**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

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| In the Matter of                 | *  | CC Docket No. 94-129         |
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| Implementation of the Subscriber | ** |                              |
| Carrier Selection Changes        |    |                              |
| Provisions of the                | *  |                              |
| Telecommunications Act of 1996   | *) |                              |
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| Policies and Rules Concerning    |    |                              |
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| Unauthorized Changes of          | *) |                              |
| Consumers\'                      | ** |                              |
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| Long Distance Carriers           | *  |                              |
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| LEC Coalition Request for        | ** |                              |
| Declaratory Ruling Regarding     |    |                              |
| Carrier Change Verification      | *  |                              |
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**DECLARATORY RULING**

**Adopted: June 8, 2005 Released: June 9, 2005**

By the Acting Chief, Consumer & Governmental Affairs Bureau:

# INTRODUCTION

1.  This Order denies a Petition for Declaratory Ruling regarding the
    Commission's carrier change verification rules filed by a coalition
    of rural local exchange carriers ("LEC Petitioners") on February 1,
    2005.[^1] Specifically, the LEC Petitioners ask the Commission to
    declare that certain carrier change verification actions do not
    violate section 64.1120(a)(2) of the Commission's rules, which
    prohibits executing carriers from verifying the submission of a
    change request by a submitting carrier or causing an unreasonable
    delay in the execution of a change.[^2] For the reasons described
    below, we deny the LEC Petitioners' request.

# background

2.  Section 258 of the Communications Act of 1934 (Act), as amended by
    the Telecommunications Act of 1996, 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,"
    distorts the telecommunications market by enabling companies that
    engage in fraudulent activity to increase their customer and revenue
    bases at the expense of consumers and law-abiding companies. A
    "submitting carrier" is defined as any telecommunications carrier
    that (1) requests on the behalf of a subscriber that the
    subscriber's telecommunications carrier be changed; and (2) seeks to
    provide retail services to the end-user subscriber.[^4] An
    "executing carrier" is defined as any telecommunications carrier
    that effects a request that a subscriber's telecommunications
    carrier be changed.[^5] An executing carrier has actual physical
    responsibility for making the change to the subscriber's
    service.[^6] The Commission has stated that submitting carriers
    should be responsible for verification of carrier change requests
    and, regardless of the solicitation method used, should employ one
    of four verification options: written letters of agency (LOAs),
    electronic authorization, Internet LOA or third party
    verification.[^7] Executing carriers may not engage in additional
    verification of the submitting carrier's initial verification of a
    change request, and may not otherwise cause an unreasonable delay in
    the execution of the change.[^8]

3.  In April, 2004, MCI filed a series of individual informal complaints
    against the LEC Petitioners regarding the rejection of carrier
    change requests.[^9] MCI alleges that the LEC petitioners were
    unduly impeding the carrier change process, and were engaging in a
    form of additional verification of carrier changes submitted by
    MCI.[^10] Specifically, MCI asserts that the LEC Petitioners were
    rejecting MCI's carrier change submissions when information in the
    submissions differed from that in the LEC Petitioners' records.[^11]
    The LEC Petitioners do not dispute these facts. The LEC Petitioners,
    however, deny that their practices are in violation of the
    Communications Act or the Commission's rules.[^12]

4.  In their *Petition,* LEC Petitioners set forth three main arguments
    that their practices do not violate the Commission's rules. First,
    they argue that there is no basis in law, including agency law, for
    the proposition that a third party (such as an executing LEC) should
    rely on a claim of authority of a person who the executing carrier
    believes to be without authorization.[^13] Second, LEC Petitioners
    contend that their actions do not constitute reverification in
    violation of section 64.1120(a)(2).[^14] Third, the LEC Petitioners
    argue that carrier change rejections under these circumstances do
    not cause "unreasonable delay" in violation of section
    64.1120(a)(2).[^15] The LEC Petitioners filed the *Petition* to
    clarify issues related to those complaints.

# discussion

5.  Section 64.1120(a)(2) of the Commission's rules provides that
    "\[a\]n executing carrier shall not verify the submission of a
    change in the subscriber's selection of a telecommunications service
    received from a submitting carrier."[^16] Based on this rule, we
    conclude that an executing carrier's rejection of carrier change
    submissions by a submitting carrier, based on the executing
    carrier's own conclusion that the customer contacted by the
    submitting carrier was not authorized to make a long distance
    carrier change, violates section 64.1120(a)(2) of the Commission's
    rules.

6.  In the *Second Report and Order*, the Commission found that
    "executing carriers...have both the incentive and ability to delay
    or deny carrier changes."[^17] The Commission expressed concern in
    the *Second Report and Order* that executing carriers could use the
    verification process as a means of delaying or denying carrier
    change requests in order to benefit themselves or their
    affiliates.[^18] While the Commission agreed that allowing executing
    carriers to re-verify carrier change requests could help to deter
    slamming, it ultimately concluded that the anti-competitive effects
    of re-verification outweighed the potential benefits.[^19]

7.  In the *Second Report and Order*, the Commission was also concerned
    that re-verification by executing carriers could function as a *de
    facto* preferred carrier "freeze," even in situations where a
    subscriber has not requested such a freeze.[^20] We believe that the
    LEC actions at issue here do just this; they serve to restrict
    consumer control by eliminating the consumer's ability to designate
    someone as authorized to change telecommunications service without
    first contacting the local carrier. [^21]

8.  The LEC Petitioners argue that there is no basis in law, including
    agency law, to hold that the executing LEC "has any right to rely on
    the claim of authority of a person without authorization from the
    subscriber and thus no obligation to its subscriber to make changes
    to the subscriber's account."[^22] This argument fails. The
    executing carrier may not make an independent determination
    regarding whether the person authorizing the switch was an
    authorized agent of the party identified on the executing carrier's
    account. The Commission has already defined the role of both the
    submitting and executing carrier in a carrier change request. The
    submitting carrier, in the course of verifying the intention to
    change long distance service, is already required to elicit
    confirmation that the person contacted was authorized to make the
    change (that is, an agent of the party identified on the
    account).[^23] That the name(s) contained in the executing carrier's
    local account information differs from that of the contact person
    listed on the submitting carrier's change is not necessarily
    indicative of a lack of authority or agency on the part of the
    person requesting the long distance change. The Commission's rules
    require that executing carries engage in "prompt execution of
    changes verified by a submitting carrier."[^24] Moreover, executing
    carriers are only allowed to use submitted carrier change
    information to effectuate the provision of service by the submitting
    carrier to its customer.[^25] An independent determination by an
    executing carrier of whether the person initiating a switch is an
    agent of the party listed on the account goes beyond this limited
    role.

9.  LEC Petitioners also state that the Commission, in its *Third Report
    and Order*, noted without disapproval that carriers maintain lists
    of customers authorized to make changes.[^26] In this vein, the LEC
    Petitioners cite several other situations that can result in their
    return of a carrier change request to the submitting carrier, such
    as when a customer is already presubscribed to the submitting
    carrier, when a customer has a PIC freeze in place, or when PIC
    changes are not permitted (*e.g.*, certain college dormitory
    rooms).[^27] We recognize that carriers may access account
    information in the course of effectuating carrier changes, and we do
    not believe that an executing carrier's return of a carrier change
    to the submitting carrier, under the limited circumstances described
    above, constitutes reverification in violation of our rules. Our
    objection to the LEC actions at issue is not related to their
    consulting account information *per se* during the course of
    executing a carrier change. Rather, executing carriers may not make
    an independent determination with respect to the ability of a person
    to authorize a carrier change.

10. We note that the Commission's preferred carrier change provisions
    give consumers the option to "freeze" their choice of
    telecommunications carrier such that they must then contact their
    LEC to lift the freeze before any carrier changes can be
    effectuated. The LEC Petitioners argue that it is unreasonable to
    ask subscribers that wish additional carrier change protections to
    utilize a preferred carrier freeze.[^28] LEC Petitioners state that
    their method of simply rejecting submitting carrier changes that
    contain name(s) that differ from what is in the LEC's account
    information "poses less of an impediment to consumers own desire to
    change carriers."[^29] We disagree. The Commission's preferred
    carrier freeze procedures are not "complex" for subscribers.[^30]
    Unlike the "de facto" freeze actions of the LEC Petitioners, the
    Commission's preferred carrier change provisions give consumers
    extra protections without raising anti-competitive concerns. In
    addition, because we find that LEC Petitioners' actions violate the
    prohibition on verification by executing carriers established in
    section 64.1120(a)(2) of the Commission's rules, we find it
    unnecessary to reach a conclusion as to whether these actions also
    result in unreasonable delay by an executing carrier in violation of
    our rules.

11. Finally, the LEC Petitioners request that we consider this petition
    in conjunction with a petition filed by MCI (MCI Petition) regarding
    preemption of a state rule.[^31] The MCI Petition concerns the
    question of permissible actions by a state regulatory agency. The
    *Petition*, in contrast, concerns the actions of private companies.
    We therefore decline the LEC Petitioner's request to combine our
    consideration of the *Petition* with the MCI Petition.

# ORDERING CLAUSES

12. Accordingly, IT IS ORDERED that, pursuant to the authority contained
    in Section 258 of the Communications Act, of 1934, as amended, 47
    U.S.C. § 258 , and sections 0.141, 0.361,1.3, 64.1120(a)(2) of the
    Commission Rules, 47 C.F.R. §§ 0.141, 0.361, 1.2, 64.1120(a)(2), the
    Rural LECs' Petition for Declaratory Ruling IS DENIED.

13. IT IS FURTHER ORDERED that, pursuant to the authority contained in
    Section 258 of the Communications Act of 1934, as amended, 47 U.S.C.
    § 258 , and sections 0.141, 0.361,1.3, 64.1120(a)(2) of the
    Commission Rules, 47 C.F.R. §§ 0.141, 0.361, 1.2, 64.1120(a)(2),
    this Declaratory Ruling is hereby ADOPTED.

    FEDERAL COMMUNICATIONS COMMISSION

    Monica Desai Acting Chief Consumer & Governmental Affairs Bureau

[^1]: *Petition for Declaratory Ruling*, CC Docket No. 94-129, filed
    Feb. 1, 2005 (*Petition*), by 3 Rivers Telephone Cooperative, Inc.,
    Armstrong Telephone Company Maryland, Armstrong Telephone Company
    New York, Armstrong, Telephone Company North, Armstrong Telephone
    Company Northern Division, Armstrong Telephone Company Pennsylvania,
    Armstrong Telephone Company West Virginia, Calaveras Telephone
    Company, Inc., Chester Telephone Company, Chibardun Telephone
    Cooperative, Inc., Chickasaw Telephone Company, Citizens Telephone
    Company of Higginsville, Concord Telephone Company, CTC Telcom,
    Inc., Darien Telephone Company, DTC Communications, Egyptian
    Telephone Cooperative, Five Area Telephone, Hardy Telephone Company,
    Horry Telephone Cooperative, Inc., HTC Communications, Lackawaxen
    Telecommunications Services, Inc., Lockhart Telephone Co.,
    Margaratville Telephone Company, Mid-Century Telephone Company,
    Mid-Rivers Telephone Cooperative, Nicholville Telephone Company,
    Inc., North Central Telephone Cooperative, Inc., North-Eastern
    Pennsylvania Telephone Company, Peoples Telephone Company, Poka
    Lambro Telephone Cooperative, Public Service Telephone Company,
    Ridgeway Telephone Co., Siskiyou Telephone Company, Smart City
    Telecom, Smithville Telephone Company, Stayton Cooperative Telephone
    Company, TEC Services, Inc., Trumansburg Telephone Company, Inc.,
    United Telephone Company, Washington County Rural Telephone
    Cooperative, West Plains Telephone.

[^2]: *See* 47 C.F.R. § 64.1120(a)(2).

[^3]: 47 U.S.C. § 258(a).

[^4]: *See* 47 C.F.R. § 64.1100(a); *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, 1564-65, para. 92 (1998) (*Second Report and Order)*.

[^5]: *See* 47 C.F.R. § 64.1100(b); *Second Report and Order,* 14 FCC
    Rcd at 1565-66, para. 94.

[^6]: *Id.* The Commission also stated that, in the current environment,
    an IXC could also be an "executing carrier," *e.g*., if a
    facilities-based IXC resells service to a switchless reseller. *See
    Second Report and Order,* 14 FCC Rcd at 1566, para. 94.

[^7]: *See Second Report and Order,* 14 FCC Rcd at 1567, para. 97;
    *Implementation of the Subscriber Carrier Selection Changes
    Provisions of the Telecommunications Act of 1996,* Third Report and
    Order and Second Order on Reconsideration, 15 FCC Rcd 15996,
    16000-16006, paras. 6-18 (2000) (*Third Report and Order*).

[^8]: *See* 47 C.F.R. § 64.1120(a)(2).

[^9]: *See* Informal Complaint file nos. EB-04-MDIC 0003 through 0064,
    filed March 1, 2004.

[^10]: *See id*.

[^11]: *See id.*

[^12]: *Petition* at 8.

[^13]: *Id.* at 10-14.

[^14]: *Id*. at 14-16.

[^15]: *Id*. at 16-17.

[^16]: 47 C.F.R. § 64.1120(a)(2).

[^17]: *Second Report and Order,* 14 FCC Rcd at 1568, para. 99.

[^18]: *See id.*

[^19]: *See id.*

[^20]: *See Second Report and Order,* 14 FCC Rcd at 1568-69, para. 100.
    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 written or
    oral consent (*Second Report and Order,* 14 FCC Rcd at 1574*,* para.
    112, n. 348).

[^21]: *See id.* at 1569, para. 100.

[^22]: *Petition* at 12.

[^23]: *See supra* para. 2.

[^24]: *Third Report and Order,* 15 FCC Rcd at 16022, para. 51.

[^25]: *See* *Implementation of the Subscriber Carrier Selection Changes
    Provisions of the Telecommunications Act of 1996*, Third Order on
    Reconsideration and Second Further Notice of Proposed Rule Making,
    18 FCC Rcd 5099, 5109, para. 25 (2003).

[^26]: *See Petition* at 15-16*,* citing the *Third Report and Order*,
    15 FCC Rcd at 16021, para. 50 n.148.

[^27]: *Petition* at 7.

[^28]: *Petition.* at 17-18.

[^29]: *Id*.

[^30]: *See id.* at 17.

[^31]: *See* *Petition for Declaratory Ruling* filed by MCI on Mar. 12,
    2004. *See also Motion to Hold Proceeding in Abeyance* filed by the
    Public Service Commission of West Virginia on June 17, 2004.