**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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| Selection Changes Provisions of  |    |                              |
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| Telecommunications Act of 1996 ) | ** |                              |
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| Policies and Rules Concerning )  |    |                              |
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| Long Distance Carriers           | *  |                              |
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**THIRD ORDER ON RECONSIDERATION**

**AND SECOND FURTHER NOTICE OF PROPOSED RULEMAKING**

**Adopted: February 28, 2003 Released:** **March 17, 2003**

By the Commission:

# Introduction AND BACKGROUND 

1.  In this Third Order on Reconsideration and Second Notice of Proposed
    Rulemaking (*Order*) in the above-captioned proceeding, we address
    certain issues raised in petitions for reconsideration of the Second
    Report and Order and Further Notice of Proposed Rulemaking (*Second
    Report and Order*),[^1] the First Order on Reconsideration (*First
    Reconsideration Order*)[^2] and the Third Report and Order and
    Second Order on Reconsideration (*Third Report and Order*)[^3]
    implementing section 258 of the Communications Act of 1934 (Act), as
    amended by the Telecommunications Act of 1996 (1996 Act).[^4]
    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.[^5] 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.

2.  In the *Second Report and Order*, *First Reconsideration Order,* and
    *Third Report and Order*, the Commission promulgated rules pursuant
    to section 258 of the Act to combat the practice of slamming.[^6] In
    the *Second Report and Order*, the Commission sought to eliminate
    the profits associated with slamming by broadening the scope of its
    carrier change rules and adopting, among other things, more rigorous
    slamming liability and carrier change verification measures. When
    the Commission released the *Second Report and 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
    *Second Report and Order*, the Commission issued a Further Notice of
    Proposed Rulemaking (*Further Notice*).[^7] In the *Third Report and
    Order and Second Order on Reconsideration*, the Commission adopted a
    number of rules proposed in the *Further Notice,* and addressed most
    issues raised on reconsideration of the *Second Report and
    Order*.[^8] In addition, in the *First Reconsideration Order*,[^9]
    the Commission amended portions of the rules regarding liability for
    slamming that had been stayed by the D.C. Circuit Court.[^10]

3.  In this *Order*, we address petitions filed by a coalition of rural
    local exchange carriers (Rural LECs) and the National Telephone
    Cooperative Association (NTCA) seeking reconsideration of Commission
    rules prohibiting carriers that effect requests for subscriber
    carrier changes submitted by other carriers from "re-verifying" such
    requests before executing the requested changes.[^11] We also
    address a petition filed by SBC Communications, Inc. (SBC) seeking
    clarification of our prohibition on the use of carrier change
    information for marketing purposes and of the application of our
    slamming rules to Responsible Organization (RespOrg) changes for 800
    number service.[^12] Additionally, we address a petition filed by
    AT&T seeking clarification regarding the application of the slamming
    rules to newly installed lines, and petitions filed by Sprint and
    WorldCom seeking the elimination of certain carrier reporting
    requirements and modification of certain carrier liability rules.
    Finally, we address petitions for reconsideration of our *Third
    Report and Order* in which the Commission, among other things,
    modified its rules on the verification of carrier change requests,
    including third party verification (TPV) using a three-way
    conference call or a call through an automated verification
    system.[^13]

4.  This *Order* also contains a Further Notice of Proposed Rulemaking,
    in which we seek comment on rule modifications with respect to third
    party verifications.

#  RE-VERIFICATION OF CARRIER CHANGE REQUESTS BY EXECUTING CARRIERS

## Background

5.  In the *Second Report and Order*, the Commission set forth general
    distinctions between "submitting carriers" and "executing carriers"
    in the context of carrier change requests. 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.[^14] An example of a submitting carrier is an
    interexchange carrier (IXC) seeking to provide interexchange service
    to an end user. An "executing carrier" is defined as any
    telecommunications carrier that effects a request that a
    subscriber's telecommunications carrier be changed.[^15] The
    Commission clarified that an executing carrier has actual physical
    responsibility for making the change to the subscriber's service, as
    opposed to merely forwarding a carrier change request on behalf of a
    subscriber.[^16]

6.  In the *Second Report and Order*, the Commission affirmed its
    tentative conclusion that submitting carriers should be responsible
    for verification of carrier change requests and, regardless of the
    solicitation method used, should employ one of three verification
    options (written letters of agency (LOAs), electronic authorization,
    or third party verification).[^17] The Commission further concluded
    that an executing carrier may not "re-verify" the submitting
    carrier's initial verification of a change request.[^18] The
    Commission agreed with parties that such re-verifications would be
    expensive, unnecessary, and duplicative. The Commission emphasized,
    however, that executing carriers must act to ensure that subscriber
    change requests are executed as quickly and as accurately as
    possible, without unreasonable delay and using the most
    technologically efficient means available.[^19]

7.  The Commission expressed concern in the *Second Report and Order*
    that executing carriers would have the incentive and ability to use
    the verification process as a means of delaying or denying carrier
    change requests in order to benefit themselves or their
    affiliates.[^20] While the Commission agreed with LEC commenters
    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.[^21] The Commission also noted that section
    222(b) of the Act states that a carrier that "receives or obtains
    proprietary information from another carrier for purposes of
    providing any telecommunications service shall use such information
    only for such purpose."[^22] The Commission found that information
    contained in a submitting carrier's change request is proprietary
    information such that that the executing carrier may only use that
    information to provide service to the submitting carriers (*i.e*.,
    changing the subscriber's carrier), and may not make additional use
    of that information for re-verification purposes.[^23]

8.  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.[^24] In general, preferred carrier freezes require
    subscribers to contact their executing carriers to lift such freezes
    before any carrier changes can be effectuated. Executing carrier
    re-verification of a subscriber change request would also act as a
    "freeze" of a customer's preferred carrier by requiring the customer
    to communicate with the executing carrier before the requested
    change can be implemented.[^25] As with unauthorized preferred
    carrier freezes, the Commission concluded that re-verification by
    executing carriers could serve to "take away control from the
    consumer" and constrain consumer choice.[^26]

9.  Notwithstanding its conclusion that executing carriers may not
    verify carrier change requests, the Commission emphasized that such
    carriers are free to provide protections to customers in ways that
    do not raise anti-competitive concerns.[^27] For example, the
    Commission stated that executing carriers may make preferred carrier
    freeze options available to customers who choose to authorize such a
    freeze to protect themselves from slamming.[^28] The Commission also
    noted that executing carriers have other means available to notify
    customers that their preferred carrier has changed, such as
    highlighting the change on the customer's bill.[^29] Finally, the
    Commission stated that the concerns expressed by the executing
    carriers would likely lessen over time as the broader slamming
    safeguards contained in the *Second Report and Order* acted to
    decrease the incidence of slamming harms.[^30]

## Rural LEC and NTCA Petitions for Reconsideration

10. Rural LECs and NTCA ask the Commission to reconsider and reverse the
    prohibition on executing carrier re-verifications.[^31] According to
    Rural LECs, because of their close relationships with their
    customers, small, rural LECs are "uniquely positioned to provide a
    line of defense" against slamming.[^32] Rural LECs state that their
    own voluntary executing carrier verification efforts prevented
    slamming in the past, and they assert that executing carriers found
    that 40-50% of change requests were unauthorized.[^33] NTCA agrees
    that, based on the number of potential slamming cases uncovered by
    executing carriers before the prohibition, it is clear that
    re-verification deters slamming.[^34] Rural LECs assert that
    executing carrier verification serves as an additional safeguard
    against slamming and, contrary to the Commission's finding in the
    *Second Report and Order,* there is no assurance that under the
    Commission's modified rules slamming practices will abate, given the
    large financial incentives that remain.[^35]

11. Rural LECs and NTCA further assert that executing carriers have a
    vested interest in verifying the accuracy of change requests because
    they are often customers' primary point of contact for phone
    service, and therefore risk damage to their business reputation and
    customer relations when slamming occurs, as well as being subject to
    the "costly and time-consuming" slamming enforcement process. [^36]
    Rural LECs assert that they have not engaged in marketing when
    re-verifying change requests, and state that many rural LECs do not
    have long distance affiliates and would thus lack incentives to
    delay or deny carrier change requests.[^37] Rural LECs argue that
    many submitting carriers, however, have incentives to use deceptive
    or misleading marketing practices in order to gain customers, and it
    is therefore inappropriate for such carriers to also be responsible
    for verification of change requests.[^38] NTCA agrees that the
    Commission's concerns regarding potential anti-competitive use of
    verification by executing carriers are unfounded, and that in any
    case the benefits of allowing executing carriers to verify change
    request far outweigh any risk of anti-competitive behavior. [^39]
    NTCA asserts that the Commission can allay any concerns it has about
    anti-competitive behavior by executing carriers by imposing, for
    example, time limits by which verification and execution must
    occur.[^40] U S West states that, instead of a prohibition on LEC
    re-verifications, the Commission should at most regulate the "form,
    content and scope" of the re-verification contact.[^41]

12. NTCA also states that, because an executing carrier could be liable
    for harms caused by inappropriate carrier changes, executing
    carriers assume great risk when relying on a submitting carrier's
    claim to be the "agent" of the end user.[^42] NTCA asserts that the
    reasonableness of a LEC's belief in the apparent authority of the
    IXC will be difficult to establish given the high incidence of
    slamming.[^43] Furthermore, NTCA states that, under the principles
    of agency law, an agent has no right or reason to require
    information to be withheld from the principal.[^44] NTCA
    acknowledges that, under section 222(b) of the Act, an executing
    carrier may not disclose carrier change information to other IXCs or
    to any other party for competitive benefit.[^45] However, NTCA
    argues that the executing carrier would be using the proprietary
    information to prevent anti-competitive practices, not to gain a
    competitive advantage.[^46] NTCA also asserts that communications
    between an executing carrier and its own customers regarding carrier
    change verification information does not violate section 222(b)
    because the information is proprietary only as to the customers
    themselves. NTCA states that it is illogical to presume that
    Congress intended that a subscriber's own proprietary information
    not be divulged to him or her.[^47]

13. Finally, Rural LECs and NTCA argue that, by restricting the ability
    of executing carriers to communicate with their customers, the
    Commission is unduly interfering with executing carriers' First
    Amendment rights. NTCA agrees that there is a substantial
    governmental interest in advancing competition and protecting
    consumer choice.[^48] NTCA asserts, however, that the prohibition on
    executing carrier re-verification does not advance this interest and
    in any case is not the least restrictive rule that could have been
    adopted.[^49] Rural LECs ask the Commission to consider this issue
    in the context of the U.S. Supreme Court's decision in *United
    States v. Playboy Entertainment Group.*[^50] Specifically, Rural
    LECs argue that, as in the *Playboy* case, the Commission has
    restricted content-based speech without demonstrating that less
    restrictive means could not be used to accomplish the Commission's
    objectives.[^51] Rural LECs also note that the Supreme Court let
    stand the Tenth Circuit's decision in *U S West v. FCC* that the
    Commission's customer proprietary network information (CPNI) rules
    improperly restricted speech.[^52]

14. Several commenters oppose the petitions of Rural LECs and NTCA,
    stating that LECs have the incentive to try to delay carrier changes
    and/or market their own products to customers under the guise of
    verifying the intent to change carriers.[^53] AT&T argues that
    petitioners have failed to demonstrate that protection of their
    purported "reputation interest" should take precedence over the
    specific interest of customers in the timely implementation of their
    orders, and the public interest in protection of a competitive
    telecommunications marketplace.[^54] AT&T asserts that petitioners
    have in any case failed to provide any factual evidence that
    customers blame them for slamming.[^55] WorldCom argues that the
    petitioners fail to explain why the new, Commission-approved
    verification processes will be insufficient to deter slamming.[^56]
    Qwest states that the prohibition against re-verification by
    executing carriers will become even more important as Regional Bell
    Operating Companies ("RBOCs") are able to offer more services
    pursuant to section 271 of the Act.[^57]

## Discussion

15. We disagree with petitioners that our prohibition on executing
    carrier re-verification fails to withstand First Amendment
    analysis.[^58] As an initial matter, the *Playboy* case cited by
    Rural LECs does not provide the proper framework for analysis of the
    speech at issue here. The ability of an executing carrier to verify
    its customer's change requests is by its nature commercial speech
    because it concerns the act of solicitation and consumer purchase of
    services provided by the consumer's carrier of choice.[^59] In
    contrast, the speech at issue in *Playboy* was not commercial
    speech, was restricted solely on the basis of its content, and was
    therefore subject to a different level of protection under the First
    Amendment, *i.e*., the speech was subject to the strictest level of
    scrutiny. Thus, in *Playboy*, the Court found that the statutory
    provision at issue should be narrowly tailored to promote a
    compelling government interest and, if a less restrictive
    alternative would serve the Government's purpose, that alternative
    must be used."[^60]

16. Commercial speech is subject to a lesser degree of First Amendment
    scrutiny than is used when examining non-commercial speech.[^61]
    Specifically, as articulated in *Central Hudson Gas & Electric
    Corp. v. Public Service Commission*, commercial speech must be
    analyzed according to the following criteria: (1) whether the
    asserted governmental interest is substantial; (2) whether the
    regulation directly advances the governmental interest asserted;
    and (3) whether the regulation is not more extensive than necessary
    to serve that interest.[^62]

17. With respect to the first prong of *Central Hudson*, we conclude
    that the governmental interest in preventing anti-competitive
    behavior and removing impediments to consumer choice, is
    substantial. Neither Rural LECs nor NTCA dispute this assertion; as
    noted above, NTCA in fact agrees that these interests are
    substantial. We also note that the Supreme Court has recognized that
    eliminating restraints on competition is a substantial government
    interest.[^63] We remain concerned that, in today's dynamic
    telecommunications marketplace, re-verifications by executing
    carriers before executing carrier changes, in addition to the other
    verification safeguards required by our rules, are duplicative and
    create unnecessary burdens on customers seeking to make carrier
    change requests, and as such can impede consumer choice. As the
    Commission stated in the *Second Report and Order*, executing
    carriers would have both the incentive and ability to delay or deny
    carrier changes, using verification as an excuse, in order to
    benefit themselves or their affiliates.[^64]

18. As to the second prong of *Central Hudson*, we conclude that the
    decision to prohibit carriers from imposing an additional,
    duplicative procedure on consumers directly advances the substantial
    government interest in preventing anti-competitive practices by
    executing carriers. Those sections of the Act from which the
    Commission's slamming rules derive were enacted with the specific
    purpose of preventing anti-competitive practices that distort the
    telecommunications marketplace and unjustly harm consumers.[^65] The
    Commission's verification procedures seek to prevent
    anti-competitive practices by all parties involved in the carrier
    change process, and promote competition and choice in
    telecommunications by ensuring that the ability to choose and change
    carriers is seamless and efficient. In general, there must be a
    "reasonable fit" between the regulation and the objective, and the
    fit "represents not necessarily the single best disposition but one
    whose scope is in proportion to the interest served."[^66] NTCA
    suggests that the Commission could avoid anti-competitive delays by
    requiring executing carriers to verify and execute change requests
    within a certain period of time.[^67] As we discussed in the *Second
    Report and Order*, mandating a specific deadline for such actions
    would be problematic due to the many legitimate reasons for delay,
    such as customer requests for delay or a large volume of change
    requests, and would likely fail to meet needs of the wide variety of
    carriers in the marketplace, small and large alike.[^68] In any
    case, regardless of whether a time limit is in effect, customers
    should not be forced by executing carriers to provide affirmation,
    for yet a third time, of their decision to change preferred
    carriers. We note that, in general, carriers can communicate
    information freely to their customers during commercial
    transactions; we simply decline here to impose a duplicative and
    burdensome additional procedural step in the carrier change
    verification process.

19. In addition, such an alternative would not eliminate unnecessary
    burdens on consumers. As with unauthorized preferred carrier
    freezes, re-verification by its very nature imposes additional
    burdens on consumers and diminishes consumer choice. TRA asserts
    that, in the "rough and tumble" telecommunications marketplace, the
    costs to competition and consumer choice of allowing executing
    carriers to re-verify carrier change requests are "painfully
    obvious" and would be much higher than any potential benefits of
    allowing this practice.[^69] TRA states that allowing carrier change
    information to be used by executing carriers for re-verification
    would be analogous to authorizing GM to confirm each sale made by
    Ford before the sale can take place.[^70]

20. We agree that it is difficult to imagine how a company that imposes
    a verification requirement on a consumer's purchase of a
    competitor's product reduces unnecessary delays and increases choice
    for consumers. We continue to believe that the Commission's
    prohibition on executing carrier verification advances and is
    proportionate to the goal of preventing anti-competitive behavior by
    executing carriers and protecting consumer choice. As the Commission
    stated in the *Second Report and Order*, even with this prohibition,
    executing carriers have other means of protecting their customers
    that will not interfere with competition or undermine consumer
    choice. For example, the Commission noted that executing carriers
    can offer a preferred carrier freeze option to customers who are
    concerned about slamming and authorize such a freeze, and can alert
    customers to carrier changes by highlighting carrier change
    information in customer billings.[^71]

21. We also find that our rule satisfies the final prong of *Central
    Hudson*, *i.e*., that it is not more extensive than necessary to
    serve the stated interest. While the Commission need not employ the
    least restrictive means, the means must be "narrowly tailored" to
    its desired objective.[^72] Under this prong, we consider the
    "careful calculation" of costs and benefits associated with the
    burden on speech.[^73] NTCA asserts that the Commission's decision
    to prohibit executing carrier verification does not reflect such a
    balancing. We disagree. In the *Second Report and Order*, the
    Commission acknowledged that executing carrier re-verification of
    carrier changes could in some instances help to deter slamming.[^74]
    In addition, we note that NTCA and Rural LECs appear to claim that a
    benefit of such an approach would be to protect the business
    reputation of executing carriers who's customers assume they are
    responsible for slamming. The costs of such an approach were also
    set forth in the *Second Report and Order*.

22. Specifically, the Commission found that executing carrier
    re-verification could diminish consumer choice and impede
    competition, and would be expensive, unnecessary and duplicative of
    the submitting carriers' verification.[^75] We also are unpersuaded
    by NTCA and Rural LECs' argument that executing carrier
    re-verification serves our interest in deterring slamming, and
    protecting consumer choice and competition, as well as our
    strengthened slamming rules. When asserting that executing carrier
    verification is necessary, NTCA and Rural LECs rely solely on the
    assertion that executing carrier verification revealed a high
    incidence of invalid change orders prior to the implementation of
    the Commission's current slamming safeguards.[^76] Rural LECs and
    NTCA also provide no evidence that their customers blame them for
    slamming.

23. We have considered alternatives to the re-verification restriction,
    such as allowing re-verification by LECs without IXC affiliates, or
    allowing re-verification by LECs if the actual re-verification is
    conducted by an independent, third-party verifier. However, we note
    that these alternatives would still involve duplicative
    verifications for customers as discussed above. In addition, even if
    a LEC or its affiliate does not provide IXC service, the LEC remains
    a competitor to IXC service providers in the lucrative intraLATA
    toll market, and as such would have incentives to engage in
    anti-competitive behavior towards IXCs. Furthermore, such
    alternatives would create administrative difficulties. For example,
    if a customer was required to complete verifications at the behest
    of both the IXC and the LEC, and the verifications were somehow
    contradictory, it may not be clear as to which verification should
    be used to effect the carrier change or to make a determination in
    the context of a slamming dispute. While we do not agree with TRA
    that executing carrier verification is simply "a naked cost with no
    countervailing benefit," we also do not find that potential benefits
    of allowing executing carriers to verify sales by other companies to
    the executing carriers' customers outweigh the costs to consumer
    choice and competition. We note that our rules require executing
    carriers (that are informed by a subscriber of an unauthorized
    carrier change) to immediately notify both the authorized carrier
    and the alleged unauthorized carrier, and to refer the subscriber to
    the appropriate governmental forum for resolution of the
    complaint.[^77] Under these circumstances, the LEC, at its
    discretion, may be able to assist the subscriber in receiving
    reimbursement or removal of the charges from the bill, particularly
    if the LEC acts as the billing and collections agent for the IXC in
    question.

24. With respect to the petitioners' other arguments, we disagree with
    NTCA that the prohibition on executing carrier re-verification
    exposes executing carriers to liability for slamming under general
    principals of agency law. The Commission's rules make clear that the
    responsibility to verify a customer's change request before
    submitting it to that customer's executing carrier rests upon the
    submitting carrier.[^78] Consequently, any liability that flows from
    a submitting carrier's failure to verify a customer's change request
    will, under the Commission's rules, fall upon the submitting
    carrier.[^79] Executing carriers are, of course, liable for any
    adverse actions that they may undertake during the execution
    process, such as unnecessary or unreasonable delay in implementing a
    change request from a submitting carrier.[^80]

25. Finally, we disagree with NTCA that the information contained in a
    carrier change request is not protected by section 222(b) of the
    Act. NTCA argues that the executing carrier would be using the
    proprietary information to *prevent* anti-competitive practices, and
    not to gain a competitive advantage in violation of section
    222(b).[^81] In contrast, Cable & Wireless and Sprint concur with
    the Commission's finding in the *Second Report and Order* that the
    use of carrier change information by executing carriers to re-verify
    orders is an impermissible use of proprietary information under
    section 222(b) of the Act.[^82] As explained above, the Commission
    has legitimate concerns with regard to LEC use of carrier change
    information to impede consumer choice and hamper competition. In
    addition, the fact that an executing carrier may also use that
    information in a pro-competitive way (*i.e.,* to prevent slamming)
    does not diminish the fact that information contained in a carrier
    change request is by its very nature proprietary to the submitting
    carrier. Such information may only be used by the executing carrier
    to effectuate the provision of service by the submitting carrier to
    its customer.

26. [Use of Carrier Change Information for Marketing
    Purposes]{.underline}. In a similar vein, SBC asks that the
    Commission clarify its position on the use of carrier change
    information for marketing purposes *after* the carrier change has
    been completed and the customer has been disconnected.[^83] No
    commenter disputes that, under section 222(b) of the Act, carrier
    change information cannot be disclosed for competitive benefit.[^84]
    NTCA agrees that "Congress intended by the express terms of section
    222(b) to prevent carriers from using information obtained from
    another to be used for the carrier's own marketing efforts against
    the submitting carrier."[^85] SBC, however, asks the Commission to
    clarify that executing carriers are not prohibited from contacting
    customers who have switched to competitors *after* the carrier
    change has been completed and the customer has been
    disconnected.[^86] SBC argues that, because disconnect information
    is available to IXCs and CLECs concurrent with its availability to
    executing carriers, there should be no restrictions on the use of
    that information.[^87] WorldCom asks the Commission to clarify that
    an executing carrier is prohibited from using information obtained
    from a carrier change request to "winback" the customer after
    carrier change completion and disconnection, even if the disconnect
    information reveals that a customer's service was disconnected as
    the result of a carrier change order.[^88]

27. We clarify that, to the extent that the retail arm of an executing
    carrier obtains carrier change information through its normal
    channels in a form available throughout the retail industry, and
    after the carrier change has been implemented (such as in disconnect
    reports), we do not prohibit the use of that information in
    executing carriers' winback efforts. This is consistent with our
    finding in the *Second Report and Order* that an executing carrier
    may rely on its own information regarding carrier changes in winback
    marketing efforts, so long as the information is not derived
    exclusively from its status as an executing carrier.[^89] Under
    these circumstances, the potential for anti-competitive behavior by
    an executing carrier is curtailed because competitors have access to
    equivalent information for use in their own marketing and winback
    operations.

28. We emphasize that, when engaging in such marketing, an executing
    carrier may only use information that its retail operations obtain
    in the normal course of business. Executing carriers may not at any
    time in the carrier marketing process rely on specific information
    they obtained from submitting carriers due solely to their position
    as executing carriers. We reiterate our finding in the *Second
    Reconsideration Order* that carrier change request information
    transmitted to executing carriers in order to effectuate a carrier
    change cannot be used for any purpose other than to provide the
    service requested by the submitting carrier. We will continue to
    enforce these provisions, and will take appropriate action against
    those carriers found in violation. In addition, we note that our
    decision here is not intended to preclude individual State actions
    in this area that are consistent with our rules.

# VERIFICATION of carrier changes

## Independent Third Party Verification

29. [Background]{.underline}. In the *Second Report and Order*, the
    Commission stated that a preferred carrier change order must be
    confirmed using written or electronically-signed letters of agency
    (LOAs), electronic authorization (a call to a toll-free number that
    records the caller's originating automatic number identification),
    independent third party verification, or "any State-enacted
    verification procedures applicable to intrastate preferred carrier
    change orders only."[^90] In particular, the Commission modified its
    rules on independent third party verification to address concerns
    raised in conjunction with its use by strengthening the independence
    criteria under which third party verification entities operate.[^91]
    The Commission noted, for example, that some carriers have used
    third party verification in a manner calculated to confuse and
    mislead consumers.[^92] The Commission thus set forth the criteria
    to be used when determining third party independence in order to
    better ensure that the third party verification process is truly
    separate from both the carrier and the carrier's sales
    representative.[^93] Specifically, the Commission (1) stated that
    the third party verifier should not be owned, managed, controlled,
    or directed by the carrier, (2) found that the third party verifiers
    should not be given financial incentives to approve carrier changes,
    and (3) reiterated that the third party verifier must operate in a
    location physically separate from the carrier.[^94] The Commission
    also 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 *Second Report and Orde*r, the Commission issued a *Further
    Notice of Proposed Rulemaking* seeking comment on independent third
    party verification, as well as on various other proposals relating
    to slamming.[^95]

30. In response to the comments received, in the *Third Report and
    Order* the Commission required that (1) the carrier or carrier's
    sales representative must drop off the call once the connection has
    been established between the subscriber and the third party
    verifier, (2) scripts for third party verification (TPV) should
    elicit, at a minimum, the identity of the subscriber, 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, and the TPV must also
    be conducted in the same language that was used in the underlying
    sales transaction, (3) the entire TPV transaction must be recorded,
    and carriers must preserve and maintain these recordings for a
    minimum period of two years after obtaining such verification,
    and (4) automated systems that preserve the independence of the
    third party verification process may be used to verify carrier
    change requests.[^96] The Commission created these requirements to
    enhance the independent nature of the third party method of
    verification and to ensure that the verification process ultimately
    involved only the consumer and the third party verifier. The
    Commission also stated, in the *Third Report and Order*, that a
    carrier's sales agent's role is concluded when a consumer is
    transferred to a third party verifier because the consumer's intent
    to change carriers should have been reached following a clear,
    non-misleading presentation by the carrier's sales agent.[^97] The
    Commission found that the presence of a sales agent on the
    verification call could compromise the independent nature of the
    process by creating an opportunity for improper influence.[^98]

31. VoiceLog, a third party verification services provider, has
    petitioned the Commission to reconsider the requirement that a
    carrier or carrier's sales representative drop off the call after
    initiating a three-way conference call or a call through an
    automated verification system.[^99] VoiceLog states, among other
    things, that many of the smaller carriers it serves do not have the
    "sophisticated central office equipment necessary to allow a sales
    representative to initiate a three-way conference call or call
    through an automated system and then drop off the line."[^100]

32. Specifically, VoiceLog asserts that, when adopting the drop-off
    rule, the Commission failed to give full consideration to the rule's
    effect on consumers and, in particular, small carriers. VoiceLog
    states that smaller carriers often lack the economic or technical
    means to comply with the drop-off requirement, and, in some cases,
    are located in areas where they are unable to procure the services
    necessary to allow the party initiating the conference call to drop
    the call without terminating it.[^101] VoiceLog conducted an
    Internet-based survey of members of the telecommunications industry
    in response to Commission staff requests for more detailed
    information about the impact of and costs of compliance with the
    drop-off rule.[^102] Of the 58 respondents, 40% had 50 or fewer
    employees, while approximately 10% had over 1000 employees; 58% of
    respondents had \$10 million or less in revenue, and 14% had more
    than \$10 million. Forty-three percent said that they were unaware
    of the rule, 52% were not in compliance with the drop-off rule, and
    33% currently do not have the technology required to comply with the
    drop-off rule.[^103] With regard to compliance costs, 16% reported
    that they could not upgrade their technology to comply with the
    drop-off rule, 21% reported the costs to upgrade would exceed
    \$10,000, 13% estimated the upgrade costs to exceed \$50,000, and
    10% estimated that the costs to comply with the rule would exceed
    \$100,000.[^104] Fifty percent of respondents stated that compliance
    with the rule would result in incremental costs of \$1000 to \$5000
    per month or more. Forty-one percent of the respondents stated that
    they cannot monitor whether their sales representative has dropped
    off the line during the TPV and, according to VoiceLog, dropping off
    the line would require these carriers to put the line on hold,
    forcing the sales representative to periodically recheck the line to
    determine if the TPV is finished, an inefficient and costly
    process.[^105]

33. When asked what reasons prevented the carriers from upgrading their
    technology to comply with the drop-off rule, 51% of respondents
    cited lack of capital, 46% cited a lack of technical information,
    and 11% stated either that the central office would not support a
    drop-off or that the technology was not available.[^106]

34. Furthermore, VoiceLog and other commenters state that customers
    sometimes have questions that occur to them during the verification
    process.[^107] VoiceLog asks that the Commission modify the drop-off
    requirement to allow a carrier or a carrier's representative
    initiating a three-way conference call or a call through an
    automated verification system to remain silently on the line, assist
    the subscriber in reaching a live person, assist in terminating the
    call, and provide neutral, objective information that responds
    directly to the subscriber's inquiry.[^108] VoiceLog states that
    permitting a sales agent to stay on the line allows "a consumer who
    becomes confused to be able terminate the verification, obtain the
    needed clarification or information from the sales agent, and then
    initiate a new verification."[^109] VoiceLog asserts that its
    proposal addresses concerns regarding potentially coercive behavior
    by the sales agent during the verification process, is practical to
    implement, and is easy to enforce.[^110]

35. [Discussion]{.underline}. We concluded in the *Third Report and
    Order* that the drop-off requirement would act as an important tool
    to better ensure that the third party verification process is truly
    separate from both the carrier and the carrier's sales
    representative.[^111] In addition, we note that a third party
    verification does not necessarily need to employ a three-way call.
    Nevertheless, we recognize that dropping off a three-way call could
    potentially be infeasible for carriers in certain specific
    situations; for example, a carrier may not be able to comply with
    the drop-off rule because its sales force is located in an area with
    an exchange that does not employ the technology necessary to support
    a drop-off. Accordingly, we will exempt from the rule those carriers
    that certify to the Commission that their sales agents are unable to
    drop off the sales call after initiating a third party
    verification.[^112] Such carriers will be exempt from the drop-off
    requirement for a period of two years from the date the
    certification is received by the Commission. Carriers that wish to
    extend their exemption from the rule must, at the end of the two
    year period (and every two years thereafter) re-certify to the
    Commission as to their continued inability to comply. For any
    carrier that certifies that it is unable to comply with the drop-off
    requirement, we emphasize that, in any case, the third party
    verification must be terminated if the sales agent of an exempted
    carrier responds to a consumer\'s inquiries after a verification
    attempt has begun. A new verification may be initiated only after
    the sales agent has finished responding to the customer.

36. This is consistent with the obligations of carriers who are subject
    to the drop-off rule in that any third party verification obtained
    before a sales representative has ceased providing information will
    not be considered valid. We also emphasize that, consistent with our
    rules for recordings of third party verifications, third party
    verification audio tapes provided by a carrier not subject to the
    "drop-off" rule (to the Commission or appropriate state agency in
    the course of an investigation of slamming) must include the
    entirety of the final verification communication, including both
    what the subscriber has said and what the subscriber has heard
    during the course of the final verification. As the Commission found
    in the *Third Report and Order*, strict liability \"provides
    appropriate incentives for carriers to obtain authorization properly
    and to implement their verification procedures in a trustworthy
    manner."[^113]

37. We believe that the above discussion fully addresses VoiceLog's
    concerns regarding the inability of certain carriers to comply with
    the drop-off rule. Inasmuch as VoiceLog also makes more general
    arguments with respect to the overall effect of the rule, and
    proposes more extensive modifications, we address these arguments
    below.

38. [Alleged Drop-off Rule Deficiencies]{.underline}. VoiceLog argues
    that the rule imposes burdens on the verification process, impedes
    competition and will increase consumer confusion.[^114] According to
    VoiceLog, the rule is overbroad because the presence of a sales
    agent during third party verification is not *per se* misleading or
    coercive; a sales agent that is allowed to remain silently on the
    line except to provide neutral, factual information would not have
    the opportunity to exert undue influence on the customer.[^115]
    VoiceLog further asserts that consumers may be confused by automated
    verification systems or have additional questions regarding a
    carrier's service.[^116] Thus, VoiceLog states, the drop-off rule
    imposes burdens on the verification process by causing unnecessary
    delays as a result of having to repeat the verification process, as
    opposed to allowing the sales representative to provide neutral,
    factual assistance during verification.[^117] VoiceLog asserts that
    because these problems do not exist with LOAs, the drop off rule
    provides an incentive for carriers that can afford it to switch from
    third party verification to LOAs.[^118]

39. AT&T asserts that it has been its experience that "verification end
    users request marketing-related information," and that the drop-off
    rule thereby forces the consumer to either forgo obtaining the
    information or terminate the verification call and place a new call
    to the carrier's telemarketing center in order to speak to the same
    carrier representative.[^119] In addition, AT&T states that carriers
    that offer presubscribed service bundled with other services that do
    not require verification risk having the entire bundled order
    invalidated if the customer fails to complete the verification
    process.[^120]

40. We are not persuaded that we need to modify our finding that a third
    party verification is valid only if it is commenced after a
    carrier's sales representative has finished providing information to
    the customer. We agree with ASCENT that there should be no reason
    for a sales agent to participate in the call after it has been
    transferred to an independent third party verifier; at this stage,
    the consumer will have manifestly exhibited a clear intent to
    effectuate a carrier change, and will have reached that conclusion
    following a non-misleading presentation by the sales
    representative.[^121] If a consumer needs to obtain additional
    information, the third party verification must be terminated, and a
    new verification may commence only after the carrier's sales agent
    has finished responding to the consumer's inquiry. We emphasize that
    we do not forbid carriers' sales agents from speaking to a consumer
    after a verification attempt has commenced. Final verification,
    however, can only be validly obtained after sales agents have
    finished providing information.

41. We note that VoiceLog and AT&T assert that requiring a sales agent
    to be silent during verification achieves the desired result of
    avoiding undue influence by the agent without creating the problems
    they claim are associated with the drop-off rule.[^122] AT&T states
    that "it is not apparent how the telemarketing personnel could
    exercise any such improper influence *unless they were to take a
    speaking role in the three way call*."[^123] However, both parties
    also advocate that the sales agent *not* remain silent so that the
    agent may provide information in response to consumer questions
    before verification is completed.[^124] We disagree with AT&T that
    "marketing-related information" should be provided by the carrier's
    sales agent during verification.[^125] As the Commission noted in
    the *Third Report and Order*, "\[b\]ecause 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."[^126] It is difficult to
    imagine how any verification obtained before marketing has ceased
    can be considered representative of a consumer's final decision;
    such a practice would blur the line between marketing and
    verification to the extent that the concept of "independent
    verification" would be rendered virtually meaningless.

42. As noted above, VoiceLog asserts that the rule is impractical
    because many smaller carriers lack access to the technical means to
    comply with the requirement or cannot afford "expensive equipment
    upgrades."[^127] We have addressed VoiceLog's concerns in this
    respect by creating an exemption for those carriers that certify
    that they are unable to comply with the rule. In addition, VoiceLog
    states that the rule is not competitively neutral with respect to
    other verification methods, such as LOAs.[^128] VoiceLog asserts
    that because the burdens on the verification process associated with
    the drop off rule do not exist with LOAs, the rule provides an
    incentive for carriers that can afford it to switch from three-way
    calling and associated third party verification to LOAs obtained by
    face-to-face conversations.[^129] VoiceLog states that smaller
    carriers, however, cannot afford these additional costs.[^130]
    Again, we note that we now allow carriers to certify that they are
    unable to comply with the drop-off rule. In any case, we do not
    believe that the rule arbitrarily discriminates against three-way
    calling and associated third party verifications as opposed to LOAs
    obtained by sales agents face-to-face. We note that we have found
    that some carriers use misleading telemarketing to induce
    subscribers to change carriers by, for example, telling them that
    their long distance and local bills will be consolidated.[^131] 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.[^132] A subscriber
    may be more easily misled in the telemarketing situation than in a
    face-to-face meeting. In a face-to-face meeting, the subscriber is
    able to physically review the critical aspects of the calling plan
    and determine if any mistakes were made with regard to the ordered
    services.

43. [Alleged Commission failure to consider the entire record when
    deciding on the drop-off rule]{.underline}. VoiceLog argues that
    "several commenters suggested that the Commission adopt a
    requirement similar to that which is proposed" by VoiceLog.[^133] In
    adopting the drop-off rule, the Commission considered all proposals
    offered in the comments, including a proposal from the National
    Association of Attorneys General (NAAG), which suggested that the
    Commission take an even harder stance to ensure the independence of
    the third party verification, by not allowing a carrier to conduct a
    three-way call to connect the subscriber to the third party
    verifier.[^134] The Commission also considered the comments of
    ASCENT who argued that the carrier's sales representatives role is
    concluded by the point at which the consumer is transferred to a
    third party verifier and there should be no reason for the carries
    sales representative to participate in a call after it has been
    transferred to an independent third party verifier.[^135] These
    examples demonstrate that the record provided a reasonable basis for
    the Commission's initial decision. By allowing carriers to certify
    that they are unable to comply with the rule, the Commission will
    not force those carriers to choose between abandoning the use of the
    three-way call to link the subscriber with the automated TPV system
    or investing in infeasible upgrades.[^136]

44. [Alleged Commission Failure to Provide Opportunity for Notice and
    Comment on the Rule.]{.underline} VoiceLog contends that, in the
    Further Notice portion of the *Second Report and Order,* the
    Commission failed to provide notice of the possible adoption of a
    drop-off rule. In addition, VoiceLog states that the Commission also
    failed to solicit comment, in the Initial Regulatory Flexibility
    Analysis (IRFA), on the effect a drop-off rule would have on small
    businesses. Thus, according to VoiceLog, the Commission failed to
    comply with the Regulatory Flexibility Act (RFA) when it adopted the
    drop-off rule in the *Third Report and Order*.[^137] The U.S. Small
    Business Association (SBA) agrees that the Commission adopted the
    drop-off requirement without raising the issue in an IRFA, or
    soliciting comment on compliance costs and significant alternatives.
    SBA adds that the *Third Report and Order's* Final Regulatory
    Flexibility Analysis (FRFA) did not analyze compliance costs of the
    drop-off rule or significant alternatives to lessen the regulatory
    impact on small businesses.[^138] SBA asks the Commission to grant a
    partial stay of the drop-off rule, issue a supplemental IRFA that
    addresses the rule, and request comment on the effect of the rule on
    small businesses.[^139]

45. We note that, in the Further Notice portion of the *Second Report
    and Order*, the Commission provided notice and the opportunity to
    comment on this aspect of third party verification. Specifically,
    the Commission asked whether, if a telemarketing carrier is present
    during the third party verification, such verification can be
    considered "independent" and asked whether "independent third party
    verification should be separated completely from the sales
    transaction, so that a carrier would not be permitted to conduct a
    three-way call to connect the subscriber to the third party
    verifier."[^140] The Commission also stated: "With some \[automated
    third party verification\] systems, the telemarketing carrier
    remains on the call during the verification, while in other systems,
    the telemarketing carrier may hang up on the call after connecting
    the subscriber to the third party verifier. We seek comment on
    whether automated third party verification systems as described
    above would comply with our rules concerning independent third party
    verification, as well as with the intent behind our rules to produce
    evidence independent of the telemarketing carrier that a subscriber
    wishes to change his or her carrier."[^141] Therefore, while we did
    not mention the "drop-off rule" by that name, the Commission did
    seek comment on the fundamental aspects of the rule. In addition, in
    the IRFA, the Commission recognized that while it did not propose
    "specific" rules for modification of the third party verification
    process, it sought comment generally on the form and content of the
    independent third party verification.[^142] Furthermore, in the
    FRFA, the Commission recognized the drop-off requirement when
    summarizing projected compliance requirements.[^143] Finally, we
    note that carriers (including small carrier entities) that certify
    that they are unable to comply, will not be subject to the rule.
    Thus, we believe that parties' regulatory flexibility concerns are
    addressed by the action we take here today. In addition, our action
    regarding the drop-off rule is discussed in the Supplemental
    Regulatory Flexibility Analysis herein.

46. [First Amendment Concerns]{.underline}. Lastly, VoiceLog argues that
    the Commission's drop-off requirement is an unconstitutional
    abridgement of the First Amendment right of free speech under the
    *Central Hudson* test for permissible regulation of commercial
    speech.[^144] As discussed in paragraph 16 *supra*, in *Central
    Hudson*, the Supreme Court articulated an analysis for determining
    whether a particular commercial speech regulation is
    constitutionally permissible.[^145] While we are not convinced that
    VoiceLog's concerns raise a First Amendment issue, we nevertheless
    address VoiceLog's assertions below.

47. VoiceLog argues that the drop-off requirement fails constitutional
    scrutiny under the *Central Hudson* analysis because the rule "halts
    all speech" in order to curtail some problematic speech.[^146]
    VoiceLog states that carriers and marketers have an interest in
    conveying truthful information about their products to consumers and
    consumers have a corresponding interest in receiving truthful
    information.[^147] VoiceLog further asserts that sales agent answers
    to consumer questions after verification has commenced, provided in
    a truthful and non-misleading manner, facilitate consumer choice and
    are protected by the First Amendment.[^148] As noted above, we do
    not forbid carriers' sales agents from providing further information
    after a verification attempt has commenced. Final verification,
    however, can only be validly obtained after a sales agent has
    finished providing information. We thus disagree that the drop-off
    rule "halts all speech," as is argued by VoiceLog. Indeed, it does
    not halt any speech. We recognize that a customer whose sales agent
    has dropped off the call may get a different sales agent than the
    original agent when attempting to obtain further information after
    verification has commenced.[^149] We do not believe that whatever
    small efficiency might be realized by a subscriber's speaking to the
    same sales agent in all cases outweighs the concerns regarding
    verifications made before marketing is completed. We emphasize that
    our rules strike a balance between our goals of protecting consumers
    and of promoting competition. We believe that the drop-off rule
    therefore is no more extensive than necessary to serve these goals.
    We also believe the drop-off rule directly advances the related
    goals of feasibility, practicality, and cost-effectiveness.

48. Consistent with our rules, any neutral, factual information that is
    provided by a third party verifier should not mirror the carrier's
    particular marketing pitch, nor should it market the carrier's
    services or be an extension of the sales call. Instead, it should
    clearly verify the subscriber's decision to change carriers.[^150]
    Commission rules also require the verification process (*i.e*.,
    everything the subscriber says and hears during the verification
    call) to be taped and preserved for a period of two years in order
    to ensure the availability of a complete and accurate record for
    investigation of any slamming complaint. If a carrier does not
    comply with the rule the verification is invalid. We will continue
    to review third party verification recordings when evaluating
    slamming complaints and will aggressively enforce our liability
    rules.

## 60-Day Limit on the Effectiveness of an LOA

49. [Background]{.underline}. In the *Third Report and Order*, the
    Commission found that a reasonable limitation on the amount of time
    an LOA should be considered valid is 60 days.[^151] The Commission
    concluded that the 60-day limit applies to submitting carriers
    rather than executing carriers, because a submitting carrier is an
    actual party to the contractual agreement with the customer and, as
    such, is more capable of conforming its behavior to the
    obligation.[^152]

50. [Discussion]{.underline}. AT&T asks that the Commission modify its
    rule to exempt multi-line and/or multi-location business customers
    from the 60-day limit.[^153] According to AT&T, large business
    customers typically execute LOAs authorizing their preferred carrier
    to pre-subscribe many or all of the customer's existing and newly
    added lines to the designated carrier.[^154] However, many of these
    installations may occur months or even years after the LOA has been
    executed.[^155] Thus, the 60-day limit on the effectiveness of LOAs
    will needlessly burden such subscribers and their carriers that must
    continually update those documents in order to maintain their
    validity.[^156] AT&T also asks the Commission to clarify that a
    carrier change order submitted to an executing carrier within the
    60-day effectiveness period should be considered timely,
    "notwithstanding the need for subsequent activities such as lifting
    a carrier freeze."[^157] ASCENT, Sprint, and WorldCom agree with
    AT&T that application of the 60-day limit to businesses is
    inconvenient, wastes resources, and conveys no consumer protection
    benefits.[^158]

51. SBC, however, sees no need to modify the 60-day period for LOAs.
    According to SBC, the rule only requires a carrier to *submit* a
    carrier change order within 60 days of the execution date of the
    LOA; the rule does not require the executing carrier to fully
    execute the change within 60 days.[^159] In addition, SBC states
    that, if the Commission were to exempt large business customers from
    the rule, SBC would have to "make major modifications to its
    mechanized systems" in order to distinguish residential and small
    business customer change orders from large "multi-line and/or
    multi-location business customers."[^160] SBC suggests that, if the
    Commission were to act to modify the 60-day rule, it should do so
    uniformly for all customers.[^161] AT&T replies that a carrier
    cannot submit a presubscription order to a LEC without knowing the
    telephone line numbers for the order, and that the carrier would not
    know these numbers if a large business customer does not establish a
    new location, or add new lines, until after the 60-day period.[^162]
    AT&T also states that SBC fails to identify the costs of the
    modifications that SBC asserts will be necessary under the exemption
    AT&T proposes, or why major modifications are necessary given the
    current ability of LECs such as SBC to identify such customers for
    other purposes.[^163]

52. We disagree with AT&T that carrier change orders submitted to an
    executing carrier within the 60-day effectiveness period should be
    considered timely, "notwithstanding the need for subsequent
    activities such as lifting a carrier freeze." When adopting the
    60-day period (as opposed to a shorter period), the Commission
    recognized that while a preferred carrier freeze can be lifted "in
    as few as 24 or 48 hours," a subscriber may be "out of town or
    otherwise unable to be reached immediately."[^164] The Commission
    found that a 60-day limitation "permits more flexibility under these
    and other circumstances."[^165] Because it is clear that the
    Commission factored subsequent activities, such as lifting a carrier
    freeze, into its decision to adopt a 60-day limit, we decline to
    "clarify," as AT&T requests, that such activities effectively toll
    the 60-day period. We continue to believe that, a period of validity
    exceeding 60 days may cause confusion for customers regarding change
    requests they may have made but no longer remember.[^166]

53. We recognize, however, that these concerns are likely not present in
    the case of multi-line and/or multi-location business customers that
    have entered into negotiated agreements with carriers to add
    presubscribed lines to their business locations during the course of
    a term agreement. We agree with AT&T that such a limitation would
    needlessly invalidate these negotiated LOAs and would not confer
    additional consumer protection benefits upon the parties. In
    addition, SBC has not adequately demonstrated why there is
    significant hardship associated with the identification of such
    customers.[^167] Accordingly, upon reconsideration, we will no
    longer limit the effectiveness of such customers' LOAs to 60 days.

## Identification of the Subscriber's Current Telecommunications Provider

54. [Background]{.underline}. In the *Third Report and Order*, the
    Commission concluded 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).[^168]

55. [Discussion]{.underline}. AT&T asks the Commission to eliminate the
    requirement that independent third party verifications elicit from
    the customer the identity of the customer's current
    telecommunications provider.[^169] AT&T states that the sole
    relevant consideration in executing a change order is identification
    of the carrier to whose service the change is being authorized, not
    the identity of the carrier being displaced.[^170] AT&T asserts that
    requiring carriers to compile and provide the identity of the
    customer's current carrier is disruptive, superfluous and
    burdensome.[^171] According to AT&T, many customers do not know or
    understand the identity of the carrier that provides their
    presubscribed telecommunications service and those that do might not
    be willing to provide such information to another carrier.[^172]
    Therefore, this requirement would inevitably result in the provision
    by submitting carriers of inaccurate information to executing
    carriers.[^173] AT&T also notes that the Commission does not require
    the inclusion of this information in LOAs.[^174]

56. Qwest, Sprint, Verizon, and WorldCom agree with AT&T that the
    identity of the displaced carrier should not be a required element
    of an independent third party verification.[^175] However, these
    commenters assert that such identification is not required by the
    Commission's rules.[^176] Commenters note that the well established,
    long-standing rules for LOAs do not contain such a requirement, and
    that the Commission specified in the *Third Report and Order* that
    the content requirements it adopted "do not differ in substance from
    our rules regarding LOAs."[^177] Accordingly, commenters state the
    "the names of the carriers affected by the change," should be read
    as referring to the executing and submitting carriers, and not to
    the displaced carrier.[^178]

57. On reconsideration, we agree that it is unnecessary for a subscriber
    to identify in an independent third party verification the identity
    of the displaced carrier. Accordingly, we find that such
    identification need not be provided by the subscriber, either in
    LOAs or independent third party verifications. A customer may not in
    every instance be aware of the identity of his or her carrier, for
    example, as in the case of a customer's intraLATA toll carrier. AT&T
    also notes that customers who are served by a switchless reseller
    may often inaccurately believe that their carrier is the reseller's
    underlying facilities-based telecommunications provider.[^179] We
    agree that the provision of this potentially inaccurate information
    could induce LECs to reject or unnecessarily delay execution of the
    change request based upon it.

## Effecting Freeze Lifts and Change Requests in the Same Three-Way Call

58. AT&T asks the Commission to require executing carriers to lift
    freezes and to process carrier change requests in the same three-way
    call.[^180] AT&T notes that the Commission in the *Third Report and
    Order* acknowledged that lifting a preferred carrier freeze and
    switching the customer to the new preferred carrier in the same
    three-way transaction would be "an efficient means of effectuating a
    consumer's carrier change request," yet declined to require this of
    LECs.[^181] According to AT&T, a LEC could have no legitimate basis
    for objecting to combining these transactions in a single call, as
    it would serve to reduce the time and cost of implementing
    customers' carrier changes.[^182] Furthermore, requiring LECs to
    perform both transactions in the same call would improve the
    convenience of the three-way calling procedure for consumers.[^183]

59. SBC states that the Commission's existing rules offer subscribers a
    "simple, understandable, but secure way of lifting preferred carrier
    freezes in a timely manner."[^184] SBC and Verizon do not oppose
    *allowing* carriers to lift freezes and process carrier change
    orders in the same three-way call, but they do oppose *requiring*
    carriers to do so.[^185] SBC asserts that requiring LECs to perform
    these transactions in the same call would force SBC to process all
    the requests manually, rather than use the mechanized systems in
    which SBC has invested millions of dollars.[^186] As a result, SBC
    would need to hire more personnel and modify procedures
    manuals.[^187] Verizon notes that manual processing would increase
    the risk of human error.[^188] Verizon also states that, while
    carrier freezes are easily handled by automated systems (*e.g*.,
    "touch '1' to freeze, touch '2' to unfreeze"), this is not the case
    for carrier change requests involving any of dozens of possible
    carriers.[^189] Thus, according to Verizon, the automated systems
    would have to be abandoned to accommodate AT&T's request.[^190]
    Verizon also argues that AT&T has not set forth any arguments not
    already raised and resolved in the *Third Report and Order*, and has
    not shown that the current rule has caused problems for
    consumers.[^191] In its reply, AT&T disputes the contention that its
    proposal would significantly increase any burdens associated with
    manual order processing. Specifically, AT&T states that, while LECs
    may have automated systems in place to lift carrier freezes or
    process carrier change orders from IXCs, LECs must also accept
    "carrier change orders submitted directly by end-users to the LECs"
    and three-way calls initiated by customers to lift a freeze.[^192]

60. We agree that AT&T fails to raise any arguments that were not
    thoroughly considered in previous orders in this proceeding. In the
    *Second Report and Order*, the Commission declined to enumerate all
    acceptable procedures for lifting preferred carrier freezes. Rather,
    parties were encouraged to develop other methods of accurately
    confirming a subscriber\'s identity and intent to lift preferred
    carrier freezes, in addition to offering written and oral
    authorization.[^193] In the *Third Report and Order*, the Commission
    stated that its rules "do not . . . prohibit LECs from requiring
    submitting carriers to use separate methods for lifting a preferred
    carrier freeze and submitting a carrier change request."[^194] We
    are not persuaded by AT&T that, because a LEC in *some* cases
    handles preferred carrier change requests or carrier freeze lifts
    using manual processes, it is not therefore appreciably more
    burdensome to handle *every* such request in this manner, including
    when a carrier freeze request is accompanied by a carrier change
    order. We note that, in the *Third Report and Order*, when
    considering a request virtually identical to AT&T's, the Commission
    specified that a carrier concerned about delays it believes are
    attributable to a LEC refusing to accept a properly verified carrier
    change order (during the same three-way call initiated for the
    purpose of lifting a freeze) may file a complaint in the appropriate
    forum.

## Registration Requirement

61. In the *Third Report and Order*, the Commission adopted a
    requirement that all new and existing common carriers providing
    interexchange telecommunications service must register with the
    Commission.[^195] The Commission further concluded 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."[^196] In situations where a
    facilities-based carrier was already providing a reseller with
    service, the Commission directed the reseller to notify its
    underlying facilities-based carrier that it had submitted the
    registration information to the Commission, within a week of having
    done so.[^197] The Commission noted that a facilities-based carrier
    would not be responsible for the accuracy of the registration
    provided to the Commission by its potential carrier-customer, nor
    would 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.[^198] The Commission held that
    it might, however, after giving appropriate notice and opportunity
    to respond, impose a fine on carriers that failed to determine the
    registration status of other carriers before providing them with
    service.[^199]

62. WorldCom asks that Commission to clarify that underlying carriers
    are not under a duty to take any action with regard to
    carrier-resellers if: (1) the underlying carrier "does not receive a
    notification of registration from an existing carrier-customer,"
    and/or (2) the underlying carrier's "existing carrier-customer does
    not appear on the list maintained by the Commission."[^200] WorldCom
    states that the Commission in the *Third Report and Order* appears
    to distinguish "new" carrier-reseller relationships from "existing"
    ones, and that this is the best policy outcome. Specifically,
    requiring underlying carriers to police relationships that existed
    prior to the requirement would, according to WorldCom, expose the
    parties to risks that were not contemplated during negotiations
    leading to the creation of the reseller arrangement, and would raise
    the carrier's cost to serve the entire reseller base.[^201]

63. ASCENT agrees that the Commission's requirements apply only on a
    forward-looking basis, and not to existing carrier-customers.[^202]
    ASCENT asserts that nothing in the *Third Report and Order*
    "suggests that an underlying carrier, which by industry practice
    will have already ascertained that its carrier-customer is
    authorized to provide interstate, interexchange service pursuant to
    Section 214 before entering into a contractual relationship with
    that carrier, is in any way authorized to abrogate such contractual
    relationship in reliance on the registration requirement recently
    established in the *Third Report and Order*."[^203] ASCENT suggests
    that any Commission clarification specify that an underlying carrier
    has no authority to act to deny service under existing service
    arrangements if it does not receive registration notification from
    existing carrier-customers.[^204]

64. We believe that the *Third Report and Order* is sufficiently clear
    with respect to the registration requirements, and we decline to
    provide the clarification sought by WorldCom and ASCENT. Never did
    the Commission indicate that it intended to "grandfather" resellers
    that provided service prior to adoption and effective date of the
    *Third Report and Order* with respect to our registration
    requirement. To the contrary, the Commission found that "all new
    *and existing* common carriers providing interexchange
    telecommunications service must register with the Commission."[^205]
    As noted above, the Commission specified that, in situations where a
    facilities-based carrier was already providing a reseller with
    service when the registration requirement took effect, the reseller
    was obligated to notify its underlying facilities-based carrier that
    it had submitted the registration information to the Commission,
    within a week of having done so.[^206] The Commission further stated
    that, once the facilities-based carrier had determined the
    registration status of its potential carrier-customer, the
    facilities-based carrier was not responsible for monitoring the
    registration status of that customer on an ongoing basis, although a
    prudent carrier might choose to do so.[^207]

65. As noted in the *Third Report and Order*, a facilities-based carrier
    will not be responsible for the accuracy of the registration
    information, 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.[^208] 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 carrier customers.[^209] The
    obligation of a reseller to register with the Commission, as well as
    the corresponding duties of the underlying carrier with respect to
    the reseller, should not differ depending on whether the reseller
    provided service prior to the adoption and effective date of the of
    the *Third Report and Order*. As the Commission noted, the
    registration requirement and related rules are intended to 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 unscrupulous resellers to stay in
    business.[^210]

# LIABILITY FOR UNAUTHORIZED CARRIER CHANGES

66. [Customer referral to unauthorized carrier]{.underline}. In its
    petition, WorldCom asserts that the Commission should require
    carriers contacted by a subscriber alleging slamming to inform the
    subscriber that he or she should contact and seek resolution from
    the alleged unauthorized carrier, in addition to informing the
    subscriber of their right to file a complaint if necessary and of
    their right to absolution.[^211] Under the rules adopted in the
    *First Reconsideration Order*, a carrier that is contacted by a
    consumer alleging slamming "shall direct each unsatisfied subscriber
    to the proper state commission (or the FCC) for resolution of the
    slamming problem and inform such unsatisfied subscriber of all the
    relevant filing requirements."[^212] The Commission noted that the
    carrier must inform the subscriber that, if all charges for the
    first 30 days of service are removed from the subscriber's bill, the
    subscriber must file a complaint with the relevant agency or be
    subject to re-billing.[^213] In addition, an executing carrier that
    is informed of an alleged slam by a subscriber must immediately
    notify both the authorized and alleged unauthorized carrier of the
    incident, including the identity of each carrier involved.[^214]

67. WorldCom states that many consumers suspecting a slam will contact
    either the carrier that they consider to be their authorized carrier
    or their LEC.[^215] WorldCom asserts, however, that there is no
    incentive for these carriers to refer the consumer to the alleged
    unauthorized carrier for resolution.[^216] WorldCom acknowledges
    that the Commission's rules require the LEC to notify the alleged
    unauthorized carrier of a subscriber's allegation, but it states
    that there is no specified deadline for this notification.[^217]
    Thus, according to WorldCom, the alleged unauthorized carrier may
    not be aware of a slamming allegation prior to the filing of a
    complaint.[^218] WorldCom asserts that a requirement of subscriber
    referral to the alleged unauthorized carrier would make customers
    better apprised of their alternatives and thus more able to obtain
    relief without engaging in administrative litigation.[^219] In
    addition, WorldCom contends, state agencies and the Commission could
    avoid needless adjudication.[^220] WorldCom asserts that the alleged
    unauthorized carrier is in the best position, relative to executing
    and authorized carriers, to satisfy the customer by providing an
    explanation for the establishment of the account, providing full
    remedies, blocking future traffic, and advising the customer to
    contact his or her carrier of choice to establish an account.[^221]
    USTA notes that a disgruntled customer might view a referral to the
    alleged unauthorized carrier as "tantamount to telling Little Red
    Riding Hood to go to grandmother's house to be greeted and eaten by
    the big, bad wolf," and that customers may feel animosity towards a
    carrier that makes such a referral.[^222] Verizon disagrees that the
    alleged unauthorized carrier is in the best position to satisfy the
    consumer given that it is the one carrier that cannot actually
    return the consumer to the authorized carrier.[^223] USTA states
    that the approach suggested by WorldCom could create an opportunity
    for the alleged unauthorized carrier to market its product,
    notwithstanding prior abusive conduct by that carrier.[^224]

68. We currently require carriers contacted by a subscriber alleging
    slamming to inform the subscriber of their right to file a complaint
    with the appropriate governmental agency.[^225] On reconsideration,
    we will also require carriers to inform the subscriber that he or
    she may contact and seek resolution from the alleged unauthorized
    carrier and, in addition, may contact the authorized carrier. Such
    contact will, amongst other things, give the subscriber the
    opportunity to inform the alleged unauthorized carrier that he or
    she will not be paying the disputed charges, and to inform the
    authorized carrier that the subscriber would like to receive its
    service. We agree with WorldCom that such a requirement may aid
    consumers seeking an immediate resolution to their situation. We
    believe that subscribers should be informed of all of their options
    by the carrier they choose to contact initially. Subscribers that
    choose to contact the alleged unauthorized carrier, but are not
    satisfied by the response of that carrier, will have been informed
    of their right to file a complaint in the appropriate forum, and
    will presumably exercise that option.

69. [Removal of charges from subscriber bills when a subscriber has not
    yet paid the charges]{.underline}. WorldCom also asks the Commission
    to reconsider its rule requiring alleged unauthorized carriers to
    remove all charges assessed for the first 30 days of services from a
    subscriber's bill upon the subscriber's allegation that he or she
    was slammed.[^226] WorldCom states that such a requirement violates
    due process because it deprives the carrier of a property right
    prior to a hearing, and is not justified on policy grounds as it
    creates incentives for consumer fraud.[^227] WorldCom asserts that
    the Commission's rule should be modified to require the filing of a
    complaint with the appropriate agency as a precondition to removal
    of the charges assessed during the first 30 days.[^228] According to
    WorldCom, such a modification will provide consumers with the
    incentive to act quickly to file a complaint, thus facilitating
    prompt resolution, and will protect carriers from "unscrupulous
    consumers who have no intention of filing a complaint with an agency
    but realize that due to the inability of carriers to ascertain if a
    consumer filed a complaint they may escape rebilling."[^229]

70. We decline to modify our rule requiring removal by the unauthorized
    carrier of all charges assessed for the first 30 days of service
    upon a subscriber's allegation that he or she was slammed.[^230] We
    agree with Verizon that charges should not remain on a subscriber's
    bill even after the subscriber has complained to a carrier of
    slamming, and we note that the Commission's rules already provide
    incentives for prompt filing of complaints by subscribers with the
    appropriate agency.[^231] In the *First Reconsideration Order*, the
    Commission found that absolution minimizes slamming carriers'
    physical control over slamming revenues, and that this was
    especially important given the Commission's experiences with
    slamming carriers that went out of business or declared bankruptcy
    after enforcement agencies detected their illegal activities.[^232]
    The Commission found that its absolution rule would also encourage
    consumers to scrutinize their bills immediately and carefully,
    thereby engaging the public in slamming detection.[^233] In
    addition, the Commission stated that the rule would encourage
    carriers to verify all changes properly in order to protect
    themselves against any improper allegations of slamming.[^234]

71. The Commission also found that its rule requiring the removal of
    charges should be accompanied by a rule to encourage prompt filing
    of a complaint with the appropriate agency.[^235] Accordingly, the
    Commission specified that any carrier informed by a subscriber of a
    slam must convey to the subscriber that, if all charges for the
    first 30 days of service are being removed from such subscriber\'s
    bill, pending resolution of the slamming complaint, the subscriber
    must file the complaint with the state commission (or the FCC)
    within 30 days of notifying the carrier of the alleged slam, or be
    subject to re-billing.[^236] In addition, the Commission stated that
    a carrier informed by a subscriber of a slam must convey to the
    subscriber relevant filing information, including information
    relating to the 30-day timeframe.[^237] Thus, we believe that
    subscribers are sufficiently motivated to promptly file complaints
    with the appropriate agency, and that WorldCom's concerns regarding
    unreasonable delays have been adequately addressed.

72. Based on our experience in administering the slamming liability
    rules, we also believe that the danger of "unscrupulous" customers
    acting in the manner that WorldCom suggests (*i.e*., never intending
    to actually file a complaint in order to escape rebilling because
    they are aware of "the inability of carriers to ascertain if a
    consumer filed a complaint") is remote at best. WorldCom also
    appears to ignore the fact that our rules require that, "upon
    receipt" of a slamming complaint, the appropriate agency must
    "notify the alleged unauthorized carrier of the slamming complaint
    and ensure that the carrier removes immediately all unpaid charges
    from the subscriber's bill, if it has not done so already."[^238] We
    note that, in cases in which the consumer has chosen not to contact
    the alleged unauthorized carrier prior to filing a complaint with
    the appropriate agency, the removal of charges may not in fact occur
    until after the complaint has been filed, as WorldCom prefers.
    Finally, although WorldCom suggests that our rule granting
    preliminary relief poses a due process concern, WorldCom's proposed
    modification would also allow for removal of charges "prior to an
    investigation or hearing." We therefore believe WorldCom's actual
    concern lies with the issue of incentive for consumer fraud, which
    we address above.[^239]

73. [Amounts owed by unauthorized carriers when the subscriber has paid
    the unauthorized carrier]{.underline}. Section 258 mandates that the
    unauthorized carrier "shall be liable to the carrier previously
    selected by the subscriber in an amount equal to all charges paid by
    such subscriber after such violation."[^240] In addition, the
    legislative history specifically directed that the Commission's
    rules implementing section 258 "should also provide that consumers
    be made whole."[^241] Accordingly, in the *First Reconsideration
    Order*, the Commission established a remedy that both allows the
    authorized carrier to retain an amount equal to "all charges paid by
    the subscriber" to the unauthorized carrier, and also insures that
    subscribers are "made whole" by reimbursing them the amount they
    paid in excess of what they would have paid their preferred carrier
    absent the slam (or a proxy for such amount).[^242] The Commission
    stated that, once a carrier has been found guilty of slamming, the
    unauthorized carrier shall be required to disgorge to the authorized
    carrier an amount adequate to satisfy both of these
    obligations.[^243] The Commission found that an approximate proxy
    for this amount is 150% of the amounts collected by the unauthorized
    carrier from the subscriber following a slam.[^244] Upon receipt of
    the money, the authorized carrier is required to remit one third
    (*i.e.*, 50% of what the subscriber paid to the unauthorized
    carrier) to the injured subscriber.[^245]

74. WorldCom asks that the Commission reconsider its requirement that
    unauthorized carriers pay the subscriber's authorized carrier 150%
    of all charges paid by such subscriber.[^246] WorldCom states that
    the Commission misconstrued the plain language of the statute "by
    interpreting the phrase '*liable* to the \[authorized\] carrier' for
    all payments received, to mean that the authorized carrier is
    allowed to *retain* an amount equal to payments received."[^247]
    WorldCom states that Congress intended to make the customer whole by
    mandating that the unauthorized carrier be liable in an amount equal
    to all charges paid.[^248] WorldCom asserts that the Commission
    places undue reliance on the fact that section 258 provides for
    remedy "in addition to any other remedies available at law," and
    that this provision was not intended to allow the Commission to set
    liability at an amount greater than "all charges paid by \[the\]
    subscriber."[^249]

75. We decline to modify our finding that unauthorized carriers must pay
    the subscriber's authorized carrier 150% of all charges paid by such
    subscriber and, upon receipt of the money, that the authorized
    carrier is required to remit one third (*i.e.*, 50% of what the
    subscriber paid to the unauthorized carrier) to the injured
    subscriber.[^250] WorldCom argues that the phrase "other remedies
    available by law" means that an authorized carrier may pursue a
    different claim in state or federal court or before the Commission,
    and does not mean that the Commission, when implementing section
    258, can set liability at an amount greater than that established by
    the provision itself.[^251] In the *First Reconsideration Order*,
    the Commission stated that section 258 specifically allows for both
    the remedy to the authorized carrier of all amounts collected from
    the subscriber, and "other remedies available by law."[^252] The
    Commission noted that one such remedy is the ability of consumers to
    bring a claim to the Commission or in federal court, or where
    allowed under state law to the state commissions, for damages due to
    slamming.[^253] WorldCom, however, fails to explain in its petition
    why the "other remedies available by law" outlined by the Commission
    in the *First Reconsideration Order* should exclude complaints made
    pursuant to any portion of the Act.

76. Specifically, the Commission stated that, pursuant to sections
    206-208 of the Act, a consumer bringing a complaint is entitled to
    actual and consequential damages following a finding of a
    slam.[^254] The Commission noted that, prior to the *Second Report
    and Order*, Commission orders compensated slammed consumers by
    requiring slamming carriers, pursuant to sections 201(b) and 208 of
    the Act, to refund to the subscriber any amounts paid to the
    slamming carrier in excess of what he would have paid his preferred
    carrier absent the slam.[^255] The Commission found that its
    modified liability requirements thus satisfied the congressional
    mandate of making consumers \"whole,\" by retaining the availability
    of other existing remedies to ensure that subscribers pay no more
    for service than they would have but for being slammed.[^256] As the
    Commission stated in the *First Reconsideration Order*, the
    requirement that the slamming carrier disgorge 150% of the amount
    paid to it by the subscriber relies on our section 258 authority
    only with respect to that provision\'s express permission for the
    Commission to use \"any other remedies available by law.\"[^257]

77. WorldCom also points to the Commission's statement in the *First
    Reconsideration Order* that the 150% disgorgement would act as an
    incentive for authorized carriers to act on slamming complaints;
    however, WorldCom asserts that the Commission failed to explain why
    reimbursement for lost revenue fails to provide the same
    incentives.[^258] We agree with AT&T that WorldCom ignores that the
    50% increment to which WorldCom objects is required to be turned
    over to the subscriber.[^259] Thus, according to AT&T, the sums do
    not accrue to the authorized carrier, which must in fact absorb the
    administrative costs of remitting those amounts to the consumer, and
    for which the authorized carrier receives no compensation.[^260]

78. We continue to believe that the 150% proxy approach utilized by our
    current liability rules most fully satisfies the dual congressional
    mandate of section 258. The 150% proxy compensates the subscriber
    while satisfying the requirement of liability of the unauthorized
    carrier to the authorized carrier for all amounts collected from the
    subscriber. In the First *Reconsideration Order*, we noted that
    several carriers, including WorldCom, supported a proxy refund of
    50% to the subscriber as fully compensating the consumer while
    sparing carriers the difficult and expensive process of actual
    re-rating.[^261]

79. Finally, we disagree with WorldCom that, because it is possible that
    under our rules an authorized carrier could ultimately receive more
    revenue if the consumer pays for unauthorized service than if he or
    she does not, authorized carriers may fail to inform subscribers of
    their right not to pay charges incurred after the first 30 days of
    being slammed.[^262] As noted above, however, the Commission
    specified that *any* carrier informed by a subscriber of a slam must
    convey to the subscriber what actions he or she must take, with
    respect to the removal of unpaid charges for the first 30 days of
    service from the bill, in order to avoid rebilling.[^263]

80. WorldCom also asks the Commission to clarify that charges for which
    a subscriber is reimbursed or credited prior to the filing of a
    complaint constitute "unpaid" charges for purposes of the
    Commission's liability rules.[^264] WorldCom notes that the
    Commission's rules do not prevent unauthorized carriers from
    providing a customer credits or reimbursement prior to the customer
    filing a complaint.[^265] WorldCom states that under such
    circumstances, a customer will be in control of the funds as if he
    or she had never paid, and the refunded or credited charges should
    thus be considered "unpaid" when calculating liability under the
    Commission's slamming rules.[^266] In the alternative, WorldCom asks
    that the Commission at a minimum clarify that credits or
    reimbursements made to the consumer are to be deducted from the
    amount owed by a carrier found guilty of a slam.[^267] WorldCom
    asserts that carriers will be discouraged from attempting to resolve
    disputes directly with the subscriber if they believe that such
    attempts could result in double payment.[^268]

81. We decline to find that credited charges made to the consumer before
    a complaint has been filed should be considered "unpaid" when
    calculating liability under the Commission's slamming rules, or that
    the credits or reimbursements should be deducted from the amount
    owed by a carrier found guilty of a slam. As SBC asserts, the fact
    that a carrier has chosen to attempt to appease a customer does not
    alter its statutory liability, as described above, to the authorized
    carrier.[^269] Furthermore, we disagree with WorldCom that this
    requirement discourages carriers from attempting to resolve disputes
    directly with subscribers. We believe that the desire to avoid an
    agency determination of slamming creates a powerful incentive to
    satisfy the customer so that the customer will be unlikely to file a
    complaint in the first instance. We note that, in our experience
    with administration of slamming complaints, complaints are very
    rarely filed by consumers who were previously credited or reimbursed
    by the unauthorized carrier. Thus, it would appear that customers
    who have been satisfied in such a manner do not generally file
    slamming complaints and, accordingly, that carriers would have great
    incentives to avoid, in this way, the filing of a complaint.

82. [Unauthorized carrier changes resulting from LEC
    actions]{.underline}. In their Petitions, Sprint and WorldCom note
    that subscribers sometimes request carrier changes by communicating
    directly with LECs.[^270] Sprint and WorldCom ask that the
    Commission reconsider its "apparent decision" to classify as an IXC
    slam any unauthorized carrier change that occurred as a result of a
    LEC mistakenly executing a carrier change and informing an IXC that
    it had gained a customer.[^271] Sprint asserts that the IXC cannot
    be considered an unauthorized carrier in this scenario because it
    has not submitted the change and is under no obligation to verify
    these "LEC installs."[^272] Sprint and WorldCom express concern that
    an IXC could nonetheless be found liable for slamming if accused
    under these circumstances because it would be unable to produce
    valid proof of verification of the carrier change as is required by
    the Commission's rules.[^273]

83. Section 258 makes it unlawful for any telecommunications carrier to
    "submit or execute a change in a subscriber's selection of a
    provider of telephone exchange service or telephone toll service
    except in accordance with such verification procedures as the
    Commission shall prescribe."[^274] AT&T asserts that section 258 and
    the Commission's implementing regulations therefore cannot be
    construed to impose liability upon an IXC when it has not
    "submitted" a carrier change.[^275] AT&T states that an IXC that
    becomes a carrier through a LEC install likewise fails to satisfy
    the Commission's definition of an "unauthorized carrier," and does
    not incur liability under the Commission's rules that apply to
    carriers that "submit" a carrier change."[^276] AT&T states that
    Sprint's petition is thus superfluous in that it appears to assume
    that such liability can be imposed without any revision to the
    *First Reconsideration Order*.[^277] Sprint asserts that it makes
    little sense as a policy matter to hold IXCs liable for the mistakes
    of LECs, and that it is necessary to provide incentives for LECs to
    minimize such mistakes.[^278] Sprint and WorldCom state that
    penalizing a carrier that made no mistake does not provide such
    incentives and is especially inappropriate considering that LECs and
    IXCs are competitors in the intraLATA and, increasingly, interLATA,
    markets.[^279]

84. Sprint asks that the Commission allow an alleged unauthorized
    carrier to produce records that show a subscriber was added to its
    customer base due to instructions it received from a LEC and, "in
    the absence of convincing evidence by the LEC or subscriber to the
    contrary, the relevant agency should exonerate the unauthorized
    carrier and instead require the LEC to provide restitution to the
    subscriber and authorized carrier as specified in the Rules as well
    as pay the previously accused but now exonerated carrier for all
    charges and fees incurred by the subscriber when such subscriber was
    erroneously assigned to \[the\] IXC by the LEC but not paid by such
    subscriber."[^280]

85. As Sprint and USTA note, the Commission has recognized that an
    executing carrier may be responsible for an unauthorized carrier
    change.[^281] In the *First Reconsideration Order*, the Commission
    stated that "executing carriers may be liable for failure to comply
    with our rules if their actions result in any unreasonable delay of
    execution of carrier changes or in unauthorized carrier
    changes."[^282] The Commission also stated that, in situations in
    which a customer initiates or changes long distance service by
    contacting the LEC directly, "if a LEC\'s actions result in the
    subscriber being assigned to a different interexchange carrier than
    the one originally chosen by the subscriber . . . \[the\] LEC could
    be liable for violations of its duties as an executing
    carrier."[^283] The Commission specified that sanctions imposed on
    executing carriers for violations "may range, for example, from
    damages proved in state or Commission proceedings to forfeiture
    penalties imposed by the Commission pursuant to section 503(b) of
    the Act."[^284] USTA states that, because the Commission has already
    provided for executing carrier liability, Sprint's petition should
    be rejected.[^285]

86. We agree with Sprint that it would be unfair to hold IXCs liable for
    slamming pursuant to section 258 when the unauthorized carrier
    change was the result of a LEC's action. Sprint notes that
    determinations of slamming by IXCs under these circumstances can
    create incentives for LECs to act in ways that contravene the goals
    of section 258 and can damage the business reputation of an
    "innocent" IXC.[^286] Verizon disagrees that LECs should be subject
    to the penalties invoked by section 258, asserting that this section
    authorizes liability only to a carrier that violates the
    verification procedures and "collects charges."[^287]

87. As an initial matter, we note that our authority to regulate in this
    area flows not only from section 258 of the Act, but also from other
    portions of the Act which preceded the adoption of section 258, and
    upon which many of our slamming rules are also based. For example,
    sections 201(b) and sections 206-208 allow for customer relief in
    addition to the carrier remedy of section 258.[^288] As a result,
    the fact that a LEC may not "collect charges" as a result of an
    unauthorized carrier change does not limit the Commission's
    authority to provide for consumer remedies. We recognize that there
    are situations in which a LEC assigns a consumer to a non-affiliated
    IXC without authorization.[^289] In this instance, three "innocent"
    parties can potentially suffer damage. The "unauthorized" carrier
    will have provided services for which it may not receive
    compensation from the subscriber, the subscriber will have been
    subject to the rates of a carrier whose services it did not
    authorize, and the authorized carrier will have been deprived of the
    revenues it would have collected from the subscriber but for the
    LEC's actions. Verizon states that, if it has mistakenly assigned a
    subscriber to an unauthorized carrier, it offers to switch the
    complaining subscriber to the desired carrier at no charge and
    refunds the charges, either by crediting the subscriber's bill or
    issuing the subscriber a check.[^290] We agree that, when a LEC has
    assigned a subscriber to a non-affiliated carrier without
    authorization, and where the subscriber has paid the non-affiliated
    carrier the charges for the billed service, the LEC shall reimburse
    the subscriber for all charges paid by the subscriber to the
    unauthorized carrier and shall switch the subscriber to the desired
    carrier at no cost to the subscriber. When the subscriber has not
    paid the unauthorized carrier, the LEC shall switch the subscriber
    to the desired carrier at no cost to the subscriber, and shall also
    secure the removal of the unauthorized charges from the subscriber's
    bill. Under no circumstances will the subscriber be held liable for
    the unauthorized charges. Authorized or unauthorized carriers may
    seek further remedies for lost profits or other damages against the
    LEC as an executing carrier that has effectuated an unauthorized
    carrier change, as is detailed in paragraph 84, above.

88. We note, however, that situations may arise in which a LEC that has
    a long distance affiliate adds, without authorization, a customer to
    its long distance affiliate's customer base, thus favoring its long
    distance affiliate. In order to deter such actions, we believe that
    a LEC should be held responsible for unauthorized carrier changes
    that favor its long distance affiliate, in the same manner that an
    IXC would be held responsible if it submitted an unauthorized change
    itself. Thus, when a LEC makes an unauthorized carrier change that
    favors its affiliate, and when the customer has paid the charges,
    the LEC must pay to the authorized carrier 150% of the amounts
    collected from the subscriber, just as an IXC would under similar
    circumstances.[^291] If the consumer has not paid the charges, then
    our absolution rule would apply.[^292] Our responsibility to provide
    remedies for consumers who experience unauthorized carrier changes
    is equally compelling when a customer experiences an unauthorized
    change as the result of a LEC's actions.

89. We note that our holding applies to any carrier acting as an
    executing carrier. In many cases, the executing carrier in question
    will be a LEC; however, an IXC may also act as an executing carrier,
    *e.g*., when a facilities-based IXC resells service to a switchless
    reseller and that reseller submits a subscriber's carrier change
    request to the underlying IXC.[^293]

90. In addition, we note that, in the *Second Report and Order*, when
    finding that verification rules should apply to "in-bound" as well
    as "out-bound" calls, the Commission reiterated its belief that "it
    serves the public interest to offer consumers who initiate calls to
    carriers the same protection under the verification rules as those
    consumers who are contacted by carriers."[^294] According to the
    Commission, "exempting in-bound calls from the verification
    requirements would undermine the policy underlying section 258,
    which we conclude was intended to provide protection for all changes
    to a subscriber's telecommunications service, regardless of the
    manner of solicitation."[^295] In the *Second Report and Order*, the
    Commission found that consumers that initiate calls to carriers are
    just as vulnerable to slamming as consumers that are contacted by
    carriers, especially as carriers begin combining services to market
    to consumers, such as intraLATA and interLATA toll services.[^296]
    However, the Commission at that time declined to require
    verification of long distance carrier changes "in situations in
    which a customer initiates or changes long distance service by
    contacting a LEC directly."[^297] The Commission stated that, under
    those circumstances, the LEC is not acting as a "submitting" carrier
    in that "the LEC is not providing interexchange service to \[the\]
    subscriber."[^298]

91. As noted by Sprint and WorldCom above, since the adoption of the
    *Second Report and Order*, however, many LECs have become (or plan
    to become) long distance service providers. Given the large numbers
    of customers that are now or may soon be served by LECs that also
    provide interexchange services, we find it necessary to modify our
    decision to exclude from our verification rules those in-bound calls
    that are initiated by a customer by directly contacting the LEC. The
    Commission has previously recognized that LECs that compete with
    other carriers for local and long distance services may not be
    neutral third parties in implementing carrier changes.[^299] Due to
    the changes in the competitive landscape that have come to fruition
    since the adoption of the *Second Report and Order*, and based on
    our experiences therewith, we now find it necessary, as with other
    in-bound carrier change calls, to require verification of carrier
    change requests that occur when a customer initiates a call to a
    LEC. We find that such verification is necessary to deter slamming
    and as such furthers the goals of section 258. We emphasize however,
    that we retain our prohibition on executing carrier
    "re-verification," *e.g*., a LEC may not require an additional
    verification by the subscriber after a carrier submits a carrier
    change to a LEC (as opposed to a customer seeking a carrier change
    by calling a LEC directly to request the change). Under such
    circumstances, the submitting carrier and the customer will have
    already completed the verification procedures required under our
    rules, and any LEC-mandated customer re-verification would be
    redundant and create unnecessary impediments to carrier changes.

# OTHER ISSUES 

92. [Toll-Free Service Accounts]{.underline}. SBC also seeks
    clarification that the carrier change verification requirements set
    forth in the *Second Report and Order* do not apply to verifications
    of Responsible Organization ("RespOrg") changes for toll-free
    service accounts.[^300] A RespOrg is the entity that a consumer
    seeking to acquire a toll-free number must contact. RespOrgs obtain
    toll-free numbers from the Service Management System (SMS/800)
    database[^301] and manage the record for the numbers, including
    billing and routing information as well as information about
    subscribers' IXCs. RespOrgs are the only entities that may gain
    access to the SMS/800 database.[^302] A subscriber may port its
    toll-free number from one RespOrg to another RespOrg by either 1)
    contacting its current RespOrg and authorizing the change, or 2)
    having the new RespOrg ask the SMS/800 administrator to port the
    number by submitting a written subscriber authorization.[^303]

93. SBC states that a RespOrg should be allowed to continue to follow
    the "industry practice" of comparing a signature on a written LOA
    with the authorized signature on the account it has on file and, if
    the signatures do not match, contacting the subscriber to verify the
    change request.[^304] WorldCom disagrees, stating that LEC
    verification of all services, including toll-free number services,
    is clearly prohibited under the Commission's rules, and that the
    written LOAs employed by SBC are not necessary in order to effect
    RespOrg changes so long as the change request is acceptable under
    the rules.[^305] WorldCom states that SBC offers no explanation for
    its proposed exemption other than SBC's history of verifying RespOrg
    changes.[^306] SBC later filed a letter asserting that, while the
    industry practice at the time it filed its Petition was to verify
    the customer's decision to change RespOrgs, the "Industry Guidelines
    for Toll Free Number Administration" now "prohibits RespOrg change
    verification prior to working the change order," and that SBC
    follows the current guidelines.[^307]

94. We note that, in the *NASC Change Order*, the Common Carrier Bureau
    stated that a RespOrg change request submitted to the SMS/800
    administrator must include "proper written authorization."[^308] In
    a subsequent Order on Reconsideration (*NASC Reconsideration*), the
    Common Carrier Bureau clarified that it "did not intend \[in the
    *NASC Change Order*\] to allow \[preferred carrier\] change
    procedures to be used for RespOrg changes: we intended that all
    RespOrg change authorizations be in writing."[^309] AT&T filed an
    Application for Review of the *NASC Reconsideration*, contending
    that the *NASC Change Order* did not preclude the use of carrier
    change procedures to verify RespOrg changes submitted to the SMS/800
    administrator, including third party verification, and that the
    Common Carrier Bureau had failed to provide a sufficient explanation
    for a finding to the contrary in the *NASC Reconsideration*, *i.e*.
    that only written LOAs satisfy the requirement of "proper written
    authorization."[^310] SBC filed an Opposition to AT&T's Application
    for Review, stating again that it must be able to continue the
    practice of comparing signatures it has on file to signatures on
    written LOAs in order to determine which subscribers to contact to
    make sure slamming does not occur.[^311] Without the signature
    comparison process, according to SBC, the RespOrg would have to
    contact the customer on every 800 number change.[^312]

95. In a subsequent *Clarification Order*, the Common Carrier Bureau
    stated that, by requiring "proper written authorization," it did not
    intend to preclude the current SMS/800 administrator practice of
    accepting LOAs for RespOrg change requests that contain a
    subscriber's personal identification number in lieu of the
    subscriber's signature.[^313] AT&T then withdrew its Application for
    Review, stating that its concerns had been addressed in the
    *Clarification Order*.[^314] Inasmuch as SBC is seeking a
    requirement that all RespOrg change requests include LOAs with
    customer signatures, we note that the *Clarification Order*
    disallows such a result. In general, it would not appear that an
    entity, when providing RespOrg service, is functioning as an
    "executing" or "submitting" carrier as contemplated by our carrier
    change rules.[^315]

96. [New Lines and New Installations]{.underline}. AT&T asks the
    Commission to clarify, or in the alternative reconsider and hold,
    that the slamming rules apply to customers' initial carrier
    selections for newly installed lines.[^316] AT&T asserts that, while
    nothing in the *Second Report and Order* suggests that such
    customers be excluded from slamming protections, the Commission
    should state more clearly that the slamming rules apply to a
    subscriber's selection of preferred carriers, either as an initial
    carrier selection or as a change from an existing choice.[^317] AT&T
    notes that millions of new subscriber lines are installed annually
    as businesses and residences expand or change locations.[^318]
    According to AT&T, excluding newly installed lines from application
    of our slamming rules would deny many customers valuable consumer
    protections and would harm competition.[^319] In AT&T's subsequent
    Motion for Expedited Decision, AT&T states that, since the adoption
    of the *Second Report and Order*, many incumbent LECs have begun to
    offer long distance service, and that "incumbent LECs do not apply
    the anti-slamming protections to at least 20 percent of all
    customers for whom the incumbent LECs submit orders selecting their
    long distance affiliate."[^320] AT&T asserts that, once LECs begin
    offering long distance service, they have a vested interest in
    ensuring that their local exchange customers are assigned to their
    long distance affiliates, whether legitimately or otherwise.[^321]

97. Ameritech, Bell Atlantic, and GTE urge the Commission to reject
    AT&T's request. Ameritech states that section 258 of the Act by its
    very terms applies only to carrier changes, as it authorizes the
    Commission to establish verification requirements for "a *change* in
    a subscriber's selection of a provider of telephone exchange or
    telephone toll service."[^322] Ameritech also asserts that AT&T's
    petition violates the Administrative Procedure Act because the
    *Notice* in this proceeding in no way suggested that the Commission
    would for the first time require verification of new service
    orders.[^323] Ameritech notes that AT&T's petition for
    reconsideration raises this issue for the first time and states that
    the Commission cannot impose a verification requirement for initial
    carrier requests without proper notice.[^324]

98. Ameritech asserts that in any case such a requirement is wholly
    unnecessary, and disagrees with AT&T that slamming risks are high in
    initial carrier selections.[^325] Ameritech asserts that slamming
    became pervasive because consumers often were not aware that their
    carrier was changed.[^326] Ameritech states that establishing an
    initial account involves the provision of much more specific and
    unmistakable customer information than is contained in a carrier
    change request, and that a consumer establishing initial service is
    very likely to check the status of their account and closely monitor
    their first bill.[^327] Thus, according to Ameritech, in new
    installation situations, a consumer is likely to detect the presence
    of any unauthorized service, and a LEC would therefore have great
    incentives to ensure that this does not occur.[^328] Ameritech and
    GTE assert that AT&T offers no factual support for its bare
    assertion that slamming is or could be a problem for new
    installations.[^329] SBC states that applying the slamming rules to
    new installations would unnecessarily add costs to fix a
    non-existent problem.[^330]

99. Sprint agrees that the slamming rules cannot be applied to new
    installations because the statutory language only addresses
    *changes* of preferred carriers.[^331] Inasmuch as Sprint also
    agrees with AT&T that the potential for abuse by LECs nevertheless
    exists in such situations, Sprint asks instead that the Commission
    "remove the gatekeeper control from LECs and establish an
    independent third party administrator for the entire PC
    process."[^332] WorldCom states that verification for new
    installations is not needed if a customer places an order with the
    executing carrier and chooses an IXC unaffiliated with the LEC for
    both long distance and local toll service.[^333] However, WorldCom
    asserts that verification should be obtained if the LEC or its
    affiliate has an interest in the long distance carrier the customer
    chooses.[^334] WorldCom states that, while Ameritech may correctly
    characterize unintentional, unauthorized changes as less likely in
    new installation situations given the amount of information the
    executing carrier typically collects, nothing prevents the ILEC from
    *intentionally* converting the customer to its affiliate. According
    to WorldCom, the rules should apply whenever LECs have the incentive
    and ability to change a customer's carrier selection.[^335]

100. We decline AT&T's request to clarify, or in the alternative
     reconsider and hold, that our slamming rules apply to new
     installations. [^336] As noted above, section 258 of the Act
     provides that "\[n\]o telecommunications carrier shall submit or
     execute a *change* in subscriber's selection of a provider of
     telephone exchange service or telephone toll service except in
     accordance with such verification procedures as the Commission
     shall prescribe."[^337] There is no indication in either the
     statute or the legislative history that the limitations imposed by
     Congress regarding carrier change requests should be expanded to
     apply to situations in which no carrier change has occurred. A
     finding to the contrary would contradict the plain language of the
     statue, and we therefore need not address the additional arguments
     raised in conjunction with AT&T's request. However, we recognize
     that, at the time of installation, an executing carrier may have
     only limited information regarding the subscriber's carrier, such
     as carrier identification codes, and may not be aware of more
     detailed information, such as the specifics of a customer's long
     distance calling plan. We stress that an executing carrier may
     advise a customer that has contacted it to arrange new service
     (such as when establishing service at a new residence) to contact
     his or her other carrier service providers to further ensure that
     all services are correctly installed. As noted above, Ameritech
     states that LECs have incentives to ensure that unauthorized
     services are not present in new installation situations;
     accordingly, we would expect that an executing carrier would find
     it in its best interest to advise the customer in such a way as to
     avoid potential confusion.

101. We emphasize, however, that the statue does encompass all *changes*
     in a subscriber's selection of a provider of telecommunications
     service, regardless of whether such change occurs at the same time
     a subscriber changes residences or when a business relocates or
     expands. As noted above, section 258 of the Act provides that
     "\[n\]o telecommunications carrier shall submit or execute a change
     in subscriber's selection of a provider of telephone exchange
     service or telephone toll service except in accordance with such
     verification procedures as the Commission shall prescribe."[^338]
     There is no indication in either the statute or the legislative
     history that carrier changes that coincide with new line
     installations should be exempt from the carrier change provisions
     of section 258. The statute is clearly intended to ensure that
     consumers receive service from the carrier of their choice without
     interference. It is no less important for carrier change
     verification to be obtained when a consumer is receiving the
     service on new lines than when the carrier change occurs without
     new line installations.

102. [Carrier Reporting of Slamming Allegations (Form 478)]{.underline}.
     Sprint and WorldCom ask the Commission to reconsider its carrier
     reporting requirement.[^339] According to our rules, carriers
     providing telephone exchange service and/or telephone toll service
     must periodically submit to the Commission reports regarding
     complaints they receive concerning unauthorized carrier
     changes.[^340] In the *Third Report and Order*, the Commission
     concluded that the information contained in these reports would
     enable the Commission to identify, as soon as possible, carriers
     that repeatedly initiate unauthorized changes.[^341] Accordingly,
     the Commission directed each carrier to submit a reporting form
     (Form 478) identifying the number of slamming complaints received
     and the number of such complaints that the carrier has investigated
     and found to be valid.[^342] The Commission also required carriers
     to identify the number of slamming complaints involving local,
     intrastate, and interstate exchange service, investigated or not,
     that the carrier has resolved directly with subscribers.[^343] In
     addition, the Commission directed wireline or fixed wireless LECs
     providing service to end-user subscribers to report allegations of
     slamming by other carriers that they have received, and to include
     the name of the entities involved, and the number of complaints
     involving unauthorized changes that have been lodged against each
     one.[^344] Finally, the Commission required reporting carriers to
     include the total number of subscribers served at the end of the
     relevant reporting period, and required the reports to be submitted
     semiannually on August 15 (covering January 1 through June 30) and
     on February 15 (covering July 1 through December 31).[^345]

103. Sprint and WorldCom state that, because the rules require some
     carriers to report unsubstantiated complaints and allegations
     against their competitors, the resultant information is invariably
     misleading.[^346] As such, they argue, it cannot legitimately be
     used by the Commission as a basis for investigation into a
     carrier's practices and can unfairly damage a carrier's
     reputation.[^347] Sprint and WorldCom note that the Commission in
     fact recognized that "a subscriber complaint is not, in and of
     itself, dispositive proof of a slam." Petitioners also state that
     carriers have strong incentives to inflate the number of slamming
     allegations received against competitors, and may not even possess
     the information necessary to enable them to accurately identify the
     carrier that allegedly slammed the consumer.[^348] For example,
     because LECs base their reporting on the carrier identification
     codes (CICs), allegations against switchless resellers using the
     CIC of their underlying facilities-based carrier will be reported
     against the underlying carrier rather than the reseller.[^349]
     Sprint and WorldCom state that any reporting requirement should at
     most require that only complaints received by the carrier from
     either the Commission or the relevant state regulatory authority be
     reported (thus helping to ensure that there may be at least some
     basis for the allegation), and note that, in any case, the
     Commission already requires the reporting of such
     information.[^350] Petitioners further state that the carrier
     reporting requirement places unnecessary burdens on carriers
     because the other carrier change rules adopted by the Commission
     sufficiently deter slamming and provide the means to track
     offenders, and they note that carriers that do not resolve disputes
     with consumers will be closely monitored through the complaint
     processes of state agencies and the Commission.[^351]

104. No parties commented in opposition to the Sprint and WorldCom
     petitions, and AT&T, BellSouth, and Qwest filed comments supporting
     them.[^352] BellSouth agrees that these rules should be eliminated
     and, while it takes issue with any suggestion of LEC impropriety in
     relation to reports of slamming allegations, BellSouth agrees in
     principle that the Commission should not require one competitor to
     report on the actions of another.[^353] BellSouth also states that
     the reporting requirements place unfair burdens on LECs and are a
     needless waste of resources for both carriers and the
     Commission.[^354] Qwest agrees that the reporting requirements lead
     to false or misleading results due to their inclusion of
     unsubstantiated slamming allegations.[^355] Qwest acknowledges that
     LEC tracking, with respect to IXC slamming, is "not terribly
     refined" and can produce imprecise data such that the "'sins' of a
     slamming reseller are visited upon the facilities-based carrier in
     terms of tracking the allegations."[^356] AT&T also advocates the
     elimination of these requirements, and reiterates that the raw data
     included in the reports is misleading and should not be used to
     guide additional agency investigation.[^357] AT&T further notes
     that, between the time that the reporting obligation was proposed
     in the *Second Report and Order* and its adoption in the *Third
     Report and Order*, the Commission modified the slamming complaint
     procedures by providing for resolution of many such complaints by
     state agencies.[^358] AT&T, like Sprint and WorldCom above, notes
     that these rules expressly contemplate that states that elect to
     administer slamming enforcement procedures will furnish reports to
     the Commission that detail the number of valid complaints
     adjudicated against each carrier. AT&T states that that Commission
     failed to acknowledge this change in procedures in the *Third
     Report and Order*, and thus failed to justify the burdens placed on
     carriers to provide information that overlaps with, but is much
     less reliable than, the reports submitted by the state
     agencies.[^359]

105. Upon reconsideration, we find that the carrier reporting
     requirement should be eliminated. We therefore delete section
     64.1180 of our rules. Our experience since the adoption of the
     requirement has shown that the information contained in such
     reports is of limited utility in investigating allegations of
     slamming; at the same time, it appears that the burdens associated
     with filing the reports are significant. As noted by commenters
     above, LECs in particular may have great difficulty complying with
     the requirements in an accurate manner. For example, many LECs
     utilize mechanized systems that track the total number of lines
     that a consumer alleges were slammed; however, these LEC do not
     generally have mechanized systems that convert the per-line numbers
     to actual per-subscriber numbers. In addition, if a slam is
     associated with a particular trunk group, a LEC's order processing
     system may attribute a slam to each channel within that trunk group
     (*e.g*., a slam within a trunk group comprised of 24 channels will
     be reported as 24 slams against the carrier). We also note that
     hundreds of carriers that submit reports each reporting period do
     not appear to have experienced any slamming problems.

106. [More Stringent Verification Requirements]{.underline}. In its
     Petition for Reconsideration of the *First Reconsideration Order*,
     WorldCom asks the Commission to clarify that, when determining
     whether a change was authorized, the states must use the
     Commission's definition of subscriber as set forth in the *Third
     Report and Order*.[^360] WorldCom asserts that, if state agencies
     are permitted to apply different meanings to key terms in the
     adjudication of slamming complaints, the federal rules begin to
     have little or no purpose.[^361] We decline to provide here the
     clarification sought by WorldCom. In the *Third Report and Order*,
     the Commission recognized that states have valuable insight into
     the slamming problems experienced by consumers.[^362] The
     Commission clearly stated that it would not require "states to
     limit their verification requirements so that they are no more
     stringent than those promulgated by this Commission."[^363] We
     confirm that, in the areas in which the states have jurisdiction,
     federal verification procedures constitute a "floor," and the
     states may choose to impose more stringent requirements, so long as
     they are consistent with the federal requirements.[^364] WorldCom
     does not identify a specific state law or laws that it would seek
     to have preempted, nor does it describe how the particular law(s)
     conflicts federal law or obstructs federal objectives. In the
     absence of such evidence, we decline to preempt state laws
     regarding the definition of "subscriber" in the context of carrier
     change verification.

107. [Underlying Facilities-Based Carrier Changes]{.underline}. In the
     *Second Report and Order*, the Commission adopted rules to clarify
     the appropriate use of preferred carrier freezes.[^365] The
     Commission stated that, while it believed that preferred carrier
     freezes can offer consumers an additional level of protection
     against slamming, "they also create the potential for unreasonable
     and anti-competitive behavior that might affect negatively efforts
     to foster competition in all markets."[^366] Specifically, the
     Commission noted that carriers are often dependent on LECs to
     administer preferred carrier freeze programs.[^367] However, given
     LEC entry into the market for interLATA services, and competition
     in the local exchange and interLATA toll markets, incumbent LECs
     "may have incentives to market freezes aggressively to their
     customers and to use different standards for placing and removing
     freezes depending on the identity of the subscriber's
     carrier."[^368] Since the implementation of the *Second Report and
     Order*, we have received inquiries from LEC representatives who
     expressed concern about the risks of "lifting" a customer's
     preferred carrier freeze in order to permit the customer's
     preferred carrier, a switchless reseller, to begin using the
     network of a different facilities-based carrier. Based on our
     experiences, we clarify here that we do not consider it a lifting
     of a preferred carrier freeze when a LEC implements the request of
     a switchless reseller to change its underlying carrier, and makes
     the technical changes necessary to permit the reseller's customer
     to retain his or her chosen carrier. Under these circumstances, the
     subscriber's preferred carrier is the switchless reseller, and the
     subscriber does not experience a carrier change when the reseller
     merely makes a change to the underlying facilities it utilizes.

108. [Resolution of Informal Complaints]{.underline}. In the *First
     Order on Reconsideration*, we modified our informal complaint rules
     to better address the adjudication of unauthorized carrier change
     complaints.[^369] The rule modifications were intended to give
     consumers a wider array of remedies than was available under the
     former informal complaint rules, which did not provide for the
     Commission to order monetary payments by carriers to consumers in
     situations involving unauthorized carrier changes.[^370] The rule
     modifications also provided for carrier change disputes to be
     handled by appropriate state commissions or this Commission, in
     cases where the state has not opted to administer our rules, rather
     than by authorized carriers.[^371] Our current rules regarding
     informal complaints filed pursuant to section 258 state that
     "\[t\]he Commission will issue a written (or electronic) order
     informing the complainant, the unauthorized carrier, and the
     authorized carrier of its finding, and ordering the appropriate
     remedy, if any, as defined by §§ 64.1160 through 64.1170 of this
     chapter."[^372] Our rules also require that the "relevant
     governmental agency will determine whether an unauthorized change,
     as defined by § 64.1100(e), has occurred . . . ."[^373] In
     addition, our rules state that, when a carrier is notified by the
     relevant governmental agency of an unauthorized carrier change
     complaint, the carrier shall remove all unpaid charges for the
     first 30 days after the alleged unauthorized transfer "pending a
     determination of whether an unauthorized change . . . has occurred,
     if it has not already done so."[^374] Given our experience with the
     resolution of unauthorized carrier change complaints since the
     promulgation of these rules, we believe that permitting flexibility
     as to the form of complaint determinations allows for more
     efficient use of Commission resources and would speed the
     resolution of complaints. Accordingly, we clarify that, under the
     appropriate circumstances, the Commission may issue an order
     addressing an informal slamming complaint in the form of a letter,
     written or electronic, containing the information required by our
     rules.

     **SECOND FURTHER NOTICE OF PROPOSED RULEMAKING**

## Third Party Verifications {#third-party-verifications .unnumbered}

109. [Background]{.underline}. As noted above, in the *Third Report and
     Order*, the Commission declined to mandate specific language to be
     used in third party verification calls. However, in order to
     eliminate uncertainty as to what constitutes necessary and
     acceptable practices, the Commission adopted minimum content
     requirements for third party verification.[^375] The Commission
     stated that minimum requirements for such calls would provide
     useful guidance to the third party verifiers and carriers without
     locking carriers into using a set script.[^376] In addition, the
     Commission stated that the requirements would also permit more
     streamlined enforcement by helping the Commission to determine the
     adequacy of steps taken by independent third parties in the
     verification process.[^377] Accordingly, the Commission concluded
     that scripts for third party verifications 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).[^378] The Commission noted that these content
     requirements do not differ in substance from the rules regarding
     LOAs.[^379]

110. In addition, the Commission found that the third party verification
     must be conducted in the same language that was used in the
     underlying sales transaction, and that the entire third party
     verification transaction must be recorded.[^380] The Commission
     also reiterated that, consistent with its rules regarding
     verifications generally, submitting carriers must maintain and
     preserve the recordings for a minimum period of two years after
     obtaining such verification.[^381] The Commission observed that, if
     a slamming dispute arises, 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 had agreed to change.[^382]

111. [Discussion]{.underline}. Based on our experience since the
     effective date of the *Third Report and Order*, we seek comment on
     the need for additional minimum requirements for third party
     verification calls in order to maximize their accuracy and
     efficiency for consumers, carriers, and the Commission. These
     additional possible requirements address issues we have seen
     repeatedly in our enforcement of the slamming liability rules.
     First, we seek comment on whether third party verifiers should
     state the date during the taped verification process. Through our
     slamming enforcement efforts, we have become aware of situations in
     which, for example, a carrier may have obtained a valid
     authorization for a past carrier change, but the customer has since
     switched away from the carrier and now alleges that he or she was
     switched back to that carrier without authorization. Without a
     clearly articulated date on the verification tapes, the carrier
     could use the former verification tape to defend itself against the
     subsequent unauthorized change.

112. Next, we seek comment on whether the verifier should explicitly
     state that, if the customer has additional questions for the
     carrier's sales representative regarding the carrier change after
     verification has begun, the verification will be terminated, and
     further verification proceedings will not be carried out until
     after the customer has finished speaking with the sales
     representative. We note that, according to our rules, final
     verification cannot be obtained until after the carrier's sales
     representative has ceased speaking to the customer. Accordingly, we
     seek comment as to whether such a requirement would lessen possible
     customer confusion in situations in which a verification is
     terminated because the customer seeks further discussions with the
     carrier's sales agent. We also seek comment on whether the verifier
     should convey to the customer that the carrier change can be
     effectuated without any further contact with the customer once the
     verification has been completed in full. We have found that
     customers may not realize that a carrier cannot in most cases
     "undo" a PIC change after it has been submitted, even if the
     subscriber quickly requests cancellation of the change order.

113. We seek comment on whether verifiers should be required to make
     clear to a customer that he or she is not verifying an intention to
     retain existing service, but is in fact asking for a carrier
     change. We have observed instances in which, for example, carriers
     seeking to obtain customer authorization for a carrier change
     merely inform customers that they are consenting to an "upgrade" of
     the customers' service or to bill consolidation. We also note that
     it can be difficult to ascertain whether a subscriber has fully and
     knowingly provided an answer to each question posed by a third
     party verifier if some questions are presented as a group rather
     than individually. Accordingly, commenters should address whether
     each piece of information that a third party verifier must gather
     under our rules should be the subject of a separate and distinct
     third party verifier inquiry and subscriber response. Finally, we
     seek comment on whether, when verifying an interLATA service
     change, the verifier should specify that interLATA service
     encompasses both international and state-to-state calls,[^383] and
     whether a verifier should define the terms "intraLATA toll" and
     "interLATA toll" service. We have observed that carriers sometimes
     use differing terms for these services; for example, a carrier
     might refer to intraLATA service as "short haul long distance,
     local toll, local long distance, or long distance calls within your
     state." Accordingly, we have received numerous complaints from
     consumers that assert they unknowingly gave up the flat rate for
     intraLATA service they paid to their LEC when consenting to a
     carrier change for different services.

#  {#section .unnumbered}

# PROCEDURAL MATTERS

## Regulatory Flexibility Analysis

113\. As required by the Regulatory Flexibility Act, as amended
(RFA),[^384] the Commission has prepared an Initial Regulatory
Flexibility Analysis (IRFA) of the possible significant economic impact
on small entities of the proposals set forth in this Second FNPRM. The
IRFA is set forth in Appendix C. Written public comments are requested
on the IRFA. These comments must be filed in accordance with the same
filing deadlines as comments filed in this Second FNPRM, and must have a
separate and distinct heading designating them as responses to the IRFA.
Appendix B sets forth a Supplemental Final Regulatory Flexibility
Analysis for the *Third Order on Reconsideration*.

## Paperwork Reduction Act Analysis

114\. This *Third Order on Reconsideration and Second Further Notice of
Proposed Rulemaking* contains either a proposed or modified information
collection. As part of a continuing effort to reduce paperwork burdens,
we invite the general public and the Office of Management and Budget
(OMB) to take this opportunity to comment on the information collections
contained in this *Third Order on Reconsideration and Second Further
Notice of Proposed Rulemaking*, as required by the Paperwork Reduction
Act of 1995, Public Law 104-13. Public and agency comments are due at
the same time as other comments on this *Third Order on Reconsideration
and Second Further Notice of Proposed Rulemaking*; OMB comments are due
60 days from the date of publication of this *Third Order on
Reconsideration and Second Further Notice of Proposed Rulemaking* in the
Federal Register. Comments should address: (a) whether the proposed
collection of information is necessary for the proper performance of the
functions of the Commission, including whether the information shall
have practical utility; (b) the accuracy of the Commission's burden
estimates; (c) ways to enhance the quality, utility, and clarity of the
information collected; and (d) ways to minimize the burden of the
collection of information on the respondents, including the use of
automated collection techniques or other forms of information
technology.

## Ex Parte Presentations

115\. This is a permit-but disclose notice and comment rulemaking
proceeding. Members of the public are advised that ex parte
presentations are permitted, except during the Sunshine Agenda period,
provided they are disclosed under the Commission's rules.[^385]

## Filing of Comments and Reply Comments

114. We invite comment on the issues and questions set forth above.
     Pursuant to sections 1.415 and 1.419 of the Commission\'s rules,
     47 C. F. R. §§ 1.415, 1.419, interested parties may file comments
     on or before 45 days after publication in the Federal Register, and
     reply comments on or before 60 days after publication in the
     Federal Register. Comments may be filed using the Commission\'s
     Electronic Comment Filing System (ECFS) or by filing paper copies.
     See Electronic Filing of Documents in Rulemaking Proceedings, 63
     Fed. Reg. 24121 (1998).

115. Comments filed through the ECFS can be sent as an electronic file
     via the Internet to \<http://www.fcc.gov/e-file/ecfs.html\>.
     Generally, only one copy of an electronic submission must be filed.
     If multiple docket or rulemaking numbers appear in the caption of
     this proceeding, however, commenters must transmit one electronic
     copy of the comments to each docket or rulemaking number referenced
     in the caption. In completing the transmittal screen, commenters
     should include their full name, U. S. Postal Service mailing
     address, and the applicable docket or rulemaking number. Parties
     may also submit an electronic comment by Internet e- mail. To get
     filing instructions for e- mail comments, commenters should send an
     e-mail to ecfs@fcc.gov, and should include the following words in
     the body of the message, \"get form.\" A sample form and directions
     will be sent in reply. Parties who choose to file by paper must
     file an original and four copies of each filing. If more than one
     docket or rulemaking number appear in the caption of this
     proceeding, commenters must submit two additional copies for each
     additional docket or rulemaking number. Filings can be sent by hand
     or messenger delivery, by commercial overnight courier, or by
     first- class or overnight U. S. Postal Service mail (although we
     continue to experience delays in receiving U. S. Postal Service
     mail). The Commission\'s contractor, Vistronix, Inc., will receive
     hand- delivered or messenger- delivered paper filings for the
     Commission\'s Secretary at 236 Massachusetts Avenue, N. E., Suite
     110, Washington, D. C. 20002. The filing hours at this location are
     8: 00 a. m. to 7: 00 p. m. All hand deliveries must be held
     together with rubber bands or fasteners. Any envelopes must be
     disposed of before entering the building. Commercial overnight mail
     (other than U. S. Postal Service Express Mail and Priority Mail)
     must be sent to 9300 East Hampton Drive, Capitol Heights,
     MD 20743. U. S. Postal Service first- class mail, Express Mail, and
     Priority Mail should be addressed to 445 12th Street, SW,
     Washington, D. C. 20554. All filings must be addressed to the
     Commission\'s Secretary, Office of the Secretary, Federal
     Communications Commission. Parties also should send four (4) paper
     copies of their filings to Kelli Farmer, Federal Communications
     Commission, Room 4- C740, 445 12th Street, S. W., Washington, DC
     20554.

116. Written comments by the public on the proposed or modified
     information collections are due on or before 45 days after the date
     of publication in the Federal Register. Written comments must be
     submitted by the Office of Management and Budget (OMB) on the
     proposed and/ or modified information collections on or before 60
     days after date of publication in the Federal Register. In addition
     to filing comments with the Secretary, a copy of any comments on
     the information collection(s) contained herein should be submitted
     to Judy Boley, Federal Communications Commission, Room 1- C804, 445
     12 th Street, S. W., Washington, DC 20554, or via the Internet to
     jboley@fcc.gov and to Edward Springer, OMB Desk Officer, Room 10236
     NEOB, 725 17th Street, N. W., Washington, D. C. 20503 or via the
     Internet to edward.springer@omb.eop.gov.

117. Accessible formats (computer diskettes, large print, audio
     recording and Braille) are available to persons with disabilities
     by contacting Brian Millin of the Consumer & Governmental Affairs
     Bureau, at (202) 418- 7426, TTY (202) 418- 7365, or at
     bmillin@fcc.gov.

# ORDERING CLAUSES

118. Accordingly, IT IS ORDERED, pursuant to sections 1, 4(i), 4(j),
     201, 206-208 and 258 of the Communications Act of 1934, as amended,
     47 U.S.C. §§ 151, 154(i), 154(j), 201, 206-208 and 258 and sections
     1.421 and 1.429 of the Commission's rules, 47 C.F.R. §§ 1.421 and
     1.429, that the *Third Order on Reconsideration and Second Further
     Notice of Proposed Rulemaking* in CC Docket No. 94-129 IS ADOPTED,
     and that Part 64 of the Commission's rules, 47 C.F.R. Part 64, is
     amended as set forth in Appendix A. The requirements of this *Third
     Order on Reconsideration* shall become effective 30 days after
     publication of a summary thereof in the Federal Register. Sections
     64.1120 64.1160, 64.1170 and 64.1180 contain new or modified
     information collections that have not been approved by OMB. The
     Commission will publish a document in the Federal Register
     announcing the effective date of these rules.

119. IT IS FURTHER ORDERED that the collection of information contained
     herein is contingent upon approval by the Office of Management and
     Budget.

120. IT IS FURTHER ORDERED, pursuant to sections 1, 4(i), 4(j) of the
     Communications Act of 1934, as amended, 47 U.S.C. §§ 151, 154(i),
     154(j), and section 1.429 of the Commission's rules, 47 C.F.R.
     §1.429, that the petition for partial stay, filed by VoiceLog, LLC,
     IS DENIED AS MOOT.

121. IT IS FURTHER ORDERED, pursuant to sections 1, 4(i), 4(j), of the
     Communications Act of 1934, as amended, 47 U.S.C. §§ 151, 154(i),
     154(j), and section 1.429 of the Commission's rules, 47 C.F.R.
     §1.429, that the petition for reconsideration, filed by VoiceLog,
     LLC, IS GRANTED IN PART AND DENIED IN PART, to the extent indicated
     herein.

122. IT IS FURTHER ORDERED, pursuant to sections 1, 4(i), 4(j), of the
     Communications Act of 1934, as amended, 47 U.S.C. §§ 151, 154(i),
     154(j), and section 1.429 of the Commission's rules, 47 C.F.R.
     §1.429, that the petition for reconsideration, filed by the Rural
     LECs, IS DENIED.

123. IT IS FURTHER ORDERED, pursuant to sections 1, 4(i), 4(j), of the
     Communications Act of 1934, as amended, 47 U.S.C. §§ 151, 154(i),
     154(j), and section 1.429 of the Commission's rules, 47 C.F.R.
     §1.429, that the petition for reconsideration, filed by NTCA, IS
     DENIED.

124. IT IS FURTHER ORDERED, pursuant to sections 1, 4(i), 4(j), of the
     Communications Act of 1934, as amended, 47 U.S.C. §§ 151, 154(i),
     154(j), and section 1.429 of the Commission's rules, 47 C.F.R.
     §1.429, that the petition for reconsideration, filed by SBC, IS
     GRANTED IN PART AND DENIED IN PART, to the extent indicated herein.

125. IT IS FURTHER ORDERED, pursuant to sections 1, 4(i), 4(j), of the
     Communications Act of 1934, as amended, 47 U.S.C. §§ 151, 154(i),
     154(j), and section 1.429 of the Commission's rules, 47 C.F.R.
     §1.429, that the petition for reconsideration, filed by AT&T on
     April 2, 2001, IS GRANTED IN PART AND DENIED IN PART, to the extent
     indicated herein, and that the petition for reconsideration, filed
     by AT&T on March 18, 1999, IS DENIED.

126. IT IS FURTHER ORDERED, pursuant to sections 1, 4(i), 4(j), of the
     Communications Act of 1934, as amended, 47 U.S.C. §§ 151, 154(i),
     154(j), and section 1.429 of the Commission's rules, 47 C.F.R.
     §1.429, that the petitions for reconsideration, filed by WorldCom
     on April 2, 2001 and September 5, 2000, ARE GRANTED IN PART AND
     DENIED IN PART, to the extent indicated herein.

127. IT IS FURTHER ORDERED, pursuant to sections 1, 4(i), 4(j), of the
     Communications Act of 1934, as amended, 47 U.S.C. §§ 151, 154(i),
     154(j), and section 1.429 of the Commission's rules, 47 C.F.R.
     §1.429, that the petitions for reconsideration, filed by Sprint on
     April 2, 2001, and September 5, 2000, ARE GRANTED IN PART AND
     DENIED IN PART, to the extent indicated herein, and the petition
     for reconsideration, filed by Sprint on March 18, 1999, IS DENIED.

     121\. IT IS FURTHER ORDERED, that the Commission's Consumer and
     Governmental Affairs Bureau, Reference Information Center, SHALL
     SEND a copy of this Third *Report and Order and Second Further
     Notice of Proposed Rulemaking* in CC Docket No. 94-129, including
     the Initial Regulatory Flexibility Analysis and the Supplemental
     Final Regulatory Flexibility Analysis, to the Chief Counsel for
     Advocacy of the Small Business Administration.

> FEDERAL COMMUNICATIONS COMMISSION
>
> Marlene H. Dortch
>
> Secretary

# APPENDIX A {#appendix-a .unnumbered}

**RULES AMENDED**

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

1.  Part 64, Subpart K, the heading is revised to read as follows:

> **Subpart K-Changes in Preferred Telecommunications Service
> Providers**

2.  Section 64.1120 is amended by revising the second sentence in
    paragraph (c)(3)(iii) to read as follows:

> **§ 64.1120 Verification of orders for telecommunications service.**
>
> \* \* \* \* \*

\(c\) \* \* \*

\(3\) \* \* \*

> \(iii\) \* \* \* 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 (not
> including the name of the displaced carrier); the telephone numbers to
> be switched; and the types of service involved. \* \* \*
>
> \* \* \* \* \*

3.  Section 64.1130 is amended by revising paragraph (j) to read as
    follows:

> **§64.1130 Letter of agency form and content**
>
> \* \* \* \* \*
>
> \(j\) 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.
> However, letters of agency for multi-line and/or multi-location
> business customers that have entered into negotiated agreements with
> carriers to add presubscribed lines to their business locations during
> the course of a term agreement shall be valid for the period specified
> in the term agreement.

4.  Section 64.1150 is amended by revising paragraph (b) to read as
    follows:

> **§ 64.1150 Procedures for the resolution of unauthorized changes in
> preferred carriers.**
>
> \* \* \* \* \*
>
> \(b\) Referral of Complaint. Any carrier, executing, authorized, or
> allegedly unauthorized, that is informed by a subscriber or an
> executing carrier of an unauthorized carrier change shall direct that
> subscriber either to the state commission or, where the state
> commission has not opted to administer these rules, to the Federal
> Communications Commission's Consumer & Governmental Affairs Bureau,
> for resolution of the complaint. Carriers shall also inform the
> subscriber that he or she may contact and seek resolution from the
> alleged unauthorized carrier and, in addition, may contact the
> authorized carrier.
>
> \* \* \* \* \*

5.  Section 64.1160 is revised by adding paragraph (g) to read as
    follows:

> **§ 64.1160 Absolution procedures where the subscriber has not paid
> charges.**
>
> \* \* \* \* \*
>
> \(g\) When a LEC has assigned a subscriber to a carrier without
> authorization, and where the subscriber has not paid the unauthorized
> charges, the LEC shall switch the subscriber to the desired carrier at
> no cost to the subscriber, and shall also secure the removal of the
> unauthorized charges from the subscriber's bill in accordance with the
> procedures specified in paragraphs (a)-(f) of this section.

6.  Section 64.1170 is revised by adding paragraph (g) to read as
    follows:

> **§ 64.1170 Reimbursement procedures where the subscriber has paid
> charges.**
>
> \* \* \* \* \*
>
> \(g\) When a LEC has assigned a subscriber to a non-affiliated carrier
> without authorization, and when a subscriber has paid the
> non-affiliated carrier the charges for the billed service, the LEC
> shall reimburse the subscriber for all charges paid by the subscriber
> to the unauthorized carrier and shall switch the subscriber to the
> desired carrier at no cost to the subscriber. When a LEC makes an
> unauthorized carrier change to an affiliated carrier, and when the
> customer has paid the charges, the LEC must pay to the authorized
> carrier 150% of the amounts collected from the subscriber in
> accordance with paragraphs (a)-(f) of this section.

7.  Remove § 64.1180.

> § 64.1180 \[Removed\]

**APPENDIX B**

**Supplemental Final Regulatory Flexibility Analysis.**

A.  

1\. As required by the Regulatory Flexibility Act (RFA),[^386] an
Initial Regulatory Flexibility Analysis (IRFA) was incorporated in the
*Third Report and Order and Second Order on Reconsideration*.[^387] The
Commission sought written public comment on the proposals in the *Third
Report and Order*, including comment on the IRFA. A Final Regulatory
Flexibility Analysis (FRFA) was incorporated in the *Third Report and
Order*.[^388] The Commission received a number of petitions for
reconsideration in response to the *Third Report and Order*. Certain
comments received are discussed below, including two received in
response to the IRFA. The instant *Order* addresses issues raised in
those reconsideration petitions and other 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 *Third Report
and Order* and addressed in the instant *Order*. This SFRFA conforms to
the RFA.[^389]

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

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. 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. In this *Order*, we address certain issues raised in
petitions for reconsideration of the *Second Report and Order and
Further Notice of Proposed Rulemaking*, the *First Order on
Reconsideration*, and the *Third Report and Order*. Specifically, in
this *Order* we modify the drop-off rule to allow the sales agents of
certain carriers to remain on the line during the Third Party
Verification (TPV).[^390] We also discuss small business concerns with
respect to this rule.[^391] We exempt "multi-line and/or multi-location
business customers" from our rule imposing a 60-day limit on the amount
of time a Letter of Agency (LOA) may be considered valid.[^392] We
decline to hold Interexchange Carriers (IXCs) liable for slamming
pursuant to section 258 when the unauthorized carrier change was the
result of a LEC mistake, and LECs must verify carrier change requests
made by a customer directly to the LEC according to our verification
rules. We no longer require carriers that provide telephone exchange
service and/or telephone toll service to periodically submit to the
Commission allegations of slamming. We do not require a subscriber to
identify, either in LOAs or third party verifications, the identity of
the displaced carrier. This *Order* also contains a Further Notice of
Proposed Rulemaking, in which we propose several additional
modifications to our carrier change rules. Specifically, we seek comment
on rule modifications with respect to third party verifications.

> **B. Summary of Significant Issues Concerning Small Entities**

3\. Two commenters responded directly to the IRFA: Voicelog and SBA.
VoiceLog filed a Petition for Partial Stay and Reconsideration of the
*Third Report and Order.* VoiceLog argues that that drop-off rule is
overbroad, impractical, and unenforceable and is not competitively
neutral with respect to other third party verification methods.[^393]
The SBA argues that the Commission adopted the drop-off rule without
raising the issue in an IRFA and that the Commission did not solicit
comment on compliance costs and alternatives in either the *Second
Report and Order* or the *Third Report and Order*.[^394] In response to
VoiceLog's arguments, the Commission modified the drop-off requirement
to balance the independence of the third party verification with the
concerns of those smaller carriers. The Regulatory Flexibility concerns
of VoiceLog and SBA are discussed in paragraphs 44-45, supra.

> **C. Description and Estimate of the Number of Small Entities to which
> the Rules Will Apply.**

4\. 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.[^395] The RFA generally
defines the term "small entity" as having the same meaning as the terms
"small business," "small organization," and "small governmental
jurisdiction."[^396] In addition, the term "small business" has the same
meaning as the term "small business concern" under Section 3 of the
Small Business Act.[^397] Under the Small business Act, a "small
business concern" is one that: (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).[^398] A small organization is generally "any not-for-profit
enterprise which is independently owned and operated and is not dominant
in its field."[^399] Nationwide, as of 1992, there were approximately
275,801 small organizations.[^400]

5\. The definition of "small governmental jurisdiction" is one with
populations of fewer than 50,000.[^401] There are approximately 85,006
governmental entities in the nation.[^402] This number includes such
entities as states, counties, cities, utility districts and school
districts. There are no figures available on what portion of this number
has populations of fewer than 50,00. However, this number includes
38,978 counties, cities and towns, and of those, 37,556, or ninety-six
percent, have populations of fewer than 50,000.[^403] The Census Bureau
estimates that this ratio is approximately accurate for all government
entities. Thus, of the 85,006 governmental entities, we estimate that
ninety-six percent, or about 81,600, are small entities that may be
affected by our rules.

6\. We have included small incumbent LECs in this 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.*, wireline
telecommunications business having 1,500 or fewer employees), and \"is
not dominant in its field of operation.\"[^404] 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.[^405] We have therefore included small incumbent
LECs in this RFA analysis, although we emphasize that this RFA action
has no effect on the Commission\'s analyses and determinations in other,
non-RFA contexts.

7**. Incumbent Local Exchange Carriers.** Neither the Commission nor the
SBA has developed a specific small business size standard for providers
of incumbent local exchange services. The closest applicable size
standard under the SBA rules is for Wired Telecommunications Carriers.
Under that standard, such a business is small if it has 1,500 or fewer
employees. [^406] According to the FCC's *Telephone Trends Report* data,
1,329 incumbent local exchange carriers reported that they were engaged
in the provision of local exchange services.[^407] Of these 1,329
carriers, an estimated 1,024 have 1,500 or fewer employees and 305 have
more than 1,500 employees.[^408] Consequently, we estimate that the
majority of providers of local exchange service are small entitles that
may be affected by the rules and policies adopted herein.

8\. **Competitive Local Exchange Carriers.** Neither the Commission nor
the SBA has developed a specific small business size standard for
providers of competitive local exchange services. The closest applicable
size standard under the SBA rules is for Wired Telecommunications
Carriers. Under that standard, such a business is small if it has 1,500
or fewer employees. [^409] According to the FCC\'s *Telephone Trends
Report* data, 532 companies reported that they were engaged in the
provision of either competitive access provider services or competitive
local exchange carrier services.[^410] Of these 532 companies, an
estimated 411 have 1,500 or fewer employees and 121 have more than 1,500
employees.[^411] Consequently, the Commission estimates that the
majority of providers of competitive local exchange service are small
entities that may be affected by the rules.

9\. **Competitive Access Providers**. Neither the Commission nor the SBA
has developed a specific size standard for competitive access providers
(CAPS). The closest applicable standard under the SBA rules is for Wired
Telecommunications Carriers. Under that standard, such a business is
small if it has 1,500 or fewer employees. [^412] According to the FCC\'s
*Telephone Trends Report* data, 532 CAPs or competitive local exchange
carriers and 55 other local exchange carriers reported that they were
engaged in the provision of either competitive access provider services
or competitive local exchange carrier services.[^413] Of these 532
competitive access providers and competitive local exchange carriers, an
estimated 411 have 1,500 or fewer employees and 121 have more than 1,500
employees.[^414] Of the 55 other local exchange carriers, an estimated
53 have 1,500 or fewer employees and 2 have more than 1,500
employees.[^415] Consequently, the Commission estimates that the
majority of small entity CAPS and the majority of other local exchange
carriers may be affected by the rules.

10\. **Local Resellers.** The SBA has developed a specific size standard
for small businesses within the category of Telecommunications
Resellers. Under that standard, such a business is small if it has 1,500
or fewer employees.[^416] According to the FCC\'s *Telephone Trends
Report* data, 134 companies reported that they were engaged in the
provision of local resale services.[^417] Of these 134 companies, an
estimated 131 have 1,500 or fewer employees and 3 have more than 1,500
employees.[^418] Consequently, the Commission estimates that the
majority of local resellers may be affected by the rules.

11\. **Toll Resellers.** The SBA has developed a specific size standard
for small businesses within the category of Telecommunications
Resellers. Under that SBA definition, such a business is small if it has
1,500 or fewer employees.[^419] According to the FCC\'s *Telephone
Trends Report* data, 576 companies reported that they were engaged in
the provision of toll resale services.[^420] Of these 576 companies, an
estimated 538 have 1,500 or fewer employees and 38 have more than 1,500
employees**.**[^421] Consequently, the Commission estimates that a
majority of toll resellers may be affected by the rules.

12\. **Interexchange Carriers.** Neither the Commission nor the SBA has
developed a specific size standard for small entities specifically
applicable to providers of interexchange services. The closest
applicable size standard under the SBA rules is for Wired
Telecommunications Carriers. Under that standard, such a business is
small if it has 1,500 or fewer employees. [^422] According to the FCC's
*Telephone Trends Report* data, 229 carriers reported that their primary
telecommunications service activity was the provision of interexchange
services.[^423] Of these 229 carriers, an estimated 181 have 1,500 or
fewer employees and 48 have more than 1,500 employees.[^424]
Consequently, we estimate that a majority of IXCs may be affected by the
rules.

13\. **Operator Service Providers.** Neither the Commission nor the SBA
has developed a specific size standard for small entities specifically
applicable to operator service providers. The closest applicable size
standard under the SBA rules is for Wired Telecommunications Carriers.
Under that standard, such a business is small if it has 1,500 or fewer
employees. [^425] According to the FCC\'s *Telephone Trends Report*
data, 22 companies reported that they were engaged in the provision of
operator services.[^426] Of these 22 companies, an estimated 20 have
1,500 or fewer employees and two have more than 1,500 employees.[^427]
Consequently, the Commission estimates that a majority of local
resellers may be affected by the rules.

14\. **Prepaid Calling Card Providers.** The SBA has developed a size
standard for small businesses within the category of Telecommunications
Resellers. Under that size standard, such a business is small if it has
1,500 or fewer employees.[^428] According to the FCC\'s *Telephone
Trends Report* data, 32 companies reported that they were engaged in the
provision of prepaid calling cards.[^429] Of these 32 companies, an
estimated 31 have 1,500 or fewer employees and one has more than 1,500
employees.[^430] Consequently, the Commission estimates that a majority
of prepaid calling providers may be affected by the rules.

15\. **Other Toll Carriers.** Neither the Commission nor the SBA has
developed a specific size standard for small entities specifically
applicable to \"Other Toll Carriers.\" This category includes toll
carriers that do not fall within the categories of interexchange
carriers, operator service providers, prepaid calling card providers,
satellite service carriers, or toll resellers. The closest applicable
size standard under the SBA rules is for Wired Telecommunications
Carriers. Under that standard, such a business is small if it has 1,500
or fewer employees. [^431] According to the FCC\'s *Telephone Trends
Report* data, 42 carriers reported that they were engaged in the
provision of \"Other Toll Services.\"[^432] Of these 42 carriers, an
estimated 37 have 1,500 or fewer employees and five have more than 1,500
employees.[^433] Consequently, the Commission estimates that a majority
of "Other Toll Carriers\" may be affected by the rules.

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

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

17\. *Verification of Carrier Changes -- Independent Third Party
Verification*. We modify our rule on third party verification to exempt
carriers that certify to the Commission that they are unable to comply
with the rule. We are persuaded that compliance with the current
drop-off rule may be infeasible for carriers, including smaller
carriers, that lack the technical means to comply or for which enabling
equipment upgrades are economically infeasible. However, if a sales
agent of an exempted carrier responds to a request by the customer for
additional information, the third party verification must be terminated.
A new third party verification may commence only after the sales agent
has finished responding to the customer inquiry. Any third party
verification obtained before a carrier's sales representative has
finished providing information regarding the carrier change will not be
considered valid. The modification, as created here, will therefore
likely reduce the costs for upgrading the network and revising internal
processes for signing up new customers, and retraining employees on how
to use the new network upgrades and internal processes. We were not able
to identify alternatives that would have lessened the economic on small
entities while remaining consistent with the Commission's objectives.

18\. *60-Day Limit on the Effectiveness of an LOA*. We exempt multi-line
and/or multi-location business customers from the 60-day limit. The
Commission concludes that this requirement would not impose significant
additional costs or administrative burdens on small carriers.[^434]

19\. *Unauthorized Carrier Changes Resulting From LEC Actions*. We
decline to hold the IXC liable for slamming when the unauthorized
carrier change was the result of a LEC mistake. LECs will be liable for
unauthorized carrier changes that are the result of the LEC's mistake.
LECs will also be required to follow the Commission's series of
verification rules when a customer contacts the LEC directly to request
a carrier change.[^435]

20\. *Carrier Reporting of Slamming Allegations (Form 478)*. The
Commission will no longer require carriers that provide telephone
exchange service and/or telephone toll service to periodically submit to
the Commission reports regarding complaints they receive alleging
unauthorized carrier changes -- form 478. The change in the rule will
alleviate the administrative burdens associated with filing the reports.

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

21\. The RFA requires an agency to describe any significant alternatives
that it has considered in developing its approach, which may include the
following four alternatives (among others): "(1) the establishment of
differing compliance or reporting requirements or timetables that take
into account the resources available to small entities; (2) the
clarification, consolidation, or simplification of compliance and
reporting requirements under the rule for such small entities; (3) the
use of performance rather than design standards; and (4) an exemption
from coverage of the rule, or any part thereof, for such small
entities."[^436]

22\. *Verification of Carrier Changes -- Independent Third Party
Verification.* The Commission was persuaded by VoiceLog that compliance
with the rule as created in the *Third Report and Order* may have been
infeasible for some carriers, including smaller carriers, and therefore
in order to minimize any adverse impact of the TPV rule on small
entities, the Commission modified the TPV rule to allow for an exception
for those carriers that certify that they are unable to comply with the
drop-off rule. Other alternatives where suggested by VoiceLog and AT&T,
including allowing the sales agent to remain on the line and answer
questions during verification were rejected because they either
compromised the independent nature of the third party verification or
were not likely to have an effect on our goals of reducing slams.
Self-certification will likely be less costly to a small business than
the costs in upgrading the network and revising internal processes for
signing up new customers, and retraining employees on how to use the new
network upgrades.

23\. *60-Day Limit on the Effectiveness of an LOA*. We expect that
exemption we create will have no significant economic impact on
carriers.

24\. *Unauthorized Carrier Changes Resulting from LEC Actions*. The
Commission is persuaded that when a LEC has assigned a subscriber to a
non-affiliated carrier without authorization, and where the subscriber
has paid the non-affiliated carrier the charges for the billed service,
the LEC shall reimburse the subscriber for all charges paid by the
subscriber to the unauthorized carrier and shall switch the subscriber
to the desired carrier at no cost to the subscriber. When the subscriber
has not paid the unauthorized carrier, the LEC shall switch the
subscriber to the desired carrier at no cost to the subscriber, and
shall also secure the removal of the unauthorized charges from the
subscriber's bill. In order to deter such actions, we believe that a LEC
should be held responsible for unauthorized carrier changes that favor
its long distance affiliate, in the same manner that an IXC would be
held responsible if it submitted an unauthorized change itself. The
alternatives, *i.e*., holding the customer or the carrier liable for
mistakes made by the LEC were rejected as contrary to the slamming
portions of the Act and fundamentally unfair. Because LECs will be held
responsible for their own mistakes, LECs must also follow our
verification rules when contacted directly by a subscriber that requests
a carrier change, such that a record of the carrier change request is
created and maintained.

25\. *Carrier Reporting of Slamming Allegations (Form 478).* In
eliminating our rule requiring carriers to submit Form 478, the
Commission removed the burdens placed on carriers to provide information
that could be misleading and damaging to a carrier; LEC's in particular
may have great difficulty complying with the requirements in an accurate
manner. This change in our rule will likely reduce significantly the
administrative burdens on carriers, including those smaller carriers.

26\. [Report to Congress:]{.underline} The Commission will send a copy
of the *Third Order on Reconsideration and Second Further Notice of
Proposed Rulemaking* (*Second Further Notice*), including this
Supplemental FRFA, in a report to be sent to Congress pursuant to the
Congressional Review Act.[^437] In addition, the Commission will send a
copy of the *Third Order on Reconsideration*, including this
Supplemental FRFA, to the Chief Counsel for Advocacy of the SBA. A copy
of the *Third Order on Reconsideration* and Supplemental FRFA (or
summaries thereof) will also be published in the Federal Register.[^438]

**APPENDIX C**

**Initial Regulatory Flexibility Analysis**

1\. As required by the Regulatory Flexibility Act (RFA), as
amended,[^439] the Commission has prepared this present Initial
Regulatory Flexibility Analysis (IRFA) of the possible significant
economic impact on small entities by the policies and rules proposed in
this *Third Order on Reconsideration and Second Further Notice of
Proposed Rulemaking* (*Second Further Notice*). Written public comments
are requested on this IRFA. Comments must be identified as responses to
the *Second Further Notice*. The Commission will send a copy of the
Notice, including this IRFA, to the Chief Counsel for Advocacy of the
Small Business Administration. *See* 5 U.S.C. § 603(a). In addition, the
Notice and the IRFA (or summaries thereof) will be published in the
Federal Register.

**A. Need for, and Objectives of, the Proposed Rules**

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. 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. In this *Order*, we address certain issues raised in
petitions for reconsideration of the *Second Report and Order and
Further Notice of Proposed Rulemaking*, the *First Order on
Reconsideration*, and the *Third Report and Order*. This *Order* also
contains a Second Further Notice of Proposed Rulemaking, in which we
propose several modifications to our carrier change rules. Specifically,
we seek comment on rule modifications with respect to third party
verifications.

**B. Legal Basis**

3\. The *Second Further Notice* is adopted pursuant to Sections 1, 4(i),
4(j) of the Communications Act of 1934, as amended, 47 U.S.C. §§ 151,
154(i), 154(j), and section 1.429 of the Commission's Rules, 47 C.F.R. §
1.429.

C.  **Description and Estimate of the Number of Small Entities to Which
    the Proposed Rules Will Apply**

4\. 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.[^440] The RFA generally
defines the term "small entity" as having the same meaning as the terms
"small business," "small organization," and "small governmental
jurisdiction."[^441] In addition, the term "small business" has the same
meaning as the term "small business concern" under Section 3 of the
Small Business Act.[^442] Under the Small business Act, a "small
business concern" is one that: (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).[^443] A small organization is generally "any not-for-profit
enterprise which is independently owned and operated and is not dominant
in its field."[^444] Nationwide, as of 1992, there were approximately
275,801 small organizations.[^445]

5\. The definition of "small governmental jurisdiction" is one with
populations of fewer than 50,000.[^446] There are approximately 85,006
governmental entities in the nation.[^447] This number includes such
entities as states, counties, cities, utility districts and school
districts. There are no figures available on what portion of this number
has populations of fewer than 50,000. However, this number includes
38,978 counties, cities and towns, and of those, 37,556, or ninety-six
percent, have populations of fewer than 50,000.[^448] The Census Bureau
estimates that this ratio is approximately accurate for all government
entities. Thus, of the 85,006 governmental entities, we estimate that
ninety-six percent, or about 81,600, are small entities that may be
affected by our rules.

6\. We have included small incumbent LECs in this 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 wireline
telecommunications business having 1,500 or fewer employees), and \"is
not dominant in its field of operation.\"[^449] 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.[^450] We have therefore included small incumbent
LECs in this RFA analysis, although we emphasize that this RFA action
has no effect on the Commission\'s analyses and determinations in other,
non-RFA contexts.

7\. **Incumbent Local Exchange Carriers.** Neither the Commission nor
the SBA has developed a specific small business size standard for
providers of incumbent local exchange services. The closest applicable
size standard under the SBA rules is for Wired Telecommunications
Carriers. Under that standard, such a business is small if it has 1,500
or fewer employees. [^451] According to the FCC's *Telephone Trends
Report* data, 1,329 incumbent local exchange carriers reported that they
were engaged in the provision of local exchange services.[^452] Of these
1,329 carriers, an estimated 1,024 have 1,500 or fewer employees and 305
have more than 1,500 employees.[^453] Consequently, we estimate that the
majority of providers of local exchange service are small entitles that
may be affected by the rules and policies adopted herein.

8\. **Competitive Local Exchange Carriers.** Neither the Commission nor
the SBA has developed a specific small business size standard for
providers of competitive local exchange services. The closest applicable
size standard under the SBA rules is for Wired Telecommunications
Carriers. Under that standard, such a business is small if it has 1,500
or fewer employees. [^454] According to the FCC\'s *Telephone Trends
Report* data, 532 companies reported that they were engaged in the
provision of either competitive access provider services or competitive
local exchange carrier services.[^455] Of these 532 companies, an
estimated 411 have 1,500 or fewer employees and 121 have more than 1,500
employees.[^456] Consequently, the Commission estimates that the
majority of providers of competitive local exchange service are small
entities that may be affected by the rules.

9\. **Competitive Access Providers**. Neither the Commission nor the SBA
has developed a specific size standard for competitive access providers
(CAPS). The closest applicable standard under the SBA rules is for Wired
Telecommunications Carriers. Under that standard, such a business is
small if it has 1,500 or fewer employees. [^457] According to the FCC\'s
*Telephone Trends Report* data, 532 CAPs or competitive local exchange
carriers and 55 other local exchange carriers reported that they were
engaged in the provision of either competitive access provider services
or competitive local exchange carrier services.[^458] Of these 532
competitive access providers and competitive local exchange carriers, an
estimated 411 have 1,500 or fewer employees and 121 have more than 1,500
employees.[^459] Of the 55 other local exchange carriers, an estimated
53 have 1,500 or fewer employees and 2 have more than 1,500
employees.[^460] Consequently, the Commission estimates that the
majority of small entity CAPS and the majority of other local exchange
carriers may be affected by the rules.

10\. **Local Resellers.** The SBA has developed a specific size standard
for small businesses within the category of Telecommunications
Resellers. Under that standard, such a business is small if it has 1,500
or fewer employees.[^461] According to the FCC\'s *Telephone Trends
Report* data, 134 companies reported that they were engaged in the
provision of local resale services.[^462] Of these 134 companies, an
estimated 131 have 1,500 or fewer employees and 3 have more than 1,500
employees.[^463] Consequently, the Commission estimates that the
majority of local resellers may be affected by the rules.

11\. **Toll Resellers.** The SBA has developed a specific size standard
for small businesses within the category of Telecommunications
Resellers. Under that SBA definition, such a business is small if it has
1,500 or fewer employees.[^464] According to the FCC\'s *Telephone
Trends Report* data, 576 companies reported that they were engaged in
the provision of toll resale services.[^465] Of these 576 companies, an
estimated 538 have 1,500 or fewer employees and 38 have more than 1,500
employees**.**[^466] Consequently, the Commission estimates that a
majority of toll resellers may be affected by the rules.

12\. **Interexchange Carriers.** Neither the Commission nor the SBA has
developed a specific size standard for small entities specifically
applicable to providers of interexchange services. The closest
applicable size standard under the SBA rules is for Wired
Telecommunications Carriers. Under that standard, such a business is
small if it has 1,500 or fewer employees. [^467] According to the FCC's
*Telephone Trends Report* data, 229 carriers reported that their primary
telecommunications service activity was the provision of interexchange
services.[^468] Of these 229 carriers, an estimated 181 have 1,500 or
fewer employees and 48 have more than 1,500 employees.[^469]
Consequently, we estimate that a majority of IXCs may be affected by the
rules.

13\. **Operator Service Providers.** Neither the Commission nor the SBA
has developed a specific size standard for small entities specifically
applicable to operator service providers. The closest applicable size
standard under the SBA rules is for Wired Telecommunications Carriers.
Under that standard, such a business is small if it has 1,500 or fewer
employees. [^470] According to the FCC\'s *Telephone Trends Report*
data, 22 companies reported that they were engaged in the provision of
operator services.[^471] Of these 22 companies, an estimated 20 have
1,500 or fewer employees and two have more than 1,500 employees.[^472]
Consequently, the Commission estimates that a majority of local
resellers may be affected by the rules.

14\. **Prepaid Calling Card Providers.** The SBA has developed a size
standard for small businesses within the category of Telecommunications
Resellers. Under that size standard, such a business is small if it has
1,500 or fewer employees.[^473] According to the FCC\'s *Telephone
Trends Report* data, 32 companies reported that they were engaged in the
provision of prepaid calling cards.[^474] Of these 32 companies, an
estimated 31 have 1,500 or fewer employees and one has more than 1,500
employees.[^475] Consequently, the Commission estimates that a majority
of prepaid calling providers may be affected by the rules.

15\. **Other Toll Carriers.** Neither the Commission nor the SBA has
developed a specific size standard for small entities specifically
applicable to \"Other Toll Carriers.\" This category includes toll
carriers that do not fall within the categories of interexchange
carriers, operator service providers, prepaid calling card providers,
satellite service carriers, or toll resellers. The closest applicable
size standard under the SBA rules is for Wired Telecommunications
Carriers. Under that standard, such a business is small if it has 1,500
or fewer employees. [^476] According to the FCC\'s *Telephone Trends
Report* data, 42 carriers reported that they were engaged in the
provision of \"Other Toll Services.\"[^477] Of these 42 carriers, an
estimated 37 have 1,500 or fewer employees and five have more than 1,500
employees.[^478] Consequently, the Commission estimates that a majority
of "Other Toll Carriers\" may be affected by the rules.

**D. Description of Projected Reporting, Recordkeeping, and Other
Compliance Requirements for Small Entities**

16\. As noted, we have sought comment on the need for additional minimum
requirements for third party verification calls in order to maximize
their accuracy and efficiency for consumers, carriers, and the
Commission. These additional possible requirements address issues we
have seen repeatedly in our enforcement of the slamming liability rules.
We do not believe that adoption of any or all of the proposals would
create the need for any additional professional skills beyond those
already employed to comply with the current third party verification
rules.

**E. Steps Taken to Minimize Significant Economic Impact on Small
Entities, and Significant Alternatives Considered**

17\. The RFA requires an agency to describe any significant alternatives
that it has considered in reaching its proposed approach, which may
include the following four alternatives (among others): (1) the
establishment of differing compliance or reporting requirements or
timetables that take into account the resources available to small
entities; (2) the clarification, consolidation, or simplification of
compliance or reporting requirements under the rule for small entities;
(3) the use of performance, rather than design standards; and (4) an
exemption from coverage of the rule, or any part thereof, for small
entities.[^479]

18\. *Third Party Verification*. The Commission is considering
additional requirements which would address issues we have seen in the
enforcement of our slamming rules, and we therefore seek comment on the
need for additional minimum requirements for third party verification
calls and of the impact of any additional requirements on small
entities. We especially seek information addressing the possible
financial impact on smaller carriers.

**F. Federal Rules that May Duplicate, Overlap, or Conflict with the
Proposed Rules**

19\. None.

**Appendix D**

[Petitioners]{.underline}

AT&T Corp. (Petitions filed on April 2, 2001, and March 18, 1999).

National Telephone Cooperative Association (NTCA)

Rural LECs

SBC Communications

Sprint Corporation (Petitions filed on April 2, 2001, Sept. 5, 2000, and
March 18, 1999).

VoiceLog, LLC

WorldCom (Petitions filed April 2, 2001, and Sept. 5, 2000).

[Commenters]{.underline}

Ameritech

Association of Communications Enterprises (ASCENT), formerly
Telecommunications Resellers Association (TRA)

AT&T Corp.

Bell Atlantic

BellSouth

Buyers Online

Cable & Wireless

Cox Communications

*Erbia* Network

Excel

Fionda

GTE

Hughes Telecom

IDS Telecom

John Ring Enterprises

Long Distance Post

PromiseVision

Qwest

SaveTel Communications

SBC Communications

Sprint Corporation

Telephone Company of Central Florida

TCM Communications

Telecom New Zealand

USTA

US West

Velocity Networks of Kentucky

Verizon

WorldCom

[^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) (*Second
    Report and Order), 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]: *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, 15
    FCC Rcd 8158 (2000).

[^3]: *Implementation of the Subscriber Carrier Selection Changes
    Provisions of the Telecommunications Act of 1996 and Policies and
    Rules Concerning Unauthorized Changes of Consumers' Long Distance
    Carriers*, CC Docket No. 94-129, Third Report and Order and Second
    Order on Reconsideration, 15 FCC Rcd 15996 (2000) (*Third Report and
    Order*); Errata, DA 00-2163 (rel. Sept. 25, 2000); Erratum, DA
    00-292 (rel. Oct. 4, 2000); *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, Order, 16
    FCC Rcd 4999 (2001).

[^4]: 47 U.S.C. § 258(a). Telecommunications Act of 1996, Pub. L. No.
    104-104, 110 Stat. 56 (1996).

[^5]: 47 U.S.C. § 258(a).

[^6]: 47 C.F.R. § 64.1100 *et seq*. Prior to the adoption of section 258
    of the Act, the Commission had taken various steps to address the
    slamming problem; the adoption of section 258 expanded the
    Commission's authority in this area. *See*, *e.g.*, *Policies and
    Rules Concerning Unauthorized Changes of Consumers\' Long Distance
    Carriers*, CC Docket No. 94-129, Report and Order, 10 FCC Rcd 9560
    (1995), *stayed in part*, 11 FCC Rcd 856 (1995); *Policies and Rules
    Concerning Changing Long Distance Carrier*s, CC Docket No. 91-64, 7
    FCC Rcd 1038 (1992), *reconsideration denied*, 8 FCC Rcd 3215
    (1993); Investigation of Access and Divestiture Related Tariffs, CC
    Docket No. 83-1145, Phase I, 101 F.C.C.2d 911, 101 F.C.C.2d 935,
    *reconsideration* *denied*, 102 F.C.C.2d 503 (1985).

[^7]: *Second Report and Order,* 14 FCC Rcd at 1591-1609, ¶¶ 139-182.

[^8]: *Third Report and Order,* 15 FCC Rcd 15996 (2000).

[^9]: *First Order on Reconsideration*, 15 FCC 8158 (2000).

[^10]: 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.

[^11]: *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).

[^12]: *SBC Communications, Inc.,* Petition for Reconsideration and for
    Clarification, CC Docket No. 94-129, at 13-14 (filed March 18,
    1999).

[^13]: *Third Report and Order*, 15 FCC Rcd at ¶ 38.

[^14]: *See* 47 C.F.R. § 64.1100(a); *Second Report and Order,* 14 FCC
    Rcd at 1564-65, ¶ 92.

[^15]: *See* 47 C.F.R. § 64.1100(b); *Second Report and Order,* 14 FCC
    Rcd at 1565-66, ¶ 94.

[^16]: *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, ¶ 95.

[^17]: *See Second Report and Order,* 14 FCC Rcd at 1567, ¶ 97. In a
    subsequent order, the Commission added a fourth verification
    option---the Internet LOA (*Third Report and Order*, 15 FCC Rcd
    15996, at ¶¶ 6-21).

[^18]: *See Second Report and Order,* 14 FCC Rcd at 1567, ¶ 97; *see* 47
    C.F.R. § 64.1120(a)(2).

[^19]: *Id.*

[^20]: *Id.* at ¶ 98.

[^21]: *Id.* at ¶ 99.

[^22]: 47 U.S.C. § 222(b).

[^23]: *See Second Report and Order,* 14 FCC Rcd at 1567, ¶ 99.

[^24]: *Id.* at ¶¶ 99-101. 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 1569, n. 348).

[^25]: *Id.*

[^26]: *See Second Report and Order,* 14 FCC Rcd at 1567, ¶ 100.

[^27]: *Id.*

[^28]: *Id.*

[^29]: *Id.*

[^30]: *Id.*

[^31]: Rural LECs Petition*;* NTCA Petition*.*

[^32]: Rural LECs Petition at 2.

[^33]: *Id.* at 3-5; NTCA Petition at 13-15. *See also* Letter of the
    Montana Telecommunications Association to Magalie Roman Salas,
    Secretary, FCC, received April 22, 1999 (asserting that MTA
    companies were able to confirm through customer verification that as
    many as 80% of change orders "were the result of slamming").

[^34]: *See* NTCA Petition at 20-22.

[^35]: Rural LECs Petition at 10-11.

[^36]: *Id.* at 2-3, 9; NTCA Petition at 5-6.

[^37]: Rural LECs Petition at 6.

[^38]: Rural LECs report specific instances of fraudulent inducements
    and misstatements by LECs (Rural LECs Petition at 6-8).

[^39]: NTCA Petition at 17-18.

[^40]: *Id.* at 23.

[^41]: U S West Support/Opposition at 12.

[^42]: NTCA Petition at 13-14.

[^43]: *Id.*

[^44]: NTCA Petition at 13-15.

[^45]: *Id.* at 9.

[^46]: *Id.* at 16-17.

[^47]: *Id.* at 12. *See also* Letter of Telecommunications Research &
    Action Center ("TRAC Letter") to Magalie Roman Salas, Secretary,
    FCC, dated September 28, 1999, at 2.

[^48]: NTCA Petition at 24.

[^49]: *Id.* at 24-25.

[^50]: Letter of David Cosson and Marci Greenstein, Counsel for Rural
    LECs, to Magalie Roman Salas, Secretary, FCC, dated June 27, 2000
    (Rural LECs *ex parte*), (citing *United States v. Playboy
    Entertainment Group*), 529 U.S. 803 (2000) (*Playboy*).

[^51]: Rural LECs *ex parte* at 1-2.

[^52]: *Id.* at 2.

[^53]: *See, e.g*., Qwest Comments at 14; Cable & Wireless Comments at
    5-6.

[^54]: AT&T Comments at 11.

[^55]: *Id*.

[^56]: WorldCom Comments at 5-6.

[^57]: *Id*.

[^58]: The First Amendment states that "Congress shall make no law . . .
    abridging the freedom of speech." U.S. Const. Amend. I. Although the
    First Amendment on its face applies to legislation enacted by
    Congress, it is in practice much broader and encompasses, amongst
    other things, regulations promulgated by administrative agencies.
    *See, e.g., Rust v. Sullivan*, 500 U.S. 173, 192 (1991).

[^59]: *See U S West v. FCC,* 182 F.2d. at 1233, n.4 ("when the sole
    purpose of the intra-carrier speech based on CPNI is to facilitate
    the marketing of telecommunications services to individual
    customers, we find the speech integral to and inseparable from the
    ultimate commercial solicitation); *See also Virginia State Board of
    Pharmacy v. Virginia Citizens Consumer Council Inc.,* 425 U.S. 748,
    760 (1976).

[^60]: *See Playboy,* 529 U.S. at 811 ("\[T\]he speech in question is
    defined by its content; and the statute which seeks to regulate it
    is content-based"). In *Playboy,* the Supreme Court also stated that
    the restriction at issue in that case "focuses only on the content
    of the speech and the direct impact that speech has on its
    listeners," and concluded that "\[T\]his is the essence of
    content-based regulation." *Id.* at 811, (citing *Boos v. Barry,*
    485 U.S. 312, 321 (1988)). *See also Playboy*, 529 U.S. at 813
    ("Since § 505 is a content-based speech restriction, it can stand
    only if it satisfies strict scrutiny . . . \[I\]f a statute
    regulates speech based on its content, it must be narrowly tailored
    to promote a compelling government interest. If a less restrictive
    alternative would serve the Government's purpose, the legislature
    must use that alternative").

[^61]: *See Central Hudson Gas and Electric Corp. v. Public Service
    Comm'n of New York,* 447 U.S. 557, 562 (1980).

[^62]: *Central Hudson,* 447 U.S. at 566. *See also Lorillard Tobacco
    Co. v. Reilly,* 121 S.Ct. 2404, 2421 (2001). In addition, under
    *Central Hudson*, if the speech in question concerns illegal
    activity or is misleading, the government may freely regulate the
    speech. In the instant proceeding, no commenter has suggested that
    the speech at issue is misleading or involves illegal activity.

[^63]: *See, e.g., Turner Broadcasting System v. FCC,* 512 U.S. 622, 663
    (1994).

[^64]: *Second Report and Order,* 14 FCC Rcd at 1568, ¶ 99.

[^65]: *See, e.g*., 47 U.S.C. §§ 258, 201(b), 206-208; *See Second
    Report and Order,* 14 FCC Rcd at 1510-11, ¶ 1.

[^66]: *See Board of Trustees of the State University of New York v.
    Fox,* 492 U.S. 469, 480 (1989).

[^67]: NTCA Comments at 23.

[^68]: *Second Report and Order*, 14 FCC Rcd at 1571, ¶ 334.

[^69]: Telecommunications Resellers Association (TRA) Comments at 10-11.

[^70]: *Id*.

[^71]: *Second Report and Order,* 14 FCC Rcd at 1569, ¶ 101.

[^72]: *Florida Bar v. Went For It Inc*., 515 U.S. 618, 632 (1995).

[^73]: *U S West v. FCC*, 182 F.3d at 1238 (quoting *Cincinnati v.
    Discovery Network, Inc*., 507 U.S. 410, 417 (1993).

[^74]: *Second Report and Order* at ¶ 100.

[^75]: *Id*. at ¶¶ 97-101.

[^76]: As noted above, Rural LECs state that their own voluntary
    executing carrier verification efforts prevented slamming in the
    past, and that such efforts revealed that 40-50% of change requests
    were unauthorized (Rural LECs Petition at 3-5). We note that AT&T,
    Sprint, and TRA question this information, and assert that nearly
    half of the change orders reported to be invalid did not involve
    actual slamming (AT&T Comments at 10-11; TRA Comments at 11; Sprint
    comments at 4). Sprint posits that the high slamming rates reported
    by Petitioners may also reflect the use of marketing efforts by LECs
    during re-verifications (Sprint Comments at 5). WorldCom states that
    it has uncovered many instances in which ILECs have attempted to
    retain customers under the guise of verification (WorldCom Comments
    at 5). AT&T asserts that only one named member of the Rural LECs
    does not provide or resell any type of long distance (AT&T Comments
    at 11). Sprint states that the information cited by Rural LECs
    appears to show that relatively few LECs without IXC affiliates
    incurred the added expense of re-verifying change requests, and
    that, in any case, rural LECs without an IXC affiliate might attempt
    to dissuade customers from changing IXCs; for example, a LEC might
    have a billing and collection agreement with the customer's current
    carrier but not with the carrier requesting the change (Sprint
    Comments at 3, nt. 1). Sprint notes that Rural LECs do not propose
    to use a third party verifier, and it is thus likely that the same
    LEC employees that conduct the verifications would also be
    responsible for marketing the LEC's services (Sprint Comments at 5).
    Rural LECs disagree that their petition indicates that relatively
    few LECs without IXC affiliates re-verify requests, as is alleged by
    Sprint (Rural LECs Reply at 4). Rural LECs state that the list of
    rural LECs that have in the past used verification was intended to
    be illustrative and not definitive, and note that NTCA reported that
    40% of its members do not have IXC affiliates (*id*. at 5). Rural
    LECs also state that one of the cited companies used verification
    forms that were mailed and "not subject to human error, *i.e*., the
    kind of miscommunication or misinterpretation that Sprint alleges"
    (*id*.). Rural LECs assert that 67% of those subscribers
    nevertheless reported that their carrier change requests were
    invalid (*id*.).

[^77]: 47 C.F.R. § 64.1150(a),(b).

[^78]: 47 C.F.R. § 64.1120(a)(1)(ii).

[^79]: *See* 47 C.F.R. § 64.1140(a).

[^80]: 47 C.F.R. § 64.1120(2). *See also* ¶¶ 82-91, *infra*, regarding
    executing carrier liability in instances where a customer contacts a
    LEC directly to request a carrier change.

[^81]: *See* NTCA Petition at 9, 16-17. *See also* *Telecommunications
    Carriers\' Use of Customer Proprietary Network Information and Other
    Customer Information*, Third Report and Order and Third Further
    Notice of Proposed Rulemaking, CC Docket Nos. 96-115, 96-149, 00-
    257, FCC 02-214, (rel. July 25, 2002) (*CPNI Order*) at ¶¶ 131-133.

[^82]: Cable & Wireless Comments at 5.

[^83]: SBC Petition at 13-14.

[^84]: *See* NTCA Petition at 9, 16 ("NTCA has no quarrel with a
    conclusion that the statute proscribes the competitive marketing of
    the LEC's or any other carrier's service against the interests of
    the submitting carrier"). As explained above, NTCA contends that
    executing carrier re-verification of change requests utilizes
    carrier change information for pro-competitive, rather than
    anti-competitive, purposes.

[^85]: NTCA Petition at 16.

[^86]: SBC Petition at 13-14.

[^87]: *Id.* at 14.

[^88]: WorldCom Comments at 17-18.

[^89]: *Second Report and Order,* 14 FCC Rcd at 1573-74, ¶ 107. This is
    also consistent with our findings regarding winback in our Customer
    Proprietary Network Information ("CPNI") proceeding. *See*
    *Telecommunications Carriers\' Use of Customer Proprietary Network
    Information and Other Customer Information*, Third Report and Order
    and Third Further Notice of Proposed Rulemaking, CC Docket Nos.
    96-115, 96-149, 00- 257, FCC 02-214, (rel. July 25, 2002) (*CPNI
    Order*)("\[w\]e reaffirm our existing rule that a carrier executing
    a change for another carrier is prohibited from using such
    information to attempt to change the subscriber\'s decision to
    switch to another carrier. However, because we recognize that a
    carrier\'s retail operations may, without using information obtained
    in violation of section 222(b), legitimately obtain notice that a
    customer plans to switch to another carrier or contact a defecting
    customer in the ordinary course of business, we decline to impose a
    presumption that all retention efforts are illegal, as requested by
    MCI WorldCom . . . we agree with BellSouth's argument that deeming
    any \"winback or retention effort\[s\], including those based on
    information learned through the carrier\'s retail operations, . . .
    presumptively unlawful would deprive customers of . . .
    pro-consumer, pro-competitive benefits.\"). *CPNI Order* at ¶¶
    131-133.

[^90]: *Second Report and Order*, 14 FCC Rcd at 1508.

[^91]: *Id.* at ¶ 33.

[^92]: *Second Report and Order*, 14 FCC Rcd at 1552.

[^93]: *Id.*

[^94]: *Id.*.

[^95]: *Id.* at 1601-1603.

[^96]: *Third Report and Order*, 15 FCC Rcd at 21-24*.* Generally, an
    automated system operates 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. *Id*. at 43,
    note 125.

[^97]: *Third Report and Order*, 15 FCC Rcd at ¶ 38.

[^98]: *Id.*

[^99]: *See* VoiceLog Petition for Reconsideration (VoiceLog
    Reconsideration Petition). VoiceLog also asks that the Commission
    stay the drop-off rule pending reconsideration. Inasmuch as we
    address VoiceLog's petition for reconsideration of the *Third Report
    and Order,* the petition for partial stay pending reconsideration is
    denied as moot. *See* VoiceLog Stay Petition.

[^100]: VoiceLog Reconsideration Petition at 5. Several comments were
    filed in support of the VoiceLog petitions; *see* Comments of AT&T,
    BuyersOnline, Cox Communications, *Erbia*Network, Fionda, Hughes
    Telecom, IDS Telecom, John Ring Enterprises, Long Distance Post,
    PromiseVision, SaveTel Communications, SBA, Telephone Company of
    Central Florida, TCM Communications, Telecom New Zealand, and
    Velocity Networks of Kentucky.

[^101]: VoiceLog states that it provides TPV services to approximately
    200 carriers, the majority of which are smaller carriers. *See*
    VoiceLog Stay Petition.

[^102]: Impact of "Representative Drop Off" Rule, A Survey by VoiceLog,
    LLC (VoiceLog Survey).

[^103]: VoiceLog Survey at 2-4.

[^104]: *Id.* at 5.

[^105]: VoiceLog Reconsideration Petition at 5. *See* VoiceLog Survey at
    4.

[^106]: VoiceLog Survey at 5.

[^107]: *See*, *e.g.*, AT&T Comments at 11.

[^108]: VoiceLog Reconsideration Petition at 9.

[^109]: Stay Petition at 5. In its Stay Petition, VoiceLog asks that a
    carrier's sales agent be allowed to remain on the line during the
    verification process, but states that verification would cease if
    the customer needed further assistance from the sales agent. In its
    Reconsideration Petition, VoiceLog asks that the Commission permit
    the sales agent to participate in the verification process by
    providing neutral assistance to the consumer if needed.

[^110]: VoiceLog Reconsideration Petition at 10.

[^111]: *Third Report and Order*, 15 FCC Rcd at ¶ 38**.**

[^112]: Such certification must include a signed affidavit testifying as
    to the carrier's inability to comply.

[^113]: *Third Report and Order*, 15 FCC Rcd at ¶ 51.

[^114]: VoiceLog Reconsideration Petition at 4-9.

[^115]: *Id.* at 5.

[^116]: *Id*. at 7.

[^117]: *Id*.

[^118]: *Id*. at 8.

[^119]: AT&T Comments at 11-12.

[^120]: *Id.* at 13.

[^121]: Association of Communications Enterprises (ASCENT) Comments at
    12.

[^122]: AT&T Comments at 10; VoiceLog Reconsideration Petition at 5.

[^123]: AT&T Comments at 10, note 22 (emphasis added).

[^124]: AT&T Comments at 11-12; VoiceLog Petition at 4-5, 7-8.

[^125]: AT&T Comments at 11-12.

[^126]: *Third Report and Order* at ¶ 45.

[^127]: VoiceLog Reconsideration Petition at 5, 8.

[^128]: *Id*. at 6.

[^129]: *Id*. at 8.

[^130]: *Id*.

[^131]: *Third Report and Order*, 15 FCC Rcd at 19, note 102.

[^132]: *Third Report and Order*, 15 FCC Rcd at 19, note 102.

[^133]: VoiceLog Reconsideration Petition at 11.

[^134]: *Second Report and Order*, 14 FCC Rcd at 1601, ¶ 166.

[^135]: ASCENT Comments at 12.

[^136]: Those methods include written or electronically-signed LOA's,
    electronic authorization, other forms of independent third party
    verification, and any State-enacted verification procedures
    applicable to intrastate preferred carrier change orders. *See* 47
    C.F.R. § 64.1120(c).

[^137]: U.S. Small Business Administration Ex Parte, filed May 3, 2001
    (SBA Ex Parte).

[^138]: *See* SBA Ex Parte at 1.

[^139]: *Id.* at 1, 4.

[^140]: *Second Report and Order*, 14 FCC Rcd at 1601, ¶ 166.

[^141]: *Id.*.

[^142]: *Second Report and Order* at ¶ 229, 14 FCC Rcd 1628.

[^143]: *Third Report and Order* at ¶ 112.

[^144]: VoiceLog Ex Parte at 3. *See* *also* VoiceLog joint letters with
    Capsule Communications, Clear World Communications, Plan B
    Communications, TransWorld Network, Corp., and AT&T Corp.

[^145]: *Central Hudson Gas & Elec. Corp. v. Public Service Comm'n of
    N.Y.*, 447 U.S. at 557 (1980) (*Central Hudson*). *See* discussion
    of Central Hudson in section II.C, *supra*.

[^146]: VoiceLog Ex Parte at 3.

[^147]: *Id.* (quoting *Lorillard Tobacco Co. v. Reilly*).

[^148]: *Id*.

[^149]: AT&T Comments at 11-12.

[^150]: *Second Report and Order*, 14 FCC Rcd at 1553, ¶ 72.

[^151]: 47 U.S.C. § 64.1130(j).

[^152]: *Third Report and Order* at ¶ 80.

[^153]: AT&T Petition at 2-4.

[^154]: *Id*. at 3.

[^155]: *Id*.

[^156]: *Id*. at 4.

[^157]: AT&T Petition at note 4.

[^158]: ASCENT Comments at 5-6; Sprint Comments at 2; WorldCom Comments
    at 6-7.

[^159]: SBC Opposition at 1-3. While SBC is correct that the rule only
    applies to the submission of LOAs, we caution that our rules require
    executing carriers to effect "prompt execution, without any
    unreasonable delay, of changes that have been verified by a
    submitting carrier." *See* 47 C.F.R. § 64.1120.

[^160]: *Id*. at 2-3.

[^161]: *Id*. at 3.

[^162]: AT&T Reply at 2-3.

[^163]: *Id*.

[^164]: *Third Report and Order* at ¶ 81.

[^165]: *Id*.

[^166]: *Id*.

[^167]: AT&T Reply at 2-3.

[^168]: *Third Report and Order* at ¶ 40.

[^169]: AT&T Petition at 4-7.

[^170]: *Id*. at 5.

[^171]: *Id*. at 5-6.

[^172]: *Id*.

[^173]: *Id*. at 6.

[^174]: *Id*.

[^175]: Qwest Comments at 3-4; Sprint Comments at 3-4; Verizon Comments
    at 2-3; WorldCom Comments at 3-6.

[^176]: *Id*.

[^177]: *Id*.

[^178]: *See, e.g*., Verizon Comments at 3.

[^179]: AT&T Petition at note 6.

[^180]: *Id*. at 7-9. *See also* MCI Comments at 8; ASCENT Comments at
    9.

[^181]: *Id*. at 8.

[^182]: *Id*. at 8-9. *See also* ASCENT Comments at 9 ("\[AT&T's
    suggested\] procedure will not add appreciably to the burdens of any
    carrier").

[^183]: *Id*.

[^184]: SBC Opposition at 3-4.

[^185]: *Id*; *see also* Verizon Comments at 1-2.

[^186]: SBC Opposition at 3-4.

[^187]: *Id.*

[^188]: Verizon Comments at 1-2.

[^189]: *Id.*

[^190]: *Id.*

[^191]: *Id.*

[^192]: AT&T Reply at 6-7.

[^193]: *Second Report and Order,* 14 FCC Rcd at 1564, ¶ 130.

[^194]: *Third Report and Order* at ¶ 74

[^195]: *Id.* at ¶ 62.

[^196]: *Id*. at ¶ 65 (emphasis in original).

[^197]: *Id.*

[^198]: *Id*. at ¶ 66.

[^199]: *Id.*

[^200]: WorldCom Petition at 9-10.

[^201]: *Id*.

[^202]: ASCENT Comments at 10-11.

[^203]: *Id*.

[^204]: *Id*.

[^205]: *Third Report and Order* at ¶ 62 (emphasis added).

[^206]: *Id.*

[^207]: *Id*.

[^208]: *Id*.

[^209]: *Id*. at ¶ 66.

[^210]: *Id*.

[^211]: WorldCom Petition at 6. *See also* AT&T Comments at 9-10.

[^212]: *First Reconsideration Order* at ¶ 34.

[^213]: *Id*. at ¶ 32.

[^214]: *Id*. at ¶ 35.

[^215]: WorldCom Petition at 5.

[^216]: *Id*. at 5-6.

[^217]: *Id*.

[^218]: *Id*.

[^219]: *Id*. at 6-7.

[^220]: *Id*.

[^221]: *Id*.

[^222]: USTA Opposition at 5.

[^223]: Verizon also disputes the contention of WorldCom that a LEC will
    not be able to provide the subscriber with a full 30-day credit
    (*see* below regarding removal of charges from a subscriber's bill
    for the first 30 days of alleged unauthorized service) because a LEC
    might not have information about the entire 30 days of service.
    Verizon states that WorldCom is "simply wrong" and that "the LEC
    takes 30 days of charges off of a subscriber's bill, even if it
    takes an additional billing cycle for the credits to appear on the
    customer's bill." Verizon Opposition at 5.

[^224]: USTA Opposition at 5-6.

[^225]: See 47 C.F.R. § 64.1150(b).

[^226]: WorldCom Petition at 14-16.

[^227]: *Id*.

[^228]: *Id*.

[^229]: *Id*.

[^230]: For a further explanation of the procedures that apply when a
    subscriber has not paid charges to the allegedly unauthorized
    carrier, *see* the *First Reconsideration Order* at ¶¶ 38-40.
    According to our rules, the authorized carrier has the option of
    billing the subscriber for calls made after the first 30 days after
    the slam at the rates the subscriber would have paid the authorized
    carrier absent the slam. *Id*. The Commission, in the *First
    Reconsideration Order*, stated that, rather that actually re-rating
    the service provided by the authorized carrier, the authorized
    carrier may bill the subscriber for 50% of the rate the unauthorized
    carrier would have charged. However, an authorized carrier must
    perform actual re-rating if the subscriber so requests. *Id*.

[^231]: Verizon notes that a LEC contacted by a subscriber who alleges
    slamming will typically credit the subscriber immediately and
    recourse the billed amount to the carrier. Verizon states that
    WorldCom's proposal seeks to "put some of the money back into
    slamming" in that WorldCom would rather have a LEC finance the
    unauthorized carrier's business until such time as a slam has been
    proven. Verizon Opposition at 5-6.

[^232]: *First Reconsideration Order* at ¶ 10.

[^233]: *Id*.

[^234]: *Id.*

[^235]: *Id.* at ¶ 32.

[^236]: 47 C.F.R. § 54.1160(c).

[^237]: *Id*. at note 88.

[^238]: *First Reconsideration Order* at ¶ 36; 47 U.S.C. § 64.1150(c).

[^239]: WorldCom Petition at 14.

[^240]: 47 U.S.C. § 258.

[^241]: *First Reconsideration Order* at ¶ 17.

[^242]: *Id.*

[^243]: *Id*. The Conference Report regarding section 258 provides that
    \"\[t\]he conferees adopt the House provision as a new section 258
    of the Communications Act. It is the understanding of the conferees
    that in addition to requiring that the carrier violating the
    Commission\'s procedures must reimburse the original carrier for
    foregone revenues, the Commission\'s rules should also provide that
    consumers are made whole.\" Joint Statement of Managers, S. Conf.
    Rep. No. 104-230, 104th Cong., 2d Sess. at 136 (1996) (Joint
    Explanatory Statement).

[^244]: *First Reconsideration Order* at ¶ 17.

[^245]: *Id*.

[^246]: WorldCom Petition at 11-13.

[^247]: *Id*. at 11-13..

[^248]: *Id.*

[^249]: *Id*. 47 U.S.C. § 258(b).

[^250]: *First Reconsideration Order* ¶ 17.

[^251]: WorldCom Petition at 12.

[^252]: *First Reconsideration Order* ¶ 19

[^253]: *Id*.

[^254]: *Id*.; 47 U.S.C. §§ 206-208.

[^255]: *Id*.

[^256]: *Id*.

[^257]: *Id*.; 47 U.S.C. § 258.

[^258]: WorldCom Petition at 13.

[^259]: AT&T Comments at note 13.

[^260]: *Id*. AT&T asserts that this procedure can, if anything, more
    accurately be viewed as unfair to the authorized carrier, and not
    the unauthorized carrier as is asserted by WorldCom.

[^261]: *First Reconsideration Order* ¶ 21. If the subscriber is failed
    to be made whole by the 50% proxy, the subscriber may ask the
    authorized carrier to re-rate the unauthorized carrier\'s charges
    based on the rates of the authorized carrier and, on behalf of the
    subscriber, seek an additional refund from the unauthorized carrier,
    to the extent that the re-rated amount exceeds the 50% of all
    charges paid by the subscriber to the unauthorized carrier. *First
    Reconsideration Order* ¶ 52.

[^262]: WorldCom Petition at 13. According to our rules, if a subscriber
    has not already paid the unauthorized carrier, the unauthorized
    carrier must remove all charges assessed for the first 30 days of
    services from a subscriber's bill upon the subscriber's allegation
    that he or she was slammed. If the subscriber has paid the
    unauthorized carrier, then our reimbursement rules (as described in
    ¶¶ 72-77, *supra*) apply.

[^263]: 47 C.F.R. § 54.1160(c). Specifically, the subscriber must file
    the complaint with the state commission (or the FCC) within 30 days
    of notifying the carrier of the alleged slam, or be subject to
    re-billing.

[^264]: *Id*. at 10-11.

[^265]: *Id.*

[^266]: *Id.*

[^267]: *Id.*

[^268]: *Id.*

[^269]: SBC Opposition at 3. AT&T notes that, if the Commission were to
    grant WorldCom's request, it should not impair the right of the
    authorized carrier to an amount at least equal to all sums paid by
    the consumer, as provided for in section 258 and implementing rules.
    AT&T Comments at 8.

[^270]: Sprint Petition at 1; WorldCom Petition at 8.

[^271]: Sprint Petition at 1-5; WorldCom Petition at 8-10.

[^272]: Sprint Reply at 3.

[^273]: Sprint Petition at 1-5; WorldCom Petition at 8-10.

[^274]: 47 U.S.C. § 258 (b).

[^275]: AT&T Comments at 3-5.

[^276]: *Id*. at 4. *See* 47 C.F.R. § 64.1100 (d) ("The term
    unauthorized carrier is generally any telecommunications carrier
    that submits a change, on behalf of a subscriber, in the
    subscriber's selection of a provider of telecommunications service
    but fails to obtain the subscriber's authorization verified in
    accordance with the procedures specified in this part."); 47 C.F.R.
    § 64.1120 (a)&(c). *See also* Excel Telecommunications, Inc.
    ("Excel") Reply at 1-2.

[^277]: AT&T Comments at 3-5.

[^278]: Sprint Petition at 2-3.

[^279]: *Id*. at 3. *See also* WorldCom Petition at 9; AT&T Comments at
    7.

[^280]: Sprint Petition at 5. *See also* Excel Reply at 1-4.

[^281]: Sprint Petition at 2; USTA Opposition at 2-4.

[^282]: *First Reconsideration Order* at ¶ 98.

[^283]: *Id*. at ¶ 93.

[^284]: *Id*. at note 312; *See, e.g*., 47 U.S.C. §§ 208, 503(b).

[^285]: USTA Opposition at 3-4.

[^286]: Sprint Petition at 2-4.

[^287]: "Any telecommunications carrier that violates the verification
    procedures described in subsection (a) and that collects charges for
    telephone exchange service or telephone toll service from a
    subscriber shall be liable to the carrier previously selected by the
    subscriber in an amount equal to all charges paid by such subscriber
    after such violation." 47 U.S.C. § 258(b).

[^288]: In the *First Reconsideration Ord*er, the Commission noted that
    sections 206-208 of the Act provide for actual and consequential
    damages for consumers upon the finding of a slam (*First
    Reconsideration Order*, 15 FCC Rcd 8158, at ¶ 19). Prior to the
    adoption of section 258 of the Act, the Commission had taken various
    steps to address the slamming problem; the adoption of section 258
    expanded the Commission's authority in this area. For example, the
    Commission required slamming carriers, pursuant to sections 201(b)
    and 208 of the Act, to refund to the subscriber any amounts paid to
    the slamming carrier in excess of what he or she would have paid the
    preferred carrier absent the slam (*Id*.). *See also* statement of
    Commissioner Michael K. Powell ("\[i\]n light of consumers' right to
    sue for damages in provisions outside of section 258, as well as the
    'other remedies' language of section 258 itself . . . we can provide
    relief to consumers over and above the authorized carrier remedy in
    section 258(b))." (*Id*., Statement of Michael K. Powell).

[^289]: *See* ¶¶ 68-71, *supra*.

[^290]: Verizon Opposition at 3-4.

[^291]: 47 U.S.C. § 64.1170.

[^292]: 47 U.S.C. § 64.1160.

[^293]: *Second Report and Order,* 14 FCC Rcd at 1566, ¶ 95.

[^294]: *Id.* at 1547.

[^295]: *Id*. at 1548.

[^296]: *Id*. at 1549.

[^297]: *Id*. at 1565.

[^298]: *Id*.

[^299]: *Id.* at 1518.

[^300]: SBC Petition at 13.

[^301]: The SMS/800 database is the single, centralized database into
    which all customer records and routing instructions for 800 numbers
    are located. *See* *Provision of Access for 800 Service*, Order, 8
    FCC Rcd 1844, 1845 (Com. Car. Bur. 1993)(*NASC Change Order*).

[^302]: *See* *Provision of Access for 800 Service*, Order, 8 FCC Rcd
    1844, 1845 (Com. Car. Bur. 1993)(*NASC Change Order*).

[^303]: *Id*.

[^304]: SBC Petition at 13. See also SBC *Ex Parte* submitted Nov. 10,
    1999; Opposition of SBC to AT&T Application of Review of *Provision
    of Access for 800 Service*, CC Docket No. 86-10, Order, 8 FCC Rcd
    1844 (Com. Car. Bur. 1993)("NASC Change Order"); Provision of Access
    for 800 Service, CC Docket No. 86-10, Order on Reconsideration, 14
    FCC Rcd 4347 (Com. Car. Bur. 1999)("Order on Reconsideration").

[^305]: WorldCom Comments at 21.

[^306]: *Id*.

[^307]: SBC *Ex Parte* at 1.

[^308]: *Provision of Access for 800 Service*, CC Docket No. 86-10,
    Order, 8 FCC Rcd 1844 (Com. Car. Bur. 1993)(*NASC Change Order*);

[^309]: *Id*; *Provision of Access for 800 Service*, CC Docket No.
    86-10, Order on Reconsideration, 14 FCC Rcd 4347 (Com. Car. Bur.
    1999)(*Order on Reconsideration*).

[^310]: *See* "Application for Review" of AT&T of the *Order on
    Reconsideration*. Concurrent with its Application for Review, AT&T
    also filed a "Petition for Stay Pending Review" of the *Order on
    Reconsideration*. SBC filed an Opposition in response to the AT&T
    Application and Petition (SBC Opposition).

[^311]: SBC Opposition at 1-2.

[^312]: *Id*. at 2.

[^313]: *Clarification Order*, 14 FCC Rcd at 19,571.

[^314]: *See* Letter submitted by AT&T March 15, 2000 in CC Docket No.
    86-10; Public Notice, DA 00-642*, AT&T Corp. Withdrawal of
    Application for Review*.

[^315]: Any further concerns regarding RespOrg issues should be raised
    in the context of our toll-free number proceedings.

[^316]: AT&T Petition at 23-25. *See also* Motion of AT&T Corp. for
    Expedited Decision at 1-7 ("AT&T Motion").

[^317]: AT&T Petition at 23-24.

[^318]: AT&T Petition at 25; AT&T Motion at 5-6.

[^319]: AT&T Petition at 25.

[^320]: AT&T Motion for Expedited Decision at 3.

[^321]: *Id*.

[^322]: Ameritech Opposition at 5, citing 47 U.S.C. § 258(a)(emphasis
    added); *see also* Bell Atlantic Comments at 3-4, GTE Comments at 5.

[^323]: Ameritech Opposition at 5-6.

[^324]: *Id*.

[^325]: *Id*. at 6.

[^326]: *Id*. at 7.

[^327]: *Id*.

[^328]: *Id*.

[^329]: *Id*. at 7-8; GTE Comments at 5.

[^330]: SBC Reply at 10.

[^331]: Sprint Opposition at 8.

[^332]: *Id*.

[^333]: WorldCom Comments at 21-22; WorldCom Reply Comments at 7-8.

[^334]: *Id*. at 8-9.

[^335]: *Id*.

[^336]: Because we deny AT&T's petition for clarification or
    reconsideration, we do not address Ameritech's assertion that AT&T's
    petition violated the Administrative Procedures Act.

[^337]: 47 U.S.C. § 258 (emphasis added).

[^338]: *Id*..

[^339]: 47 C.F.R. § 64.1180.

[^340]: *Third Report and Order,* 15 FCC Rcd 15996, at paras. 55-56;
    *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, Order, FCC 01-67, 16 FCC Rcd 4999
    (2001) (*Order*) at ¶ 4-7.

[^341]: *Third Report and Order,* 15 FCC Rcd 15996, ¶ 55.

[^342]: *Id*. at ¶ 56.

[^343]: *Id.*

[^344]: *Third Report and Order,* 15 FCC Rcd 15996, ¶¶ 55-56; *Order*,
    16 FCC Rcd 4999, ¶ 7.

[^345]: *Order*, 16 FCC Rcd 4999, at paras. 5, 7.

[^346]: Sprint Petition at 1-2; WorldCom Petition at 4-5.

[^347]: *Id*.

[^348]: WorldCom Petition at 5; Sprint Petition at 3.

[^349]: WorldCom Petition at 5, nt. 16.

[^350]: Sprint Petition at 5; WorldCom Petition at 5. States that choose
    to administer the Commission's carrier change rules are required to
    file regularly with the Commission information that details slamming
    activity in their regions. The reports filed by the states contain
    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 Order on Reconsideration*, 15 FCC Rcd 8158 ¶¶ 23-28.

[^351]: *Id*. at 6.

[^352]: AT&T Comments at 3; BellSouth Comments at 2; Qwest Comments at
    2.

[^353]: BellSouth Comments at 2-3.

[^354]: *Id*.

[^355]: Qwest Comments at 2-3.

[^356]: *Id.*

[^357]: AT&T Comments at 3.

[^358]: *Id.* at 6-8.

[^359]: *Id.*

[^360]: WorldCom Petition at 9.

[^361]: *Id*.

[^362]: *Third Report and Order* at ¶ 87.

[^363]: *Id*.

[^364]: *Id*.

[^365]: *Second Report and Order* at ¶¶ 112-138.

[^366]: *Id*. at ¶ 113.

[^367]: *Id*. at ¶ 116.

[^368]: *Id*.

[^369]: 47 C.F.R. § 1.719.

[^370]: *See First Order on Reconsideration*, 15 FCC Rcd 8158, note 72.

[^371]: *Id*. at ¶¶ 22-43.

[^372]: 47 C.F.R. § 1.719(c).

[^373]: 47 C.F.R. § 64.1150(d).

[^374]: 47 C.F.R. § 64.1150(c).

[^375]: *Third Report and Order* at ¶ 40.

[^376]: *Id.*

[^377]: *Id.*

[^378]: *Id.*

[^379]: *Id.*

[^380]: *Id*. at ¶ 41.

[^381]: *Id*. *See also* *Second Report and Order* at ¶ 74.

[^382]: *Third Report and Order* at ¶ 41.

[^383]: We note that, in least one state (Hawaii), international service
    is a separate service such that "interLATA service" would not
    encompass both international and state-to-state calls.

[^384]: *See* [5 U.S.C. § 603]{.underline}. The RFA, [5 U.S.C. §§
    601-612]{.underline}, has been amended by the Small Business
    Regulatory Enforcement Fairness Act of 1966 (SBREFA), [Pub. L. No.
    104-121, Title II, 110]{.underline} Stat. 857 (1996).

[^385]: *See generally*, 47 C.F.R. §§ 1.1202, 1.1203, 1.1206.

[^386]: *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).

[^387]: *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, Third Report and Order and Second
    Order on Reconsideration, 15 FCC Rcd 15996 (2000) (*Third Report and
    Order*); Errata, DA 00-2136 (rel. Sept. 25, 2000); Erratum, DA
    00-292 (rel. Oct. 4, 2000).

[^388]: *Section 258 Order*, 14 FCC Rcd at 1611.

[^389]: *See* 5 U.S.C. § 604.

[^390]: *See supra* ¶¶ 35-37.

[^391]: *See supra ¶¶* 35-42.

[^392]: *See supra ¶¶* 49-53.

[^393]: *See supra ¶¶ 38-44*.

[^394]: *See supra ¶ 44*.

[^395]: See 5 U.S.C. § 603(b)(3).

[^396]: 5 U.S.C. § 601(6).

[^397]: 5 U.S.C. § 601(3) (incorporating by reference the definition of
    "small business concern" in the Small Business Act, 15 U.S.C. §
    632). Pursuant to 5 U.S.C. § 601(3), the statutory definition of a
    small business applies "unless an agency, after consultation with
    the Office of Advocacy of the Small Business Administration and
    after opportunity for public comment , establishes one or more
    definitions of such term which are appropriate to the activities of
    the agency and publishes such definitions(s) in the Federal
    Register."

[^398]: 15 U.S.C. § 632.

[^399]: 15 U.S.C. § 601(4).

[^400]: Department of Commerce, U.S. Bureau of the Census, 1992 Economic
    Census, Table 6 (special tabulation of data under contract to Office
    of Advocacy of the U.S. Small Business Administration).

[^401]: 5 U.S.C. § 601(5).

[^402]: 1992 Census of Governments, U.S. Bureau of the Census, U.S.
    Department of Commerce.

[^403]: *Id*.

[^404]: 5 U.S.C. § 601(3).

[^405]: *See* Letter from Jere W. Glover, Chief Counsel for Advocacy,
    SBA, to Chairman William E. Kennard, 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* 5 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 C.F.R. §
    121.102(b).

[^406]: 13 C.F.R. § 121.201, NAICS code 513310.

[^407]: FCC, Wireline Competition Bureau, Industry Analysis and
    Technology Division, *Trends in Telephone Service*, at Table 5.3, p
    5-5 (May 2002) (*Telephone Trends Report*).

[^408]: *Id*.

[^409]: 13 C.F.R. § 121.201, NAICS code 513310.

[^410]: *Telephone Trends Report*, Table 5.3.

[^411]: *Id*.

[^412]: 13 C.F.R. § 121.201, NAICS code 513310.

[^413]: *Telephone Trends Report*, Table 5.3.

[^414]: *Id*.

[^415]: *Id*.

[^416]: 13 C.F.R. § 121.201, NAICS code 513330.

[^417]: *Telephone Trends Report*, Table 5.3.

[^418]: *Id*.

[^419]: 13 C.F.R. § 121.201, NAICS code 513330.

[^420]: *Telephone Trends Report*, Table 5.3.

[^421]: *Id*.

[^422]: 13 C.F.R. § 121.201, NAICS code 513310.

[^423]: *Telephone Trends Report*, Table 5.3.

[^424]: *Id*.

[^425]: 13 C.F.R. § 121.201, NAICS code 513310.

[^426]: *Telephone Trends Report*, Table 5.3.

[^427]: *Id*.

[^428]: 13 C.F.R. § 121.201, NAICS code 513330.

[^429]: *Telephone Trends Report*, Table 5.3.

[^430]: *Id*.

[^431]: 13 C.F.R. § 121.201, NAICS code 513310.

[^432]: *Telephone Trends Report*, Table 5.3.

[^433]: *Id*.

[^434]: *See supra* ¶¶ 52-53.

[^435]: *See supra* ¶¶ 86-89.

[^436]: 5 U.S.C. § 603(c)(1) -- (c)(4).

[^437]: *See* 5 U.S.C. § 801(a)(1)(A).

[^438]: *See* 5 U.S.C. § 604(b).

[^439]: 5 U.S.C. § 603. The RFA, *see* 5 U.S.C. § 601 *et seq*., has
    been amended by the Contract With America Advancement Act of 1996,
    Pub. L. No. 104-121, 110 Stat. 847 (1996) (CWAAA). Title II of CWAAA
    is the Small Business Regulatory Enforcement Fairness Act of 1996
    (SBREFA).

[^440]: See 5 U.S.C. § 603(b)(3).

[^441]: 5 U.S.C. § 601(6).

[^442]: ^?^ 5 U.S.C. § 601(3) (incorporating by reference the definition
    of "small business concern" in the Small Business Act, 15 U.S.C. §
    632). Pursuant to 5 U.S.C. § 601(3), the statutory definition of a
    small business applies "unless an agency, after consultation with
    the Office of Advocacy of the Small Business Administration and
    after opportunity for public comment , establishes one or more
    definitions of such term which are appropriate to the activities of
    the agency and publishes such definitions(s) in the Federal
    Register."

[^443]: 15 U.S.C. § 632.

[^444]: *Id*. § 601(4).

[^445]: Department of Commerce, U.S. Bureau of the Census, 1992 Economic
    Census, Table 6 (special tabulation of data under contract to Office
    of Advocacy of the U.S. Small Business Administration).

[^446]: 5 U.S.C. § 601(5).

[^447]: 1992 Census of Governments, U.S. Bureau of the Census, U.S.
    Department of Commerce.

[^448]: *Id*.

[^449]: 5 U.S.C. § 601(3).

[^450]: *See* Letter from Jere W. Glover, Chief Counsel for Advocacy,
    SBA, to Chairman William E. Kennard, 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* 5 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 C.F.R. §
    121.102(b).

[^451]: 13 C.F.R. § 121.201, NAICS code 513310.

[^452]: FCC, Wireline Competition Bureau, Industry Analysis and
    Technology Division, *Trends in Telephone Service*, at Table 5.3, p
    5-5 (May 2002) (*Telephone Trends Report*).

[^453]: *Id*.

[^454]: 13 C.F.R. § 121.201, NAICS code 513310.

[^455]: *Telephone Trends Report*, Table 5.3.

[^456]: *Id*.

[^457]: 13 C.F.R. § 121.201, NAICS code 513310.

[^458]: *Telephone Trends Report*, Table 5.3.

[^459]: *Id*.

[^460]: *Id*.

[^461]: 13 C.F.R. § 121.201, NAICS code 513330.

[^462]: *Telephone Trends Report*, Table 5.3.

[^463]: *Id*.

[^464]: 13 C.F.R. § 121.201, NAICS code 513330.

[^465]: *Telephone Trends Report*, Table 5.3.

[^466]: *Id*.

[^467]: 13 C.F.R. § 121.201, NAICS code 513310.

[^468]: *Telephone Trends Report*, Table 5.3.

[^469]: *Id*.

[^470]: 13 C.F.R. § 121.201, NAICS code 513310.

[^471]: *Telephone Trends Report*, Table 5.3.

[^472]: *Id*.

[^473]: 13 C.F.R. § 121.201, NAICS code 513330.

[^474]: *Telephone Trends Report*, Table 5.3.

[^475]: *Id*.

[^476]: 13 C.F.R. § 121.201, NAICS code 513310.

[^477]: *Telephone Trends Report*, Table 5.3.

[^478]: *Id*.

[^479]: 5 U.S.C. § 603(c).