations, Chapter 1 of Title
47 of the Code of Federal Regulations, is amended as follows:**

1\. Part 1, Subpart E, is amended by adding section 1.719 to read as
follows:

**§ 1.719 Informal Complaints Filed Pursuant to Section 258**

(a) Notwithstanding the requirements of §§ 1.716-1.718, the following
    procedures shall apply to complaints alleging that a carrier has
    violated section 258 of the Communications Act of 1934, as amended
    by the Telecommunications Act of 1996, by making an unauthorized
    change of a subscriber's preferred carrier, as defined by §
    64.1100(e).

(b) *Form.* The complaint shall be in writing, and should contain: (1)
    the complainant's name, address, telephone number and e-mail address
    (if the complainant has one); (2) the name of both the allegedly
    unauthorized carrier, as defined by § 64.1100(d), and authorized
    carrier, as defined by § 64.1100(c); (3) a complete statement of the
    facts (including any documentation) tending to show that such
    carrier engaged in an unauthorized change of the subscriber's
    preferred carrier; (4) a statement of whether the complainant has
    paid any disputed charges to the allegedly unauthorized carrier;
    and (5) the specific relief sought.

(c) *Procedure.* The Commission will resolve slamming complaints under
    the definitions and procedures established in §§ 64.1100-1190. The
    Commission will issue a written (or electronic) order informing the
    complainant, the unauthorized carrier, and the authorized carrier of
    its finding, and ordering the appropriate remedy, if any, as defined
    by §§ 64.1160-70.

(d) *Unsatisfied Informal Complaints Involving Unauthorized Changes of a
    Subscriber's Preferred Carrier; Formal Complaints Relating Back to
    the Filing Dates of Informal Complaints.* If the complainant is
    unsatisfied with the resolution of a complaint under this section,
    the complainant may file a formal complaint with the Commission in
    the form specified in § 1.721 of this part. Such filing will be
    deemed to relate back to the filing date of the informal complaint
    filed under this section, so long as the informal complaint complied
    with the requirements of paragraph (b) of this section and provided
    that: the formal complaint (1) is filed within 45 days from the date
    an order resolving the informal complaint filed under this section
    is mailed or delivered electronically to the complainant; (2) makes
    reference to both the informal complaint number assigned to and the
    initial date of filing the informal complaint filed under this
    section; and (3) is based on the same cause of action as the
    informal complaint filed under this section. If no formal complaint
    is filed within the 45-day period, the complainant will be deemed to
    have abandoned its right to bring a formal complaint regarding the
    cause of action at issue.

**APPENDIX B**

**Parties Filing Petitions for Reconsideration and Responsive
Pleadings**

[Parties Filing Petitions]{.underline}

AT&T Corp.

Excel Telecommunications, Inc.

Frontier

GTE Service Corp.

MediaOne Group

National Association of State Utility Consumer Advocates (NASUCA)

National Telephone Cooperative Association

New York State Consumer Protection Board

RCN Telecom Services, Inc.

Rural LECs

SBC Communications, Inc.

Sprint Corp.

[Parties Filing Comments, Reply Comments, Responses,
Oppositions]{.underline}

Ameritech

AT&T Corp.

Bell Atlantic

BellSouth Telecommunications, Inc.

Cable & Wireless USA., Inc.

GTE Service Corp.

MCI WorldCom

National Association of State Utility Consumer Advocates (NASUCA)

National Telephone Cooperative Association

Qwest Communications Corp.

Rural LECs

SBC Communications, Inc.

Sprint Corp.

Telecommunications Resellers Association

Teltrust, Inc.

U S West Communications, Inc.

APPENDIX C

Parties filing Comments, Oppositions, and Reply Comments to Waiver
Petition

Ameritech

Attorneys General of the States of Colorado, Connecticut, Illinois,
Kansas, Maryland, Minnesota, New Mexico, and New York (State Attorneys
General)

Bell Atlantic

Cable & Wireless USA, Inc.

California Public Utilities Commission (California PUC)

Cincinnati Bell Telephone Company

Consumer Action

Consumer Federation of America

Competition Policy Institute

GTE Service Corporation

MediaOne Group, Inc.

National Consumers League

National Association of Regulatory Utility Commissioners (NARUC)

National Association of State Utility Consumer Advocates (NASUCA)

National Telephone Cooperative Association

Public Utilities Commission of Ohio (Ohio PUC)

Qwest Communications Corporation

Rural LECs

SBC Communications Inc.

Small Business Survival Committee

United States Telephone Association

US West Communications, Inc.

Western Iowa Telephone Association

# 

# STATEMENT OF COMMISSIONER HAROLD FURCHTGOTT‑ROTH, APPROVING IN PART & DISSENTING IN PART

*Re: Implementation of the Subscriber Carrier Selection Changes
Provisions of the Telecommunications Act of 1996; Policies and Rules
Concerning Unauthorized Changes of Consumers' Long Distance Carriers*,
First Order on Reconsideration, CC Docket No. 94-129.

In this Order on Reconsideration, the Commission has modified the
framework it will use to combat slamming in two important respects, both
of which I support. First, it has modified its re-rating policy to
comport with section 258(b)'s directive that a slamming carrier will be
liable to a preferred carrier " in an amount equal to all charges paid"
by the subscriber. 47 U.S.C. § 258(b). Departing from its previous
approach, which required the preferred carrier to refund to the consumer
any overpayment the consumer may have paid the slamming carrier, the new
approach permits the preferred carrier to *keep* the full amount of
charges paid by the subscriber to the slamming carrier. And, to protect
the consumer who has paid the slamming carrier more than he otherwise
would have paid his preferred carrier, the Order requires the slamming
carrier to remit to the authorized carrier a payment that reflects the
amount of the consumer's overpayment, which the authorized carrier will
then convey to the consumer. I endorse this modification to our
re-rating rules, which I believe are now consistent with section 258's
statutory mandate. Second, I agree with the Commission's decision to
give State commissions the option of assuming primary responsibility for
resolving consumer slamming complaints.

As I explained in dissent from the previous ruling in this docket,
however, I do not agree with the Commission's complete absolution of
consumers from liability for services provided in the first 30 days
after being slammed. In my view, there is no basis in the statute for
this approach, and it is at odds with the policy that Congress enacted
in section 258. Slamming harms not only the consumer, but also the
preferred carrier, whose customers are unlawfully taken away. Section
258 is aimed at compensating preferred carriers for this harm, and it is
structured to give the preferred carrier a strong incentive to police
against slamming, by making the slamming carrier liable to the preferred
carrier. Absolving consumers from liability for services provided by the
slamming carrier will tend to discourage the authorized carrier from
enforcing the slamming provisions, a result that is at odds with the
statute's plain intention. I therefore dissent from those aspects of
this order that preserve the subscriber absolution rules.

**STATEMENT OF COMMISSIONER MICHAEL K. POWELL**

*Re: First Order on Reconsideration, Implementation of the Subscriber
Carrier Selection Changes Provisions of the Telecommunications Act of
1996 and Policies and Rules Concerning Unauthorized Changes of
Consumers\' Long Distance Carriers (CC Docket No. 94-129).*

As I have stated on previous occasions, I vigorously support the vast
bulk of this Commission's efforts to combat "slamming:" the unauthorized
change of a subscriber's preferred carrier (usually a long distance
company). The potentially egregious nature of slamming is
well-recognized. It has resulted in consumers, their authorized carriers
and regulators spending countless hours and immeasurable patience to
identify and rectify these violations. Slamming insults the
procompetitive, deregulatory framework of the Telecommunications Act of
1996 because it robs consumers of their ability to patronize their
vendors of choice and, if not stemmed, requires increasing regulatory
intervention to protect unwitting consumers. To the extent we all are
eager to hasten this villain from its too-prominent role on the
competitive stage, my colleagues and I applaud state and federal
anti-slamming initiatives in unison.

I am especially pleased that, in this *Order,* we adjust one aspect of
our slamming implementation that brings it more in line with the plain
meaning of the statute. Upon adoption of some of our slamming rules in
1998, I expressed concerns regarding narrow aspects of those rules
because of their apparent inconsistency with the plain language of
section 258 of the Act. Section 258(b) provides that

Any telecommunications carrier that violates the verification procedures
described in subsection (a) and that collects charges for telephone
exchange service or telephone toll service from a subscriber shall be
liable to the carrier previously selected by the subscriber in an amount
equal to *all charges paid by such subscriber* after such violation . .
.[^192]

Although the courts have harshly criticized the Act for providing
ambiguous and even sharply conflicting guidance to the Commission,[^193]
the Act could not be more clear that a slamming carrier is liable to the
authorized carrier for the *entire* amount the slammed subscriber has
paid to the slammer. In light of the unambiguous language of section
258(b), I objected to our previous decision to require authorized
carriers to forward to the subscriber charges the subscriber has paid to
the slamming carrier (which the authorized carrier then collects from
the slammer) to the extent those monies exceed the amount the subscriber
would normally have paid the authorized carrier (the so called
"re-rating" issue).

In this *Order*, however, I believe that my colleagues and I have
largely corrected this problem. Specifically, we have adjusted our
analysis to base relief to the consumer solely on the basis of
provisions *other* than section 258. I believe this approach takes
advantage of section 258's express allowance that the authorized carrier
remedy of that section is "in addition to any other remedies available
by law."[^194] Sections 206-208, in particular, enable consumers to make
complaint to the Commission and the federal district courts for damages
for violations of the Act, including slamming violations.[^195] In light
of consumers' right to sue for damages in provisions outside of section
258, as well as the "other remedies" language of section 258 itself, I
am comfortable that we can provide relief to consumers over and above
the authorized carrier remedy in section 258(b). Because we will no
longer require authorized carriers to give consumers a portion of the
carrier's remedy under the statute, moreover, I believe our new approach
is consistent with that remedy.

I also am comfortable with the judgment that we should allow the
authorized carrier to collect the consumer\'s remedy along with the
authorized carrier remedy under section 258 (i.e., the 150% proxy
approach). Although there are no doubt analytically cleaner approaches
to calculating the consumer's damages, I believe that this proxy
adequately compensates consumers while providing an option whereby, in
many cases, authorized carriers will not be further penalized after a
slam by having to make costly financial calculations or provide
potentially sensitive customer information to slamming carriers.

In closing, I wish to thank the Common Carrier and Enforcement Bureaus,
as well as my colleagues, for their tireless efforts and open-mindedness
in this area. Such qualities will, I believe, ultimately enable us to
win the war against slamming.

[^1]: *Implementation of the Subscriber Carrier Selection Changes
    Provisions of the Telecommunications Act of 1996; Policies and Rules
    Concerning Unauthorized Changes of Consumers Long Distance
    Carriers*, CC Docket No. 94-129, Second Report and Order and Further
    Notice of Proposed Rulemaking, 14 FCC Rcd 1508 (1998) (*Section 258
    Order*), stayed in part, *MCI WorldCom, Inc. v. FCC*, No. 99-1125
    (D.C. Cir. May 18, 1999) (*Stay Order*).

[^2]: 47 U.S.C. § 258. Telecommunications Act of 1996, Pub. L. No.
    104-104, 110 Stat. 56 (1996) (1996 Act).

[^3]: Joint Petition for Waiver filed by AT&T Corp., MCI WorldCom, Inc.,
    Sprint Corp., Competitive Telecommunications Assn.,
    Telecommunications Resellers Assn., Excel Telecommunications, Inc.,
    Qwest Communications Corp., and Frontier Corp. (March 30, 1999)
    (Joint Waiver Petition).

[^4]: *Section 258 Order*, 14 FCC Rcd at 1521, ¶ 18; 1529, ¶ 34; 1531, ¶
    38; 1533-35, ¶¶ 42-45.

[^5]: *MCI WorldCom, Inc. v. FCC*, No. 99-1125 (D.C. Cir. May 18, 1999).

[^6]: Slamming Complaint Trends, Common Carrier Bureau, Enforcement
    Division, Consumer Protection Branch (September 1999).

[^7]: Letter from Chris Jines, SBC, to Glenn Reynolds, FCC, dated
    October 22, 1999, at Attachment A (SBC Carrier Dispute Activity).

[^8]: Letter from Marie Breslin, Bell Atlantic, to Glenn Reynolds, FCC,
    dated October 25, 1999.

[^9]: The petitions filed are: AT&T Corp. Petition for Partial
    Reconsideration or, in the Alternative, for Clarification (AT&T
    Petition); Excel Telecommunications, Inc. Petition for Clarification
    and Reconsideration (Excel Petition); Frontier Corp. Petition for
    Reconsideration (Frontier Petition); GTE Service Corp. Petition for
    Reconsideration (GTE Petition); MediaOne Group Petition for
    Reconsideration (MediaOne Petition); National Association of State
    Utility Consumer Advocates Petition for Reconsideration of the
    Second Report and Order (NASUCA Petition); National Telephone
    Cooperative Association Petition for Reconsideration (NTCA
    Petition); New York State Consumer Protection Board Petition for
    Reconsideration (NYSCPB Petition); RCN Telecom Services, Inc.
    Petition for Clarification and Reconsideration (RCN Petition); Rural
    LECs Petition for Reconsideration (Rural LECs Petition); SBC
    Communications, Inc. Petition for Reconsideration and for
    Clarification (SBC Petition); Sprint Corp. Petition for
    Reconsideration (Sprint Petition).

[^10]: Joint Parties' Motion for Extension of the Effective Date of the
    Rules or, in the Alternative, for a Stay filed by by AT&T Corp., MCI
    WorldCom, Inc., Sprint Corp., Competitive Telecommunications Assn.,
    Telecommunications Resellers Assn., Excel Telecommunications, Inc.,
    Qwest Communications Corp., and Frontier Corp. (March 29, 1999);
    Motion for Stay Pending Judicial Review or, in the Alternative, for
    Expedited Consideration and Consolidated Response to the FCC's
    Motion to Hold in Abeyance filed by MCI WorldCom, Inc. (D.C. Cir.
    May 10, 1999) (MCI WorldCom Motion for Stay).

[^11]: *See* 47 C.F.R. § 1.429(b).

[^12]: SBC Response to Petitions for Reconsideration at 3. *See also*
    NASUCA Petition at 4; NTCA Opposition to Petitions for
    Reconsideration at 6; NYSCPB Petition at 6.

[^13]: *See, e.g.,* AT&T Petition; Frontier Petition; Sprint Petition;
    Cable & Wireless Comments; Qwest Reply Comments; MCI Comments.

[^14]: *Section 258 Order,* 14 FCC Rcd at 1518-20, ¶¶ 13-16. In 1995,
    the Commission processed fewer than 9,000 slamming complaints. In
    1996, the Commission processed fewer than 13,000 slamming
    complaints. In 1997 and 1998, the number of processed slamming
    complaints jumped to over 20,000 each year. Consumer Protection
    Branch, Enforcement Division, Common Carrier Bureau, Consumer
    Complaint Statistics (October 1999).

[^15]: *Section 258 Order,* 14 FCC Rcd at 1518-19, ¶¶ 13-14.

[^16]: *See, e.g.,* AT&T Petition at 2; MCI Comments at 10; Qwest
    Comments at 4.

[^17]: *Policies and Rules Concerning Unauthorized Changes of Consumers
    Long Distance Carriers*, CC Docket 94-129, Report and Order, 10 FCC
    Rcd 9560, 9579 (1995) (*1995 Order*).

[^18]: *See, e.g.,* AT&T Petition at 2; MCI Comments at 10.

[^19]: *1995 Order* 10 FCC Rcd at 9579**,** ¶ 37 (emphasis added).

[^20]: A survey by the United States General Accounting Office found
    that the number of slamming complaints reported to the various state
    commissions had grown from 20,741 in 1996 to 39,688 in 1988. *Report
    of the General Accounting Office on State and Federal Actions to
    Curb Slamming and Cramming*, July 1999, at 6.

[^21]: *See*, *e.g.*, NASUCA Petition at 4; NTCA Opposition to Petitions
    for Reconsideration at 6.

[^22]: *See, e.g.*, Ariz. Rev. Stat. Ann. § 44-1572 (1999); Minn. Stat.
    Ann. § 237.661 (1998); Mont. Code Ann. § 69-3-1305 (1999).

[^23]: Joint Statement of Managers, S. Conf. Rep. No. 104-230, 104th
    Cong., 2d Sess. At 136 (1996) (Joint Explanatory Statement).

[^24]: *See, e.g.,* TRA Comments to Petitions for Reconsideration at 3;
    AT&T Petition at 5; Frontier Petition at 5; Sprint Petition at 7.

[^25]: 47 U.S.C. § 258(b).

[^26]: We stated that, for example, an authorized carrier could file
    suit in state court for tortious interference with a business
    contract. *Section 258 Order*, 14 FCC Rcd at 1525-26, ¶ 27 and n.88.

[^27]: *See* NASUCA Petition at 8; NYSCPB Petition at 6; NTCA Petition
    at 27.

[^28]: *See, e.g.*, AT&T Comments to Petitions for Reconsideration at 6,
    n.9; Sprint Opposition to Petitions for Reconsideration at 6; GTE
    Comments to Petitions for Reconsideration at 4; Qwest Comments to
    Petitions for Reconsideration at 8.

[^29]: *See, e.g.*, GTE Comments to Petitions for Reconsideration at 4.

[^30]: *Section 258 Order*, 14 FCC Rcd at 1524-25, ¶ 24.

[^31]: *See* NTCA Petition at 27.

[^32]: *Truth-in-Billing and Billing Format*, CC Docket. No. 98-170,
    First Report and Order and Further Notice of Proposed Rulemaking, 14
    FCC Rcd 7492, 7511-12, ¶¶ 31, 33 (1999).

[^33]: *Id.* at 7505, ¶ 23.

[^34]: *Section 258 Order* 14 FCC Rcd at 1524-25**, ¶** 24 (explaining
    the 30-day period may be extended where a carrier engages in
    "practices used to delay the subscribers' realization of the carrier
    change.")

[^35]: Frontier Petition at 16-17. *See also* MCI Petition for Stay
    Pending Judicial Review at 8.

[^36]: Commissioners Furchgott-Roth and Powell dissented from this part
    of the *Section 258 Order*.

[^37]: The Conference Report on Section 258 provides that \"The
    conferees adopt the House provision as a new section 258 of the
    Communications Act. It is the understanding of the conferees that in
    addition to requiring that the carrier violating the Commission\'s
    procedures must reimburse the original carrier for foregone
    revenues, the Commission\'s rules should also provide that consumers
    are made whole.\" Joint Explanatory Statement at 136.

[^38]: *Section 258 Order,* 14 FCC Rcd at 1531, ¶ 38.

[^39]: *Id.*

[^40]: *Id.* at 1591-93, ¶¶ 140-144.

[^41]: *See* discussion ¶¶ 22-28, *infra*.

[^42]: *See, e.g.,* Sprint Petition at 5-6 ("section 258 envisions (1)
    that the consumer would pay for the services received while on the
    unauthorized carriers network at his authorized carrier's rates and
    would receive all premiums to which he would otherwise be entitled .
    . . ); Qwest Comments at 3-5 ("Qwest agrees with Sprint that the
    goal of Section 258 is to make both victims of the slamming incident
    -- the subscriber and the authorized carrier -- whole . . .
    Therefore, as long as subscribers receive service at rates equal to
    that of their preferred carrier, the subscriber is made whole and
    should not be entitled to any further compensation."); *see* *also*
    AT&T Petition at 2, 9-11 (supporting the Commission's previous
    re-rating policy); MCI Comments at 10 (asserting that the Commission
    had not adequately explained why our previous re-rating rules were
    no longer appropriate).

[^43]: 47 U.S.C § 258(b).

[^44]: Frontier Petition at 15-18. Our experience handling slamming
    complaints affirms that, when the consumer has taken the time and
    effort to pursue such a complaint, that consumer has usually paid
    more to the slamming carrier than he would have paid to his
    preferred carrier. Nothing in the record of this proceeding appears
    to contradict this conclusion.

[^45]: 47 U.S.C § 258(b).

[^46]: 47 U.S.C. §§ 206-208.

[^47]: In the *1995 Order*, we explained that "through the complaint
    process, we will prohibit unauthorized carriers from collecting more
    than the original IXC's rates." *1995 Order,* 10 FCC Rcd at 9579-80,
    ¶ 37. Indeed, the Commission has entertained such complaints for
    damages from slamming since the effective date of our rules
    establishing presubscription. *See, e.g., Franks v. U.S. Telephone,
    Inc.,* File No. E-86-11 (Com.Car.Bur. 1986*); In the Matter of
    Illinois Citizens Utility Board Petition for Rulemaking,* FCC 87-89,
    Memorandum Order and Opinion (1987) ("Section 208 complaint remedies
    can be invoked to recover actual damages" arising from slamming).

[^48]: 47 U.S.C. § 258(b).

[^49]: As we have previously recognized, both carriers and subscribers
    incur costs associated with remedying the slam, and we believe the
    Commission would be within its authority to award compensatory and
    consequential damages above the amounts collected in order to
    compensate these entities for these costs directly resulting from
    the unauthorized carrier's violation of the Act. *See* 47 U.S.C §
    206.

[^50]: *See, e.g.,* 47 U.S.C. § 206.

[^51]: *See* Frontier Petition at 18 ("re-rating simply cannot be
    implemented in any cost-effective manner . . . \[that\] would likely
    cost more than the revenues the authorized carrier would ever
    realize.").

[^52]: *See, e.g.,* AT&T Petition at 9; Sprint Petition at 13; Joint
    Waiver Petition at 33 ("Re-rating is a particular problem.").

[^53]: Joint Waiver Petition at 36-37.

[^54]: *See, e.g.,* Reply Comments of Competition Policy Institute on
    Joint Waiver Petition at 5 (use of "50% of the slamming carrier's
    bill as a proxy for the credit due a slammed customer . . . is a
    sensible approach: the use of a proxy is intended to avoid the
    potentially high cost of re-rating the bill."); Comments of National
    Association of Attorneys General to Joint Waiver Petition at 7
    ("Based on the experience of some state Attorneys General with
    re-rating, we agree that the fifty-percent proxy proposed by the
    Joint Parties provides simplicity which may prove beneficial to
    consumers."); Comments of SBC on Joint Waiver Petition at 3 (50%
    proxy approach "is a good, practical solution to what could be a
    very sticky problem.")

[^55]: *Section 258 Order*, 14 FCC Rcd at 1533-34, ¶ 42.

[^56]: *Id.* at 1524, ¶ 23.

[^57]: *See, e.g.,* Frontier Petition at 18.

[^58]: MCI Worldcom, Inc. Motion for Stay at 7-8, 15-17.

[^59]: The *Stay Order* did not provide the D.C. Circuit's analysis
    beyond stating that the requirements for a stay had been satisfied.

[^60]: *Section 258 Order*, 14 FCC Rcd at 1542, ¶ 55.

[^61]: *See generally*, Joint Waiver Petition.

[^62]: Letter from Bob Rowe, Chairman, NARUC Telecommunications
    Committee, to William Kennard, Chairman, Federal Communications
    Commission, dated April 20, 1999 (NARUC April 1999 Letter); *see
    also*, Letter to William E. Kennard, Chairman of the FCC, from Bob
    Rowe, NARUC First Vice President and Chairman, Telecommunications
    Committee, and Bill Gillis, NARUC Chairman, Consumer Affairs
    Committee, dated Sept. 1, 1999, at 2 (NARUC September 1999 Letter).

[^63]: NARUC September 1999 Letter.

[^64]: In most states, slamming disputes are resolved by the state
    public utility commission. We note, however, that some states may
    designate an entity other than the state public utility commission
    to resolve its slamming complaints. Accordingly, references to
    "state commissions" in this order, and in the rules adopted herein,
    shall include all entities that each individual state chooses to
    designate to resolve its residents' slamming complaints. *See*
    Appendix A, 47 C.F.R. § 64.1170(a).

[^65]: *See* 47 U.S.C. § 258 (stating that "nothing in this section
    shall preclude any State commission from enforcing such procedures
    with respect to intrastate services").

[^66]: *See* Report of State and National Action Plan Activities to the
    National Association of Regulatory Utility Commissioners at 1-2
    (July 1999).

[^67]: *Id.*

[^68]: GAO Report on Telecommunications, State and Federal Actions to
    Curb Slamming and Cramming at 8 (July 1999).

[^69]: *See* Letter to William E. Kennard, Chairman of the FCC, from Bob
    Rowe, NARUC President, Joan Smith, NARUC Chair, Telecommunications
    Committee, and Bill Gillis, NARUC Chairman, Consumer Affairs
    Committee, dated April 6, 2000 (NARUC April 2000 Letter).

[^70]: *See* NARUC April 1999 Letter.

[^71]: *See* discussion *infra*. at ¶¶ 31-43.

[^72]: Currently, slamming complaints filed with this Commission are
    adjudicated under the FCC's informal complaint rules, *see* 47
    C.F.R. §§ 1.716-1718. The informal complaint rules do not provide
    for the FCC to order monetary payments by carriers against a slammed
    consumer. While a consumer could proceed under the formal complaint
    rules, *see* 47 C.F.R. § 1.720, such a process may not be
    cost-effective for many consumers. To maximize consumer protection
    in this particular area, we are amending our informal complaint
    rules for the adjudication of slamming actions. *See* Appendix A, 47
    C.F.R. § 1.719. This new manner of adjudication resembles the
    existing informal complaint rules, but gives the consumer a wider
    array of remedies. We also amend the function statement of the
    Consumer Information Bureau to expressly accommodate the the new
    informal complaint rules. *See* Appendix A, 47 C.F.R. §
    0.141(b)(1)(iii).

[^73]: *See* discussion *infra*. At ¶ 37.

[^74]: *See* Appendix A, 47 C.F.R. § 64.1110. States which file such
    notification are referred to as "participating states"; states that
    do not file such notification are referred to as "non-participating
    states." We note that the rules we modify in this Order have been
    stayed by the Court. *See* *MCI Worldcom v. FCC*, No. 99-1125 (D.C.
    Cir., May 18, 1999). Accordingly, we will publish a notification in
    the Federal Register of the effective date of the rules adopted
    herein to ensure that the states have sufficient notice to comply
    with this filing deadline.

[^75]: *See* Appendix A, 47 C.F.R. § 64.1110(a).

[^76]: *Id*.

[^77]: *See* Appendix A, 47 C.F.R. § 64.1110(b).

[^78]: *Section 258 Order*, 14 FCC Rcd at 1533, ¶ 42.

[^79]: *See, e.g.*, Frontier Petition at 14-15, 16; TRA Comments to
    Petitions for Reconsideration at 5; Cable & Wireless Comments to
    Petitions for Reconsideration at 8; Qwest Comments to Petitions for
    Reconsideration at 2.

[^80]: *Section 258 Order*, 14 FCC Rcd at 1523, ¶ 22.

[^81]: *Id.* at 1521, ¶ 19.

[^82]: We note that the requirement is that the complaint be filed
    within the 30-day period, not that the carrier be served with a
    complaint within the 30-day period. Any carrier seeking to re-bill
    for charges removed based on a subscriber's failure to file a
    complaint in accordance with this rule must first contact the
    subscriber and provide the subscriber with a reasonable opportunity
    to demonstrate that the requisite complaint was filed within the 30
    day-period. *See* Appendix A, 47 C.F.R. § 64.1160(c).

[^83]: *See* Appendix A, 47 C.F.R. § 64.1160(b).

[^84]: *See* Appendix A, § 64.1160(c).

[^85]: We note that carriers may designate other carriers to act as
    their agents in resolving slamming disputes and that such
    designation would not change our determination herein. For example,
    an IXC may reach an agreement with a LEC that the LEC act on the
    IXC's behalf by providing any subscriber that alleges a slam by that
    IXC with all of the remedies such subscriber would be entitled to
    under our rules.

[^86]: We note that a carrier choosing to satisfy a slamming complaint
    as described in this paragraph is electing to *not* challenge the
    subscriber's allegation that an unauthorized change of carrier
    occurred. Thus, the satisfied subscriber would *not* be required to
    file a complaint with a state commission (or the FCC) pursuant to
    section 64.1160(c) of our rules within 30 days of such carrier's
    notification that a slam occurred.

[^87]: A subscriber is unsatisfied by the resolution of its slamming
    dispute for purposes of our rules in all circumstances other than
    those that are specifically described in paragraph 33 of this order.

[^88]: *See* Appendix A, §64.1150(b). In particular, we note that the
    carrier must inform the unsatisfied subscriber that, if all charges
    for the first 30 days of service are being removed from such
    subscriber's bill, pending resolution of the slamming complaint, the
    subscriber must file the complaint with the state commission (or the
    FCC) within 30 days of notifying the carrier of the alleged slam.
    *See* Appendix A, 47 C.F.R. § 64.1160(c).

[^89]: *See* *Section 258 Order* at 1544, ¶ 57.

[^90]: These reports should be filed with the Commission's Enforcement
    Bureau, Telecommunications Consumers Division.

[^91]: *See* 47 U.S.C. §§ 214(c), 503(b)(1); *see also,* *CNN, Inc. et
    al.,* Revocation Order, 13 FCC Rcd 13599 (1998); *CNN, Inc. et al.*,
    Order to Show Cause and Notice of Opportunity for Hearing, 12 FCC
    Rcd 8547 (1997).

[^92]: *See* Appendix A, 47 C.F.R. § 64.1150(c).

[^93]: SBC Petition at 10; AT&T Petition at 9, n.14; Sprint Reply to
    Petitions for Reconsideration at 4.

[^94]: *See* MCI WorldCom Motion for Stay at 16-17.

[^95]: An executing carrier is generally any carrier that effects a
    request that a subscriber's telecommunications carrier be changed.
    *See* *Section 258 Order*, 14 FCC Rcd. at 1565, ¶ 94.

[^96]: *See* Appendix A, 47 C.F.R. § 64.1150(c). Notification is not a
    problem with regard to local slamming because the executing carrier
    is also one of the LECs that is involved in the slamming incident,
    either as the allegedly unauthorized carrier or the authorized
    carrier.

[^97]: The industry's Ordering and Billing Forum (OBF) has agreed to add
    two new data elements to the mechanized carrier change process to
    facilitate notification of all affected carriers when a customer
    claims a carrier change was unauthorized. Carriers are free to
    voluntarily implement these new data elements. *See* Letter from
    Marie Breslin, Bell Atlantic, to Magalie Roman Salas, Secretary of
    FCC, dated January 6, 2000.

[^98]: *See* Appendix A, §64.1150(c). All subsequent references to the
    FCC refer to situations in which the complaint is from a
    non-participating state or the complainant has expressly indicated
    that it wants this Commission to resolve its complaint.

[^99]: *See* Appendix A, §64.1150(d).

[^100]: *Id*.

[^101]: *Id*. We note that the factual determinations made by the FCC on
    slamming complaints filed pursuant to new section 1.719 of the
    Commission's rules will be made by the Consumer Information Bureau
    pursuant to its delegated authority. 47 C.F.R. § 0.361.

[^102]: 47 C.F.R. § 1.720-36.

[^103]: *See* Appendix A, §64.1160. In recognition of the statutory
    language of section 258(b) establishing liability of unauthorized
    carriers to authorized carriers "in an amount equal to all charges
    paid by the subscriber after" a slamming violation, we concluded in
    the *Section 258 Order* that different liability procedures are
    necessary depending upon if the subscriber has or has not already
    paid charges to the unauthorized carrier. *See* *Section 258 Order*
    14 FCC Rcd at 1520-39, ¶¶ 17-49.

[^104]: *See* Appendix A, §64.60(g). We note that a carrier may re-bill
    a subscriber in several different ways. For example, a carrier may
    request the LEC or billing agent to place the charge on the
    subscriber's bill. Alternatively, a carrier may choose to pursue
    collection of the charge on its own. We decline to impose any
    specific requirements governing the contractual relationship between
    carriers and their billing agents.

[^105]: *See* Appendix A, §64.1160(d). We note that nothing in this
    Order prohibits states from taking more stringent enforcement
    actions against carriers not inconsistent with section 258 of the
    Act.

[^106]: *See* Appendix A, 47 C.F.R. § 64.1160(e).

[^107]: *Id*.

[^108]: Under section 258(b) and the rules adopted in this proceeding,
    authorized carriers are entitled to receive this billing information
    from unauthorized carriers. Authorized carriers may need to take
    enforcement action against recalcitrant unauthorized carriers, if
    necessary, to exercise these rights before being able to rebill
    subscribers. We note that several carriers have indicated informally
    that they do not intend to bill their subscribers for service
    provided by a slamming carrier. In any event, however, unauthorized
    carriers may not rebill subscribers for any such amounts.

[^109]: *See* Appendix A, 47 C.F.R. § 64.1160(e)(2).

[^110]: *See, e.g.*, Comments of State Attorneys General and Ohio Public
    Utilities Commission to Waiver Petition (stating that, in cases
    where a 50% rebate would not sufficiently compensate the consumer,
    the authorized carrier should perform actual re-rating for the
    consumer).

[^111]: *See* MCI WorldCom Motion for Stay at 16.

[^112]: In essence, the carriers complain only about the potential
    volume of slamming complaints and re-rating, rather than any
    impossibility of performing re-rating. *See, e.g,* Joint Petition
    for Waiver at 33.

[^113]: *See, e.g.*, SBC Reply to Petitions for Reconsideration at 7;
    GTE Comments to Petitions for Reconsideration at 9.

[^114]: *See* generally Appendix A, 47 C.F.R. § 64.1170.

[^115]: *Section 258 Order*, 14 FCC Rcd at 1531, ¶ 38.

[^116]: *See* ¶¶ 15-21, *supra*.

[^117]: *See* Appendix A, 47 C.F.R. § 64.1170(b).

[^118]: *See* Appendix A, 47 C.F.R. § 64.1170(c).

[^119]: *Id*.

[^120]: *Id*.

[^121]: *See* Appendix A, 47 C.F.R. § 64.1170(e). We note that nothing
    would prevent the subscriber from taking action against the
    unauthorized carrier in federal or state court.

[^122]: *See* *Section 258 Order*, 14 FCC Rcd at 1532, ¶ 40.

[^123]: Joint Waiver Petition.

[^124]: *See* 47 CFR § 64.1100(c) (in cases where the customer has paid
    the unauthorized carrier, the unauthorized carrier is liable to the
    preferred carrier in an amount equal to the charges paid); 47 CFR §
    64.1100(d) (30-day absolution period; for periods after the 30^th^
    day, preferred carrier must re-rate and bill for calls and refund to
    customer any monies collected from the unauthorized carrier in
    excess of re-rated bill); 47 CFR § 64.1170 (governs reimbursement of
    charges where customer has paid unauthorized carrier; requires
    restoration of premium programs of preferred carrier); 47 CFR §
    64.1180 (investigation procedures to be utilized by preferred
    carrier to determine whether unauthorized conversion occurred;
    unauthorized carriers must remove 30 days of charges from
    customer\'s bill).

[^125]: Public Notice, CC Docket No. 94-129, DA 99-683 (released April
    8, 1999).

[^126]: *See* discussion ¶¶ 23-28, *supra*.

[^127]: *WAIT Radio v. FCC*, 418 F.2d 1153, 1157 (D.C. Cir. 1969)
    (*WAIT*).

[^128]: Waiver Petition at i.

[^129]: *See, e.g.*, Ameritech Comments to Waiver Petition at 4; GTE
    Comments to Waiver Petition at 6-7.

[^130]: *See, e.g.*, NARUC April 2000 Letter; Letter to William E.
    Kennard, Chairman of FCC, from Susan Grant, National Consumers
    League, dated July 30, 1999.

[^131]: *Section 258 Order*, 14 FCC Rcd at 1542, ¶ 55 (stating that
    "consumers would benefit by having one point of contact to resolve
    slamming problems").

[^132]: *See* State Attorneys General Comments to Waiver Petition at
    8-9; Ohio PUC Comments to Waiver Petition at 8 (stating that the
    proposal lacks consumer and state voting representation on the
    board); National Consumers League Letter to FCC, CC Docket 94-129,
    dated July 30, 1999 (any FCC-approved third party administrator must
    include voting representation by consumer organizations); NARUC
    Comments to Waiver Petition at 4-5; Ohio PUC Comments to Waiver
    Petition at 7-8; California PUC Reply Comments to Waiver Petition at
    10; Consumer Federation of America Comments to Waiver Petition at 5
    (stating concern at the lack of information on costs); NASUCA
    Comments to Waiver Petition at 1; California PUC Reply Comments to
    Waiver Petition at 3, 6; State Attorneys General Comments to Waiver
    Petition at 2; Ohio PUC Comments to Waiver Petition at 5; NARUC
    Comments to Waiver Petition at 1-2 (stating that the proposal may
    restrict consumer remedies).

[^133]: *See* Appendix A, 47 C.F.R. § 1.719.

[^134]: *See* Appendix A.

[^135]: *See* 5 U.S.C. § 603. The RFA, s*ee* 5 U.S.C. § 601 *et. seq*.,
    was amended by the Contract with America Advancement Act of 1996,
    Pub. L. 104-121, 110 Stat. 87 (1996) (CWAA). Title II of the CWAA is
    the Small Business Regulatory Enforcement Fairness Act of 1996
    (SBREFA).

[^136]: 5 U.S.C. § 603.

[^137]: *Implementation of the Subscriber Carrier Selection Changes
    Provisions of the Telecommunications Act of 1996, Policies and Rules
    Concerning Unauthorized Changes of Consumers' Long Distance
    Carriers*, Further Notice of Proposed Rule Making and Memorandum
    Opinion and Order on Reconsideration, 12 FCC Rcd 10674 (1997)
    (*Further Notice and Order*).

[^138]: 5 U.S.C. § 604.

[^139]: *Implementation of the Subscriber Carrier Selection Changes
    Provisions of the Telecommunications Act of 1996, Policies and Rules
    Concerning Unauthorized Changes of Consumers' Long Distance
    Carriers*, Second Report and Order and Further Notice of Proposed
    Rulemaking, 14 FCC Rcd 1508 (1998) (*Section 258 Order*).

[^140]: Section 258 makes it unlawful for any telecommuncations carrier
    "to submit or execute a change in a subscriber's selection of a
    provider of telephone exchange services or telephone toll service
    except in accordance with such verification procedures as the
    Commission shall prescribe." 47 U.S.C. § 258.

[^141]: *See supra* ¶ 1; *see also Section 258 Order*, 14 FCC Rcd at
    1510-12, ¶¶ 1-4.

[^142]: *See supra* n.14.

[^143]: *See supra* ¶¶ 4-6 & n.10.

[^144]: *See supra* ¶ 6; *see also supra* discussion on Absolution and
    discussion on Liaibility Where Consumer Has Paid Unauthorized
    Carrier.

[^145]: *See supra* ¶ 1; *see also supra* discussion on Administration
    of the Slamming Liability Rules.

[^146]: *Id.*

[^147]: *See, e.g.,* MCI Worldcom Motion for Stay at 16.

[^148]: *See supra* ¶ 15-22, 38-43.

[^149]: *See supra* ¶ 24-27, 45-49.

[^150]: *See supra* n.114.

[^151]: *See supra ¶¶* 48-49.

[^152]: 5 U.S.C. § 603(b)(3).

[^153]: 5 U.S.C. § 601(3).

[^154]: 15 U.S.C. § 632.

[^155]: 5 U.S.C. § 601(4).

[^156]: 1992 Economic Census, U.S. Bureau of the Census, Table 6
    (special tabulation of data under contract to Office of Advocacy of
    the U.S. Small Business Administration).

[^157]: 47 CFR § 1.1162

[^158]: 5 U.S.C. § 601(5).

[^159]: U.S. Dept. of Commerce, Bureau of the Census, \"1992 Census of
    Governments.\"

[^160]: *Id*.

[^161]: 1992 Economic Census, U.S. Bureau of the Census, Table 6
    (special tabulation of data under contract to Office of Advocacy of
    the U.S. Small Business Administration).

[^162]: FCC, Common Carrier Bureau, Industry Analysis Division, *Trends
    in Telephone Service*, Table 19.3 (March 2000).

[^163]: FCC, Common Carrier Bureau, Industry Analysis Division, *Trends
    in Telephone Service*, Table 19.3 (March 2000).

[^164]: 13 CFR § 121.201, Standard Industrial Classification (SIC) codes
    4812 and 4813. *See also* Executive Office of the President, Office
    of Management and Budget, *Standard Industrial Classification
    Manual* (1987).

[^165]: 5 U.S.C. § 601(3).

[^166]: Letter from Jere W. Glover, Chief Counsel for Advocacy, SBA,
    *to* William E. Kennard, Chairman, FCC (May 27, 1999). The Small
    Business Act contains a definition of \"small business concern,\"
    which the RFA incorporates into its own definition of \"small
    business.\" *See* 15 U.S.C. § 632(a) (Small Business Act); 5 U.S.C.
    § 601(3) (RFA). SBA regulations interpret \"small business concern\"
    to include the concept of dominance on a national basis. 13 CFR §
    121.102(b). Since 1996, out of an abundance of caution, the
    Commission has included small incumbent LECs in its regulatory
    flexibility analyses. *See*, *e.g*., *Implementation of the Local
    Competition Provisions of the Telecommunications Act of 1996*, CC
    Docket No. 96-98, First Report and Order, 11 FCC Rcd 15499, 16144-45
    (1996), 61 FR 45476 (Aug. 29, 1996).

[^167]: U.S. Department of Commerce, Bureau of the Census, 1992 Census
    of Transportation, Communications, and Utilities: Establishment and
    Firm Size, at Firm Size 1-123 (1995) (1992 Census).

[^168]: *See generally* 15 U.S.C. § 632(a)(1).

[^169]: *1992 Census*, *supra*, at Firm Size 1-123.

[^170]: 13 CFR § 121.201, SIC code 4813.

[^171]: *Id*.

[^172]: FCC, Common Carrier Bureau, Industry Analysis Division, *Trends
    in Telephone Service*, Table 19.3 (March 2000).

[^173]: 13 CFR § 121.201, SIC code 4813.

[^174]: FCC, Common Carrier Bureau, Industry Analysis Division, *Trends
    in Telephone Service*, Table 19.3 (March 2000).

[^175]: 13 CFR § 121.201, SIC code 4813.

[^176]: FCC, Common Carrier Bureau, Industry Analysis Division, *Trends
    in Telephone Service*, Table 19.3 (March 2000).

[^177]: 13 CFR § 121.201, SIC code 4813.

[^178]: FCC, Common Carrier Bureau, Industry Analysis Division, *Trends
    in Telephone Service*, Table 19.3 (March 2000).

[^179]: 13 CFR § 121.201, SIC code 4813.

[^180]: FCC, Common Carrier Bureau, Industry Analysis Division, *Trends
    in Telephone Service*, Table 19.3 (March 2000).

[^181]: 13 CFR § 121.201, SIC code 4813.

[^182]: FCC, Common Carrier Bureau, Industry Analysis Division, *Trends
    in Telephone Service*, Table 19.3 (March 2000).

[^183]: We include all toll-free number subscribers in this category,
    including 888 number subscribers.

[^184]: FCC, CCB Industry Analysis Division, *FCC Releases, Study on
    Telephone Trends*, Tbls. 21.2, 21.3 and 21.4 (February 19, 1999).

[^185]: 13 CFR § 121.201, SIC code 4812.

[^186]: *1992 Census, Series UC92-S-1*, at Table 5, SIC code 4812.

[^187]: *Trends in Telephone Service*, Table 19.3 (March 2000).

[^188]: *See supra* ¶ 35 & nn.93, 94

[^189]: *See supra* ¶ 35.

[^190]: *See* 5 U.S.C. § 801(a)(1)(A).

[^191]: *See* 5 U.S.C. § 604(b).

[^192]: 47 U.S.C. § 258(b) (emphasis added).

[^193]: *See, e.g., AT&T Corp. v. Iowa Utils. Bd.,* 525 U.S. 366, 397
    (1999) ("It would be a gross understatement to say that the
    Telecommunications Act of 1996 is not a model of clarity. It is in
    many respects a model of ambiguity or indeed self-contradiction.").

[^194]: 47 U.S.C. § 258(b).

[^195]: 47 U.S.C. §§ 207-208.