**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

+----------------------------------+---+------------------------------+
| In the Matter of                 | * | CC Docket No. 94-129         |
|                                  | * |                              |
| Implementation of the Subscriber | ) |                              |
| Carrier                          | * |                              |
|                                  | * |                              |
| Selection Changes Provisions of  |   |                              |
| the                              | * |                              |
|                                  | * |                              |
| Telecommunications Act of 1996   | ) |                              |
|                                  | * |                              |
| Time Warner Telecom Inc.         | * |                              |
|                                  |   |                              |
| Petition for Waiver              | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  | ) |                              |
|                                  | * |                              |
|                                  | * |                              |
|                                  |   |                              |
|                                  | ) |                              |
+----------------------------------+---+------------------------------+
|                                  |   |                              |
+----------------------------------+---+------------------------------+

ORDER

**Adopted: October 26, 2000 Released: October 27, 2000**

By the Associate Chief, Accounting Policy Division, Common Carrier
Bureau:

**I. INTRODUCTION AND BACKGROUND**

1.  In its *Carrier Change Orders*,[^1] the Commission adopted rules
    applicable to carriers changing a consumer\'s preferred carrier.
    [^2] In this Order, we grant Time Warner Telecom Inc. (Time Warner)
    a limited waiver of the authorization and verification requirements
    of the Commission\'s rules and *Carrier Change Orders*.[^3] We grant
    this limited waiver to the extent necessary to enable Time Warner to
    become the preferred carrier of consumers currently presubscribed to
    GST Telecommunications, Inc. and affiliated companies[^4] fff
    without first obtaining the consumers' authorization and
    verification.

2.  Section 258 of the Communications Act of 1934, as amended by the
    Telecommunications Act of 1996, 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 procedures
    as the Commission shall prescribe.\"[^5] The goal of section 258 is
    to eliminate the practice of \"slamming,\" the unauthorized change
    of a subscriber\'s preferred carrier. Pursuant to section 258,
    carriers are absolutely barred from changing a customer\'s preferred
    local or long distance carrier without first complying with the
    Commission\'s verification procedures.[^6] In the *Section 258
    Order*, the Commission revised its procedures to ensure that
    carriers obtain the requisite authority prior to changing a
    customer\'s preferred carrier. The Commission requires that carriers
    follow one of the Commission\'s prescribed verification procedures
    before submitting carrier changes on behalf of consumers.[^7]

3.  Time Warner seeks a waiver of our verification rules to allow Time
    Warner to be designated the preferred intrastate, interstate, and
    international carrier for customers of GST without first obtaining
    each customer's authorization and verification.[^8] Because we
    conclude that, under the circumstances presented, it is in the
    public interest to grant the waiver, we grant Time Warner a waiver,
    subject to the conditions represented in its filings.

    **II. DISCUSSION**

4.  Generally, the Commission's rules may be waived for good cause
    shown.[^9] As noted by the Court of Appeals for the D.C. Circuit,
    however, agency rules are presumed valid.[^10] The Commission may
    exercise its discretion to waive a rule where the particular facts
    make strict compliance inconsistent with the public interest.[^11]
    In addition, the Commission may take into account considerations of
    hardship, equity, or more effective implementation of overall policy
    on an individual basis.[^12] Waiver of the Commission\'s rules is
    therefore appropriate only if special circumstances warrant a
    deviation from the general rule, and such a deviation will serve the
    public interest.[^13]

5.  We find that Time Warner has demonstrated that good cause exists to
    justify a limited waiver of the Commission's authorization and
    verification requirements to the extent necessary to enable Time
    Warner to transfer to its own customer base the affected GST
    customers. In the Waiver Petition, Time Warner states that, on May
    17, 2000, GST filed for protection under Chapter 11 of the U.S.
    Bankruptcy Code. Pursuant to a bankruptcy sale, Time Warner entered
    into a definitive asset purchase agreement with GST in which Time
    Warner agreed to acquire substantially all of the assets of GST,
    including GST's customer accounts and accounts receivable. The
    Bankruptcy Court approved this purchase agreement on September 21,
    2000.[^14] Upon discontinuance of service by GST, Time Warner will
    provide intrastate, interstate, and international services to the
    former customers of GST.

6.  We conclude that special circumstances exist to justify a waiver.
    Without this waiver, some former GST customers might temporarily
    lose service when GST ceases to provide presubscribed service; some
    customers might also pay potentially higher rates after
    discontinuance of service. We conclude that a waiver of the
    Commission's carrier change rules and orders is necessary to provide
    a seamless transition with no disruption of service to the
    transferred customers.

7.  We find that Time Warner has demonstrated that a limited waiver of
    the authorization and verification rules is in the public interest
    because it will prevent consumers from temporarily losing service,
    and because Time Warner has agreed to notify the affected customers
    as described below. Time Warner states that it will undertake a
    two-step process to notify the affected customers of the
    transaction. In a first letter, Time Warner will inform customers of
    the proposed transaction and assure them that no charges or rate
    increases will be assessed in connection with the transfer from GST
    to Time Warner.[^15] Time Warner states that it will also advise the
    affected customers that they are free to choose a different
    preferred carrier, should they desire to do so. In addition,
    customers will be given a toll-free number to call with any
    questions they may have about the transition. [^16] According to
    Time Warner, once the proposed sale has been consummated, Time
    Warner will notify these customers of that event and reiterate the
    foregoing information, assurances, and advice.[^17] In addition,
    Time Warner states that it will cooperate with the Commission to
    investigate and resolve any outstanding complaints of affected
    customers regarding services provided by GST.[^18] We conclude that
    these conditions will adequately protect the rights of the
    transferred customers of GST.

8.  We note that GST, the carrier selling its customer base in this
    instance, has a history of delinquency in its contributions to the
    Universal Service Fund. Carriers pay into the Fund in order to
    provide financial support for various programs, including the High
    Cost, Schools and Libraries, and Rural Health Care programs. These
    programs were established by the Commission under Section 254 of the
    Communications Act of 1934, as amended, and are administered by the
    Universal Service Administration Company, in order to ensure the
    delivery of affordable telecommunications service to all
    Americans.[^19] While we recognize the undue burden that delinquent
    carriers like GST put on the Universal Service Fund, we believe that
    transferring GST's customer base to Time Warner, a responsible
    carrier contributing to the Fund as required under the Commission's
    rules, would be in the public interest.

9.  For the foregoing reasons, we grant Time Warner a waiver of the
    authorization and verification requirements of our rules for the
    limited purposes described above. The grant of this waiver is
    conditioned upon Time Warner\'s provision of customer notification
    and handling of customer complaints, as described above and further
    detailed in the Waiver Petition.

    **III. ORDERING CLAUSES**

10. Accordingly, pursuant to authority contained in Sections 1, 4, and
    258 of the Communications Act of 1934, as amended, 47 U.S.C. §§ 151,
    154, 258, and the authority

    delegated under sections 0.91, 0.291, and 1.3 of the Commission\'s
    rules, 47 C.F.R. §§ 0.91, 0.291, 1.3, the emergency waiver request
    filed by Time Warner Telecom Inc. on September 27, 2000, IS GRANTED
    to the extent indicated herein.

11. IT IS FURTHER ORDERED that this Order is effective upon release.

    FEDERAL COMMUNICATIONS COMMISSION

    K. Michele Walters

Associate Chief, Accounting Policy Division,

Common Carrier Bureau

[^1]: *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, Further Notice of Proposed Rule
    Making and Memorandum Opinion and Order on Reconsideration, 12 FCC
    Rcd 10674 (1997), Second Report and Order and Further Notice of
    Proposed Rule Making, 14 FCC Rcd 1508 (1998) (*Section 258 Order*);
    *stayed in part, MCI WorldCom v. FCC*, No. 99-1125 (D.C. Cir. May
    18, 1999); *First Order on Reconsideration*, FCC 00-135 (released
    May 3, 2000); 65 Fed. Reg. 47678 (August 3, 2000); *stay lifted, MCI
    WorldCom v. FCC*, No. 99-1125 (D.C. Cir. June 27, 2000); Third
    Report and Order and Second Order on Reconsideration, FCC 00-255
    (released August 15, 2000); *reconsideration pending*; *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)
    (*PIC Change Recon. Order*); Investigation of Access and Divestiture
    Related Tariffs, CC Docket No. 83-1145, Phase I, 101 F.C.C.2d 911
    (*Allocation Order*), 101 F.C.C.2d 935 *(Waiver Order*),
    *reconsideration* *denied*, 102 F.C.C.2d 503 (1985)
    (*Reconsideration Order*) (the *Reconsideration Order* denied
    reconsideration of both the *Allocation Order* and the *Waiver
    Order*). We refer to these orders collectively as the *Carrier
    Change Orders*.

[^2]: 47 C.F.R. §§ 64.1100 - 64.1190.

[^3]: On September 27, 2000, Time Warner filed an Emergency Petition for
    Limited Waiver (Waiver Petition) relating to Time Warner's
    acquisition of certain customers from GST Telecommunications, Inc.
    and the following affiliated companies: GST Action Telecom, Inc.,
    GST Call America, Inc., GST Net, Inc., ICON Communications Corp.,
    International Telemanagement Group, Inc. d/b/a Call America, NACT
    Telecommunications, Inc., Totalnet Communications, Inc., GST Telecom
    Pacific, Inc., and GST Telecom, Inc. (collectively, GST).

[^4]: *See* n. 3, *supra.*

[^5]: 47 U.S.C. § 258.

[^6]: The Commission\'s rules and orders clearly contemplate that a
    switchless reseller may be a customer\'s preferred carrier.
    Therefore, changes to a customer\'s preferred carrier that do not
    involve a change in the customer\'s underlying facilities-based
    carrier are nonetheless subject to the Commission\'s authorization
    and verification rules. *See Section 258 Order* at paras. 145-146;
    *WATS International Corp. v. Group Long Distance (USA), Inc.*, 12
    FCC Rcd 1743, 1752 (1997) (*citing* *PIC Change Recon. Order*, 8 FCC
    Rcd at 3218).

[^7]: Pursuant to these procedures, a carrier must: (1) obtain the
    subscriber\'s written authorization; (2) obtain confirmation from
    the subscriber via a toll-free number provided exclusively for the
    purpose of confirming orders electronically; or (3) utilize an
    independent third party to verify the subscriber\'s order. *See* 47
    C.F.R. § 64.1150.

[^8]: In February 1997, Time Warner received section 214 authorization
    to provide international telecommunications service. Between 1990
    and 1998, each of the GST subsidiaries noted above received section
    214 authorization to provide international telecommunications
    service. In a separate filing, Time Warner and GST jointly applied
    to the Commission for consent to the assignment of all section 214
    authorizations held by GST to Time Warner. *See* Waiver Petition at
    2-3.

[^9]: 47 C.F.R. § 1.3.

[^10]: *WAIT Radio v. FCC*, 418 F.2d 1153, 1157 (D.C. Cir. 1969), *cert.
    denied*, 409 U.S. 1027 (1972).

[^11]: *Northeast Cellular Telephone Co. v. FCC*, 897 F.2d 1164, 1166
    (D.C. Cir. 1990).

[^12]: *WAIT Radio*, 418 F.2d at 1157.

[^13]: *WAIT Radio*, 418 F.2d at 1159; *Northeast Cellular*, 897 F.2d at
    1166.

[^14]: Waiver Petition at 3.

[^15]: Time Warner filed sample notification letters. *Se**e*** Waiver
    Petition, Exhibits A and B. (Notification Letters).

[^16]: Waiver Petition at 4.

[^17]: *See* Notification Letters.

[^18]: Waiver Petition at 4-6.

[^19]: *See, e.g., Federal-State Joint Board on Universal Service,* CC
    Docket No. 96-45, Report and Order, 12 FCC Rcd 8776 (1997), as
    corrected by *Federal-State Joint Board on Universal Service,
    Errata,* CC Docket No. 96-45, FCC 97-157 (rel. June 4, 1997),
    *affirmed, reversed, and remanded in part sub nom. Texas Office of
    Public Utility Counsel, v. FCC,* 183 F.3d 393 (5^th^ Cir. 1999)
    *motion for stay granted in part* (Sept. 28, 1999), *petitions for
    rehearing and rehearing [en]{.underline} [banc]{.underline} denied*
    (Sept. 28, 1999) (*Universal Service Order).*