Before the

**Federal Communications Commission**

**Washington, D.C. 20554**

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| In the Matter of                 | * | WT Docket No. 00-164         |
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| Petition for Declaratory Ruling  | ) |                              |
| on Issues Contained in Count I   | * |                              |
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| White v. GTE                     | * |                              |
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**MEMORANDUM OPINION AND ORDER**

**Adopted:** May 23, 2001 **Released:** May 25, 2001

By the Commission:

# introduction

1.  In this Memorandum Opinion and Order, we address a Petition for
    Declaratory Ruling filed by James J. White, Perry Kranias, Ralph
    DeLuise and Wall Street Connections, Inc. as Representative
    Plaintiffs in a class action complaint against GTE Corp. et al.[^1]
    Certain legal issues in Count I of the plaintiffs' third amended
    complaint were referred to the Commission, under the doctrine of
    primary jurisdiction, for a declaratory ruling on whether certain
    GTE billing practices are *per se* "unjust and unreasonable" under
    Section 201(b) of the Communications Act.[^2] Specifically, four
    practices are at issue: (1) charging customers for dead
    time[^3], (2) charging for unanswered or unconnected calls; (3)
    measuring the time of a call from the time the "send" button (or
    other similar button) is pushed; and (4) the practice of "rounding
    up" any of the foregoing types of charges to the next minute.[^4]

2.  Based on our review of the record, we deny White's petition and find
    that the four billing practices at issue are not *per se* unjust or
    unreasonable under Section 201. We do not, however, preclude the
    possibility that in specific cases, in the context of the related
    contractual services and marketing practices of the CMRS provider,
    these practices may be found to be in violation of Section 201.

# background

3.  On October 29, 1998, the Representative Plaintiffs filed their Third
    Amended Complaint in a class action lawsuit against GTE and many of
    its subsidiaries in the U.S. District Court for the Middle District
    of Florida, Tampa Division. In addition to General Allegations, the
    Plaintiffs' Third Amended Complaint included four counts against
    GTE: (1) violation of 47 U.S.C. 201(b) for "unjust and unreasonable"
    billing practices; (2) an action for injunctive relief to enjoin and
    restrain GTE from continuing these practices; (3) breach of
    contract; and (4) violation of Florida's Unfair and Deceptive Trade
    Practices Act.[^5]

4.  On October 21, 1999, the Court issued an Order in response to GTE's
    Dispositive Motion to Dismiss Plaintiff's Third Amended Complaint,
    which, among other things, referred certain legal issues relating to
    Count I to this Commission for decision under the doctrine of
    primary jurisdiction.[^6] The remaining counts were stayed pending
    the Commission's determination of the issues contained in Count
    I.[^7] All other pending motions, including the motion for class
    certification, were denied but with leave to refile after the FCC
    has rendered its decision.[^8]

5.  On February 2, 2000, the Plaintiffs filed a Petition for Declaratory
    Ruling on the Issues Contained in Count I of White Class Action. In
    its petition, White asks the Commission to issue a declaratory
    ruling that the billing practices at issue in Count I constitute
    unjust and unreasonable billing practices in violation of Section
    201(b).[^9] The issues of breach of contract, deceptive or unfair
    practices due to improper disclosure or the preemptive effect of
    Section 332 are not at issue here. GTE filed an opposition to the
    White petition on February 10, 2000. On March 3, 2000, the
    Plaintiffs moved for acceptance of late-filed comments and submitted
    a reply to GTE's opposition.

6.  In a Public Notice released on September 20, 2000, the Wireless
    Telecommunications Bureau invited comment on the issues presented,
    in light our decisions in *SBMS* and *WCA,*[^10] the latter of which
    was released August 14, 2000. Eleven comments were received. In
    addition, four reply comments were filed.[^11] Industry commenters
    take the position that all four practices under discussion are
    neither unjust nor unreasonable.[^12] In support of their position,
    they contend that these practices reflect competitive market
    conditions and these charges are reasonably related to the cost of
    providing service.[^13] They also argue that in a market as
    competitive as that among CMRS providers, if a consumer is not happy
    with one company's service agreement, the consumer can choose a
    different plan offered by another provider.[^14]

7.  Petitioners and other consumer commenters assert that it is both
    unjust and unreasonable to charge for non-communication time and the
    injury is further compounded by permitting those charges to be
    rounded up.[^15] Some commenters contend that customers do not have
    a reasonable expectation that they would be billed for such time
    based on their wireline experience,[^16] and that allowing CMRS
    carriers to bill for such time rewards poor service.[^17]

# discussion

8.  In this Memorandum Opinion and Order, we examine, as requested by
    the court, whether or not the billing practices described in Count I
    of Plaintiffs' Third Amended Complaint are *per se* unjust or
    unreasonable under Section 201(b). The factors we consider include
    the relationship of carrier costs to billing charges or practices,
    consumers' expectations based on their wireline experience, and the
    role of competitive markets. From our examination of these factors,
    we deny the Plaintiffs' petition.

9.  Several commenters argue that this Commission has already decided in
    its *SBMS Order* that practices at issue in this petition are not in
    violation of Section 201.[^18] We disagree. Instead, we agree with
    WCA's narrower interpretation of the *SBMS Order*, where we held
    that for completed CMRS calls, neither "rounding up" nor charging
    for in-coming calls were *per se* violations of Section 201.[^19]
    The *SBMS Order* addressed only certain charging practices,[^20] but
    not the issues raised by White regarding charges for time from the
    moment the "send" button is pushed, for dead time, or for unanswered
    or unconnected calls. Thus these issues are properly before this
    Commission in the context of this request for declaratory ruling. In
    other words, we conclude that the *SBMS Order* addressed only the
    rounding up of communication time for completed calls, while White
    presents the issue of billing for non-communication time for both
    completed and uncompleted calls and the rounding-up of any calls
    that include non-communication time in their time measurement.

## Charging for dead time, unanswered or unconnected calls, and charging from the time the "send" button is pushed.

10. We begin by addressing the first three practices \-- charging for
    dead time, charging for unanswered or unconnected calls, and
    charging from the time the "send" button is pushed \-- because they
    involve similar legal issues. Section 201(b) of the Communications
    Act provides: "All charges, practices, classifications, and
    regulations for and in connection with such communications service,
    shall be just and reasonable, and any such charge, practice,
    classification, or regulation that is unjust or unreasonable is
    hereby declared to be unlawful . . . ."[^21] In the *SBMS Order*, we
    analyzed the specific practices at issue in terms of whether they
    reasonably reflect a carrier's cost, whether the practices were
    common for interexchange services as well as for CMRS services, and
    whether the practices reflect competitive market conditions.[^22]

11. *Costs*. Carriers assert that these charges are derived from both
    the direct costs of using the network and the opportunity costs that
    become significant due to nature of CMRS operations. We concur with
    carriers that charging for the time a network is engaged but no
    actual conversation occurs is related to the costs associated with
    the network functions that occur even if call is not completed.[^23]
    These include costs for: seizing a channel, setting up the trunk,
    interconnecting with the LEC, establishing in-band or out-of-band
    signaling, providing answer supervision, and recording detail
    information for all attempted and completed calls, as well as costs
    related to switching the voice channel to another available channel
    as a caller moves from cell to cell.[^24] Nextel states that billing
    for unanswered calls is just and reasonable because, from the moment
    the send button is pressed, there are "costs of running the network
    and processing that phone call."[^25] Such use of system hardware
    and software should be considered operating costs.[^26] We
    acknowledge, as WCA points out, that interexchange carriers also
    incur network costs for uncompleted calls, yet they do not charge
    for such calls.[^27] The difference in billing practice does not
    imply, however, that the charges are unrelated to actual costs.

12. *Interexchange services and consumer expectations.* Petitioners and
    other consumer commenters argue that we should consider the
    expectation of consumers based on their wireline telephone
    experience in determining whether the charges in question are unjust
    or unreasonable. In deciding in the *SBMS Order* that rounding up
    for CMRS calls was not *per se* unjust or unreasonable, we noted
    that wireline calls have historically been billed on a rounded up,
    whole minute basis.[^28] In contrast, WCA argues, consumers would
    find it to be an unreasonable expectation to be charged for dead air
    time based on their wireline experience.[^29]

13. We recognize that wireline carriers generally do not charge for
    unconnected calls (where the line is busy or unanswered), nor do
    they charge for set-up time for a call even though wireline services
    also use system and plant for unconnected calls. In contrast, in the
    case of wireless service, charges typically begin at the time the
    "send" button is pressed. Although we look to wireline service for
    historical perspective, the practices used there are not necessarily
    controlling of whether a practice is in violation of Section 201(b).
    For example, even though wireline customers are not billed for
    incoming calls, we did not find in the *SBMS Order* that this
    rendered charging for incoming calls to CMRS phones a *per se*
    violation of Section 201.[^30]

14. It should be understood, however, that we conclude only that these
    rate structures are not in themselves \"unjust or unreasonable\" in
    violation of Section 201(b) of the Act. Thus, as we stated in the
    *SBMS Order*, "\[w\]e do not conclude that the implementation of
    these industry practices by CMRS providers will necessarily be
    lawful under Section 201(b) of the Act in all circumstances and
    without regard to other contractual, service and marketing practices
    of the CMRS provider."[^31] Section 201, as well as consumer
    protection laws, prohibit deceptive practices that constitute unjust
    or unreasonable practices.[^32] If a carrier employs unreasonable
    practices, the carrier may be found to be in violation of Section
    201(b) or consumer protection laws, even if the rates and rate
    structures themselves are not unreasonable.[^33]

15. *Competitive market conditions*. When Congress established
    commercial mobile radio services as a distinct category of common
    carrier, its general intent was for prices to reflect the
    competitive market.[^34] The Representative Plaintiffs do not object
    to allowing a competitive market to operate in setting CMRS prices.
    However, they view the Commission's role as enforcing Section 201(b)
    in a manner that prevents unjust or unreasonable practices from
    influencing the market.[^35] From their viewpoint, the argument put
    forth by carriers that competition is better than regulation
    concerning pricing is irrelevant to the particular billing practices
    contained in Count I.

16. Although CMRS carriers are free to operate in a deregulated (i.e.,
    non-tariffed), competitive market environment, the mere fact that
    CMRS providers engage in a particular practice does not make it just
    and reasonable under Section 201. Section 201 and consumer
    protection laws exist to prohibit deceptive, unfair, and
    unreasonable practices. These laws are applicable in competitive
    markets. While we may examine the effect a competitive market
    appears to have with respect to particular practices, it is just one
    factor to consider in determining if a practice is in violation of
    Section 201.

17. It appears that in this instance, a competitive, deregulated market
    has enabled carriers to adopt different types of services and
    billing practices. With regard to the practice of determining at
    what point a call is initiated for purposes of starting charging, of
    the four companies mentioned by Verizon, three charge from the time
    the "send" button is pressed while one charges from the time a voice
    channel is seized.[^36] As for billing for ring time on busy or
    unanswered calls, we are aware of at least four different billing
    practices ranging from no charge for uncompleted calls, to no charge
    for calls lasting less than one minute, to no charge for completed
    calls lasting less than 2 seconds. [^37] In this market, consumers
    can factor these different practices into their assessment of the
    total package of services offered by each carrier, provided these
    practices are fully disclosed to the consumer.

18. *Conclusion.* Upon consideration of the relationship with carrier
    costs, consumer expectations, and the effect of the competitive
    market, we hold that these three billing practices are not in
    themselves *per se* "unjust nor unreasonable" in violation of
    Section 201(b)*.* Consistent with our conclusions in the *SBMS
    Order* however, we do not conclude that the implementation of these
    practices "will necessarily be lawful under Section 201(b) of the
    Act in all circumstances and without regard to other contractual,
    service, and marketing practices of the CMRS provider."[^38]

## Rounding up.

19. The Representative Plaintiffs also allege that the practice of
    rounding up the time for a call that includes any above three
    practices is unjust and unreasonable under Section 201.[^39] In this
    Order, we have determined that the practice of charging for these
    three practices time is not *per se* a violation of Section 201. In
    addition, the Commission has already found that the practice of
    rounding up rates to the next minute for completed calls is not *per
    se* an unjust or unreasonable practice.[^40] In *SBMS* we
    acknowledged that charging on a whole minute basis "is a simplified
    method on which to base charges which still reflect general
    costs."[^41] We also noted that interexchange services have
    historically been billed on a rounded-up, whole minute basis and
    that this is still the most common billing practice for both CMRS
    and interexchange carriers.[^42] Nothing has been presented in this
    proceeding, with respect to the practices here complained of, that
    would lead us to conclude rounding up in conjunction with these
    practices is inherently unjust or unreasonable. We therefore
    conclude that rounding up of calls that include non-communication
    time is not a *per se* violation of Section 201. However, as with
    the other practices discussed in this order, we do not preclude the
    possibility that in the context of related contractual, service, and
    marketing practices of the CMRS provider, this practice may be found
    to be in violation of Section 201 in specific cases.

# Ordering clause

20. Accordingly, pursuant to Sections 4(i) and 4(j) of the
    Communications Act of 1934, as amended, 47 U.S.C. §§ 154 (i) and 154
    (j), Section 5 (d) of the Administrative Procedure Act, 5 U.S.C. §
    554(e), and Section 1.2 of the Commission's Rules, 47 C.F.R. § 1.2,
    IT IS ORDERED, that the Petition for Declaratory Ruling filed by
    White et al. IS DENIED.

> FEDERAL COMMUNICATIONS COMMISSION
>
> Magalie Roman Salas
>
> Secretary

APPENDIX

Comments

  ------------------------------------------------- ---------------------
  Alloy LLC                                         Alloy

  AT&T Wireless Services                            AT&T

  Cellular Telecommunications Industry Ass'n        CTIA

  Excel Communications                              Excel

  Fontana, Thomas                                   Fontana

  Newcomb, Donald                                   Newcomb

  Nextel Communications, Inc.                       Nextel

  Sprint PCS                                        Sprint

  STPCS Joint Venture, LLC                          STPCS

  Verizon Wireless                                  Verizon

  Waring, Malcolm                                   Waring
  ------------------------------------------------- ---------------------

Late-Filed Comments

  -------------------------------------------------- --------------------
  U.S. Cellular Corporation                          U.S. Cellular

  -------------------------------------------------- --------------------

Reply Comments

  -------------------------------------------------- --------------------
  Staack, Simms & Hernandez, P.A.                    White

  Verizon Wireless                                   

  Wireless Consumers Alliance                        WCA
  -------------------------------------------------- --------------------

[^1]: White v. GTE Corp., No. 97-1859-CIV-T-26C (U.S. District Court,
    M.D. Fla., Tampa Division, filed July 29, 1997) (White Class
    Action).

[^2]: 47 U.S.C. § 201(b).

[^3]: Parties have not supplied a specific definition for "dead time."
    For the purposes of this proceeding, we interpret the term to refer
    to non-communication time associated with neither call initiation
    nor ringing. For example, dead time might include the time after a
    signal has faded or time after a called party had terminated the
    call, but before the wireless subscriber pushes the "end" button.

[^4]: We note that the use of the term "rounding up" in the White Class
    Action itself differs significantly from our use of the term. We use
    the term to refer to charging for a call in the next larger minute
    increment. In the White Class Action, "rounding up" is used to
    describe all of the four different billing scenarios listed here.

[^5]: Third Amended Complaint, Plaintiff's Exhibit A at 8-12.

[^6]: Order, Plaintiff's Exhibit B, at 7, 10.

[^7]: *Id.* at 10.

[^8]: *Id*.

[^9]: Petition at 2.

[^10]: Southwestern Bell Mobile Systems, Inc. Petition for a Declaratory
    Ruling Regarding the Just and Reasonable Nature of, and State
    initiation Challenges to, Rates Charged by CMRS Providers when
    Charging for Incoming Calls and Charging for Calls in Whole-Minute
    Increments, FCC 99-356, *Memorandum Opinion and Order*, 14 FCC Rcd
    19898 (1999) (*SBMS Order*). Wireless Consumers Alliance, Petition
    for a Declaratory Ruling Concerning Whether the Provisions of the
    Communications Act of 1934, as Amended, or the Jurisdiction of the
    Federal Communications Commission Thereunder, Serve to Preempt State
    Courts from Awarding Monetary Relief Against Commercial Mobile Radio
    Service (CMRS) Providers (a) for Violating State Consumer Protection
    Laws Prohibiting False Advertising and Other Fraudulent Business
    Practices, and/or (b) in the Context of Contractual Disputes and
    Tort Actions Adjudicated Under State Contract and Tort Laws, WT
    Docket No. 99-263, *Memorandum Opinion and Order*, FCC 00-292, 15
    FCC Rcd 17021 (2000) (*WCA Order*).

[^11]: A list of comments and reply comments is attached in the
    Appendix.

[^12]: *See* AT&T Comments at 2; Alloy Comments at 6; Excel Comments at
    7; CTIA Comments at 4; Nextel Comments at 4; STPCS Comments at 6;
    Sprint Comments at 8; U.S. Cellular Comments at 3-4; Verizon
    Comments at 3, 10; Verizon Reply at 2.

[^13]: *See* Alloy Comments at 6; CTIA Comments at 3; Excel Comments at
    6; Nextel Comments at 4-8; STPCS Comments 3-8; U.S. Cellular
    Comments at 3-4; Verizon Comments at 3, 11-13; Verizon Reply at 2-3.

[^14]: *See* Alloy Comments at 3, 5; Nextel Comments at 3; Sprint
    Comments at 6-8, 14; Verizon Comments at 3, 9; Verizon Reply at 2.

[^15]: *See* Fontana Comments at 1 (unpaginated); Waring Comments at 1
    (unpaginated); WCA Reply at 5-6.

[^16]: WCA Reply at 3-5; Newcomb at 1 (unpaginated) (\"none of these
    practices is unjust or unreasonable, *per se* . . . failure to
    clearly and completely inform the consumer of practices to which
    they are accustomed in the wireline industry can, under some
    circumstances become unjust and unreasonable, in aggregate.\").

[^17]: Fontana Comments at 1 (unpaginated); Waring Comments at 1
    (unpaginated).

[^18]: STPCS Comments at 3-4; USCC Comments at 3; Sprint Comments at 4,
    8-9; CTIA at 2.

[^19]: WCA Reply at 2-3.

[^20]: *SBMS Order*, 14 FCC Rcd at 19905-6 (para. 17).

[^21]: 47 U.S.C. § 201(b).

[^22]: *SBMS Order*, 14 FCC Rcd at 19904 (para. 14).

[^23]: Verizon Reply at 2 and n. 6; Alloy at 6; Nextel at 5; STPCS at 4.

[^24]: Verizon Comments at 12. *See also* STPCS Comments at 4-5; USCC
    Comments at 3.

[^25]: Nextel Comments at 6.

[^26]: Nextel Comments at 5.

[^27]: WCA Reply at 5.

[^28]: *See* *SBMS Order*, 14 FCC Rcd at 19905 (para. 15).

[^29]: WCA Reply at 3 and n. 8 (citing comment by Newcomb).

[^30]: *SBMS Order*, 14 FCC Rcd at 19904-05 (paras. 14-15).

[^31]: *Id.* at 19905 (para. 15).

[^32]: *See* Business Discount Plan, Inc., Apparent Liability for
    Forfeiture, File No. ENF 98-02, *Order of Forfeiture*, 15 FCC Rcd
    14461, 14468-70, 14472 and n.65 (paras. 14-18, 24) (2000), *aff'd on
    recon.*, 15 FCC Rcd 24396, 24398-400, and n.46 (paras. 5-9); *see
    also*, *WCA Order*, 15 FCC Rcd at 17039-40 (para 35); *SBMS Order*,
    14 FCC Rcd at 19904-05 (para. 15).

[^33]: *See SBMS Order*, 14 FCC Rcd at 19905 (para. 15).

[^34]: *See* H.R. Conf. Rep. No. 103-213 at 490-491 (1993).

[^35]: White Reply at 6.

[^36]: Verizon Comments at 8.

[^37]: Verizon Comments at 8-9; Nextel Comments at 5.

[^38]: *See* *SBMS Order*, 14 FCC Rcd at 19905 (para. 15).

[^39]: Petition at 2.

[^40]: *SBMS Order*, 14 FCC Rcd at 19904-05 (paras. 14-15).

[^41]: *Id.* at 19904 (para. 14).

[^42]: *Id*.