**Before the**

**FEDERAL COMMUNICATIONS COMMISSION**

## Washington, D. C. 20554

**\[CORRECTED VERSION\]**

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 )

**THIRD REPORT AND ORDER AND SECOND ORDER ON RECONSIDERATION**

# Adopted: July 21, 2000 Released: August 15, 2000

By the Commission:

Table of Contents

[Paragraph No.]{.underline}

I.  Introduction and Background . . . . . . . . . . . . . . . . . . . .
    . . . . . . . . . . . . . . . 1

II. Third Report and Order

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A.  Preferred Carrier Changes Using the Internet . . . . . . . . . . . .
    . . . . . . . 6

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1.  Authorization and Verification of Internet LOAs . . . . . . . . . .
    . . . . 12

2.  Pre-Existing Relationships . . . . . . . . . . . . . . . . . . . . .
    . . . . . . . . . . 16

3.  Separate Screen Requirement . . . . . . . . . . . . . . . . . . . .
    . . . . . . . . . 17

4.  Choice of Telecommunications Services . . . . . . . . . . . . . . .
    . . . . . 19

5.  Preferred Carrier Freeze . . . . . . . . . . . . . . . . . . . . . .
    . . . . . . . . . . . 20

6.  State Authority . . . . . . . . . . . . . . . . . . . . . . . . . .
    . . . . . . . . . . . . . 21

> B. Resellers and CICs . . . . . . . . . . . . . . . . . . . . . . . .
> . . . . . . . . . . . . . . . . . 22
>
> C. Independent Third Party Verification . . . . . . . . . . . . . . .
> . . . . . . . . . . . . 33
>
> D. Definition of "Subscriber" . . . . . . . . . . . . . . . . . . . .
> . . . . . . . . . . . . . . . 46
>
> E. Submission of Reports by Carriers . . . . . . . . . . . . . . . . .
> . . . . . . . . . . . . 53
>
> F. Registration Requirement . . . . . . . . . . . . . . . . . . . . .
> . . . . . . . . . . . . . . . 59
>
> G. Recovery of Additional Amounts from Unauthorized Carriers . . . . .
> . . 67

III\. Second Order on Reconsideration

A. Administration of Preferred Carrier Freezes

1.  IXC Submission of Preferred Carrier Freeze Orders and

> Freeze Lifts . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
> . . . . . . . . . . . 69

2.  Simultaneous Submission of Preferred Carrier Change

> Requests and Preferred Carrier Freeze Requests . . . . . . . . . . .
> 72

3.  Effecting Freeze Lifts and Change Requests in the

> Same Three-Way Call . . . . . . . . . . . . . . . . . . . . . . . . .
> . . . . . . . 73

B. Verification of Preferred Carrier Changes

> 1\. Liability of an Executing Carrier . . . . . . . . . . . . . . . .
> . . . . . . . . 77
>
> 2\. Separate Authorizations for Multiple Services . . . . . . . . . .
> . . . . 78

C. Rules Governing LOAs

1\. Limitation on the Effectiveness of an LOA . . . . . . . . . . . . .
. . . . 80

> 2\. Contents of LOA Regarding Preferred Carrier Change Charge . 82

D. Payment of Preferred Carrier Change Charges After Slam . . . . . . .
. . . .84

E.  Preemption of State Regulations . . . . . . . . . . . . . . . . . .
    . . . . . . . . . . . . . 87

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IV. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
    . . . . . . . . . . . . . . . . . . . . . 88

V.  Procedural Matters

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A.  Final Regulatory Flexibility Analysis . . . . . . . . . . . . . . .
    . . . . . . . . . . . . . 89

B.  Supplemental Final Regulatory Flexibility Analysis . . . . . . . . .
    . . . . . . .120

C.  Paperwork Reduction Act . . . . . . . . . . . . . . . . . . . . . .
    . . . . . . . . . . . . . . 131

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VI. Ordering Clauses . . . . . . . . . . . . . . . . . . . . . . . . . .
    . . . . . . . . . . . . . . . . . . . . 132

# 

Appendix A -- Final Rules and Rule Changes

Appendix B - Commenters

##  I. INTRODUCTION AND BACKGROUND

1.  In this Third Report and Order and Second Order on Reconsideration
    (Order), we adopt rules proposed in the Second Report and Order and
    Further Notice of Proposed Rulemaking (*Section 258 Order or Further
    Notice*)[^1] to implement section 258 of the Communications Act of
    1934 (Act), as amended by the Telecommunications Act of 1996 (1996
    Act).[^2] Section 258 prohibits any telecommunications carrier from
    submitting or executing an unauthorized change in a subscriber's
    selection of a provider of telephone exchange service or telephone
    toll service.[^3] This practice, known as "slamming," enables those
    companies who engage in fraudulent activity to increase their
    customer and revenue bases at the expense of consumers and
    law-abiding companies. The rules we adopt in this Order will improve
    the carrier change process for consumers and carriers alike while
    making it more difficult for unscrupulous carriers to perpetrate
    slams.

2.  In the *Section 258 Order*, we established a comprehensive framework
    designed to close loopholes used by carriers who slam consumers and
    to bolster certain aspects of our slamming rules to increase their
    deterrent effect. In particular, we adopted aggressive new liability
    rules designed to take the profit out of slamming. We also broadened
    the scope of our slamming rules to encompass all carriers and
    imposed more rigorous verification measures. In our *First
    Reconsideration Order*,[^4] we amended certain aspects of the
    slamming liability rules, granting in part petitions for
    reconsideration of our *Section 258 Order*.[^5] Although the
    petitions raised a broad range of issues relating to the slamming
    rules, the *First Reconsideration Order* addressed only those issues
    relating to our liability rules, which had been stayed by the D.C.
    Circuit. We chose to resolve those issues separately, and on an
    expedited basis, because of the overriding public interest in
    reinstating the liability rules in order to deter slamming.[^6]

3.  When the Commission released the *Section 258 Order*, it recognized
    that additional revisions to the slamming rules could further
    improve the preferred carrier change process and prevent
    unauthorized changes. Thus, concurrent with the release of the
    *Section 258 Order*, the Commission issued a Further Notice of
    Proposed Rulemaking and sought comment on the following
    proposals: (1) permitting the authorization and verification of
    preferred carrier changes over the Internet; (2) requiring resellers
    to obtain their own carrier identification codes (CICs), or, in the
    alternative, some type of pseudo-CIC that would provide underlying
    facilities-based carriers and subscribers of resellers with a way to
    identify the service provider; (3) modifying the independent third
    party verification method; (4) defining the term "subscriber" for
    purposes of authorizing preferred carrier changes; (5) requiring
    carriers to submit reports on the number of slamming complaints they
    receive; (6) creating a registration requirement for all providers
    of interstate telecommunications services; and (7) requiring
    unauthorized carriers to remit to authorized carriers certain
    amounts in addition to the amount paid by slammed subscribers.[^7]

4.  On June 30, 2000, the President signed into law a piece of
    legislation that is relevant to our slamming rules and some of the
    issues pending in this proceeding, particularly our proposal in the
    *Further Notice* to allow the authorization and verification of
    preferred carrier changes using the Internet. The *Electronic
    Signatures in Global and National Commerce Act,* S.761 (E-Sign
    Act)[^8] is intended to foster the development of e-commerce, or
    commerce conducted electronically over the Internet. To accomplish
    this goal, the E-Sign Act establishes a framework governing the use
    of electronic signatures and records in transactions in or affecting
    interstate and foreign commerce.[^9] With certain exceptions not
    relevant here, the provisions of the E-Sign Act will take effect on
    October 1, 2000.[^10]

5.  In this Order, we adopt a number of the proposals discussed in the
    *Further Notice*, and we also address the remaining issues that were
    raised on reconsideration of the *Section 258 Order*. Specifically,
    in this Order, we amend the current carrier change authorization and
    verification rules to expressly permit the use of Internet Letters
    of Agency (Internet LOAs) in a manner consistent with the new E-Sign
    Act;[^11] we direct the North American Numbering Plan Administration
    (NANPA) to eliminate the requirement that carriers purchase Feature
    Group D access in order to obtain a CIC; we provide further guidance
    on independent third party verification; we define the term
    "subscriber;" we require each carrier to submit a bi-annual report
    on the number of slamming complaints it receives; and we expand the
    existing registration requirement on carriers providing interstate
    telecommunications service to the Commission to include additional
    facts that will assist our enforcement efforts. This Order also
    contains a Second Order on Reconsideration, in which we uphold our
    rules governing the submission of preferred carrier freeze orders,
    the handling of preferred carrier change requests and freeze orders
    in the same transaction, and the automated submission and
    administration of freeze orders and changes. In addition, we
    reaffirm our decision not to preempt state regulations governing
    verification procedures for preferred carrier change requests that
    are consistent with the provisions of Section 258. We also decline
    to adopt a 30-day limit on the amount of time an LOA confirming a
    carrier change request should be considered valid and instead adopt
    a 60-day limit. Finally, we clarify certain of our rules regarding
    the payment of preferred carrier change charges after a slam.[^12]

### II. THIRD REPORT AND ORDER

#### **Preferred Carrier Changes Using the Internet** 

6.  [Background]{.underline}. In the *Further Notice*, we recognized
    that many carriers currently use the Internet as a marketing tool
    for their services.[^13] Typically, such carriers will post
    electronic carrier change forms on their websites. A subscriber is
    invited to electronically submit the carrier's form to select that
    carrier as his or her preferred carrier for a particular service
    *(i.e.,* local, intraLATA, or interLATA telecommunications service).
    Carriers that utilize the Internet in this fashion usually require
    the subscriber to submit the telephone number(s) to be affected by
    the change, the billing name and address for the subscriber, and
    other information (*e.g.*, a credit card number, a social security
    number, or a mother's maiden name) for billing, verification,
    security, or credit purposes.[^14]

7.  Our current rules provide that all preferred carrier change requests
    must be confirmed in accordance with one of four verification
    methods: written LOA, electronic (*i.e*., telephone) authorization,
    independent third party verification, or State-enacted verification
    procedure (only applicable to intrastate preferred carrier
    changes).[^15] In the *Further Notice*, we sought comment on, among
    other things, whether a carrier change authorized and verified over
    the Internet (Internet LOA) could be considered valid under our
    existing verification rules and whether use of Internet LOAs should
    be permitted but subject to additional requirements.[^16] We also
    invited parties to comment on whether Internet LOAs should contain
    separate statements regarding a subscriber's choice of interLATA and
    intraLATA toll services[^17] and on other possible uses of the
    Internet in the carrier change context, such as the submission of
    requests to impose or lift preferred carrier freezes.[^18]

8.  Since the release of the *Further Notice*, the growth of the
    Internet has continued to accelerate, and the many ways in which
    companies and consumers may benefit from using the Internet have
    become increasingly apparent. E-commerce comprises a growing segment
    of all consumer transaction activity. Estimates place online
    consumer retail spending at \$38 billion this year.[^19] This figure
    is expected to grow to \$199 billion by 2005.[^20] Over 11 million
    new consumers are expected to engage in e-commerce transactions this
    year.[^21] In addition, the range of types of consumer transactions
    conducted on-line is also predicted to expand.[^22] Against this
    backdrop, the federal government has taken various measures to
    examine and promote e-commerce while ensuring that consumers are
    protected from fraud.[^23] The exponential growth of e-commerce also
    provides important context for our evaluation of the proposal in the
    *Further Notice* to endorse the Internet LOA as a method of
    authorizing carrier changes.

9.  As noted above, the new E-Sign Act is designed to promote the use of
    electronic signatures in interstate and foreign commerce.[^24] The
    E-Sign Act mandates that a contract or business transaction cannot
    be denied validity or enforceability solely because the contract or
    transaction is not in writing, so long as the contract or
    transaction is a properly authenticated electronic record or has
    been affirmed by an electronic signature. The E-Sign Act
    specifically defines the terms electronic record,[^25] electronic
    signature,[^26] and electronic.[^27] The E-Sign Act provides a
    specific framework for the use of electronic records and signatures
    and places limits on the interpretation authority of federal and
    state regulatory agencies with regard to this framework.[^28] It
    also specifies certain circumstances in which this framework will
    not apply, such as the signing of wills and the cancellation of
    health insurance.[^29] In addition, while the E-Sign Act seeks to
    promote e-commerce, it does not require consumers to enter into
    electronic contracts against their wishes.[^30]

10. Section 104(e) of the E-Sign Act, entitled "Electronic Letters of
    Agency," specifically addresses our slamming rules by providing that
    the Commission "shall not hold any contract for telecommunications
    or letter of agency for a preferred carrier change, that otherwise
    complies with the Commission's rules, to be legally ineffective,
    invalid, or unenforceable solely because an electronic record or
    electronic signature was used in its formation or
    authorization."[^31]

11. [Discussion.]{.underline} We continue to believe that the Internet
    provides a quick and efficient means of signing up new subscribers
    and should be made widely available to carriers and consumers.[^32]
    We recognize that consumers' use of the Internet for electronic
    commerce has grown tremendously in recent years, as more and more
    businesses provide services online, and a greater percentage of
    consumers and businesses utilize computers and the Internet to
    transact business. In addition, we recognize that section 104(e) of
    the E-Sign Act directs us not differentiate between written LOAs and
    LOAs that are submitted and signed electronically. In view of these
    developments, we hereby amend our carrier change authorization and
    verification rules to expressly permit the use of Internet LOAs, in
    a manner consistent with the provisions of the E-Sign Act.

> 1\. [Authorization and Verification of Internet LOAs]{.underline}.

12. As stated in the *Further Notice*, we believe that subscribers using
    the Internet to change telecommunications service providers are
    entitled to the same level of protection against slamming that we
    have mandated for other forms of solicitation. Internet LOAs must
    comply with the requirements of our rules governing written LOAs,
    subject to the clarifications and modifications adopted in this
    Order. Carriers who wish to sign up new subscribers over the
    Internet must adhere to the informational requirements for written
    LOAs, as specified in section 64.1130(e) of our existing rules.[^33]
    In light of the E-Sign Act, we now conclude that an electronic
    signature used for a carrier change submitted over the Internet will
    satisfy the signature requirement of section 64.1130(b) governing
    LOAs, and that the information submitted to authorize and verify a
    carrier change request may be submitted in the form of an electronic
    record.

13. Carriers using Internet LOAs to sign up subscribers will be required
    to comply with the consumer disclosure requirements of section
    101(c) of the E-Sign Act.[^34] Section 101(c) requires, among other
    things, that the carrier obtain the subscriber's consent to use
    electronic records, obtain the subscriber's acknowledgment that he
    or she has the software and hardware necessary to access the
    information in the electronic form (*i.e.*, Internet LOA) used by
    the carrier, and give the subscriber notice of the procedures for
    withdrawing consent.[^35] Section 101(c) also requires carriers to
    inform subscribers of any right (after consent to the transaction)
    to a non-electronic (that is, paper) copy of the electronic record
    of the transaction, to tell them how to obtain such a copy, and to
    make clear whether a fee will be charged for the copy.[^36]
    Accordingly, we modify our rules to incorporate by reference the
    requirements of Section 101(c) of the E-Sign Act. We note that these
    consumer disclosures, in conjunction with the form and content
    requirements for LOAs under 64.1130 of our rules, are likely to
    address concerns about unwary consumers who might inadvertently
    switch their telephone service providers while exploring websites or
    participating in contests on the Internet.[^37] At the same time, we
    recognize that many commenters expressed concerns regarding
    fraudulent use of Internet LOAs that may not be fully addressed by
    the protections afforded by compliance with section 101(c) of the
    E-Sign Act.[^38] In this regard, we note that, if a subscriber
    contests the authenticity of an Internet LOA, the carrier will have
    the burden of proof to counter the subscriber's allegation.[^39] For
    this reason, we would expect a carrier to employ procedures that
    would enable it to demonstrate that the electronic signature on an
    Internet LOA could not have been submitted by anyone other than the
    subscriber.[^40] While it is our expectation that the consumer
    protection measures afforded by the combination of the requirements
    in the E-Sign Act and our LOA rules will suffice, we note that, if
    we detect an inordinate increase in slamming after these changes
    take effect, we may choose to re-evaluate our rules.

14. We are aware that some consumers may be concerned about security and
    privacy issues associated with submitting carrier change requests
    and associated personal information over the Internet.[^41] Security
    and privacy issues arise because Internet communications are sent
    from computer to computer until the communications reach their final
    destinations. When information is sent from point A to point B over
    the Internet, every computer involved in the transmission path has
    an opportunity to intercept and view the information being
    sent.[^42] As a result, we acknowledge the concerns of commenters
    who argue that carriers should provide subscribers with a secured
    web transaction for submitting Internet LOAs.[^43] At this time, we
    decline to impose specific requirements regarding security and
    privacy as it relates to Internet LOAs, but we strongly encourage
    carriers who utilize Internet LOAs to sign up new subscribers to
    employ security measures in keeping with the best practices used for
    Internet transactions, such as providing subscribers with secured
    web access.[^44] In addition, we strongly encourage carriers to
    provide notice to subscribers regarding the level of security that
    applies to the submission of Internet LOAs.[^45] We also support the
    use of digital signatures, when they are made widely available, in
    order to more precisely establish the identity of the subscriber
    submitting an Internet LOA, the date of the submission, and other
    specifics.[^46]

15. We also acknowledge that consumers have a legitimate interest in the
    privacy of personal information that they may be asked to submit
    with an Internet LOA. Again, we decline to mandate a specific action
    with regard to such information at this time. However, we encourage
    carriers to keep such information confidential and not use a
    subscriber's information, including his or her electronic mail
    (e-mail) address, for marketing or other business purposes without
    the express consent of the subscriber.[^47] In addition, we
    recognize that some consumers may prefer, for a variety of reasons,
    not to use the Internet to authorize carrier changes. Consistent
    with section 101(b)(2) of the E-Sign Act, we will amend our rules to
    state that carriers must give subscribers the option of using one of
    the other authorization and verification methods specified in
    section 64.1120 of our rules, in addition to the use of Internet
    LOAs.[^48]

> 2\. [Pre-Existing Relationships]{.underline}

16. We recognize that some carriers and subscribers who have
    pre-existing business relationships may wish to follow a more
    truncated authorization and verification process for making carrier
    changes than required for written and Internet LOAs. AOL and other
    commenters assert that subscribers and carriers belonging to a
    closed user group (CUG)[^49] or linked in a similar ongoing business
    relationship should be permitted to utilize a less stringent
    verification method for Internet LOAs.[^50] However, we see no
    compelling reason to determine that our LOA rules, which are
    designed to protect subscribers, should apply to a lesser degree
    when the subscriber belongs to a CUG or has a similar type of
    pre-existing relationship with the carrier.[^51] Therefore, at this
    time, we decline to permit carriers and subscribers with
    pre-existing business relationships, such as CUG providers and
    members, to use less stringent verification methods to authorize and
    verify carrier changes processed over the Internet.[^52]

> 3\. [Separate Screen Requirement]{.underline}

17. In the *Further Notice*, we sought comment on the extent to which
    change requests submitted over the Internet may or may not contain
    all the required elements of a valid LOA, and we also sought comment
    on ways in which we might ensure that consumer interests are
    protected when Internet LOAs are used.[^53] In certain respects, our
    existing rules on the form and content of LOAs reflect the fact that
    they were written with paper documents in mind. For example, a
    written LOA must be a separate document not combined with
    inducements of any kind.[^54] In order to conform Internet LOAs to
    this preexisting requirement, we amend our rules to specify that
    Internet LOAs must appear on a separate screen from any inducements
    or solicitations for a carrier's services and contain only the
    authorizing language found in section 64.1130(e) of our rules. We
    regard this requirement as the functional equivalent of the
    pre-existing requirements that a written LOA must be a separate
    document not combined with inducements of any kind.[^55] Moreover,
    as noted by several commenters, this separate screen requirement is
    easily achievable and is necessary to eliminate the possibility of
    customer confusion and the potential for inadvertent selection of a
    new preferred carrier.[^56]

18. We believe that this determination is consistent with section
    104(b)(2)(C) of the E-Sign Act. That section of the E-Sign Act
    allows agencies to include requirements for electronic records that
    are "substantially equivalent to the requirements imposed on records
    that are not electronic records," that will not "impose unreasonable
    costs on the acceptance and use of electronic records," and will not
    "require, or accord greater legal status or effect to, the
    implementation or application of a specific technology or technical
    specification for performing the functions of creating, storing,
    generating, receiving, communicating, or authenticating electronic
    records or electronic signatures."[^57] As stated above, this
    separate screen requirement is substantially equivalent to the
    requirements found in subsections 64.1130(b) and (c) as they apply
    to written LOAs. Moreover, the record in this proceeding indicates
    that this separate screen requirement will not impose unreasonable
    costs on the acceptance and use of electronic records.[^58]

> 4\. [Choice of Telecommunications Services]{.underline}

19. We adopt our tentative conclusion that carriers who solicit service
    over the Internet and require subscribers to sign up for more than
    one service (*e.g.,* interLATA and intraLATA) in order to authorize
    a carrier change, rather than giving subscribers the option of
    signing up for individual services, violate our rule requiring all
    LOAs to contain separate statements regarding choices of interLATA
    and intraLATA toll service.[^59] While we presented this issue in
    the *Further Notice* as a "general concern\[\] about the content of
    the solicitation using the Internet" and cited some IXC webpages as
    examples of the practice,[^60] we note that there is no reason to
    believe this type of inappropriate carrier change solicitation would
    only appear in an electronic medium. We emphasize that carriers must
    clearly and conspicuously delineate on any LOA, written or Internet,
    the individual services that the subscriber may choose to be covered
    by the carrier change request, including, but not limited to, local,
    intraLATA, and interLATA services. Consumers should know what
    specific services are being offered and should have the discretion
    to subscribe to only the services they desire. Such consumer choice
    and discretion are essential to maintaining and advancing the
    development of a competitive telecommunications marketplace.

> 5\. [Preferred Carrier Freeze]{.underline}

20. Consistent with our amendment of the rules governing LOAs, we are
    also amending our rules to allow subscribers to submit, and carriers
    to process, the imposition and/or lifting of preferred carrier
    freezes over the Internet, as recommended by many commenters.[^61]
    Carriers must comply with the same verification requirements that
    apply to LOAs, as discussed in paragraphs 11-15 above, to help
    prevent the unauthorized imposition or lifting of preferred carrier
    freezes over the Internet.[^62] In addition, as stated in paragraphs
    14-15, we encourage carriers to employ measures to protect the
    security and confidentiality of subscribers' personal information.

> 6\. [State Authority]{.underline}

21. We note that the amendments to our rules that we adopt in this Order
    for Internet LOAs represent a minimum threshold for carrier change
    authorization and verification with which all carriers must comply.
    State jurisdictions may adopt verification requirements for Internet
    LOAs, so long as they are consistent with section 258, as
    implemented by our rules, and the E-Sign Act. We disagree with Cable
    & Wireless that we should preempt state laws regarding the legality
    and form of Internet LOAs at this time.[^63] Carriers already must
    comply with state requirements for written LOAs that are consistent
    with section 258 and the Commission's rules,[^64] and state
    requirements for Internet LOAs that are consistent with section 258,
    as implemented by our rules,

and the E-Sign Act warrant the same compliance.

**B. Resellers and CICs**

22. [Background.]{.underline} A switchless reseller is a carrier that
    lacks switches or other transmission facilities in a given local
    access and transport area (LATA). It purchases long distance service
    in bulk from facilities-based carriers and resells such service
    directly to consumers. Resellers frequently share CICs[^65] with the
    underlying carriers whose services they resell. In the *Further
    Notice*, we explained that the shared use of CICs gives rise to two
    related problems: soft slamming and carrier misidentification.[^66]
    A soft slam is the unauthorized change of a subscriber from its
    authorized carrier to a new carrier that uses the same CIC. Because
    the change is not executed by the LEC, which continues to use the
    same CIC to route the subscriber's calls, a soft slam bypasses the
    preferred carrier freeze protection available to consumers from
    LECs. Carrier misidentification occurs because LECs also identify
    carriers by their CICs for billing purposes. A LEC's call record
    therefore is likely to reflect the identity of the underlying
    carrier whose CIC is used, even if the actual service provider is a
    reseller. As a result, the name of the underlying carrier may appear
    on the subscriber's bill in lieu of, or in addition to, the reseller
    with whom the subscriber has a direct relationship. This makes it
    difficult for consumers to detect a slam and to identify the
    responsible carrier.

23. We requested comment in the *Further Notice* on three possible
    approaches to the problems arising from the shared use of CICs: (1)
    requiring switchless resellers to obtain their own CICs; (2)
    requiring the use of "pseudo-CICs," digits appended to underlying
    carriers' CICs to identify resellers; and (3) requiring modification
    of underlying carriers' systems to prevent soft slams where
    subscribers have preferred carrier freeze protection, and to permit
    identification of resellers on bills.[^67] The Common Carrier Bureau
    subsequently released a public notice seeking further information on
    the first proposal.[^68]

24. [Discussion]{.underline}. As set forth below, we shall direct the
    NANPA to eliminate the requirement that carriers purchase "Feature
    Group D" to obtain CICs. This action will facilitate the assignment
    of CICs to switchless resellers and remove one obstacle to their
    independent use of CICs. At the present time, we are not requiring
    resellers to obtain their own CICs, nor are we adopting either of
    our other two proposals. Although we believe that requiring
    switchless resellers to obtain CICs may well be an effective
    solution to soft slamming and related carrier identification
    problems, commenters have raised a number of concerns regarding the
    potential impact of such a requirement on the carrier industry.
    Based on our review of the record, as discussed herein, we are not
    persuaded that we should adopt a CIC requirement for switchless
    resellers at this time. However, in order to continue developing the
    record, we shall refer the CIC assignment and use issues discussed
    below to the North American Numbering Council (NANC) for analysis
    and recommendations. We intend to reevaluate the costs and benefits
    of the proposed CIC requirement when we receive the NANC's report.

25. Under the current CIC Assignment Guidelines, a carrier must purchase
    Feature Group D access service to be assigned a CIC.[^69] A
    switchless reseller does not require the physical or trunk access to
    the public switched telephone network (PSTN) available through the
    purchase of Feature Group D, and is unlikely to bear the expense
    simply to obtain a CIC.[^70] The NANC's CIC Ad Hoc Working Group has
    recommended elimination of the Feature Group D requirement as "an
    unnecessary administrative burden for resale providers\[.\]"[^71] In
    light of this recommendation, and based on our examination of the
    record in this proceeding, we direct the NANPA to eliminate the
    Feature Group D requirement. This action, which is an aspect of our
    first proposal, "will facilitate the assignment of CICs to
    resellers, and thereby allow easier \[carrier\] identification . . .
    , enhancing the ability to resolve conflicts, including disputes
    which involve slamming."[^72]

26. Commenters are divided on our proposal to require switchless
    resellers to obtain their own CICs. Generally, supporters argue that
    it would be a cost-effective and administratively simple solution to
    soft slamming and related problems.[^73] Opponents raise a number of
    concerns regarding the impact of a CIC requirement on the carrier
    industry, including that it would: (1) impose undue financial
    burdens on resellers and damage them competitively; (2) require
    expensive and time-consuming LEC switch upgrades; and (3) accelerate
    exhaustion of the four-digit CIC pool.[^74] Opponents also contend
    that the record contains insufficient evidence of the dimensions of
    soft slamming and related problems to warrant regulatory action and,
    in any event, that other recent Commission actions are likely to
    address such problems.[^75] We address these issues in turn below.

27. Turning to the first issue, the principal cost of the subject
    proposal for a switchless reseller would be deploying or loading a
    CIC in LEC switches in each LATA where it operates. In this regard,
    "the use of translations access does not significantly reduce the
    time or expense required" to deploy a CIC.[^76] On a nationwide
    basis, most estimates of this cost range from \$500,000 to \$1
    million for a single CIC.[^77] Relying on such estimates, and on the
    small size of many resellers,[^78] opponents maintain that a CIC
    requirement would create a substantial market entry barrier for
    resellers.[^79] Our review of the record suggests that in many cases
    such estimates are unrealistic because resellers typically operate
    on a regional basis.[^80] In addition, CIC deployment costs may be
    viewed as "a legitimate cost of doing business,"[^81] and the
    independent use of CICs clearly has competitive advantages for
    resellers.[^82] Nevertheless, we are concerned about restricting
    competition in the wholesale long distance service market by
    limiting resellers' ability to change and/or use multiple underlying
    carriers.[^83] Although some resellers use their own CICs despite
    the asserted disadvantages, we are reluctant to adopt a requirement
    that resellers obtain their own CICs pending further review of the
    conclusions reached by the NANC.

28. Second, GTE, SBC, and USTA express concern that a CIC requirement
    may exhaust the limited capacity of certain types of LEC
    switches.[^84] For example, GTE states that:

> \[GTE\] generally averages over two hundred CICs per switch in its
> 1600 plus switches. Almost half of these switches have a capacity of
> only 255 codes today. . . . The GTD5 switch, which comprises over a
> third of \[GTE's\] total, has a capacity of only 500 CICs. A 500 CIC
> capacity could well be insufficient in some locations to handle all
> resellers who would obtain CICs. . . . \[GTE\] cannot add any new CICs
> to its switches in Hawaii because international operations have
> already utilized the total capacity.[^85]

It is unclear how many LEC switches are implicated by this issue, as
only GTE has identified the number of limited-capacity switches deployed
in its territory, and the likelihood of exhausting switch capacity
depends on the related questions of demand and location.[^86] To the
extent that upgrades are necessary, however, GTE, SBC, and USTA state
that they are likely to be costly and time-consuming. Furthermore,
although the need for upgrades was contemplated when the carrier
industry moved from a three-digit to a four-digit CIC format, USTA
suggests that requiring investment in switch upgrades may be wasteful
because the industry now is moving towards new technology
platforms.[^87] There may be ways to ensure that any systems
modifications necessary to accommodate the use of additional CICs do not
impose undue burdens on LECs.[^88] Nevertheless, we believe that this
matter warrants further consideration.

29. Third, several commenters argue that adoption of a CIC requirement
    would accelerate exhaustion of the pool of four-digit CICs, thereby
    inflicting undue disruption and expense on the entire carrier
    industry.[^89] Preliminarily, we find no compelling evidence of a
    significant threat of premature CIC exhaustion. The pool of
    four-digit CICs is 10,000, of which only 2,031 were assigned as of
    January, 2000, and the *NANC CIC Report* predicts that they will
    last for 22 years, assuming a limit of six per carrier.[^90] In
    addition, it is not clear that the subject proposal would
    substantially increase the long-term net demand for CICs, given that
    some resellers already have CICs, and those without CICs are likely
    to obtain them as their businesses develop, without any regulatory
    requirement.[^91]

30. Turning to the fourth issue, there is a consensus among commenters
    that the shared use of CICs by resellers gives rise to significant
    problems that warrant Commission action.[^92] Opponents of the
    subject proposal, however, argue that the record contains
    insufficient evidence for us to determine whether a CIC requirement
    is warranted in light of its potential costs.[^93] The Commission
    does not maintain data as to the specific dimensions of these
    problems, but our review of the record suggests that they represent
    a substantial percentage of all slamming complaints.[^94] We agree,
    however, that recent Commission actions in this proceeding and in
    the *Truth-in-Billing* proceeding may help to address soft slamming
    and related problems indirectly. In this regard, Bell Atlantic and
    USTA point out that the *Section 258 Order* imposes on
    facilities-based carriers the responsibilities of executing carriers
    in soft slam situations, and AT&T notes that the framework of the
    slamming rules is "intended to increase effective deterrence of
    slamming, including . . . 'soft slamming.'"[^95] In the
    *Truth-in-Billing* proceeding, the Commission adopted a rule that
    the name of the service provider associated with each charge must be
    clearly and conspicuously identified on the telephone bill.[^96]
    AT&T contends that this action "should substantially alleviate the
    'soft slamming' problem by making unauthorized carrier changes
    readily detectable by end users."[^97]

31. Based on our review of the record as a whole, we are not persuaded
    that we should adopt a CIC requirement at this time. Rather, as
    explained below, we wish to have more information on the financial
    and competitive issues discussed herein before imposing a CIC
    requirement. By directing that the Feature Group D requirement be
    eliminated, we are taking a step that will facilitate the ability of
    switchless resellers to obtain and use their own CICs, while
    allowing them to choose whether to do so based on their own
    competitive needs. Nevertheless, we continue to believe that
    requiring resellers to obtain their own CICs holds promise as a
    direct and effective solution to the significant problems that arise
    from the shared use of CICs. We therefore wish to continue
    developing a record on the subject proposal, in order to be in a
    position to take informed and expeditious action, should we deem it
    necessary to do so. Accordingly, we shall refer the CIC use and
    assignment issues discussed herein to the NANC for analysis and
    recommendations. To the extent possible, we also request that the
    NANC submit any data it develops that may shed light on the
    financial and competitive issues discussed herein,[^98] as well as
    the dimensions of soft slamming and related problems. We request
    that the NANC provide its report to the Commission by August
    1, 2001. We intend to reassess the costs and benefits of the
    proposed CIC requirement after receiving the NANC's report. In the
    meantime, we anticipate that the reporting requirements we adopt
    herein will help to furnish us with more data as to the ongoing
    significance of the problems at issue and the impact of the
    Commission's recent anti-slamming and truth-in-billing
    measures.[^99]

32. Finally, we conclude that adoption of either the second or the third
    proposals set forth in the *Further Notice* would not serve the
    public interest. Whereas a CIC requirement would rely on existing
    call routing and billing systems and provide consumers with equal
    access to switchless resellers, the "pseudo-CIC" proposal would
    require extensive systems modifications by both LECs and underlying
    carriers, without the advantage of equal access.[^100] Commenters
    argue persuasively that the third proposal, carrier systems
    modifications, is not viable because, among other things, it would
    be costly and time-consuming to implement, would be likely to
    complicate and delay the carrier change process, and would not
    comport with existing billing systems.[^101]

**C. Independent Third Party Verification**

33. [Background]{.underline}. In the *Section 258 Order*, we modified
    our rules regarding the independent third party method of
    verification to address some of the problems we have seen in
    conjunction with its use.[^102] Specifically, we strengthened the
    independence criteria under which third party verification entities
    operate to better ensure that the third party verification process
    is truly separate from both the carrier and the carrier's sales
    representative. Thus, we determined that the third party verifier
    should not be owned, managed, controlled, or directed by the
    carrier; the third party verifier should not be given financial
    incentives to approve carrier changes; and the third party verifier
    must operate in a location physically separate from the
    carrier.[^103] We concluded that these criteria, while not
    exhaustive, will inform the Commission's evaluation of the
    particular circumstances of each case. [^104] In addition, we
    clarified that the third party verification must clearly and
    conspicuously confirm the previously obtained authorization.[^105]

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34. Despite these modifications, several parties requested further
    clarification of the independent third party verification option.
    Given the number and breadth of these clarification requests, we
    tentatively concluded in the *Further Notice* that we should revise
    our rules for independent third party verification.[^106]
    Accordingly, we sought comment on (1) whether the carrier's sales
    representative should be permitted to remain on the line during the
    verification of the change request; (2) the types of information
    that third party verifiers should be either required or allowed to
    provide during the verification; (3) whether we should permit an
    automated verification system that plays recorded questions and
    records the subscriber's answers; and (4) whether we should permit a
    "live-scripted" automated verification system, which records
    scripted questions posed by the carrier's sales representative,
    along with the subscriber's answers to those questions.[^107] We
    address each of these issues, in turn, below.

35. [Discussion]{.underline}. The first issue we address is whether a
    carrier's sales representative should be permitted to remain on the
    line during the three-way verification call. NAAG raises concerns
    that the subscriber might remain under the influence of the sales
    representative during the verification process. NAAG argues that
    third party verification should be separated completely from the
    sales transaction, so that a carrier would not be permitted to
    connect the subscriber to the third party verifier by initiating a
    three-way call.[^108] Other commenters support allowing the
    carrier's representative to remain on the line during the three-way
    conference call.[^109]

36. As we stated in the *Further Notice*, the three-way call is often
    the most efficient means of accomplishing third party
    verification.[^110] We believe that subscribers may benefit from the
    convenience of authorizing and verifying the carrier change in one
    phone call. In addition, use of this method of verification
    minimizes the risk that the subscriber will not be available when
    the third party verifier calls to confirm the change.

37. Some commenters propose that the Commission impose certain limited
    restrictions on such calls to ensure that the verification process
    will not become tainted, cause subscriber confusion, or go forward
    without the subscriber's express consent.[^111] The proposed
    restrictions range from prohibiting carriers from remaining on the
    line once a connection is established with the third party verifier
    to requiring that all conversation on a three-way conference call be
    recorded.[^112]

38. We agree with NAAG and others that the Commission should delineate
    minimum requirements to ensure that verification ultimately involves
    only the consumer and the third party verifier.[^113] Given the
    convenience and cost-effectiveness of the three-way conference call
    as a verification method, we will retain the three-way call as a
    verification method, subject to one limited restriction. The
    carrier's sales representative may initiate the three-way conference
    call but must drop off the call once the connection has been
    established between the subscriber and the third party
    verifier.[^114] We believe that this limited restriction will help
    ensure the independence of the third party verification process and
    prevent the carrier's sales representative from improperly
    influencing subscribers, without burdening the verification process.
    Once the connection has been established between the subscriber and
    the third party verifier, there is no need for the carrier's sales
    representative to stay on the line.

39. With respect to the content and format of the third party
    verification, we asked parties in the *Further Notice* to comment on
    a possible requirement that all third party verifications include
    certain information, such as information on preferred carrier
    freezes or the carrier change process.[^115] We also asked parties
    to comment on any benefits that might be gained from permitting or
    requiring third party verifiers to provide subscribers with such
    additional information.[^116] This proposal generated both strong
    support and opposition. Although many commenters argue that
    requiring third party verifiers to follow a scripted format would
    impose unnecessary, additional rules on the carrier change process
    without producing a significant corresponding benefit,[^117] several
    other commenters ask the Commission for additional guidance
    regarding the format and content of the third party
    verification.[^118] For instance, Media One states that third party
    verifiers should be required to confirm the identity of the
    subscriber, to ascertain that the person contacted is authorized to
    make a change, and to frame the request for confirmation of the
    change as a simple yes/no question.[^119]

40. We decline to mandate specific language to be used in third party
    verification calls. In order to eliminate uncertainty as to what
    practices are necessary and acceptable, however, we adopt minimum
    content requirements for third party verification. We believe that
    having minimum content requirements for third party verification
    calls will provide useful guidance to the third party verifiers and
    carriers without locking carriers into using a set script. These
    requirements also allow for more streamlined enforcement because
    they will assist the Commission in determining the adequacy of steps
    taken by independent third parties in the verification process.
    Accordingly, we conclude that a script for third party verification
    should elicit, at a minimum, the identity of the subscriber;
    confirmation that the person on the call is authorized to make the
    carrier change; confirmation that the person on the call wants to
    make the change; the names of the carriers affected by the change;
    the telephone numbers to be switched; and the types of service
    involved (*i.e*., local, in-state toll, out-of-state toll, or
    international service). We note that these content requirements do
    not differ in substance from our rules regarding LOAs.[^120]

41. In addition, the third party verification must be conducted in the
    same language that was used in the underlying sales transaction. We
    also conclude that the entire third party verification transaction
    must be recorded,[^121] a practice that is already common in the
    industry. Consistent with our requirements under section
    64.1120(a)(1)(ii), submitting carriers must maintain and preserve
    these recordings for a minimum period of two years after obtaining
    such verification.[^122] If a slamming dispute arises, having a
    recorded verification will help determine whether the subscriber was
    simply seeking information or was in fact agreeing to change
    carriers and, if so, which service(s) the subscriber agreed to
    change.[^123]

42. We further conclude that third party verifiers may not dispense
    information concerning the carrier or its services, including
    information regarding preferred carrier freeze procedures or other
    non-telecommunications services that the carrier may offer to the
    subscriber. Allowing third party verifiers to effectively market the
    carrier's services could compromise the third party verifiers'
    independence and neutrality because verifiers could easily be drawn
    into presenting the particular market viewpoints of carriers by whom
    they are retained.[^124] In addition, providing the verifier with
    certain carrier information could result in the disclosure of
    proprietary information to competing carriers. We also believe that
    incorporating information about preferred carrier freezes into the
    verification script is likely to be confusing to subscribers and
    would prolong the verification process unnecessarily.

43. Finally, we conclude that automated systems that preserve the
    independence of the third party verification process may be used to
    verify carrier change requests.[^125] The use of automated third
    party verification systems not only promotes consistency in the
    verification process and adequacy of the information provided to
    subscribers, but also gives carriers a cost-effective way to create
    a readily accessible record of each order confirmation.[^126]
    Moreover, the recordings generated by this automated process may be
    useful in addressing subscriber complaints of slamming. For
    instance, the recording can reveal whether the carrier change at
    issue was properly verified and whether an authorized person
    provided the verification. Automated systems may also help provide
    predictable and consistent service.[^127]

44. Although several commenters argue that using automated verification
    systems that record the verification should obviate the need for
    more detailed script requirements,[^128] we conclude that these
    systems should elicit, at a minimum, the same information that our
    rules currently require,[^129] as well as the information specified
    in paragraph 40 above. To reiterate, automated verification systems
    must elicit, at a minimum, the identity of the subscriber;
    confirmation that the person on the call is authorized to make the
    carrier change; confirmation that the person on the call wants to
    make the change; the names of the carriers affected by the change;
    the telephone numbers to be switched; and the types of service
    affected by the transaction (*i.e*., local, in-state toll,
    out-of-state toll, or international service). In addition, automated
    verifications must be conducted in the same language that was used
    in the underlying sales transaction and must be recorded in their
    entirety to ensure that there is a record of the verification in the
    event of a slamming dispute.[^130] As with the three-way conference
    call, and for the same reasons, a carrier's sales representative
    initiating the automated verification call may not remain on the
    line after the connection has been established. We further conclude
    that automated verification systems should provide subscribers with
    an option of speaking with a live person at any time during the
    call.[^131] We believe that, in situations where the subscriber
    cannot follow the prompts of an automated system (or has questions
    once the automated verification commences), the subscriber should be
    able to reach a live person who can complete the process. If the
    subscriber does not want to complete the verification process, or is
    unable to do so, the third party verifier must end the call, and the
    transaction must be treated as unverified.

45. We note that, although our rules do not generally prohibit automated
    third party verification systems, certain types of automated
    verification systems undermine the independence requirement and
    contradict the intent behind our rules to produce evidence,
    independent of the telemarketing carrier, that a subscriber wishes
    to change his or her carrier. In particular, we conclude that the
    "live-scripted" automated verification system is at odds with our
    rules because it permits the carrier's agent, who is not an
    independent party located in a separate physical location, to
    solicit the subscriber's confirmation.[^132] From a subscriber
    perspective, the "live-scripted" version may be appealing because
    the subscriber is interacting with a live person, even though that
    person is following a set script. The fact that the questions on the
    script are being read by the carrier's sales representative,
    however, compromises the independence of the verification.[^133] The
    risk that the sales representative may ask the questions in a
    pressuring or misleading manner is inherent in the "live-scripted"
    version. Because the carrier's sales representative is usually
    compensated for sales completed, and not for sales attempts, the
    sales representative could not be considered an unbiased third party
    that lacks motivation to influence the outcome of the verification
    process.

> **D. Definition of "Subscriber"**

46. [Background]{.underline}. In the *Further Notice*, we sought comment
    on how to define the term "subscriber" for purposes of our rules
    implementing section 258 of the Act.[^134] Specifically, we
    requested comment on an SBC proposal that "subscriber" be defined as
    "any person, firm, partnership, corporation, or lawful entity that
    is authorized to order telecommunications services supplied by a
    telecommunications service provider."[^135] We stated our belief
    that this proposal would promote consumer convenience and
    competition by allowing the party responsible for payment of the
    telephone bill (*i.e.*, the customer of record) to authorize
    additional persons to make telecommunications decisions. We
    expressed concern, however, that it could lead to increased slamming
    and impose undue burdens on executing carriers.[^136] We also
    requested comment on other proposals to define the term
    "subscriber," as well as on current carrier practices "with regard
    to which members of a household are permitted to make changes to
    telecommunications service."[^137]

47. Twenty-two parties addressed this issue in comments and reply
    comments.[^138] There is a consensus among commenters that, with
    regard to business services, the term "subscriber" should be defined
    so as to allow contractually or lawfully authorized agents to make
    telecommunications decisions on behalf of the customer of
    record.[^139] With regard to residential service, the majority of
    commenters \-- largely carriers \-- favor a broad definition that
    would allow the customer of record to authorize additional persons
    to make telecommunications decisions. Specifically, ten commenters
    support the SBC proposal or a similar definition,[^140] and four
    support a definition that would include any adult household
    member.[^141] On the other hand, six commenters -- including three
    state commissions and the AARP \-- support restricting the
    definition to the customer of record,[^142] and two commenters
    oppose defining the term "subscriber" at all.[^143]

48. [Discussion]{.underline}. Based on our consideration of the comments
    filed in this proceeding, we adopt the following definition of the
    term "subscriber" for purposes of our rules implementing section 258
    of the Act: "The party identified in the account records of a common
    carrier as responsible for payment of the telephone bill, any adult
    person authorized by such party to change telecommunications
    services or to charge services to the account, and any person
    contractually or otherwise lawfully authorized to represent such
    party." We believe that this definition will serve our public
    interest goals of promoting consumer protection, consumer
    convenience, and competition in telecommunications services.
    Specifically, this definition will allow customers of record to
    authorize additional persons to make telecommunications decisions,
    while protecting consumers by giving the customers of record control
    over who is authorized to make such decisions on their behalf. In
    addition, this definition will provide carriers with the flexibility
    to establish authorization procedures that are appropriate to their
    own and their customers' needs, consistent with the framework of our
    rules.

49. The definition we adopt is similar to the SBC proposal set forth in
    the *Further Notice*, in that it allows customers of record to
    authorize additional persons to make telecommunications
    decisions.[^144] We believe that it is preferable to the SBC
    proposal, however, because it clearly identifies the customer of
    record as the source of authority over who is authorized to make
    telecommunications decisions. In addition, the definition we adopt
    distinguishes between two different types of authority: (1)
    authority based on the express or implied authorization of the
    customer of record, as reflected in carrier account records or
    elsewhere;[^145] and (2) authority based on federal and/or state law
    and regulations concerning agency and authority.[^146]

50. The principal concern expressed by commenters opposed to a
    definition that allows customers of record to authorize additional
    persons to make telecommunications decisions is that such a
    definition invites disputes among household members.[^147] We
    conclude that this concern does not warrant restricting customer
    options. Commenters favoring a broad definition generally indicate
    that the current carrier practice is to allow persons other than the
    customer of record to make telecommunications decisions subject to
    varying authorization procedures,[^148] and that consumers expect
    and value this service.[^149] Examination of the record does not
    indicate that this practice has given rise to a substantial number
    of slamming complaints.[^150] Moreover, as discussed below, we
    believe that our current rules provide sufficient incentives for
    carriers to adopt appropriate safeguards to ensure that only
    authorized persons are permitted to change telecommunications
    services. Absent more concrete evidence of the likelihood of harm to
    consumers, we agree with the majority of commenters that consumers
    "should be able to make decisions about their preferred carrier
    \[and\] delegate that authority if needed\[.\]"[^151]

51. We emphasize that, by adopting a definition, we are not imposing
    additional responsibilities on carriers in the submission or
    execution of carrier changes. Rather, carriers' responsibilities are
    determined by the framework of the current rules. Under these rules,
    submitting carriers are subject to liability for the submission of
    unauthorized changes, regardless of intent.[^152] As we held in the
    *Section 258 Order*, strict liability "provides appropriate
    incentives for carriers to obtain authorization properly and to
    implement their verification procedures in a trustworthy
    manner."[^153] Within this framework, the definition that we adopt
    will permit submitting carriers to utilize varying authorization
    procedures based on their own and their customers' needs, without
    tolerating procedures likely to enable unauthorized persons to make
    telecommunications decisions.[^154] With regard to executing
    carriers, their responsibility is limited to prompt execution of
    changes verified by a submitting carrier. Carriers that execute
    changes verified by submitting carriers are not subject to liability
    for unauthorized changes.[^155] For these reasons, we are not
    concerned that the definition we adopt will impose unreasonable
    burdens on executing carriers.[^156]

52. In sum, we believe the "subscriber" definition that we adopt herein
    will serve our public interest goals of promoting consumer
    convenience and competition in telecommunications services, without
    leading to increased slamming. The definition we adopt is consistent
    with the framework of our rules and will enable carriers to adopt
    safeguards against unauthorized carrier changes that are suited to
    their own and their customers' needs.[^157]

> **E. Submission of Reports by Carriers**

53. [Background]{.underline}. In the *Section 258 Order*, we
    acknowledged that the number of slamming complaints filed with the
    Commission reflects a mere fraction of the actual number of slamming
    incidents.[^158] Indeed, many incidents of slamming are reported to
    the IXCs themselves or the LECs and not to this Commission. To
    illustrate, while the Commission processed 19,769 slamming
    complaints between January and the beginning of December 1998,
    Ameritech reported that it received 123,848 complaints of slamming
    by IXCs during that same period.[^159]

54. In the *Further Notice*, we sought comment on a proposal requiring
    carriers to periodically submit reports on the number of complaints
    regarding unauthorized carrier changes that they received.[^160] We
    sought comment on the potential benefits of this reporting
    requirement and on whether such benefits would outweigh the burdens
    it would impose on carriers. We also asked for comment on how often
    carriers should file reports on slamming complaints, if the
    Commission were to adopt such a requirement. We stated that the
    information contained in these reports would constitute an "early
    warning" system for detecting slammers and would enable the
    Commission to take prompt investigative action to compel them to
    stop slamming.[^161]

55. [Discussion]{.underline}. We will require carriers to periodically
    submit reports regarding slamming complaints they received. Carriers
    objecting to this reporting requirement are concerned that the
    reports on slamming complaints received by carriers would produce
    inaccurate and misleading information.[^162] Specifically, these
    carriers argue that such information, when provided by LECs, will
    inflate the number of slams attributed to other carriers because
    what is reported is the total number of slamming allegations,
    without reference to their validity or their underlying
    causes.[^163] We believe the reporting requirement adopted herein is
    designed to address these concerns, and we are confident that
    reliance on the reported information as an "early warning" system
    will not misdirect the enforcement of the Commission's slamming
    rules.[^164] Moreover, the information will be invaluable in
    enabling the Commission to identify, as soon as possible, the
    carriers who repeatedly initiate unauthorized changes. In addition,
    because the reports will be available for public inspection, they
    may compel carriers to reduce slamming on their own to avoid public
    embarrassment or loss of goodwill.

56. We recognize that a subscriber complaint is not, in and of itself,
    dispositive proof of a slam. Nevertheless, an excessive number of
    complaints directed at a particular carrier, or an increase in the
    number of such complaints, suggests that an immediate investigation
    into that carrier's practices may be warranted. Accordingly, to
    assist our enforcement efforts in this area, we conclude that each
    carrier must submit to the Commission via the Internet, U.S. Mail,
    or facsimile, a slamming complaint reporting form which will
    identify the number of slamming complaints received and state the
    number of such complaints that the carrier has investigated and
    found to be valid.[^165] This report also must include the number of
    slamming complaints involving local intrastate and interstate
    interexchange service, investigated or not, that the carrier has
    chosen to resolve directly with subscribers.[^166] Moreover, because
    most subscribers who are slammed by an IXC report the slam to their
    LEC, rather than the IXC, facilities-based LECs should include in
    their reports the name of the entity against which the complaint is
    directed and the number of complaints involving unauthorized changes
    that have been lodged against that entity. Reporting shall commence
    on February 15, 2001 for calendar year 2000, and shall continue on a
    bi-annual basis thereafter on August 15 (covering January 1 through
    May 31) and on February 15 (covering June 1 through December 31).
    The slamming complaint reporting form may be obtained in the
    Commission's Public Reference Room or by accessing the Commission's
    website**.**

57. We recognize that some carriers may not have gathered the data
    described above for the entire calendar year 2000 because they were
    not required to track slamming complaints prior to the release of
    this Order. We direct these carriers to begin tracking the requisite
    information once this item has been published in the Federal
    Register and the Office of Management and Budget has approved the
    collection of information.[^167] For purposes of complying with the
    reporting requirement for calendar year 2000, carriers shall submit
    their reports reflecting the information gathered for the period
    between the effective date of this requirement, as published in the
    Federal Register, and December 31, 2000.

58. Based on the record before us, we do not believe that this
    requirement will impose significant additional costs or
    administrative burdens on carriers. Indeed, several carriers have
    indicated that they already track slamming complaints received from
    subscribers.[^168] It would be a reasonable business practice for
    all telecommunications carriers, including small carriers, to track
    slamming complaints they receive in the course of their business; we
    would be surprised if carriers did not do this. Thus, we do not
    believe we are requiring carriers to keep information that they
    would not otherwise keep.

> **F. Registration Requirement**

59. [Background]{.underline}. In the *Further Notice*, we invited
    parties to comment on whether we should impose a registration
    requirement on carriers who wish to provide interstate
    telecommunications services. We stated that such a requirement could
    help to keep entities that are unqualified or have the intent to
    commit fraud from entering or remaining in the telecommunications
    marketplace, while giving us a means of tracking and contacting
    carriers who may be engaged in slamming. We requested comment on the
    information that the registration should contain and proposed that,
    at a minimum, such information should include the carrier's business
    name(s); the names and addresses of officers and principals;
    verification that such officers and principals have no prior history
    of committing fraud; and verification of the financial viability of
    the carrier.[^169] In addition, we asked whether the collection of
    such additional information, to deter slammers from entering the
    market and assist our anti-slamming enforcement efforts, should be
    combined with existing information collection mechanisms, in order
    to lessen the burden on carriers.[^170]

60. We also proposed to revoke or suspend, after appropriate notice and
    opportunity to respond, the operating authority of carriers that
    fail to file a registration statement or provide false or misleading
    information in their registration. In addition, we tentatively
    concluded that a carrier should have an affirmative duty to
    ascertain whether another carrier has filed a registration with the
    Commission prior to offering service to that carrier.[^171]

61. [Discussion]{.underline}. The Commission currently requires carriers
    providing interstate interexchange telecommunications service to
    submit various types of information, and the Commission recently
    streamlined many of these information collection requirements. For
    example, the Commission has consolidated several different
    worksheets into the Telecommunications Reporting Worksheet (FCC Form
    499), which is used to calculate carriers' contributions to fund
    four different programs: interstate telecommunications relay service
    (TRS), federal universal service support mechanisms, the
    cost-recovery mechanism for the North American Numbering Plan
    Administration, and the cost recovery mechanism for the shared costs
    of long-term local number portability.[^172] In addition, to assist
    carriers in meeting the requirement of section 1.47 of our rules
    that all common carriers must designate an agent for service of
    process in the District of Columbia, we have allowed carriers to
    report such information on the Form 499.[^173] Our rules now provide
    that carriers may file the relevant portion of the Form 499 with the
    Commission to satisfy this requirement, and must update the
    information about the registered agent for service of process by
    submitting the revised portion of the Form 499 to the Chief of the
    Enforcement Bureau's Market Disputes Resolution Division within one
    week of any changes. The rules also provide that a paper copy of the
    designation list shall be maintained in the Office of the Secretary
    of the Commission.

62. We adopt our tentative conclusion that all new and existing common
    carriers providing interstate interexchange telecommunications
    service must register with the Commission. We believe such a
    registration requirement will bolster our efforts to curb slamming
    by enabling us to monitor the entry of carriers into the interstate
    telecommunications market and any associated increases in slamming
    activity. This requirement will also enhance our ability to take
    appropriate enforcement action against carriers that have
    demonstrated a pattern or practice of slamming. Slammers that simply
    change their names and/or move to different jurisdictions will find
    it difficult to escape detection if they cannot escape the
    obligation to register with the Commission. This registration
    information will enable the Commission to identify those entities
    providing interstate interexchange telecommunications service, it
    will complement the certification and registration requirements in
    effect in almost every state for intrastate service providers, and
    it will enable the Commission and state authorities to coordinate
    enforcement actions through the creation of a central repository of
    key facts about carriers providing interstate interexchange
    telecommunications.

63. While we decline to rely exclusively on existing annual reporting
    mechanisms,[^174] we are mindful of the importance of not
    overburdening carriers with obligations. Therefore, we will revise
    the annually-filed Telecommunications Reporting Worksheet (FCC Form
    499-A), which must be filed by all telecommunications carriers in
    April of each year,[^175] to include the following additional
    information that is targeted to assist our anti-slamming efforts and
    thereby minimize the burden of this registration requirement: the
    carrier's business name(s) and primary address; the names and
    business addresses of the carrier's chief executive officer,
    chairman, and president, or, in the event that a company does not
    have such executives, three similarly senior‑level officials of the
    company; the carrier's regulatory contact and/or designated agent
    for service of process; all names under which the carrier has
    conducted business in the past; and the state(s) in which the
    carrier is certified to provide service.[^176] The next scheduled
    filing of the Form 499-A is April 1, 2001, at which time carriers
    will file the revised form containing the additional information
    described above in accordance with the Instructions to FCC Form
    499-A. This information shall be submitted under oath and penalty of
    perjury, and must be updated to reflect any changes.[^177] Pursuant
    to the existing requirement in section 1.47 of our rules, a carrier
    shall update its registration to reflect any changes by submitting
    the revised relevant portion of the FCC Form 499-A within no more
    than one week of the change. The Commission will make the
    registration information described above available for public
    inspection in its reference room and on its website.[^178]

64. We believe that all carriers providing interstate interexchange
    telecommunications service, including small carriers providing such
    service, should be able to submit this information without much
    expense or difficulty because it is readily available, and to a
    large degree, must already be submitted in state jurisdictions. In
    addition, we note that making the registration information part of
    an existing form that must be completed and submitted for other
    obligations will minimize the burden on carriers. We therefore
    conclude that carriers failing to register with the Commission may,
    after notice and opportunity to respond, be subject to a fine.[^179]
    Carriers providing false or misleading information in their
    registrations may have their operating authority revoked or
    suspended, after receiving appropriate notice and opportunity to
    respond.[^180]

65. We further conclude that facilities-based carriers shall have an
    affirmative duty to ascertain whether a potential carrier-customer
    (*i.e*., a reseller) has filed a registration with the Commission
    *prior to* providing that carrier-customer with service.[^181] Once
    the facilities-based carrier determines the registration status of
    its potential carrier-customer, the facilities-based carrier will
    not be responsible for monitoring the registration status of that
    customer on an ongoing basis, although we believe that a prudent
    carrier may choose to do so. In situations where a facilities-based
    carrier is currently providing a reseller with service, we direct
    the reseller to notify its underlying facilities-based carrier that
    it has submitted the registration information to the Commission,
    within a week of having done so.

66. We note that a facilities-based carrier will not be responsible for
    the accuracy of the registration provided to the Commission by its
    potential carrier-customer, nor will such a carrier, relying in good
    faith on the absence of such registration, be liable under section
    251 of the Act for withholding service from the unregistered entity.
    The Commission may, however, after giving appropriate notice and
    opportunity to respond, impose a fine on carriers that fail to
    determine the registration status of other carriers before providing
    them with service. The dollar amount of the fine imposed on a
    facilities-based carrier for failing to meet its affirmative duty
    with respect to an unregistered reseller will depend on the
    egregiousness of the facts surrounding the particular incident. We
    conclude that this will deter facilities-based carriers from
    providing service to resellers that have not registered with the
    Commission, which will, in turn, make it more difficult for "bad
    actor" resellers to stay in business.

> **G. Recovery of Additional Amounts from Unauthorized Carriers**

67. [Background.]{.underline} In the *Further Notice,* we tentatively
    decided that it would be consistent with our authority under section
    258 to subject slammers to additional expenses as a way of providing
    an even greater economic disincentive to their unlawful conduct.
    Where a subscriber has paid charges to an unauthorized carrier, we
    proposed that the authorized carrier be permitted to collect from
    the unauthorized carrier double the amount of charges paid by the
    subscriber during the first 30 days after the unauthorized
    change.[^182] We noted in the *Further Notice* that this proposed
    remedy would enable the authorized carrier to provide a complete
    refund to the subscriber, as well as retain an equal amount for
    itself, which would give authorized carriers extra incentive to
    pursue their claims against slammers. [^183] In situations where a
    subscriber has not paid charges to an unauthorized carrier, we
    proposed that the authorized carrier should collect from the
    unauthorized carrier the amount that would have been billed to the
    subscriber during the first 30 days after the unauthorized change.
    We noted that this proposed remedy would punish the unauthorized
    carrier and enable the authorized carrier to receive payments to
    which it would have been entitled had the slam not occurred.[^184]

68. [Discussion.]{.underline} We believe that the issue of recovery of
    additional amounts from unauthorized carriers has been effectively
    resolved in the context of our *First Reconsideration Order*.[^185]
    As discussed above, in that order*,* we reaffirmed our decision to
    absolve consumers of liability for slamming charges for a limited
    period of time, *i.e*., within the first 30 days after the
    unauthorized change.[^186] We established procedures that apply when
    a consumer has not paid charges to the slamming carrier and also
    modified the liability rules that apply when a subscriber has paid
    charges to a slamming carrier. Specifically, we concluded that, when
    the slamming carrier receives payment from the subscriber, such
    carrier must pay out 150% of the collected charges to the authorized
    carrier, which, in turn, will pay to the subscriber 50% of his or
    her original payment.[^187] In addition, the order provides specific
    notification requirements to facilitate carriers' compliance with
    the liability rules. Given these modifications, we do not believe
    that there is a need for further action in this area at the present
    time.

**III. SECOND ORDER ON RECONSIDERATION**

> **A. Administration of Preferred Carrier Freezes**
>
> 1\. [IXC Submission of Preferred Carrier Freeze Orders and Freeze
> Lifts]{.underline}

69. Several parties argue on reconsideration that the Commission should
    allow carriers to verify and submit orders to implement or lift
    preferred carrier freezes,[^188] just as the Commission allows
    carriers to verify and submit preferred carrier change orders.[^189]
    We decline to modify our rules and retain the requirement that
    subscribers must implement or lift preferred carrier freezes through
    contact with their local carriers.

70. In the *Section 258 Order,* we decided carriers should not be
    permitted to submit preferred carrier freeze lifts, even if those
    lift orders were first verified by a neutral third party. We stated
    that "the essence of a preferred carrier freeze is that a subscriber
    must specifically communicate his or her intent to request or lift a
    freeze \[and it is this\] limitation on lifting preferred carrier
    freezes that gives the freeze mechanism its protective
    effect."[^190] We determined that subscribers would gain no
    additional protection from the implementation of a preferred carrier
    freeze if we were to allow third party verification of a carrier
    change to override a preferred carrier freeze. Although such a
    proposal minimizes the risk that unscrupulous carriers might attempt
    to impose preferred carrier freezes without the consent of
    subscribers, we concluded that it frustrates the subscriber's
    ability to change carriers.[^191] Petitioners have not persuaded us
    that we erred in making these determinations. We therefore affirm
    our decision that only a subscriber may request or lift a preferred
    carrier freeze.[^192]

71. Consistent with this purpose, we also take this opportunity to
    clarify that LECs may not accept preferred carrier freeze orders
    from carriers on behalf of subscribers, even if they are properly
    verified.[^193] We believe that limiting the submission of preferred
    carrier freeze requests to subscribers will help curb the potential
    for abuse by slamming carriers.[^194] To interpret our rules
    otherwise would undermine the effectiveness of preferred carrier
    freezes.[^195] For example, if a slamming carrier were allowed to
    submit an unauthorized freeze order with an unauthorized change
    order, not only would the subscriber be slammed, but it would also
    be more difficult for the subscriber to be switched back to the
    authorized carrier because of the unauthorized freeze. This freeze
    mechanism assures that no carrier change is processed without the
    direct involvement of the subscriber.

> 2\. [Simultaneous Submission of Preferred Carrier Change Requests and
> Preferred Carrier Freeze Requests]{.underline}

72. RCN and Excel seek clarification that a subscriber request a change
    and obtain a preferred carrier freeze in the same transaction.[^196]
    Nothing in our rules prohibits a subscriber from changing a carrier
    and requesting a freeze in the same transaction. We emphasize that
    the LEC must, however, verify both the freeze request and the
    carrier change request in accordance with our rules.[^197]
    Specifically, the LEC must obtain a Letter of Agency, electronic
    authorization, or third party verification that applies to the
    freeze request and, if the LEC is the provider of the requested long
    distance service, the LEC must also properly verify the carrier
    change request.[^198] We note that, in situations where a customer
    initiates or changes long distance service by contacting the LEC
    directly, verification of the customer's choice is not necessary by
    either the LEC or the chosen IXC because neither carrier is the
    "submitting carrier" as we have defined it.[^199]

> 3\. [Effecting Freeze Lifts and Change Requests in the Same Three-Way
> Call]{.underline}

73. MCI asks the Commission to clarify that executing carriers have an
    obligation to lift a preferred carrier freeze and switch a customer
    during the same three-way call.[^200] MCI states that it has
    experienced difficulties in making authorized carrier changes where
    preferred carrier freezes have been place.[^201] MCI explains that,
    after a carrier change request is properly verified, MCI
    electronically sends the request to the executing carrier.[^202] In
    situations where the customer has a preferred carrier freeze in
    place, but may have forgotten, the change request has been rejected
    by the executing carrier.[^203] At that point, MCI states that it
    contacts the customer and initiates a three-way call between the
    executing carrier, the customer, and MCI. According to MCI, the
    executing carrier will only sometimes accept the three-way call,
    will only sometimes lift the preferred carrier freeze during the
    three-way call, and will never execute the carrier change during the
    three-way call.[^204] Thus, MCI appears to argue that, in situations
    where the submitting carrier initiates a three-way call for the
    purpose of simultaneously lifting a preferred carrier freeze and
    submitting a carrier change request that has been already properly
    verified, the Commission should require the executing carrier to
    accept the freeze lift and effect the carrier change request in the
    same three-way call.[^205]

74. Although we agree with MCI that accepting both freeze lift and
    properly verified carrier change requests during the same three-way
    call may be an efficient means of effectuating a consumer's carrier
    change request, we need not mandate that executing carriers follow
    this course at this time. As we stated in the *Section 258 Order*,
    carriers must offer subscribers a simple, easily understandable, but
    secure way of lifting preferred carrier freezes in a timely
    manner.[^206] We concluded that LECs administering a preferred
    carrier freeze program must accept the subscriber's authorization,
    either oral or written and signed, stating an intent to lift a
    preferred carrier freeze.[^207] We determined that LECs also must
    permit a submitting carrier to conduct a three-way conference call
    with the LEC and the subscriber in order to lift a freeze.[^208] Our
    rules do not, however, prohibit LECs from requiring submitting
    carriers to use separate methods for lifting a preferred carrier
    freeze and submitting a carrier change request. If MCI is concerned
    about the delay that may result from some LECs refusing to accept
    properly verified carrier change orders during the same three-way
    call initiated for the purpose of lifting a freeze, it may file a
    complaint in the appropriate forum.[^209]

75. We also note that, in the *Section 258 Order,* we declined to
    enumerate all acceptable procedures for lifting preferred carrier
    freezes. Rather, we encouraged parties to develop other methods of
    accurately confirming a subscriber's identity and intent to lift a
    preferred carrier freeze, in addition to offering written and oral
    authorization to lift preferred carrier freezes.[^210] We continue
    to believe that, as long as these other methods are secure and
    "impose only the minimum burdens necessary on subscribers who wish
    to lift a preferred carrier freeze," we need not mandate an
    automated process for carrier freezes, as requested by AT&T.[^211]

76. Furthermore, for the same reasons articulated in the *Section 258
    Order,* we will not require LECs administering preferred carrier
    freeze programs to make subscriber freeze information available to
    other carriers.[^212] We continue to believe that, in light of our
    preferred carrier freeze solicitation requirements, subscribers
    should know whether there are preferred carrier freezes in place on
    their carrier selections.[^213] As we noted in the *Section 258
    Order,* if a subscriber is uncertain about whether a preferred
    carrier freeze has been imposed, the submitting carrier may use the
    three-way calling mechanism to confirm the presence of a
    freeze.[^214] Carriers therefore would not need to rely on a
    LEC-prepared list identifying those subscribers who have freezes in
    place. Moreover, there is no indication, based on the record before
    us, that this information has been used in an anti-competitive
    manner, as AT&T suggests.[^215] If, in the future, we find that LECs
    are using this information for anti-competitive purposes, we will
    revisit this issue at that time.

> **B. Verification of Preferred Carrier Changes**
>
> 1\. [Liability of an Executing Carrier]{.underline}

77. Several carriers ask the Commission to clarify that an executing
    carrier is liable for an unauthorized carrier change when the
    carrier improperly executes a carrier change request.[^216] Section
    258 of the Act contemplates that the submitting carrier and/or the
    executing carrier could be liable for an unauthorized change in a
    subscriber's telecommunications service. In the *Section 258 Order,*
    we delineated the duties and obligations of submitting and executing
    carriers in order to minimize disputes over the source or cause of
    unauthorized carrier changes. Generally, we concluded that
    submitting carriers are responsible for submitting, without
    unreasonable delay, authorized and properly verified carrier change
    requests; while executing carriers are charged with executing
    promptly and without unreasonable delay changes that have been
    verified by the submitting carrier.[^217] We found that "where the
    submitting carrier submits a carrier change request that fails to
    comply with our rules and the executing carrier performs the change
    in accordance with the submission, only the submitting carrier is
    liable as an unauthorized carrier; \[but\] where the submitting
    carrier submits a change request that conforms with our rules and
    the executing carrier *fails to perform* the change in conformance
    with the submission, ... the executing carrier is liable...."[^218]
    Thus, an executing carrier that fails to execute promptly and
    without unreasonable delay a change request that has been properly
    submitted and verified is in violation of section 258 of the Act and
    section 64.1100(b) of our rules and may be subject to liability for
    damages.[^219]

> 2\. [Separate Authorizations for Multiple Services]{.underline}

78. We affirm our decision to require separate authorization for each
    service for which a subscriber requests a carrier change and/or
    freeze. Excel has not presented any new arguments or credible
    evidence that would cause us to conclude our original decision was
    in error.[^220]

79. We also clarify that the separate authorization requirement does not
    prohibit carriers from obtaining a customer\'s authorization to
    change more than one service on the same LOA. Section 64.1130(d) of
    our rules allows carriers to use these "combined check-LOAs," as
    long as they comply with all the requirements governing Letters of
    Agency in section 64.1130.[^221] Thus, a carrier may use one
    combined check-LOA to obtain authorization for more than one
    service. It must be clear to the subscriber, however, that he or she
    will be receiving each service listed on the combined check-LOA from
    the same carrier.

> **C. Rules Governing LOAs**

1.  [Limitation on the Effectiveness of an LOA]{.underline}

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80. We will not adopt a 30-day limit on the effectiveness of an LOA as
    suggested by petitioner SBC.[^222] We believe a more reasonable
    limitation on the amount of time an LOA should be considered valid
    is 60 days, and we hereby adopt this 60-day limit.[^223] We further
    conclude that the 60-day limit shall apply to submitting carriers
    rather than executing carriers, because submitting carriers are
    actually parties to the contractual agreement with the customer and,
    as such, are more capable of conforming their behavior to the
    obligation.

81. Although we recognize that a LEC may be able to lift a freeze in as
    few as 24 or 48 hours,[^224] there are several factors to consider
    in determining the time period that an LOA should be considered
    valid. For example, if a carrier change request is rejected because
    the subscriber has not lifted the freeze on his or her account, the
    carrier must contact the subscriber and give him or her the
    opportunity to lift the freeze via a three-way call to the LEC. The
    subscriber may, however, be out of town or otherwise unable to be
    reached immediately. In either case, the carrier will be forced to
    continue to hold the LOA indefinitely or until the subscriber can be
    contacted. A 60-day limitation permits more flexibility under these
    and other, similar circumstances. We emphasize that this 60-day
    limitation represents the maximum time period for which an LOA will
    be considered valid. We note that consumers expect that their
    expressed preference for a new carrier will be honored within a
    reasonable time frame, and we think that a 60-day period sets a
    reasonable outer limit. In addition, a time period exceeding 60 days
    may cause confusion for customers regarding requests they may have
    made concerning their account but no longer remember. We encourage
    carriers to submit a change order immediately after the subscriber
    authorizes the change to minimize the risk that the subscriber will
    have forgotten the change.[^225]

> 2\. [Contents of LOA Regarding Preferred Carrier Change
> Charge]{.underline}

82. Under section 64.1130(e)(5) of our rules, LOAs are required to
    include a statement "\[t\]hat the subscriber understands that any
    preferred carrier selection the subscriber chooses may involve a
    charge to the subscriber for changing the subscriber's preferred
    carrier."[^226] In its petition, MediaOne explains that this
    requirement, which initially applied only to changes of a
    subscriber's long distance provider, can now be read to apply to
    changes of local service providers.[^227] Because preferred carrier
    change charges do not apply when a subscriber changes from one local
    service provider to another, MediaOne argues that the requirement
    set forth in section 64.1130(e) will result in consumer
    confusion.[^228] Accordingly, MediaOne asserts that this rule should
    be revised to provide that this statement is not required in LOAs
    authorizing changes of local service providers.[^229]

83. We will revise our requirements for the content of LOAs. Our current
    rules state that an LOA must indicate to the subscriber that a
    charge "may" be assessed for any preferred carrier change.[^230] We
    agree with MediaOne that section 64.1130(e)(5) of our rules, as
    written, may result in consumer confusion to the extent there is no
    preferred carrier change charge applied for a change in local
    service providers. To alleviate consumer confusion, we therefore
    amend section 64.1130(e)(5) to provide that an LOA must contain
    language giving a subscriber the option of consulting with the
    carrier as to whether a fee applies to his or her preferred carrier
    change.[^231]

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D.  **Payment of Preferred Carrier Change Charges After Slam**

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84. There are two preferred carrier change charges that can be involved
    in a slam. The first charge is assessed when the LEC executes the
    slamming carrier\'s preferred carrier change order. The second
    charge is assessed when the LEC returns the subscriber to his or her
    authorized carrier. SBC seeks clarification as to whether, under the
    new slamming procedures, the unauthorized carrier is responsible for
    paying the carrier change charge when the subscriber is returned to
    his or her authorized carrier.[^232] SBC also requests clarification
    that, when a slam has been alleged, the LEC, acting as executing
    carrier, is no longer obligated to investigate or make a
    determination as to the validity of the initial carrier
    change.[^233]

85. We have previously stated that where an IXC submits a request that
    is disputed by a subscriber and the IXC is unable to produce
    verification of that subscriber\'s change request, the LEC must
    assess the applicable change charge against that IXC.[^234] We also
    stated in the *Section 258 Order* that the unauthorized carrier must
    pay for the expenses of restoring the subscriber to his or her
    authorized carrier.[^235] We continue to believe that an
    unscrupulous carrier should bear full financial responsibility for
    the costs of its unlawful actions. Accordingly, we hereby clarify
    that the unauthorized carrier shall pay the preferred carrier change
    charges that are assessed in the event of a slam, *i.e*., the charge
    assessed when the LEC executes the slamming carrier\'s preferred
    carrier change order and the charge assessed when the LEC returns
    the subscriber to his or her authorized carrier.[^236] Unauthorized
    carriers also are responsible for reimbursing authorized carriers in
    accordance with the requirements set forth in section 258 of the Act
    and section 64.1170 of our rules.[^237]

86. We note that SBC's second clarification request regarding the
    executing carrier's role in investigating slamming allegations was
    made in response to the Commission's prior liability rules, which
    were superceded by the liability rules adopted in the *First
    Reconsideration Order*. The procedures we adopted in the *First
    Reconsideration 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.*"[^238] Under these procedures, carriers must inform
    subscribers who believe that they have been slammed of their right
    to file a complaint with the appropriate governmental entity.[^239]
    We have not, however, restricted the ability of carriers to try to
    satisfy subscribers who alleged they have been slammed. For example,
    an IXC might authorize a LEC to fix alleged slams on a no-fault
    basis or to investigate the validity of the carrier changes. Nothing
    in the *First Reconsideration Order* precludes carriers from
    attempting to resolve slamming allegations, either directly or
    through contractual arrangement with another carrier, before the
    subscribers have filed complaints, and, indeed, we anticipate that
    carriers will have incentives to continue such practices.

> **E. Preemption of State Regulations**

87. Excel and RCN argue in their petitions that the Commission should
    reconsider its decision not to preempt state regulations regarding
    slamming because they believe that "the costs to carriers to comply
    with a patchwork of inconsistent federal and state regulations could
    be exorbitant, while accruing little benefit to consumers."[^240]
    Although we recognize that it may be simpler for carriers to comply
    with one set of verification rules,[^241] we will not interfere with
    the states' ability to adopt more stringent regulations. As we
    observed in both the *Section 258 Order* and the *First
    Reconsideration Order*, the Commission must work hand-in-hand with
    the states towards the common goal of eliminating slamming. States
    have valuable insight into the slamming problems experienced by
    consumers in their respective locales and can share their expertise
    with this Commission.[^242] We will not thwart that effort by
    requiring states to limit their verification requirements so that
    they are no more stringent than those promulgated by this
    Commission.[^243] The carriers challenging the Commission's decision
    to refrain from preempting state regulations have failed to identify
    a particular state law that should be preempted and how that state
    law conflicts with federal law or obstructs federal
    objectives.[^244] In the absence of such evidence, we will not
    preempt state regulations governing verification procedures for
    preferred carrier change requests.[^245]

**IV. CONCLUSION**

88. In this Order, we amend the current carrier change authorization and
    verification rules to expressly permit the use of Internet LOAs in a
    manner consistent with the E-Sign Act. We direct NANPA to eliminate
    the requirement that carriers purchase "Feature Group D access to
    obtain CICs, thereby facilitating the assignment of CICs to
    switchless resellers. We also provide additional guidance on
    independent third party verification methods. In addition, we define
    the term "subscriber," establish reporting requirements for all
    carriers regarding slamming complaints, require all carriers that
    provide interstate interexchange telecommunications services to
    submit additional information, in conjunction with existing
    information collections, that will assist the Commission's
    enforcement efforts, and create incentives for carriers to avoid
    doing business with slammers. In the Second Order on Reconsideration
    portion of this item, we grant in part and deny in part petitions
    for reconsideration or clarification of the slamming rules adopted
    in the *Section 258 Order.* In particular, we reaffirm our rules
    governing the submission of preferred carrier freeze orders, the
    handling of preferred carrier change requests and freeze orders in
    the same transaction, and the automated submission and
    administration of freeze orders and changes. We also decline to
    adopt a 30-day limit on the time period that an LOA confirming a
    carrier change request should be considered valid and instead adopt
    a 60-day limit. Finally, we reaffirm our decision not to preempt
    state regulations governing verification procedures for preferred
    carrier change requests that are consistent with the provisions of
    Section 258, and we clarify certain of our rules regarding the
    payment of preferred carrier change charges after a slam.

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V.  **PROCEDURAL MATTERS**

#### 

**A. Final Regulatory Flexibility Analysis.**

A.  

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89. As required by the Regulatory Flexibility Act (RFA),[^246] an
    Initial Regulatory Flexibility Analysis (IRFA)[^247] was
    incorporated in the *Further Notice* in this proceeding.[^248] The
    Commission sought written public comment on the proposals in the
    *Further Notice*, including comment on the IRFA. The comments
    received are discussed below. The instant Final Regulatory
    Flexibility Analysis (FRFA) conforms to the RFA.[^249]

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1.  **Need For and Objectives of this Action**

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90. Section 258 of the Act makes it unlawful for any telecommunications
    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." In the *Section 258 Order*, the
    Commission established a comprehensive framework of rules to
    implement section 258 and strengthen its existing anti-slamming
    rules.[^250] Concurrent with the release of the *Section 258 Order*,
    the Commission issued a *Further Notice* seeking comment on a number
    of additional proposals to further improve the preferred carrier
    change process and to prevent unauthorized carrier changes. In the
    instant *Order*, the Commission adopts some of the proposals set
    forth in the *Further Notice*. Specifically, the Commission: (1)
    amends the current carrier change authorization and verification
    rules to expressly permit the use of Internet Letters of Agency
    (Internet LOAs) in a manner consistent with the new E-Sign
    Act;[^251] (2) directs the North American Numbering Plan
    Administration (NANPA) to eliminate the requirement that carriers
    purchase Feature Group D access in order to obtain a carrier
    identification code (CIC);[^252] (3) provides further guidance on
    the independent third party verification process;[^253] (4) defines
    the term "subscriber" for purposes of its slamming rules;[^254] (5)
    requires each carrier to submit a bi-annual report on the number of
    slamming complaints it receives;[^255] and (6) expands the existing
    registration requirement on carriers providing interstate
    telecommunications service to include additional facts that will
    assist the Commission's enforcement efforts.[^256] The objectives of
    the modified rules adopted in this *Order* are to implement section
    258 by improving the preferred carrier change process and
    strengthening the Commission's framework of anti-slamming rules.

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2.  **Summary of Significant Issues Raised by Public Comments in
    Response to the IRFA.**

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91. The Commission received no comments directly in response to the
    IRFA.

92. *Resellers and CICs*. Relying in part on the small size of many
    resellers, opponents of the Commission's proposal to require
    switchless resellers to use their own CICs argue that such a
    requirement would create a substantial market entry barrier for
    resellers.[^257] Others maintain that CIC deployment costs would be
    manageable for resellers because they typically operate on a
    regional rather than on a national basis,[^258] that such costs may
    be viewed as "a legitimate cost of doing business,"[^259] and that
    the independent use of CICs has significant competitive advantages
    for switchless resellers.[^260] These comments are discussed in more
    detail in paragraph 27 above.

93. *Submission of Reports by Carriers.* Commenters contend that
    requiring each carrier to submit reports on the number of slamming
    complaints that it receives would create serious burdens for the
    Commission and compliant carriers alike.[^261] We do not believe
    that the reporting requirement adopted in this Order will impose
    significant additional costs or administrative burdens on carriers.
    Several carriers indicated that they already track slamming
    complaints received from subscribers. Thus, we do not believe that
    we are requiring carriers to keep information that they would not
    otherwise already keep. Moreover, this requirement will enable the
    Commission to identify the carriers who repeatedly initiate
    unauthorized changes. In addition, carriers may be compelled to
    reduce slamming on their own, since the reports will be available
    for public inspection.

94. *Registration Requirement.* Commenters argue that the proposed
    registration requirement would impose unnecessary costs on carriers
    and would do little to alleviate the slamming problem.[^262] We
    believe that all carriers providing interstate interexchange
    telecommunications should be able to comply with the registration
    requirement adopted herein without much expense or difficulty,
    because the information requested is readily available, and to a
    large degree, must be provided to the states. We have minimized the
    burden that this requirement may have on carriers by making the
    registration information part of an existing form that must be
    completed and submitted for other obligations. We believe this
    requirement will benefit consumers by enhancing our ability to take
    appropriate enforcement action against carriers that have
    demonstrated a pattern or practice of slamming.

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

95. 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.[^263] 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.[^264] 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).[^265] A
    small organization is generally \"any not-for-profit enterprise
    which is independently owned and operated and is not dominant in its
    field.\"[^266] Nationwide, as of 1992, there were approximately
    275,801 small organizations.[^267] \"Small governmental
    jurisdiction\"[^268] generally means \"governments of cities,
    counties, towns, townships, villages, school districts, or special
    districts, with a population of less than 50,000.\"[^269] As of
    1992, there were approximately 85,006 such jurisdictions in the
    United States.[^270] This number includes 38,978 counties, cities,
    and towns; of these, 37,566, or 96 percent, have populations of
    fewer than 50,000.[^271] 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.[^272]
    Below, we further describe and estimate the number of small entity
    licensees and regulatees that may be affected by the proposed rules,
    if adopted.

96. 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.[^273] In a recent news release, the Commission indicated
    that there are 4,144 interstate carriers.[^274] 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.

97. 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.[^275] 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.

98. 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.\"[^276]
    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.[^277] 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.

99. **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.[^278] 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 because they are not \"independently owned and
    operated.\"[^279] 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 3,497 or fewer telephone service firms are small
    entity telephone service firms that may be affected by the new
    rules.

100. **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.[^280] 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.[^281] 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. 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 2,295 or fewer small
     telephone communications companies other than radiotelephone
     companies are small entities that may be affected by the new rules.

101. **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.[^282] 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.[^283] 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 1,348 or fewer providers of local exchange service
     are small entities that may be affected by the new rules.

102. **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.[^284] According to the most recent *Trends in Telephone
     Service* data, 171 carriers reported that they were engaged in the
     provision of interexchange services.[^285] 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 171 or
     fewer small entity IXCs that may be affected by the new rules.

103. **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.[^286] 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.[^287] 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 212 or fewer small entity
     CAPs and 10 other LECs that may be affected by the new rules.

104. **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.[^288] According to the most recent *Trends in Telephone
     Service* data, 24 carriers reported that they were engaged in the
     provision of operator services.[^289] 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 24 or fewer small entity operator service providers
     that may be affected by the new rules.

105. **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.[^290]
     According to the most recent *Trends in Telephone Service* data,
     615 carriers reported that they were engaged in the provision of
     pay telephone services.[^291] 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 615 or fewer small entity pay telephone operators that may be
     affected by the new rules.

106. **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.[^292] 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.[^293] 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 388 or fewer small toll
     entity resellers and 54 small local entity resellers that may be
     affected by the new rules.

107. **Toll-Free 800 and 800-Like Service Subscribers***.*[^294] 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.[^295] 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 7,692,955 or fewer small entity 800
     subscribers, 7,706,393 or fewer small entity 888 subscribers, and
     1,946,538 or fewer small entity 877 subscribers may be affected by
     the new rules.

108. **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.[^296]
     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.[^297] 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.[^298] 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 808 or fewer small cellular service
     carriers that may be affected by the new rules.

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

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

110. **Preferred Carrier Changes Using the Internet**. The Commission
     amends its rules to expressly permit preferred carrier changes to
     be conducted electronically through the use of Internet Letters of
     Agency (LOAs). Internet LOAs must comply with all current
     Commission authorization and verification requirements (as
     modified), and consumers must have the option of using alternative
     authorization and verification methods. This action is consistent
     with the *E-Sign Act*'s mandate that electronic signatures and
     transactions be treated the same as written ones, and will promote
     consumer convenience and competition by facilitating the use of the
     Internet for preferred carrier changes.

111. **Resellers and CICs**. The Commission directs the NANPA to
     eliminate the requirement that carriers purchase "Feature Group D
     access" to obtain CICs. This action will facilitate the assignment
     of CICs to switchless resellers and eliminate a financial and
     administrative obstacle to their independent use of CICs.

112. **Independent Third Party Verification**. The Commission retains
     the three-way conference call and confirms that automated systems
     may be used as independent third party verification methods, but
     requires that the carrier's sales representative drop off the call
     once the connection has been established between the subscriber and
     the third-party verifier. This action will ensure the independence
     of the third party verification process and prevent the carrier's
     sales representative from improperly influencing subscribers,
     without burdening the verification process. In addition, the
     Commission adopts minimum content requirements for third party
     verification to provide guidance as to what practices are necessary
     and acceptable, and confirms that automated verification systems
     that preserve the independence of the third party verification
     process may be used to verify carrier change requests.

113. **Definition of "Subscriber**.**"** The Commission adopts a
     definition of the term "subscriber" for purposes of its slamming
     rules that will allow customers of record to authorize additional
     persons to make telecommunications decisions, while retaining
     control over who is authorized to make such decisions on their
     behalf. The adoption of this definition will benefit all carriers,
     including small carriers, by providing them with the flexibility to
     establish authorization procedures appropriate to their own and
     their customers' needs, consistent with the framework of the
     Commission's slamming rules.

114. **Submission of Reports by Carriers**. Each carrier is required to
     submit to the Commission a bi-annual report identifying the number
     of complaints involving unauthorized changes that it has received,
     the number that it has investigated and found to be valid, and the
     number, investigated or not, that it has chosen to resolve directly
     with consumers. The report also must include the number of slamming
     complaints involving local intrastate and interstate interexchange
     service, investigated or not, that the carrier has chosen to
     resolve directly with subscribers. Because most subscribers who are
     slammed by an IXC report the slam to their LEC, rather than the
     IXC, facilities-based LECs should include in their reports the name
     of the entity against which the complaint is directed and the
     number of complaints involving unauthorized changes that have been
     lodged against that entity. These reporting requirements will
     enable the Commission to identify carriers who repeatedly initiate
     unauthorized changes, and may induce carriers to reduce slamming on
     their own to avoid public embarrassment or loss of goodwill.

115. **Registration Requirement**. Each carrier is required to register
     with the Commission, and an affirmative duty is established on the
     part of facilities-based carriers to confirm that a reseller has
     registered with the Commission prior to providing that reseller
     with service. Specifically, the annually-filed Telecommunications
     Reporting Worksheet (FCC Form 499-A), which must be filed by all
     telecommunications carriers in April of each year, will be revised
     to include the following additional information that is targeted to
     assist the Commission's anti-slamming efforts: the carrier's
     business name(s) and primary address; the carrier's regulatory
     contact and/or designated agent for service of process; all names
     under which the carrier has conducted business in the past; and the
     state(s) in which the carrier is certified to provide service. The
     new registration requirement will enable the Commission to monitor
     the entry of carriers into the interstate telecommunications market
     and any associated increases in slamming, enhance the Commission's
     ability to take appropriate enforcement action against carriers
     that have demonstrated a pattern or practice of slamming, and deter
     facilities-based carriers from providing service to unregistered
     resellers.

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

116. **Resellers and CICs**. The Commission requested comment in the
     *Further Notice* on three possible approaches to the problems
     arising from the shared use of CICs by switchless resellers and
     their underlying, facilities-based carriers.[^299] The Commission
     believes that its proposal to require resellers to obtain their own
     CICs holds promise as a direct and effective solution to the
     significant problems that arise from the shared use of CICs. Based
     on review of the record as a whole, however, including concerns
     raised by some commenters regarding the financial and competitive
     impact of a CIC requirement on resellers, many of which are small
     entities, the Commission is not adopting a CIC requirement at this
     time. By directing that the Feature Group D requirement be
     eliminated, the Commission is taking a step that will facilitate
     the ability of resellers to obtain and use their own CICs, while
     allowing them to choose whether to do so based on their own
     competitive needs.

117. **Submission of Reports by Carriers**. The Commission has
     considered whether the reporting requirements adopted herein will
     impose significant additional costs or administrative burdens on
     carriers.[^300] The Commission concludes that this requirement
     would not impose significant additional costs or administrative
     burdens on carriers. In this regard, the Commission notes the
     comments of several carriers that they already track slamming
     complaints received from subscribers,[^301] and reasons that it
     would be a reasonable business practice for all telecommunications
     carriers, including small carriers, to track slamming complaints
     they receive in the course of their business. Indeed, the
     Commission states that it would be surprised if carriers did not do
     this. Accordingly, the Commission concludes that it is not
     requiring carriers to keep information that they would not
     otherwise keep. Moreover, these modest reporting requirements will
     help the Commission to achieve important objectives: identifying
     carriers that repeatedly initiate unauthorized changes, and
     deterring carriers from slamming. Because the Commission recognizes
     that some carriers may not have gathered the required data for the
     entire calendar year 2000, as they were not required to do so prior
     to the release of this *Order*, the Commission also directs that
     such carriers need only gather the required information
     prospectively.

118. **Registration Requirement**. To minimize the administrative burden
     on carriers of the registration requirement adopted herein, the
     Commission makes the registration information part of an existing
     form that must be completed and submitted for other
     obligations.[^302] The Commission also observes that all carriers
     providing interstate interexchange telecommunications service,
     including small carriers providing such service, should be able to
     submit this information without much expense or difficulty because
     it is readily available, and to a large degree, must already be
     submitted in state jurisdictions.

**6. Report to Congress**

119. The Commission will send a copy of the *Order,* including this
     FRFA, in a report to Congress pursuant to the Small Business
     Regulatory Enforcement Fairness Act of 1996.[^303] In addition, the
     Commission will send a copy of the *Order*, including the FRFA, to
     the Chief Counsel for Advocacy of the Small Business
     Administration. A copy of the *Order* and FRFA (or summaries
     thereof) also will be published in the Federal Register.[^304]

     **B. Supplemental Final Regulatory Flexibility Analysis**

120. As required by the Regulatory Flexibility Act (RFA),[^305] an
     Initial Regulatory Flexibility Analysis (IRFA)[^306] was
     incorporated in the Further Notice of Proposed Rule Making and
     Memorandum Opinion and Order on Reconsideration in this
     proceeding.[^307] The Commission sought written public comment on
     the proposals in the *Further Notice and Order*, including comment
     on the IRFA. A Final Regulatory Flexibility Analysis (FRFA) was
     incorporated in the subsequent *Section 258 Order* in this
     proceeding.[^308] The Commission received a number of petitions for
     reconsideration in response to the *Section 258 Order*. The instant
     *Second Order on Reconsideration* addresses issues raised in those
     reconsideration petitions. This associated Supplemental Final
     Regulatory Flexibility Analysis (SFRFA) reflects revised or
     additional information to that contained in the FRFA. This SFRFA is
     thus limited to matters raised in response to the *Section 258
     Order* and addressed in the instant *Second Order on
     Reconsideration*. This SFRFA conforms to the RFA.[^309]

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1.  **Need For and Objectives of this Action**

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121. Section 258 of the Act makes it unlawful for any telecommunications
     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." In the *Section 258 Order*, the
     Commission established a comprehensive framework of rules to
     implement section 258 and strengthen its existing anti-slamming
     rules.[^310] In this *Second Order on Reconsideration*, the
     Commission upholds its rules governing the submission of preferred
     carrier freeze orders, the handling of preferred carrier change
     requests and freeze orders in the same transaction, and the
     automated submission and administration of freeze orders and
     changes.[^311] In addition, the Commission reaffirms its decision
     not to preempt state regulations governing verification procedures
     for preferred carrier change requests that are consistent with the
     provisions of section 258.[^312] Furthermore, the Commission
     declines to adopt a 30-day limit on the amount of time an LOA
     confirming a carrier change request should be considered valid and
     instead adopts a 60-day limit.[^313] Finally, the Commission
     clarifies certain of its rules regarding the payment of preferred
     carrier change charges after a slam.[^314]

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2.  **Summary of Significant Issues Raised by Petitions in Response to
    the FRFA**

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122. The Commission received no comments directly in response to the
     previous FRFA concerning the issues addressed in this Order.

     **3. Description and Estimate of the Number of Small Entities To
     Which this Action Will Apply**

123. In the associated FRFA, *supra*, we have provided a detailed
     description of the pertinent small entities.[^315] Those entities
     include wireline carriers, local exchange carriers, interexchange
     carriers, competitive access providers, resellers, and wireless
     carriers. We hereby incorporate those detailed descriptions by
     reference.

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

124. **Administration of Preferred Carrier Freezes**. The Commission
     clarifies that only subscribers may submit freeze requests to LECs.
     The Commission also clarifies that a subscriber may request a
     preferred carrier change and obtain a preferred carrier freeze in
     the same transaction. In addition, the Commission declines to
     prohibit LECs from requiring submitting carriers to use separate
     methods for lifting a preferred carrier freeze and submitting a
     carrier change request, or to require LECs to make subscriber
     freeze information available to other carriers.

125. **Verification of Preferred Carrier Changes**. The Commission
     clarifies that an executing carrier that fails to promptly execute
     a properly submitted and verified change request has violated
     section 258 and the Commission's slamming rules. In addition, the
     Commission reaffirms its prior decision to require separate
     authorization for each service for which a subscriber requests a
     carrier change and/or freeze, and clarifies that the separate
     authorization requirement does not prohibit carriers from obtaining
     authorization to change more than one service in the same LOA.

126. **Rules Governing Letters of Agency (LOAs)**. The Commission
     declines to adopt 30-day limit on the amount of time that an LOA
     confirming a carrier change request is considered valid, instead
     adopting a 60-day limit as a more reasonable limitation. The 60-day
     limit applies to submitting carriers only. To avoid customer
     confusion as to whether a preferred carrier change charge applies
     for a change in local service providers, the Commission also amends
     its rules to provide that LOAs must contain language giving a
     subscriber the option of consulting with the carrier as to whether
     a fee applies to his or her preferred carrier change.

127. **Payment of Preferred Carrier Change Charge After Slam**. The
     Commission clarifies that the unauthorized carrier shall pay the
     preferred carrier change charge assessed when the LEC executes the
     slamming carrier's preferred carrier change order and the change
     charge assessed when the LEC returns the subscriber to his or her
     authorized carrier. The Commission also clarifies that slamming
     carriers are responsible for payment of all preferred carrier
     change charges associated with a slam, including both the charge
     assessed when the LEC executes the slamming carrier\'s preferred
     carrier change order and the charge assessed when the LEC returns
     the subscriber to his or her authorized carrier.

128. **Preemption of State Regulations**. The Commission reaffirms its
     decision in the *Section 258 Order* not to preempt state
     regulations regarding slamming.

     **5. Steps Taken to Minimize the Significant Economic Impact of
     This Action on Small Entities, and Significant Alternatives
     Considered**

129. The clarifications and minor modifications to the Commission's
     slamming rules made in this *Second Order on Reconsideration* will
     benefit all carriers, including small carriers, by providing
     certainty and guidance in the preferred carrier change process. For
     instance, the Commission declines to adopt a 30-day time limit on
     the amount of time that an LOA confirming a carrier change request
     is considered valid because it does not provide enough flexibility
     to submitting carriers. Instead, the Commission adopts a 60-day
     time limit as a reasonable time frame which will provide
     flexibility but will also avoid consumer confusion that may be
     produced by a indefinite period of validity. We expect that the
     60-day time limit will have no significant economic impact.

     **6. Report to Congress**

130. The Commission will send a copy of the *Second Order on
     Reconsideration,* including this SFRFA, in a report to Congress
     pursuant to the Small Business Regulatory Enforcement Fairness Act
     of 1996.[^316] In addition, the Commission will send a copy of the
     *Second Order on Reconsideration*, including the SFRFA, to the
     Chief Counsel for Advocacy of the Small Business Administration. A
     copy of the *Second Order on Reconsideration* and SFRFA (or
     summaries thereof) also will be published in the Federal
     Register.[^317]

     **C. Paperwork Reduction Act**

131. 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**

132. Accordingly, IT IS ORDERED that pursuant to sections 1, 4, 201-205,
     and 258 of the Communications Act of 1934, as amended, 47 U.S.C. §§
     151, 154, 201-205, and 258, the policies, rules, and requirements
     set forth herein ARE ADOPTED. IT IS FURTHER ORDERED that 47 C.F.R.
     Part 64 IS AMENDED as set forth in Appendix A.

133. IT IS FURTHER ORDERED that pursuant to sections 1, 4(i), 4(j) of
     the Communications Act of 1934, as amended, 47 U.S.C. §§ 151, 154
     that the petitions for reconsideration or clarification filed by
     AT&T Corp., Excel Telecommunications, Inc., MediaOne Group,
     National Telephone Cooperative Association, RCN Telecom Services,
     Inc., Rural LECs, and SBC Communications, Inc. ARE GRANTED IN PART
     AND DENIED IN PART to the extent discussed above.

134. IT IS FURTHER ORDERED that the requirements contained herein not
     pertaining to new or modified reporting or recordkeeping
     requirements shall become effective 30 days after publication of a
     summary in the Federal Register. The requirements or rules adopted
     herein pertaining to new or modified reporting or recordkeeping
     requirements are subject to approval by the Office of Management
     and Budget (OMB) and shall become effective upon announcement in
     the Federal Register of OMB approval.

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

> FEDERAL COMMUNICATIONS COMMISSION

Magalie Roman Salas

Secretary

**APPENDIX A**

### RULES AMENDED

Part 64 of the Commissions 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 modifying section 64.1100 to read
as follows:

**§ 64.1100 Definitions**

(a) \* \* \*

(b) \* \* \*

(c) \* \* \*

(d) \* \* \*

(e) \* \* \*

(f) \* \* \*

(g) \* \* \*

(h) The term *subscriber* is any one of the following:

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```
(1) the party identified in the account records of a common carrier as
    responsible for payment of the telephone bill;

(2) any adult person authorized by such party to change
    telecommunications services or to charge services to the account; or

(3) any person contractually or otherwise lawfully authorized to
    represent such party.

2\. Part 64, Subpart K, is further amended by modifying section 64.1120
to read as follows:

**§ 64.1120 Verification of Orders for Telecommunications Service**

(a) \* \* \*

(b) \* \* \*

\(c\) \* \* \*

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

> \(2\) \* \* \*
>
> \(3\) An appropriately qualified independent third party has obtained,
> in accordance with the procedures set forth in sections (i)-(iv) of
> this subsection, the subscriber's oral authorization to submit the
> 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 of the carrier's
> marketing agent; and must operate in a location physically separate
> from the carrier or the carrier's marketing agent.
>
> \(i\) *Methods of Third Party Verification*. Automated third party
> verification systems and three-way conference calls may be used for
> verification purposes so long as the requirements of sections
> (ii)-(iv) of this subsection are satisfied.
>
> \(ii\) *Carrier Initiation of Third Party Verification*. A carrier or
> a carrier's sales representative initiating a three-way conference
> call or a call through an automated verification system must drop off
> the call once the three-way connection has been established.
>
> \(iii\) *Requirements for Content and Format of Third Party
> Verification*. All third party verification methods shall elicit, at a
> minimum, the identity of the subscriber; confirmation that the person
> on the call is authorized to make the carrier change; confirmation
> that the person on the call wants to make the carrier change; the
> names of the carriers affected by the change; the telephone numbers to
> be switched; and the types of service involved. Third party verifiers
> may not market the carrier's services by providing additional
> information, including information regarding preferred carrier freeze
> procedures.
>
> \(iv\) *Other Requirements for Third Party Verification*. All third
> party verifications shall be conducted in the same language that was
> used in the underlying sales transaction and shall be recorded in
> their entirety. In accordance with the procedures set forth in §
> 64.1120(a)(1)(ii), submitting carriers shall maintain and preserve
> audio records of verification of subscriber authorization for a
> minimum period of two years after obtaining such verification.
> Automated systems must provide consumers with an option to speak with
> a live person at any time during the call.

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

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```
(d) Telecommunications carriers must provide subscribers the option of
    using one of the authorization and verification procedures specified
    in § 64.1120(c) in addition to an electronically signed
    authorization and verification procedure under § 64.1120(c)(1).

```{=html}
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```
3.  Part 64, Subpart K, is further amended by revising section 64.1130
    to read as follows:

**§ 64.1130 Letter of Agency Form and Content**

(a) A telecommunications carrier may use a written or electronically
    signed letter of agency to obtain authorization and/or verification
    of a subscriber's request to change his or her preferred carrier
    selection. A letter of agency that does not conform with this
    section is invalid for purposes of this part.

(b) The letter of agency shall be a separate document (or an easily
    separable document) or located on a separate screen or webpage
    containing only the authorizing language described in paragraph (e)
    of this section having the sole purpose of authorizing a
    telecommunications carrier to initiate a preferred carrier change.
    The letter of agency must be signed and dated by the subscriber to
    the telephone line(s) requesting the preferred carrier change.

(c) The letter of agency shall not be combined on the same document,
    screen, or webpage with inducements of any kind.

(d) \* \* \*

(e) \* \* \*

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```
(1) \* \* \*

(2) \* \* \*

(3) \* \* \*

(4) \* \* \*

(5) That the subscriber may consult with the carrier as to whether a fee
    will apply to the change in the subscriber's preferred carrier.

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```
(f) \* \* \*

(g) \* \* \*

(h) \* \* \*

\(i\) Letters of agency submitted with an electronically signed
authorization must include the consumer disclosures required by § 101(c)
of the *Electronic Signatures in Global and National Commerce Act*.

\(j\) A telecommunications carrier shall submit a preferred carrier
change order on behalf of a subscriber within no more than 60 days of
obtaining a written or electronically signed letter of agency.

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

**§64.1180 Reporting Requirement**

\(a\) *Applicability*. Each carrier shall submit to the Commission via
Internet ([www.fcc.gov]{.underline}), U.S. Mail, or facsimile a slamming
complaint report form identifying the number of slamming complaints
received during the reporting period and other information as specified
in subsection (b) of this section.

(b) *Contents of Report*. The report shall contain the following
    information:

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```
(1) the information specified in subsection (a) of this section;

(2) the number of slamming complaints received during the reporting
    period that the carrier has investigated and found to be valid.

(3) the number of slamming complaints received during the reporting
    period, investigated or not, that the carrier has directly resolved
    with consumers;

(4) if the reporting carrier is a facilities-based local exchange
    carrier, the names of the entities against which the slamming
    complaints received during the reporting period were directed;

(5) if the reporting carrier is a facilities-based local exchange
    carrier, the number of slamming complaints received during the
    reporting period that were lodged against the entities identified in
    subsection (b)(4) of this section; and

(6) the total number of subscribers the reporting carrier is serving as
    of the date the report is filed.

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```
(c) *Bi-Annual Reporting Requirement*. Reporting shall commence February
    15, 2001, and shall continue on a bi-annual basis thereafter on
    August 15 (covering January 1 through May 31) and on February 15
    (covering June 1 through December 31).

> 5\. Part 64, Subpart K, is further amended by revising section 64.1190
> to read as follows:

**§64.1190 Preferred carrier freezes.**

(a) \* \* \*

(b) \* \* \*

(c) \* \* \*

(d) \* \* \*

```{=html}
<!-- -->
```
(1) \* \* \*

> \(i\) \* \* \*
>
> \(ii\) A description of the specific procedures necessary to lift a
> preferred carrier freeze; an explanation that these steps are in
> addition to the Commission's verification rules in §§ 64.1120 and
> 64.1130 for changing a subscriber's preferred carrier selections; and
> an explanation that the subscriber will be unable to make a change in
> carrier selection unless he or she lifts the freeze.

(2) \* \* \*

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```
(i) The local exchange carrier has obtained the subscriber's written or
    electronically signed authorization in a form that meets the
    requirements of § 64.1190(d)(3); or

(ii) \* \* \*

(iii) \* \* \*

> \(3\) \* \* \*
>
> \(i\) The written authorization shall comply with §§64.1130(b), (c),
> and (h) of the Commission's rules concerning the form and content for
> letters of agency.

(e) \* \* \*

```{=html}
<!-- -->
```
(1) A local exchange carrier administering a preferred carrier freeze
    must accept a subscriber's written or electronically signed
    authorization stating his or her intent to lift a preferred carrier
    freeze; and

(2) \* \* \*

```{=html}
<!-- -->
```
6.  Part 64, Subpart K, is amended by adding section 64.1195 to read as
    follows:

**§ 64.1195 Registration Requirement**

\(a\) *Applicability*. A telecommunications carrier that will provide
interstate interexchange telecommunications service shall file the
registration information described in subsection (b) of this section in
accordance with the procedures described in subsections (c) and (g) of
this section. Any telecommunications carrier already providing
interstate interexchange telecommunications service on the effective
date of these rules shall submit the relevant portion of its FCC Form
499-A in accordance with subsections (b) and (c).

(b) *Information Required for Purposes of Part 64.* A telecommunications
    carrier that is subject to the registration requirement pursuant to
    subsection (a) of this section shall provide the following
    information:

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```
(1) the carrier's business name(s) and primary address;

(2) the names and business addresses of the carrier's chief executive
    officer, chairman, and president, or, in the event that a company
    does not have such executives, three similarly senior‑level
    officials of the company;

(3) the carrier's regulatory contact and/or designated agent;

(4) all names that the carrier has used in the past; and

(5) the state(s) in which the carrier is certified to provide service.

\(c\) *Submission of Registration*. A carrier that is subject to the
registration requirement pursuant to subsection (a) of this section
shall submit the information described in subsection (b) of this section
in accordance with the Instructions to FCC Form 499-A. FCC Form 499-A
must be submitted under oath and penalty of perjury.

\(d\) *Rejection of Registration*. The Commission may reject or suspend
a carrier's registration for any of the reasons identified in
subsections (e) or (f) of this section.

\(e\) *Revocation or Suspension of Operating Authority*. After notice
and opportunity to respond, the Commission may revoke or suspend the
authorization of a carrier to provide service if the carrier provides
materially false or incomplete information in its FCC Form 499-A or
otherwise fails to comply with subsections (a), (b), and (c) of this
section.

\(f\) *Imposition of Fine*. After notice and opportunity to respond, the
Commission may impose a fine on a carrier that is subject to the
registration requirement pursuant to subsection (a) of this section if
that carrier fails to submit an FCC Form 499-A in accordance with
subsections (a), (b), and (c).

\(g\) *Changes in Information*. A carrier must notify the Commission of
any changes to the information provided pursuant to subsection (b) of
this section within no more than one week of the change. Carriers may
satisfy this requirement by filing the relevant portion of FCC Form
499-A in accordance with the Instructions to such form.

\(h\) *Duty to Confirm Registration of Other Carriers*. The Commission
shall make available to the public a comprehensive listing of
registrants and the information that they have provided pursuant to
subsection (b) of this section. A facilities-based carrier shall have an
affirmative duty to ascertain whether a potential carrier-customer
(*i.e*., reseller) that is subject to the registration requirement
pursuant to subsection (a) of this section has filed an FCC Form 499-A
with the Commission prior to offering service to that carrier-customer.
After notice and opportunity to respond, the Commission may impose a
fine on a carrier for failure to confirm the registration status of a
potential carrier-customer before providing that carrier-customer with
service.

### APPENDIX B

Parties Filing Petitions and Responsive Pleadings in CC Docket No.
94-129

#### Parties Filing Petitions

AT&T Corp.

Excel Communications, Inc.

Frontier

GTE Service Corp.

MediaOne Group

National Association of State Utility Consumer Advocates

National Telephone Cooperative Association

New York Consumer Protection Board

RCN Telecom Services, Inc.

Rural LECs

SBC Communications, Inc.

Sprint Corp.

##### Parties Filing Comments, Reply Comments, Responses, Oppositions

America Online, Inc.

Ameritech

AT&T Corp.

Bell Atlantic

BellSouth Telecommunications, Inc.

Cable & Wireless USA, Inc.

Cincinnati Bell Telephone Company

Competitive Telecom. Association/America's Carriers Telecom. Assoc.

CoreComm Ltd.

Excel Communications, Inc.

Frontier Corp.

GST Telecom., Inc.

GTE Service Corp.

GNVW Consulting, Inc.

IXC Communications Services, Inc.

MCI WorldCom

MediaOne Group, Inc.

Montana Public Service Commission

National Association of State Utility Consumer Advocates

National Telephone Cooperative Association

New York State Department of Public Service

PriceInteractive, Inc.

Qwest Communications Corp.

RCN Telecom Services, Inc.

Rural LECs

SBC Communications, Inc.

Sprint Corp.

TALK.com, Inc.

Telecommunications Resellers Association

Tel-Save.com, Inc.

Teltrust, Inc.

U S WEST Communications, Inc.

VoiceLog LLC

[^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 Rule Making, 14 FCC Rcd 1508 (1998) (*Section 258
    Order or Further Notice ), stayed in part*, *MCI WorldCom v. FCC*,
    No. 99-1125 (D.C. Cir. May 18, 1999) (*Stay Order*), *motion to
    dissolve stay granted*, *MCI WorldCom v. FCC*, No. 99-1125 (D.C.
    Cir. June 27, 2000) (*Order Lifting Stay*).

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

[^3]: ^?^ 47 U.S.C. § 258(a).

[^4]: ^?^ *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, First Order on Reconsideration, FCC
    00-135 (rel. May 3, 2000) (*First Reconsideration Order*).

[^5]: ^?^ *First Reconsideration Order,* FCC 00-135, at ¶¶ 7-21. We note
    that, in conjunction with the modifications adopted in the *First
    Reconsideration Order,* several sections within Part 64 of the
    Commission's rules (*i.e*., the slamming rules) have been
    renumbered. *See id*. at Appendix A. *See also* *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, Errata (Com. Car. Bur. June 14, 2000).

[^6]: Shortly after the release of the *First Order on Reconsideration*,
    the FCC filed a motion to dissolve the stay on the slamming
    liability rules that the D.C. Circuit had imposed in its *Stay
    Order*. Motion of the FCC to Dissolve the Stay, filed May 18, 2000
    in *MCI WorldCom, Inc. v. FCC*, D.C. Cir. No. 99-1125. On June 27,
    2000, the D.C. Circuit issued the *Order Lifting Stay*, which
    granted the Commission's unopposed motion and lifted the stay.

[^7]: ^?^ *Section 258 Order,* 14 FCC Rcd at 1591-1609, ¶¶ 139-182.

[^8]: ^?^ *See Electronic Signatures in Global and National Commerce
    Act*, S. 761, 106^th^ Cong., 2d Sess. (signed into law June 30,
    2000).

[^9]: *See* E-Sign Act at § 101.

[^10]: *See* E-Sign Act at § 107.

[^11]: ^?^ *See* E-Sign Act at §§ 101, 104(e).

[^12]: In this order, we are not addressing the petitions filed by the
    Rural LECs and that National Telephone Cooperative Association
    (NTCA) seeking reconsideration of the rule prohibiting executing
    carriers from re-verifying properly submitted carrier change
    requests before executing the requested changes*. See Rural LECs*,
    Petition for Reconsideration, CC Docket No. 94-129, at 3-10 (filed
    March 18, 1999); *National Telephone Cooperative Association*,
    Petition for Reconsideration, CC Docket No. 94-129, at 4-18 (filed
    March 18, 1999). We note that the Rural LECs filed an *ex parte*
    submission on June 27, 2000 that raised additional issues. We plan
    to give these petitions expeditious but thorough attention and to
    resolve them in the near future. In addition, we are not addressing
    SBC's petition for reconsideration of our prohibition on the use of
    carrier change information for marketing purposes, nor are we
    addressing AT&T's petition for clarification of whether our
    verification rules apply to initial carrier selections or to carrier
    selections for newly-installed lines. *See* *SBC Communications,
    Inc.*, Petition for Reconsideration and for Clarification, CC Docket
    No. 94-129, at 13-14 (filed March 18, 1999); *AT&T Corp.*, Petition
    for Partial Reconsideration, or in the Alternative, for
    Clarification, CC Docket No. 94-129, at 23-25 (filed March 18,
    1999). We also intend to address these petitions in the near future.

[^13]: ^?^ *See Further Notice*, 14 FCC Rcd at 1603, **¶** 169.

[^14]: We note that much of this information is required by the current
    rule governing the form and content of LOAs, section 64.1130. Under
    this section, when a carrier obtains a written LOA from a
    subscriber, the LOA serves as both authorization to change the
    subscriber's preferred carrier and verification of that subscriber's
    decision to change carriers. *Further Notice*, 14 FCC Rcd at 1604,
    **¶** 171.

[^15]: *See Further Notice*, 14 FCC Rcd at 1636-1637, Appendix A; 47
    C.F.R § 64.1120(c).

[^16]: *See Further Notice*, 14 FCC Rcd at 1604, **¶¶** 17-73. We
    observed in the *Further Notice* that carriers appeared to differ
    greatly in their interpretations of the applicability of the
    Commission's verification rules to Internet carrier changes. *Id*.
    at **¶** 170.

[^17]: *See Further Notice*, 14 FCC Rcd at 1605, **¶** 174.

[^18]: *See Further Notice*, 14 FCC Rcd at 1605, **¶** 175.

[^19]: *See The Changing Face of E-Commerce*,
    \<[[http://cyberatlas.internet.com/big_picture/demographics/article/0,1323,6061_366201,00.html]{.underline}](http://www.cyberatlas.com/)
    \> (date visited June 23, 2000) (citing a study by Forrester
    Research).

[^20]: *See* *id.*

[^21]: ^?^ *See* *id.*

[^22]: ^?^ *See id*.

[^23]: For example, to alleviate concerns about abusive e-commerce
    practices, the federal government has recently created the Internet
    Fraud Complaint Center (IFCC), an on-line collaboration among law
    enforcement agencies. The IFCC, located at
    [www.ifccfbi.gov](http://www.ifccfbi.gov/), is intended to provide
    consumers with a convenient way to alert authorities of a suspected
    criminal or civil violation relating to Internet fraud. The IFCC may
    also serve as a resource for the Commission, along with the records
    of our own Consumer Information and Enforcement Bureaus, to quantify
    any patterns of fraud involving e-commerce.

[^24]: ^?^ *See, generally,* E-Sign Act.

[^25]: An "electronic record" is defined as "a contract or other record
    created, generated, sent, communicated, received, or stored by
    electronic means." *See* E-Sign Act at § 106(4).

[^26]: ^?^ An "electronic signature" is defined as "an electronic sound,
    symbol, or process, attached to or logically associated with a
    contract or other record and executed or adopted by a person with
    the intent to sign the record." *See* E-Sign Act at § 106(5).

[^27]: The term "electronic" is defined as "relating to technology
    having electrical, digital, magnetic, wireless, optical,
    electromagnetic, or similar capabilities." *See* E-Sign Act at §
    106(2).

[^28]: ^?^ *See, e.g.,* E-Sign Act at §§ 101, 104(b)(2), 104(c).

[^29]: *See* E-Sign Act at § 103.

[^30]: *See* E-Sign Act at § 101(b)(2).

[^31]: E-Sign Act at § 104(e).

[^32]: *See Further Notice*, 14 FCC Rcd at 1603, **¶** 169.

[^33]: ^?^ 47 C.F.R. § 64.1130(e).

[^34]: E-Sign Act at § 101(c).

[^35]: *Id.*

[^36]: E-Sign Act at § 101(c).

[^37]: *See Further Notice*, 14 FCC Rcd at 1603, **¶** 169; *see, e.g*.,
    New York State CPB Comments at 7-8; New York PSC Comments at 7.

[^38]: *See , e.g.,* Missouri PSC Comments at 3; Montana Comments at 3;
    New York PSC Comments at 7; New York State CPB Comments at 14-16.
    *See also Further Notice*, 14 FCC Rcd at 1604, **¶** 171.

[^39]: *See* 47 C.F.R. § 64.1150(d).

[^40]: *See* paragraph 6, *supra*.

[^41]: *See, e.g.,* CompTel Comments at 9; Qwest Comments at 19-20;
    TelTrust Reply at 13.

[^42]: *See* Microsoft Internet Explorer v. 4.0, Help Section.

[^43]: *See, e.g*., BellSouth Comments at 3-4 (recommending that
    subscriber information be submitted using fields on webpages
    protected through electronic encryption); Florida PSC Comments at 6
    (stating that the submitted Internet LOA should be encrypted to
    protect the consumer's personal information); New York CPB Comments
    at 16-19 (recommending that all Internet LOA websites be "secure
    transmission encrypted").

[^44]: By "secured web access," we are referring to the use of secure
    websites for carrier change transactions. A "secure" website is a
    website that is designed to prevent unauthorized parties from
    viewing or downloading the information that is sent to or from those
    websites. *See* Microsoft Internet Explorer v. 5.5, Help Section.

[^45]: *See* Excel Comments at 4-5 (recommending that the security
    notice advise the consumer of the type of security measure (*i.e.*,
    encryption, secure server), if any, that is used when the consumer
    transmits the personal verification data); *see also* CoreComm Reply
    at 5 (supporting Excel's recommendation of a security notice
    requirement); MCI Reply at 24 (recommending that carriers should
    disclose, in an online (electronic) privacy policy, how the
    submitting subscriber's information will be used and secured).

[^46]: *See, e.g*., CoreComm Comments at 4, Reply at 2; Excel Reply at
    3; RCN Reply at 3. In legislation currently pending before the U.S.
    House of Representatives, the "Digital Signature Act of 1999," a
    "digital signature" is defined as "a mathematically-generated mark,
    utilizing asymmetric key cryptography techniques, that is unique to
    both the signatory and the information provided." *See* HR 1572,
    106^th^ Congress, 1^st^ Session, § 8 (3).

[^47]: We note that carriers already have a statutory duty to protect
    the privacy of customer information. *See* 47 U.S.C. § 222(a)
    ("\[E\]very telecommunications carrier has a duty to protect the
    confidentiality of proprietary information of, and relating to,
    other telecommunication carriers, equipment manufacturers, and
    customers, including telecommunication carriers reselling
    telecommunications services provided by a telecommunications
    carrier.")

[^48]: ^?^ *See* 47 C.F.R. § 64.1120.

[^49]: ^?^ The subscribers of an on-line service provider are often
    members of a CUG. The term "CUG" refers to a separate automated
    system in which a CUG service provider requires consumers to open an
    account with the CUG and to provide the CUG service provider with
    their name, address, and, typically, a credit card number to pay the
    CUG service charges. *See, e.g.,*Tel-Save Comments at 5-7.

[^50]: *See, e.g*., AOL Reply at 4-6; BellSouth Comments at 3-4; Cable &
    Wireless Comments at 12; Talk.com Reply at 5.

[^51]: We note that the NPRM sought comment on whether verification of
    Internet LOAs should include the submission of identifying
    information, such as a credit card number, by the subscriber. *See
    Further Notice*, 14 FCC Rcd at 1604-05, ¶¶ 171-73. In general, the
    commenters who raised this issue were seeking the ability to bypass
    such a requirement so that customers with whom they had pre-existing
    relationships could, for example, rely on passwords to identify
    themselves instead of redundantly supplying personal information.
    *See, e.g*., AOL Reply at 4. However, the Internet LOAs approved in
    this order, consistent with the E-Sign Act, do not require the
    submission of the additional identifying information that the
    proposed exception for pre-existing business relationships was meant
    to bypass.

[^52]: Carrier changes processed over the Internet, in this instance,
    include World Wide Web-based transactions as well as all other
    on-line transactions provided on a service provider's proprietary
    area.

[^53]: *See Further Notice*, 14 FCC Rcd at 1604-1605, ¶¶ 171-73.

[^54]: *See* 47 C.F.R. § 64.1130(b) and (c).

[^55]: *See* *id.*

[^56]: ^?^ *See, e.g.,* CompTel Comments at 6; Cable & Wireless Reply at
    3; Qwest Comments at 20.

[^57]: E-Sign Act § 104(b)(2)(C).

[^58]: Commenters noted the ease of compliance with, and negligible cost
    of, a separate screen requirement for Internet LOAs. *See, e.g.,*
    Cable & Wireless Reply at 3.

[^59]: *See Further Notice*, 14 FCC Rcd at 1601, ¶ 174; 47 C.F.R. §
    64.1130(e)(4).

[^60]: *See Further Notice*, 14 FCC Rcd at 1601, ¶ 174.

[^61]: *See, e.g.,* RCN Comments at 2, Reply at 3; Qwest Reply at 5;
    Tel-Save Reply at 17; Excel Reply at 3.

[^62]: *See, e.g.,* CoreComm Comments at 5, Reply at 2-3; Excel Comments
    at 5, Reply at 4.

[^63]: ^?^ *See* Cable & Wireless Comments at 12-13, Reply at 2.

[^64]: *See*, *e.g.,* Letter from James M. Veilleux, VoiceLog, to
    Magalie Roman Salas, FCC, dated June 13, 2000 (Voice Log June 13 *ex
    parte*) (noting variations in state carrier change verification
    rules, *e.g*., Louisiana requires that the carrier keep records of
    the data and time of the call when a carrier change order is made,
    verify the service change, including the calling plan offered and
    all fees or charges assessed in exchange for the change in service
    provider, and provide the subscriber with a statement of the
    certificated name of the provider and a disclosure that the carrier
    change may involve a charge and could involve another charge if the
    subscriber later desires to switch back to the original carrier.)

[^65]: CICs are four-digit numerical codes used by LECs to route traffic
    to IXCs and to identify them for billing purposes. They are assigned
    by the North American Numbering Plan Administration on a nationwide
    basis. We refer herein to "Feature Group D" CICs, which provide
    callers with equal access to their carrier of choice through
    presubscription or the use of a seven-digit carrier access code
    (CAC) incorporating the carrier's CIC. Feature Group D is one of
    several switching or access arrangements available from LECs to
    IXCs. *See generally* Carrier Identification Code Assignment
    Guidelines, INC 95-0127-006 (January 10, 2000) ("*CIC Assignment
    Guidelines*"). *See also infra*, ¶ 25.

[^66]: *See Further Notice*, 14 FCC Rcd at 1590, 1594-95.

[^67]: *Further Notice*, 14 FCC Rcd at 1597-1603.

[^68]: *Common Carrier Bureau Asks Parties to Refresh Record and Seeks
    Additional Comment on Proposal to Require Resellers to Obtain
    Carrier Identification Codes*, Public Notice, DA 00-1093, 65
    Fed.Reg. 33281 (released May 17, 2000). Comments and replies filed
    in response to the Public Notice are referred to herein as "Suppl.
    Comments" and "Suppl. Reply," respectively.

[^69]: *See CIC Assignment Guidelines*, INC 95-0127-006 at 6.

[^70]: Our review of the record indicates that switchless resellers that
    have CICs despite the Feature Group D requirement generally obtain
    them as a result of the purchase of Feature Group D in areas where
    they operate as facilities-based carriers. *See, e.g.,* U S WEST
    Comments at 8. *See also infra*, n. 91.

[^71]: North American Numbering Council Report and Recommendation
    Regarding Use and Assignment of CICs (February 18, 1998), at 7
    ("*NANC CIC Report*"). The NANC's recommendation represents a
    consensus within the carrier industry. *See id.* at 3. *See also*
    BellSouth Comments at 2; Cable & Wireless Comments at 16; GTE
    Comments at 5; GVNW Comments at 13-14 (supporting Commission
    adoption of the NANC's recommendation).

[^72]: *NANC CIC Report* at 7. *See Further Notice*, 14 FCC Rcd at
    1597-98.

[^73]: *See generally* AARP Comments at 3; BellSouth Comments at 1-2;
    Cable & Wireless Comments at 15-16 and Reply at 5-6; GVNW Comments
    at 8-15 and Suppl. Comments; Montana PSC Comments at 2; NASUCA
    Comments at 9-10; NTCA Suppl. Comments; PA Office of Consumer
    Advocate Suppl. Comments; Sprint Comments at 4-6, Reply at 4-9, and
    Suppl. Comments; VA State Corp. Comm'n Suppl. Comments.

[^74]: *See generally* Allegiance Suppl. Reply; ASCENT (formerly TRA)
    Comments at 5-12, Reply at 3-14, and Suppl. Comments; AT&T Comments
    at 36-37, Reply at 20-22, and Suppl. Comments; Ameritech Comments at
    8; Bell Atlantic Suppl. Comments; Cincinnati Bell Comments at 2-3;
    CompTel/ACTA Comments at 11-12; Frontier Comments at 5 and Reply at
    1-2; GST Comments at 15-16; GTE Suppl. Comments; Qwest Comments at
    8-9; SBC Comments at 5; USTA Suppl. Comments and Suppl. Reply; U S
    WEST Suppl. Reply; WorldCom (formerly MCI WorldCom) Comments at
    16-20, Reply at 18-22 and Suppl. Comments.

[^75]: *See* ASCENT Suppl. Comments at 3-7; AT&T Comments at 34-35, 40
    and Suppl. Comments at 6-7; Bell Atlantic Suppl. Comments at 3-4;
    Comptel/ACTA Comments at 11-13; GTE Suppl. Comments at 6-7; USTA
    Suppl. Comments at 5-6; WorldCom Comments at 14-16 and Suppl.
    Comments at 9-10. *But see* GVNW Suppl. Reply at 1-2.

[^76]: *NANC CIC Report* at 7. *See* Bell Atlantic Comments at 3; ASCENT
    Suppl. Comments at 16-17; Sprint Suppl. Comments at 3. Translations
    access, also known as "CIC-Redirect," is non-trunk access to the
    PSTN, accomplished by programming a LEC switch to recognize the
    reseller's CIC and route traffic to the reseller via the underlying
    carrier's facilities. *See NANC CIC Report* at 7; GVNW Suppl.
    Comments at 8. Translations access has two main cost components:
    \"the Access Service Request (\'ASR\') fee charged by the underlying
    facilities-based IXC and the fee charged by the LEC to load the CIC
    and CIC-Redirect functionality into its switches.\" *Id.*

[^77]: *See* Allegiance Suppl. Reply at 2; ASCENT Suppl. Comments at
    9-10; Frontier Comments at 5; Sprint Comments at 5-6 and Suppl.
    Comments at 2-3; WorldCom Comments at 18 and Suppl. Comments at 4-5.

[^78]: ASCENT, which describes itself as the "the largest association of
    competitive providers of telecommunications service in the United
    States," including "more than 800 carrier and supplier members,"
    states that 20 percent of its carrier members generate annual
    revenues of less than \$5 million, 40 percent generate less than
    \$10 million, and over 50 percent generate less than \$25 million.
    In addition, approximately 50 percent report earnings of less than 5
    percent, and two-thirds report earnings of less than 10 percent.
    ASCENT Suppl. Comments at 1-2, 8.

[^79]: *See* ASCENT Suppl. Comments at 22-25; Frontier Comments at 5;
    Qwest Comments at 8; WorldCom Comments at 18.

[^80]: *See* GVNW Suppl. Comments at 9; Sprint Reply at 6; U S WEST
    Comments at 12. GVNW estimates the cost of deploying a CIC on a
    per-tandem basis at between \$280 and \$560. GVNW Suppl. Comments at
    8-9. On a regional basis, ASCENT states that "\[c\]harges for CIC
    deployment vary widely . . . \[F\]or example, it would cost more
    than \$30,000 to deploy a CIC with BellSouth and the major ITCs in
    the State of Kentucky, but less than \$10,000 to deploy a CIC with
    Pacific Bell and the major ITCs in the State of California." ASCENT
    Suppl. Comments at 10 and n. 20.

[^81]: Sprint Comments at 6.

[^82]: *See, e.g.**, ***Sprint Suppl. Comments at 4-5 ("resellers
    themselves derive significant benefits from having their own
    CICs."). *See also* U S WEST Comments at 8 ("it is U S WEST's belief
    that some facilities-based carriers will not permit a reseller to
    resell their services unless the reselling carrier has a CIC.").
    GVNW and the NTCA argue that a CIC requirement, in conjunction with
    a requirement that underlying carriers utilize Carrier
    Identification Parameter (CIP), a functionality available from LECs,
    would give resellers greater parity with facilities-based carriers
    "in the timing of customer access to long distance service." GVNW
    Comments at 11. *See* NTCA Suppl. Comments at 6-7. GVNW also argues
    that CIC/CIP requirements would address two additional problems: (1)
    "misdirection of a reseller's calls to casual billing by the
    underlying \[\] carrier;" and (2) "provision by underlying carriers
    of call detail records ('CDRs') for billing purposes for both
    interLATA and intraLATA to one reseller even though the reseller
    only configured the resale account for either interLATA or intraLATA
    alone." *Id.* at 4, 22-25.

[^83]: ASCENT and WorldCom point out that CIC deployment costs are
    recurring, and state that the costs of changing underlying carriers
    for a reseller that uses its own CIC are the same as the costs of
    deploying a new CIC. *See* ASCENT Suppl. Comments at 11-12 (CIC
    requirement "will not only limit the carrier's service options, but
    it will reduce its bargaining power with its current provider who
    will know that the substitution of another provider's service will
    entail substantial additional cost"); WorldCom Suppl. Comments at 8
    (\"According to the current ILEC tariffs, the charge for the
    re-direct is the same as that for loading a newly obtained CIC.\").
    WorldCom estimates that such costs are eight times greater than when
    the reseller shares a CIC, and that the time required may be up to
    four months instead of an average of three to five days. In
    addition, ASCENT argues that a CIC requirement would restrict
    resellers' use of multiple underlying carriers because of the need
    to deploy multiple CICs. ASCENT Suppl. Comments at 11.

[^84]: *See* GTE Suppl. Comments at 4; SBC Suppl. Comments at 4; USTA
    Suppl. Comments at 8. *See also* Bell Atlantic Suppl. Comments at 4;
    U S WEST Suppl. Reply at 6-7.

[^85]: GTE Suppl. Comments at 4.

[^86]: *See* Bell Atlantic Suppl. Comments at 4 ("Bell Atlantic does not
    know . . . how many switchless resellers operate in its territory,
    let alone how many would want to provide service in the areas served
    by each of these switches."); GTE Suppl. Comments at 4 ("many of
    these smaller capacity switches are in locations that are less
    likely to be targeted by a large number of resellers").

[^87]: *See* USTA Suppl. Comments at 8-9 ("at the time the original CIC
    use and assignment plan was broadly endorsed by the industry,
    current architectures and capabilities such as the 'soft switch'
    that fully integrates digital transmission and routing functions,
    had not been developed.").

[^88]: For example, GTE suggested in its original comments that LEC
    switch upgrades "be allowed to occur in the course of planned
    carrier switch upgrades." GTE Comments at 6.

[^89]: *See* ASCENT Suppl. Comments at 20; AT&T Comments at 36-37 and
    Suppl. Comments at 3-4; Ameritech Comments at 8; Cincinnati Bell
    Comments at 2; CompTel/ACTA Comments at 12; GST Comments at 15; SBC
    Comments at 5 and Suppl. Comments at 6. AT&T, for example, estimates
    that "up to six CICs may need to be assigned to each of the
    approximately 500 current switchless resellers," pointing out that
    resellers often deal with multiple underlying carriers and purchase
    services from other resellers rather than directly from
    facilities-based carriers, so that second-tier resellers also would
    have to obtain CICs. AT&T Comments at 36-37. Other commenters
    maintain that there is no danger of CIC exhaustion, or that
    preventive measures are available that would be sufficient to avert
    any danger, such as directing NANPA to reclaim CICs from carriers
    that have more than necessary. *See* Bell Atlantic Comments at 3;
    BellSouth Comments at 1; GTE Comments at 7-8; Sprint Comments at 4-5
    and Suppl. Comments at 2.

[^90]: *See* AT&T Supplemental Comments at 4 (citing *NANPA 1999
    Activity and Quality Report* at 4); *NANC CIC Report* at 12-13.
    Currently, carriers may be assigned only two CICs each. *Id.*

[^91]: *See, e.g.*, WorldCom Comments at 17 ("Many of today's national
    carriers relied exclusively or substantially on resale in their
    first few years of business. And many, like MCI WorldCom, grew to
    provide their own facilities.").

[^92]: *See generally* AT&T Comments at 33; Cincinnati Bell Comments at
    1-2; Comptel/ACTA Comments at 11; NY DPS Comments at 4-5; PA Office
    of Consumer Advocate Suppl. Comments at 1; VA State Corp. Comm'n.
    Suppl. Comments at 1-2.

[^93]: *See* ASCENT Comments at 11-12; Comptel/ACTA Comments at 11; GTE
    Suppl. Comments at 6; USTA Suppl. Comments at 3-5.

[^94]: *See* Cable & Wireless Comments at 13-15 (resellers responsible
    for "\[m\]ost of the slamming accusations \[Cable & Wireless\]
    receives from the Commission or state regulatory bodies"); GVNW
    Suppl. Comments at 14 (estimating that "the incidence of soft
    slamming far exceeds any other form of slamming."); IXC Comments at
    2-3 (carrier identification problems account for "\[m\]ore than
    ninety percent of IXC\[\]'s slamming complaints"); Sprint Suppl.
    Comments at 1-2 ("Between May 1999-April 2000, over 41% of the total
    number of slamming complaints served on Sprint by the Commission
    involved . . . a reseller which utilized the Sprint CIC, and
    approximately 11% involved a soft slam"). We find unpersuasive
    ASCENT's argument that only a small percentage of slamming
    complaints involve resellers. ASCENT relies on Trends in Telephone
    Service (available at
    [www.fcc.gov/ccb/stats](http://www.fcc.gov/ccb/stats)), which
    reports the number of slamming complaints against certain carriers,
    as well as each carrier's "complaint index," or complaints divided
    by revenue. This report, however, does not reflect (1) the nature of
    a carrier's operation in the area where the complaint originated
    (some resellers operate with switches in some regions and without in
    others), (2) the outcome of the complaint (a complaint against a
    facilities-based carrier may turn out to be the responsibility of a
    reseller of its services), or (3) complaints against carriers with
    less than a minimum number of complaints.

[^95]: AT&T Suppl. Comments at 7. *See* Bell Atlantic Suppl. Comments at
    4; USTA Suppl. Comments at 5-6. *See also supra*, ¶ 2.

[^96]: *Truth-in-Billing and Billing Format*, *First Report and Order
    and Further Notice of Proposed Rulemaking*, CC Docket No. 98-170, 14
    FCC Rcd 7492, 7510 (released May 11, 1999) (subsequent history
    omitted); 47 C.F.R. § 64.2401.

[^97]: AT&T Suppl. Comments at 6-7 ("For example, for the first five
    months of this year the monthly average number of complaints
    regarding its resellers reported to AT&T---including, but *not*
    limited to, complaints of 'soft slamming'---was less than 20 percent
    the average monthly number of such complaints during the
    corresponding period in 1999."). *See* WorldCom Suppl. Reply at 2
    ("Based on the complaints WorldCom has been served by the
    Commission, it appears the number of unauthorized conversion
    complaints involving its resellers has declined approximately 50%
    this year relative to a corresponding time period last year.").

[^98]: For example, the number/percentage of switchless resellers that
    avail themselves of CICs, the geographic scope of most resellers'
    operations, etc.

[^99]: Specifically, carriers will be required to regularly report
    information about slamming complaints they receive to the
    Commission. *See* *infra*, Section E. In addition, state commissions
    that choose to administer our slamming rules will be regularly
    filing information with the Commission that details slamming
    activity in their regions. *First Reconsideration Order*, FCC
    00-135, at § 34.

[^100]: *See generally* ASCENT Comments at 12-13 and Reply at 14-17;
    AT&T Comments at 37-38; Ameritech Comments at 9; Cable & Wireless
    Comments at 16; CompTel/ACTA Comments at 12-13; Frontier Comments at
    5; GVNW Comments at 17-18; WorldCom Comments at 19; Qwest Comments
    at 9-10; Sprint Comments at 6; U S WEST Comments at 7, 16-18.

[^101]: *See generally* ASCENT Comments at 13-14 and Reply at 17-20;
    AT&T Comments at 35, 38-39; Cable & Wireless Comments at 16;
    CompTel/ACTA Comments at 13; Frontier Comments at 4-5; GST Comments
    at 15; GTE Comments at 10; GVNW Comments at 18-20; WorldCom Comments
    at 15; Qwest Comments at 10-11; SBC Comments at 8; Sprint Comments
    at 6-7; U S WEST Reply at 17-19.

[^102]: Some carriers use misleading telemarketing to induce subscribers
    to change carriers by, for example, telling them that their local
    and long distance bills will be consolidated. The third party
    verifiers then close the deal for the slamming carriers by assuring
    the consumers that they have merely authorized billing
    consolidation, rather than any carrier changes. *Section 258 Order,*
    14 FCC Rcd at 1551-2, ¶ 70.

[^103]: ^?^ *Section 258 Order,* 14 FCC Rcd at 1552, 1601, ¶¶ 71, 165.

[^104]: ^?^ *Section 258 Order*, 14 FCC Rcd at 1552, ¶ 71.

[^105]: ^?^ *Section 258 Order*, 14 FCC Rcd at 1552-3, ¶ 72.

[^106]: ^?^ *Section 258 Order*, 14 FCC Rcd at 1601, ¶ 165.

[^107]: ^?^ *Section 258 Order*, 14 FCC Rcd at 1601-3, ¶¶ 165-168.

[^108]: ^?^ *See* NAAG Comments at 17. *See also* Montana PSC Comments
    at 3; NASUCA Comments at 10; NY PSC Comments at 6.

[^109]: ^?^ *See, e.g*., Bell Atlantic Comments at 3; Cable & Wireless
    at 19; CoreComm Comments at 5.

[^110]: ^?^ *Section 258 Order*, 14 FCC Rcd at 1601, ¶ 166.

[^111]: ^?^ *See, e.g.,* GST Comments at 29; RCN Comments at 5.

[^112]: ^?^ *See, e.g.,* Teltrust Comments at 5; RCN Comments at 5.

[^113]: *See* NAAG Comments at 17. *See also* Teltrust Comments at 5;
    RCN Comments at 5.

[^114]: *See, e.g.*, Teltrust Comments at 5; Sprint Comments at 8.

[^115]: ^?^ *Section 258 Order,* 14 FCC Rcd at 1602-3, ¶ 168.

[^116]: ^?^ *Section 258 Order,* 14 FCC Rcd at 1602-3, ¶ 168.

[^117]: ^?^ *See,* *e.g*., Qwest Reply at 15; CoreComm Comments at 5;
    Excel Comments at 6.

[^118]: ^?^ *See, e.g.,* MediaOne Comments at 8; Montana PSC Comments at
    5; NASUCA Comments at 11-12.

[^119]: ^?^ MediaOne Comments at 5.

[^120]: ^?^ *See* 47 C.F.R. § 64.1130(e).

[^121]: *See, e.g.,* RCN Comments at 5 (stating that third party
    verification systems should record exchanges between the sales agent
    and the subscriber in the event the subscriber claims that the sales
    agent improperly influenced the subscriber's decision); NASUCA
    Comments at 11-12 (stating that the entire conversation with the
    customer should be recorded so that evidence of a customer's assent
    can be reviewed and investigated if a subsequent complaint is
    filed); NY PSC Comments at 6 (urging the Commission to require
    taping as a part of the verification process to help determine, in
    the event of a slamming complaint, what service(s) the customer
    agreed to change or whether the customer was simply seeking
    information). *See also Section 258 Order,* 14 FCC Rcd at 1602-3, ¶
    168.

[^122]: *See* 47 C.F.R. § 64.1120(a)(1)(ii).

[^123]: ^?^ *See, e.g., In the Matter of Coleman Enterprises, Inc. d/b/a
    Local Long Distance, Inc., Apparent Liability for Forfeiture*,
    Notice of Apparent Liability for Forfeiture, File No. ENF-99-09,
    NAL/Acct. No. 916EF0004, 14 FCC Rcd 13786 (1999) (relying on
    recordings of TPV conversations to demonstrate that the slammed
    subscribers were *not* authorizing carrier changes.) *See also* ¶
    44, *infra.* We remind carriers that if a subscriber claims that he
    or she has been subjected to an unauthorized change, the allegedly
    unauthorized carrier bears the burden of proving that such change
    was in fact authorized. *See* 47 C.F.R. § 64.1150(d).

[^124]: ^?^ *See* AT&T Comments at 42.

[^125]: ^?^ Generally, such systems operate in the following manner:
    after obtaining a carrier change request from a subscriber through
    telemarketing, the carrier's sales representative sets up a
    three-way call among the subscriber, the carrier, and the automated
    verification recording system. The automated system then plays
    recorded questions and records the subscriber's answers to those
    questions.

[^126]: *See* Bell Atlantic Comments at 6; Cable & Wireless Comments at
    19; Frontier Comments at 6.

[^127]: ^?^ *See* VoiceLog Comments at 4-5; Ameritech Comments at 12.

[^128]: ^?^ *See, e.g.,* Ameritech Comments at 14.

[^129]: ^?^ *See* 47 C.F.R. § 64.1130(e).

[^130]: ^?^ *See, e.g.,* SBC Comments at 12; VoiceLog Comments at 4-10;
    Ameritech Comments at 12.

[^131]: ^?^ *See, e.g.,* Montana PSC Comments at 3; VoiceLog Comments at
    3.

[^132]: ^?^ The "live-scripted" version of automated third party
    verification typically is conducted as follows: after the carrier's
    sales representative sets up the three-way call between the
    subscriber, the carrier's sales representative, and the automated
    recording system, the system begins recording, at which point the
    carrier's sales representative asks scripted questions to confirm
    the necessary information about the subscriber's account and the
    subscriber's desire to change his or her carrier.

[^133]: ^?^ *See* PriceInteractive Comments at 13; Qwest Comments at 15;
    TRA Comments at 21.

[^134]: ^?^ *Further Notice*, 14 FCC Rcd at 1605-06, ¶¶ 176-178; *see*
    47 U.S.C. § 258; 47 C.F.R. §§ 64.1100, *et seq*.

[^135]: ^?^ *Further Notice,* 14 FCC Rcd at 1605-06, ¶ 176.

[^136]: ^?^ *Further Notice*, 14 FCC Rcd at 1606, ¶ 177.

[^137]: ^?^ *Further Notice*, 14 FCC Rcd at 1606, ¶ 178.

[^138]: ^?^ *See* AARP Comments at 5; Ameritech Comments at 17; Bell
    Atlantic Comments at 7; Cable & Wireless Comments at 20-21 and Reply
    at 9; Cincinnati Bell Comments at 3; Comptel/ACTA Comments at 17;
    Frontier Comments at 8 and Reply at 1-2; GST Comments at 22-24; GTE
    Comments at 12-13 and Reply at 5-6; GVNW Comments at 25; MCI
    WorldCom Comments at 24-25 and Reply at 14-15; MediaOne Comments at
    12-13; Missouri PSC Comments at 3-4; Montana PSC Comments at 3;
    NASUCA Comments at 3-4; NY DPS Comments at 8; Qwest Comments at
    21-23 and Reply at 25-26; SBC Comments at 14-15 and Reply at 14-15;
    Sprint Comments at 10-11; TRA Comments at 22-23; Texas PUC Comments
    at 14-16; U S WEST Comments at 25, n.49 and Reply at 37-38.

[^139]: ^?^ *See* Ameritech Comments at 17; Cable & Wireless Comments at
    20-21; Cincinnati Bell Comments at 3; Comptel/ACTA Comments at 17;
    GST Comments at 22-24; GTE Comments at 12-13; MCI WorldCom Comments
    at 24-25; MediaOne Comments at 12-13; NY DPS Comments at 8; Qwest
    Comments at 21-23; SBC Comments at 14-15; Texas PUC Comments at
    14-16; U S WEST Reply at 38. The remaining commenters address
    residential service only or make no distinction between residential
    and business service.

[^140]: ^?^ *See* Ameritech Comments at 17; Cable & Wireless Comments at
    20; Cincinnati Bell Comments at 3; Comptel/ACTA Comments at 17; GTE
    Comments at 13; Qwest Comments at 22; SBC Comments at 15; Texas PUC
    Comments at 16. *See also* Bell Atlantic Comments at 7 (stating "the
    Commission could reasonably adopt" its practice of permitting
    account changes by other household members as authorized by the
    customer of record), U S WEST comments at 25, n.49 (stating its
    practice is to permit account changes by the customer(s) of record
    or others expressly or implicitly authorized by the customer(s) of
    record).

[^141]: ^?^ *See* MCI WorldCom Comments at 24-25; MediaOne Comments at
    12-13; Sprint Comments at 10-11; TRA Comments at 23.

[^142]: ^?^ *See* AARP Comments at 5; GST Comments at 22; GVNW Comments
    at 25; Missouri PSC Comments at 4; Montana PSC Comments at 3; NY DPS
    Comments at 8.

[^143]: ^?^ *See* Frontier Comments at 8; NASUCA Comments at 3-4.

[^144]: ^?^ *See Further Notice*, 14 FCC Rcd at 1605-06, ¶ 176. The
    structure of the definition derives from that of two proposed
    definitions which are based, respectively, on the Anti-Cramming Best
    Practice Guidelines and anti-cramming legislation proposed in
    Congress in 1998. *See* Cincinnati Bell Comments at 3; GTE Comments
    at 13.

[^145]: ^?^ We choose not to restrict this category to persons
    identified in carrier account records, as do the above-referenced
    anti-cramming definitions. *See supra*, n. 145. Cramming involves
    the billing relationship between LECs and their local telephone
    customers, whereas, in the slamming context, long distance service
    providers often lack access to the LEC account records containing
    the pertinent information. *See* Texas PUC Comments at 15; TRA
    Comments at 22. In addition, a LEC may choose not to maintain such
    records.

[^146]: ^?^ *See*, *e.g.*, Comptel/ACTA Comments at 17; NASUCA Comments
    at 3-4. *See also* Texas PUC Comments at 16 (supporting definition
    that "allows for differences among the federal and state laws in
    legal areas such as family law (*e.g.*, community property),
    creditor/debtor law, business law (*e.g.*, principal and agent
    relationships, contract law (*e.g.*, vis-à-vis minors), etc.").

[^147]: ^?^ *See, e.g.*, GST Comments at 24; GVNW at 25; NY DPS Comments
    at 8.

[^148]: ^?^ According to Cable & Wireless USA, the general practice of
    submitting carriers is to obtain specific acknowledgement from the
    person "signing the LOA or accepting service through third party
    verification . . . that he or she has the authority to make
    telecommunications decisions on behalf of the principal." Cable &
    Wireless Comments at 21. A number of LECs also state that they
    maintain records of persons authorized to make telecommunications
    decisions on behalf of the customer of record. *See* Bell Atlantic
    Comments at 7; GTE Comments at 12-13; SBC Comments at 15; U S WEST
    Comments at 25, n.49.

[^149]: ^?^ *See, e.g.*, GTE Comments at 12 ("GTE finds that allowing
    customers the ability to have multiple persons make account changes
    is an option customers value and expect.").

[^150]: ^?^ *See, e.g.*, Sprint Comments at 10-11 ("While Sprint has
    received a few complaints regarding the conversion of a household's
    long distance service by another member of the household . . .
    without authority to make such a decision, such complaints are . . .
    small in both absolute numbers and as a percentage of total slamming
    complaints"). *See also* Ameritech Comments at 17; Bell Atlantic
    Comments at 7; Cable & Wireless Comments at 21; GTE Comments at
    12-13.

[^151]: ^?^ Qwest Reply at 26. We reject proposals that "subscriber" be
    defined to include any adult household member. *See supra*, n. 142
    and accompanying text. Such a definition would remove control from
    customers of record by presumptively authorizing household members
    and excluding non-household members from making telecommunications
    decisions. *Compare* SBC Reply at 14 ("The problem with limiting the
    definition to a member of the household is that there are all sorts
    of commonly occurring situations that just do not fit the pattern.")
    *and* U S WEST Reply at 37 (definition "should be liberal enough to
    accommodate the practical fact that adults in a single household
    often think they are all authorized to make decisions about
    telecommunications purchases.").

[^152]: ^?^ 47 C.F.R. § 64.1140. *See also Section 258 Order*, 14 FCC
    Rcd at 1539-41, ¶¶ 50-52.

[^153]: ^?^ *Section 258 Order*, 14 FCC Rcd at 1541, ¶ 52. Because
    strict liability would prevent a slamming carrier from avoiding
    liability on the basis of a claim of mistake, we are not concerned
    that the "subscriber" definition we adopt herein will lead to an
    increase in slamming. *See id.* at 1606, ¶ 177.

[^154]: ^?^ For example, carriers may choose to rely on representations
    of authority by the person ordering the changes, the person's
    relationship to the customer of record (*e.g.*, household or family
    member), the person's access to the customer of record's telephone
    line, account records indicating who is authorized to order carrier
    changes on behalf of the customer of record, and/or other indicia of
    authority. *See, e.g.*, TRA Comments at 22.

[^155]: ^?^ *See* 47 C.F.R. § 64.1120(a)(2); *Section 258 Order* at
    1541, ¶ 54 ("where the submitting carrier submits a carrier change
    request that fails to comply with our rules and the executing
    carrier performs the change in accordance with the submission, only
    the submitting carrier is liable as an unauthorized carrier").

[^156]: ^?^ *See Further Notice*, 14 FCC Rcd at 1606, ¶ 177.

[^157]: ^?^ We reject arguments that we should not adopt a "subscriber"
    definition. *See* Frontier Comments at 8; NASUCA Comments at 3-4.
    *See also* Cable & Wireless Comments at 20-21; Comptel/ACTA Comments
    at 17; GTE Comments at 12-13; MCI Worldcom Comments at 24-25. The
    lack of a definition creates needless uncertainty. For example, the
    lack of a definition may discourage carriers from submitting changes
    ordered by persons other than their customers of record, regardless
    of the benefits to their customers of this service, based on concern
    about their potential liability under the current rules.

[^158]: ^?^ *Section 258 Order*, 14 FCC Rcd at 1511, ¶ 2.

[^159]: *See Section 258 Order,* 14 FCC Rcd at 1512, ¶ 4. *See also*
    Ameritech Comments at 18. We note, in the future, the Commission may
    receive even fewer slamming complaints, as many states are likely to
    take the opportunity provided to them in the *First Reconsideration
    Order* to become the primary forum for the resolution of slamming
    complaints filed by their citizens. *See First Reconsideration
    Order,* FCC 00-135 at ¶¶ 23-28.

[^160]: ^?^ *Section 258 Order*, 14 FCC Rcd at 1607, ¶ 179.

[^161]: ^?^ *Section 258 Order*, 14 FCC Rcd at 1607, ¶ 179.

[^162]: ^?^ *See, e.g*., Qwest Comments at 23; Bell Atlantic Comments at
    7; CompTel Comments at 16; RCN Comments at 6.

[^163]: ^?^ *See, e.g*., Bell Atlantic Comments at 7-8; Cable & Wireless
    Comments at 22; CoreComm Comments at 6-7.

[^164]: ^?^ Cable & Wireless Comments at 23.

[^165]: ^?^ *See infra,* Appendix A. We note that states that choose to
    administer the Commission's slamming rules are required to regularly
    file information with the Commission that details slamming activity
    in their regions. Such filings will 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. *See First Reconsideration Order,*
    FCC 00-135, at ¶ 34.

[^166]: We expect that carriers will continue to work with subscribers
    to resolve many alleged incidents of slamming before they reach the
    complaint stage. *See infra*, ¶ 86.

[^167]: The Commission will publish a notice in the Federal Register
    announcing the effective date of this requirement.

[^168]: ^?^ *See, e.g*., Ameritech Comments at 19; GTE Comments at 14.

[^169]: ^?^ *Section 258 Order*, 14 FCC Rcd at 1607-9, ¶¶ 180-82.

[^170]: *Section 258 Order*, 14 FCC Rcd at 1607-9, ¶¶ 180-82.

[^171]: ^?^ *Section 258 Order*, 14 FCC Rcd at 1607-9, ¶¶ 180-82.

[^172]: *See 1998 Biennial Regulatory Review -- Streamlined Contributor
    Reporting Requirements Associated with Administration of
    Telecommunications Relay Services, North American Numbering Plan,
    Local Number Portability, and Universal Service Support Mechanisms*,
    Report and Order, CC Docket No. 98-171, 14 FCC Rcd 16606 (1999)
    (*Streamlining Order*).

[^173]: ^?^ 47 C.F.R. § 1.47(h). *See also* *Streamlining Order,* 14 FCC
    Rcd at 16609-10, ¶ 11.

[^174]: ^?^ *See, e.g*., Bell Atlantic Comments at 8-9; U S WEST
    Comments at 30-31; AT&T Comments at 46.

[^175]: The Telecommunications Reporting Worksheet (FCC Form 499-S),
    which is filed in September of each year, is only filed by
    contributors to the universal service fund.

[^176]: ^?^ We note that, in the near future, FCC Form 499-A will be
    expanded to reflect the requirement that all interstate, domestic,
    interexchange carriers certify their compliance with statutory
    geographic rate averaging and rate integration obligations under
    section 254(g) of the Act. *See* 47 C.F.R § 64.1900; *Domestic,
    Interexchange Carrier Detariffing Order Takes Effect,* CC Docket No.
    96-61, Public Notice, DA 00-1028 (Com. Car. Bur. May 9, 2000). *See
    also* 47 U.S.C. § 254(g).

[^177]: ^?^ *See* CoreComm Comments at 7; GST Comments at 18; GTE
    Comments at 14.

[^178]: Pursuant to the Commission's confidentiality rules, filers may
    request confidential treatment of the revenue data in their
    Telecommunications Reporting Worksheet by checking a box on the
    form. Data submitted pursuant to such a confidentiality request will
    be afforded the full protections of the Commission's rules and will
    not be made publicly available with the registration information
    described above.

[^179]: ^?^ *See* 47 U.S.C. § 503(b).

[^180]: *See* 47 U.S.C. § 214.

[^181]: ^?^ *See* Frontier Comments at 10.

[^182]: ^?^ *Section 258 Order*, 14 FCC Rcd 1592, ¶ 141.

[^183]: ^?^ *Section 258 Order*, 14 FCC Rcd 1592, ¶¶ 141, 143.

[^184]: ^?^ *Section 258 Order*, 14 FCC Rcd 1592, ¶ 142.

[^185]: ^?^ *See First Reconsideration Order,* FCC 00-135, at ¶¶ 7-49
    (complete discussion of liability rules).

[^186]: ^?^ *First Reconsideration Order,* FCC 00-135, at ¶ 14.

[^187]: ^?^ *First Reconsideration Order,* FCC 00-135, at ¶ 17.

[^188]: ^?^ A preferred carrier freeze prevents a change in a
    subscriber's preferred carrier selection, unless the subscriber
    gives the carrier from whom the freeze was requested his or her
    express consent. *See* 47 C.F.R. § 64.1190(a).

[^189]: ^?^ *See* AT&T Petition at 15-19; *Excel Telecommunications,
    Inc.*, Petition for Clarification and Reconsideration, CC Docket No.
    94-129, at 6-7 (filed March 18, 1999); *RCN Telecom Services, Inc.*,
    Petition for Clarification and Reconsideration, CC Docket No.
    94-129, at 7-8 (filed March 18, 1999).

[^190]: *Section 258 Order,* 14 FCC Rcd at 1586, ¶ 131.

[^191]: *Section 258 Order* 14 FCC Rcd at 1583, ¶ 125.

[^192]: *See* Bell Atlantic Comments at 2; U S WEST Comments at 9-12;
    Rural LECs Comments at 3-4.

[^193]: *See* Ameritech Comments at 2-4, U S WEST Comments at 9-10 and
    AT&T Comments at 14 (stating that our rules are clear that only
    subscribers can submit properly verified PC freeze orders to LECs).

[^194]: SBC Response to RCN and Excel Petitions at 5, Reply at 7-8
    (stating that allowing carriers to submit preferred carrier freeze
    requests would create the same opportunity for the submission of
    unauthorized freeze orders that currently exists for unauthorized
    carrier changes). *See also* GTE Comments at 7 (stating that
    maintaining the LEC-subscriber link enables the LEC to ensure that
    the decision to lift the freeze, like the decision to implement the
    freeze, is an informed decision made by the subscriber); Bell
    Atlantic Comments at 2 ("Lifting of freezes by long distance
    carriers, even with verification, will permit unscrupulous carriers
    to avoid the wishes of consumers who don't want any carrier change
    without their direct involvement.").

[^195]: ^?^ SBC Response at 7-10; Ameritech Comments at 2-4; Bell
    Atlantic Comments at 2-3; U S WEST Comments at 9-11 (stating that
    "the hallmark of preferred carrier protection is a personal message
    communicated by the principal and not through any agent"); GTE
    Comments at 7; NTCA Comments at 4 (stating that "a carrier that
    would risk submitting an unauthorized change request, would also
    risk an unauthorized request to impose or lift a preferred carrier
    freeze."); Rural LECs Reply at 7; Ameritech Comments at 2.

[^196]: ^?^ RCN Comments at 8-9; Excel Comments at 7-8.

[^197]: ^?^ *See* 47 C.F.R. §§ 64.1120, 64.1190.

[^198]: ^?^ *See* 47 C.F.R. §§ 64.1120, 64.1190.

[^199]: ^?^ *See Section 258 Order,* 14 FCC Rcd at 1565, ¶ 93. *See
    also* 47 C.F.R. § 64.1100 (a).

[^200]: ^?^ *See* MCI Comments at 12, Reply at 3.

[^201]: ^?^ MCI Comments at 13.

[^202]: ^?^ MCI Comments at 13.

[^203]: ^?^ MCI Comments at 13.

[^204]: ^?^ MCI Comments at 13.

[^205]: ^?^ MCI Reply at 3.

[^206]: ^?^ *Section 258 Order,* 14 FCC Rcd at 1584, ¶ 127.

[^207]: ^?^ *Section 258 Order,* 14 FCC Rcd at 1584-5, ¶ 128.

[^208]: ^?^ *Section 258 Order,* 14 FCC Rcd at 1585, ¶ 129.

[^209]: ^?^ *See Section 258 Order*, 14 FCC Rcd at 1570, ¶ 103.
    Executing carriers may be liable for failing to comply with our
    rules if their actions result in any unreasonable delay of execution
    of carrier changes or in unauthorized carrier changes.

[^210]: ^?^ *See Section 258 Order*, 14 FCC Rcd at 1586, ¶ 130. *See
    also* AT&T Petition at 19 (stating that LECs should be required to
    provide automated handling of freeze orders and changes.)

[^211]: ^?^ *See Section 258 Order*, 14 FCC Rcd at 1586, ¶ 130.

[^212]: *See Section 258 Order*, 14 FCC Rcd at 1587-8, ¶ 133; AT&T
    Petition at 20-23. *But see* Rural LEC Comments at 5; SBC Reply at
    10.

[^213]: ^?^ *See* 47 C.F.R. § 64.1190. For example, under section
    64.1190(a) of our rules, "\[a\] preferred carrier freeze (or freeze)
    prevents a change in a subscriber's preferred carrier selection
    unless the subscriber gives the carrier from whom the freeze was
    requested *his or her express consent*. 47 C.F.R. § 64.1190(a)
    (emphasis added).

[^214]: ^?^ *See Section 258 Order*, 14 FCC Rcd at 1587-8, ¶ 133.

[^215]: ^?^ *See* AT&T Petition at 20-23. *See also* Rural LECs Comments
    at 5 ("AT&T does not document any instance in which information
    obtained in connection with implementing a freeze was used for
    anti-competitive purposes...")

[^216]: *See e.g.,* RCN Petition at 6-7; Excel Petition at 5.

[^217]: *See Section 258 Order,* 14 FCC Rcd at 1541, ¶ 54. *See also* 47
    C.F.R. § 64.1100(a), (b).

[^218]: ^?^ *See Section 258 Order,* 14 FCC Rcd at 1541, ¶ 54 (emphasis
    added).

[^219]: ^?^ *See, e.g.,* 47 U.S.C. §§ 208, 503(b).

[^220]: ^?^ We disagree with Excel's argument that separate
    authorization is not necessary for the interexchange and
    international portions of either preferred carrier changes or
    preferred carrier freezes. *See* Excel Petition at 9.

[^221]: ^?^ 47 C.F.R. § 64.1130(d). *See also* SBC Reply at 11.

[^222]: SBC Petition at 11-13; SBC Reply at 8. *See also* U S WEST
    Comments at 13 and Reply Comments at 3-4 (supporting SBC's proposal
    but suggesting a 60-day time limit).

[^223]: U S WEST Comments at 13; Reply Comments at 4. *See also infra,*
    Appendix A at 47 C.F.R. § 64.1130(j).

[^224]: ^?^ SBC Reply Comments at 8.

[^225]: ^?^ SBC Reply at 8.

[^226]: ^?^ 47 C.F.R. § 64.1130(e)(5).

[^227]: ^?^ *MediaOne Group, Inc.*, Petition for Reconsideration, CC
    Docket No. 94-129, at 5 (filed March 18, 1999).

[^228]: ^?^ *Id*.

[^229]: ^?^ *Id*.

[^230]: ^?^ *See* 47 C.F.R. § 64.1130.

[^231]: *See infra,* Appendix A, § 64.1130(e)(5).

[^232]: ^?^ SBC Petition at 5.

[^233]: ^?^ SBC Petition at 6.

[^234]: ^?^ *See Illinois Citizens Utility Board Petition for
    Rulemaking*, Memorandum Opinion and Order, 2 FCC Rcd 1726, 1729
    (1987).

[^235]: *Section 258 Order*, 14 FCC Rcd at 1530-1, ¶ 37.

[^236]: We note that our determination is not meant to interfere with
    any tariffed offerings by LECs that are designed to return
    subscribers to their preferred providers more simply and more
    effectively. For example, the SBC PIC Switchback offering should not
    be withdrawn as a result of the new slamming rules. This offering
    allows the IXC to pay for returning the subscriber back to its
    formerly authorized carrier on a no-fault basis. *See* SBC Petition
    at 6-7.

[^237]: ^?^ *See* 47 U.S.C. § 258; 47 C.F.R. § 64.1170.

[^238]: ^?^ *First Reconsideration Order,* FCC 00-135, at ¶¶ 22-28. *See
    also* 47 C.F.R. § 64.1150.

[^239]: *First Reconsideration Order,* FCC 00-135, at ¶¶ 33-37.

[^240]: RCN Petition at 9; Excel Petition at 9; Cable & Wireless
    Comments at 10; MCI Comments at 22. MCI suggests that the Commission
    examine the lawfulness of the "exorbitant" \$5 preferred carrier
    change charge imposed by ILECs and argues that the charge is not
    cost based. MCI Comments at 23. We decline, however, to address the
    lawfulness of the amounts charged for preferred carrier changes in
    this Order because it is outside the scope of this proceeding. *See
    MCI Telecommunications Corp. v. U S West Communications, Inc., et
    al.*, File Nos., E-07-08, E-97-20, E-97-21, E-97-22, E-97-23,
    E-97-24, Memorandum Opinion and Order, 15 FCC Rcd 9328 (2000).

[^241]: MCI Comments at 22; *but see* NASUCA Comments at 8 (noting that
    there is no evidence in the record to support the allegation that
    varying state verification procedures increases carriers' costs.).

[^242]: *Section 258 Order,* 14 FCC Rcd at 1561-2, ¶¶ 87-88; *First
    Reconsideration Order*, FCC 00-135, at ¶¶ 24-25.

[^243]: ^?^ *See* MCI Comments at 22-23 (suggesting that the Commission
    determine that states may have state-specific verification
    requirements, but the requirements may be no more onerous or
    stringent than those required by the Commission).

[^244]: ^?^ *See* NASUCA Comments at 8-9 (stating that neither Excel nor
    RCN cites any authority allowing the Commission to preempt state
    regulation on the basis that it would increase carrier's costs.)

[^245]: ^?^ *Section 258 Order,* 14 FCC Rcd at 1562-3, ¶ 89.

[^246]: *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).

[^247]: 5 U.S.C. § 603.

[^248]: *Further Notice*, 14 FCC Rcd at 1626.

[^249]: *See* 5 U.S.C. § 604.

[^250]: *See Section 258 Order*, 14 FCC Rcd at 1510-12, ¶¶ 1-4. *See
    also supra*, ¶ 2.

[^251]: ^?^ E-Sign Act at §§ 101, 104(e). *See supra*, ¶¶ 6-21.

[^252]: *See supra*, ¶¶ 22-31.

[^253]: *See supra*, ¶¶ 33-45.

[^254]: *See supra*, ¶¶ 46-52.

[^255]: *See supra*, ¶¶ 53-58.

[^256]: *See supra*, ¶¶ 59-66.

[^257]: *See* ASCENT Suppl. Comments at 22-25; Frontier Comments at 5;
    Qwest Comments at 8; WorldCom Comments at 18.

[^258]: *See* GVNW Suppl. Comments at 9; Sprint Reply at 6; U S WEST
    Comments at 12.

[^259]: Sprint Comments at 6.

[^260]: *See* Sprint Suppl. Comments at 4-5; U S WEST Comments at 8.
    *See also supra*, n. 82.

[^261]: *See, e.g.,* AT&T Comments at 45.

[^262]: ^?^ *See, e.g.,* Qwest Comments at 24; Cable & Wireless Comments
    at 24.

[^263]: ^?^ 5 U.S.C. § 603(b)(3).

[^264]: ^?^ 5 U.S.C. § 601(3).

[^265]: ^?^ 15 U.S.C. § 632.

[^266]: ^?^ 5 U.S.C. § 601(4).

[^267]: ^?^ 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).

[^268]: 47 CFR § 1.1162

[^269]: ^?^ 5 U.S.C. § 601(5).

[^270]: ^?^ U.S. Dept. of Commerce, Bureau of the Census, \"1992 Census
    of Governments.\"

[^271]: ^?^ *Id*.

[^272]: ^?^ 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).

[^273]: ^?^ FCC, Common Carrier Bureau, Industry Analysis Division,
    *Trends in Telephone Service*, Table 19.3 (March 2000).

[^274]: ^?^ FCC, Common Carrier Bureau, Industry Analysis Division,
    *Trends in Telephone Service*, Table 19.3 (March 2000).

[^275]: ^?^ 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).

[^276]: 5 U.S.C. § 601(3).

[^277]: 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).

[^278]: 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).

[^279]: *See generally* 15 U.S.C. § 632(a)(1).

[^280]: *1992 Census*, *supra*, at Firm Size 1-123.

[^281]: 13 CFR § 121.201, SIC code 4813.

[^282]: *Id*.

[^283]: FCC, Common Carrier Bureau, Industry Analysis Division, *Trends
    in Telephone Service*, Table 19.3 (March 2000).

[^284]: ^?^ 13 CFR § 121.201, SIC code 4813.

[^285]: ^?^ FCC, Common Carrier Bureau, Industry Analysis Division,
    *Trends in Telephone Service*, Table 19.3 (March 2000).

[^286]: ^?^ 13 CFR § 121.201, SIC code 4813.

[^287]: ^?^ FCC, Common Carrier Bureau, Industry Analysis Division,
    *Trends in Telephone Service*, Table 19.3 (March 2000).

[^288]: 13 CFR § 121.201, SIC code 4813.

[^289]: FCC, Common Carrier Bureau, Industry Analysis Division, *Trends
    in Telephone Service*, Table 19.3 (March 2000).

[^290]: 13 CFR § 121.201, SIC code 4813.

[^291]: FCC, Common Carrier Bureau, Industry Analysis Division, *Trends
    in Telephone Service*, Table 19.3 (March 2000).

[^292]: 13 CFR § 121.201, SIC code 4813.

[^293]: FCC, Common Carrier Bureau, Industry Analysis Division, *Trends
    in Telephone Service*, Table 19.3 (March 2000).

[^294]: We include all toll-free number subscribers in this category,
    including 888 number subscribers.

[^295]: FCC, CCB Industry Analysis Division, *FCC Releases, Study on
    Telephone Trends*, Tbls. 21.2, 21.3 and 21.4 (February 19, 1999).

[^296]: ^?^ 13 CFR § 121.201, SIC code 4812.

[^297]: ^?^ *1992 Census, Series UC92-S-1*, at Table 5, SIC code 4812.

[^298]: ^?^ *Trends in Telephone Service*, Table 19.3 (March 2000).

[^299]: *See supra*, ¶¶ 22-23.

[^300]: *See supra*, ¶ 58.

[^301]: ^?^ *See, e.g*., Ameritech Comments at 19; GTE Comments at 14.

[^302]: *See supra*, ¶¶ 61-64.

[^303]: *See* 5 U.S.C. § 801(a)(1)(A).

[^304]: *See* 5 U.S.C. § 604(b).

[^305]: *See* 5 U.S.C. § 603.

[^306]: 5 U.S.C. § 603.

[^307]: *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*).

[^308]: *Section 258 Order*, 14 FCC Rcd at 1611.

[^309]: ^?^ *See* 5 U.S.C. § 604.

[^310]: *See Section 258 Order*, 14 FCC Rcd at 1510-12, ¶¶ 1-4. *See
    also supra*, ¶ 2.

[^311]: *See supra*, ¶¶ 69-76.

[^312]: *See supra*, ¶ 87.

[^313]: *See supra*, ¶¶ 80-81.

[^314]: *See supra*, ¶¶ 84-86.

[^315]: *See supra*, ¶¶ 93-106.

[^316]: *See* 5 U.S.C. § 801(a)(1)(A).

[^317]: *See* 5 U.S.C. § 604(b).